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Site Remediation Reform Act of 2009 (“SRRA”)

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Presentation on theme: "Site Remediation Reform Act of 2009 (“SRRA”)"— Presentation transcript:

1 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

2 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.

3 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.

4 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.

5 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.

6 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.

7 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 See DEP website for list of licensed LSRPs.

8 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.

9 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.

10 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.

11 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.

12 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.

13 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.

14 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.

15 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).

16 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.

17 ISRA The SRRA included significant changes to the Industrial Site Recovery Act (“ISRA”): No new Remediation Agreements issued after November 3, 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.

18 - 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.

19 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.

20 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,

21 (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.

22 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).

23 Within 270 days, initiate control of contaminant source and complete delineation of contaminant source. Depending on type of IEC, additional requirements may exist.

24 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.

25 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.

26 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

27 RAO Conditions RAOs contain a “Covenant Not to Sue” (release of civil liability by the State) same as the NFA. The covenant is statutory

28 Audits/Invalidation and Reopeners of RAOs
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.

29 DEP has three (3) years to conduct an audit
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.

30 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.

31 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.

32 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.

33 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).

34 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.

35 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).

36 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.

37 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.

38 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.

39 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.

40 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.

41 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.

42 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.

43 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);

44 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.

45 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.

46 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.

47 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.

48 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.

49 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.

50 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.

51 Need to account for changes of terms (RAOs, LSRPs, IECs, etc
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.

52 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.

53 The consultant/LSRP-client relationship has changed
The consultant/LSRP-client relationship has changed. LSRPs are required to report certain information to DEP and are the main decision-makers. 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

54 of which is to be the LSRP’s responsibility and cost,
- 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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