Autumn 1997
Volume 6, No. 1

When Your Neighbor's Problem Becomes Your Own: Requests for Site Access to Your Property
by Todd L. Normane, Esq.

In 1993, the New Jersey Legislature enacted several measures intended to reform the site remediation process. One of the issues addressed by the Legislature concerned the ability of a person to obtain access to property not owned by that person to conduct remediation activities.

N.J.S.A. 58:10B-16 sets out the framework for providing reasonable access to property to conduct such activities. That law states that a third party, "may enter upon the property to conduct the necessary remediation if there is an agreement, in writing, between the person conducting the remediation and the owner of the property authorizing the entry onto the property." The statute requires good faith efforts on behalf of the requestor before mandating the person undertaking the remediation to "seek an order from the Superior Court directing the property owner to grant reasonable access to the property and the court may proceed in the action in a summary manner."

The New Jersey Department of Environmental Protection (the "Department") recently proposed administrative regulations establishing the procedural requirements for a person to obtain access to property to conduct remediation at N.J.A.C. 7:26C-8. Basically, the Department rules require the requestor to provide sufficient information for the property owner to make an informed decision regarding the scope of the access. The rules also establish the procedural steps that a requestor must implement prior to filing a complaint in Superior Court. The failure to comply with these procedural steps and take "all appropriate action" to obtain site access may result in the requestor's exposure to penalties.

While the regulations are applicable to the requestor's actions, the Department has no authority to compel a property owner to agree to a request for site access. The agency's general position in these matters is that the remediation is necessary and the property owner should acquiesce to a request for site access when made. However, the Department is not the final arbiter of whether a request for site access constitutes "reasonable access" and whether the request should be granted by a property owner.

The existence of this statutory right to enter another's property involves complex legal issues not only for the requestor, but also the property owner. Such issues include: what is the scope of reasonable access; what are the technical merits of the proposed remediation; post-remediation property restoration; the extent of interference with normal operations of the property; liability issues; insurance requirements; potential property damage issues; and whether the proposed site access constitutes a permanent, temporary and/or regulatory taking which requires just compensation.

The vindication of property rights are not diminished by this statute. The New Jersey Constitution offers protection to property owners that ensures that the court will not order access for private parties without prior, just compensation. The New Jersey Constitution, N.J.S.A. Const. Art. 1, § 20 provides that:

Private property shall not be taken for public use without just compensation. Individuals or private corporations shall not be authorized to take private property for public use without just compensation first made to the owners.

The physical occupation of property by another requires compensation. This remains true regardless of whether the transaction is voluntary or of a quasi-regulatory taking nature.

There may be consequences to the site access which are not readily identifiable nor easily quantified. There may be stigma damages caused by the remediation of the site which may not be reflected until a subsequent property sale. The site may be included on the Department's Known Contaminated Sites List which may negatively impact the property value as collateral used to obtain lender financing. The statute requires that the requestor indemnify the property owner for damages, penalties or liabilities resulting from the remediation. However, the site access agreement must be drafted to reflect these issues as well as the potential for stigma or future damages.

Potential interference with on-site operations presents an issue which must be resolved prior to site access. The statute requires only reasonable access. The property owner is not required to subrogate its own operations for the benefit of the requestor. The requestor may need to modify the scope of its remedial investigation to avoid unnecessary interference with the landowner's operations.

Even though the owner's operations at the property have not caused any known or suspected environmental conditions, the owner is not likely to want someone else to investigate and open the proverbial "can of worms." The requestor is required to notify the property owner of any discharges of hazardous substances which are discovered during the course of the remediation. Upon receiving such notice, the owner is required to notify the Department which may result in future remedial obligations. At a minimum, the property owner will be required to investigate the source and extent of the contamination.

Conclusion

There are many legal issues which arise upon receipt of a request for access to a site to conduct remediation beyond those discussed above. The most important rule is to refrain from executing the standard site access form until you are comfortable that all your property rights and concerns have been addressed. What may seem a simple request, e.g., installing a groundwater monitoring well, may be the cause of future headaches to come. As in any agreement affecting property rights--think short term and long term.

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New Brownfield Law Adopted Providing Liability Protection
by Leah C. Healey, Esq.

On January 6, 1998, Governor Whitman signed into Law the "Brownfield and Contaminated Site Remediation Act" (P.L. 1997 C. 278). A major component of the Act expands liability protection for municipalities and private parties acquiring contaminated property so as to encourage Brownfield redevelopment. Before the Act's adoption, New Jersey's environmental statutes imposed liability upon most purchasers of contaminated property regardless of fault. Defenses to liability were severely limited to acts of God, war and sabotage. In the name of Brownfields, this has now changed.

Purchaser Liability Protection

The most significant and long awaited change is the new protection granted to persons who purchase contaminated property after September 14, 1993. Such persons are protected from liability for cleanup costs and damages to the State and third parties arising under the Spill Act or Common Law, provided the person acquires the property after the discharge, maintains all engineering or institutional controls, if any, and provided one of the following applies:

1. The person performed remediation after the effective date of the Act (January 6, 1998); or
2. The person relied upon a valid no further action letter ("NFA") from the NJDEP for remediation performed prior to acquisition; or
3. The person obtained approval of a remedial action workplan after January 6, 1998.

In addition to liability protection, the Act provides some finality to cleanup for those purchasers who obtains or rely on a NFA. If the purchaser receives a NFA after January 6, 1998 or relies on a previously issued NFA, that purchaser will not be liable for further remediation resulting from a change in standards or subsequent discovery of preexisting contamination. This finality of cleanup has been long sought after by the development community.

The Act should not be construed to provide absolute liability protection to purchasers. Purchasers are not protected for their negligent actions which contribute to or aggravate the prior discharges, post acquisition discharges or failure to maintain institutional or engineering controls or other wise to comply with the provision of the NFA.

Another significant limitation to this protection is that liability remains for discharges that are off of the site of the property covered by the NFA. This means that the purchaser either must be sure there is not an unremediated off-site problem or must address this risk in the contract of sale. Unfortunately, the most expensive off-site remediation - contaminated groundwater - will still be a risk.

Covenants Not to Sue

The Act also requires the NJDEP to issue covenants not to sue to the person performing remediation when remediation is approved by an NFA. In the future, the covenant will issue coincident with the NFA for the remediation. The covenant protects the person who undertook the remediation from all civil liability to the State for additional remediation and cleanup costs. Significantly, however, it does not provide protection to a discharger who remediates, nor does it protect anyone from third party liability, except liability to the State. Parties, other than dischargers, who seek liability protection from private parties, will need to rely on the purchaser liability protection in the Act.

The benefit of the covenant to the discharger is that it is transferable to successor owners and tenants of contaminated property which has been remediated. Under the covenant, the transferee is not liable to the state for any additional cleanup necessitated by subsequently discovered pre-existing contamination or change in standards. The real benefit of the covenant is that it provides successors access to public monies (Spill Fund) if successors want to cleanup subsequently discovered pre-existing contamination. However, access to the Fund is restricted by the level of cleanup that is approved by the NFA. Successors to properties with unrestricted approved cleanups may access the Fund if any remediation is necessary as a result of newly discovered pre-acquisition discharges or standard changes. Cleanups which involve only institutional controls allow successors to access the Fund for any remediation except removal of the institutional control. Cleanups with both engineering and institutional controls can not access the Fund.

Voluntary Acquisitions by Municipalities

The Act extends immunity from liability to municipalities which "voluntarily" acquire property for redevelopment purposes. Previously this protection only existed for involuntary acquisitions such as foreclosure and condemnation. Significantly, the Act lifts liability for cleanup costs and damages to both the State or third parties arising under New Jersey's Spill Act or Common Law. This change is intended to encourage municipalities to get into the Brownfield arena without putting the municipal budget at risk from cost recovery actions. The Act does narrow the previously existing protection afforded municipalities by not providing immunity if municipalities seek to condemn property that is otherwise being remediated in a "timely fashion". This leaves open to interpretation what is a "timely" remediation and may frustrate municipal efforts.

The Brownfield and Contaminated Site Remediation Act marks a significant step forward in liability relief for purchasers of contaminated property in New Jersey. What remains to be seen is if liability really is the primary obstacle to Brownfield Redevelopment. If so, we should see some real transactional movement once the word is out.

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It's 1997--Do You Know Where Your Solid Waste Will Go? Or Waste Flow Control After Atlantic Coast
by Joseph J. Maraziti, Jr., Esq.

It is widely expected that the United States Supreme Court will soon take final action which will give full force and effect to the May 1, 1997 decision of the Third Circuit Court of Appeals in the Atlantic Coast case. Those who have been following the constitutional debate in the popular press about the ability of the state to direct waste haulers to particular transfer stations, waste to energy facilitates, or the like, will be surprised by the real impact of the Supreme Court decision. They will be wrong if they believe all waste flow controls in New Jersey will end once and for all after that decision. In this respect, the press accounts have been overly simplistic and misleading.

Although the Third Circuit did conclude that New Jersey's waste flow control system was constitutionally flawed, the Court issued a very surgical opinion--very carefully choosing which portion of the State's solid waste system was unenforceable. Not only did the Court specifically rule that the majority of the system was valid and enforceable, such as the planning, permitting and record keeping requirements, but more importantly and, to many, surprisingly, it took great pains to spell out how the flaws in the waste flow control system could be cured. In other words, it provided very clear guidance about how to overcome the legal impediments to flow control. It is not often that a court undertakes, in such detail, to lay out the proper way to do something it has found to be illegal.

At the risk of oversimplifying the solution spelled out by the Third Circuit, the answer to the state's flow control woes lies in the details of the procurement process. If the bid/proposal process is a "fair, open and competitive" one--one that invites responses from solid waste companies located outside the state as well as from those in New Jersey, it will pass constitutional muster. Waste flow directives that send waste to facilities obtained through such a process will be fully enforceable.

This slant on the issue raises a host of new questions for counties, municipalities and waste haulers and operators. Some counties will choose to undertake a new procurement process in order to re-instate waste flow directives; others will be able to argue that the system they have currently in place already satisfies the new test and they will continue to enforce waste flow directives as before. Another set of counties will be unable or unwilling to go forward with a new procurement process. Municipalities in such counties will then be faced with the opportunity--and the challenge--to do something they have not done in decades. They will be preparing bid specifications to obtain solid waste disposal bids, in addition to the bids they now routinely seek for collection only.

In anticipation of this new reality, the New Jersey Department of Environmental Protection has issued a comprehensive set of new regulations that deal with the multi-faceted impacts of the expected Supreme Court ruling. One new provision, in particular, will eliminate the long standing "mixed load" rule. That rule allows waste to be taken to a facility other than the one designated in the waste flow order for the removal of recyclables, as long as the balance of the load is delivered or credited to the county facility. This change will profoundly impact the operations of many haulers and material recovery facility operators.

The Department of Community Affairs has also issued concurrent regulations to deal with non-discriminatory procurement of solid waste services.

The critics of New Jersey's long-standing waste flow control system have been eagerly anticipating its demise since the landmark Supreme Court decision in the Carbone case. They were certain that the Atlantic Coast decision would finally bring an end to the system. Instead, it appears that in much of the state, waste flow control will not only continue, but, in those counties which satisfy the new rules, waste flow will be stronger than before because it will have the full weight of the United States Supreme Court behind it.

Reflecting on these developments, one is reminded of the old adage: "The more things change; the more they remain the same."

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