Ever expecting an influx of residents and business to New Jersey, Trenton is again touting "smart growth", the control of sprawl and the promotion of redevelopment. Several state programs are available in New Jersey to promote development of "brownfields" - environmentally compromised and either abandoned, idle or underutilized sites that are often, but not always, former industrial sites or gas stations. Contrary to popular belief, these sites aren't only located in urban areas. The mechanisms described herein aid purchasers and developers/redevelopers of such sites by affording liability protection and providing an opportunity to quantify and recover cleanup and removal costs.
The New Jersey Brownfield and Contaminated Site Remediation Act (BCSRA) protects buyers not responsible for original contamination from private lawsuits and from having to perform additional cleanup work (related to past contamination) if the site is cleaned pursuant to applicable regulations. Any voluntary cleanup must meet the criteria for remediation set forth in the technical requirements for site remediation, N.J.A.C. 7:26E.
The Hazardous Discharge Site Remediation Fund (HDSRF) created pursuant to the BCSRA, provides opportunities for municipalities and private parties to receive monies for the development of such sites. A private party may qualify for loans up to $1 million per year if unable to obtain private funding. Half of the $1 million may be by grant to an innocent party, regardless of whether private funding is available. A developer may also qualify to enter into a "redevelopment agreement" providing for up to 75% reimbursement of remediation costs. A portion of the costs are recouped from tax revenues from operations at the site. This mechanism is available for private parties conducting voluntary cleanups. The New Jersey Department of Environmental Protection (NJDEP) initially reviews an application to determine whether or not a scope of work may be approved such that a loan or grant may be issued. Then, the application is moved to the New Jersey Economic Development Authority (EDA), which actually funds and distributes monies for the cleanup.
A contaminated property may also be designated as an environmental opportunity zone (EOZ) pursuant to the Environmental Opportunity Zone Act. Under this act, an owner of property may be eligible for tax relief, again contingent upon agreement to conduct a remediation with NJDEP oversight. This funding is also contingent upon the municipality adopting legislation authorizing EOZ eligibility and tax relief. Owners of contaminated properties are offered special tax incentives by the municipalities in return for a commitment to clean such properties up. This funding is also in the form of low_interest loans. Unique to this program is the fact that the property owner needn't establish a funding source as part of the remediation. The municipality authorizing the designation of properties as EOZs must provide in the ordinance for a tax exemption of 10 years; set forth application procedures; and provide a method of computing payments in lieu of taxes. Of course, the property owner must enter into an oversight agreement with the NJDEP.
Innocent purchaser protection is available to property purchasers who perform appropriate due diligence investigations, as an affirmative defense to liability under the New Jersey Spill Compensation and Control Act (Spill Act). A purchaser of contaminated property, at least since September 14, 1993, is a responsible party pursuant to the Spill Act unless the property was acquired after contamination occurred; the purchaser had no reason to know about pre_existing contamination; the purchaser was not in any way responsible for the hazardous substance; the NJDEP was notified upon discovery of the discharge; and, if contamination was found, it must be remediated.
Following a cleanup, when a remediating party receives a no further action letter (NFA) from the NJDEP, it includes a covenant not to sue. This means that the NJDEP won't sue a property owner to require additional cleanup work necessitated by changes in remediation standards or based on discovery of previously undiscovered contamination. The recipient of the NFA is protected from claims regarding the property remediated, but not from claims pertaining to offsite contamination.
Even if unable to avail oneself of the "innocent purchaser" defense to liability, the remediating party may yet seek contribution, including treble damages, from a party in any way responsible for contaminating the property, if the purchaser follows the dictates of the Spill Act to qualify for treble damages. Further, a directive must have been issued by the NJDEP against a party responsible for cleanup in order for the purchaser to be able seek treble damages at some future point for clean up and removal costs.