8/14/2019 CriticalIssues Reprint
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When Does NFA Really Mean NFA?
By Janet S. Kole
M any developers have discovered the virtues andrewards of
buying a contaminated site, remediat-ing it, obtaining a No Further
Action letter (NFA)from the New Jersey DEP and putting the site to
productivereuse. For those more risk-averse, buying an
remediatedproperty with an NFA and developing it is the ticket.
What
makes the NFA valuable is its finalityNJDEP promises not to come
back toask for more cleanup. Recent changesin the states
groundwater standards,however, may make existing NFAs lessthan
final.
When a party cleans up a site inaccordance with NJDEPs
TechnicalRegulations, or when no furthercleanup is required, NJDEP
will issuean NFA. Most NFAs have so-calledreopeners for changes in
action levelsby order of magnitude. In other words,NJDEP may only
compel additionalremediation at a site with NFA status if a cleanup
standard applied at the sitehas decreased by more than a factor of
10. For example, if a compoundscleanup standard was 1,000 parts
permillion and was lowered to 100 ppm,NJDEP may require more
remediation.
Under DEPs new water quality regu-lations effective November 7,
2005,action levels for several contaminantswere changed by an order
of magni-tude. Many of these are common organ-
ic compounds found in groundwater. Consequently, propertyowners
with NFAs, or purchasers of property with NFAsattached, should be
certain the standards for the contaminantsof concern at their site
have not changed by an order of mag-nitude. If the standards have
changed, will further remediationbe required? If required, how
extensive? Here we will discussseveral ways the new regulations
will change due diligence.
It is important to note that the reopener only applies tothose
who actually caused the contamination in the past. Anowner of a
property with an NFA designation who is notresponsible for past
discharges at the site will not be heldliable for additional
cleanup necessitated by a change in stan-dards, as long as they are
an innocent purchaser under theNew Jersey Spill Act and undertook
all appropriate inquirybefore purchase. Regulations under the Spill
Act define and
set forth requirements for innocent purchaser status. Apart
from interaction of the NFA reopener with due
diligencerequirements of the regulations, the activities required
tobecome an innocent purchaser are beyond the scope here.
Representatives of the NJDEP believe as many as 2,500sites may
be reopened because of the change in order of magnitude. NJDEP is
preparing a policy position on howthese sites will be chosen or
located. Those sites cleaned upbefore the era of electronic data
submittal will probably flyunder NJDEPs radar unless the property
is subject to theIndustrial Site Reuse Act. Any event that triggers
an ISRAreviewsuch as sale of the propertywill bring
previouscontamination to the attention of NJDEP and, if
standardshave changed by an order of magnitude, will probably
resultin further cleanup. Where a nonpermanent cleanup, such assome
type of engineering control (for example, a cap, suchas a parking
lot), has been approved, DEP may require addi-tional remedial
activities only if the control is no longer pro-tective of human
health and the environment.
The innocent purchaser defense requires a prospectivepurchaser
to perform a number of different investigationsinto the site. One
is to compare past data about contamina-tion to current remediation
standards to determine if therehas been an order of magnitude
change. Fourteen contami-nants under the new Groundwater Quality
Standards havechanged by an order of magnitude, and a careful
purchaserwill examine what has been done in the past at a site
withrespect to groundwater. If a prospective purchaser performsall
activities required under the regulations and documentsthe
findings, they will not be liable for cleanup of contami-nation
even if discovered after closing.
NJDEP is also proposing new soil remediation standards,which
will probably be adopted sometime in the winter of 2007, after
undergoing the promulgation process and com-ment period. These
proposed standards, too, change thelevel of contamination allowable
for certain chemicals by anorder of magnitude. The lesson to be
learned is that due dili-gence is an ongoing matter, and sometimes
a remediatorwho has obtained an NFA thinking his job is over may
haveto get back to work.RENJ
The views expressed here are those of the author and notof Real
Estate Media or its publications.
Janet S. Kole is a shareholder and chair of the Environmental
Practice Group at the law firm of Flaster/Greenberg PC, working out
of the Cherry Hill and Philadelphia offices. She can be reached
at [email protected].
Due diligence is
ongoing, and some-times a remediatorwith an NFA letter,
thinking his job isover, may have to
get back to work.
Critical Issues
Reprinted with permission from the March 2006 edition of Real
Estate New Jersey
