Environmental & Energy Law Monitor

Essex Chemical Successfully Challenges NJDEP's Natural Resource Damages Suit

Douglas I. Eilender — Thu, 12 Apr 2012 10:11:21 -0500

The New Jersey Appellate Division sides with Essex Chemical Corporation, a subsidiary of DOW Chemical, in a suit filed by the NJDEP in its effort to obtain both restoration and compensatory natural resource damages (“NRDs”) pursuant to the Spill Compensation and Control Act (“Spill Act”). The Court held that Essex Chemical did not need to pay $8 million sought by the NJDEP under the Spill Act.

In NJDEP v. Essex Chemical Corp., A-0367-10, the Court held that the NJDEP failed to prove by a preponderance of evidence that Essex Chemical’s cleanup plan was inadequate. The NJDEP’s NRD claims against Essex Chemical stemmed from the discharge of hazardous substances on property that Essex Chemical previously owned and operated as a paper products preparation facility located in South Brunswick, New Jersey. Essex Chemical was remediating the Property with the oversight of the NJDEP. The lower court dismissed both of NJDEP’s NRD claims. The NJDEP subsequently appealed the decision, which was the subject to the recent Appellate Division case.

Primary Restoration Damages

The NJDEP sought $5.7 million in Restoration NRDs to implement an alternative groundwater remedy at the Property, which, it was claimed, would remediate the groundwater in ten years. The trial court found that the NJDEP did not establish that they were entitled to damages to restore the Property to pre-discharge conditions in that expedited timeframe. The trial court evaluated several factors including cost and public harm in deciding that the NJDEP’s arguments were lacking. In this case, the Appellate Division indicated that the NJDEP, which maintained the burden of proof on the issue of damages, had to establish by a preponderance of the evidence that its expedited remediation plan should be implemented rather than Essex Chemical’s plan of in-situ remediation. The trial court and the Appellate Division both held that the NJDEP did not show the need to restore the Property to pre-discharge conditions within ten years, especially when the NJDEP did not show that contamination remaining on-site was causing harm to any sensitive receptors or pose any threat to the public health, safety or welfare. The Appellate Division pointed to the fact that Essex Chemical had spent over $5 million in remediating the groundwater with the NJDEP’s oversight. The pace at which Essex Chemical was performing the remediation was reasonable and the proposed remediation plan was already approved by the NJDEP.

Compensatory Resource Damages

Further, the NJDEP sought over $2 million in Compensatory NRDs for alleged loss of use of NRD services, which in this case was groundwater. The Appellate Division affirmed the trial court’s dismissal of the claim. The Court found that they were not required to provide NJDEP’s experts any special deference where the expert’s opinions were based on economic factors in lieu of environmental factors. Further, and more importantly, the Appellate Division agreed with the trial court’s finding that an award of compensatory NRDs was not warranted based on the expert testimony that the NJDEP presented. The NJDEP failed to establish why they used the Resource Equivalency Analysis (“REA”) methodology to calculate NJDEP’s loss of use of groundwater for the NRD claim. The REA determines how much restoration would be needed to offset the nature resource injury. Using the REA, NJDEP’s expert calculated how much groundwater was allegedly injured by contamination at the Property, and then proposed a certain amount of acreage to be purchased for future protection and re-charge of groundwater. The assessed value of the acreage to be purchased was the monetary amount of compensatory NRDs sought by the NJDEP. The trial court noted that the REA is ordinarily used where NJDEP is calculating the injury to wildlife, where it is impossible to quantify lost services or use. There was no instance presented at trial, where the REA was used to value loss of use for groundwater. As such, the Appellate Division affirmed that the application of the REA analysis to this case was flawed and unconvincing.

Even assuming that the application of the REA was accepted, the Appellate Division noted that the expert’s analysis would have potentially provided NJDEP with a windfall because there was no adjustment for the different types and quality of services provided by the undeveloped land that would have been acquired. For example, the Appellate Division discussed the fact that, in addition to groundwater protection, open space provides for public recreation and suitable habitat for wildlife. The Court found the expert’s analysis unfairly imposed on Essex Chemical costs that were in no way related to the injury resulting from the contamination. Further in developing comparables used in the REA, NJDEP failed to utilize industrial properties such as the Property in question nor did it take into consideration zoning, location, utilities, tax rates and aesthetics, all of which effect the price of land. The Court found that the damages were not indicative or equivalent to the loss.

Conclusion

This case is good news for those challenging NRDs, as it puts a significant dent in NJDEP’s basis for calculating NRDs. It is unclear whether the NJDEP will challenge this ruling and appeal to the New Jersey Supreme Court. However, given the time and money spent in developing and defending the REA methodology, an appeal is likely.

Watershed Date for N.J. Site Remediation: May 7, 2012

Susan C. Karp — Tue, 03 Apr 2012 08:12:42 -0500

Article as originally published in New Jersey Law Journal.

In just over two months, nearly every existing site remediation case pending before the New Jersey Department of Environmental Protection (NJDEP) will become subject to the 2009 Site Remediation Reform Act, N.J.S.A. 58:10C-1 et seq. The regulated community and NJDEP have been gearing up for this pivotal date since the 2009 reform legislation, which was the culmination of years of political and agency strategy, stakeholder meetings and white papers. All of these efforts have paved the way for the development of New Jersey’s version of a semi-privatized site remediation program, relying on private consultants to oversee the cleanups languishing in a massive NJDEP administrative backlog. The reform act also establishes strict remediation timeframes and solidifies affirmative obligations for cleanups in response to a growing political concern that NJDEP was failing to adequately protect the environment.

In the three years since the reform act was passed, private consultants temporarily licensed under the law as “licensed site remediation professionals” (LSRP) have been both performing and signing off on new cleanups initiated after the reform act was enacted and older cleanups where the remediating party opted in to the LSRP program. During this interim period, NJDEP has been in so-called compliance assistance mode and, for the lion’s share of cases, has been allowing responsible parties to move forward at a much slower pace without threats of penalty.

But the watershed date of May 7, 2012, which once seemed so far away, is nearing — the date when so many of the over 20,000 backlogged cases currently under NJDEP oversight must transition to the LSRP program. The effectiveness of the reform legislation will take years to evaluate, particularly given the dearth of new, well-financed brownfield transactions that should be able to take advantage of the new paradigm which, despite its demands, will allow cleanups to proceed without the delays of waiting for the state to review and dispute each phase of cleanup.

In the near term, parties involved in cleanups are focused on the immediate implications of May 7, 2012, and what they need to do to avoid a regulatory misstep that exposes them to NJDEP’s newly enhanced enforcement capabilities.

Retain an LSRP by May 7, 2012
By May 7, 2012, nearly all cleanups currently under NJDEP oversight must hire an LSRP, who will then assume the primary oversight role of the cleanup. LSRP retention occurs by submission of an LSRP “notice of retention or dismissal” form, identifying the LSRP. The form requires the applicant to state whether the LSRP is being retained to remediate and ultimately certify that the entire site is clean or just a particular area of contamination. This is an important distinction to be considered.

The shift in power from NJDEP case manager to LSRP creates a new dynamic between the environmental consultant and its customer, moving from a partnership based on trust and advocacy to one which has the potential to become adversarial. Under the reform act, the LSRP has new whistle-blower type obligations supported by significant financial penalties, loss of license and even imprisonment. But not all environmental consultants in the state are currently or will ever become licensed, and there are numerous consulting firms that do not have an LSRP on staff, leaving customers to make the business decision of whether to start over with a new consultant or pay a second firm that has an LSRP to oversee their already competent consultant.

Shopping for the right environmental consultant is now, perhaps more than ever, critical to a cleanup, because the degree to which an LSRP is willing to use its professional judgment (as permitted under the reform act), in the face of confusing technical rules and NJDEP guidance documents may make the difference between an efficiently run case or a protracted, overly conservative and expensive cleanup. Careful consideration should also be given to using an LSRP in a transactional due-diligence setting; one of the few instances of invasive environmental investigation where an LSRP is not required. In general, buyers will want to use an LSRP who can investigate the site with the gravitas of the state and then see the matter through to closing, while sellers fear the reporting obligations of the LSRP, which could trigger cleanup obligations before a deal goes to closing.

Address Outdated Agreements
As customers around the state retain their LSRP, they should be re-evaluating the consultant’s or their own template services agreements. The review should focus on making the terms consistent with the reform act and contractually creating protections for the client that the law may have taken away. For example, the LSRP assigned to a case must report discharges and other conditions, as well as deviations from remediation work plans, to NJDEP. Many LSRPs are expecting revisions to the standard confidentiality clause to allow for this self-reporting while customers want to secure the right to object to the obligations to report before a report is made. Customers also want LSRPs to notify them of any investigations of the LSRP being undertaken by NJDEP or the LSRP licensing board, since that can also trigger an audit of the LSRP’s entire body of work under the reform act. Customers need to ensure that the consulting company has notified its insurance carriers where it is employing LSRPs to ensure that standard coverages afforded to employees of the firm apply to the new risks inherent to the LSRP role.

Likewise, parties to real estate transactions need to be aware that contractual provisions and milestones drafted prior to the enactment of the reform legislation may no longer be applicable. A buyer will no longer be obtaining a No Further Action letter from NJDEP, rather the LSRP will be issuing the buyer a Response Action Outcome. Many contracts and insurance policies were not drafted in contemplation of an affirmative audit process by NJDEP. The reform legislation gives NJDEP the right to conduct such an audit up to three years after the issuance of this formal LSRP signoff.

Mandatory Deadlines; March 1, 2012
The reform legislation established four mandatory timeframes covering submissions to NJDEP of a Preliminary Assessment and Site Investigation report for matters subject to the Industrial Site Recovery Act or NJDEP’s underground storage tank law; an initial Receptor Evaluation identifying the effects of contamination on nearby residential properties and schools, groundwater, potable water and indoor air; an Immediate Environmental Contaminant Source Control Report; and a Free Product Interim Remedial Measures Report. The mandatory timeframe for each of these submissions is March 1, 2012, for all cases initiated as of March 1, 2010, except for cleanups triggered after that date by any of the events set forth in N.J.A.C. 7:26C-2.2(b), in which case the submissions are due two years from the date of that event.

Failure to meet a mandatory timeframe requires NJDEP to take direct oversight from the responsible party, a result that NJDEP wants to ensure remediating parties do not strive for. Perhaps the most draconian consequence of direct oversight is the mandatory relinquishment of the right to make decisions about remedial strategy to the state, and the obligation of the remediating party to post a financial assurance in the full amount of the cleanup which the state can then use itself to perform the cleanup.

NJDEP is now issuing Compliance Assistance Alerts warning of the March 1, 2012, mandatory deadline and advising of NJDEP’s right to assume direct oversight. There had been some indication from NJDEP that it would seek a method to defer taking direct oversight, but no such mechanism has yet been identified, at least not to the public.

DEP Staff Reassignments
The role of the NJDEP site remediation case manager has been phasing out over the last year and as of May 7, 2012, will become largely obsolete. While the regulated community has been enjoying NJDEP’s compliance assistance mode, with case managers actually un-assigning themselves from the cases they once managed, most case managers have now been quietly reassigned to NJDEP’s Bureau of Enforcement or to its document review and inspection teams. NJDEP has historically been lax on enforcement on all but the most egregious of site remediation violations. However, with hundreds of personnel moved to these new posts, and with LSRPs now performing what was once NJDEP’s job, it is well within the realm of possibility that NJDEP will use its resources to effectuate much more aggressive enforcement initiatives.

DEP Ranking of Contaminated Sites
The reform legislation also compelled NJDEP to rank all of the sites on its Known Contaminated Site List within a year of passage of the law. NJDEP did not meet this deadline but the ranking is in progress, as NJDEP has confirmed in new boilerplate language that now appears in NJDEP correspondence. Under the reform legislation, cases that have high priority ranking permit NJDEP to conduct a more detailed review of documents submitted by the LSRP than would be otherwise conducted.

As with any major modification to a regulatory process, the final transition to LSRPs required by the Site Remediation Reform Act is being greeted with more trepidation than optimism. A long-awaited rule proposal issued last August, to make NJDEP’s various environmental regulations consistent with the law, went well beyond the intent of the reform legislation and drew wide concern from industry groups, which was expressed during the rule’s public comment period. If history repeats itself, the rules will pass with little change. While NJDEP positions itself in its new role, the regulated community is best advised to prepare itself by coming into compliance during these early stages of the state’s full transition into the LSRP program.

NJDEP to Rank Contaminated Properties Based Upon Environmental Risk

David P. Steinberger — Thu, 29 Mar 2012 08:27:06 -0500

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.

NJDEP Adopts Waiver Rule - Waiver of Strict Compliance with NJDEP Rules Now a Possibility

David P. Steinberger — Fri, 09 Mar 2012 12:57:16 -0500

On March 8, 2012, the New Jersey Department of Environmental Protection announced the adoption of its “Waiver Rule.” As set forth in the NJDEP’s press release “strict compliance with rules can sometimes produce unreasonable, unfair or unintended results that may actually undermine, rather than advance, the” goal of the underlying environmental law. The Waiver Rule was first proposed in March 2011, and was subject to significant public comment. The adoption document released by the NJDEP is 355 pages, and over 500 comments were received for the proposed rule.

In its formal rule adoption, the NJDEP further stated that “The Department of Environmental Protection is adopting new rules at N.J.A.C. 7:1B to establish the conditions and procedures for the Department to approve waivers from strict compliance with its rules where appropriate to address situations where rules conflict, or a rule is unduly burdensome in specific application, or a net environmental benefit would be realized, or a public emergency exists.”

The NJDEP will thus consider granting waivers where an applicant can demonstrate that one of these four conditions apply:

1. A public emergency has been formally declared;
2. There is a conflict between regulations that is adversely impacting a project or preventing an activity from proceeding;
3. A net environmental benefit would be achieved by granting a waiver; or
4. strict compliance would be unduly burdensome.

The NJDEP states that “there is no automatic right to a waiver. Waivers will be granted only on a case-by-case basis after careful review by technical staff and approval of the Commissioner. DEP will not compromise its core mission of protecting public health, safety and the environment, and will continue to make decisions based on science, facts, data and common sense.”

Please note that the NJDEP will not accept any requests for waivers under the Waiver Rule until August 1, 2012.

It seems likely to expect that one of the most sought-after waivers will be based upon a regulatory requirement being “unduly burdensome.” The proposed rules defines “unduly burdensome” as a situation where strict regulatory compliance “would result in either:

1. Actual, exceptional hardship for a particular project or activity, or property; or
2. Excessive cost in relation to an alternative measure of compliance that achieves comparable or greater benefits to public health and safety or the environment.”

How the Waiver Rule will be interpreted and applied in any specific case will remain uncertain until after August 1, 2012, when the NJDEP begins accepting applications for waivers. Additionally, the Waiver Rule provides a list of regulatory requirements for which waivers will not be allowed.

At this time, anyone with a current or expected dispute with the NJDEP over the strict application of a regulatory requirement should begin to consider whether the Waiver Rule might apply to their specific situation. If the Waiver Rule might provide some needed relief, you should review the Waiver Rule and its comments carefully and start laying the foundation for a waiver application.

Lack of Control by Insured Over Related Companies Results in Denial of Coverage

Gerard M. Giordano — Sun, 04 Mar 2012 15:44:31 -0500

In Newport Associates, Phase 1 Developers Limited Partnership v. Travelers Casualty and Surety Company, No. HUD-L-3070-09 ( New Jersey L. Div. January 24, 2012), plaintiff developers brought a declaratory judgment action against its comprehensive general liability and excess insurance carriers seeking indemnification for cleanup costs related to a site located in Jersey City, New Jersey. Coverage was denied based on two facts: (i) plaintiffs were not named insureds under the policies; and (ii) the excess policies contained an absolute pollution exclusion clause.

The comprehensive general liability insurer issued a policy to an affiliate of the plaintiffs (the “Insured”). The policy defined “named insured” to include entities controlled by the Insured. The plaintiffs contended that they should be included as named insureds.

The Court, in determining whether the plaintiffs were named insureds, focused on the interpretation of the term “controlled,” which was not defined in the comprehensive general liability policy. In reviewing both common law and statutes defining the concept of “control,” the Court concluded that for the plaintiffs to be named insureds, the Insured had to own an interest in the plaintiffs of 50% or more. Because the Insured owned less than 50% interest in the plaintiffs, the Court held that the plaintiffs are not named insureds under the policy.

The second issue addressed by the Court was the absolute pollution exclusion provision contained in the excess policies. Plaintiffs contended that because the excess insurers made misrepresentations to the State Insurance regulators regarding the exclusion, the court should not apply the absolute pollution exclusion clause to preclude coverage. The Court held that because the policies at issue were issued after 1982, the date of the passage of the law exempting the umbrella and excess policies from regulations governing CGL policies, the absolute pollution exclusion clause was not invalid. Accordingly, the Court held the absolute pollution exclusion in the excess umbrella policies to be applicable. The Court granted summary judgment to the insurers on both issues.

OSHA's Top Ten Citations

Gerard M. Giordano — Thu, 09 Feb 2012 10:47:07 -0500

The Occupational Safety and Health Administration (OSHA) is an agency within the United States Department of Labor. OSHA’s primary function is to inspect workplaces including manufacturing facilities and construction sites to ensure compliance with its safety and health standards. As a result of these inspections, OSHA in most cases issues citations to employers for violations of OSHA’s standards observed during the inspection. Below is a list of the top 10 most frequently cited OSHA standards violated in 2011.

1. Scaffolding (29 CFR 1926.451) – This standard applies to construction sites and provides the general safety requirements for the construction and use of scaffolding.

2. Fall Protection (29 CFR 1926.501) – This rule is to protect employees from falling off, onto or through working levels and covers most construction workers.

3. Hazard Communication Standard (29 CFR 1910.1200) – The hazard communication standard provides employees with information about chemicals used in the workplace. Employers are required to label all chemicals used in the workplace, provide employees with material safety data sheets and train employees on the safe handling of such chemicals.

4. Respiratory Protection (29 CFR 1910.134) – Respirators are typically required to protect employees against airborne contaminants such as dusts, smokes, gases or vapors. In most cases, the use of respirators must comply with this standard.

5. Control of Hazardous Energy (29 CFR1910.147) – Also known as the lockout/tagout standard, this standard requires employers implement practices and procedures to safeguard employees from the unexpected startup of machinery during service or maintenance activities.

6. Electrical Wiring Methods (29 CFR 1910.305) – This standard sets forth the general requirements for wiring methods in the workplace.

7. Powered Industrial Trucks (29 CFR 1910.178) –The use of powered industrial trucks such as forklifts is regulated by this standard.

8. Ladders (29 CFR 1926.1053) – This standard applies to construction sites and governs the use and construction of ladders.

9. Electrical Systems Design (29 CFR 1910.303) – The inspection, installation and use of electrical equipment in the workplace is governed by this standard.

10. Machine Guarding (29 CFR 1910.212) –The general requirements for machine guarding are described in this standard.

Cole Schotz Welcomes New Partner

LexBlog — Tue, 07 Feb 2012 13:18:42 -0500

Cole Schotz is pleased to welcome Susan C. Karp as a partner in the Environmental Department.

Ms. Karp regularly counsels clients on transactional and regulatory environmental issues relating to the sale and purchase of commercial and industrial properties, the cleanup and redevelopment of contaminated properties and the financial incentive programs available to reduce cleanup costs.

Ms. Karp can be reached at 201-525-6348 or skarp@coleschotz.com.

How Clean is Clean in New York

Gerard M. Giordano — Wed, 01 Feb 2012 11:35:29 -0500

New York’s highest court recently upheld New York Department of Environmental Conservation’s (“NYDEC”) regulations regarding cleanups at contaminated sites. In New York State Superfund Coalition Inc. v. New York State DEC, No. 189 (12/15/11), the New York State Superfund Coalition, a group of companies that own contaminated sites in New York, challenged NYDEC’s regulations requiring responsible parties to cleanup contaminated sites to “predisposal conditions.”

The Coalition argued that the regulations were not authorized by the applicable state statute, Article 27, Title 13 of New York’s Environmental Conservation Law, contending that the statute only required environmental cleanups to eliminate significant threats to human health and the environment. The court rejected the Coalition’s arguments and held that the regulations were a valid and reasonable exercise of NYDEC’s powers. The Court determined that NYDEC’s regulations, when read in conjunction with the entire statute, were consistent with the legislative intent and goals to require a complete cleanup of inactive hazardous waste sites.

The Court also addressed the Coalition’s concern that NYDEC’s regulations would require that every site be remedied to a pristine condition. The Court recognized that while NYDEC has the authority to order the cleanup of a site, such power is not unfettered. In determining the scope and nature of a cleanup, the Court noted that NYDEC must consider a number of factors including the technical feasibility and cost of the remedy, the danger to human health and the environment and the extent to which the remedy would reduce such danger. The Court concluded that NYDEC is not empowered to unilaterally impose a remedy without considering the practicalities of such remedies.

NJDEP has Finalized its Vapor Intrusion Technical Guidance Document

Douglas I. Eilender — Wed, 25 Jan 2012 10:20:12 -0500

The NJDEP has recently finalized its revamped Vapor Intrusion Technical Guidance Document to provide more in depth assistance in the evaluation of vapor intrusion concerns. Vapor intrusion concerns relate to the potential for the migration of volatile chemicals from the subsurface and to the overlying structures. The presence of volatile chemicals in the soil or groundwater offers the potential for chemical vapors to migrate through subsurface soils potentially impacting the indoor air (“IA”) quality of effected buildings. NJDEP’s initial Vapor Intrusion Technical Guidance Document was created in 2005, which governed how vapor intrusion investigations were performed on contaminated sites since that time. However, after much discussion amongst stakeholders, on January 13, 2012, NJDEP finalized its Vapor Intrusion Technical Guidance Document.

The new Vapor Intrusion Technical Guidance is designed to help assist the investigator to comply with the requirements of the NJDEP to properly assess the vapor intrusion pathway. The Vapor Intrusion Technical Guidance guides the investigators through the various stages of the process, including receptor evaluation, vapor intrusion investigation, mitigation, monitoring and ultimately termination of the system.

Basic concepts, such as conceptual site models and multiple lines of evidence, are presented and their application to the vapor intrusion assessment are detailed. NJDEP provides recommended protocols for investigating the vapor intrusion pathway, including the recommended number of sub-slab soil gas samples and indoor air quality samples collected based on the size of the building footprint and numerous other technical factors. Indoor air analytical results are compared to the indoor air screening levels and the rapid action levels (“RALs”). An immediate environmental concern is present when a vapor intrusion related indoor air concentration exceeds the RAL, the source of the exceedance is due to a discharge, and a completed pathway into the structure for vapor intrusion has been confirmed. If an immediate environmental concern is identified, specified action items are required on an expedited basis. On the other hand, if a vapor intrusion related indoor air concentration exceeds the indoor air screening level, but is equal to or less than the RAL, a vapor concern exists but the timeframes to act are not as onerous as with an immediate environmental concern.

NJDEP additionally provides design, mitigation and post-mitigation procedures as well as the appropriate monitoring provisions in its most recent Vapor Intrusion Technical Guidance Document.

The NJDEP’s Vapor Intrusion Technical Guidance Document and associated tables are located on the NJDEP’s vapor intrusion website.

Be Sure to Read the Fine Print In a Consultant's Proposal

David P. Steinberger — Thu, 19 Jan 2012 13:52:52 -0500

When hiring an environmental consultant, it is important to carefully review the terms and conditions governing the agreement between you and your consultant. One of the key components of the professional services agreement is the section dealing with the consultant’s potential liability for its own negligence. Consulting firms will often look to limit their liability to the contract price or some other nominal amount. Richard Ericsson and David Steinberger of the Cole Schotz Environmental Law Department discuss this issue and a recent New Jersey court decision in an article titled, "Be Aware of Your Consultant’s Liability Limit."

In its decision, the Appellate Division upheld a consultant’s contract which limited the consultant’s liability to $25,000. In that case, the consultant, retained by a real estate buyer for pre-acquisition due diligence, had grossly underestimated the cost to clean up the property. The consultant’s initial cleanup cost estimate was between $13,000 to $17,000, while the final cleanup cost estimate was over $3 Million. Nevertheless, the court upheld the consultant’s contractual liability limit of $25,000. This case reinforces the need to carefully review professional services agreements to make sure you are adequately protected.

New Jersey Appellate Court Grants Hearing to Contest Rescission of a No Further Action Letter

Douglas I. Eilender — Wed, 30 Nov 2011 10:24:42 -0500

In the Matter of Crompton Colors, Inc., No. A 0778 09T1 (App. Div. 10/27/11), the NJ Appellate Division ruled that a property owner is entitled to have an administrative hearing regarding the rescission of a no further action letter (“NFA Letter”) by the DEP. In this case, a subsidiary of Hartz Mountain Industries, a former landlord of an industrial tenant named Crompton Colors, Inc., appealed DEP’s rescission of an NFA Letter issued in 2002 and the denial of its request for a hearing to contest the decision.

Hartz purchased the property located in Bloomfield, NJ in 1965 and leased to Peerless Bindery. The property consisted of a warehouse and an office building. In 1990, the buildings were demolished and a 10,000 gallon heating oil underground storage tank was removed. According to the Report submitted by Hartz to DEP, petroleum product was encountered in the soil and floating on the groundwater. The impacted soil was subsequently excavated and the floating oil was removed. Although groundwater monitoring wells initially did not detect any contamination, a second round of sampling revealed slight exceedences for petroleum constituents. At that point, additional soil was removed from this area and residual petroleum in fill material was left in place and covered with the newly constructed warehouse concrete slab.

The property was subdivided into two lots in 1991. One lot was occupied by the new warehouse that was leased by a predecessor of Crompton Colors and the second lot was leased to a daycare center. A Remedial Action Work Plan was submitted to DEP in January of 1996, which was found by DEP to be unacceptable. Hartz then submitted a Remedial Investigation Report that discussed the results of the supplemental soil and groundwater sampling, which showed elevated levels of semi volatile organic compounds that are typical of urban fill material. As the contamination was detected in an area that is located up-gradient from the former tank, the report concluded that the contaminants were unrelated to the tank. The DEP issued an NFA Letter with respect to the former tank but required further investigation to confirm that the source of the contamination was from an off site source. Hartz did not implement the requested additional investigation. The environmental documents referenced the street address as 60 West Street, which represented the original address of the undivided property. However, after the property had been subdivided, the warehouse facility was known as 50 West Street.

In 2001, the Industrial Site Recovery Act (“ISRA”) was triggered when Crompton Colors ceased operations at the warehouse. Crompton Colors filed the appropriate paperwork using the 50 West Street address relying on the prior tank NFA letter. However, DEP responded that the site known as 50 West Street was not eligible for an expedited review because it had not been previously issued an NFA Letter. Crompton Colors then prepared and submitted a Preliminary Assessment, along with revised paperwork with the correct lot number requesting DEP issue an NFA. Crompton Colors did not disclose, however, the presence of soil and groundwater contamination that had been identified in the 1996 NFA Letter. In 2002, DEP issued the NFA Letter for the Crompton Colors’ ISRA case.

In 2004, DEP was under pressure to re-evaluate closed cases in response to a situation where a daycare facility began operating at a former thermometer manufacturing facility where significant mercury contamination was discovered. As a result of this incident, DEP mapped all known childcare centers and schools within a 500 foot radius of contaminated sites and re-examined all open and closed DEP cases within the radius to determine whether any of these properties could adversely impact the childcare facilities. As a result of the childcare center being located at the Bloomfield property, DEP reviewed the 2002 NFA determination and concluded that the contamination not addressed by Hartz in 1996 was located at 50 West Street. Therefore, DEP rescinded the NFA Letter issued in 2002 and directed Hartz and Crompton’s successor, Chemtura, to investigate potential vapor intrusion concerns at the childcare center.

Hartz argued that DEP did not have the basis to reopen the case or the authority to require a vapor intrusion study and requested an administrative hearing. DEP rejected the claims that the contamination was from an off site source as they concluded that the nearest potential off site source was more than a ½ mile away in a down-gradient location. The DEP also denied the request for a hearing, stating that DEP was merely requesting Hartz to submit documentation and perform studies Hartz should have done as part of its original application in 2002.

The Appellate Division stated that the revocation of the NFA was a rescission of the permission DEP provided Hartz in 2002 to convey the property free and clear of any remedial obligations under ISRA. The Court found that the directives to perform environmental studies fell in the purview of N.J.S.A. 13:1K 13.1b, which expressly provides that DEP is required to give a recipient of an order requiring abatement of a violation notice of its rights to a hearing. Although Hartz will now be afforded the opportunity to participate in an administrative hearing, it must present evidence that challenges DEP’s conclusion that the contamination that triggered the “reopener” is not from an off site source. As the DEP is typically given significant discretion over technical determinations, Hartz will be hard pressed to show DEP acted in an arbitrary and capricious manner and have DEP’s decision over turned.

Do You Have Available Sewer Service for your Development or Expansion? Are you Sure About That?

David P. Steinberger — Tue, 08 Nov 2011 14:38:00 -0500

Being able to dispose of wastewater is a key element in any development, redevelopment or expansion project. However, a process is underway in New Jersey that may remove properties from existing sewer service areas.

The New Jersey Water Quality Planning Act requires, among other things, that the New Jersey Department of Environmental Protection establish a planning process for wastewater management. NJDEP adopted the Water Quality Management Planning Rules, which were amended in 2008.

Counties are generally responsible for developing a Wastewater Management Plan which governs, in part, the distribution of sewer service within the County. Several counties (Bergen, Passaic, Union and Warren), however, have “opted out” and will not be issuing Wastewater Management Plans. In those cases, a regional utility authority or municipality establishes the plan for NJDEP approval.

Generally, the Wastewater Management Plan compares the available treatment capacity of existing wastewater treatment plants with expected demand from future development. If that analysis shows that there could be a shortage of wastewater treatment capacity based upon possible future development, then properties will need to be excluded from the applicable sewer service area to limit the future wastewater demand. Additionally, the NJDEP rules do not allow sewer service in areas identified by the NJDEP as “environmentally sensitive areas”. Environmentally sensitive areas include, for instance, certain wetlands and threatened and endangered species habitat. If the NJDEP believes that your property includes environmentally sensitive areas, then it would be excluded from the future sewer service area.

The process of redrawing sewer service area maps is currently underway statewide, and many properties may be removed from sewer service areas. In redrawing these maps, the NJDEP may be using out-dated and unreliable data. For instance, the NJDEP computer mapping may show a wetland on your property, while on the ground there are no wetlands. Nevertheless, once the sewer service area maps are finalized, there will be a presumption that the NJDEP maps of environmentally sensitive areas are valid. It will therefore be very difficult to challenge the final sewer service area maps. A much better course of action is to challenge the draft sewer service area maps.

Finally, if you are excluded from a sewer service area, don’t count on using a septic system to handle your wastewater – the NJDEP has tightened the standards applicable to septic systems too.

It is therefore critical to determine – right now – whether your property is being slated for removal from the sewer service area. Again, this should be done before the new maps go into effect, because it will be easier to correct the draft map than revise a final map.

Cole Schotz Welcomes New Partner

LexBlog — Mon, 17 Oct 2011 14:32:02 -0500

Cole Schotz is pleased to welcome Richard J. Ericsson as the Chair of the Environmental Law Department.

Mr. Ericsson regularly counsels clients on the impact of environmental laws on corporate and property transactions and financing, the clean up and redevelopment of contaminated properties, responding to governmental enforcement actions, and air, water and waste regulatory compliance.

Mr. Ericsson can be reached at 201-525-6346 or rericsson@coleschotz.com.

Please click here to view the full press release.

What Every Business Owner Needs To Know About OSHA (Part Three)

Gerard M. Giordano — Tue, 11 Oct 2011 08:50:12 -0500

The final installment of this three part series describes what employers should expect after an OSHA inspection as well as the employers’ rights.

1. What happens after OSHA completes its inspection?

Unless your establishment is in full compliance with OSHA’s standards, you will receive a “Citation and Notification of Penalty” from OSHA. Generally, OSHA has up to six months after it initiates the inspection to issue a Citation. A Citation includes: the type of violation (classification); the standard, regulation or section of the Occupational Safety and Health Act that was violated; a description of the violation; the abatement date; and the penalty.

A. The alleged violation could fall into one of the following categories:

Willful - A willful violation is a violation in which the employer knew that a hazardous condition, which violated a standard, regulation or a section of the Occupational Safety and Health Act, existed but made no reasonable effort to eliminate it. If the willful violation results in a death, OSHA can seek criminal sanctions against an employer.

Serious - A serious violation exists:

if there is a substantial probability that death or serious physical harm could result from a condition which exists, or from one or more practices, means, methods, operations, or processes which have been adopted or are in use, in such place of employment unless the employer did not, and could not with the exercise of reasonable diligence, know of the presence of the violation.

Repeat - OSHA may cite an employer for a repeated violation if:

(A) the employer has been cited previously for a substantially similarviolation;

(B) the previous citation containing the substantially similar violation has become final order of the Occupational Safety and Health Review Commission; and

(C) the current violation occurred within 5 years from the date that the earlier citation became final order or from the final abatement date, whichever is later.

Other-Than-Serious - An other than serious violation exists where an accident or illness that could occur from a violation “would probably not cause death or serious physical harm but would have a direct and immediate relationship on the safety and health of employees.”

De Minimis – A de minimis violation is a “violation of a standard that has no direct or immediate relationship to safety and health.”

In addition, an employer can also be cited for failure to correct a previously cited condition. The Occupational Safety and Health Act allows OSHA to assess penalties for each day a violation continues past the final abatement date.

B. Section of OSHA Standard Violated and Description of the Violation

The citation must also describe the violation and section of OSHA’s standard that was violated.

C. Abatement Date

The abatement date is the date by which the violation must be corrected. The abatement period is “the shortest interval within which the employer can reasonably be expected to correct the violation.” Abatement dates are usually discussed at the closing conference. In determining the abatement date the inspector generally considers the following factors:

(a) The seriousness of the alleged violation;

(b) the equipment, material and/or personnel needed to correct the alleged violation and their availability;

(d) the time period to construct or install the abatement equipment; and

(e) the time period to train personnel.

If an employer is unable to meet an abatement date because of some uncontrollable circumstance, the employer can petition the OSHA Area Director to modify the abatement date contained in the Citation.

D. Penalty

The Citation also sets forth the penalty assessed by OSHA. OSHA is authorized to assess the following civil penalties: $70,000 for each willful or repeated violation; $7,000 for each serious or other than serious violation; $7,000 for each violation of the posting requirement; and $7,000 per day beyond a stated abatement date for failure to correct a violation.

Penalties are calculated once a violation is classified. In calculating penalties OSHA takes into account the following factors: the seriousness of the violation; the number of employees employed by the employer; the employer’s good faith as demonstrated by the employer’s efforts to comply with the Occupational Safety and Health Act and OSHA’s standards and regulations; and the employer’s past history of compliance. OSHA can, at its discretion, reduce the maximum penalty that it will impose after considering these factors.

2. If OSHA issues citations to my company, what should I do?

Once you receive a Citation, you must post the Citation at or near the place where each violation occurred so that it will be conspicuous to employees. The purpose of this is to make employees aware of the hazards to which they may be exposed. The Citation must remain posted for three (3) working days or until the violation is corrected, whichever is longer. You are required to comply with these posting requirements even if you subsequently decide to contest the Citation.

You have two choices once you receive a Citation. The first option is you can comply with the Citation. That is, you can correct the alleged violations by the date specified in the Citation and pay any penalty that may have been assessed. If you do not contest the Citation, the Citation will become a final order in fifteen (15) working days after receiving the Citation. Once the Citation is a final order, it will be binding and not subject to review by any court or agency.

The second option available to you is to contest the Citation. You have fifteen (15) working days from the date of receipt of the Citation to contest the Citation.

However, before you decide which course to take, you should take advantage of an OSHA process known as the Informal Conference. You must request and schedule the Informal Conference with the OSHA Area Office that issued the Citation within the fifteen (15) working day contest period.

If you cannot reach a settlement agreement with OSHA at the informal conference, you may wish to contest the Citation. Generally, a notice of intent to contest all or any portion of the Citation must be submitted in writing to the OSHA Area Office that issued the Citation within fifteen (15) working days after the receipt of the Citation.

3. Should I challenge the OSHA citations?

There is no universal formula to assess whether you should challenge the OSHA Citation. The decision must be made in good faith and based on the facts, which include consideration of alleged violation, its impact on employee health and safety, the classification of the violation, the method of abatement and the cost involved in abating the alleged violation.

4. If I do challenge an OSHA citation, what should I expect?

Once you file a notice of contest, jurisdiction over the matter vests with the Occupational Safety and Health Review Commission (the “Commission”). The Commission, sometimes called “OSHRC,” is an independent agency not connected in any way with OSHA. Its primary purpose is to decide contested cases arising from Citations issued by OSHA. It does not perform investigations or promulgate standards.

Once the Notice of Contest is filed with the OSHA Area Office that issued the Citation, the OSHA Area Director will forward a copy of the Notice of Contest to the Commission. The Commission will appoint an Administrative Law Judge who will preside over the hearing and render a decision, which can be appealed by the employer or OSHA.

5. How can I clear my company’s record from any citations issued by OSHA?

There is no method to clear your company’s record of past Citations issued by OSHA. However, the longer your company operates without OSHA Citations the better. OSHA can use past Citations as a basis to issue Citations that have a more severe classification with increased penalties. For instance, if OSHA re inspects your company in the future, it can issue repeated violations for conditions that were violated during the original inspection.

6. Can OSHA re-inspect my facility? If so, is there any action that I can take to prevent OSHA from inspecting my facility in the future?

Yes, OSHA can re-inspect your facility. You cannot prevent OSHA from re inspecting your facility in the future, but you can minimize the chances of that occurring by being proactive. By establishing safety and health programs that incorporate coordination and communication of safety and health issues among personnel; means for planning and implementing needed training and job orientation for employees; and means for identifying and controlling workplace hazardous and monitoring the effectiveness of such program, you can minimize workplace hazards and thus, reduce the chances of OSHA re-inspecting your facility. In certain situations you may want to utilize the services of a safety and health consultant to assess your workplace and make recommendations to better comply with OSHA’s standards. Your lawyer can assist you with deciding whether to retain a consultant to evaluate your workplace.

7. If OSHA re-inspects my facility, should I expect the same result as the initial inspection?

The answer to this question is dependent on your company’s response to the initial inspection and your company’s commitment to health and safety. Only by being proactive and implementing programs that protect employees can you reduce the possibility of future OSHA enforcement actions.

What Every Business Owner Needs To Know About OSHA (Part Two)

Gerard M. Giordano — Tue, 20 Sep 2011 13:56:05 -0500

This article, the second of a three part series, focuses on OSHA’s procedures during an inspection and outlines what employers should and should not do during an inspection.

1. What should I do or not do during an inspection?

There are certain actions that you should take to protect your interest during an OSHA inspection. These actions include:

(a) Check the inspector’s identification to ensure he/she is who he/she says he/she is.

(b) Ascertain from the inspector the reason for the inspection. If the inspection is the result of a complaint, you should request a copy of the complaint.

(c) Have someone from management escort the inspector through the entire inspection process i.e., from opening to closing conference.

(d) Document the inspector’s activities i.e, areas inspected, interviews, measurements taken, etc..

(e) If the inspector performs any monitoring i.e., noise or air monitoring, you should consider performing similar monitoring at the same time. The purpose of the “side by side” monitoring will allow you to document and confirm the results obtained by OSHA.

(f) Request the results of all monitoring performed by the inspector.

(g) At the closing conference, if the inspector indicates that violations have been found, determine why certain conditions constitute a violation. In addition, you should request from the inspector recommended methods to correct any alleged violations.

(h) Consult your attorney at the time an OSHA inspection is initiated and if at any time you are unsure how to respond to a certain requests made by the inspector.

The following is a list of “don’ts”:

(a) You should not forcibly interfere with the conduct of an inspection.

(b) You should not discriminate against or punish any employee who cooperates with OSHA or who may exercise his or her rights under the Occupational Safety and Health Act.

(c) You should not provide the compliance officer with false or misleading information. Providing false information to OSHA is punishable as a crime under the Occupational Safety and Health Act.

(d) You should not argue with or antagonize an inspector during an inspection.

2. How long will OSHA be at my facility?

OSHA will remain at your facility until it completes its investigation. The inspection could last a couple of hours or up to several months. The length of time is determined by the scope of the inspection i.e., whether it is confined to one area or the entire facility. It is also dependent on the type of inspection. That is, whether the inspector will be required to make subsequent visits to the facility to perform monitoring to establish employee exposure to workplace contaminants or noise.

3. Do I have to let my employees talk to the OSHA inspector?

OSHA inspectors are authorized to use various investigatory techniques, such as observing employees’ activities in the workplace, conducting employee interviews, and taking photographs and measurements in the workplace (i.e., air and noise monitoring).

The Occupational Safety and Health Act authorizes OSHA to interview employees privately to obtain whatever information is necessary or useful for the inspector to perform his or her inspection effectively. The interviews, however, must be conducted in a reasonable manner and within a reasonable time limit. If they appear to be unreasonable, you should consult your attorney. On occasions, interviews may be conducted at locations other than the workplace (e.g., employee’s house or OSHA Area office). OSHA’s regulations afford any employee the right to bring any alleged violation to the attention of the inspector.

OSHA inspectors are also authorized to take photographs or videos whenever such are deemed necessary. Generally, an employer cannot prohibit an inspector from taking photographs or videos because a certain process or equipment is a trade secret. To protect a trade secret, you should inform the inspector of the process or equipment that is proprietary. Once informed of trade secret status, the inspector is obligated to treat the information obtained from the inspection in a manner assuring confidentiality.

In order for OSHA to document employee exposure to chemical or physical hazards, it is often necessary for the inspector to perform monitoring. Typically, during the walkthrough phase of the inspection the inspector will identify certain areas where monitoring must be performed. The inspector may then return on another day to perform the monitoring, which may last for the full term of the work shift.

Monitoring employees for chemical and/or physical hazards usually consists of placing monitoring devices such as air samplers or noise dosimeters on the employees. The employer may not object to such investigatory procedures. Once the monitoring devices are placed on the employees, the inspector will observe the employees throughout the day and document their work practices, use of personal protective equipment and other relevant information.

What Every Business Owner Needs To Know About OSHA (Part One)

Gerard M. Giordano — Tue, 13 Sep 2011 09:04:48 -0500

A significant number of businesses are likely to find themselves face-to-face with an inspector from OSHA, and many will be caught off guard. We recommend that businesses take a two-pronged approach to OSHA compliance.

First, make every effort to comply with OSHA’s safety and health rules to protect your employees. Second, be prepared in the event OSHA initiates an inspection at your establishment. If you have a plan in place that provides guidance to your managers, describe the procedures employed by OSHA and what to expect during an inspection, you can minimize disruption of your business and possibly adverse consequences.

This is a three-part series to assist employers and familiarize them with OSHA and its procedures. Part One will focus on OSHA’s function, who is subject to OSHA’s requirements and what OSHA looks for during an inspection.

Part Two describes an actual step-by-step inspection and outlines suggested procedures for employers to follow. The third and final part describes what an employer should expect following an inspection and the employers’ rights and obligations.

1. What is OSHA and what does it do?

OSHA or the Occupational Safety and Health Administration, is an agency within the United States Department of Labor. OSHA’s primary function to protect employees by inspecting workplaces to ensure that employers comply with the safety and health standards promulgated by OSHA.

2. Who is subject to OSHA’s requirements?

Most private sector employers and their employees are subject to OSHA’s requirements. Employees employed by state and local governments are not covered by OSHA. Likewise, certain private sector workers are exempt from OSHA’s requirements. Specifically excluded are self employed individuals, farm workers where only immediate members of the farm employer’s family are employed and workers at facilities where safety and health is regulated by other federal agencies under separate federal statutes.

3. If OSHA shows up at my facility, do I have to allow the inspector in my facility?

In most cases, OSHA must either obtain your consent or a valid warrant authorizing an inspection before entering your facility to perform an inspection. The inspector who arrives at your workplace, may not inform you of your rights.

If denied entry to perform an inspection without a warrant, OSHA has the authority to obtain a warrant by ex parte application to the United States District Court (i.e., OSHA will ask the court to issue a warrant to allow the inspection). If OSHA seeks a warrant, you will not receive advance notice that OSHA is seeking a warrant or receive copies of any materials supplied to the court by OSHA in applying for the warrant.

The decision regarding whether to allow OSHA to inspect your facility is not always clear cut. We recommend that you discuss your options with your lawyer and have a plan in place should an OSHA inspector show up. That plan should be made as a matter of company policy developed prior to the actual inspection. Your managers and key employees should be familiar with the plan and who to contact should they have questions.

4. What does OSHA look for?

There are three phases to an OSHA inspection, the opening conference, the walkthrough and the closing conference.

At the opening conference, the inspector will seek general information concerning your business (e.g., name, address, etc.) as well as your safety and health program. For instance, the inspector may inquire into the following:

The details of your company’s safety and health program;
How information on your company’s safety and health program is communicated to employees;
How your company enforces violations of its safety and health rules;
The type of safety and health training programs that your company has established and how they are implemented;
How your company performs an accident investigation and whether your company implements preventative measures as a result of the investigation; and
Whether the OSHA Notice is posted on site in your facility.

In addition, the inspector will request access to the records that you are required to maintain under the OSHA’s standards (e.g., injury and illness records and Hazard Communication Records, etc.).

The next phase of the OSHA inspections is the walkthrough. The main purpose of the walk-through is to allow the inspector to identify potential safety and/or health hazards in the workplace. You and the employee representative will be given the opportunity to accompany the inspector.

During this phase of the inspection the inspector will assess your safety and health program, collect information on your business and document any hazards found in the workplace.

The final phase of the OSHA inspection is the closing conference. The inspector is required to have a closing conference with you and the employee representative. At the closing conference the inspector is required to describe any and all alleged violations that were observed during the inspection and identify the applicable sections of the OSHA standards or Occupational Safety and Health Act that were allegedly violated. The violations that are found by the inspector will be outlined in a Citation. Citations are not issued at the closing conference, but are issued at a later date under the signature of the Area Director. In addition, the inspector is required to advise you and the employee representative of your rights following an OSHA inspection.

Public Notification and Outreach Rule Update

Douglas I. Eilender — Fri, 26 Aug 2011 10:26:51 -0500

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.

Sole Shareholder Of Company That Owns Contaminated Property Can Be Held Liable Under CERCLA As Current Operator

Gerard M. Giordano — Wed, 08 Jun 2011 09:17:11 -0500

In the case of Litgo v. Martin, 2011 WL 65933 (D.N.J. Jan. 7, 2011) the federal District Court of New Jersey held that a shareholder of a single-purpose entity that owns a contaminated facility is liable as a current operator under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Sec. 9601 et al. (“CERCLA”). In 1983, the New Jersey Department of Environmental Protection (“NJDEP”) was ordered to clean up a property located in Newark, New Jersey. NJDEP removed drums of hazardous waste from the Newark site and stored them at a warehouse located at 40 Haynes Road, Somerville, New Jersey (the “Site”). The warehouse at the Site was determined to be contaminated with hazardous substances.

While the remediation at this Site was being conducted by NJDEP, plaintiff Sheldon Goldstein entered into negotiations with the current owner of the Site. On August 6, 1985, the current owner of this Site entered into an agreement to sell the Site to plaintiff Goldstein. Subsequently a dispute broke out over the sale of the Site and the Court ultimately ordered the plaintiff Goldstein to take title to the Site. On February 14, 1990, plaintiff Goldstein took title to the Site and pursuant to the contract of sale assumed the obligations to clean up the Site. On April 14, 1990, plaintiff Goldstein transferred the Site to plaintiff Litgo New Jersey, Inc.

In 2006, plaintiffs filed suit against NJDEP alleging that the State failed to properly remediate the Site. Plaintiffs’ suit was under various claims including CERCLA. The NJDEP filed a counterclaim. At trial, the District Court found that plaintiff Goldstein, as a shareholder in Litgo, the current owner of the Site, was liable under CERCLA as a current operator. On a motion for reconsideration, the Court upheld the trial Court’s determination regarding plaintiff Goldstein’s liability as an operator.

The plaintiffs argued that Goldstein’s involvement with the cleanup of this Site was insufficient to impose liability on Goldstein as a current operator under CERCLA. The Court addressing this issue explained that under CERCLA, past owners and operators are liable only to the extent that a discharge of hazardous substances occurred at the Site during their ownership or operations. However, current owners and operators are liable under CERCLA regardless of whether hazardous substances were discharged at the Site during their ownership or at the time they operated at a site. The Court observed that the parties do not dispute that Litgo, as a current owner of the Site, is liable under CERCLA. The Court, however, dismissed the plaintiffs’ argument that Goldstein could not be held liable as a current operator. The Court, distinguishing the cases relied upon by the Plaintiffs, concluded that because of his involvement with this Site, the plaintiff Goldstein could be liable as a current operator. The Court specifically noted the following:

Plaintiffs have been involved with the property for two decades and were responsible for environmental compliance decisions and decisions not to proceed with the remediation. … We believed the decision to delay remediation may have increased the threat to the environment and public health. ... Given these considerations, the Court is not persuaded that it should reconsider its decision as to Goldstein’s liability.

The instructive value of this case is that sole shareholders of single entity companies can be held liable under CERCLA to cleanup contamination for which its company is responsible. Factors that will be used in determining whether a shareholder should be held liable is the actual control the shareholder has over the day to day operations of the company causing the contamination. By being proactive and ensuring compliance with environmental laws can a sole shareholder minimize exposure to liability for environmental contamination.

NJDEP Proposes Common Sense Waiver Rule

Douglas I. Eilender — Fri, 11 Mar 2011 14:46:28 -0500

On March 7, 2011, the New Jersey Department of Environmental Protection (“NJDEP”) proposed a rule that would enable them to relax standards set-forth in existing rules under appropriate circumstances. The goal of the proposed rule is to remove unreasonable impediments to economic growth while ensuring net environmental benefit for the State. The proposed rule establishes the conditions and procedures for the NJDEP “to approve waivers from strict compliance with its rules where rules conflict, or rules are unduly burdensome in specific application, or net environmental benefit would be realized, or public emergency exists.” The idea is to prevent or minimize the circumstances where strict compliance with a rule would lead to an unreasonable, unfair, or unintended result which in turn could adversely effect the applicant, the public, and/or the environment.

This proposed rule is consistent with Governor Chris Christie’s Executive Order No. 2, which sought to establish “Common Sense Principals” of governance. As we have consistently been hearing from the NJDEP and the Governor’s office recently, it appears that the State is willing to listen to the regulated community as to the rules effecting employers, job creators, local government and families throughout the State. NJDEP Commissioner, Bob Martin has stated, “[w]e have an opportunity to change how government operates in a positive way. We can cut through unnecessary red tape and provide real solutions to real world problems, while maintaining our high protective standards.”

The NJDEP would consider a waiver application only if one or more of the following conditions exists:

Conflicting rules – the requirements sought to be waived conflicts with another NJDEP or other State or Federal agency rule;
Unduly burdensome – Strict application of a rule creates an exception and undue hardship (similar to criteria for local zoning variances), or where another method of compliance would have the same or better results but at a significantly lower cost;
Net environmental benefit – The environment would be enhanced by a project enabled by the waiver; mitigation would be allowed to be considered; and
Public emergency – NJDEP would waive a rule to respond to an emergency.

The Commissioner makes clear that this proposal would not allow waivers to be routinely or commonly granted, but will be issued on a site by site and case by case basis. NJDEP officials have said that it needs some flexibility to decide what makes more sense in making government work.

Critics of the proposed rule say that this is just merely a way to turn over decision making power to the NJDEP to circumvent existing environmental rules. Their concern is that the rules should apply across the board and the subjectivity of this proposed rule could counteract the application of the existing rules and regulations. Regardless of which side of the fence you fall, this proposed rule could have significant impacts on future development, re-development, as well as how property is investigated and cleaned up in New Jersey.

A public hearing on the proposed waiver rule is scheduled for April 14, 2011 at 3:00 p.m. at the NJDEP’s Headquarters in Trenton. Written comments may be submitted to NJDEP through May 6, 2011. The proposed rule is available on line at http://www.nj.gov/dep/rules/notices.html.

NJ Acts to Reduce Nutrient Pollution in Barnegat Bay

Gordon C. Duus — Wed, 02 Mar 2011 09:02:58 -0500

The ecological health of Barnegat Bay is in decline, mostly resulting from human activities. Since Barnegat Bay is a key feature of the shore experience in central New Jersey, the impact to its aesthetic, economic and recreational values threatens the economic health of the region. In December 2010, the New Jersey Legislature enacted three statutes designed to comprehensively address the situation. Gordon Duus, Chair of the Environmental Department of Cole Schotz, recently had an article on this subject published in the February 28, 2011 issue of the New Jersey Law Journal. Click here to read the article.