Remediation Funding Source (RFS) Guide
What constitutes a complete RFS package?
The initial submission of RFS should include:
For subsequent submissions, the person responsible for conducting the remediation is required to submit
an annual cost review 365 days after the person was required to establish the initial RFS. This submission
must include:
Annual 1% RFS Surcharge
N.J.S.A. 58:10B-11 and N.J.A.C. 7:26C-5.9 requires a surcharge in the amount
equal to one percent (1%) of the required RFS to be paid annually by every person
who is required to establish and maintain a RFS in the form of a Letter of Credit,
Line of Credit, Remediation Trust Fund and/or Environmental Insurance Policy. There
are no surcharges for Self-Guarantees. The 1% surcharge checks should be made payable to:
"Treasurer, State of New Jersey". Please include the NJDEP Program Interest Number
(PI #) or ISRA case number (e.g. E2013001) in the memo field of the check so the
Department and the Department of Treasury can accurately record receipt of the check
in its database and the person will be considered in compliance with the requirement.
The initial surcharge check is due with the initial submission of the RFS mechanism and
is due annually thereafter on the same date the initial submission was required. Thereafter, the
person responsible for conducting the remediation will receive an invoice for the 1%
surcharge from the Department of Treasury annually. Payment of the 1% annual surcharge
that is invoiced from the Department of Treasury must be mailed back to the Department
of Treasury. Please follow the instructions on the invoice when making payment.
Please note:
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The 1% surcharge is calculated on the amount that is in the
RFS account for the cost of remediation. It is not calculated on any accrued interest.
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The 1% surcharge cannot be paid from the amount posted for the RFS. It may be paid from
interest accrued on the RFS.
What are acceptable RFS and FA mechanisms?
All RFS and FA mechanisms must comport with the format and language
of the model documents found at the links below.
Surety bonds and performance bonds are not acceptable RFS mechanisms.
However, the Department includes them on the forms for sites that
were grandfathered in prior to these mechanisms being excluded
by statute.
Annual RFS Renewal and Verification of the Amount in the RFS
The person responsible for conducting the remediation who has established RFS shall notify the
Department annually of the value of the RFS and that the RFS will continue to exist for the next
consecutive 12 months as follows:
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Self-guarantee: 30 calendar days prior to the current approved expiration date, a new application
is to be submitted based on the most current fiscal year end financials.
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Remediation Trust Funds, Lines of Credit and Environmental Insurance Policies: 30 calendar days
prior to the anniversary date of establishment of the RFS, a written statement must be submitted
to the Department from the holder or issuer of the RFS confirming the value of the funding source
and renewal of the funding source for the next 12-month period.
Please see the RFS Annual Renewal Notification template .
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Letters of Credit: This mechanism stipulate 'self-renewal' clauses (i.e., the letter of credit
will be automatically renewed) unless 120 days prior to the expiration date the lender notifies
DEP of the nonrenewal. If the lender does not renew the letter of credit, the person responsible
for conducting the remediation must obtain a replacement RFS mechanism prior to the expiration
date of the existing letter of credit.
Changes to RFS Amount or Mechanism
There are four ways that the RFS can or must be changed:
- Disbursed to pay for actual remediation costs:
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If the RFS is in the form of a Remediation Trust Fund or a Line of Credit, the
request for disbursement must be made by the LSRP to the holder of the RFS.
-
If the RFS is in the form of a letter of credit or an environmental insurance policy,
the request for disbursement must be made to the Department to authorize the holder of
the RFS to disburse funds for remediation.
- All requests for disbursement must contain the name of
the site and the PI# or ISRA case number, the amount of
the disbursement request, and a certification by the person
responsible for conducting the remediation and the LSRP
that the money requested is for actual remediation costs
that were or will be incurred. Please provide the Form Letter
for Disbursement
and submission of the completed Remediation Cost Review
and RFS/FA form to the Department.
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Requests for disbursements can only be made once every three months.
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Decreased based on a decreased cost estimate for the completion of the remediation:
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At any time during the course of the remediation, if the person responsible for
conducting the remediation determines (via the LSRP's certification) that the cost
estimate to complete the remediation has decreased, the person may request that the
Department authorize a reduction of the amount of RFS posted to the amount of the
revised cost estimate.
-
The person must submit a completed Remediation Cost Review and RFS/FA form indicating
the amount of the revised cost estimate and the amount of the remaining RFS. This will
ensure that the Department's database contains the accurate amount of funds in the RFS
and that the 1% surcharge is calculated on the correct amount that is in the RFS.
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Must be increased based on increased cost estimate for the completion of the remediation:
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At any time during the course of the remediation, if LSRP determines that the cost
estimate to complete the remediation has increased, the LSRP must submit written
notice of the increased cost estimate to the person responsible for conducting the
remediation and copy the Department.
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The person MUST request that the holder of the RFS increase the amount of RFS posted
to the amount of the revised cost estimate within 30 days of receipt of the LSRP's
revised cost estimate.
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The person must submit a completed Remediation Cost Review and RFS/FA form to the Department indicating
the amount of the revised cost estimate and the amount of the increased RFS.
-
Return/release of RFS:
Transitioning from RFS to FA
If the LSRP is issuing a Remedial Action Outcome (RAO) with the Department for all known areas of
concern and the RAO requires an engineering control as part of the remedial action, the person responsible
for conducting the remediation may use the existing RFS to meet FA requirements. RFS can be
transitioned to FA as follows:
- All three of the following criteria must apply at the site:
-
The LSRP will be issuing an entire site RAO following the issuance of the
Remedial Action Permit for which the RFS will be used as FA. In other words,
there are no remaining areas of concern which require remediation at the site.
(Note: If there are remaining areas of concern requiring remediation (an entire
site RAO can't be issued), RFS is still required for that site, therefore the
person cannot use the existing RFS mechanism, but must obtain a separate FA
mechanism)
-
The amount of the funds in the RFS mechanism is equal to the amount of the funds
required to be posted for FA at the time the Remedial Action Permit application
is submitted. If the amount of the funds in the RFS is either greater than or
less than the amount required for FA, the person must follow the requirements
in the ARRCS rules at N.J.A.C. 7:26C-5.11 to either increase or decrease the
funds PRIOR TO the submission of the Remedial Action Permit application.
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The RFS is NOT in the form of a self-guarantee. If the RFS is in the form
of a self-guarantee, the person cannot use the existing RFS, but must obtain a
separate FA mechanism.
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The person responsible for conducting the remediation must indicate in section H
of the Remedial Action Permit form(s) that s/he is choosing to utilize the existing
RFS mechanism to satisfy the FA requirement.
-
Once the amount of the RFS is equal to the amount of FA required and the Department
has been advised via the Remedial Action Permit application that the person responsible
for conducting remediation wishes to use the existing RFS mechanism to meet their FA
requirement, the Department will adjust its records to change the mechanism from RFS
to FA and insure that the 1% surcharge invoices are suspended.
Note: If the remedy includes a ground water monitored natural attenuation (MNA) and no
engineering control, the person is not required to post FA.
If the LSRP is issuing an area of concern Remedial Action Outcome (RAO) requiring an
engineering control as part of the remedial action, the person responsible for conducting
the remediation must get a Remedial Action Permit and post FA. The funds in the RFS can be
transitioned to FA only if the full scope of the required remediation for which the RFS was
required is completed. If the area of concern RAO does not cover the full scope of the remediation:
-
The person responsible for conducting the remediation must establish a separate mechanism
of FA as part of the Remedial Action Permit application.
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The RFS must be maintained in the amount of the cost estimate to complete the remediation
of the remaining area(s) of concern.
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The person responsible for conducting the remediation may decrease the amount of the
existing RFS to the amount estimated to complete the remediation of the remaining area(s)
of concern. The person must check the "Change in Remediation Funding Source or Financial
Assurance Amount pursuant to N.J.A.C. 7:26C-5.11" box on the Remediation Cost Review and
RFS/FA form submitted along with the Remedial Action Permit application.
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