CSG Law Alert: New Jersey's SRRA Amended: What's Changed?
On August 23 2019, New Jersey Governor Phil Murphy signed into law A5293, which amends the Site Remediation Reform Act (SRRA). The amendments are wide ranging and include exemptions from direct oversight, authorization to use surety bonds as remediation funding sources, and a requirement that the person responsible for conducting the remediation respond to public inquiries regarding the status of a remediation.
Initially adopted in 2009, SRRA shifted oversight for remediation of environmentally contaminated sites from the Department of Environmental Protection (DEP) to Licensed Site Remediation Professionals (LSRPs). SRRA also established mandatory remediation timeframes relating to the reporting, investigation, and remediation of contaminated sites. SRRA is generally considered a successful statute. The LSRP program eliminates delays relating to DEP review that plagued earlier remediation efforts, and SRRA’s mandatory remediation timeframes, enforced with stiff penalties, have resulted in the remediation of contaminated sites. In the ten years since SRRA’s passage, over 700 LSRPs have been licensed and over 38,000 contaminated sites have been closed.[1]
Given that success, the recent amendments are essentially fine-tuning of SRRA to address some of the practical issues that have arisen over the past decade. The more sweeping changes proposed during stakeholder discussions did not survive the legislative process. Most notably, the amendments do not include DEP’s proposal to require reporting to DEP of any discharges identified by a potential buyer during due diligence. Likewise, the amendments do not include proposals by public entities to eliminate soil permits for historic fill, permit city wide classification exception areas for groundwater, and evaluate whether presumptive remedies are overly conservative. Other proposals by the regulated community that were not adopted include, among others, a bona fide prospective purchaser defense modeled after CERCLA, LSRP authority to issue certain remedial action permits, and extension of regulatory timeframes.
Still, the adopted amendments are substantive and should be familiar to anyone addressing or considering acquiring a contaminated site. While the statute should be referenced to determine the full scope of the amendments, a non-comprehensive summary of certain changes is set forth here.
Direct Oversight: Generally, DEP assumes direct oversight of a remediation when the person responsible for conducting the remediation has a history of noncompliance, or has failed to meet mandatory remediation timeframes. The amendments create exemptions from direct oversight. Now, failure to comply with a statutory deadline will not result in direct oversight if the person responsible for conducting the remediation demonstrates to DEP either that (1) the timeframe could not be met because the person responsible does not own the property and could not gain access despite taking appropriate and timely action to gain access, or (2) the site is subject to federal oversight and the deadline could not be met because of DEP’s additional review.
The amendments also clarify that direct oversight runs with the land, regardless of changes in ownership. However, DEP may enter into an administrative consent order (ACO) with a prospective purchaser which will modify the requirements of direct oversight. Pre-purchaser ACOs are not available for any person who discharged a hazardous substance at the subject site, owned or operated the site, or has a legal relationship to either a discharger or a former owner or operator.
DEP may also modify the conditions of direct oversight if the person subject to direct oversight can demonstrate financial hardship preventing the performance of remediation due to the imposition of direct oversight, or a State or federal public emergency results in a delay in meeting mandatory timeframes. DEP may also modify the conditions of direct oversight for a particular site following public notice and comment concerning the proposed modification.
Remediation Funding Sources: Several changes were made to SRRA regarding remediation funding sources. Most notably, surety bonds may now be used as a remediation funding source, in addition to the previously existing options of a remediation trust fund, an environmental insurance policy, a line of credit, a self-guarantee, and a letter of credit.
Remediation trust funds must be administered by an entity with authority to act as trustee and whose trust operations are regulated by state or federal regulations or court rules. A person who establishes a trust fund as a remediation funding source may now use the trust fund to pay for the actual cost of remediation, after the DEP provides written authorization for the release of funds.
An environmental insurance policy used as a remediation funding source cannot be terminated without the insurance company first notifying DEP of the decision to terminate the policy. The insurance company may only reduce an environmental insurance policy used as a remediation funding source pursuant to written direction from the DEP. Likewise, a line of credit or letter of credit used as a remediation funding source shall not be allowed to expire, and a surety bond shall not be cancelled, without adequate prior notification to DEP.
Public Inquiries: The person responsible for conducting a remediation or a designated LSRP must respond to letters or emails from the public regarding the remediation with specific responsive information, responsive documents or a written summary status report in a form determined acceptable by the DEP. In addition, upon request, any documents submitted to DEP must also be provided to the clerk of the municipality and the local health agency where the site is located. The person responsible for conducting the remediation may designate an LSRP to respond to public inquiries.
Civil Penalty: The Superior Court and municipal courts are now authorized to impose a civil penalty for violations of the Spill Act, in accordance with the Penalty Enforcement Law of 1999. This amendment provides explicit statutory authorization for a DEP ticketing practice that has been ongoing since approximately 2014.
Sustainable Remediation: DEP must now encourage green and sustainable practices during the remediation of a contaminated site. The statute does not explain how DEP will provide encouragement, but it does state that this provision does not alter the requirement that a remediation protect public health and safety and the environment.
Remedial Action Permit: A person who receives a remedial action permit must retain an LSRP to manage, supervise, or perform the requirements of the permit for the duration of the permit. This provision was already required pursuant to the terms of remedial action permits.
Notice: Written notice of a remediation must be sent to the municipality and county prior to the initiation of the remediation investigation. Previously, municipal notice was not required until later in the process, prior to initiation of the remedial action.
An LSRP retained to perform remediation on any portion of a site, and who obtains specific knowledge that a discharge has occurred anywhere on the site must notify the person responsible for conducting the remediation and the DEP of the discharge. An LSRP who identifies an immediate environmental concern (IEC) must immediately provide written notification to the person responsible for conducting the remediation of their duty to notify DEP. Previously, LSRPs were only required to provide verbal notification.
Immediate Environmental Concerns: The definition of immediate environmental concern now includes confirmed contamination that has migrated into “a structure.” The revision closes a loophole regarding IECs. Previously, migration of contamination into a structure was only considered an IEC if it was to “an occupied structure.” However, an unoccupied structure does not require further IEC response if the person responsible for conducting the remediation certifies to DEP that the building is not occupied, will not be occupied and will be demolished.
LSRPs: Actions alleging malpractice or negligence against an LSRP must include an affidavit of merit from a licensed individual stating that there is a reasonable probability that the actions of the LSRP fell outside acceptable professional standards. An affidavit of merit is currently required to be filed in malpractice claims against other professionals in New Jersey.
LSRP licensing requirements have changed. Eligibility criteria now require site remediation experience in New Jersey for three of the last five years immediately prior to the application, as opposed to the prior requirement of remediation experience during all of the three prior years. The list of disqualifying crimes has been expanded to include any crime involving breach of trust, any crime that requires sex offender registration, and any other crime involving moral turpitude. Also, within the 10 years prior to the application, an applicant must not have had a professional certification or license revoked by a state licensing agency, and must not have surrendered a professional certification of license in response to a disciplinary investigation.
Loopholes regarding retention of LSRPs have been closed. In general, an LSRP cannot work at, facilitate, aid or cooperate in the retention of non-LSRPs at a site that requires but does not have an LSRP of record. Persons who are not LSRPs may not perform remediation unless the remediation is managed, supervised, or periodically reviewed by an LSRP.
In addition, LSRPs may not knowingly certify false statements to the DEP and may not certify documents submitted to DEP unless the LSRP believes that the information in the submission is true, accurate and complete.
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