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ECRA law changes 'business friendly'.

Recently introduced in a bill (S-1070) the New Jersey Senate, amendments to the Environmental Cleanup Responsibility Act (ECRA) create a more business friendly" environment as the state works with industry to clean up contaminated properties. While these changes may provide welcome assistance to many commercial property owners in the state, it is important to note that the intent and strength of New Jersey's strict environmental regulations will remain intact.

As enacted in 1984, ECRA provided broad directives to industry and other landowners about remediation of contaminated properties. Based on the experience gained through implementation of the statute since its creation, the amendments now before the state Senate streamline the ECRA administrative process for businesses while protecting the public interest and providing more concise definitions to the statute.

Due to the inequities often involved with the ECRA process, the costs inherent to any business designated as a potentially responsible party, and the restrictions on property transfer until a site cleanup is completed and approved. ECRA has been perceived by some as creating a negative environment for business in New Jersey. By easing ECRA's effect on real estate transactions through the proposed amendments, the state may ultimately reduce the costs involved with the process, encouraging economic development while continuing to protect the environment and public health. The amendments will lessen overall confusion over which parties are responsible for cleaning up properties, what their particular remediation responsibilities include and when ECRA rules are to be invoked.

At the same time, however, it is important for property owners to remember that the proposed changes do not lessen the seriousness of ECRA's basic intent: to clean up contaminated property and to the proposed amendments, the state may ultimately reduce the costs involved with the process, encouraging economic development while continuing to protect the environment and public health. The amendments will lessen overall confusion over which parties are responsible for cleaning up properties, what their particular remediation responsibilities include and when ECRA rules are to be invoked.

At the same time, however, it is important for property owners to remember that the proposed changes do not lessen the seriousness of ECRA's basic intent: to clean up contaminated property and to assess the costs and responsibility to the polluters.

The proposed amendments define distinct stages of remediation, recognizing that, depending on the nature of the individual project, the state may want to oversee only certain parts of the cleanup process. Property owners will also have the option of privatizing the cleanup under certain circumstances. Eliminating many of the opportunities for delay in ECRA compliance, these new features will allow timely property transfer, enabling businesses to avoid costly downtime.

The ECRA amendments also contain provisions which lessen the law's monetary onus upon businesses while preserving the original strength and intent of the law. To support financially strapped businesses faced with the economic demands imposed by mandatory cleanup of a contaminated site, the amendment provides for the establishment of a low-interest bond fund to offer financing for both small and larger businesses who qualify. This will ensure the timely remediation of contaminated property while reducing the financial burden often faced by businesses attempting to comply with present ECRA statutes.

The fund will also eliminate the defacto double dipping required by the law as it now stands. Currently, in order to secure a cleanup plan approved by the New Jersey Department of Environmental Protection and Energy (DEPE), a company must post a bond upon approval of the submitted plan. Because these bond funds cannot be touched during the cleanup, the company must provide separate funding for the actual remediation - which in effect penalizes the potentially responsible party twice.

In many instances, this double funding requirement has hampered the ability of property owners to finance the actual cleanup, delaying the remediation of a potential public hazard and possibly resulting in the issuance of fines to the company. Rather than requiring such bonding, the amendments would order companies to establish a fully-funded trust, establish a qualified line of credit, or fund remediation with working capital.

The newly-created bond fund would provide a financing mechanism for companies which do not have the resources to create any of these three options, charging a proposed 2 percent interest rate. In both cases, the amendments seek to balance public safety and industry's requirement for expeditious, cost-effective cleanups.

These new funding mechanisms will no doubt be well-received by the business community, especially in light of the recent New Jersey Supreme Court decision supporting DEPE requirements that commercial property owners clean up adjacent land contaminated by pollutants migrating from a contaminated industrial property. (In fact, the new amendments clarify this stipulation to prevent further challenges). Yet, with the passage of the ECRA amendments, affected property owners, who are now forced to remediate others' property, will have greater access to funds to finance the necessary work.

Additional ECRA amendments include a one-year amnesty program for ECRA and the Spill Act, and an expansion of the limited conveyance program which allows a portion of a site to be transferred without a full ECRA study of the property. Other changes include improved definitions of subject transactions, including some safe harbor' exemptions, and a clearer authorization to the DEPE to enter into Administrative Consent orders and issue "No Further Action" letters.

The revised statute will also streamline the process for those involved with Ecra-subject sites. This is especially true for those currently involved with a remediation plan on a site whose ownership has already been transferred. Once the cleanup is completed, the owners will not have to undertake the full ECRA process all over again, alleviating the "multiple jeopardy" aspects of the program.

In introducing amendments to the landmark act, the state of New Jersey has acknowledged that it can both encourage environmental responsibility and stimulate business development. By no means will the original intent of ECRA be diluted by these proposed changes, however.
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Title Annotation:Environmental Cleanup Responsibility Act
Author:Cohen, Irv
Publication:Real Estate Weekly
Date:Aug 19, 1992
Words:982
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