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School Construction Alert

March 2002

How New Jersey’s Brownfield Program Can Affect New School Construction

By Norman W. Spindel, Esq.

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n order to take advantage of the $12 billion public school construction program put into effect through passage of the Educational Facilities Construction and Financing Act, School Boards may need to locate available space for construction

• f new facilities, in the event that existing facilities

do not provide adequate space for the number of students who are or who are projected to be

• enrolled. Since New Jersey is one of the most

developed states in the country, finding available space for new school construction is often

• impossible. This is particularly the case in Abbott

Districts which may most benefit from the program since the Act provides 100% State funding of eligible school construction in those districts. These urban communities in which Abbott Districts are located frequently include contaminated sites which are not suitable for residential, commercial

• r public development. If properly remediated,

however, these sites, commonly referred to as “Brownfields,” may be utilized for the construction

• f new schools. The decision to undertake the

remediation of a Brownfield site for use in school construction is a complex one that must be carefully reviewed by the School Board and the local community with input from a variety of experts in this area of law. The New Jersey Brownfield program is based on a number of statutes, including the Brownfield and Contaminated Site Remediation Act (“BCSRA”), the Spill Compensation and Control Act (“Spill Act”), the Industrial Site Recovery Act (“ISRA”), and the Environmental Opportunity Zone Act (“EOZA”). The New Jersey Department of Environmental Protection’s (“THE NJDEP”) Voluntary Cleanup Program, through its use of Memoranda of Agreement, is the administrative vehicle by which Brownfields are generally

• remediated. The NJDEP’s Technical Requirements

for Site Remediation (“TRSR”) are the technical guidelines with which a Brownfield remedial program must comply. Together, these statutes and programs have invigorated the redevelopment of Brownfields in New Jersey by providing: (1) financial and liability incentives to Brownfield remediators, and (2) increased certainty in the nature of the remedial actions (assessment, investigation and clean-up) necessary to satisfy governmental authorities.

Identifying Brownfield Sites

The NJDEP actively encourages the cleanup and redevelopment of Brownfield sites through various mechanisms. These resources can be utilized by School Boards to identify potential sites for redevelopment as educational facilities. The Brownfield Redevelopment Task Force, established in 1998 under the BCSRA, coordinates State policy on Brownfield redevelopment, including the identification, inventory, and marketing of

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Brownfield sites in New Jersey. Site information is made publicly-available on the NJDEP’s Geographic Information System (“GIS”). Additionally, the Task Force provides planning assistance to local governments in their own efforts at Brownfield redevelopment. In addition, the NJDEP’s Site Remediation Program periodically publishes its Known Contaminated Sites in New Jersey, a publicly- available inventory of contaminated sites in New

• Jersey. This list is only part of the more extensive

Comprehensive Site List, which also includes No Further Action sites (a listing of sites which presently require no further remediation) and Sites Under Review (a listing of sites which require further investigation to determine if they are contaminated). Recently, the NJDEP launched “I-Map NJ Brownfields,” its free on-line mapping application which allows users to access information about known Brownfield sites in New Jersey. The easily accessible database uses interactive maps which allow school officials and other stakeholders interested in redeveloping Brownfields to quickly

• btain information about site locations and their

characteristics.

Limitation on Liability

Perhaps the most significant incentive to Brownfield redevelopment in New Jersey is the limitation on liability that the State offers to those who remediate sites. But this liability protection does not come without cost. Simply stated, a person is protected from future liability

• nly for those conditions that are investigated and

remediated, as appropriate, to the satisfaction of the NJDEP. Such investigation and remediation must occur in accord with the NJDEP’s comprehensive technical regulations for site investigation and remediation. These regulations specify how a person is to investigate groundwater, surface water, soil and other environmental contamination, and the process to be utilized in evaluating and ultimately choosing the remedy for such contamination. The NJDEP’s technical program also requires the evaluation of ecological

• damage. The NJDEP’s current policy is not to

insist upon the active remediation

• f

environmental contamination in all instances, although there will be a bias towards active remediation in areas occupied by school children. In instances where it can be demonstrated to the NJDEP that leaving residual contamination above the most restrictive numerical cleanup criterion for a particular contaminant will not pose a threat to the school population, the NJDEP may not insist

• n active remediation.

However, it is likely that engineering and/

• r

institutional controls will be required by the

• NJDEP. Engineering controls limit the potential

for human contact with contaminated soils. The most common example of engineering controls are fencing and capping of contaminated areas. The most common institutional controls are well restriction areas that preclude the installation or use of groundwater wells located in contaminated areas, and deed notices that put the public on notice of the existence of elevated levels of contamination at a property. Deed notices are recorded in county registries along with property

Perhaps the most significant incentive to Brownfield redevelopment in New Jersey is the limitation on liability that the State

• ffers to those who remediate sites.

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deeds, thereby enabling any person inquiring into the ownership of property to be apprised of its environmental condition. The NJDEP has prepared a standard form deed notice whose use will be required when a site remediation does not meet the State residential soil cleanup criteria. The standard form deed notice identifies the property areas containing residual contamination above residential standards by reference to data tables and figures of the contamination. The deed notice specifically restricts future property use to uses consistent with the nature and concentration of the residual contamination. The deed notice also precludes the disturbance of any engineering control at the site without prior NJDEP approval, provided however that temporary disturbances not exceeding 60 days need not be pre-approved. In either case, the engineering control must be restored after the site

• disturbance. In instances where engineering

controls also are utilized at the site, the deed notice will require periodic monitoring and repair

• f the engineering controls, and periodic

confirmation to the NJDEP that the controls remain in place and continue to be effective. A deed notice may be terminated upon NJDEP consent in instances where the impacted soils are further remediated to the State residential cleanup criteria. New Jersey’s incorporation of the use of engineering and institutional controls into its site remediation program provides flexibility. In order to take advantage of this flexibility, the person must completely delineate the extent of soil and/

• r

groundwater contamination. This specificity is required to insure that the passive controls utilized will be deemed adequate by the NJDEP to protect public health and the environment. A person who seeks to ultimately obtain Brownfield liability protection must satisfy a number of legally required conditions: (1) Post-January 6, 1998 property acquisition; (2) The person did not actually discharge the hazardous substance or is not a corporate successor to the discharger; (3) The person gave notice of the discharge to the NJDEP upon actual discovery of the discharge; (4) Within 30 days following property acquisition, the person initiated remedial action of the discharge (preliminary assessment, investigation

• r remediation);

(5) Such remedial action ultimately is determined by the NJDEP to have been completed in a timely and appropriate fashion; and (6) The new property owner agreed in writing to provide access to the NJDEP for its oversight of the site remediation. Such oversight is accomplished through the entry by the developer or other person into the NJDEP’s standard form Memorandum of Agreement. The liability protection afforded is not absolute either in terms of the nature of future claims or the identity of potential future claimants. Upon initiation of remedial action, the person obtains a defense against any private party claim arising out

• f the contamination being addressed. Claims by

Following the completion of the site remediation to the NJDEP’s satisfaction, the NJDEP will issue a “No Further Action” letter with a covenant not to sue in favor of the remediating party for all matters addressed by the remedial action.

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New Jersey or the federal government are not barred at this time. Following the completion of the site remediation to the NJDEP’s satisfaction, the NJDEP will issue a “No Further Action” letter with a covenant not to sue in favor of the remediating party for all matters addressed by the remedial action. The covenant not to sue releases the remediating party from civil liability for additional remediation or cleanup and removal costs, and extends to future owners and

• perators of the property and successors to the

remediating party. Although potential liability to USEPA and other federal entities is not effected by the New Jersey legislation, it is not commonplace for USEPA to become involved in site remediation cases being handled by the NJDEP.

Financial Incentives

State legislation now provides several financial incentives to persons utilizing innovative technologies to remediate property, although many of these incentives are limited to private, commercial developments. However, school construction projects may qualify for certain incentives. Financial incentives exist in the form of grants, low-interest loans, and loan guarantees from the Hazardous Discharge Site Remediation Fund (“HDSRF”) administered by the New Jersey Economic Development Authority (“NJEDA”). Financial assistance is available for up to 100% of site remediation costs, but there is a $1 million per-year cap for private parties and a $2 million per-year cap for municipalities. The HDSRF does not have unlimited resources, nor are its total resources equally available to everyone. Various percentages of the total fund are earmarked for different categories of assistance: A school board is well advised to determine the availability and timing of funding from the HDSRF when developing its development plans and construction budget. There also exist a variety of technology and use-based incentives designed to reduce the costs

• f remediation. For example, BCSRA exempts a

person remediating a site in an environmental

• pportunity zone or utilizing innovative remedial

technology from having to maintain a remediation funding source (financial assurance) for the costs

• f these remedial activities. Moreover, the statute

now specifically allows, as a permanent remedy, soil cleanups to nonresidential standards, recognizing that there is a significantly reduced threat of exposure to contamination on property that will not be used for residential purposes.

Procedural Mechanism for Cleanup - The NJDEP’s Voluntary Cleanup Program

In order to take advantage of the various recently enacted BCSRA and Spill Act incentives, remediation activities must be conducted under the NJDEP oversight, typically within the State Voluntary Cleanup Program pursuant to a Memorandum of Agreement (“MOA”). The NJDEP’s program encourages parties to voluntarily remediate and develop contaminated property under a less onerous oversight document than previously existed in New Jersey. An MOA identifies the scope of the remediation actions, including assessment, investigation, and cleanup a person elects to perform. The program provides interested parties with significant procedural

State legislation now provides several financial incentives to persons utilizing innovative technologies to remediate property...

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flexibility and does not pose the threat of the NJDEP enforcement action if remedial deadlines are missed. Under an MOA, a person may proceed on his own schedule, and is not required to obtain financial assurances until a remedial action workplan is approved by the NJDEP. Furthermore, the MOA has an “out” clause which allows a person to terminate the agreement and cease its remedial activities. A voluntary remediation must comply with all aspects of the NJDEP’s TRSR which set forth comprehensive requirements for the investigation of soil, groundwater, surface water and other areas of environmental concern, and the development of a remedial workplan for contaminated areas.

Practical Advice

A school construction project

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a contaminated site is a complex undertaking requiring input from professionals in many disciplines and is a multi-step project that must be carefully analyzed, developed and constructed in order to avoid a myriad of pitfalls that will either doom the project or result in increased

• cost. In light of the current realities of

contaminated property, it is necessary to utilize a team approach for the construction project. Once a location is identified, local land use and environmental issues must be addressed. Urban planners and other professionals expert in the area of municipal zoning and planning are important members of a project team. Many State Brownfield incentives cannot be used for non-environmentally related activities, including infrastructure development and building development. A banker or other lender, and other professionals expert in the area of financing projects are other necessary members of a development team. Insurance consultants and brokers also are valuable to evaluate risk sharing/ shifting insurance programs. Generally, the major costs to be incurred in a Brownfield project include the cost of property acquisition, the cost of the site remediation, and the cost of constructing the facility to be placed on the property. Real estate brokers and real estate attorneys expert in the areas of property evaluation and contract negotiation are critical to the success

• f these projects. Additionally, an attorney expert

in the field of construction law and labor relations would be a valuable member of the team. As for the environmental remediation aspects

• f the project, New Jersey has one of the most

sophisticated and detailed environmental regulation programs in the United States. The NJDEP has developed detailed and comprehensive regulations imposing the technical standards to be achieved in the assessment, investigation, and remediation of environmentally contaminated

• sites. Moreover, the NJDEP implements regulatory

programs governing the development of properties in waterfront areas; how wetlands must be addressed during remediation and development; and the permissible impact upon groundwater and surface water from site development. A school project would be well served by the use of environmental consultants, engineers and lawyers familiar with the NJDEP regulatory and Brownfield programs as part of the team. Finally, the current social and regulatory climate in New Jersey requires that professionals in the areas of public relations/ issues management be part of the development team. Neighbors or other members of the community in which a school development is proposed obviously have a

...New Jersey has one of the most sophisticated and detailed environmental regulation programs in the United States.

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substantial interest and stake in the siting and development of the educational facility. To avoid having to deal with potentially significant issues in this area at a late stage of a project’s formulation or development, an effective community outreach program should be incorporated into the construction project. If you have any questions regarding this or any other construction law issue, please call Steven E. Brawer, Chair of the Construction Law Practice Group, at 973- 597-2412 or sbrawer@ lowenstein.com, or Norman W. Spindel, a Senior Counsel in the Environmental Law and Litigation Practice Group, at 973.597.2514 or nspindel@ lowenstein.com.

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