In what is designed to break a 20,000-case logjam of remediation projects pending before the New Jersey Department of Environmental Protection (“NJDEP”), Governor Corzine on May 7, 2009, signed into law a new far-reaching measure that will transfer to specially licensed environmental consultants the task of overseeing most environmental remediation projects in the state of New Jersey. The law, known as the Site Remediation Reform Act (Assembly Bill No. 2962), authorizes the NJDEP to establish a Site Remediation Professional (“LSRP”) program that will license and audit consultants who will perform site remediation projects without NJDEP oversight, and then certify that the remediation was performed in compliance with applicable statutory and regulatory requirements.

Among its most direct impacts, the LSRP program is expected to fundamentally alter the relationship that remediating parties have with their consultants when performing a remediation under LSRP oversight. Whereas under the existing NJDEP-oversight process, environmental consultants have played the role of an advocate for their clients in negotiating site remediation goals and methods with the NJDEP, the goal of the new program is to ensure that LSRPs act in a neutral capacity to exercise their best professional judgment in implementing remedial measures that are necessary to ensure protection of public health and the environment. While LSRPs’ fees will be paid for by the party or parties who are legally responsible for remediating contaminated sites, the new law seeks to enforce LSRPs’ impartiality by relying on a range of increasingly severe sanctions – from loss of license to criminal penalties – for cases involving malfeasance or intentional misconduct. At the conclusion of the remediation, the LSRP will issue what is known as a Response Action Outcome (“RAO”), which will take the place of the No Further Action Letter (“NFA”) that was issued by the NJDEP at the conclusion of a remediation project.

Parties who are currently performing remediation projects with NJDEP oversight may elect to remain in the NJDEP oversight program while the program is implemented in stages over the next 18 months, or can opt in to an LSRP pilot program that will be set up within the next 90 days. In general, it is widely expected that remediation projects performed with LSRP oversight will tend to be more conservative and, hence, more expensive, if only because the LSRP will risk the loss of his or her license and could even face potential civil or criminal penalties in the event that the NJDEP audits the RAO and determines that the remediation was not properly performed.

On the other hand, for particular sites, LSRP oversight may prove to be more cost-effective than the current NJDEP-oversight model for several reasons. First, LSRP oversight is expected to significantly reduce the amount of time for completing the investigation and remediation of contaminated sites, which may result in cost savings in particular cases by reducing the number of contract mobilizations at remediation sites to complete investigation work. Second, the LSRP program will provide somewhat greater flexibility in approaches that can be taken to perform site investigation and remediation tasks. NJDEP officials responsible for implementing the program have said that LSRPs will have the latitude to depart from highly prescriptive NJDEP site remediation requirements as set forth in the NJDEP’s Technical Requirements for Site Remediation (N.J.A.C. 7:26E), provided that the variance is justified because the NJDEP requirement does not fit the particular situation and the alternative approach is well-supported by established procedures employed by other federal or state environmental agencies. Third, experience in other states that use similar programs, like Massachusetts and Connecticut, has shown that licensed site professionals are frequently more willing to employ innovative remediation or site investigation technologies and methods than what state agencies may be willing to accept.

The LSRP program also is likely to have far-reaching implications for parties conducting business transactions (including purchases and commercial loans) involving contaminated property. In addition to modifying contractual provisions that currently premise cleanup obligations on the NJDEP’s issuance of an NFA, contracting parties such as purchasers and lenders would be wise to incorporate additional contractual protections aimed at addressing the potential risk associated with an RAO being reversed by the NJDEP. It would also be prudent for contracting parties seeking to enforce contractual cleanup obligations to require the selection of the LSRP to be mutually acceptable to all parties.

The LSRP program will also increase the public visibility of site remediation projects, as an Executive Order signed by Gov. Corzine accompanying the bill’s signature directs the NJDEP to publish on its website all documents submitted to it by the LSRP, as well as all NJDEP audit findings. This increased visibility could mean more “toxic tort” and property claims by neighboring property owners and/or citizen opposition to proposed remedial measures that may entail leaving contamination in place, subject to continued long-term monitoring.

The Site Remediation Reform Act defines the role of the LSRP and directs the NJDEP to adopt regulations establishing their requisite qualifications, the licensing procedures, and a code of conduct. The law also creates a Site Remediation Professional Board to adopt education, experience and training standards for environmental consultants applying for LSRP program licenses. Because it will take time for the NJDEP to develop and implement this program, the law provides for a temporary 18-month licensing program.

Once the permanent program is in place, it is expected that the NJDEP will retain oversight of roughly 1,000 remediation sites based on various criteria indicative of the degree of risk they present to public health and the environment, potential exposures of children, and the extent to which the parties responsible for the remediation have been recalcitrant in performing their remedial obligations.

If you have any questions regarding this advisory or would like assistance with a particular project, please contact:

Steven L. Humphreys
(973) 503-5900
shumphreys@kelleydrye.com

Governor Corzine Signs New Jersey Licensed Site Remediation Professional Bill