A S P UBLISHED IN THE N OVEMBER 15, 2004 I SSUE OF B USINESS W EEK To view the Extended Report, visit: www.enviromental-resource.com/gibbons.asp special advertising section Environmental Solutions: 2004 Progressive Ideas and Leading Technologies To read full reports and related information, go to the links listed below or visit www.environmental-resource.com New Jersey’s Natural Resource million dollars. In addition, there are approxi- mately a dozen NRD lawsuits now pending and perhaps as many as 4,000 sites in the pipeline. Damage Program Initiative New Jersey has added a profit motive to the NRD equation. The Attorney General has enlisted outside private law firms to prosecute A Novel Program That Could Change The Site controversial new settlement formula which NRD claims. These firms will be paid a percent- Remediation Process calculates a dollar value for every gallon of age of every dollar they help recover. How much are natural resources such as groundwater alleged to have been impacted. If New Jersey is successful NRDs will be here wetlands, wildlife and drinking water worth? Potentially responsible parties face some diffi- to stay and the trend will spread. T wenty-six New Jersey is addressing this question through cult choices. In the typical case, they must pay other states may have legal authority to seek a novel natural resource damage (“NRD”) initia- for the clean-up then settle on the replacement NRDs. However, it remains to be seen whether tive aimed at quantifying such losses and then value of any impacted groundwater, otherwise states can successfully manage this challenge or recovering damages from responsible parties. their clean-up will not get approved and they if this poorly charted course slows the cleanup, NRDs were once reserved for catastrophic will face a lawsuit. approval and redevelopment of industrial and spills. However, New Jersey intends to make Since last fall, New Jersey has collected over commercial property. these damages a routine part of every clean-up. $18 million dollars in NRDs. New Jersey has This initiative is not the result of any new law. also issued a directive regarding the lower To read the full report, go to www.environmental-resource.com/gibbons.asp Rather, New Jersey’s program relies upon a Passaic River that may cost industry $950 Gibbons, Del Deo, Dolan, Griffinger & Vecchione, P .C. is a full-service law firm with more than 170 attorneys based in New Jersey (Newark and Trenton) and New York. Gibbons’ Real Property & Environmental Department assists in all aspects of environmental law with an emphasis on transfer and redevelopment of contaminated property. Gibbons presently represents the New Jersey Chamber of Commerce on a challenge to the New Jersey NRD program. For more information please contact Edward F . McTiernan, E EM Mc cT Ti ie er rn na an n@ @g gi ib bb bo on ns sl la aw w. .c co om mor w ww ww w. .g gi ib bb bo on ns sl la aw w. .c co om m GIBBONS, DEL DEO, DOLAN, GRIFFINGER & VECCHIONE A PROFESSIONAL CORPORATION ATTORNEYS AT LAW One Riverfront Plaza One Pennsylvania Plaza 224 West State Street, Suite 1 Newark, New Jersey 07102 New York, New York 10119 Trenton, New Jersey 08608 973-596-4500 • Fax: 973-596-0545 212-649-4700 • Fax: 212-333-5980 609-394-5300 • Fax: 609-394-5301 e-mail: firm@gibbonslaw.com • web site: www.gibbonslaw.com
Environmental Solutions: 2004 Extended Report as Published on: www.environmental-resource.com An Overview Of New Jersey’s Natural Resource Damage Program Edward F . McTiernan, Esq., Arthur J. Clarke, Esq., Susanne Peticolas, Esq. How much are natural resources such as the land, air, wildlife and drinking water worth and who should pay for the damages that these resources have sustained from years of industrial neglect? These are the questions that the State of New Jersey is attempting to address through its novel Natural Resource Damage Program - a program aimed at quantifying such damages and then restoring natural resources. This effort will be paid for by corporations and other responsible parties. The fact that New Jersey was once one of the nation’s most industrialized states is no surprise. Moreover, like many other northeastern states, the industrial land- scape of New Jersey has changed dramatically over the past two decades. Gone are the smokestack industries of yesteryear, replaced by high technology , warehous- ing, retailing and other service sector businesses. Yet the scars left by the past activities still stretch across much of the State in the form of contaminated industrial sites and landfills. The primary impacts of these sites on the environment are well-known and have resulted in costly and seemingly interminable remediation proj- ects paid for by the government and private parties. However, the secondary impacts of New Jersey’s long industrial legacy , including the degradation of its rivers, streams and ground water, have not been systematically addressed. This is changing as the new Natural Resource Damage Program sweeps across the State. It is no accident that New Jersey Department of Environmental Protection ("NJDEP") Commissioner Bradley Campbell used Newark’s Passaic River, one of the most industrialized rivers in the State, as his back drop to announce a bold new initiative. Campbell, a Democrat who has a flair for media coverage, was Director of the United States Environmental Protection Agency’s Regional Office in Philadelphia and a personal environmental advisor to former President Bill Clinton. He is a long- time environmental advocate and a shrewd environmental regulator. Some experts say that New Jersey’s Natural Resource Damage Policy Directive, the regulatory doc- ument that outlines the State’s methodology for pursuing NRDs claims, is written with Campbell’s personal touch. The Directive calls for the coordinated efforts of many State programs to help identify sites where natural resources have been impacted, quantify their damages, and repair or replace them. While NJDEP’s policy directive uses certain kinder, gentler tenets including voluntary restoration efforts and the cash settlement, Commissioner Campbell has also seen to it that litigation and penalties, long-time components of the Department’s notorious “command and control” enforcement policy , are still at NJDEP’s disposal. Commissioner Campbell has also promoted the use of outside legal counsel that specialize as plaintiff’s trial attorneys to pursue NRD claims through settlement and, where necessary , litigation. BACKGROUND Natural resources are “ land, fish, wildlife, biota, air, water, ground water, drinking water supplies and other such resources.” 42 U.S.C. 9601(16). Natural Resource Damages are the injury to, destruction of, or loss of natural resources. 42 U.S.C.9607(a)(4)(c). New Jersey is authorized by statute to recover the “cost of restoration and replacement of any natural resource . . .” N.J.S.A. 58:10-23.11u.b.(4). The combination of these broad definitions and sweeping statutory authority gives the State considerable discretion. Until now , New Jersey had generally only exercised this authority in cases involving extraordinary events or catastrophic spills. However, the new initiative integrates NRDs into the routine site remediation process. NEW JERSEY’S SCREENING PROCESS The number of potential NRD claims in New Jersey is staggering. New Jersey has 112 sites on the Superfund National Priorities list, over 9,000 sites on a state sponsored “Known Contaminated Site” List and an estimated 10,000 sites with leaking underground storage tanks. The initial step in the New Jersey’s NRD program is claim identification. Claim identification involves the review of properties and on-going clean-up cases through a screening review . NJDEP will implement a phased process for screening sites by completing a screening form that evaluates NRD-related issues. The screening process is akin to a mini-preliminary assessment and are coordinated by NJDEP’s Natural and Historic Resources and Site Remediation Programs. Outside legal counsel and their experts have also been involved in screening sites. The screening determines whether a Baseline Ecological Evaluation or Ecological Risk Assessment are required. The screening process often focuses on the identification of contaminant plumes that may have impacted surface and ground water. The screening process also concentrates on whether the plume is “co-mingled.” Presumably , the search for co-mingled plumes is a way to widen NJDEP’ s search for additional Potentially Responsible Parties (“PRPs”). EXCLUSIONS Certain classes of cases are excluded early-on in the screening process. Excluded involve sites where the cost of pursuing the NRD claim will exceed the poten- tial benefit from restoring the resource or recovering damages. NJDEP will also exclude the following classes of cases from the NRD program: • Sites or claims for which the only responsible parties are residential homeowners residing at the site at which the claim arises. • Sites or claims for which the only PRPs are small businesses with a limited ability to pay . • Sites that meet the qualifying criteria for DEP's "Cleanup Star" Program. Parties responsible for these sites may , in theory , request written assurance that they are not subject to an NRD claim. However, the criteria for these exemp- tions, and especially the definition of small business, are highly unsettled.
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