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SOUTH PLAINFIELD, NJ-Industry experts gave real estate developers and attorneys a preview of the pending Licensed Site Remediation Professionals program yesterday at NAIOP NJ’s “Life Under LSRP” event held at the PSE&G Training Center here.

On hand to discuss the program and how it will impact the industry were Irene Kropp, New Jersey Department of Environmental Protection assistant commissioner for site remediation, as well as Steven Senior, counsel in the environmental practice group of Riker, Danzig, Scherer, Hyland & Perretti; Peter Rand, vice president and senior relationship manager with KeyBank Real Estate Capital; Dan Borgna, vice president of Frenkel Environmental; and Nick DeRose at Langan Engineering and Environmental Services.

But first some background. Faced with the challenge of ensuring that more than 20,000 contaminated sites in New Jersey are properly remediated in a timely manner, the DEP worked closely with the New Jersey Legislature and stakeholders to develop legislation that will dramatically change the process used to conduct environmental investigations and cleanups. On May 7, 2009, Gov. Jon Corzine signed the Site Remediation Reform Act into law.

SRRA, as it is known, provides sweeping changes to the way in which sites are remediated in New Jersey and also amends other statutes such as the Brownfield and Contaminated Sites Act and the Spill Compensation and Control Act. SRRA establishes a program for the licensing of Licensed Site Remediation Professionals, who will be responsible for the oversight of environmental investigation and cleanup.

While the law changes the process of how sites are remediated, the NJDEP will retain significant authority over the remediation process and will ensure that LSRPs comply with all applicable regulations, but the day-to-day management of site remediation will be overseen by qualified LSRPs.

Under SRRA, NJDEP approval is no longer required prior to proceeding with remediation. The hope is that implementation of SRRA will therefore result in contaminated sites being cleaned up more quickly, thus providing a greater measure of environmental protection to the citizens of New Jersey and ensuring that development of underutilized properties are returned to the tax rolls more quickly.

While the real estate industry has, for the most part, reacted positively to the LSRP program, there are a few sticking points. Kropp noted that the DEP can no longer issue a “covenant not to sue” once the first licenses are issued. “The problem is that the NFAs issued over the next three years will not have CNS language,” she said, before adding that the department is currently trying to work with state Senators on amending this language. But she admits that “the first few years of the program will be a learning experience for everyone.”

Of course, a big concern for the industry is the fee structure, which will be modeled after the Massachusetts program. “All new cases will get an annual fee based on the number of contaminated areas of concern at a site and the number of media contaminated areas such as groundwater,” Kropp explained. She added that there is essentially a category fee plus a fee for each media. This includes four categories based on the number of contaminated AOCs. These range from 0 to 2, 2 to 11, 11 to 20 and 20-plus. According to Kropp, USTs fall under category two, while landfills are in the third. “The fees are not scary, though, I promise,” she said. In fact, they start at $500 for the first category and max out around $20,000.

Following Kropp’s presentation, Borgna addressed the insurance sector. And while he assured the industry that LSRPs will continue to be their advocates, he advised investing in a Pollution Legal Liability Policy, which is available for as low as $5,000 to $7,000 for a $1-million limit, with limits as high as $25 million available.

Still, he voiced several concerns with the program, namely what to do if an LSRP is hired and then brings an existing project with them. Other grey areas include what to do if your LSRP leaves and goes to another firm or if he/she retires.

So what can you do to protect your company and what can LSRPs do to protect themselves? According to Borgna, get a limitation of liability clause, as well as a pollution legal liability policy in the case of the property owner. “And absolutely invest in continued professional liability coverage maintaining the retroactive date,” he added. Also, “read and complete your liability application thoroughly.”

The process is changing in a big way, “but the best LSRPs will continue to be advocates for their clients,” agreed Senior, who then led a panel discussion focused on the lending community’s reaction to the program.

According to Rand, lenders “see the process as a positive because it should speed things up.” He added that KeyBank has been operating in Massachusetts for many years and has gone through the same program there. But he also noted that not all lenders are necessarily focused on this legislation because the basic process will remain the same. “What we will see is a timing change. Banks have the luxury of not putting out money until they are comfortable with a project.”

When asked if one should use an LSRP for due diligence, DeRose chimed in and said, “The situation where one would not want to use an LSRP is pretty limited.” Meanwhile, Kropp reiterated that “we are trying to make the program work so we have a hand holding mindset for the first few years.”

One of the first notifications of approval for a temporary LSRP license recently went to Dr. Ira Whitman of environmental and engineering management firm Whitman in East Brunswick, which is little surprise considering the company has a long history of working with the NJDEP. Dr. Whitman serves on the Site Remediation Advisory Committee, a group established to assist NJDEP in implementing its site remediation activities.

In addition, the firm currently has several staff members certified by the NJDEP as New Jersey Clean Up Stars, a designation that already allows Whitman professionals to investigate and remediate low-priority sites and areas of concern with limited state oversight.

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