Last week, the New Jersey Department of Environmental Protection (NJDEP) announced a new Response Action Outcome (RAO) Notice, which allows Licensed Site Remediation Professionals (LSRPs) to issue an RAO for a site with contaminated sediment that migrated from an off-site source.  The new notice, entitled “Sediment Contamination From an Off-Site Source Not Remediated – General,” is the most recent addition to the growing list of RAO notices.

The notice can be used after a Preliminary Assessment and Site Investigation (PA/SI) confirms that the source of the sediment contamination is off-site and not related to the site being evaluated.  The off-site source must be reported to NJDEP and the resultant new incident number included in the Notice.  Furthermore, the LSRP can identify an existing NJDEP case if it is known to be the off-site source and is currently undergoing investigation or remediation.

Given that it is well-established law that you are not responsible for contamination coming from offsite, the primary purpose of this action appears to be to streamline the RAO process.  So, this is another tool in the LSRP toolbox for the often complicated sediment cases, which continue to garner regulator’s attention here in New Jersey and nationwide.

Read more on sediment contamination in these discussions:

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A recent New Jersey Appellate Division case clarifies the process of valuing contaminated property in a condemnation action, and finds that where the cleanup has been completed, even if contamination remains at the property, the property owner is not required to escrow additional monies for any further cleanup.

In 2003, in the Suydam Investors case, the New Jersey Supreme Court set forth the process for valuing contaminated property in a condemnation matter: the property is valued as if the contamination has been remediated, with a portion of the condemnation award necessary to fund the cleanup being escrowed.  This rule avoids a “double-take,” in which the condemning authority pays less for a property because it is dirty, but then gets the property cleaned-up by forcing the former owner to pay for the cleanup.

In Borough of Paulsboro v. Essex Chemical Corp., decided July 16, 2012, the Appellate Division was asked to decide whether the Suydam methodology applied where the NJDEP approved the cleanup and capping of a landfill.  Paulsboro was condemning a 67 acre property owned by Essex Chemical.  Located on the property was a seventeen acre landfill which was capped with a 40-foot high mound of gypsum.  The landfill closure was approved by the NJDEP, and the only remaining obligations were maintenance and monitoring requirements associated with the cap.  Those obligations were assumed by BP, which leased the landfill for a solar power facility.

Paulsboro argued that under Suydam, the entire condemnation award should have been put into escrow to pay for the removal of the landfill.  Essentially, they argued that property with a closed landfill was not the same as a “clean” property, and therefore they should be able to use the condemnation award to pay for the landfill’s removal.  The Appellate Division, however, held that the critical issue was whether Essex Chemical had any further liability for cleaning up the landfill.  If Essex Chemical did have further cleanup liability, then Suydam would apply to avoid the “double-take” problem.  In this case, however, because the NJDEP approved the landfill closure and Essex Chemical had no further cleanup liability, the Suydam formula did not apply.  Therefore, the fair market value paid by Paulsboro was immediately available to Essex Chemical and did not need to remain in an escrow account to pay further cleanup costs.

While the presence of a landfill on the condemned property is potentially a more significant concern, the reasoning of the case should apply to more typical cleanup cases where a property might have a conditional No Further Action letter from the NJDEP or a conditional Response Action Outcome letter from a Licensed Site Remediation Professional.  In the typical conditional closure, contamination remains on-site but is subject to the implementation of institutional or engineering controls such as a deed notice or an asphalt cap over the contaminated soils.  With such a conditional closure, the property owner generally faces no additional remediation liability for the property.  If that property is then condemned, Suydam would not apply and the condemnor would need to pay the property owner the full fair-market value of the property with no monies set aside for further cleanup at the property.

Article originally published in New Jersey Law Journal.

In an effort to expedite the remediation of more than 20,000 contaminated sites, New Jersey passed the Site Remediation and Reform Act (SRRA) on May 7, 2009. SRRA transferred the responsibility of overseeing most cleanups in the state from the New Jersey Department of Environmental Protection (NJDEP) to licensed private environmental consultants called Licensed Site Remediation Professionals (LSRPs). LSRPs now perform the environmental cleanups and have the authority to stand in NJDEP’s shoes and sign off on the cases they oversee. Among many other changes, SRRA enhanced the affirmative obligation of responsible parties to timely remediate contaminated sites.

The LSRP program became fully effective on May 7, at which time all existing NJDEP matters should have been transitioned into the new program. Although that critical date has now passed, SRRA will influence nearly every real estate transaction going forward. Real estate attorneys must be aware of SRRA’s implications on their practice and on their clients’ obligations with respect to their properties.

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Reprinted with permission from the June 4, 2012 edition of New Jersey Law Journal. © 2012 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited.

Over the next three to four weeks, the NJDEP will be sending letters to the responsible parties for all contaminated properties in New Jersey (other than residential properties) providing the NJDEP’s proposed ranking for each site.  Responsible parties will have only about 60 days to “challenge” those rankings.

The Site Remediation Reform Act, passed in 2009, not only established the LSRP program, but also requires the NJDEP to establish a “Priority Ranking System” to classify/categorize all contaminated properties in the state.  Specifically, the Act requires the NJDEP to create “a ranking system that establishes categories in which to rank sites based upon the level of risk to the public health, safety, or the environment, the length of time the site has been undergoing remediation, the economic impact of the contaminated site on the municipality and on surrounding property, and any other factors deemed relevant by the department.”  Site rankings are expected to become public in September 2012.

Contaminated sites will be ranked between 1 and 5, with category 5 reserved for sites presenting the highest risk to public health, safety or the environment, or the sites undergoing remediation for the longest time.  Category 1 will be for the sites with the least risk.  The NJDEP has not yet included economic impact or other factors in their ranking system, despite the Act’s mandate that those factors be included in the ranking process.

The rankings have been established using computer modeling, based upon electronic data submitted for contaminated sites as well as the NJDEP’s existing GIS computer data.  The NJDEP’s model considers data inputs such as the proximity of a site to sensitive receptors (e.g., schools, residential properties, wetlands, etc.), the contaminants of concern at the property, the toxicity of those contaminants, and the affected media (soil, groundwater, surface water or vapor intrusion).  The model then generates a score for a property, and that score in turn determines the overall site ranking.

The letters to be sent out by the NJDEP over the next several weeks are expected to allow responsible parties approximately 60 days to challenge the NJDEP’s ranking.  Those challenges will likely be limited to claims that the NJDEP used incorrect, outdated or incomplete data in determining a site’s rank.  The NJDEP has stated that this challenge period will not be extended for any site.  After considering challenges, the NJDEP is expected to issue its final site rankings in September 2012.  Those rankings will be updated periodically by the NJDEP based upon new data received from on-going cleanup cases.

This is a brand new NJDEP program, and it is not known how the NJDEP will ultimately use the rankings or how the public will use them.  With such uncertainty over the potential use of the rankings, a responsible party should minimally make sure that its site ranking is “accurate” under the NJDEP’s model.

With such a short window to present the NJDEP with any challenges to a site’s rank, it is critical that responsible parties discuss this issue with their attorneys and environmental consultants as soon as they receive their letter from the NJDEP.

This article is a follow-up to our prior post of July 31, 2009 dealing with this issue.  As you may know, the New Jersey Department of Environmental Protection (“NJDEP”) enacted a notification and public outreach rule, N.J.A.C. 7:26E-1.4 et seq., in September of 2008.  The regulation requires responsible parties who are conducting an environmental investigation or remediation at contaminated sites to provide various public notifications and outreach activities.  In general, the notification letters contain the name of the responsible party, address, tax block and lot, NJDEP ID number, brief description of the type of contaminant and actions being taken, contact information and a statement indicating the municipality may request that the person conducting the remediation provide copies of all environmental reports.  The regulation provided that most of these notifications had to be completed prior to September 2, 2009. 

As the cases have progressed and the new Licensed Site Remediation Professional Program has been implemented, responsible parties may have been distracted from the details of this public notification rule.  Specifically, the public notification and outreach requirements are continual.  If a responsible party chose to comply with its public notification requirements by sending letters to owners and operators of property within 200 feet of the site boundary instead of posting a sign, updated notification letters detailing the current condition and progress of their remediation must be sent every 2 years until all the required remediation is completed and the final remediation document is filed or issued (No Further Action Letter or Response Action Outcome).  Therefore, if you sent out public notification letters prior to the former September 2, 2009 deadline and your cleanup is not yet complete, you must issue updated public notification letters prior to September 2, 2011.  Two years ago, we were skeptical as to the reaction the public would have to these notification letters, but for the most part, the reaction has not been significant or problematic.