ASSEMBLY APPROPRIATIONS COMMITTEE
STATEMENT TO
[First Reprint]
SENATE COMMITTEE SUBSTITUTE FOR
SENATE, No. 39, ASSEMBLY, No. 2250 ACS, SENATE, Nos. 1815 and 1539
with Assembly committee amendments
STATE OF NEW JERSEY
DATED: DECEMBER 11, 1997
The Assembly Appropriations Committee reports favorably Senate Bill No. 39/A2250ACS/S1815/1539 ACS (1R), with committee amendments.
The SCS for Senate Bill No. 39/A2250ACS/S1815/1539 (1R), as amended, the "Brownfields and Contaminated Site Remediation Act," is intended to remove impediments in the law and create incentives to promote and facilitate the cleanup and reuse of New Jersey's older industrial sites. The redevelopment of these industrial sites, often referred to as “brownfields,” will help protect the public health and environment, conserve open space, improve the economy, create jobs, and revitalize our cities and neighborhoods.
New Jersey began the process of facilitating the remediation and redevelopment of brownfields in 1993 when the Legislature enacted a comprehensive reform of its site remediation laws. Three years experience with that reform measure and the legislative actions and experiences of several other states have demonstrated that more changes are needed in order to further facilitate brownfield redevelopment.
This bill was crafted with three predominant policy goals. First, the bill is intended to result in more remediations being performed and brownfields being redeveloped. The achievement of this goal will protect the environment, alleviate local property tax burdens, create jobs, and improve the economy. Second, the bill will not lessen any environmental or health standard. The strict standards set in the 1993 legislation and enforced by the Department of Environmental Protection (DEP) will remain in place. Finally, the persons responsible for the discharge 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 will be given any liability protections.
For a detailed statement of the provisions of the committee substitute as it was referred to the Appropriations Committee see the committee statement of the Senate Environment Committee dated June 5, 1997.
As amended by this committee, the bill is identical to the Assembly Committee Substitute for Assembly Bill No.2724 (1R) reported by this committee.
FISCAL IMPACT:
The bill offers financial incentives 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 unrestricted or limited restricted remedies. Such matching grants or loans are also 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. The Office of Legislative Services has estimated that the matching grant and loan programs will have no fiscal impact on the State budget because 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.
The bill directs the 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.
The bill limits public entity liability for contaminated property that is acquired by any means and extends this immunity from liability to third party suits. The OLS has estimated 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 bill extends the 10-year property tax exemption under the Environmental Opportunity Zone Act (P.L.1995, c.413) to 15 years if an unrestricted or limited restricted remedial action is used for brownfields sites within those zones. The bill expands the exemption to sites redeveloped for residential use.
The bill 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.
The bill provides that the Commissioner of the Department of Commerce and Economic Development (DCED) can enter into a redevelopment agreement with the brownfield site developer if new taxes are to be realized from the redevelopment to reimburse the developer for up to 75 percent of the costs of the remediation. The potential net tax revenue gain from such projects cannot be estimated because the DCED commissioner is given broad discretion in deciding the terms and conditions of such agreements.
The bill 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. The $5.0 million in combined appropriations for the two studies required 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.
The OLS has estimated 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 of a remediation; however, the General Fund will receive less revenue from this source, requiring a greater proportion of State funds to support DEP staff operations in this area.
COMMITTEE AMENDMENTS:
The committee made substantial amendments to the bill. These amendments are listed as follows:
(1) Provisions that would have expanded the role of county improvement authorities were deleted;
(2) The DEP is required to perform certain risk communication functions in order to properly explain the risks posed by site remediations;
(3) The general powers of the DEP were expanded to require the department to encourage and aid in brownfield redevelopment;
(4) The Spill Compensation and Control Act's findings and declarations section was amended to declare that the facilitation and coordination of the cleanup of industrial sites is a public policy function of the DEP;
(5) New definitions for "unrestricted use remedial actions," "restricted use remedial actions," and "limited restricted use remedial actions" were created to replace the definitions "permanent remedial action" and "nonpermanent remedial action";
(6) The covenant not to sue provisions were amended to provide that the covenant is to afford no liability protections to persons who are liable under the "Spill Compensation and Control Act" to clean up and remove a discharged hazardous substance. The committee substitute had listed certain exemptions from the covenants protections for these responsible parties but rather than list individual exemptions, the committee amendments created a broad exemption for responsible parties from the protections of the covenant not to sue;
(7) The Legislative Underground Storage Tank Remediation Task Force created in section 40 of the bill is required to study and add to its report an evaluation of the use of standard probabilistic approaches in the development of minimum remediation standards;
(8) Certain changes to the provisions concerning the performance of an alternative risk assessment for a contaminated site were made;
(9) Amendments to the liability provisions (C.58:10-23.11g) of the "Spill Compensation and Control Act" were made. These changes include clarifying provisions to the "innocent purchaser" provisions to ensure that a proper remediation will be performed. Additionally, a provision was added that a governmental entity that condemns or takes by eminent domain a property undergoing a timely cleanup will not receive the liability protections that would otherwise be afforded governmental entities that take title to contaminated property. The amendments add additional protections for persons who acquire contaminated property from liability to third parties. To obtain these third party liability protections, which take effect upon acquisition of the property, the purchaser must enter into an agreement with the DEP and remediate the property in a timely fashion;
(10) The provisions allowing redevelopment agreements for the reimbursement of a portion of the remediation costs were amended to ensure that no money will be reimbursed until the State Treasurer is satisfied that the State has received adequate tax revenues from the redevelopment project to pay for the reimbursements;
(11) The amendments provide for procedures when a landlord or tenant petitions DEP to compel compliance with the "Industrial Site Recovery Act" pursuant to N.J.S.A.13:1K-11.9;
(12) The amendments provide the Superior Court with jurisdiction for actions to void a transfer pursuant to N.J.S.A.13:1K-13;
(13) The DEP is designated as the agency to designate brownfields for the purposes of the federal "Taxpayer Relief Act of 1997;"
(14) The "Environmental Opportunity Zone Act" was amended to specify the remediation costs recoverable by the property tax exemption and to provide that once those costs are recovered, the property tax exemption will end; and
(15) Various other technical changes were made to the bill to ensure that its intent is clearly stated.