Previously issued Response Action Outcomes (“RAOs”)  and No Further Action (“NFA”) letters (collectively known as “Final Remediation Documents” or “FRDs”) do not waive the requirement for a new RAO when there is a new triggering event under the Industrial Site Recovery Act (“ISRA”), N.J.S.A. 13:1K-6 to -14.

Under ISRA, regulated entities are required to remediate the discharge of hazardous substances prior to the transfer of the business or the land or upon the cessation of operations.  Before the enactment of the Site Remediation Reform Act (“SRRA”), N.J.S.A. 58:10C-1 to -28, in 2009, the New Jersey Department of Environmental Protection (“NJDEP”) issued an NFA together with a covenant not to sue after the environmental concern was remediated to NJDEP’s satisfaction.  Since the establishment of SRRA, regulated entities must now hire Licensed Site Remediation Professionals (“LSRPs”) to supervise the remediation.  Once the remediation is completed to the LSRP’s satisfaction, the LSRP issues an RAO.  The RAO provides the recipient with the same covenant not to sue previously bestowed upon holders of NFAs.

The New Jersey Appellate Court recently upheld the dismissal of a complaint against the NJDEP in which the plaintiff requested a declaration that it did not have to comply with the site remediation obligations set forth in ISRA.

In Drytech, Inc. v. State of New Jersey, Department of Environmental Protection, Docket No. A-5619-14T4, plaintiff (a manufacturer of desiccants) conceded that its industrial manufacturing operations were subject to the ISRA reporting requirements.  However,  plaintiff argued that it had previously complied with ISRA in connection with the three NFAs previously issued by NJDEP as a result of ISRA triggering events in 1998, 2001 and 2002.  Based on its compliance during these periods, plaintiff claimed that it was not obligated to comply with SRRA’s new requirements that an LSRP review a contaminated site and determine the appropriate steps needed to protect the public health and safety and environment prior to the issuance of an RAO.

The Court disagreed, stating that “[n]othing in SRRA affords a regulated entity the option of waiving this requirement based upon its prior compliance with ISRA following previous triggering events.”  The Court also reminds us that an LSRP is to use “professional judgement” in determining the scope of work required to issue an RAO.

As this decision illustrates, FRDs issued yesterday do not guarantee the absence of contamination tomorrow.  If you are contemplating the sale or transfer of your current business operations, contact Sills Cummis & Gross P.C. to evaluate whether your business is subject to ISRA’s reporting obligations.