Another Potential Paradigm Shift in The Site Remediation Landscape?

In May 2012, the New Jersey Department of Environmental Protection’s (NJDEP) newly overhauled Site Remediation Program took final effect. NJDEP has proclaimed that this revamped program established a "new paradigm" in New Jersey’s site remediation regulatory landscape. New federal legislation is brewing, however, that could pre-empt certain aspects of these new regulations. It could also impose onerous financial burdens on industry and impact business growth and profitability by restricting a company’s use of its operating and investment capital.

The NJDEP Financial Responsibility Framework

One of the features of NJDEP’s new regulatory scheme is a detailed framework of financial responsibility provisions applicable to persons responsible for remediating contaminated property. N.J.A.C. 7:26C, Subchapter 5. The principal financial responsibility provision is a "remediation funding source."N.J.A.C. 7:26C-5.2(b). "Financial assurance" requirements, by comparison, apply only to remedial actions involving engineering controls. N.J.A.C. 7:26C-5.2(b). A remediation funding source must be maintained only until an "unrestricted use" or "limited restricted use" response action outcome has been issued for the site. N.J.A.C. 7:26C-5.2(e). Financial assurance for engineering controls, on the other hand, must be maintained for a potentially longer period of time, until the remedial action permit is terminated (i.e., when the remedial action "meets all applicable remediation standards" and is "protective of the public health and safety and of the environment" without the permit), is transferred (in the case of a statutory permittee), or expires after the default 99-year term. N.J.A.C. 7:26C-5.2(e), 7:26C-7.11, and 7:26C-7.13. And while a qualifying party has the option of providing a "self-guarantee" for a remediation funding source, that option is not available for the longer-term financial assurance requirements. Compare N.J.A.C. 7:26C-5.2(h) with 7:26C-5.2(j). To qualify for "self-guarantee," a responsible party must meet certain financial requirements concerning net worth and cash flow, as set forth in N.J.A.C. 7:26C-5.8(a).