Significant changes to the Site Remediation Program have been introduced in new legislation known as the Licensed Site Professional (LSP) Act (Act). While still under discussion in the Legislature, due to the: (1) incredible backlog of cases in the site remediation program; (2) loss of staff; and (3) budget deficit, the adoption of this Act in some form is quite likely. This Act will establish a program to govern the licensing, continuing education, financial responsibility and professional conduct of site remediation professionals. The use of LSP’s will be required at all but a handful of sites, so the requirements of the LSP program will be of interest to anyone who has hired, or may need to hire, a remediation consultant or professional. Significantly, no LSP can be a salaried employee of the person conducting the remediation.

Importantly, this legislation also includes some significant amendments to existing remediation statutes that are intended to streamline the remediation process, expedite cleanups and, most significantly, encourage the use of permanent remedies. While critics believe that some tweaking can cure the deficiencies in the proposed LSP program, other key changes found in S-1897 might be viewed as more objectionable and will increase the cost of doing business in New Jersey. These more troublesome changes focus on modifications to existing rules on Remediation Funding Sources and the creation of a new Remediation Guaranty Fund.

The Proposed LSP Program. The Act sets out experience, educational and financial responsibility requirements to become an LSP both on a permanent and interim basis. The LSP must meet minimum education requirements, have minimum years of training and hours of remediation experience at New Jersey sites, must maintain specified levels of insurance, comply with continuing education requirements and be subject to a professional code of conduct.

The proposed LSP program also may impact how remediation professionals and those who must hire them exchange information and manage their relationship. For example, the Act imposes an independent duty on the LSP to maintain records generated in performing its work for a minimum of 10 years after issuance of a No Further Action (NFA) determination. Many contracts between LSPs and their clients consider such work product the property of the client and, in some cases, mandate the return of such material once the project is complete. The new record preservation requirement would change that. Likewise, the LSP is subject to the subpoena authority of the Department and may be asked to produce materials being held. Such requests could come well after the relationship between the LSP and the client has ended. While the LSP is prohibited from disclosing, without prior client consent, any facts, data or information designated by the client in writing as confidential (if not otherwise in the public domain), there are no limits on disclosure of other information. Thus, provision for notice to and an opportunity for the client to protect its interests in other information should be a part of any contract and needs to survive the termination of the contract. The requirement that confidential information must be so designated in writing in order to benefit from the notice provision of the Act also suggests the need for clients providing information to an LSP to pay closer attention to the transmission and legending of confidential information.

Other provisions of the LSP program also seem to raise the potential for tension between the LSP and the client. The code of conduct to be established provides that the LSP must hold paramount the protection of the public health, safety and the environment in its performance of professional services. Theoretically, circumstances could arise at a site where the LSP and the client reasonably differ in opinion about what is required to meet the LSP’s “paramount” obligation. The Act offers no guidance to how such a conflict might be resolved, so agreements between the LSP and the client should probably address that point. Other provisions in the code of conduct impose obligations on the LSP traditionally viewed as the province of the client. For example, an LSP that discovers a discharge of “immediate environmental concern,” or identifies a condition that, in the independent professional judgment of the LSP, “requires notification to the Department,” must report the discharge or condition to the Department directly after notifying he client.

Still other provisions impose a duty on the LSP to notify the client in writing of certain problem areas it detects. While the Act imposes no duty on the client to act, a failure to act in the face of the written notice might not bode well for a client if the problem becomes the subject of later DEP scrutiny. Among the client notification obligations are: (1) situations where the LSP learns of an action or decision by the client that “significantly deviates” from any scope of workplan or report developed by the LSP; (2) situations where, subsequent to completion of a report for a given phase of work, the LSP learns that material facts, data or information existed at the time that work was conducted and tends to support a workplan contrary to or significantly different than the one submitted; and (3) situations where the LSP learns of material facts, data or information not disclosed by a prior LSP.

The basic LSP concept is to help alleviate DEP’s caseload by allowing LSPs in certain cases (see discussion of tiering below) to complete submittals for the various phases of remediation without having to await DEP review and approval of every submission. The chief criticism of the proposed program is that it falls short by its failure to allow LSPs to issue NFAs for routine cases. The proposed law gives DEP the right to audit LSP cases to insure adherence to relevant regulations. The argument in favor of giving LSPs the right to issue NFAs is that this audit function provides sufficient oversight for the routine case.

The companion to the LSP program is a new tiering system that requires the categorization of sites by DEP into one of four tiers, based on (1) the potential to impact public health and the environment as determined by DEP, (2) the length of time the site has been pending, (3) the site’s compliance history or (4) any other data deemed relevant by DEP.

Tier 1 includes sites with a history of noncompliance, there has been no Remedial Investigation (RI) approved in more than 10 years from discovery of the contamination and the RI remains incomplete after the statute is adopted. Thus, if you discovered a site more than 10 years ago and timely submitted an RI that remains pending in DEP’s review process you could find yourself in Tier 1.

Tier 2 includes sites in brownfields or other economic development priority areas, sites in environmentally sensitive areas (such as the Highlands or the Pinelands), sites subject to federal oversight, sites affecting licensed childcare facilities, or sites where there is a significant detrimental impact on public health or the environment as determined by DEP.

Tier 4 includes sites involving heating oil leaks, sites where groundwater contamination is within the property boundaries and not within 100 feet of a potable well, sites not posing vapor intrusion threats and sites where the delay of remediation would not pose an immediate environmental concern.

Tier 3 includes any sites not in Tiers 1, 2 or 4.

The tier to which a site is assigned will matter because the level of oversight provided by DEP will vary from tier to tier, as will the level of involvement by your LSP. The submissions required for Tier 1 and 2 sites are more extensive than those for Tier 3. All submissions for Tier 1, 2 and 3 sites must be signed and certified by an LSP. A specially designated professional known as a subsurface evaluator (SSE) can sign for Tier 4 sites. Tier 2 sites will have traditional DEP oversight in the review and approval of submissions. Tier 1 sites, on the other hand, will be subject to DEP review, approval or denial of submissions, DEP remedy selection authority, DEP approval authority over remediation funding source disbursements, a requirement that the responsible party implement a public participation plan and a requirement that the LSP submit documents it prepares simultaneously to DEP and the responsible party. For Tier 3 sites, DEP will review screening level documents and certifications. Tier 4 sites require DEP review of checklists that it will presumably prepare to identify necessary submittals and the certifications submitted by the LSP.

There are three major criticisms of the tiering program:

  •  DEP alone decides what tier a site should be assigned to without input from the Responsible Party(ies) (RPs) that might have more information or at least some continuity concerning the site;
  •  the 10-year rule for Tier 1 sites fails to consider delay caused by DEP inaction; and
  •  there is no existing system to prioritize sites based on risk.

The other legislative changes focus on modifications to existing rules on Remediation Funding Sources and the creation of a new Remediation Guaranty Fund. Remediation Funding Sources will be required for all sites other than heating oil tank sites, childcare facilities, educational facilities or Tier 4 sites. The amount of the Remediation Funding Source will be in an amount equal to or greater than the cost approved by NJDEP (for Tier 1 sites) or determined by an LSP pursuant to DEP guidance (for Tier 2 and Tier 3 sites) to implement the remediation and will be in effect for a period of not less than the actual time it takes to implement the remediation. Whenever any estimate increases, the Funding Source must automatically be increased. Where estimates decrease, however, DEP approval is required to decrease the amount of funding. Where a nonpermanent remedy is selected, a cost estimate must be performed annually and must include any required post-remediation operation, monitoring and maintenance for a rolling 20-year period.

Regardless of the type of Remediation Funding Source employed, an annual 1 percent surcharge is assessed based on the amount of the Funding Source. This marks a change from prior law that enabled a party with sufficient financial resources to Self-Guarantee performance of the remedy to avoid payment of the surcharge. In addition, the bill as proposed would limit the Self-Guarantee option to clean-ups costing less than $1 million. Because other remediation funding sources such as lines of credit, insurance policies or surety bonds include costs to maintain them, curtailing use of the Self-Guarantee in this fashion will add to the charges a remediating party might otherwise pay, in addition to the surcharge. The Department has shown some flexibility in recent discussions on this proposed change but only as to the cleanup limit allowing self-guarantees.

As if the 1percent surcharge and potential for additional costs associated with funding sources were not enough, the bill would also require payment of a one-time 5 percent premium surcharge when any non-permanent remedy is selected. The funds raised, up to a total of $100 million are to be placed in a special Remediation Guarantee Fund to be available for grants to homeowners or homeowner associations when:

(1) there is an unrestricted or limited restricted use remedy at the site, but there has been an order of magnitude change in the remediation standard;

(2) the original responsible party (RP) is not viable and additional work is needed due to an order of magnitude change; or

(3) a remedy involving Engineering Controls fails, and the original RP is not viable. Monies in excess of $100 million, that are raised by the 5 percent surcharge will be diverted from the Remediation Guaranty Fund to the Hazardous Site Discharge Fund. The Department has not indicated that it is willing to modify this proposed requirement.

Other changes in the bill would require RPs to meet mandatory deadlines to be established by DEP for document submittals or other activities involved in the remediation (although DEP itself is not subject to deadlines for review), as well as expanded authority for DEP to select and mandate remedies when the end-use at a site includes schools, child care or residential uses. In addition, DEP will give priority to review for sites that choose to implement permanent remedies.

Stakeholder groups have been actively involved in trying to ensure that all points of view are considered as this legislation moves forward. Additional stakeholder meetings will probably take place later this year with the expectation that this legislation, in some form or another, will be passed. Clearly, S-1897 is one to watch.