N.J.A.C. 7:22 - 3.40 through 3.44 - Penalties
7:22-3.40 Noncompliance
(a) In addition to any other remedies as may be
provided by law or in the Fund loan agreement,
in the event of noncompliance with any loan condition,
requirement of this subchapter, or contract requirement
or specification, the Department may take any
of the following actions or combinations thereof:
- Issue a notice of noncompliance pursuant to
N.J.A.C. 7:22-3.41;
- Withhold Fund loan moneys pursuant to N.J.A.C.
7:22-3.42;
- Order suspension of project work pursuant
to N.J.A.C. 7:22-3.43;
- Terminate the Fund loan pursuant to N.J.A.C.
7:22-3.44; and/ or
- Issue administrative orders of enforcement
pursuant to the New Jersey Water Pollution Control
Act (N.J.S.A. 58:10A-1 et seq.) or the Safe
Drinking Water Act (N.J.S.A. 58:12A-1 et seq.).
7:22-3.41 Notice of noncompliance
Where the Department determines that the recipient
is in noncompliance with any condition or requirement
of these rules or with any contract specification
or requirement, it shall notify the recipient,
its engineer, and/or the contractor of the noncompliance.
The Department may require the recipient, its
engineer, and/or contractor to take and complete
corrective action within 10 working days of receipt
of notice. If the recipient, its engineer, and/or
contractor fails to take corrective action or
if the action taken is inadequate, then the Department
may issue a stop-work order or withhold disbursement.
The Department may, however, withhold disbursement
or issue a stop-work order pursuant to N.J.A.C.
7:22-3.423 and 3.43 without issuing a notice pursuant
to this section.
7:22-3.42 Withholding of
funds
The Department may withhold, upon written notice
to the recipient, a Fund loan disbursement or
any portion thereof where it determines that a
recipient has failed to comply with any loan condition,
provision of this subchapter, or contract specification
or requirement.
7:22-3.43 Stop-work orders
(a) The Department may order work to be stopped
for good cause. Good cause shall include, but
not be limited to, default by the recipient or
noncompliance with the terms and conditions of
the Fund loan. The Department shall limit use
of stop-work orders to those situations where
it is advisable to suspend work on the project
or portion or phase of the project for important
program or Department considerations.
(b) Prior to issuance, the Department shall
afford the recipient an opportunity to discuss
the stop-work order with Department personnel.
The Department shall consider such discussions
in preparing the order. Stop-work orders shall
contain:
- The reasons for issuance of the stop-work
order;
- A clear description of the work to be suspended;
- Instructions as to the issuance of further
orders by the recipient for materials or services;
- Guidance as to action being taken on subagreements;
and
- Other suggestions to the recipient for minimizing
costs.
(c) The Department may, by written order to
the recipient (certified mail, return receipt
requested), require the recipient to stop all,
or any part of, the project work for a period
of not more than 45 days after the recipient receives
the order, and for any further period to which
the parties may agree.
(d) The effects of a stop-work order are as
follows:
- Upon receipt of a stop-work order, the recipient
shall immediately comply with the terms thereof
and take all reasonable steps to minimize the
incurrence of costs allocable to the work covered
by the order during the period of work stoppage.
Within the suspension period or within any extension
of that period to which the parties shall have
agreed, the Department shall either:
- Rescind the stop-work order, in full or
in part;
- Terminate the work covered by such order
as provided in N.J.A.C. 7:22-3.44; or
- Authorize resumption of work.
- If a stop-work order is cancelled or the period
of the order or any extension thereof expires,
the recipient shall promptly resume the previously
suspended work. An equitable adjustment shall
be made in the Fund loan period, and/or the
project, and the Fund loan agreement shall be
modified if necessary. However, additional project
costs as a result of this action shall be the
responsibility of the recipient
7:22-3.44 Termination of
loans
(a) Termination of loans by the Department shall
be conducted as follows:
- The Department may terminate a Fund loan in
whole or in part for good cause. The term "good
cause" shall include but not be limited to:
- Substantial failure to comply with the
terms and conditions of the Fund loan agreement;
- Default by the recipient;
- A determination that the Fund loan was
obtained by fraud;
- Without good cause therefor, substantial
performance of the project work has not
occurred;
- Gross abuse or corrupt practices in the
administration of the project have occurred;
or
- Fund moneys have been used for non-allowable
costs.
- The Department shall give written notice to
the recipient (certified mail, return receipt
requested) of its intent to terminate a Fund
loan, in whole or in part, at least 30 days
prior to the intended date of termination.
- The Department shall afford the recipient
an opportunity for consultation prior to any
termination. After such opportunity for consultation,
the Department may, in writing (certified mail,
return receipt requested), terminate the Fund
loan in whole or in part.
(b) Project termination by the recipient shall be
subject to the following:
- A recipient shall not unilaterally terminate
the project work for which a Fund loan has been
awarded, except for good cause and subject to
negotiation and payment of appropriate termination
settlement costs. The recipient shall promptly
give written notice to the Department of any
complete or partial termination of the project
work by the recipient.
- If the Department determines that there is
good cause for the termination of all or any
portion of a project for which the Fund loan
has been awarded, the Department may enter into
a termination agreement or unilaterally terminate
the Fund loan effective with the date of cessation
of the project work by the recipient. The determination
to terminate the Fund loan shall be solely within
the discretion of the Department. If the Department
determines not to terminate, the recipient shall
remain bound by the terms and conditions of
the Fund loan agreement.
- If the Department determines that a recipient
has ceased work on a project without good cause,
the Department may unilaterally terminate the
Fund loan pursuant to this section.
(c) The Department and recipient may enter
into a mutual agreement to terminate at any
time pursuant to terms which are consistent
with this subchapter. The agreement shall
establish the effective date of termination
of the project and the schedule for repayment
of the Fund loan.
(d) Upon termination, the recipient may
be required to immediately refund or repay
to the State the entire amount of the Fund
loan moneys received. If the loan is guaranteed
by a security/deficiency agreement, such agreement
may have to be brought into effect to ensure
the entire repayment of the Fund loan. The
Department may, at its discretion, authorize
the immediate repayment of a specific portion
of the Fund loan and allow the remaining balance
to be repaid in accordance with a revised
Fund loan repayment schedule.
(e) The recipient shall reduce the amount
of outstanding commitments insofar as possible
and report to the Department the uncommitted
balance of Fund moneys awarded under the Fund
loan. The recipient shall make no new commitments
without the Department's specific approval
thereof. The Department shall make the final
determination of the allowability of termination
costs.
(f) In addition to any termination action,
the Department retains the right to pursue
other legal remedies as may be available under
federal, State and local law as warranted.
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