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DEP’s Tough New Soil Cleanup Standards—
Are You Grandfathered?
by Nielsen V.Lewis
Under the Brownfield and
Contaminated Site Remediation
Act (Brownfield Act), it is the policy of
the State of New Jersey to encourage
the acquisition and redevelopment
of abandoned and underutilized
contaminated commercial properties
(Brownfields). To that end, the
Brownfield Act established a combination
of cleanup liability defenses for
innocent parties, financial incentives,
technical innovations and the promise
of more flexible, risk-based cleanup
requirements.
The Grandfathering
Provision
On May 7, 2007, moving in a
seemingly contradictory direction, the
New Jersey Department of Environmental
Protection (DEP) proposed
rules incorporating extraordinarily
stringent new site remediation
standards for soils. The new soil
cleanup standards include substantial
changes in the required cleanup levels
for many contaminants, especially with
regard to soil impact to groundwater
standards. For Brownfield redevelopers,
the critical threshold question is
whether they qualify for “grandfathering”
protection from compliance with
DEP’s onerous new cleanup standards.
The proposed new cleanup rules
do include a grandfathering provision
reading:
(d) The person responsible for
conducting the remediation of a
site shall remediate soil:
- To meet the remediation
standards at N.J.A.C. 7:26D; or
- To meet the standards or
criteria developed by the
Department under N.J.S.A.
58:10B-12a for that site prior to
[the effective date of N.J.A.C.
7:26D] provided:
- A remedial action workplan
or a remedial action report
containing standards or criteria
developed for the site under
N.J.S.A. 58:10B-12a is submitted
“The proposed rules would frustrate a vital goal of the
Brownfield Act.”
to the Department before [the
effective date of N.J.A.C. 7:26D
plus 6 months];
- The remedial action work-
plan or a remedial action report
meets the requirements of
N.J.A.C. 7:26E-6; and
- The standards or criteria
developed by the Department
under N.J.S.A. 58:10B-12a for
the site are not greater by
an order of magnitude or
more, than the soil remediation
standards otherwise applicable
under N.J.A.C. 7:26D.
As currently worded, the new rules
can be read to say that even innocent
parties who invest capital in the
acquisition and cleanup of Brownfield
sites for redevelopment, leading to a
No Further Action (NFA) letter from
DEP, may incur still more cleanup
obligations in the future if DEP adopts
new cleanup standards differing from
those at the time of cleanup by an
order of magnitude. These unquantifiable
regulatory risks are anathema to
private investment in land development,
as open-ended liability for compliance
with any future cleanup standards is a
risk few redevelopers wish to incur.
Inconsistency with
Brownfield Act and Spill Act
In its comments, DEP explains
its purported order of magnitude
“re-opener” exception to grandfathering
protection as follows: “When a new
remediation standard is lower than a
soil cleanup criterion by an order of
magnitude or more, the Brownfield
Act …mandates that the new standard
must be used.” DEP’s explanation is
legally incorrect because the referenced
provision of the Brownfield Act is not a
“mandate”; it is simply a limitation on
DEP’s cleanup re-opener powers.
More importantly, DEP’s explanation
ignores other controlling provisions
of the Brownfield Act and the Spill
Compensation and Control Act (Spill
Act). A relevant provision of the
Brownfield Act states:
Upon the adoption of a regulation
that amends a remediation
standard, or where the adoption
of a regulation would change a
remediation standard which was
otherwise approved by the
department, only a person who
is liable to cleanup and remove
that contaminant pursuant to
section 8 of P.L. 1976, c. 141
[the Spill Act], and who does
not have a defense to liability
pursuant to subsection d. of
that section [N.J.S.A. 58:1023.11g.
d], shall be liable for any
additional remediation costs
necessary to bring the site into
compliance with the new
remediation standards except
that no person shall be so liable
unless the difference between
the new remediation standard
and the level of concentration of
contaminant at the property
differs by an order of magnitude.
This provision expressly exempts
persons who have a defense to cleanup
liability under the Spill Act from
liability for future order of magnitude
changes in cleanup standards. Under
the Spill Act, these persons include
innocent purchasers of real property
with pre-existing contamination who
“acquired the real property after the
discharge of that hazardous substance,”
who are not “dischargers” or “persons
in any way responsible” for the discharges,
who exercised “all appropriate
inquiry” (due diligence) before acquiring
the property, and who, where due
diligence reveals pre-existing hazardous
substance discharges,
(ii) performed, following the
effective date of P.L. 1997, c. 278
[January 6, 1998] a remediation
of the site or discharge consistent
with the provisions of section 35
of P.L. 1993, c. 139 (C. 58:10B12),
or relied upon a valid no
further action letter from the
department for a remediation
performed prior to acquisition, or
obtained approval of a remedial
action workplan from the department
after the effective date of
P.L. 1997, c. 278 and continued
to comply with the conditions of
that workplan, and
(iii) established and maintained
all engineering and institutional
controls as may be required
pursuant to sections 35 and 36
of P.L. 1993, c. 139. [N.J.S.A.
58:10-23.11g.d(2)(d)]
The Spill Act releases such innocent
purchasers from further cleanup liability.
In clear and unequivocal terms, the
statute provides that they:
shall not be liable for any cleanup
and removal costs or for any
damages to the State or to any
other person for the discharged
hazardous substance pursuant
to subsection c. of this section
[N.J.S.A. 58:10-23.11g.c] or
pursuant to civil common law, if
that person can establish by a
preponderance of the evidence
that [the foregoing innocent
purchaser defenses apply].
It further specifies that such persons
“shall not be liable for any further
remediation including any changes in a
remediation standard . . . .”
To the same effect, the Brownfield
Act mandates that NFA letters issued
by DEP include a covenant not to sue
containing:
(1) a provision releasing the
person who undertook the
remediation from all civil liability
to the State to perform for any
additional remediation, to pay
compensation for damage to, or
loss of, natural resources, for the
restoration of natural resources in
connection with the discharge on
the property or for any cleanup
and removal costs;
(2) for a remediation that involves
the use of engineering or
institutional controls [a provision
requiring continued maintenance
and compliance with such
controls].
The covenant not to sue protects not
only qualifying innocent purchasers of
the property, but “all successors in
ownership of the property and [ ] all
persons who lease the property or
engage in operations on the property.”
As stated by the Legislature when
enacting the Brownfield Act,
in order to encourage the cleanup
of contaminated sites, there must
be finality in the process, the
provision of financial incentives,
liability protection for innocent
persons who clean up, cleanup
procedures that are cost effective
and regulatory action that is
timely and effective. [N.J.S.A.
58:10B-1.2]
What Do the New Soil
Cleanup Standards Mean
for You?
Continued cleanup liability of
innocent Brownfield redevelopers who
voluntarily clean up (or purchase
property relying on a prior cleanup and
NFA letter) would deny the Brownfield
Act’s promise of finality in cleanups by
innocent persons. It would discourage
the cleanup of contaminated sites by
persons who did not contribute to the
problem. The proposed rules would
frustrate a vital goal of the Brownfield Act.
It is essential that the DEP redraft its
proposed rules to specify that the “order
of magnitude” exception to grandfathering
protection against compliance with
future cleanup standards does not apply
to innocent purchasers who have
defenses to liability under the Spill Act.
In the meantime, parties considering the
acquisition of Brownfield sites for
redevelopment should consult with their
legal advisors and environmental
consultants to fully assess their cleanup
liability exposure and defenses if they
should close on a deal.
Nielsen V. Lewis is a partner of the firm’s Environmental
Law Practice Group and a member of the
Land Use Division. He concentrates his practice in
the areas of environmental law, insurance law and
land use, with an emphasis on prosecuting and
defending complex environmental litigation.
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