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On September 5, 2018, the United States Third Circuit Court of Appeals (“Third Circuit”) rendered a decision that could potentially implicate the NJDEP permitting process in future Natural Gas Act and other federal permitting actions.

In Township of Bordentown, et al. v. FERC, No. 17-3207 (3rd Cir.  September 5, 2018), the Third Circuit held that the New Jersey Department of Environmental Protection (“NJDEP”) could not deny the Petitioners the ability to request an adjudicatory hearing under the New Jersey Freshwater Wetlands Protection Act (“FWPA”) solely on the basis of preemption of the Federal Natural Gas Act (“NGA”). This opinion means that challengers have at least the right to request an administrative hearing for State-issued environmental permits, even for certain Federally-permitted projects. If a state environmental agency like the NJDEP were to grant such a hearing, this could significantly delay the commencement of a project.

By way of background, Transcontinental Gas Pipe Line Co. (“Transco”) proposed to upgrade its existing interstate natural gas pipeline system – including the construction of a new mater and regulating station, compressor station, and electrical substation along a lateral in Chesterfield, NJ – and conduct certain modifications in Mercer County, NJ (the “Project”). The Project required, and obtained, approvals from the Federal Energy Regulatory Commission (“FERC”) under the NGA. In addition, the Project is to be situated in freshwater wetlands and transition areas requiring the discharge of fill or dredge material into navigable waters, as well as a significant diversion of volumes of water. The discharge of dredge and fill material into navigable waters requires a permit pursuant to Section 404 of the Federal Clean Water Act , 33 U.S.C. 1341(a) (“CWA”). New Jersey has assumed permitting authority for certain navigable waters such as those involving the Project, which is implemented under the FWPA. Transco applied for, and obtained, a Freshwater Wetlands Individual Permit and Water Quality Certification.

Once NJDEP issued the permit, and pursuant to the FWPA, the Petitioners requested an adjudicatory hearing. NJDEP denied the hearing based solely upon the NGA’s requirement that the federal courts have exclusive jurisdiction to review the issuance of permits such that the state administrative hearing process is not applicable.

The Third Circuit concluded otherwise, and ruled that the administrative hearing process provided under state law is not precluded by the court’s exclusive jurisdiction under the NGA. In doing so, the Third Circuit reviewed the NGA and concluded that its jurisdiction is limited to civil actions, and not administrative proceedings. The Third Circuit also reviewed case law from the Supreme Court of the United States and other Federal Circuit Courts of Appeal, and concluded that the hearings at the administrative hearing level were not civil actions as referenced in the NGA, even if administrative proceedings mirror adversarial trials. Thus, the NGA “leaves untouched the state’s internal administrative process, which may continue to operate as it would in the ordinary course under state law.”

Depending on the Federal permitting process involved, applicants must consider the possibility that an administrative hearing may – and can, if granted – be considered as part of the timing of the state permitting process. The Third Circuit’s opinion, of course, is limited to the applicability of an administrative hearing in a state-permitting program delegated under a Federal statute, in this case the delegation of CWA authority to the NJDEP under the FWPA. However, the analysis of whether an administrative hearing is a judicial action can be read beyond its applicability to the FWPA. Each individual permittee applying under State law must always add a permit of time predicted for the hearing, if a hearing is granted, as part of its construction planning process. In addition, permittees may now want to vigorously oppose adjudicatory requests, as they can be used offensively by project challengers to delay a project.

It should be noted that the vast majority of the opinion provides a detailed analysis of FERC’s issuance of certificate of public convenience and necessity, and its subsequent analysis under the Federal National Environmental Protection Act (“NEPA”). The Third Circuit issues important conclusions regarding the applicability of a related intrastate project and its impact on the NEPA analysis. However, the important takeaway from this opinion is the applicability of the state administrative hearing process to state permits issued for Federal projects, and its impact on the timing of a project.

Effective August 6, 2018, the New Jersey Department of Environmental Protection (“NJDEP” or the “Department”) adopted amendments to several key rules governing site remediation—including Discharges of Petroleum and Other Hazardous Substances (N.J.A.C. 7:1E); Heating Oil Tank System Remediation Rules; Administrative Requirements for the Remediation of Contaminated Sites (“ARRCS,” N.J.A.C. 7:26C); and the Technical Requirements for Site Remediation (“Technical Regulations,” N.J.A.C. 7:26E).

While this rule adoption made many modifications to these regulations, we call two significant changes to your attention. The first involves the use of alternative fill materials at remediation and redevelopment sites, while the second concerns the expansion of the definition of “person responsible for conducting the remediation.”

Alternative Fill

Alternative Fill is material used in a remediation containing contaminants exceeding the most stringent cleanup standard applicable to a site. The amendments to both ARRCS and the Technical Regulations will result in NJDEP being more involved in many cases using alternative fill, requiring review and approval prior to its use on a contaminated site. Previously, NJDEP did not have such broad authority, which allowed the use of fill without the delays caused by NJDEP review.

If the person responsible for conducting the remediation (“PRCR”) proposes to import alternative fill that does not meet the requirements of the Technical Regulations (N.J.A.C. 7:26E-5.2(b), discussed below), then the PRCR must obtain prior written approval from NJDEP.

However, prior NJDEP approval is NOT required if alternative fill from an off-site source is imported to a site as long as the alternative fill meets the following requirements set forth at N.J.A.C. 7:26E-5.2(b), in that the alternative fill:

  1. Does not contain any contaminants not already present at the receiving area of concern (“AOC”) above the applicable soil remediation standard (“SRS”);
  2. Does not contain a concentration of any individual contaminant above the 75th percentile of that contaminant’s concentration in the receiving AOC; and
  3. Is not imported in excess of the volume necessary to restore the pre-remediation topography and elevation of the receiving AOC.

With respect to using alternative fill from an on-site source (i.e., moving contaminated material from one part of a site to another), prior NJDEP approval IS NOT required if the concentrations in the alternative fill are already present in concentrations above the applicable SRS at the receiving AOC. If the contaminants in the alternative fill are not above the SRS in the receiving AOC, then prior NJDEP approval IS required before using the on-site alternative fill.

In response to comments, NJDEP believes the potential to delay remediation is justified by preventing further contamination of sites through inappropriate use of alternative fill and associated additional costs (i.e., for its removal and possible penalties) for such inappropriate use. The NJDEP stated that “the person should communicate with the Department early in the remedial process so that the person does not expend significant time, resources, and capital without knowing whether the Department will approve the proposal” (Response to Comment 254; 50 N.J.R. 1754).

The NJDEP is not sympathetic to comments that the proposal is unduly restrictive. The NJDEP emphasized the “use of alternative fill is for the purposes of remediating a contaminated site, not for the development of that contaminated site.”

Definition of “Person”

The amended ARRCS rules now place responsible corporate officers squarely within the realm of enforcement liability, even under statutes which do not place them within the target of such liability. Given the specter of personal liability for certain corporate officers, they will need to be even more vigilant in ensuring their company’s compliance with environmental rules governing site remediation.

Specifically, the definition of “person” was broadened to include for the purpose of enforcement, “a responsible corporate official, which includes a managing member of a limited liability company or a general partner of a partnership” (N.J.A.C. 7:26C-1.3). Numerous comments to the rule proposal emphasized that New Jersey’s Spill Compensation and Control Act, and other similar environmental statutes do not include corporate officials or shareholders within the definition of “person.” One commenter noted well-established corporate law distinguishes between human beings acting in a personal capacity as distinguished when acting as a representative or agent of a corporate entity.

In response to the many comments it received to the amended definition, NJDEP argues its expanded definition of “person” is consistent with statutory language (including the Water Pollution Control Act, Solid Waste Management Act and Spill Act) and that there is a “need for a systematic and consistent approach to the detoxification” of contaminated sites in New Jersey (Response to Comment 255; 50 N.J.R. 1754). The Department further notes that the protections granted to individuals by the corporate form are not absolute.

For more information regarding the NJDEP’s amended site remediation regulations, please contact your CSG attorneys or the post’s authors.

On Monday, the United States Environmental Protection Agency (“EPA”) issued a Compliance Advisory Update announcing the implementation of streamlined changes to the Hazardous Waste Manifest submission process.  Pursuant to the Hazardous Waste Electronic Manifest Establishment Act, beginning on June 30, 2018, EPA will launch a new e-Manifest system nationwide, allowing Hazardous Waste Manifests to be created and submitted via the EPA website. Consequently, EPA will no longer be accepting paper manifests and paper manifests submitted to the New Jersey Department of Environmental Protection will not be forwarded to EPA.

Among those most impacted will be treatment, storage, and disposal facilities (“TSDs”) which receive and report hazardous waste to EPA. The e-Manifest system will not be required for very small quantity generators (“VSQGs”), medical waste generators, used oil generators, universal waste generators, and others who are not required to have an EPA ID nor use the uniform hazardous waste manifest (EPA Form 8700-22).

To avoid confusion over compliance as the new e-Manifest system launches, EPA will phase in the rule based 30 day deadline such that all manifests expected to be delivered to EPA between June 30 and September 1, 2018 may be submitted to EPA as late as September 30, 2018.  More information on the e-Manifest system is available via the EPA website.

 

The next time a government inspector comes to a business and inspects its dumpster, do not be surprised if the resulting legal problem involves both environmental and consumer fraud actions. During the last few years, a number of national corporations have found themselves in legal trouble because the inspector found both hazardous waste and customer records containing personal information in a dumpster. If the business is in New Jersey that means it will be dealing with both the Department of Environmental Protection and the Division of Consumer Affairs’ Office of Consumer Protection. Needless to say, it is a situation to avoid.

Many items routinely handled by a business, including retail businesses, become a hazardous waste when disposed. These may include returned or excess inventory consumer products as well as cleaning and building maintenance products used at the business. Determining if they become hazardous waste when disposed often requires analysis not readily available at the disposing facility. Failure to know if disposed material is a hazardous waste can lead to substantial fines and even criminal prosecutions if it is improperly disposed. Any business should have a plan for determining if the materials disposed are hazardous waste subject to regulation and, if so, to ensure that the hazardous waste is handled and disposed of legally.

Many businesses are aware of the hazardous waste issues referenced above. Fewer are aware of this obligation imposed by New Jersey law with regard to disposal of customer information. “A business or public entity shall destroy, or arrange for destruction of, a customer’s records within its custody or control containing personal information, which is no longer to be retained by the business or public entity, by shredding, erasing, or otherwise modifying the personal information in those records to make it unreadable, undecipherable or nonreconstructable through generally means.” New Jersey is not alone in regulating the disposal of customer records. In states with such laws or regulations, any business having such records should also have a plan for their legal disposal. In New Jersey, the amount of actual damage to a consumer is automatically tripled, the consumer is automatically awarded attorney fees and costs and fines may be imposed up to $10,000 for a first violation and up to $20,000 for each subsequent violation. In some states, each disposed customer record is a separate violation.

The recent cases against national companies are likely only a prelude to similar actions against state or local business. When the inspector comes, those business should know that what is in their dumpsters does not include hazardous waste or discarded customer records containing personal information.

Can groundwater discharges violate the Clean Water Act and require NPDES permits?  Two federal court cases coming out of the 4th and 9th Circuits dealing with the applicability of the Clean Water Act (CWA) to groundwater are creating real concern over how expansive the court’s holdings and application of the Act can be.  The decisions were rendered by US Court of Appeals for the 4th Circuit in Upstate Forever v. Kinder Morgan Energy Partners LP and the 9th Circuit in Hawaii Wildlife Fund v. County of Maui.

In each case, the courts held that groundwater can be regulated under the CWA when it acts as a conduit through which pollutants from a spill of hazardous substances, septic waste or injection can be traced to protected surface waters.  While the burden of proof is significant, if a nexus can be established between the contaminant detected in the surface water and groundwater where the release originally occurred, then exposure to CWA fines is real and the need for a National Pollution Discharge Elimination System permit appears to be required.  The 4th Circuit’s holding is even broader than the 9th Circuit in that it applies to residual or historic contamination.  In other words, if released contamination ever reaches surface water protected by the CWA, then it doesn’t matter when the spill contaminants were first released to the environment.

In the 9th Circuit case, the County of Maui has already informed the court that it will seek Supreme Court review and for good reason.  If upheld, these rulings have far reaching implications for not only regulated industries, such as oil and gas, but also private home owners with septic systems and municipalities with leaking sewer pipes.  Here in NJ, where there is a robust state regulatory program requiring remediation of discharges to the environment, CWA regulation will add another regulatory scheme to be considered and may end up regulating septic tanks, which are common in New Jersey, and other systems designed to release materials below ground level.  Releases, both recent, as well as historic, could create a set of liabilities no private citizen even remotely considered.   Moreover, these decisions could cause the New Jersey Department of Environmental Protection to require re-investigation and re-assessment of sites that have been remediated pursuant to state law to determine if a previously unaddressed contaminant pathway between groundwater and surface water exists.

It remains to be seen how EPA will integrate these decisions, if they stand, into practice.  Once it does, the question will become how state delegated clean water programs will be affected.

In a recent unreported opinion, the Appellate Division affirmed a trial court’s decision imposing Spill Act liability on the sole shareholder of a dry cleaning business. (Morris Plains Holding VF, LLC v. Milano French Cleaners, Inc., Dkt. No. A-0604-16T1.) The case serves as a reminder that shareholder status does not protect individuals who are otherwise liable for contamination pursuant to the Spill Act.

The trial judge found that Milano French Cleaners operated for 25 years in a strip mall owned by the plaintiff. PCE was detected in the soil in 1999. After approximately 10 years of remediation the business went bankrupt. The landowner then assumed responsibility for the remediation and filed the subject action against the bankrupt corporation and its sole shareholder. The trial judge held both the sole shareholder and the corporation jointly liable for all remediation costs.

On appeal, the shareholder argued that imposing Spill Act liability on him improperly pierced the corporate veil. The Appellate Division disagreed, relying on NJDEP v. Dimant, 212 N.J. 153 (2002). As set forth in Dimant, to recover damages under the Spill Act, a plaintiff must establish a “reasonable nexus” between the discharge and the environmental damage, and a “reasonable link between the discharge, the putative discharger, and the contamination at the specifically damaged site.” Relying on the trial courts factual determinations, the appellate panel found a “reasonable nexus” because PCE contamination was found directly below dry cleaning machines with no other credible source in the area. In addition, the shareholder operated the dry cleaning equipment, was responsible for overseeing and handling the PCE used, and was responsible for ensuring legal and regulatory compliance of the corporation. Taken together, the record satisfied Dimant’s reasonable nexus standard and established individual liability.

Liability protection is clearly available to shareholders of close corporations in Spill Act actions. As recently as 2016 the appellate division remanded a decision imposing personal liability on shareholders for failure to conduct the fact intensive analysis necessary to pierce the corporate veil. See NJDEP v. Navillus Group, App. Div. Dkt. No. A-4726-13T3 (Jan. 14, 2016). However, in this case, given the nexus between the individual shareholder and the contamination, the appellate division refused to allow shareholder status to be used as a shield to individual liability. Rather, liability arose from a “reasonable link” between the discharger and the contamination, without regard for shareholder status.

It may be much harder to fill property in New Jersey.  In a recent decision, New Jersey Department of Environmental Protection v. Bleimaier, 2018 WL 1513152, (App. Div. 2018), the New Jersey Appellate Division in effect has held that the placement of more than five-yards of fill material always changes the existing topography and a permit is required.

In the case, a homeowner was issued an Administrative Order and Notice of Civil Administrative Penalty Assessment after the homeowner filled and graded their property, which fell within a delineated-flood-hazard-area, without a permit. The homeowner argued that a permit was not required because they were not altering the pre-existing topography and were merely remediating recent soil erosion.

The Department disagreed because the stated purpose of N.J.A.C. 7:13-2.4(a)(1) was to require a permit for “any topographic alteration, such as excavation, grading, or placement of fill.” Agreeing with the Department, the Appellate Division reasoned that if it were to accept the homeowner’s argument, a landowner could choose an arbitrary point in time and claim that they were restoring the topography to that particular point.

While the Appellate Division explains that the Department’s interpretation of the regulation was consistent with its stated purpose and in the public’s interest, the Department appears to be taking the position that the placement of more than five-yards of fill changes the pre-existing topography and, in effect, a permit is always required. The question becomes, was this the result the Department intended?

In the latest chapter on the issue regarding public access to beaches and waterfronts, on February 5, 2018, the Senate Environment and Energy Committee passed a bill that attempts to codify public access requirements as it applies to NJDEP coastal permitting programs. S-1074 (1R) sponsored by Senators Smith and Bateman, requires that NJDEP issue any permits, approvals, administrative actions or consent decrees under the Coastal Area Facilities Review Act (CAFRA), the Wetlands Act of 1970 (Coastal Wetlands Act), the Flood Hazard Area Control Act or the Coast Zone Management Act consistent with the public trust doctrine. In sum, any party taking action pursuant to these coastal programs that provides for a change in the existing footprint of a structure, or a change in use of the property, must review the existing public access to tidal waters and adjacent shorelines and require that additional public access be provided.

If enacted, the bill would also amend the Municipal Land Use Law to require municipalities to include, as part of their master plan, a public access plan for tidal areas and adjacent shorelines. The bill would require a public access to inventory public access points and facilities (i.e. parking, boat ramps, etc.); assess the need for additional public access; include a statement of goals and administrative mechanisms to ensure that access will be permanently protected; and provide strategy and implementation schedule addressing forms of access necessary to satisfy the municipality’s need. These provisions would codify NJDEP’s prior efforts to provide for planning at the municipal level. After a significant stakeholder process, NJDEP adopted Public Access Rule amendments in 2012 providing for municipalities to adopt Municipal Public Access Plan as a mechanism to determine public access requirements. Those provisions were struck down by the Appellate Division in 2015 being considered beyond the scope of both the “public trust doctrine” and current law.

Notably, the bill provides certain exemptions for facilities that are subject to certain site security or safety situations. The excluded facilities include the following: (1) facilities required to submit a facilities security plan under the “Maritime Transportation Security Act of 2002;” (2) facilities required to develop and adhere to a transportation security plan for hazardous materials pursuant to the regulations adopted by the federal Pipeline and Hazardous Materials Safety Administration; (3) facilities required to participate in the US Department of Homeland Security’s Chemical Facility Anti-Terrorism Standards program; (4) facilities located at any airport, railroad yard or nuclear power facility; or (5) facilities requiring exclusion of the public for security reasons pursuant to rules issued by the New Jersey Office of Homeland Security and Preparedness.

After being referenced by the Senate Environment and Energy Committee, S-1074(1R) has been referred to the Senate Budget and Appropriations Committee.

On January 16, 2018, Governor Christie signed into law P.L.2017, c.325, which revised previous law concerning the use of recycled asphalt pavement (the “Act”).  The Act broadens the permissible methods that asphalt pavement can be reused.  Specifically, recycled asphalt pavement can be used as follows:

  1. Unbound in bedrock quarry reclamation;
  2. Unbound underneath a guardrail of a public road or highway;
  3. Unbound or mixed with other materials for use a base or subbase material in accordance with applicable engineering designs;
  4. Unbound as surface material for a parking lot, farm road, or pathway, or in any other location as authorized by NJDEP; or
  5. In any other use authorized by NJDEP.

Reuse is generally prohibited in very acidic soil (pH of 4 or less) absent the demonstration that groundwater will not be impacted.

It should be noted that the Act is not effective until September 2018, but allows NJDEP to take action beforehand to implement the new law.

 

NJDEP has published a web page addressing Contaminants of Emerging Concern (“CECs”). CECs are described by NJDEP as “chemicals that recently have been shown to occur in water resources and identified as being a potential environmental or public health risk.” LSRPs must consider CECs when the remedial objective is an entire site final remediation document and the site has stored, handled or used CECs.

The new web page currently addresses Per- and Polyfluoroalkyl Substances (PFAS), which are associated with a wide variety of industrial and commercial processes. Guidance criteria for PFAS include the following:

  • Perfluorooctanoic Acid (PFOA) – recommended MCL of 0.014 ppb (October 2017);
  • Perfluorononanoic Acid (PFNA) – proposed amendment to Safe Drinking Water Act to add PFNA as an MCL (August 2017); interim specific ground water quality criterion of 0.010 ppb (November 2015);
  • Perfuorooctanesulfonic Acid (PFOS) – USEPA drinking water health advisory for PFOA and PFOS at 0.070 ppb individually or combined (May 2016).

The NJDEP web page includes links to additional resources and is expected to be expanded to further address PFAS as well as other CECs.