Tic, TAC, No Dough for Innocent Landowner in NJ Who Sells Property Before Brownfield Grant

Last year, the Appellate Division in TAC Associates v. NJDEP, 408 N.J. Super. 117 (App. Div. 2009) had held that an applicant under the NJ Brownfield Innocent Party Grant, N.J.S.A. 58:10B-5, need not be a landowner at the time of application for such grant. In so ruling, the Appellate Division invalidated NJDEP regulations that imposed an ownership requirement, a requirement absent from the underlying statute.

In January of 2010, the legislature amended the Act to require that the landowner must acquire the property before 1983 and own it until application is made for a grant and the application is granted. On July 15, 2010, the New Jersey Supreme Court reversed the Appellate Division in TAC, holding that the “after the fact” amendment by the legislature clarified the intent of the legislation which the NJDEP gleaned in issuing its regulations.

Justice Rivera-Soto, in dissent, criticized the ruling,

The unvarnished and ugly truth is that, recognizing their error, defendants [NJDEP and NJEDA] scurried — four years after the fact, six and one-half months after their position had been rebuffed by the Appellate Division, and while this appeal was pending before this Court — to have the Legislature ratify rules defendants adopted that plainly exceeded the original statutory mandate.

With brownfields property, the greatest difficulty is obtaining funds. Often the purchaser is interested in obtaining the property and having it cleaned up, but not in funding it. This holding restricts who can actually get grants. Grants defray, but do not cover the costs of cleanup. Owners who may have held property for over 27 years must continue to hold it until the application is granted and cannot have the benefit of the sales proceeds until the sale is consummated. It frequently takes years to get a grant approved.

This ruling will undoubtedly limit the number of eligible grantees. Indeed, that seems to be the point. As NJDEP and NJEDA asserted in their successful argument for reversal, “the Appellate Division’s holding would create a financial strain on the State and on the HDSRF [Hazardous Discharge Site Remediation Fund] by expanding eligibility for grants to a broader array of applicants.”