14 Apr Potential Changes Loom for Site Remediation Compliance
Environmental compliance in New Jersey may soon become more challenging, and here’s why. In October 2024, the New Jersey Department of Environmental Protection (NJDEP) published proposed rule-making (Proposed Rule) to amend its site remediation program rules, including:
- NJAC 7:26B (Industrial Site Recovery Act)
- NJAC 7:26C (Administrative Requirements for the Remediation of Contaminated Sites)
- NJAC 7:26E (Technical Requirements for Site Remediation)
- NJAC 7:26F (Heating Oil Tank System Remediation Rules)
These proposed rules codify the provisions of the Site Remediation Reform Act (SRRA 2.0), which became effective on August 23, 2019, as well as other changes and clarifications intended to streamline the site remediation process.
These rules, for the most part, reaffirm the policies and interpretations the NJDEP has been implementing since SRRA 2.0 was adopted. However, there are a few provisions in the new rule that have upset the regulated community. These provisions have three important impacts. First, certain compliance steps may become more onerous within the site remediation program. Next, more sites may be pulled into the program. And, lastly, compliance may take longer for many regulated sites.
Following is a summary of the provisions most likely to change.
Due diligence/Prospective Purchaser Reporting Obligations
The Spill Act specifically requires that anyone responsible for contamination has a reporting obligation when contamination is discovered. This has been the rule of law for nearly five decades. Absent from the reporting obligation were people not responsible for contamination. Specifically, prospective purchasers and others who may have knowledge of, but were not responsible for, contamination had no obligation to report. It seems that this stipulation is being eliminated. Many argue that this proposed rule goes beyond the original obligation and perhaps the intent of the Spill Act. If adopted, the new rule would impose reporting obligations upon prospective purchasers, their legal counsel, perhaps their lender, and their consultants (and possibly the consultant’s laboratory, driller, or other subcontractors) who may gain knowledge of contamination. This greatly expands the universe of people with an affirmative reporting obligation. With so many people responsible for reporting, confusion may ensue, including multiple calls being made to the spill hotline to report the same event.
Beyond the need to report contamination, this change may also impact the real estate market. Owners of underutilized Brownfield properties may not list their properties for sale if there is potential for costly remediation, especially if they do not have the financial wherewithal to complete remediation. This could also reduce the inventory of underutilized Brownfield properties, thereby affecting both developers and environmental consultants.
This change may also affect property owners who are selling their properties because the prospective buyer will have new reporting requirements during the due diligence process. If a prospective buyer performing due diligence identifies contamination, they would then be required to report it, regardless of the property sale occurring. This opens many questions that, unfortunately, will not be answerable until these changes are passed and codified. Ultimately, it may require an environmental attorney to argue on the impacts regarding each specific deal.
Thus, the question becomes this: will the additional reporting requirement mean more sites get cleaned up, or will it just delay the cleanup of sites and negatively impact the real estate market? Does the intended outcome of this potential change benefit human health and the environment (NJDEP’s overriding purpose) sufficiently to outweigh the resulting negative impacts?
Remedial Action Permit Changes
NJDEP wishes to add a new permit for indoor air concerns. This increases cost and future obligations. Concurrent with the new indoor air permit is the need to establish an Indoor Air Notification Area (IANA) institutional control. This new permit will increase the cost of compliance services. On the bright side, NJDEP proposes to consolidate several different media permits (soil/groundwater/air) into one permit, thereby creating one biennial reporting obligation versus multiple. This is a positive development.
Conclusion
The public comment period for these proposed regulations closed on January 31, 2025, and the NJDEP is currently reviewing and analyzing the comments received. They will then decide whether to proceed with the rulemaking process or issue a new or modified proposal. They may also opt to withdraw the entire proposal.
While the NJDEP has no specific time requirement regarding when they need to issue final rulemaking, ESA suspects that a decision will be reached sometime in the second half of 2025. Due to these proposed rules, the site remediation program continues to become more challenging and complex.
ESA invites you to call us to discuss any sales transactions that may be in your pipeline so we can evaluate how these proposed changes may affect your deal.