Liability Exceptions to Missed ISRA Triggers

20 Oct Liability Exceptions to Missed ISRA Triggers

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Occasionally, ESA encounters projects where Industrial Site Recovery Act (ISRA) triggers have been overlooked. A common assumption is that the current owner or operator must comply with a prior ISRA trigger. However, that is not always the case. The following guidance explains how to potentially avoid ISRA compliance obligations you did not cause.

How Missed ISRA Triggers Are Discovered

Missed ISRA triggers are most often uncovered during real estate transactions. During due diligence, buyers or consultants may find that a past ISRA event occurred, but the required New Jersey Department of Environmental Protection (NJDEP) filings, assessments, or investigations were never completed. For background on how ISRA works, ESA has published a detailed overview of the ISRA process,

Two Possible Paths After an ISRA Trigger

Once an ISRA event has been triggered, there are generally two possible paths forward:

1. De Minimis Quantity Exemption (DQE) – In some cases, a DQE may eliminate the need to file a General Information Notice (GIN), conduct a Preliminary Assessment (PA), and meet other administrative requirements. Think of a DQE as a “get out of jail free” card for ISRA—an opportunity to avoid the full compliance process. However, a DQE must be filed within 30 days of the triggering event. After that window closes, the NJDEP will no longer accept it.
2. Full ISRA Compliance – If the exemption period lapses or the conditions for a DQE are not met, the responsible party must proceed with filing a GIN, performing a PA, and completing any required remedial investigation or action.

Understanding Liability Under ISRA

The liability regulations for ISRA compliance are set forth in N.J.A.C. 7:26B-1.10. Paragraph (d) outlines a potential exception for certain property owners:

“Any person, other than the owner or operator of the industrial establishment, that has obtained title to the industrial establishment by deed of foreclosure, by other deed or transfer, or by court order or other process, shall not be deemed an owner or operator of that industrial establishment where the operator had closed operations prior to the transfer of title and where no new industrial establishment has operated under the person’s ownership. Nothing contained herein shall be construed as a waiver or release of liability by the Department of an owner or operator subject to the requirements of this chapter for the industrial establishment.”

To interpret this correctly, it is important to understand how “owner” and “operator” are defined under N.J.A.C. 7:26B-1.4:

• Owner – Any person who owns the real property of an industrial establishment or who owns the industrial establishment. A holder of a mortgage or other security interest in the industrial establishment is not an owner of the industrial establishment unless or until it loses its exemption under N.J.S.A. 58:10-23.11g4 or obtains title to the industrial establishment by deed of foreclosure, by other deed, or by court order or other process.
• Operator – Any person (including users, tenants, or occupants) having and exercising direct actual control of the operations of an industrial establishment. A holder of a mortgage or other security interest in the industrial establishment is not an operator of the industrial establishment unless or until it loses its exemption under N.J.S.A. 58:10-23.11g4 or obtains title to the industrial establishment by deed of foreclosure, by other deed, or by court order or other process.

Potential Outcomes

Consider two potential scenarios:

1. A new owner acquires a property where a prior ISRA trigger was missed. Under certain conditions, that owner may later sell the property without being required to comply with ISRA.
2. The subsequent buyer might also be exempt from ISRA compliance, provided that no new industrial activity has taken place and the regulatory definitions of “owner” and “operator” are satisfied.

These outcomes are highly fact-specific and depend on the circumstances described above.

Why a Thorough Environmental Assessment Matters

This situation highlights the importance of engaging a qualified environmental consultant to conduct a comprehensive Preliminary Assessment. Proper due diligence can identify missed ISRA obligations early, minimize potential liability, and help avoid unnecessary costs.

ESA’s team is experienced in navigating complex ISRA compliance issues and helping clients achieve favorable outcomes. We are committed to protecting both your environmental and financial interests. Ask ESA.