New Jersey S.2345

ENVIRONMENTAL LAW UPDATE JANUARY 2002

NEW JERSEY S.2345

a. Statute Of Limitations

The S.2345 legislation that passed at the end of 2001 arose out of NJDEP's fears that the generic ten year statute of limitation (N.J.S.A. 2A:14-1.2) was about to have the intended result of barring claims, in a way NJDEP itself believed was unintended. The agency was concerned that tens and maybe hundreds of millions of dollars spent on remediations would become unrecoverable, natural resource damages ("NRD") claims would expire and many polluters would escape liability.

Section 5 of S.2345 provides some relief against the impending expiration of the 10-year statute of limitation. First, it provides a general 3-year statute of limitation for "any civil action concerning the remediation of a contaminated site or the closure of a sanitary landfill facility commenced by the State pursuant to the State's environmental laws…." It clarifies that the statute begins to run beginning on the later of "January 1, 2002 or until the contaminated site is remediated or the sanitary landfill has been properly closed…." Thus the earliest any claim might be barred under this provision is January 1, 2005. Presumably, the statute will not run until a site is fully remediated. It is unclear how monitoring of groundwater, CEAs, engineering controls and institutional controls will affect the running of this statute of limitation.

Second, it provides a 4-year statute of limitation for "any civil action concerning the payment of compensation for damage to, or loss of, natural resources due to the discharge of a hazardous substance, commenced by the State pursuant to the State's environmental laws…." It clarifies that the statute begins to run beginning on the later of "January 1, 2002 or until the performance of the preliminary assessment, site investigation, and remedial investigation, if necessary, of the contaminated site or the sanitary landfill facility." Thus the earliest any claim for natural resource damages might be barred under this provision is January 1, 2006. Unlike the prior provision, it does not appear that the remediation needs to be completed for the statute to begin to run. It is unclear how monitoring of groundwater, CEAs, engineering controls and institutional controls will affect the running of this statute of limitation.

Finally, section 7 of S.2345 clarified that N.J.S.A. 2A:14-1.2 does not apply to the above cases.

b. Natural Resource Damages ("NRD")

The term "Remediation" in existing law (N.J.S.A. 58:10B-1) and newly inserted into the Spill Act (N.J.S.A. 58:10-23.11 et seq.) is revised to state "'remediation'… shall not include the payment of compensation for damage to, or loss of, natural resources…." See S.2345 Sections 1 & 3.

By this change the Legislature resolved the question of whether NJDEP can require payment of money for NRD. The Legislature did not, however, deny NJDEP the ability to require ecological assessments, remediation or restoration. Thus, it appears that if a discharge of hazardous substances enters a wetlands, NJDEP can require remediation of the discharge and restoration of the wetlands.

The change does not answer the question of whether NJDEP could require a remediating party to conduct an assessment of natural resource injury, of the kind required or permitted under applicable federal regulations, to assess that injury in a way that could then be used to bring a claim for money damages. Some fear that NJDEP will choose to do this. The change also does not address the troubling NRD issue of whether contamination in groundwater is a natural resource injury regardless of its use.

Many believe the change will favorably alter NJDEP behavior by redirecting NJDEP into issues of remediation rather than fundraising. There is some indication that NJDEP itself feels that the change will help it regain its focus on the remediation system and move forward. However, some believe there remains adequate opportunity for NJDEP to do mischief by way of NRD and ecological demands, now that the Legislature will see the problem as fixed.

The covenant not to sue provision of N.J.S.A. 58:10B-13.1 is revised to address NRD. The change, however, has raised interpretive issues, not discussed with the Legislature. Specifically, S.2345 Section 4 requires that in the future, except as provided in subsection e. of this section, a covenant not to sue shall contain the following, as applicable: (1) a provision releasing the person who undertook the remediation from all civil liability to the State to perform any additional remediation, to pay compensation for damage to, or loss of, natural resources, or for any cleanup and removal costs; …

Some read this provision as inconsistent with the earlier discussed change defining NRD compensation out of remediation. They express concern that NJDEP will use this requirement as an explanation for their new requirement that NRD be addressed as part of the administrative remedial process. Others read this section as having one of two other alternate meanings. First, it could mean that when a party finishes a remediation and obtains the final no further action ("NFA") letter, the covenant not to sue will automatically extend to natural resource damage compensation. Second, it could mean that the release for NRD only is included if and to the extent applicable. Historically, NJDEP has always read part (1) as mandatory in all NFA letters and parts (2) and (3) as optional, to be applied only in matters where the NFA letter relates to engineering or institutional controls, as applicable. Thus this second interpretation is arguably inaccurate.

Section 6 of S.2345 clarifies that if you have a defense to liability under the Spill Act, then you also have a defense against payment of compensation for natural resource injury. While arguably this is redundant, it also clarifies for the brownfields developers that by qualifying for the brownfields developer defense, they avoid liability for NRD money damages.

Article continues