Winter 1998 (Special Brownfield Edition)
Volume 6, No. 2

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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Liability Limitations (This article was also published in the New Jersey Law Journal Environmental Law Supplement dated February 16, 1998.)
by Todd L. Normane, Esq.

Governor Whitman signed the Brownfield and Contaminated Site Remediation Act, P.L. 1997, c.278 (the "Act") on January 6, 1998 ushering in the latest effort to reform the site remediation process and institutionalize Brownfields redevelopment. The Act covers a wide range of issues, including liability, technical, financial and policy initiatives intended to continue the evolution of the site remediation process. The narrow focus of this article is the new and revised liability provisions which were anticipated to alleviate the common liability concerns implicated in every remediation or transfer of contaminated property.

The Act addresses the current state law liability scheme by establishing new provisions, such as the covenant not to sue, and by supplementing and amending the liability provisions of the Spill Compensation and Control Act, 58:10-23.11a et seq. ("Spill Act"). The Act deals with liability of the dischargers of hazardous substances as well as potential purchasers, subsequent owners or operators, public entities and lenders.

This latest version of the New Jersey liability framework is a positive step in the effort to encourage development in this State by rewarding those who choose to invest in New Jersey. While the Act is a step forward in the area of liability relief, it does not provide prospective developers or purchasers of contaminated property with "real-world" finality or categorical liability protection. The common denominator of the Act is the empowerment of the owner and/or potential purchaser of the brownfield site to determine the extent of the liability protection applicable to a given site. Even so, the true test of the value of the liability protection lies not with new liability framework, but will depend on the quality and completeness of the remediation conducted at a contaminated site. A person would be well-advised to rely on a complete and comprehensive remediation as the best measure of liability protection rather simply rely on the liability protections afforded by this Act. A holistic approach to liability issues requires careful scrutiny of the actual conditions of the site in order to assess the future value of the protections afforded by this Act.

Liability of the Discharger

Who is liable: Any discussion of liability protection must originate with an examination of those persons who are liable for a discharge of hazardous substances. The broadest statement of liability is contained in the Spill Act. "Any person who has discharged a hazardous substance, or is in any way responsible for any hazardous substance shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred." N.J.S.A. 58:10-23.11g(c)(1). (hereinafter collectively referred to as "Discharger") The Spill Act was amended by the Act which now provides that any person that acquired contaminated property after September 14, 1993 without conducting the appropriate due diligence is similarly held strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred. N.J.S.A. 58:10-23.11g(c)(3).

Liability for pre-September 14, 1993 acquisitions of contaminated property is unaffected by the Act. (See the Supreme Court of New Jersey’s recent decision in Marsh v. New Jersey Department of Environmental Protection, 1997 WL 805309 (1997) which addressed pre-September 14, 1993 acquisition liability and essentially vindicated the NJDEP’s long-held interpretation of the requirement to perform due diligence in pre-1993 Spill Act matters.) In addition, owners and operators of an industrial establishment or an underground storage tank facility are held de facto liable for discharges within their respective jurisdictional limits pursuant to the Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq. ("ISRA") and the Underground Storage of Hazardous Substances Act, N.J.S.A. 58:10A-21 et seq. ("UST law").

Can a discharger ever shed liability?: This rhetorical question can be answered simply--No. The legislative statements accompanying the Act proclaim that no liability relief will be extended to a person responsible for a discharge. One needs only to look at the new language contained at N.J.S.A. 58:10B-12(o) which incorporates an affirmative duty of all dischargers into the conditions of a no further action letter to "maintain with the department a current address at which that person may be contacted in the event additional remediation needs to be performed at the site." A discharger is never released, but merely paroled.

For those dischargers that cannot prove the triad of statutory defenses, an act of war, sabotage or God, the only mechanism to reduce the weight of liability is to remediate the contamination for which you are held responsible. A discharger remains liable for future changes in remediation standards and undiscovered contamination. Rather than liability relief, the Act provides the discharger with an added incentive (beyond the statutory obligations) to remediate--a covenant not to sue.

Covenant Not to Sue: To a discharger, the Covenant Not to Sue ("Covenant") is more appropriately viewed as a marketing tool than a mechanism for liability relief. While the Covenant provides different levels of liability relief to subsequent owners’ or tenants, it provides none to the discharger or its corporate successors. The NJDEP issues a Covenant to the person performing the remediation (even a discharger) when the remediation is approved pursuant to a No Further Action letter ("NFA"). P.L. 1997, c.278, §6. The Covenant serves no liability-based purpose to a discharger except the promise that a subsequent owner or operator may be attracted to the site and the benefits extended by the Covenant.

It is important to remember that a NFA letter applies to the physical condition of a site or area of concern but makes no statement regarding a person's liability or compliance with statutory or regulatory authorities. The NFA letter should only be viewed as a snapshot statement by NJDEP which becomes obsolete on the day it is issued. The Act correctly cautions the prospective purchaser of this salient fact in the Covenant and innocent purchaser defense sections. See P.L. 1997, c.278, §6(d) and N.J.S.A. 58:10-23.11g(d)(2)(e).

Conversely, the Covenant provides prospective liability protection. The Covenant releases a non-discharger from all civil liability to the State to perform additional remediation or further cleanup or removal costs. P.L. 1997, c.278, §6(a)(1). The Covenant offers no liability protection from third parties. The Covenant applies to all successors in ownership as well as tenants who engage in operations on the property. A discharger who remediated a contaminated site, while not receiving liability protection itself, can provide a measure of liability protection to prospective purchasers and future tenants.

The scope of the Covenant is directly related to the conditions of the NFA. For example, a Covenant based on an NFA letter which includes institutional controls (i.e., declaration of environmental restriction) and engineering controls (i.e., a cap, groundwater treatment) still requires the subsequent owner to maintain the controls and comply with the NJDEP's post-remediation reporting requirements. Failure to do so may result in revocation of the Covenant. P.L. 1997, c.278, §6(a)(2)(b).

Lastly, the level of liability protection afforded by the Covenant to non-dischargers is directly related to the level of remediation achieve at the contaminated site. As a practical matter, while the State may not hold a purchaser liable for additional remediation based on the Covenant, the purchaser is still left owning a contaminated site if previously unknown contamination due to pre-NFA discharges are discovered after the acquisition. This may also mean the need to commit significant resources to remediate the newly discovered contamination. Certainly, a Covenant will not replace the traditional indemnifications which are contained in standard real estate contracts.

The purchaser of contaminated real estate under a Covenant is always left to bear the burden of future remediation costs. However, the purchaser may not bear that burden alone. Depending on the level of remediation achieve at the site, the non-discharger/owner may access the New Jersey Spill Compensation Fund or Sanitary Landfill Facility Contingency Fund (hereinafter collectively referred to as "Spill Fund") for reimbursement of cleanup and removal costs. In this manner, the Spill Fund acts as an insurance policy for the Covenant. P.L. 1997, c.278, §6(a)(3).

An NFA letter for an "unrestricted use remedial action" provides the highest level of access to the Spill Fund for the cost of remediating changes in remediation standards or to address previously unknown contamination. An unrestricted use remedial action does not include engineering or institutional controls. All post-NFA remediation requirements for pre-NFA discharges are subject to reimbursement from the Spill Fund.

A limited use remedial action requires the continued use of institutional controls but does not require engineering controls. A non-discharger can access the Spill Fund to address pre-NFA discharges or subsequent changes in the remediation standard except for those costs incurred to remove the institutional control.

A restricted use remedial action requires the continued use of both, an institutional control and engineering control. In this case, a non-discharger is barred from accessing the Spill Fund for any costs relating to the real property and the remediation covered by the Covenant.

The Covenant is an important mechanism in the evolution of New Jersey’s approach to encouraging the redevelopment of industrial and contaminated properties. The discharger's efforts to address its contaminated site will satisfy its obligations under law and provide prospective liability protection to future owners and operators. The discharger's only mechanism to reduce or eliminate its liability exposure is through the quality and completeness of the remediation. At best, the Covenant provides the discharger with a marketing tool to eliminate (most likely only reduce) the thorny issues which sometimes impede real estate transactions.

Caution for purchasers is still warranted since the Covenant is only as good as the remediation that resulted in an NFA letter. This places a strong burden on the prospective beneficiary of the Covenant to look beyond the surface of the NFA letter and evaluate the remediation. The NFA letter should be viewed as nothing more than an announcement to conduct a file review. The file review should dictate the extent of a prospective purchaser's reliance on the remediation rather than the NFA letter. In simple terms, rather than the sometimes misleading terms of no further action, think of an NFA letter as "Need File Access."

Secondly, a prospective purchaser cannot rely on the Covenant as the single source of liability protection. A prospective purchaser must still comply with the innocent purchaser defense requirements of the Spill Act to reduce its exposure to third parties since the Covenant addresses only civil liability to the State.

Purchaser Liability

The primary objective of the Brownfields movement is to encourage potential purchasers/developers to invest in New Jersey’s older, urban and contaminated sites. The concept of "land-recycling" makes sound economic and public policy sense. However, after all the policy, political and lofty philosophical discussions are heard, the State’s Brownfields legislation must provide true liability relief to work in the real world.

Innocent Purchaser: The Act amends the innocent purchaser defense provisions of the Spill Act in three major ways. First, the amendments clearly state that an innocent purchaser will not be liable to either, the State or third parties for any damages or cleanup and removal costs pursuant to the Spill Act and civil common law. N.J.S.A. 58:10-23.11g(d)(2). Second, the amendments provide that corporate successor to a discharger or person in any way responsible for the discharge will not be considered an innocent purchaser. See N.J.S.A. 58:10-23.11g(d)(2)(c). This amendment is consistent with the Supreme Court of New Jersey's latest decision in Marsh v. New Jersey Department of Environmental Protection regarding liability under the Spill Act. Third, the Act creates a "not-so innocent purchaser" defense for situations where contamination is discovered through the due diligence investigation.

The basic framework of the innocent purchaser defense remains unchanged. A person who purchased real property after September 14, 1993 must have performed the required due diligence investigation to determine whether hazardous substances had been discharged at the site. Due diligence is defined as a preliminary assessment and/or site investigation conducted in accordance with the Technical Requirements for Site Remediation, N.J.A.C. 7:26E.

If the preliminary assessment and/or site investigation do not demonstrate the existence of any discharges on the site, then a purchaser will be considered an "innocent purchaser" for any post-acquisition discovery of pre-acquisition discharges. An innocent purchaser may access the Spill Fund for any cleanup or removal cost incurred to remediate pre-acquisition discharges that were undiscovered through the preliminary assessment and/or site investigation.

Not-so innocent purchaser: The third major amendment to the innocent purchaser defense of the Spill Act resolves the issue where a prospective purchaser performs a preliminary assessment and/or site investigation and discovers either; 1) a discharge did occur at the premises but was remediated and received an NFA letter from NJDEP; or 2) a discharge is discovered which requires further remediation in order to obtain an NFA letter or remedial action workplan approval. N.J.S.A. 58:10-23.11g(d)(2)(e).

Under the "not-so innocent purchaser defense" provisions, a prospective purchaser may obtain the innocent purchaser liability protections for post-January 6, 1998 acquisitions, by relying upon a previously issued NFA letter, relying upon a post-January 6, 1998 remedial action workplan ("RAW") approval by NJDEP for the site and continue to implement the RAW or complete the remediation of the site or discovered discharges. In any of these scenarios, the prospective purchaser may be required to establish and maintain all necessary engineering or institutional controls.

Most likely, a prospective purchaser may face a combination of these conditions in the acquisition of a former industrial site. For example, the site may have been remediated pursuant to ISRA and received an NFA letter in 1994. The prospective purchaser is still required to conduct due diligence for the interim period from 1994 to the date of acquisition. Therefore, a prospective purchase may obtain the innocent purchaser liability protections by relying on the 1994 NFA letter and remediating any additional discharges discovered through its due diligence.

The Act should not be construed to provide absolute liability protection to prospective purchasers. The Act provides several examples which state the obvious bounds of the liability relief. See N.J.S.A. 58:10-23.11g(d)(2)(e). The "not-so innocent purchaser" is not protected for its negligent actions which contribute or aggravate the discharges, compliance with future laws and regulations, failure to maintain institutional or engineering controls or otherwise comply with the provisions of the NFA letter.

In addition to the above, the Act, N.J.S.A. 58:10.23.11g(d)(2)(e) provides:

Compliance with the provisions of this subparagraph (e) [the "not-so innocent purchaser" provisions] shall not relieve any person of any liability for a discharge that is off the site of the property covered by the no further action letter,...

The above highlighted text may be problematic for prospective purchasers who are performing remediation of discharges which have migrated beyond the property boundaries. This provision declares that a not-so innocent purchaser will still be liable for additional remediation and damages to the State and third parties even where the NJDEP has issued an NFA letter for the remediation of that discharge [including offsite impacts]. For example, the NJDEP issues an NFA letter for a groundwater remediation which migrated offsite to Property A. Subsequent to the issuance of an NFA, the State discovers that Property B was also impacted by the discharge. The prospective purchaser is still required to remediate Property B under the "not-so innocent purchaser" provision.

The above example presents a possible conflict with the liability protections afforded by a Covenant. Under a Covenant, a non-discharger would not be liable for post-NFA letter discovery of pre-NFA letter discharges. Keeping in mind that the Covenant applies only to liability to the State, a purchaser that remediates under the "not-so innocent purchaser" provisions and obtains a NFA letter/Covenant should not be held liable for further remediation. In addition, the above highlighted text places the purchaser in the same shoes as the discharger, because the purchaser is now potentially liable for additional remediation and damages to offsite properties. By doing so, this provision conflicts with the basic premise of the brownfields legislation.

The "not-so innocent purchaser" defense also replaces the liability protections which were previously afforded under the Urban Redevelopment Act, P.L.1996, c.62. ("URA") Under the URA, the amendments to the Spill Act established liability protections limited to remediations conducted within the 66 qualified municipalities as defined by the URA. The Act has expanded the URA liability protections to all remediations conducted within the State.

The amendments to the innocent purchaser defense and creation of the "not-so innocent purchaser defense" demonstrates the evolution of the State liability framework. After all, how often does a due diligence investigation of a former industrial site result in a finding of no contamination? The Act confirms that discovery of contamination should not be considered a deal-breaker but merely a transactional issue to be addressed by the parties. Developers and purchasers can achieve the same level of prospective liability protection for a contaminated site as a "clean" site, even though the results of the site investigation may prohibit the claim of "innocence."

Public entity liability

The Act expands the scope of liability protection for public entities that acquire contaminated property. N.J.S.A. 58:10-23.11g(d)(4). Historically, the liability protection encompassed only those involuntary property acquisitions which occurred by virtue of the sovereign functions of the public entity; such as bankruptcy, tax delinquency, abandonment, escheat, eminent domain or condemnation.

The Act now provides liability protection for voluntary acquisitions of contaminated property as long as the acquisitions is "for the purpose of promoting the redevelopment of that property." A public entity cannot obtain liability protection for its own facilities which it operates and may be considered responsible for any discharges or property where the entity caused or contributed to the discharge.

The Act also limits the grant of liability protection to public bodies where property is acquired through eminent domain or condemnation on which a remediation is in progress to address the discharges on the site. This appears to be a defensive measure against public entities that are aggressively pursuing redevelopment through the URA and similar means.

3rd party liability protection?

The Act contains language which purports to provide third party liability relief to persons who purchase contaminated property without conducting pre-acquisition due diligence. See N.J.S.A.58:10-23.11g(f). The terms of this provision dictate that this provision will not serve a useful purpose in practical terms to encourage persons to buy contaminated properties.

Under this section, the discharge must have occurred prior to the acquisition. The purchaser cannot be the discharger or in any way responsible for the discharge or be a corporate successor to these parties. The conundrum created by this section is that the Spill Act currently provides that any person who purchases real property without conducting the required due diligence shall be considered a person responsible for a discharge and held strictly liable without regard to fault for all cleanup and removal costs. See N.J.S.A. 58:10-23.11g(c)(3). By its terms, this section can only apply to persons who are responsible for a discharge and who are specifically excluded from the scope its liability protection. Therefore, the eligibility for the liability protections contained in this section appear to create an exclusive club with limited potential membership.

Upon discovery of the discharge, the purchaser must provide notice of the discharge to NJDEP. There is no requirement that the purchaser must have performed pre-acquisition due diligence. Despite the absence of the pre-acquisition due diligence requirements, the purchaser is still required to enter into an oversight document (Memorandum of Agreement) prior to acquisition and commence remediation within 30 days after acquisition.

A second problem is created by this section because the purchaser is placed directly into the shoes of the discharger by the Act.

The provisions of this subsection [N.J.S.A. 58:10-23.11g(f)]shall not relieve any person of any liability:

(4) for any liability to clean up and remove, pursuant to the department's regulations and directions, any hazardous substances that may have been discharged on the property or that may have migrated therefrom;

In essence, this provision provides the negative or dormant liability aspect of the innocent purchaser defense. After September 14, 1993, any person who purchased or acquired real property without performing due diligence was considered liable for cleanup and removals costs for discharges at that property. N.J.S.A. 58:10-23.11g(f) appears to duplicate the negative aspects of the innocent purchaser defense as well as placing strict timing requirements on the unfortunate purchaser.

Any potential purchaser of real property that can effectuate the acquisition of property without the benefit of obtaining outside financing or insurance would still desire the State and third party liability protections under the innocent and not-so innocent purchaser defense provisions. Secondly, the risk associated with buying into the liability to the State without knowing the potential exposure for unknown or suspected contamination does not generally outweigh the need to achieve third party liability protection. Lastly, the implications of exposure to future liability for undiscovered discharges or changes in remediation standards would still dictate the need to secure the benefits derived from the innocent purchaser defenses. Therefore, the practical use of this amendment to the Spill Act is questionable in a real world transaction

It appears that any purchaser of contaminated property which discovers that this section would unfortunately apply, would be better served by complying with the standard procedures for remediating a contaminated site under a Memorandum of Agreement and obtaining a Covenant upon issuance of an NFA letter from NJDEP.

ISRA/UST liability

The liability protections afforded by the Act and the amendments to the Spill Act do not relieve any person, even an innocent purchaser, of the obligations to comply with ISRA or the UST law and regulations for any acquisition of real property which contains an industrial establishment or underground storage tank facility. The obligation to remediate under these statutory and regulatory authorities is unaffected by the Spill Act.

Lender Liability

The Act contains amendments to the New Jersey Lender Liability Law (P.L. 1993, c.112), N.J.S.A. 58:10-23.11g4 through 58:10-23.11g8 by incorporating the terms of federal underground storage tank lender liability law into the New Jersey statutory scheme.

The most significant effect of the amendments is the establishment of a 60-day time frame by which a lender must address its foreclosed properties containing an underground storage tank facility. The lender is not required to undertake any actions to maintain its exemption from liability when an operator of the underground storage tank facility ("UST") is in control of the UST and the operator is responsible for compliance with applicable federal and State authorities. In the absence of an operator, the lender is basically required to temporarily or permanently close the underground storage tank facility in order to maintain its exemption from liability. N.J.S.A. 58:10-23.11g(6)(f).

For future foreclosure actions, these new requirements will merely be added to the list of environmental issues to be addressed. However, the Act requires a lender to address the underground storage tank facility within 60 days of foreclosure or within 60 days after the effective date of the Act. Therefore, all lenders seeking lender liability protection must comply with the amendments for all previously foreclosed properties which contain underground storage tank facilities and have absentee operators by March 7, 1998.

Conclusion

 The Act presents a step in the right direction toward encouraging redevelopment of brownfield sites through liability relief. This is only the next phase in the evolution of the site remediation process in New Jersey and further changes can be expected. The common factor underlying the various liability protections is that the quality and completeness of the remediation conducted at the brownfield site should dictate one’s comfort level rather than mere reliance on the words beneath the government letterhead.

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P.L. 1997, c.278
SENATE COMMITTEE SUBSTITUTE FOR
SENATE, No. 39, ASSEMBLY, No. 2250 ACS, SENATE, Nos. 1815 and 1539
STATE OF NEW JERSEY
ADOPTED JUNE 5, 1997

Sponsored by Senator McNAMARA, Assemblyman BAGGER, Senators Singer, Ciesla, McGreevey, Assemblyman Garrett, Senators Baer, MacInnes, Bennett, Cafiero, Littell, Ewing, Kyrillos, Inverso, Assemblymen Bucco, DiGaetano, Doria, Zisa, LeFevre and Assemblywoman Heck

1. (New section) Sections 23 through 43 and section 45 of7 P.L.1993, c.139 (N.J.S.A. 58:10B-1 et seq.), as may be amended and supplemented, shall be known and may be cited as the "Brownfield and Contaminated Site Remediation Act."

N.J.S.A. 58:10-23.11g(c)(1)

(1) Any person who has discharged a hazardous substance, or is in any way responsible for any hazardous substance, shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred. Such person shall also be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs incurred by the department or a local unit pursuant to subsection b. of section 7 of P.L.1976, c.141 (N.J.S.A..58:10-23.11f).

N.J.S.A. 58:10-23.11g(c)(3)

(3) In addition to the persons liable pursuant to this subsection, any person who owns real property acquired on or after September 14, 1993 on which there has been a discharge prior to the person's acquisition of that property and who knew or should have known that a hazardous substance had been discharged at the real property, shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred. Such person shall also be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs incurred by the department or a local unit pursuant to subsection b. of section 7 of P.L.1976, c.141 (C.58:10-23.11f). Nothing in this paragraph shall be construed to alter liability of any person who acquired real property prior to September 14, 1993.

N.J.S.A. 58:10B-12(o)

o. A person who has remediated a site pursuant to the provisions of this section, who was liable for the cleanup and removal costs of that discharge pursuant to the provisions of paragraph (1) of subsection c. of section 8 of P.L.1976, c.141 (N.J.S.A..58:10-23.11g), and who remains liable for the discharge on that site due to a possibility that a remediation standard may change, undiscovered contamination may be found, or because an engineering control was used to remediate the discharge, shall maintain with the department a current address at which that person may be contacted in the event additional remediation needs to be performed at the site. The requirement to maintain the current address shall be made part of the conditions of the no further action letter issued by the department the completion of a remediation.

P.L. 1997, c.278, §6. Covenant Not To Sue

a. Whenever after the effective date of P.L. 1997 , c.278 (now before the legislature as this bill) the Department of Environmental Protection issues a no further action letter pursuant to a remediation, it shall also issue to the person performing the remediation a covenant not to sue with respect to the real property upon which the remediation has been conducted. A covenant not to sue shall be executed by the person performing the remediation and by the department in order to become effective. The covenant not to sue shall be consistent with any conditions and limitations contained in the no further action letter. The covenant not to sue shall be for any area of concern remediated and may apply to the entire real property if the remediation included a preliminary assessment and, if necessary, a site investigation of the entire real property, and any other necessary remedial actions. The covenant remains effective only for as long as the real property for which the covenant was issued continues to meet the conditions of the no further action letter. Upon a finding by the department that real property or a portion thereof to which a covenant not to sue pertains, no longer meets with the conditions of the no further action letter, the department shall provide notice of that fact to the person responsible for maintaining compliance with the no further action letter. The department may allow the person a reasonable time to come into compliance with the terms of the original no further action letter. If the property does not meet the conditions of the no further action letter and if the department does not allow for a period of time to come into compliance or if the person fails to come into compliance within the time period, the department may invoke the provisions of the covenant not to sue permitting revocation of the covenant not to sue.

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 or for any cleanup and removal costs ;

(2) for a remediation that involves the use of engineering or institutional controls:

a. a provision requiring the person, or any subsequent owner, lessee, or operator during the person's period of ownership, tenancy, or operation, to maintain those controls, conduct periodic monitoring for compliance, and submit to the department, on biennial basis, a certification that the engineering and institutional controls are being properly maintained and continue to be protective of public health and safety and of the environment. The certification shall state the underlying facts and shall include the results of any tests or procedures performed that support the certification; and

b. a provision revoking the covenant if the engineering or institutional controls are not being maintained or are no longer in place; and

(3) for a remediation that involves the use of engineering controls but not for any remediation that involves the use of institutional controls only, a provision barring the person or persons whom the covenant not to sue benefits, from making a claim against the New Jersey Spill Compensation Fund and the Sanitary Landfill Facility Contingency Fund for any costs or damages relating to the real property and remediation covered by the covenant not to sue. The covenant not to sue shall not bar a claim by any person against the New Jersey Spill Compensation Fund and the Sanitary Landfill Contingency Fund for any remediation that involves only the use of institutional controls if, after a valid no further action letter has been issued, the department orders additional remediation, except that the covenant shall bar such a claim if the department ordered additional remediation in order to remove the institutional control.

b. Unless a covenant not to sue issued under this section is revoked by the department, the covenant shall remain effective. The covenant not to sue shall apply to all successors in ownership of the property and to all persons who lease the property or who engage in operations on the property.

c. If a covenant not to sue is revoked, liability for any additional remediation shall not be applied retroactively to any person for whom the covenant remained in effect during that person's ownership, tenancy, or operation of the property.

d. A covenant not to sue and the protections it affords shall not apply to any discharge that occurs subsequent to the issuance of the no further action letter which was the basis of the issuance of the covenant, nor shall a covenant not to sue and the protections it affords relieve any person of the obligations to comply in the future with laws and regulations.

e. The covenant not to sue may be issued to any person who obtains a no further action letter as provided in subsection a. of this section. The covenant not to sue shall not provide relief from any liability, either under statutory or common law, to any person who is liable for cleanup and removal costs pursuant to subsection c. of section of P.L.1976, c.141 (N.J.S.A.58:10-23.11g), and who does not have a defense to liability pursuant to subsection d. of that section.

P.L. 1997, c.278, §6(d) and N.J.S.A. 58:10-23.11g(d)(2)(e)

P.L. 1997, c.278, §6(d) A covenant not to sue and the protections it affords shall not apply to any discharge that occurs subsequent to the issuance of the no further action letter which was the basis of the issuance of the covenant, nor shall a covenant not to sue and the protections it affords relieve any person of the obligations to comply in the future with laws and regulations.

N.J.S.A. 58:10-23.11g(d)(2)(e) Notwithstanding any other provisions of this subparagraph, a person who complies with the provisions of this subparagraph only by virtue of the existence of a previously issued no further action letter shall receive no liability protections for any discharge which occurred during the time period between the issuance of the no further action letter and the property acquisition.

P.L. 1997, c.278, §6(a)(1)

(1) a provision releasing the person who undertook the remediation from all civil liability to the State to perform any additional remediation or for any cleanup and removal costs ;

P.L. 1997, c.278, §6(a)(2)(b)

b. Unless a covenant not to sue issued under this section is revoked by the department, the covenant shall remain effective. The covenant not to sue shall apply to all successors in ownership of the property and to all persons who lease the property or who engage in operations on the property.

P.L. 1997, c.278, §6(a)(3)

(3) for a remediation that involves the use of engineering controls but not for any remediation that involves the use of institutional controls only, a provision barring the person or persons whom the covenant not to sue benefits, from making a claim against the New Jersey Spill Compensation Fund and the Sanitary Landfill Facility Contingency Fund for any costs or damages relating to the real property and remediation covered by the covenant not to sue. The covenant not to sue shall not bar a claim by any person against the New Jersey Spill Compensation Fund and the Sanitary Landfill Contingency Fund for any remediation that involves only the use of institutional controls if, after a valid no further action letter has been issued, the department orders additional remediation, except that the covenant shall bar such a claim if the department ordered additional remediation in order to remove the institutional control.

N.J.S.A. 58:10-23.11g(d)(2)- Innocent Purchaser

(2) A person, including an owner or operator of a major facility, who owns real property acquired on or after September 14, 1993 on which there has been a discharge, shall not be liable for cleanup and removal costs or for any other damages to the State or to any other person for the discharged hazardous substance pursuant to subsection c. of this section or pursuant to civil common law, if that person can establish by a preponderance of the evidence that subparagraphs (a) through (d) apply, or if applicable, subparagraphs (a) through (e) apply:

(a) the person acquired the real property after the discharge of that hazardous substance at the real property;

(b) (i) at the time the person acquired the real property, the person did not know and had no reason to know that any hazardous substance had been discharged at the real property, or

(ii) the person acquired the real property by devise or succession, except that any other funds or property received by that person from the deceased real property owner who discharged a hazardous substance or was in any way responsible for a hazardous substance, shall be made available to satisfy the requirements of P.L.1976, c.141, or

(iii) the person complies with the provisions of subparagraph (e) of paragraph (2) of this subsection;

(c) the person did not discharge the hazardous substance, is not in any way responsible for the hazardous substance, and is not a corporate successor to the discharger or to any person in any way responsible for the hazardous substance or to anyone liable for cleanup and removal costs pursuant to this section ; and

(d) the person gave notice of the discharge to the department upon actual discovery of that discharge.

To establish that a person had no reason to know that any hazardous substance had been discharged for the purposes of this paragraph (2), the person must have undertaken, at the time of acquisition, all appropriate inquiry into the previous ownership and uses of the property. For the purposes of this paragraph (2), all appropriate inquiry shall mean the performance of a preliminary assessment, and site investigation, if the preliminary assessment indicates that a site investigation is necessary, as defined in section 23 of P.L.1993, c.139 (C.58:10B-1), and performed in accordance with rules and regulations promulgated by the department defining these terms.

Nothing in this paragraph (2) shall be construed to alter liability of any person who acquired real property prior to September 14, 1993.

 N.J.S.A. 58:10-23.11g(d)(2)(c)

(c) the person did not discharge the hazardous substance, is not in any way responsible for the hazardous substance, and is not a corporate successor to the discharger or to any person in any way responsible for the hazardous substance or to anyone liable for cleanup and removal costs pursuant to this section; and

N.J.S.A. 58:10-23.11g(d)(2)(e)
Not-so Innocent Purchaser Defense

(e) For the purposes of this subparagraph the person must have

(i) acquired the property subsequent to a hazardous substance being discharged on the site and which discharge was discovered at the time of acquisition as a result of the appropriate inquiry, as defined in this paragraph (2),

(ii) performed, following the effective date of P.L. , c. (now before the legislature as this bill),

a remediation of the site or discharge consistent with the provisions of section 35 of P.L.1993, c.139 (C.58:10B-12), or,

relied upon a valid no further action letter from the department for a remediation performed prior to acquisition, or

obtained approval of a remedial action workplan by the department after the effective date of P.L. ,c. (before the Legislature as this bill) and continued to comply with the conditions of that workplan, and

(iii) established and maintained all engineering and institutional controls as may be required pursuant sections 35 and 36 of P.L.1993, c.139.

A person who complies with the provisions of this subparagraph by actually performing a remediation of the site or discharge as set forth in (ii) above shall be issued , upon application, a no further action letter by the department. A person who complies with the provisions of this subparagraph either by receipt of a no further action letter from the department following the effective date of P.L. , c. (before the Legislature as this bill), or by relying on a previously issued no further action letter shall not be liable for any further remediation including any changes in a remediation standard or for the subsequent discovery of a hazardous substance, at the site, if the remediation was for the entire site, and hazardous substance was discharged prior to the person acquiring the property.

Notwithstanding any other provisions of this subparagraph, a person who complies with the provisions of this subparagraph only by virtue of the existence of a previously issued no further action letter shall receive no liability protections for any discharge which occurred during the time period between the issuance of the no further action letter and the property acquisition. Compliance with the provisions of this subparagraph (e) shall not relieve any person of any liability for a discharge that is off the site of the property covered by the no further action letter, for a discharge that occurs at that property after the person acquires the property, for any actions that person negligently takes that aggravates or contributes to a discharge of a hazardous substance, for failure to comply in the future with laws and regulations, or if that person fails to maintain the institutional or engineering controls on the property or to otherwise comply with the provisions of the no further action letter.

 N.J.S.A. 58:10-23.11g(d)(4)

Any federal, State, or local governmental entity which acquires ownership of real property through bankruptcy, tax delinquency, abandonment, escheat, eminent domain, condemnation or any circumstance in which the governmental entity involuntarily acquires title by virtue of its function as sovereign, or where the governmental entity acquires the property by any means for the purpose of promoting the redevelopment of that property, shall not be liable, pursuant to subsection c. of this section or pursuant to common law, to the Stateor to any other person for any discharge which occurred or began prior to that ownership. This paragraph shall not provide any liability protection to any federal, State or local governmental entity which has caused or contributed to the discharge of a hazardous substance. This paragraph shall not provide any liability protection to any federal, State, or local government entity that acquires ownership of real property by condemnation or eminent domain where the real property is being remediated in a timely manner at the time of the condemnation or eminent domain action.

 N.J.S.A. 58:10-23.11g(f)

 f. Notwithstanding any other provision of this section, a person, who owns real property acquired on or after the effective date of P.L. , c. (C. ) (before the Legislature as this bill), shall not be liable for any cleanup and removal costs or damages, under this section or pursuant to any other statutory or civil common law, to any person, other than the State and the federal government, harmed by any hazardous substance discharged on that property prior to acquistion, and any migration off that property related to that discharge, provided all the conditions of this subsection are met:

(1) the person acquired the real property after the discharge of that hazardous substance at the real property;

(2) the person did not discharge the hazardous substance, is not in any way responsible for the hazardous substance, and is not a corporate successor to the discharger or to any person in any way responsible for the hazardous substance or to anyone liable for a discharge pursuant to this section;

(3) the person gave notice of the discharge to the department upon actual discovery of that discharge;

(4) within 30 days after acquisition of the property, the person commenced a remediation of the discharge, including any migration, pursuant to a department oversight document executed prior to acquisition, and the department is satisfied that remediation was completed in a timely and appropriate fashion; and

(5) Within ten days after acquisition of the property, the person agrees in writing to provide access to the State for remediation and related activities, as determined by the State.

The provisions of this subsection shall not relieve any person of any liability:

(1) for a discharge that occurs at that property after the person acquired the property;

(2) for any actions that person negligently takes that aggravates or contributes to the harm inflicted upon any person;

(3) if that person fails to maintain the institutional or engineering controls on the property or to otherwise comply with the provisions of a no further action letter or a remedial action workplan and a person is harmed thereby;

(4) for any liability to clean up and remove, pursuant to the department's regulations and directions, any hazardous substances that may have been discharged on the property or that may have migrated therefrom; and

(5) for that person's failure to comply in the future with laws and regulations.

 N.J.S.A. 58:10-23.11g(6)(f) New Jersey Lender Liability Law

(1) A holder who acquires an underground storage tank continues to hold the exemption granted to holders pursuant to this section if there is an operator of the underground storage tank, other than the holder, who is in control of the underground storage tank or has responsibility for compliance with applicable federal and State requirements.

(2) If an operator does not exist, a holder continues to maintain the exemption from liability granted to holders pursuant to this section if the holder:

( i) empties all underground storage tanks within 60 days after foreclosure or within 60 days after the effective date of P.L. , c. (now in the Legislature as this bill), whichever is later,

so that no more than one inch of residue, or .3 percent by weight of the total capacity of the underground storage tank remains in the underground storage tank, leaves vent lines open and functioning, and caps and secures all other lines, pumps, manways, and ancillary equipment;

(ii) empties those underground storage tanks that are14 discovered after foreclosure within 60 days of discovery or within 60 days of the effective date of P.L. , c. (now in the Legislature as this bill), whichever is later, so that no more than one inch of residue, or .3 percent by weight of the total capacity of the underground storage tank remains in the system, leaves vent lines open and functioning, and caps and secures all other lines, pumps, manways, and ancillary equipment; and

(iii) permanently closes the underground storage tank pursuant to the provisions of P.L.1986, c.102 (C.58:10A-21 et seq.) or temporarily closes the underground storage tank.

g. An underground storage tank may be temporarily closed until a subsequent purchaser has acquired marketable title to the underground storage tank. When a subsequent purchaser acquires marketable title to the facility, the purchaser shall operate the underground storage tank in accordance with applicable State and federal laws or shall permanently close or remove the underground storage tank in accordance with the provisions of P.L.1986. c.102 (C.58:10A-21 et seq.). For the purposes of this section, an underground storage tank shall be considered temporarily closed if a holder installs or continues to operate and maintain corrosion protection and reports suspected releases to the Department of Environmental Protection. If the underground storage tank has not been upgraded to comply with the provisions of P.L.1986, c.102 and the applicable federal law or does not comply with the standards for new underground storage tanks pursuant to State and federal law except for spill and overfill protection, and is temporarily closed for 12 months or more, the holder shall conduct a site investigation in accordance with rules and regulations adopted by the department.(cf: P.L.1993, c.112, s.3)

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