Under the Act, the NJDEP may enter a permittee’s property at reasonable times to conduct inspections and sampling, copy documents or records, and otherwise ensure compliance with the Act once the NJDEP representative presents credentials and the permittee consents to access.  If access is denied, the Act’s regulatory scheme grants the NJDEP the ability to issue an administrative order requiring compliance, assess a penalty for each day access is denied, and seek judicial recourse for court-ordered access.  Accordingly, while the Act does not permit the NJDEP to “forcibly” enter a residential property, where heightened privacy interests lie, it does provide a process consistent with the Fourth Amendment that allows the NJDEP to eventually gain access and achieve compliance.

The New Jersey Supreme Court adopted this view in the case of NJDEP v. Robert and Michelle Huber (April 4, 2013), where the defendants were found to have violated the Act because of improvements they made to their property in violation of an existing wetlands permit.  The parties disputed whether access had been granted, and the defendants argued that the Court should exclude certain evidence based on the Department’s warrantless inspection of their property.  The Court held that court-ordered entry would be required before the NJDEP could access and inspect a permittee’s property.  However, in this case, the Court found sufficient evidence in the record to uphold the violation even with the contested information excluded.

The Waiver Rule contains several conditions that must be met before the DEP will waive a regulatory requirement.  First, the waiver request must fall within at least one of four bases for obtaining a waiver: (a) the applicant faces conflicting rules; (b) strict compliance would be unduly burdensome; (c) a waiver would yield a net environmental benefit; or (d) a public emergency warrants the waiver.  Second, the waiver cannot fall within any of thirteen categories of DEP rules that cannot be waived (e.g., federal requirements cannot be waived).  Finally, the DEP applies several additional specific criteria in reviewing waiver requests.  The court indicated that one of the most significant of these additional criteria was to ensure that waivers are consistent with the DEP’s core mission.

A number of environmental groups challenged the legality of the Waiver Rule, claiming that the Waiver Rule was invalid because it exceeded the DEP’s authority and failed to provide adequate standards governing the implementation of the Waiver Rule.

The Appellate Division upheld the Waiver Rule.  The court first noted that it was required to defer to the DEP’s interpretations of the various statutes for which it is responsible.  Next, the court held that under those environmental statutes, the DEP has inherent authority to waive the requirements of its own regulations, provided that it does so in limited and well defined situations. This authority exists where waivers do not violate a statutory requirement or federal law and comport with the agency’s core mission.  Additionally, the agency must issue properly adopted regulations and provide clear standards for how the agency will issue waivers.  The court determined that the Waiver Rule met these requirements.  An appeal to the New Jersey Supreme Court is expected.

The court did invalidate the Waiver Rule guidance documents issued by the DEP.  Before the Waiver Rule became effective in August 2012, the DEP established several  guidance documents ostensibly governing the implementation of the Waiver Rule.  These  guidance documents were available on the DEP’s Waiver Rule webpage.  The court held that the DEP’s Waiver Rule guidance documents were invalid because they were effectively agency rules that had not been issued in compliance with the rulemaking requirements of the Administrative Procedures Act.  Nevertheless, the Waiver Rule remains in effect because the court found that the rule itself was detailed enough to stand on its own without the guidance documents.

A BFPP is a person (or the tenant of a person) that acquires ownership of property after January 11, 2002 and can establish the following:

1. that all disposal of hazardous substances at the facility occurred prior to acquisition;
2. the person conducted all appropriate inquiry (“AAI”) into the previous ownership and uses of the facility;
3. the person provides certain legally required notices;
4. the person takes reasonable steps with respect to hazardous substance releases;
5. the person provides cooperation, assistance and access to EPA and/or the remediating party;
6. the person complies with land use restrictions and institutional controls;
7. the person complies with information requests and administrative subpoenas; and
8. the person is not potentially liable for response costs at the facility or “affiliated” with any such person.

Tenants may derive BFPP status from an owner who satisfies the BFPP criteria.  The tenant remains a BFPP and is protected from CERCLA liability as long as the owner maintains BFPP status, provided the Tenant does not impede the performance of a response action or natural resource restoration.  Further, as long as the owner maintains compliance with the BFPP criteria, the tenant who has derived BFPP status does not have any independent duty to carry out those responsibilities (such as conducting AAI).  However, if the owner loses its BFPP status, whether by its own action or inaction, or that of the tenant, EPA’s guidance would hold that the tenant would no longer have derivative BFPP status. 

The EPA acknowledges in its guidance that due to its self-implementing process, as a practical matter, it may be difficult for a tenant to know with certainty whether the owner has qualified for and continues to maintain BFPP status.  Thus, it’s good practice for tenants with or seeking to obtain derivative BFPP status to independently verify and/or evaluate whether the BFPP criteria are being met in order to assess their own status as a BFPP.  Additionally, where appropriate, the tenant may seek to protect its BFPP status through the lease agreement.

Tenants may also independently assert BFPP status where the owner is not a BFPP.  The EPA states that it will exercise its enforcement discretion on a site specific basis to treat the tenant as a BFPP when a tenant itself meets all of the BFPP provisions in CERCLA.  As such, whether the tenant intends to obtain its BFPP status derivatively or independently, a tenant should review existing environmental assessments, investigations and/or remedial action reports in order to assess what, if anything, a tenant must do to obtain its BFPP status. 

A link to USEPA’s “Revised Enforcement Guidance Regarding the Treatment of Tenants Under the CERCLA Bona Fide Prospective Purchaser Provision,” dated December 5, 2012 is available here.

The summary form must be posted in a place where notices to employees are customarily posted or should be provided to employees who may not see the posted summary because they do not report to a fixed location on a regular basis.  The owner or officer of the company is required to certify the information contained in the OSHA 300A form.

OSHA’ recordkeeping requirements apply to all non-exempt employers.  Excluded from these regulations are companies with ten or fewer employees as well as low hazard industries such as retail, service industries, finance etc.  A full listing of exempt employers as well as OSHA’s recordkeeping forms and instructions can be found at its website, OSHA.

Volatile organic contaminants in soil and groundwater can migrate upward through floor slabs and basements into the indoor air.  In recent years, NJDEP has focused much attention on the potential risks to building occupants posed by such so-called “vapor intrusion.”  Depending on the levels of volatile contaminants in the subsurface and in the indoor air, parties responsible to clean up impacted properties may be required to take action to monitor or mitigate the vapor intrusion pathway.  At high enough levels, vapor intrusion rises to the level of an “immediate environmental concern” for which specific, rapid action is required.

NJDEP’s new screening levels could result in significant changes to cleanups already in progress, as well as future cleanups.  For some contaminants, the screening level has become much less stringent – for example, the groundwater screening level for a common cleaning solvent, tetrachloroethene (“PCE”), has increased from 1 part per billion to 31 parts per billion.   Other screening levels have become more stringent.  Two new compounds, naphthalene and 2-methylnaphthalene, were added to the screening level tables.

NJDEP has issued a flow chart to guide implementation of the new vapor intrusion screening levels:

• For all new cases initiated after January 16, 2013, the new screening levels apply.
• For cases closed prior to January 16, 2013 with an unrestricted use final remediation document, no further investigation of the vapor intrusion pathway is required.
• For cases closed prior to January 16, 2013 with a restricted use final remediation document, the vapor intrusion pathway must be reevaluated as part of the biennial certification using an “order of magnitude” analysis.
• For cases in which a Remedial Action Workplan for groundwater was issued before January 16, 2013, the existing data must be reevaluated using an “order of magnitude” analysis.
• For all other cases, the investigator has until April 16, 2013 to evaluate site conditions using the new vapor intrusion screening levels.  After this review, the cleanup must proceed following applicable rules, using the new screening levels.

Details of the new guidance can be found on NJDEP’s website.

Most molds are harmless but some can cause infections and allergy symptoms.  The fact sheet outlines safety precautions and procedures, which are based on the size of the impacted area, to be taken when dealing with mold-infested structures.  These recommendations are mandatory for employers as to minimize employee exposure to mold.

• Areas less than 30 square feet – the work area should be unoccupied but removing people from adjacent spaces is unnecessary.  Surfaces in the work area should be covered with plastic to prevent dust and debris contamination. 
• Areas greater than 30 square feet, – in addition to the work area, areas directly adjacent to the work area should be unoccupied.  The ventilation ducts in the work area and areas directly adjacent to the work area should be sealed with plastic sheeting.

If there is extensive and visible mold contamination, a mold remediation plan should be developed and implemented that addresses work area isolation, the use of exhaust fans and air locks/decontamination rooms.  If the contamination is significant, an industrial hygienist with experience in performing mold remediation should be consulted.

The key to protecting employees and the public when remediating mold is to eliminate inhalation of the mold spores.  This is achieved by using engineering controls that minimize the airborne exposure.  Such controls include wetting materials to minimize dust and debris, exhaust ventilation, and sealing areas in which the work is being conducted.  Likewise, certain work practices should be followed such as prohibiting eating, drinking and smoking in work areas, using high efficiency vacuums, controlling access to the work area, and using decontamination procedures.  Personal protective equipment, such as respirators, goggles, gloves and protective clothing, is also recommended.

1. The existence of the Spill Act affirmative defense for pre-1993 acquisitions set forth in the law allows liability   to be inferred for current owners of contaminated property, where the Property was purchased before 1993, unless   the  property owner  can establish a defense to liability.
2. Even where contamination is identified by a condemning authority after it has filed its declaration of taking, the condemned party is still considered the property owner for purposes of liability in a subsequent cost recovery suit.

In this case, the City of East Orange acquired Marcantuone and Gieson’s property by eminent domain in 2005 to build a performing arts pre-school. Under well established condemnation law in New Brunswick v. Suydam Investors, 177 N.J. 2 (2003), a portion of the acquisition money was set aside in court to pay for any cleanup costs incurred by the New Jersey Schools Development Authority (“NJ Schools”), which funded the acquisition.

A number of environmental assessments prepared for the City and for NJ Schools prior to the taking  had identified former dry cleaning operations at the site since the 1930′s,  but did not recommend  that any investigation be performed. A subsequent  environmental assessment after the taking, however, led to sampling which revealed the dry cleaning  solvent PCE in soil. Cleanup was completed and NJ Schools sued defendants for recovery of its cleanup costs of approximately $200,000.

Pre-1993 Acquisition Spill Act Liability

At trial, Plaintiff asserted that the defendants  were liable because they owned  the property with no defense to Spill Act liability , in that they failed to undertake pre-acquisition environmental due diligence when they purchased the property in 1985 in accordance with a 2001 amendment to the Spill Act (with retroactive applicability) requiring due diligence based on generally accepted good and customary standards for pre-1993 acquisitions. Defendants argued  that although there is a defense in the Spill Act for pre-1993 acquisitions, the existence of the defense does not  in itself create Spill Act liability for pre-1993 purchasers,  and that  prior case law did not clearly establish such liability.

Although NJ courts have been reticent about making clear assertions of current owner liability under the Spill Act, the Spill Act rules implementing the statute are clear that current owners are liable for contamination, subject to any of the available defenses under the law. In addition to an act of war and an act of god, these defenses include pre-acquisition environmental due diligence that does not identify any reason to know that there is contamination at the property. The Appellate Division’s decision here clarifies the situation, stating “Although it may seem counterintuitive to infer liability from legislation establishing an affirmative defense, logic dictates that that is the case….and reveals the Legislature’s acknowledgment of the underlying liability these affirmative defenses were intended to counteract.” 

The Appellate Division remanded the matter to the trial court  to determine whether  the defendants met the pre-1993 due diligence requirement which is vaguely worded in the statute as being based on generally accepted good and customary standards for pre-1993 acquisitions. The opinion details an interesting analysis prepared by NJ School’s expert as to the evolution of due diligence practices from the 1970′s , when only high risk properties were evaluated for environmental risks by large and multi-national corporations, to the current practice based on the 1993 Spill Act amendment setting out NJ’s prescriptive preliminary assessment process.

Timing of Ownership in Condemnation

Since the liability of the defendants was based on their ownership of the property, the defendants argued that no contamination was identified until after the property had been taken by NJ Schools and that they no longer owned the property at that time.

The Appellate Division looked at the Suydam decision in which the court determined that properties are to be valued as if remediated and fair compensation paid  based on that valuation, with funds being placed in escrow until the true cost of remediation and the liability of the condemned party is determined in a cost recovery action. Using the intent of Suydam to bifurcate the condemnation proceedings from the cost recovery process, the Appellate Division held that although the act of filing a declaration of taking vests title in the condemning authority, the condemned party is deemed to be the “current owner” even after that point, for purposes of the cost recovery suit.  

On remand, if defendants are not able to establish a defense to liability based on the pre-1993 acquisition due diligence standard,  defendants will be liable for the cleanup costs even though they were discovered after title had passed. 

In State Farm, Kimberly Rossi owned property on which a leaking underground storage tank (“UST”) was located.  She sold the property but retained the obligation to cleanup the contamination from the UST.  Shea owned the property adjacent to Rossi and did not perform a pre-purchase environmental inspection despite the fact that there was evidence of an UST on his property.

While investigating the contamination on her property, Rossi discovered a leaking UST located on Shea’s property.  State Farm, on behalf of Rossi, and Cumberland Mutual Insurance Company, on behalf of Shea, sued each other seeking to recover cleanup costs.

The trial court found that the contaminant plumes migrating from Shea’s UST and Rossi’s UST were separate and distinct.  The court concluded that because Shea did not perform an environmental assessment before acquiring his property he was not an innocent purchaser, which would have absolved him from liability.  The court ruled that each party was responsible for the cleanup of their respective contaminant plume.

On appeal, Shea argued that the trial court improperly required him to conduct a pre-purchase environmental investigation.  Shea also contended that the trial court never addressed whether the contamination on his property occurred during his ownership as required by N.J. Dep’t of Env’l. Prot. v. Dimant, No. 1-2-11 (N.J. Sept. 26, 2012)

In addressing the first issue, the court noted the statutory requirements that must be met for a buyer to be an innocent purchaser.  The court stated that while Shea was not required to do an environmental assessment, he needed to have performed the appropriate pre-purchase inquiry of the property if he wanted to qualify as an innocent purchaser.  Because Shea did not conduct any type of environmental assessment prior to purchasing his property, he was not an innocent purchaser.

The court further ruled that Dimant was inapplicable in that it did not address whether a property owner such as Shea would be absolved from liability if contamination was found to occur prior to his ownership.  Unlike in Dimant, the court determined that there was credible evidence to allow a fact-finder to conclude that the contamination from Shea’s UST leaked during the time he owned the property.  The Appellate Division affirmed the lower court’s ruling.

The New Jersey Department of Environmental Protection had looked to hold certain parties liable for groundwater contamination in an area of Bound Brook, New Jersey.  That contamination, which consisted of chlorinated solvents, was discovered in 1988.  The Court examined whether defendant Sue’s Clothes Hanger was liable under the Spill Act and would therefore be required to reimburse the State for its cleanup and investigation costs related to the groundwater contamination.  Specifically, the case examined whether Sue’s was liable based upon their use and discharge of dry cleaning solvents for a fifteen month period beginning in December 1987.

The evidence in the case showed that in December 1988, the NJDEP and a health officer  inspected Sue’s to determine whether it might be a source of the Bound Brook groundwater contamination.  The inspectors observed an exterior pipe slowly dripping a liquid from five feet above an exterior paved driveway.  The liquid hit the pavement and then flowed away from the building.  The inspectors took a sample of that liquid from the pipe, which was found to contain dry cleaning solvents at 3,000 times greater than the applicable maximum contaminant level.  No samples were taken in soil beneath the pavement where the liquid had dripped, and no evidence was presented to show whether the dripping liquid had contaminated the groundwater.

The NJDEP argued “that it is sufficient to show a nexus between the substance discharged and its appearance in the environment to warrant relief under the Spill Act.”  In other words, the NJDEP position was that it’s observation of chlorinated solvents coming from Sue’s in the vicinity of the chlorinated solvent groundwater contamination was sufficient to satisfy the Spill Act’s “causation” requirement, and that the NJDEP was not required to offer evidence actually linking the pipe drip to the groundwater contamination. 

The State Supreme Court rejected that approach, and held that “a party in Sue’s circumstances must be shown to have committed a discharge that was connected to the specifically charged environmental damage of natural resources – groundwater damage – in some real, not hypothetical, way.  A reasonable nexus or connection must be demonstrated by a preponderance of the evidence.” 

The Court further stated that upon proof of a discharge of a hazardous substance, injunctive relief to stop that discharge is immediately available.  But “in an action to obtain damages, authorized costs and other similar relief under the [Spill] Act there must be shown a reasonable link between the discharge, the putative discharger, and the contamination at the specifically damaged site.”  In this case, the NJDEP had offered no evidence showing how the solvents leaking from Sue’s pipe actually migrated to the groundwater and contributed to its contamination.  Absence that evidence, Sue’s could not be held liable under the Spill Act.

Interestingly, the Court inferred that the State could have, at the time the drip was discovered, required Sue’s to investigate whether the confirmed dripping of the dry cleaning solvents had contaminated soil and groundwater beneath the drip.  But the Court stated that it would be “fundamentally unfair” to allow the NJDEP to require Sue’s to do so ten years later when this case made it to the courts.

The lesson to the regulated community from the Dimant case is that when confronted with possible liability under the Spill Act, the parties need to carefully evaluate whether the evidence presented demonstrates the required nexus between a discharge and the contamination.