Transcript Site Remediation Reform Act of 2009 (“SRRA”)

Site Remediation Reform Act
of 2009 (“SRRA”)
And the Administrative Requirements for the Remediation
of Contaminated Sites (“ARRCS”)
SAIBER LLC
Randi Schillinger, Esq.
18 Columbia Turnpike, Suite 200
Florham Park, New Jersey 07932
1
Background of SRRA and ARRCS
• SRRA was signed into law on May 7, 2009.
• Previously, site remediations were conducted
under the oversight of the Department of
Environmental Protection (“DEP”), which issued
a “No Further Action” letter (“NFA”) upon
completion.
2
• SRRA provides for site remediation to be
performed by “Licensed Site Remediation
Professionals” (“LSRPs”) (private environmental
consultants with substantial education/
experience), who will issue Response Action
Outcomes (“RAOs”) upon completion.
• SRRA required that the DEP promulgate new
temporary regulations for LSRPs and issue
temporary licenses no later than November 5,
2009.
• DEP released ARRCS on November 4, 2009.
3
• Cleanups commenced prior to November 4,
2009 may be completed under prior system of
DEP oversight with existing consultants as long
as completed before May 7, 2012.
• Cleanups initiated after November 4, 2009 must
utilize a LSRP.
• A party conducting a cleanup predating
November 4, 2009 may “opt in” to the LSRP
system by filing a request with DEP.
4
• Cleanups are considered to be “initiated prior to
November 4, 2009” if obligation to remediate
arose before November 4, 2009 and there has
been continuous remediation since notification
of DEP.
• Taking over cleanup of a site from another party,
even if the site cleanup predated SRRA,
constitutes “initiating” a cleanup for SRRA
purposes.
• Going forward, any party taking over a cleanup
will now be required to retain a LSRP and
proceed to remediate under ARRCS.
5
• If an existing cleanup is not completed by May 7,
2012 the remediating party must retain a LSRP.
• Person responsible for conducting the
remediation must maintain and preserve all
information and documents related to the
remediation and provide to DEP on request.
• The requirement to utilize a LSRP does not
apply to (i) a party conducting due diligence prior
to acquisition; and (ii) with limited exception,
remediating a discharge from an unregulated
heating oil tank.
6
LSRP Administration
• DEP issued the temporary ARRCS regulations
on November 4, 2009, which were effective
immediately for 18 months (through May 2011).
• Until permanent regulations are issued by the
newly created Site Remediation Professional
Licensing Board, DEP and ARRCS will control
cleanups by LSRPs.
• DEP began issuing temporary LSRP licenses in
October 2009. See DEP website for list of
licensed LSRPs.
7
LSRP Conduct
• LSRP’s highest priority is the protection of
human health, safety and the environment, not
the client/remediating party.
• LSRP can be disciplined and have his/her
license revoked for failure to remediate in
accordance with law.
• LSRP must comply with the Technical
Regulations For Site Remediation (“Tech Regs’)
and ARRCS when conducting remediation, and
exercise professional judgment.
8
• The LSRP has mandatory reporting obligations
to DEP:
– Immediate Environmental Concerns (“IEC”) of
which the LSRP becomes aware (not only on
sites for which LSRP is responsible).
– Discharges discovered on a site being
remediated by LSRP.
– Facts that do not support conclusions
expressed in site remediation documents.
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– Conduct by remediating party that deviates
from established remediation plan.
– Discovery of new facts and correct
deficiencies in site documents.
– When the LSRP is either hired or fired by filing
a “Notification of Retention or Dismissal with
the DEP”.
– LSRP must also comply with mandatory
time frames and presumptive remedies.
10
LSRP Remediation
• Presumptive remedies apply to child care
facilities, schools and residences.
• A LSRP is not necessarily the remediating
party’s friend!
• LSRP is now the primary decision-maker.
11
Remediation by LSRP vs. DEP
• Previously, a remediation was conducted under
the oversight of DEP by an environmental
consultant employed by remediating party, who
submitted site remediation documents to DEP
for review and approval.
• The DEP issued an NFA once the remediation
was completed.
• The consultant acted as intermediary (and
occasionally as an advocate) between client and
DEP, the decision-maker.
12
• Under SRRA, except in limited situations where
DEP will exercise direct oversight, the LSRP will
have primary responsibility for overseeing the
remediation.
• Remediation documents will be submitted to
DEP. Except in limited situations of audit or
partial direct oversight, DEP will screen
documents but will not substantially review or
approve them.
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• LSRP will select the remedy.
• LSRP will issue an RAO when completed.
• NFAs will no longer be issued by DEP except for
sites completing cleanup during interim period
and sites where the DEP retains direct oversight.
14
Obligations to Remediate
• Under SRRA, an affirmative obligation is now
imposed on a party responsible for a discharge
to remediate in accordance with timeframes set
forth in ARRCS.
• Voluntary cleanups no longer exist (no more
Memorandum of Agreements).
15
• A responsible party is required by law to report a
discharge to DEP upon its discovery and file a
written report with DEP within 5 days of
discovery. Mandatory remediation timeframes
run from date of discovery.
• Failure to remediate can result in significant
monetary penalties.
16
ISRA
• The SRRA included significant changes to the
Industrial Site Recovery Act (“ISRA”):
– No new Remediation Agreements issued after
November 3, 2009. Ongoing cleanups are to
be completed pursuant to prior Remediation
Agreement (no further amendments
accepted).
– Parties must retain LSRP and proceed to
remediate the site.
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- Mandatory timeframes set forth in ARRCS will
apply.
– Remediation Agreements are replaced by
“Remediation Certifications”.
– For an ISRA subject transaction to proceed
prior to completion of all ISRA requirements, a
Remediation Certification must be submitted
to DEP and a funding source established
equal to the estimated cost of the
remediation.
18
– In the event that an ISRA-triggering
transaction is terminated and a GIN is
withdrawn, if the site has been
determined to be contaminated,
obligation of responsible party to
remediate continues to exist and
mandatory timeframes continue to run.
– The responsibility to remediate exists
independent of the transaction.
19
Immediate Environmental Concerns
(“IECs”)
• LSRPs and responsible parties are required by law to
immediately report “Immediate Environmental Concerns”
(“IECs”) to DEP, and will be obligated to remediate
same.
• IECs are environmental issues that pose an immediate
threat to human health or safety or the environment and
are defined to include: (i) contaminated potable well, (ii)
indoor vapor levels in excess of indoor air screening
levels as described in DEP’s vapor intrusion guidance,
20
• (iii) contamination in an occupied or confined
space causing a toxic or harmful atmosphere
resulting in unacceptable human health
exposure, (iv) soil contamination exceeding
DEP’s acute human health exposure levels in
surface soils, or
• (v) any other condition that poses an immediate
threat to the environment or to the public health
and safety as described in DEP’s IEC guidance.
21
• Discovery of an IEC triggers the following
actions:
– Immediate reporting to DEP’s Hotline.
– Within 5 days, must take action to prevent
human exposure (i.e. provide bottled water or
seal vapor-emitting areas ). Notify affected
property owners/tenants and provide test
results.
– Within 60 days, implement “engineered
system response” (such as water treatment
system or vapor mitigation system).
22
– Within 270 days, initiate control of
contaminant source and complete delineation
of contaminant source.
– Depending on type of IEC, additional
requirements may exist.
23
Failure to Meet Remediation
Obligations
• Failure to (i) conduct a remediation for which a
party is responsible, or (ii) to complete
remediation within prescribed mandatory
timeframes, can result in a significant monetary
civil penalty and direct oversight by DEP.
• Responsible parties can no longer conduct
leisurely and lengthy cleanups.
24
Response Action Outcome (“RAO”)
• An RAO represents LSRP’s professional opinion
that a remediation is protective of public health
and safety and the environment, and is in
accordance with all laws and regulations.
• It is the equivalent of an NFA (as formerly issued
by DEP).
• Can be issued for the entire site or a specific
area of concern.
25
Types of RAOs
• The following types of RAOs can be issued by
an LSRP:
– Unrestricted use (no contaminants present or
contaminants remediated to strictest
standard).
• Limited restricted use (either (i) soil is
remediated to non-residential standard with
deed notice and no engineering controls; or (ii)
groundwater is contaminated above standard,
but no engineering control is utilized).
• Restricted Use – Engineering controls exist
26
RAO Conditions
• RAOs contain a “Covenant Not to Sue”
(release of civil liability by the State) same
as the NFA. The covenant is statutory
27
Audits/Invalidation and Reopeners
of RAOs
• Audits:
• DEP and the LSRP Board are required to audit
annually at least ten (10%) of the LSRP’s
submissions to DEP . Executive Order 140.
signed by then Governor Corzine, increased the
audit requirement for the first 24 months of
SRRA’s enactment to at least one review for
each LSRP.
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• DEP has three (3) years to conduct an audit.
For 3 years an RAO is potentially not final.
• The DEP can audit after three years if; (i) the
Board is investigating the LSRP; (ii)
undiscovered contamination is found on the site;
or (iii) the LSRP issuing the RAO has had
his/her license suspended or revoked.
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• Invalidations: By regulation, DEP has the power
to invalidate RAOs in following circumstances:
– If a discharge or a contamination pathway is
discovered that predates RAO and is not
addressed in the RAO;
– If a new remediation standard is passed that
is lower than the standard utilized by an order
of a magnitude.
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– RAO’s conditions are not complied with;
– Remedial action permit is not complied with;
Remediation does not comply with statutes, rules and
guidance (i.e., failure to use presumptive remedies, or
implementing remedy that makes site unusable
without DEP approval);
• Or other factors exist indicating remediation is not
protective of public health, safety and environment.
• If RAO is invalidated, expedited site specific timeframes
will be implemented by DEP for remainder of cleanup.
31
DEP Intervention
• Aside from invalidating RAOs, DEP may
intervene in remediations conducted by LSRPs
in the following ways:
– Enforcement of mandatory timeframes;
– Direct oversight;
– Approval of alternate remedies (for
presumptive remedies set by ARRCS) or
remedies that render site unusable;
– Approval of alternative site specific standards.
32
Mandatory and Regulatory
Timeframes
• There are three types of timeframes:
– Regulatory timeframes (those set forth in
assorted regulations or guidance, such as
notification to DEP of LSRP retention);
– Site specific timeframes (set by DEP for a
specific site due to extent of contamination or
owner compliance history); and
– Mandatory timeframes (set forth in Section
7:26C-3.3 of ARRCS).
33
• Each has a different extension request
procedure and different qualifications for
extension. Failure to meet timeframes or request
valid extension subjects the person responsible
for remediation to direct DEP oversight.
• Mandatory timeframes have been established
for cleanups started before SRRA (PA/SI and
receptor evaluation due 1 year from March 1,
2010).
• All IECS discovered before SRRA must be
remediated within 1 year from March 1, 2010.
34
• Mandatory timeframes have also been
established for cleanups started after SRRA
(PA/SI and receptor evaluation due 1 year from
date of discharge
• IECS to be delineated, source controlled and
report prepared, within 1 year of date of
discovery).
35
Direct Oversight
• Direct oversight means that while LSRP will
continue to conduct remediation, DEP will review
every document in detail and will select the
remedy for the site.
• Direct oversight will be triggered if: (i) the
remediating party has a history of
noncompliance or enforcement actions; (ii)
mandatory or expedited timeframes are not met;
or (iii) remedial investigation of the entire site is
not completed within 10 years of discovery of
discharge and 5 years after enactment of SRRA
for sites predating SRRA.
36
• DEP also has the option to undertake direct
oversight based upon the type of contamination
at the site.
• Funding source will be required to be
remediation trust fund, with DEP controlling
disbursements.
• “Oversight fees” will be charged by DEP.
37
Remedial Action Permits
• Remedial action permits will be issued by DEP
for new engineering controls or institutional
controls (i.e. Deed Notices and CEAs), starting
January 15, 2010.
• Soil Remedial Action Permits will be issued for
engineering controls and Groundwater Remedial
Action Permits will be issued for CEAs,
groundwater attenuation.
• As biennial certifications for institutional/
engineering controls issued prior to the
enactment of SRRA come due, the DEP will also
issue a permit for such controls.
38
• DEP will require permittees with engineering
controls to establish a funding source for
ongoing costs of controls, with limited
exceptions.
• Financial Assurance must be for the duration of
the control. If indefinite time, thirty (30) years
will be used.
• Guidance permits homeowner and condominium
associations to utilize their budgets to meet the
financial assurance requirement.
39
• Failure to abide by the terms of a
permit can result in monetary penalties
and/or invalidation of an RAO.
• Permits require 60 days prior notice to
DEP to request a transfer of the permit.
40
Remedies
• The DEP has established different types of
remedies in ARRCS and related DEP guidance:
– “Presumptive remedies” for sites “used by a
sensitive population” (such as schools, child
care centers, single family residences or
residential buildings), for new remediations
after May 7, 2010;
– LSRP can request approval from DEP for
alternative remedies to the presumptive
remedies, but may not proceed without DEP
approval.
41
– Remedies that render land unusable
(substantially restricts use of site for
redevelopment or recreation, such as
permanent fencing that blocks access and
treatment systems that occupy large amounts
of land) may not be used without DEP
approval.
– Failure to comply with presumptive remedies
or to obtain DEP approval for alternative
remedy or remedy that renders land unusable
can result in invalidation of RAO and
significant monetary penalties.
42
DEP Fee Structure
• The fee system has been revised. There are four
types of fees:
– Annual remediation fees (annual fees
calculated based upon number and types of
areas of concern on the site and
contaminated media on site);
– Individual review fees (for review of each
specific document sent to DEP unless subject
to the annual remediation fee);
43
– Remedial action permit fees (related to
obtaining or modifying remedial action permits
from DEP. These are tied to a soil or
groundwater remedial action permit); and
– Oversight costs (only apply in the event of
direct oversight by a DEP case manager).
• Cannot obtain RAO until all fees are paid!
• Failure to pay remediation fees may result in the
placement of a lien on all real and personal
property of remediating party, including first
priority lien on site being remediated.
44
Funding Source
• DEP will require for ISRA cases and certain Spill
Act cases that funding source be established for
remediation and be maintained until either an
NFA/RAO or a remedial action permit (with its
own financial assurance established) is issued.
• May use following instruments:
– Remediation trust fund;
– Environmental insurance policy;
– Letter of credit;
– Line of credit;
– Self-guarantee; or
– Loan or grant from DEP funds.
45
• Cases subject to direct oversight require the
establishment of a remediation trust fund, with
disbursements controlled by DEP.
• Generally, if not in direct oversight, either LSRP
or DEP can disburse funds for purposes of
conducting the remediation every 3 months.
• DEP may, in its discretion, after providing 30
days prior notice, perform the remediation of a
site using the funding source if the notified party
fails to respond and remediate.
46
Implications of SRRA
• For ongoing cleanups need to evaluate whether
to currently opt into the LSRP program. If
determine to opt in, need to analyze if should
continue with the current consultant (provided
he/she is an LSRP) or utilize a different LSRP.
• Make sure you have engaged a licensed LSRP.
• If property is being currently remediated, if new
party takes over cleanup, that cleanup will
require an LSRP since this is considered an
initialization of remediation under SRRA.
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• Mandatory timeframes will not reset if new party
takes over; therefore, purchasers/lenders must
closely examine status of remediation and
determine that timeframes are being met and
can be met in future.
• LSRPs are not required if you are conducting
due diligence prior to acquisition of a property.
• Potential for conflict between
seller/purchaser/lender as to whether an LSRP
will be used for due diligence.
48
• Purchaser/lender will want an LSRP (otherwise
remediation work may need to be redone after
property acquisition) while seller/borrower will not
want an LSRP due to reporting obligation
concerns. If you want to prohibit a purchaser/
lender from using an LSRP because of reporting
obligations, include an affirmative statement in the
agreement.
• Purchasers and lenders need to get accustomed
to the use of RAOs and need to understand what
program the seller or borrower is operating under.
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• Additional information must be requested
periodically from remediating party throughout
term of lease, loan and contract period to review
compliance.
• Lenders/landlords may require requests for
approval of “risky” actions (i.e., those actions
that could potentially get RAO invalidated).
• Existing documents (purchase agreements,
lease and/or loan documents) will require
revision to incorporate SRRA requirements.
50
• Need to account for changes of terms (RAOs, LSRPs,
IECs, etc.), to address mandatory timeframes, potential
RAO reopeners, and to address switch over to LSRP.
• Include language that permits Seller to obtain either a
RAO or an NFA. Address in agreement the three(3) year
RAO reopener.
• Indemnities and escrow should stay in place for at least
three(3) years after issuance of the RAO.
Do you want the seller to transition to an LSRP? If so, state
it in the agreement.
• New program may initially result in many RAOs being
invalidated or reopened.
51
• ISRA mandatory cleanup obligation means that
even if trigger event is terminated, obligation to
remediate continues.
• Responsible parties are now affirmatively
obligated to remediate after discovery.
• Mandatory timeframes mean that sites must be
actively and continuously remediated, even if
remediations were ongoing at the time of SRRA.
• Status of current cleanups need to be reviewed
to ensure timeframes are met.
• The LSRP program is new and there are
questions as to how LSRPs will proceed.
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• The consultant/LSRP-client relationship has
changed. LSRPs are required to report certain
information to DEP and are the main decisionmakers.
• The client/LSRP consultant contract has
substantially changed. Need to address:
- Who pays the cost of the audit;
- Who is responsible for an RAO being
reopened.
- Reporting obligations
- Insurance by LSRP
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-
Include provision requiring LSRP to meet the
mandatory time frames in SRRA; the failure
of which is to be the LSRP’s responsibility and cost,
except if caused by the client
• Persons currently engaged in public notification may
need to revise existing signs to include LSRP contact
information and communication center incident number
for spill.
• Child care centers and other sensitive population areas
are subject to much more stringent environmental
remediation requirements.
• Lenders, landlords, developers and purchasers will need
to be aware of increased requirements.
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