ISRA Overview: September 2004

by Richard J. Conway, Jr.

Schenck, Price, Smith & King, LLP 10 Washington Street, P.O. Box 905 Morristown, NJ 07963-0905 Direct: (973) 540-7328 Fax: (973) 540-7300 E-Mail: rjc@spsk.com

A. Regulatory Framework:

Overview: In 1983 the New Jersey Legislature adopted the Environmental Cleanup Responsibility Act, N.J.S.A. 13:1K-6 et seq. (“ECRA”). In 1993 the Legislature changed ECRA to the Industrial Site Recovery Act (“ISRA”). ISRA is administered by the New Jersey Department of Environmental Protection (“NJDEP”) in Trenton, N.J. The ISRA process is more routine than it once was, but still poses serious challenges, costs and delays to ordinary business transactions. NJDEP is not fully predictable, and the rules for compliance are not self-executing. Technical and legal changes and surprises occur with regularity.

Regulations: ISRA compliance is governed by three sets of regulations: the ISRA regulations (N.J.A.C. 7:26B); the Technical regulations (N.J.A.C. 7:26E); and the Oversight regulations (N.J.A.C. 7:26C). Further revisions occur periodically, sometimes dramatically affecting various ISRA issues. For example, in June 2004 NJDEP adopted use of the North American Industrial Classification System (“NAICS”) instead of the Standard Industrial Classification (“SIC”) Manual to determine ISRA applicability (see N.J.A.C. 7:26B-1.4 and Appendix C) and shortly after sought interested party review and comments on soils remediation standards (see http://www.nj.gov/dep/srp/regs/srs/proposed/), an effort previously last initiated in 1992 and abandoned in 1993.

Many other statutes and regulations may be relevant to specific issues arising as part of ISRA compliance, ranging from spill reporting (N.J.A.C. 7:1E), Underground Storage Tanks (N.J.A.C. 7:26E), Surface Water Standards (N.J.A.C. 7:9B & N.J.A.C. 7:26E-1.13(e)), Groundwater Standards (N.J.A.C. 7:9-6 & N.J.A.C. 7:26E-1.13(b)) and other permitting schemes. ISRA compliance is also influenced by a set of written and unwritten NJDEP practices and procedures, many of which are not enforceable as regulations (the most notable of which is the current soils cleanup criteria used as “guidance” by NJDEP). Because of the resignation of Governor McGreevey and the coming 2005 election, and likely future changes in NJDEP leadership, many issues now thought resolved and understood may be revisited.

ISRA applicability issues are also subject to complicated rules, processes and interpretations, not always applied consistently either from one case to another, or over time. In fairness, there is greater consistency today than in 1990, but sometimes the more complex the issue the less certain the approach NJDEP will take. The effects of the recent adoption of the NAICS manual as a rule book for ISRA applicability is yet untested, though NJDEP has said that the intent of that adoption was not to change ISRA applicability decisions.

Proving the Site is Clean : ISRA compliance has a fairly simple goal. Prior to the completion of a transaction (or cessation) which is a triggering event (see description below) the owner or operator of an industrial establishment affected by that triggering event (who may or may not be the transferor in a transaction) must prove to NJDEP’s satisfaction that the industrial establishment is clean (e.g. free of discharges of hazardous substances or hazardous wastes, at least in excess of applicable standards). This may require investigation and/or remediation of a site. This is usually too difficult and time consuming to permit timely completion of a transaction without special NJDEP approvals (see below). Closing a transaction prior to completion of ISRA compliance, as outlined below, is a violation of law. Violations of law may result in fines of up to $25,000/day per violation. NJDEP enforcement during Governor McGreevey’s administration increased over that of Governor Whitman’s administration, but did not approach the prior pace or tone during Governor Florio’s administration. Predictions cannot be made for enforcement trends in the next few months.

B. Applicability:

Industrial Establishments: Both ECRA and ISRA apply only to industrial establishments. Until recently an industrial establishment was a place of business or real property having a covered SIC number (22-39; 46-49; 51; or 76, minus exempted codes) and “using” (my word) hazardous substances. Now in lieu of assessing SIC numbers coverage exists if the NAICS code is listed in Appendix C of the ISRA regulations.

Triggers: Until and unless a triggering event occurs industrial establishments have no special duties under ISRA. ISRA triggering events consist of: (i) sales or transfers of real estate on which operates an industrial establishment (including for example the conveyance of real estate from a person to an entity controlled by that person), (ii) sales or transfers of assets of an industrial establishment, (iii) mergers, sales or transfers of or involving shares, partnership interests, LLC membership interests or other equity in an entity which owns or operates an industrial establishment or directly or indirectly owns such interests in such an entity, or (iv) events which involve or result in a cessation of covered operations of an industrial establishment, all of the foregoing being subject to an array of exemptions, including, for example, transfers qualifying as corporate reorganizations or involving only indirect owners of industrial establishments, not liable as owners of those places, both exemptions requiring somewhat complex application of specific regulatory tests.

Second Triggers: It is common that sites which are undergoing an ISRA compliance process for one triggering transaction may experience one or more subsequent triggering transactions. For example, a site may have a tenant corporation operating its business that undergoes a triggering merger or acquisition and begins ISRA compliance while continuing operations; thereafter the owner of the real estate may decide to sell the real estate. It is well established that the second event is a new independent ISRA trigger for which ISRA filings are required and liability is created (e.g. the buyer of the real estate has rights under ISRA against the seller because of the second independent trigger). Fortunately, there are several mechanisms under ISRA that are intended to avoid two separate ISRA investigations and minimize duplicative inefficient processes (e.g. multiple cases are usually consolidated, or the second is put on hold pending completion of the first). In certain instances (e.g. where there is an approved Remedial Action Workplan (“RAW”) ISRA allows the second transaction to occur without a need for execution of a remediation agreement. See e.g. N.J.A.C. 7:26B-5 (remediation in progress waivers and expedited review waivers). However, in cases where the first matter is unresolved, the second matter is not exempt, and the first matter does not yet have an approved RAW, then the second matter may need to obtain a remediation agreement and post a remediation funding source in order to proceed with the closing of the transaction.

Exemptions and LNAs: There are a number of regulatory exemptions for transactions, the most relevant of which are discussed below. The tests for exemption included in the regulations are somewhat complicated and are rarely relied on by entities doing business in NJ without seeking a letter of non-applicability (“LNA”) from NJDEP.

To seek an LNA, an applicant completes and submits an application to NJDEP, often accompanied by a letter arguing the merits. NJDEP often rules on simpler applications in as little as two weeks. Moderately complex applications can take months to obtain a reply. If an application for an LNA is approved, NJDEP issues the LNA in which it confirms that the transaction described in the application is not subject to the obligation to comply with ISRA. By custom and usage, the parties to the transaction rely on the issued LNA to proceed to closing without otherwise complying with ISRA. Often contract provisions for the transaction require application for an LNA and detail the consequences of a denial of the application. Those consequences usually include possible termination of the triggering transaction. From NJDEP’s perspective if an LNA is sought and denied, so long as the transaction is terminated and does not close, there is no penalty or consequence for the denial. However, if the transaction is to proceed, a party must comply as outlined in this letter (either seek a no further action letter because the site is clean or seek and sign a remediation agreement- see below).

Sometimes LNAs are sought long after a transaction has occurred because a later transaction is occurring and questions have arisen about ISRA applicability to the earlier transaction. Obviously it is more difficult to assemble information to prepare an accurate LNA application after a transaction has occurred. However, even if the LNA is denied, some believe it easier to address the violation so identified after denial of a good faith LNA application than otherwise.

C. Procedural Compliance- Transactions:

NJDEP has inserted several regulatory provisions supporting and articulating its recent pronouncements that groundwater is itself a receptor. Similarly, as expected, surface water is now a receptor itself. In this view, contamination in these receptors must be addressed without regard to the existence of other more traditional receptors (such as those who drink groundwater, or adjacent wetlands). This logic and related principles include that: remediation standards must protect receptors; risk to receptors is unrelated to actual use; NJDEP is required to improve water quality (static conditions are unacceptable); and those who do not obtain unconditional no further action letters (e.g. because water quality at and from their site now meets all applicable standards) remain liable to police and sample water quality and uses forever. Collectively, these principles impede simple application of numeric criteria and concepts of natural remediation and institutional and engineering controls in favor of ever more stringent requirements imposed on polluters.

Filings: Under the ISRA regulations when (i) a public announcement of a planned cessation is made, or (ii) employment, output or areas of operations fall below a 10% threshold, or (iii) a contract is signed for a transaction, the initial filing of a simple General Information Notice (“GIN”) for each industrial establishment involved in the transaction or cessation must be made within five calendar days. N.J.S.A. 13:1K-9(a). Once the GIN is filed, the ISRA regulations allow flexibility in the processing of the case by the applicant. See below.

Either with the GIN, or shortly thereafter, the complying party prepares and submits a preliminary assessment report (“PAR”) for the site. The PAR uses a checklist approach to identify each and every potential area of concern (“AOC”) at the site. The PAR includes a narrative explanation for each area, and discusses whether sampling is required to investigate known, suspected, or potential discharges in accordance with the rules and Technical Requirements. The preliminary assessment of a site requires collection and review of information about operations at a site since the 1940s (and sometimes earlier). If the complying party or NJDEP believes sampling is required, a site remedial investigation workplan (“SIW”) is usually prepared and sampling is conducted. If sampling shows contamination, a remedial investigation, perhaps pursuant to a remedial investigation workplan (“RIW”), and remedial action is conducted. Generally speaking, a site must be investigated to unrestricted standards so that the need for remediation is assessed against the most stringent standards. A key determinant in completing the remedial investigation phase is whether the site has been adequately delineated so that all contamination has been located to the point at which the matrix (soils or water) meets the most stringent applicable standard. When a site meets all standards, the site is treated as clean. Although the regulations contemplate a staged approach of investigations and reports, it is fairly typical for work to be conducted at risk, without workplans, with a fair degree of confusion as to whether a site is in site investigation or remedial investigation stages. In 2003 revisions to the Technical Requirements were intended to accelerate assessment by sampling of the existence of actual threats of releases to groundwater users.

In general, if operations at a site continue, NJDEP is relatively unconcerned with interior conditions except for the most obvious (floor drains and holes through walls). However, if site operations have ceased, NJDEP tends to focus more carefully on interior issues, regardless of whether or not the site remains vacant and unused. However, in 2004 NJDEP increased its focus on the pathway of vapor intrusion from volatile organic compound groundwater plumes into interiors. Guidance for addressing these issues is still limited, but many fear this issue will have extraordinary effects. See http://www.state.nj.us/dep/srp/guidance/indoor_air/.

Once a site is investigated further efforts depend on the results of the investigation.

Negative Declaration/No Further Action Letter: The goal of ISRA compliance is to obtain a No Further Action Letter (“NFA Letter”) from NJDEP or obtain the approval of a negative declaration. Until this is obtained, by definition more work is required. A negative declaration is a sworn statement by the applicant, sometimes made at NJDEP’s direction and sometimes made at the applicant’s initiative, that there have been no discharges at a site or alternatively that all discharges have been remediated to NJDEP’s satisfaction. If the negative declaration is approved, the case is closed and any pending transaction may proceed. Alternatively, an applicant may hold off closing the planned transaction while it investigates the site’s areas of concern (which itself can take 6-12 months and cost tens to hundreds of thousands of dollars on even clean sites- and significantly longer and more on contaminated sites) and remediates the site (which itself can take from 1 month to many years, depending on the problems being fixed). Upon completion of that effort and review of the Remedial Action Report (“RAR”) by NJDEP, NJDEP can issue an NFA letter (NJDEP’s own determination that the site is clean), the case is closed and the transaction may then proceed.

Upon the approval of an NFA Letter or negative declaration for a cessation of operations of an industrial establishment, subsequent transactions involving the same company or site will not be subject to a new obligation to comply with ISRA, even if such transactions conceptually are covered by ISRA (e.g. a sale of real estate), unless the site again has become subject to ISRA through some other continuing operations (e.g. a new tenant) or the company has other operations or real estate elsewhere in New Jersey which are industrial establishments themselves (in which case the transaction likely causes a need for a new compliance only at those operating industrial establishments).

RAW: When a site is contaminated, a party can proceed with a series of remedial efforts, sometimes at risk, sometimes after NJDEP approval, designed to remediate identified areas of concern (“AOCs”) in the effort to obtain an NFA Letter from NJDEP. Alternatively, a party can draft and seek approval of a RAW designed to describe all remedial measures needed to remediate all AOCs and implement that RAW once approved. To prepare a RAW the site must have been properly investigated to ensure full remediation of all AOCs at the site. Generally, NJDEP will not review a RAW until the investigation is complete. Most RAWs are not approved as originally submitted.

Once a RAW is approved the remediating party must post a remediation funding source in the amount of the approved budget for the planned remediation. The ISRA case for which the RAW approval was obtained remains open, and the remediating party remains obligated to comply with that approval, until issuance of the final NFA letter by NJDEP after completion of the required remedial action and NJDEP review and approval of the remedial action report.

Remediation Agreement: While a few transactions await receipt of the required NFA Letter as a condition of closing, sometimes for years, most transactions involving sites never before investigated or remediated under NJDEP scrutiny proceed to closing of the transaction under a remediation agreement. A remediation agreement is a promise by a responsible party to complete the investigation and remediation of the subject site to NJDEP’s satisfaction after the closing of the transaction. Usually the responsible party is the seller, but often it is the target company in corporate transactions or the buyer when the transaction shifts environmental liability to the buyer.

Most practitioners do not advise clients to seek a remediation agreement for a mere cessation of operations because the statutory wording supports the argument that a negative declaration or NFA letter need not be approved in advance of the actual cessation (as opposed, for example, to the transfer of title to real estate). However, some argue a departing operator must sign a remediation agreement in order to be in compliance with ISRA if the required no further action letter cannot be obtained before actual (as opposed to announced) termination of operations. As best we can now determine, NJDEP does not compel operators to sign a remediation agreement so long as compliance is proceeding in due course. On occasion, however, we have heard that NJDEP has asserted that under its regulations a party should sign a remediation agreement for continuing compliance for a mere cessation if operations have fully ceased. If this is correct, we believe their approach has not been consistent.

There is a separate application made to obtain a remediation agreement. This application can be filed without any investigation having been conducted. The application must attach an estimate for investigation and remediation of each industrial establishment, usually based on a consultant’s “guesstimates” based on the areas of concern identified in the PAR (if it exists). If NJDEP approves, this estimate will be included in the remediation agreement as the amount of remediation funding source to be posted. If NJDEP disapproves the estimate for a site, finalization of the remediation agreement can be delayed. Although the remediation agreement will fix the amount of remediation funding source required, that amount can and will change as the investigation proceeds. NJDEP often requires a minimum of $100,000 in funding sources per site and $1,000,000 for sites having groundwater concerns. In recent years NJDEP has seemed to focus more carefully on the appropriateness of funding sources at many sites, apparently because of a growing realization that at some sites the remediation funding source may actually be needed by NJDEP to complete site work.

The terms of the remediation agreement and the funding source are not negotiable. NJDEP will rarely permit an applicant to see a draft of the remediation agreement in advance of NJDEP’s execution and delivery of a final for the applicant’s execution. If an error exists, as has been known to happen, there may be a delay of several days to obtain a correction. The remediation agreement takes effect when signed by the applicant. NJDEP often requires multiple signatures on the remediation agreement (e.g. the applicant and the transferor), but not always. NJDEP’s signature on a remediation agreement remains effective for approximately thirty (30) to sixty (60) days after NJDEP signs. If the applicant has not signed at that point a new remediation agreement is needed.

Remediation Funding Sources: Forms of remediation funding sources are a remediation trust fund, an environmental insurance policy (rarely used outside of Brownfields’ deals), or a line (not a letter) of credit. N.J.S.A. 58:10B-3.b. The funds available in or through the remediation funding source can be drawn by the party doing the work to pay for the work. N.J.S.A. 58:10B-3.b. (Our experience is that this is only a theoretical benefit because NJDEP approval is required and the transactional effort and cost of obtaining the approval may not be worth the marginal gain, except for the most financially strapped applicants). The remediation funding source must be posted within the period specified in the remediation agreement after it is signed. The terms of these instruments are not readily accepted by institutions inexperienced with ISRA and preparations to obtain a line of credit, for example, should commence long before it is needed.

Some persons and entities can self guarantee their obligations in lieu of providing a funding source if the cost of the required remediation is less than one-third of their tangible net worth and they can demonstrate adequate cash flow. N.J.S.A. 58:10B-3.f. Use of this approach is highly recommended if the responsible party qualifies, in part because it avoids the 1% annual surcharge charged by NJDEP on other forms of financial assurances.

On the occurrence of a breach of a remediation agreement, NJDEP and any transferee can take over and use the funding source to complete the remaining work. N.J.S.A. 58:10B-3.g.

Surcharge; Fees: As a fund-raiser for the financial assistance program in 1993 the Legislature imposed a one (1%) percent annual surcharge (tax) on the amount of funding source. It is not charged on voluntary remediations, self-guarantees or funding sources created with financial assistance under ISRA. N.J.S.A. 58:10B-11. Under the Oversight regulations, NJDEP is entitled to be reimbursed by the regulated entity for its time spent in handling a particular ISRA Case. Under the ISRA regulations, there are many fixed fees for various ISRA filings. Typically NJDEP fees at clean sites can be several thousand dollars.

D. Standards:

Soil Standards: Absence of Regulations: Recently NJDEP announced that it is beginning the process of formally proposing and adopting cleanup standards for soils designed to minimize harm to public health, safety and the environment to acceptable levels, taking into consideration the location, surroundings, intended use, potential exposure, and ambient conditions, whether naturally occurring or man-made. N.J.S.A. 58:10B-12.a. In 2003 they adopted existing planning standards for surface water and ground water as remediation standards (which adoption is under challenge). In 1993 the Legislature has adopted a risk standard of one-in-a-million cancer risk for human carcinogens (as designated by EPA) and Hazard Index for non-carcinogens to not exceeding one. N.J.S.A. 58:10B-12.d. Until standards are adopted, NJDEP is to act on a case-by-case basis. N.J.S.A. 58:10B-12.a. With few exceptions, NJDEP still follows its strategy outlined in its February 1992 proposed cleanup standards (see 24 N.J.R. 373 (2/3/92) proposed N.J.A.C. 7:26D), which were withdrawn by NJDEP in February of 1993.

At present NJDEP uses guidance criteria for residential and nonresidential settings and soils remediations. NJDEP also has criteria intended to assess whether soils pose an unacceptable risk of impact to groundwater. Generally the most stringent of all applicable criteria will be applied as unrestricted standards. NJDEP can disapprove use of restricted - nonresidential soils standards proposed to be used by an applicant on (i) a finding that their use at a site will not be protective of public health, safety or the environment (N.J.S.A. 13:1K-9.g) or (ii) if the criteria for their use are not met (N.J.S.A. 13:1K-9.i). At most sites responsible parties resolve certain remedial issues by resorting to site specific and/or nonresidential standards, coupled with a deed notice, largely to save costs. However, NJDEP has become more enamored of detailed and expensive delineation at sites as a condition of pursuing that strategy. See discussion of engineering controls below.

Ecological Standards: NJDEP eventually will propose separate Environmental/Ecological Standards. N.J.S.A. 58:10B-12.a. (likely to be more strict than unrestricted/residential and restricted/nonresidential, in some cases). The focus of such standards is to protect ecological receptors (streams, wetlands/swamps, groundwater, flora & fauna). Recently, NJDEP has begun to require increased focus on ecological issues in both investigations and remediations. Despite a recent 2001 legislative change there remains considerable concern of the prospect of conduct of, or payment for, additional ecological remediation or restoration in lieu of payments of natural resource damages (“NRD”). One major difference in New Jersey’s approach to NRD from the federal approach is that NJDEP will presume a damage, regardless of the absence of lost use or service, from the mere excedence of any standard and expect compensation or restoration for same. In 2004 NJDEP initiated a number of suits seeking NRD and is pursuing several initiatives to focus on natural resource issues in regional contexts (e.g. in the Passaic Basin and Raritan River). See http://www.nj.gov/dep/nrr/

Water Standards: Formal water remediation standards were thought to exist until an appellate court ruled that NJDEP improperly adopted them. In 2003, NJDEP re-adopted the same standards as remediation standards, which re-adoption is itself under challenge. Some relief against strict application of these stringent standards is available. In particular, NJDEP allows use of a Classification Exception Area (“CEA”) to prevent future usage of contaminated groundwater without necessity for continued perpetual pumping and treatment of the contaminated groundwater. While the tests for eligibility for use of a CEA are complex, in essence if it can be shown that groundwater quality in a particular contaminated volume of an aquifer will improve so as to meet standards after a particular period of time, through biodegradation or natural attenuation, a CEA can be used. To obtain a CEA a fair amount of data over at least two years is required. Modeling is then used to meet most of the eligibility criteria. Under 2003 regulatory amendments in all circumstances on expiration of a CEA samples must be taken to establish that the remediation was successful. There are many unanswered questions about the ultimate effect on liability of a CEA: for example, if the area affected by a CEA does not, in fact, meet then applicable standards upon expiration of the term of the CEA, what is the liability of the original remediating party, particularly if the site is then owned or leased by another? The technical requirements also impose biennial requirements, including inspections and reporting, to ensure that the CEA remains protective.

Alternate Standards: A party may seek alternate soil remediation standards (“ASRS”) as alternatives to residential (unrestricted) or nonresidential (restricted) standards based on either site specific characteristics or a site specific risk assessment, consistent with USEPA risk assessment approaches. NJDEP must decide that the ASRS will adequately protect public health and safety, and the environment. N.J.S.A. 58:10B-12.f.(1). It is relatively rare and expensive to pursue this route successfully. Indeed, many believe that NJDEP will not provide a fair review of such efforts.

More Stringent Standards: NJDEP on its own initiative may require a more stringent alternate remediation standard for a particular contaminant at a particular site when established standards are not protective enough. N.J.S.A. 58:10B-12.f.(2). This occurs rarely.

Engineering or Institutional Controls: Since 1993, with NJDEP’s prior approval, Engineering or Institutional Controls can be used to obtain relief from restricted and unrestricted standards that cannot be met. N.J.S.A. 58:10B-13. Engineering controls are mechanisms to contain or stabilize contamination or ensure the effectiveness of a remedial action, and include caps, covers, dikes, trenches, signs and leachate collection systems. Institutional controls are mechanisms used to limit human activities at or near a contaminated site, or to ensure the effectiveness of a remedial action over time, and include use restrictions, well restriction areas and deed notices. N.J.S.A. 58:10B-1. Although their use is often required as part of the use of alternate cleanup standards and nonresidential standards, it appears that they are in and of themselves the equivalent of a separate standard that can be used to meet the one-in-a-million risk standards (by changing exposure scenarios) even when a party does not otherwise meet the residential or nonresidential numbers and does not seek an alternate standard. N.J.S.A. 58:10B-13.a. provides that “engineering or institutional controls [may be]... used in lieu of remediating a site to the established remediation standard for soil, groundwater or surface water....”

As a condition of use of nonresidential standards and/or the use of other institutional or engineering controls the then real estate owner’s consent must be obtained and NJDEP:

• shall require any engineering or institutional controls it deems necessary to prevent exposure, require maintenance and restrict use. N.J.S.A. 58:10B-13.a.(1).
• shall require recording in county (if the owner consents) of a notice of contaminants and restrictions. N.J.S.A. 58:10B-13.a.2 (If the site owner doesn't consent to the required recorded notice than the remediation must use residential standards. N.J.S.A. 58:10B-13.b.)
• shall require a notice to the local municipal governing body. N.J.S.A. 58:10B-13.a.3
• may require the use of signs. N.J.S.A. 58:10B-13.a.4
• shall require maintenance of a list of restrictions on-site. N.J.S.A. 58:10B-13.a.5
• shall require prior notice of a remedial action to the municipal governing body. N.J.S.A. 58:10B-13.a.(6)

Without belaboring the point, it can be quite dangerous to sell a site prior to completion of the site investigation because the future owner may be able to interfere with the investigation and remediation, at a minimum by refusing to sign any required deed notice for remediation that does not meet the most stringent criteria. Similarly, it can be advantageous, and perhaps essential, to acquire some agreement with an owner (and perhaps title) of contaminated property in order to control the remedial strategy of a site the remediating party does not own (including sites to which contamination has migrated). It is not known whether a court will enforce a sales contract provision obligating an owner to sign a deed notice (particularly if the then owner whose signature is required is not the same owner who signed the contract containing the requirement to sign), although this author believes such clauses should be enforced. However, many transactions do occur with the investigation and remediation happening thereafter. In essence, in such cases there are extensive negotiations and contract provisions dealing with remediation processes, control, standards, access, recordings, appeals, and liability. See below.

Future owners, lessees or operators (and perhaps the original remediating party) must maintain the institutional and engineering controls used for remediation by their predecessors and warn those working at the site of the contamination addressed by the controls and the nature and requirements in the controls. N.J.S.A. 58:10B-12.d. It is unclear, however, whether or not, and to what extent, the remediating party using the control has continuing liability for a later failure of that control because of a breach by a future owner or operator of these obligations. Also, under the new technical regulations all controls must be inspected biennially to assess whether they are being maintained, complied with and are functioning to protect the designed pathways. NJDEP takes the position that the remediating party remains liable for these obligations, even if delegated to a future owner or operator. A report of that inspection is to be filed with NJDEP. NJDEP is required to inspect sites with controls every 5 years.

Background Conditions: No remediation should be required for contamination due to regional natural background. N.J.S.A. 58:10B-12.g(4). No remediation should be required for contamination moving onto a site from a neighboring site. N.J.S.A. 58:10B-12.g(5) & (6). Regrettably, NJDEP does not easily accept arguments that onsite contamination in excess of standards is due to offsite sources and imposes a high burden of proof before it accepts even visual evidence.

Fill: ISRA includes a rebuttable presumption that NJDEP shall not require removal and treatment of large quantities of historic fill materials in order to meet the remediation standards. However, the 1997 technical regulations can be used to require extensive investigation of fill at a site. Put bluntly, NJDEP resists those who seek to do less because of historic fill, and regularly warns that the presumption does not prohibit them from requiring a lot of work at filled sites. Wastes from chemical production or processing and processing of metal or mineral ores, residues, slags or tailings are defined not to be historic fill, and thus can be compelled to be removed. N.J.S.A. 58:10B-12.h.(1).

Innocent Purchaser Status: Regrettably ISRA provides no relief from the obligation to investigate or remediate if a party is eligible for innocent purchaser status under the Spill Act. N.J.S.A. 58:10-23.11g

Finality: Once a “no further action letter” (or equivalent) is received from NJDEP, theoretically, more stringent cleanups can be avoided if a change in standards is less than 'an order of magnitude,' so long as the remaining work continues as scheduled. N.J.S.A. 58:10B-12.j. Order of magnitude should be interpreted as the same as a factor of 10. It is unclear how this protection will be applied once standards are adopted given that all prior remediations were not conducted under adopted standards. However, NJDEP has taken the position that new triggering events under ISRA are always subject to the obligation to meet then current standards (i.e. it may not reopen old cases to impose new standards, but all new cases must meet then current standards). This position is based on NJDEP’s view that the excedence of a remediation standard is automatic proof of a health or environmental risk that needs to be corrected. How this position interacts with the statutory protection has not yet been tested.

Owners and operators, and the person performing a remediation, are given limited liability protections against more stringent changes in standards adopted after they implement a remediation. N.J.S.A. 58:10B-13.e. Only those who are liable under the Spill Act (N.J.S.A. 58:10-23.11g) shall be liable to meet the new remediation standard, except that no person shall be liable if the change is less than an order of magnitude. Those who are not so liable, e.g. innocent purchasers, apparently are not liable in such circumstances no matter how large the change in standard. See N.J.S.A. 58:10B-12.j. above. There have been dramatic revisions in the law since the 1998 Brownfields law which changes are of some interest to buyers, but provide little relief, and some problems, for sellers. Some buyers and tenants, and their lenders, fearful of the consequences of their knowledge that a site is contaminated (i.e. that they may not qualify for innocent purchaser status), demand extensive indemnifications as a condition of any sale or lease of a site prior to issuance by NJDEP of its NFA letter.

When engineering or institutional controls are used, no further remediation can be required by NJDEP unless the controls are 'no longer protective of public health, safety or the environment.' N.J.S.A. 58:10B-13.f. The meaning of this phrase has not yet been established.

Finally, a subsequent trigger of ISRA may require a reexamination of the site, but in theory and in practice it is much simpler to repeat an ISRA process at a site already owning a no further action letter because old issues are usually not reopened, and only changes in the site and standards since the prior completed process are usually addressed. Sometimes, however, NJDEP does reopen old issues or require verification work or visit issues not addressed in the older process.