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Financial Requirements Under SRRA / ARRCS

March 2010

This is the third in a series of Environmental Law Alerts that focus on the recently enacted Site Remediation and Reform Act (“SRRA”) and the Administrative Requirements for the Remediation of Contaminated Sites (“ARRCS”). The prior two Alerts can be accessed under the “Client Alerts” section of our website.

This Alert highlights several new – and some previously existing – financial requirements that are payable to, or inure to the benefit of, the New Jersey Department of Environmental Protection (“Department”), even when a party is remediating a site using a Licensed Site Remediation Professional (“LSRP”).

Annual Remediation Fee

A person that initiates remediation at a site on or after November 4, 2009, is required to pay the Department a non-refundable remediation fee. As raised in our prior Environmental Law Alert, the date a person initiated remediation may not be intuitive.

  • How much is it? The remediation fee could vary from $450 to $13,700 based on the number of Areas of Concern (“AOC”) at the site and the media that is contaminated (i.e., soil, groundwater, or sediment). Depending upon how the LSRP categorizes the AOCs at a site, the amount of the fee can vary significantly. Although the regulation expressly provides that AOCs shall not be combined for purposes of determining the amount of the remediation fee, responsible persons should discuss with their LSRP and counsel how the AOCs at a site are being categorized. For instance, if a facility has multiple floor drains, the remediation fee could vary depending on whether the LSRP categorizes each floor drain as a separate AOC or as one cumulative AOC. Whether the floor drains are connected by a common drain pipe or are on different floors or in different buildings could affect this analysis and the amount of the remediation fee.
  • When is it due? The initial remediation fee is due on the earlier of the date that the first technical report is submitted to the Department or 270 days after the person initiates remediation. The Department will invoice the responsible person on an annual basis until a Response Action Outcome (“RAO”) has been issued for each AOC.

Remedial Action Permit Fees

The Department established a permit program for the implementation of remedial actions when contamination will remain in place at a site. In general, the Department will issue a Remedial Action Permit (“RAP”) whenever the remediation includes an engineering or institutional control that imposes monitoring, maintenance or reporting requirements.

  • How much is it? The application fee is $550 for a soil RAP, and $750 for a groundwater RAP. The Department will invoice the responsible person on an annual basis until the Department terminates the permit: for a soil RAP – $100 (for a deed notice without engineering controls) or $250 (for a deed notice and an engineering control); for a groundwater RAP – $250 (for a natural attenuation remedy) or $750 (for any other groundwater remedy).
  • When is it due? The application fee is due upon submission of an application for a RAP and delivery of a properly recorded deed notice or groundwater workplan. Thereafter, an invoice will be issued on an annual basis until the Department terminates the permit. For sites with deed notices, this annual fee could be perpetual.

Financial Assurance for Remedial Action Permits

The Department requires the person responsible for the remediation to post financial assurance in an amount equal to or greater than the cost estimate to operate, maintain and inspect all engineering controls at a site over the life of the permit. The options for financial assurance include a remediation trust fund, environmental insurance policy, line of credit, letter of credit or self-guarantee (each in accordance with specific requirements). There are several notable exemptions to the requirement to post financial assurance including, but not limited to: (i) persons who are not otherwise liable for cleanup and removal costs under the Spill Act who purchased the site prior to May 7, 2009, and are remediating or remediated the site pursuant to the so-called innocent purchaser defense provisions of the Spill Act, and (ii) the owner or operator of a small business who is responsible for performing a remediation at his or her business property. Persons responsible for the remediation should consider consulting their LSRP or attorney to discuss whether these or other exemptions may be available.

  • How much is it? The financial assurance amount shall be the amount equal to or greater than the cost estimate to operate, maintain and inspect all engineering controls at the site over the life of the permit, which may be up to 30 years.
  • When is it due? The financial assurance must be established when the RAP is issued and then adjusted, as necessary, every two years until the Department terminates the permit.

Oversight Costs

The person responsible for conducting the remediation shall pay the Department’s oversight costs, if any. Importantly, a person shall not receive a final remediation document (i.e., No Further Action letter or RAO) until such oversight costs have been paid in full.

  • How much is it? It varies depending upon how complicated the remediation may be and how diligent the Department staff is at recording their time, and is further a function of the Department staff hourly rates and other eligible costs. Oversight cost invoices sometimes come as a shock since they may reflect substantial charges (i.e., tens of thousands of dollars), which may have accrued over several years.
  • When is it due? All oversight cost invoices include a due date. If the oversight cost charges are not paid, the charges will accrue interest and may subject the person responsible for payment to enforcement (including the payment of penalties), may result in a lien on all real and personal property of the person responsible (including a first priority lien on the subject site), and could prevent the issuance of a final remediation document.

Remediation Funding Source

A person responsible for conducting remediation at a site pursuant to the Industrial Site Recovery Act (“ISRA”) or a Spill Act directive or order is required to establish and maintain a remediation funding source.

  • How much is it? The funding source amount is the amount equal to or greater than the cost to implement the remediation as determined by the LSRP. The funding source amount may exclude the estimated cost to operate, maintain and inspect engineering controls or such other amount as may be prescribed by order, directive or agreement with the Department.
  • When is it due? The funding source must be established within (i) 14 days after the approval of a Remedial Action Workplan, (ii) upon submission of a Remediation Certification, or (iii) as may be prescribed by order or directive.

Remediation Funding Source Surcharge

A person who is required to maintain a remediation funding source – with the exception of a self guarantee funding source – is also required to pay an annual remediation funding source surcharge.

  • How much is it? The remediation funding source surcharge is equal to one (1) percent of the remediation funding source.
  • When is it due? The surcharge is due annually until such time that a final remediation document for all AOCs have been issued.

Keep an eye out for the next Environmental Law Alert covering additional elements of the SRRA and ARRCS.

For more information, please contact:
Robert H. Crespi | (973) 530-2060 | rcrespi@wolffsamson.com
Todd W. Terhune | (973) 530-2091 | tterhune@wolffsamson.com