Real Property & Environmental Law Alert : New Jersey, New York, Pennsylvania & Delaware Lawyers & Attorneys for Real Estate Development & Environmental Law

In less than a month, the New Jersey legislature introduced and passed S-2036, the “Offshore Wind Economic Development Act." Both the NJ Senate and the Assembly passed the Senate version on June 28, 2010. This swift action quickly followed NJ’s joining a 10-state Atlantic OffShore Wind Consortium.

The bill establishes an offshore wind renewable energy certificate program that will require a percentage of electricity sold in NJ to be from offshore wind energy. The New Jersey Board of Public Utilities will be authorized to accept and approve applications for qualified offshore wind projects. The New Jersey Economic Development Authority will have the authority to provide financial assistance to qualified offshore wind projects and associated equipment manufacturers and assembly facilities in the state.

Concerns about potential environmental impacts have been soothed by the conclusions of a two year study led by New Jersey Department of Environmental Protection and announced in draft form on June 18, 2010. The study surveyed bird species, marine mammals, sea turtles and fish off the NJ coast and assessed the likely impact from the construction, operation and decommissioning of an offshore wind farm. The final report will provide the necessary data to screen sites, estimate potential impacts on sea animals and mitigation. NJDEP Commissioner Martin noted, “We now have the science and data needed to take the first steps towards making wind energy projects a reality for New Jersey. It puts us in the forefront environmentally, while also providing New Jersey with a great economic boost from jobs that will be created by this new green industry.” The final report is expected to be released in July.

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On June 8, 2010, Governor Chris Christie joined nine East Coast state governors in signing a Memorandum of Understanding with the U.S. Department of the Interior, which creates the Atlantic Offshore Wind Energy Consortium. The consortium is intended to foster federal-state cooperation for commercial wind development on the Outer Continental Shelf off the Atlantic coast.

According to U.S. Secretary of the Interior, Ken Salazar, wind could supply 20% of the nation’s electricity needs by 2030 and create a quarter of a million jobs.

New Jersey DEP Commissioner Bob Martin stated, “It opens the door of economic opportunity, allowing us to lure companies that manufacture the components of wind turbines, creating green jobs to harness the power of nature and provide our resident with a renewable energy supply.”

In a May 1, 2010, article, Abby Gruen of the Star Ledger, reports on 3 offshore wind projects currently underway off the coast of New Jersey, including a 20 megawatt project proposed for 3 miles off the coast of N.J. She notes that there is little opposition to wind energy in NJ in contrast to Massachusetts, where local opposition threatens its first offshore project.

Susanne Peticolas is a Director in the Gibbons Real Property & Environmental Department.

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An amendment to the Municipal Land Use Law (MLUL) which Governor Christie signed into law on May 4, 2010, will protect developers from municipal zone changes that are rushed through, often as a result of public opposition, to thwart a specific development proposal. Under the new law, which takes effect in one year, the development regulations which apply to a project would be those in effect on the date the application is filed with the municipal land use board.

The new law, dubbed the "time of application" rule, was needed to undo the much-criticized "time of decision" rule under which the New Jersey Supreme Court, in Manalapan Realty v. Township Committee, 140 N.J. 366 (1995), decided that a municipality could change its zoning to negatively affect a project which was already under review by the municipal planning board. That decision involved a proposed Home Depot, which met with substantial public opposition. After the applicant spent significant sums of money acquiring an interest in the property, preparing development plans, retaining experts, submitting its development application, and participating in a number of public hearings, opponents of the project were successful in electing a new township council. The newly constituted council immediately enacted a zoning amendment specifically targeted at Home Depot, as a result of which it was no longer permitted in the zone. The case ultimately reached the New Jersey Supreme Court, which found this sequence of events to be perfectly appropriate.

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New Jersey is pressing forward with its efforts to privatize the site remediation process. Since adoption of the Site Remediation Reform Act (SRRA) in May 2009, there has been a steady stream of new regulations, new guidance documents and revised forms. Because of these changes, practitioners must constantly check the New Jersey Department of Environmental Protection’s website.

As part of the SRRA, the Legislature directed NJDEP to develop a remedial priority system. This system will combine readily available information about site specific characteristics and contamination with public data about receptors to develop a risk index. (This process should sound familiar to anyone who has worked with EPA’s Hazard Ranking System outlined in its complex Final Rule.)

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Senate Bill S-1, which revises and reforms many of the statutes relating to affordable housing in New Jersey, was voted out of the Senate Economic Growth Committee on June 3rd with amendments. S-1 would abolish the Council on Affordable Housing (COAH) and would allow municipalities to administer their own affordable housing obligations. S-1 would eliminate State imposed calculations of affordable housing need and would permit local governments to take charge of planning for affordable housing.

The Senate Committee Substitute to S-1 incorporates the most recent amendments to the bill. The original bill transferred the authority of COAH to the State Planning Commission. Under the Substitute to S-1, much of this authority has been given to municipalities to determine their affordable housing needs, with decreased state involvement, now transferred to the Department of Community Affairs. This reallocation of power was the heart of the reform plan announced by Governor Christie on May 13. Other measures, also part of the Governor’s plan, were incorporated in the Substitute to S-1, such as priority for development and funding of special needs housing, an affordable housing unit set-aside based on the size of the residential development project, and flexibility for municipalities of provide for a variety of economic incentives to a developer, such as payments in lieu of construction, off-site construction, provision of accessory apartments and Elder Cottage Housing Opportunity Units and rehabilitation that includes affordable units. The statement issued by the Senate Economic Growth Committee outlines and explains the amendments in detail.

On June 10, the Senate approved S-1 by a vote of 28-3 and now heads to the Assembly for consideration.

Howard D. Geneslaw is a Director in the Gibbons Real Property & Environmental Department. Susanne Peticolas, a Director in the Gibbons Real Property & Environmental Department, assisted in the preparation of this post.

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On June 8, 2010, in Westport Insurance Co. v. Appleton Papers, Inc., the Wisconsin Court of Appeals for the First District held that two insurers, namely Munich Re Ag and Westport Insurance Co., are liable each for $5 million dollars to compensate Appleton Papers, Inc. (Appleton) for cleaning up the sediment contamination in the Fox River. The Fox River is undergoing a cleanup pursuant to oversight by the United States Environmental Protection Agency.

Appleton acquired assets of National Cash Register Inc. (NCR) during the l950’s and later, NCR manufactured carbonless paper using PCBs (polychlorinated biphynols). The Fox River became polluted with PCBs, a suspected carcinogenic substance. Appleton had sued nine insurers but settled with seven. The remaining two filed the appeal decided by the Wisconsin Court of Appeals in a 2 to 1 decision. Among the issues raised on appeal was whether the insurers were responsible for “after-acquired liability,” namely liability that Appleton acquired along with NCR assets after the policy periods in question expired. The insurers also asserted that Appleton had made voluntary payments not covered by the policies and that notice to the insurers was late, excusing coverage.

While the case was decided under Wisconsin state law, it bears significance to USEPA led river cleanups here in New Jersey. At present the USEPA has entered into a consent decree with 73 potentially responsible parties to conduct a remedial investigation and feasibility study of the Lower Passaic River, a seventeen mile stretch of the estuarine portion of the Passaic River. Presumably parties potentially responsible for sediment contamination in the Passaic will be scrutinizing both their old insurance policies for possible coverage and this decision for legal authority.

Passaic River, Newark, NJ. Photo courtesy of EPA.

John H. Klock is a Director in the Gibbons Real Property & Environmental Department.

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Does the NJ Bulk Sales Act Apply to Deeds in Lieu?

The Bulk Sales Act, NJSA 54:50-38, was expanded a couple years ago to cover transactions in which any seller makes a bulk sale, not just sellers who collect and remit sales tax. It provides:

• A buyer who does not comply by requesting a clearance letter and holding an escrow as directed by the Division of Taxation becomes liable for seller’s tax liability to the State, now including income taxes arising from the bulk sale itself in addition to past due taxes.
• Bulk sale means any sale, transfer or assignment, in whole or in part, of a persons business assets, not made in the ordinary course of business.
• Business assets is defined to mean realty if the primary use of the realty is to support a business on the premises.

By virtue of this expansive definition, all realty transfers other than non-rental residential real estate and inventory sales (e.g., condo units sold by a developer) are covered.

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