Real Property & Environmental Law Alert
The Lighter Side of LSRP: Opportunity to Reduce Remediation Funding Source in New Jersey
With the advent of New Jersey’s LSRP program comes an added financial benefit for environmental remediation matters requiring a remediation funding source (“RFS”). There is an opportunity to save on the statutory annual 1% surcharge on an RFS, especially useful for those sites subject to the requirements of the Industrial Site Recovery Act.
Among the new remediation requirements in the Administrative Requirements for the Remediation of Contaminated Sites, N.J.A.C. 7:26C (“ARRCS”) is an annual remediation cost review to be submitted to the NJDEP on a Remediation Cost Review Form. N.J.A.C. 7:26C-5.10. For new sites subject to the LSRP program and for older sites that have opted-in to the LSRP program, the form must be certified by the site’s LSRP.
Based on the revised cost of the remediation developed in conjunction with the annual review (though this can also be done at other times as well), the person required to establish it, may reduce the amount of the RFS upon submission of the remediation cost review form to the NJDEP. N.J.A.C. 7:26C-5.11. So long as its certified by the LSRP, there is no need to obtain NJDEP approval of an RFS reduction. Of course, such a reduction is ultimately subject to the NJDEP’s broad rights of review of all documents and submissions. N.J.S.A. 58:10C-21. Thus, if the RFS is reduced by the LSRP, then, the 1% RFS surcharge required by 7:26C-5.9 will accordingly be reduced. In addition, to the extent the cost of the RFS itself is driven by the amount (such as with letters of credit), there will be further cost savings. For those sites subject to an ISRA Remediation Agreement with high initial remediation cost estimates that have not been reviewed recently, there may be an opportunity for a substantial cost savings.
For those sites with a remediation trust fund as an RFS, the NJDEP is currently developing a new form of trust agreement to replace the current form which continues to require NJDEP approval for reductions and withdrawals.
Please note that by using a self guarantee as a RFS, a responsible party can continue to avoid the 1% surcharge altogether. See N.J.A.C. 7:26C-5.9.
David A. Brooks is an Associate in the Real Property & Environmental Department.
- New York