Have you ever wanted to escape a clingy and annoying relationship? In terms of environmental compliance, triggering New Jersey’s Industrial Site Recovery Act (ISRA) can evoke the same feelings of frustration. N.J.S.A. 13:1K (1993). The recent Drytech, Inc. v. State of New Jersey, in particular, highlighted the pesky and recurrent nature of ISRA.
ISRA applies to owners and operators of industrial business operations that intend to sell or transfer their property. It requires that the owner or operator investigate the environmental condition of the property and complete any remedial activity necessary prior to the sale or transfer of a property (the triggering event). Drytech confirmed that ISRA compliance is required regardless of whether the environmental condition of the property has changed since the last triggering event.
Each triggering event requires the owner or operator to, at a minimum, hire a Licensed Site Remediation Professional (LSRP) to conduct a Preliminary Assessment (PA) and, if necessary, perform a Site Investigation (SI) and any remediation. The result of this process ends with a Response Action Outcome (RAO) certifying the property has no environmental issue on site and is compliant with ISRA. In addition to the annual fees of $900 assessed by the New Jersey Department of Environmental Protection (NJDEP) when ISRA is triggered, there are the costs associated with hiring an LSRP to conduct a thorough investigation, which can be a costly surprise if IRSA is triggered unknowingly.
In practice, ISRA’s triggering events occur repeatedly for the same property, and often without incident of any known environmental hazard (e.g., a spill) since the last investigation. This repetition of triggering events can require repeated investigations of the property under ISRA, despite a known lack of contamination on the site.
Drytech involved the applicability of ISRA’s LSRP requirement and annual fees for a manufacturer that had received three No Further Action Letters (NFA)—the precursor to the RAO –which indicated all environmental issues at the site had been addressed. The NJDEP abandoned the NFA letters in 2012. The court found that the NFA letters were no longer valid and that the manufacturer was required to hire an LSRP to certify the facility was ISRA compliant. The effect of this holding confirmed ISRA’s applicability even in instances where it is clear no environmental hazard exists on a site.
This case additionally highlighted the LSRP’s discretionary power to exercise “independent professional judgment.” The LSRP conducted a PA, but required an SI before granting the manufacturer an RAO, despite acknowledging there were no areas of concern on site not previously addressed. The SI was estimated to cost in excess of $12,000. The court found that such action was within the LSRP’s powers, as the NFAs were not binding on the LSRP. The takeaway from this finding is that in cases where it is clear no environmental hazard exists on site, there is still a risk that a property owner will be required to do more than the minimum requirements under ISRA to receive an RAO.
Corporations with industrial property in New Jersey should be mindful of ISRA when engaging in routine business decisions that may trigger the regulation. Often, business considerations dictate multiple transactions that trigger ISRA. However, careful attention can help mitigate this concern.