LEGISLATIVE FISCAL ESTIMATE TO
SENATE COMMITTEE SUBSTITUTE FOR
SENATE, No. 39, ASSEMBLY, No. 2250 ACS,
SENATE, Nos. 1815 and 1539
STATE OF NEW JERSEY
DATED: JUNE 16, 1997
Senate Committee Substitute for Senate Bill No. 39 of 1996, Assembly Bill No. 2250 (ACS) of 1996, Senate Bill No. 1815 of 1997 and Senate Bill No. 1539 of 1996, the "Brownfields and Contaminated Site Remediation Act," is primarily designed to remove legal, financial, technical and institutional impediments in current State laws and regulations, and to create incentives, in order to promote and facilitate the cleanup and reuse of the State's contaminated sites. The committee substitute particularly addresses New Jersey's older industrial sites, often referred to as “brownfields.”
The committee substitute was crafted with three predominant policy goals. First, it is intended to result in more remediations being performed so more brownfield sites can be redeveloped. Second, the committee substitute does not lessen any environmental or health standards, particularly those that were enacted by P.L.1993, c.139, the primary legislation this bill amends and supplements. Last, the persons responsible for the contamination being cleaned up will not be given any relief from liability. Only those “innocent” purchasers who either unknowingly buy contaminated property, or who clean up a contaminated property that they have purchased, or who buy previously cleaned property will be given any liability protections.
The committee substitute contains the following provisions that may have fiscal impacts on public entities: First, persons performing remediations would be allowed to select the remedial action to be undertaken. Since State law encourages permanent remediation of such sites, financial incentives would be offered in the form of 25 percent matching grants or loan guarantees from the Hazardous Discharge Site Remediation Fund, as administered by the New Jersey Economic Development Authority (EDA), to support the implementation of permanent remedies. Such matching grants or loans would also be available to persons who propose to use an innovative technology for a remedial action, provided that person has assets of less than $2.0 million.
Second, the committee substitute directs the Department of Environmental Protection (DEP) to investigate and determine the extent of contamination in the State's aquifers and make the results public through its inclusion in the State Geographic Information System. An appropriation of $3.0 million from the 1996 Environmental Cleanup Fund, which is funded from bond monies approved in November, 1996 (P.L.1996, c.70), is appropriated for this purpose. In addition, $2.0 million from this funding source is provided to the DEP to support an investigation and mapping project concerning known areas of historic fill. The availability of data generated from both studies is intended to lower the costs of performing brownfields remediations by private parties.
Third, the committee substitute changes the law that generally provides that public entities are not liable for existing contamination on land they acquire through actions such as a tax lien or foreclosure; a public entity may still be liable, however, for knowingly and voluntarily acquiring contaminated property, even if for a public purpose such as redevelopment. This law is amended to limit public entity liability for contaminated property that is acquired by any means. This provision also extends this immunity from liability to third party suits.
Fourth, the 10-year property tax exemptions provided under the Environmental Opportunity Zone Act (P.L.1995, c.413) would be extended to 15 years if a permanent remediation remedy is employed for brownfields sites within those zones. This provision is also expanded to allow for such tax benefits when a site is redeveloped for residential use.
Fifth, the committee substitute provides that cleanup and removal costs assessed by the DEP under the Spill Compensation and Control Act are not to include administrative indirect costs unless the costs are being assessed in a cost recovery action.
Sixth, the committee substitute provides that where new taxes are to be realized from the redevelopment of a brownfields site, the Commissioner of the Department of Commerce and Economic Development (DCED) can enter into a redevelopment agreement with the site developer to reimburse the developer for up to 75 percent of the costs of the remediation. Reimbursement funding could be derived from various taxes generated from new businesses developed on these sites.
Finally, the committee substitute creates a Brownfields Redevelopment Task Force to plan and coordinate brownfields issues, and a Legislative Underground Storage Tank Remediation Task Force to study the policy implications of implementing a risk-based corrective action program for petroleum releases. The Brownfields Task Force would be funded by a $250,000 appropriation that is included in the recommended FY 1998 budget for the Office of State Planning (if adopted).
The Office of Legislative Services estimates that the matching grant and loan programs proposed by the committee substitute will have no fiscal impact on the State budget or the General Fund, since these costs will be covered by the monies already contained in the Hazardous Discharge Site Remediation Fund. Most of these funds are derived from previously appropriated bond funds, loan repayments, and other non-State funding sources.
Likewise, the $5.0 million in combined appropriations for the two task forces established are also supported by bonds and thus will not affect the State budget until debt service payments for these funds are initiated sometime in the future. It should be noted that in addition to alleviating some of the costs for persons performing brownfields remediations, the generation of data from these task forces may also help to lower the costs for State-funded site remediations.
Regarding the proposed amendment to limit public entity liability for contaminated property that is acquired by any means, as well as extending this immunity from liability to third party suits, the OLS estimates that municipalities, counties and public improvement authorities will benefit from this provision by enabling them to acquire more brownfields property without the threat of such liabilities or potential lawsuits.
The OLS contends that the exclusion of administrative indirect costs that are currently assessed under the Spill Compensation and Control Act will have the effect of lowering the fees assessed by the DEP to review a remediation, thereby lowering the cost for a person to perform a remediation. Conversely, the General Fund will receive less revenue from this source, thereby requiring a greater proportion of State funds to support DEP staff operations in this area. Estimates of potential revenue loss cannot be ascertained at this time.
Concerning the reimbursement of new taxes to be realized from the redevelopment of a brownfields site, the potential net tax revenue gain from such projects cannot be estimated since the DCED commissioner is given broad discretion in deciding the terms and conditions of such agreements. Although similar legislation was enacted last year (P.L.1996, c.124) that provided for remediation cost reimbursement to developers of landfills, no comparative tax revenue data have yet been generated.
Last, the OLS estimates the legislative task force established by the committee substitute may incur some costs that cannot be totally borne by the participating public agencies or the private participants. While final costs cannot be estimated until the study parameters are developed, the actual efforts of the task force may be limited by the amount of time and resources that can be donated by the participants if additional funding is indeed needed but not provided.
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67.