Changes to UST and Hazardous Discharge Site Remediation Funds

By: Colleen Kokas
Bureau of State Case Management

The Site Remediation Program administers two funding programs for contaminated sites, the Underground Storage Tank Remediation, Upgrade and Closure Fund and the Hazardous Discharge Site Remediation Fund. Several changes have been made in the review of applications for funding from these funds. These changes are discussed in this article.

HDSRF "Innocent" Party Grants

The Department has received inquiries about the approval process for "innocent" party grants from the Hazardous Discharge Site Remediation Fund. The statute states that a person qualifies for an "innocent" party grant if:

1. that person acquired the property prior to December 31, 1983, and
   
   
2. the hazardous substance or waste that was discharged at the property was not used by the person at that site, and
   
   
3. that person certifies that he/she did not discharge any hazardous substances or hazardous wastes at an area where a discharge is discovered.

During the review of an application the Department will determine if each of the three criteria listed above has been met. The Department will confirm the date of acquisition of the property via the Deed and require a certification from the applicant regarding any discharges on the property. This certification should indicate whether the applicant had ANY discharges of ANY hazardous substances or hazardous wastes at ANY area of the property.

The Department will determine that an applicant has met the second criteria if:

1. the hazardous substances or hazardous wastes requiring remediation were never used by the applicant; and
   
   
2. the hazardous wastes or hazardous substances are not products used by the applicant that have commingled or combined with other substances to create hazardous sub-stances or hazardous wastes requiring remediation; and
   
   
3. the hazardous substances or hazardous wastes are not breakdown products of substances used by the applicant; and
   
   
4. the remediation addresses only those hazardous substances or hazardous wastes that were never used by the applicant.

The Department reserves the right to focus on less than an entire site in the review of "innocent" party grant status.

If the Department determines that an applicant is eligible for an "innocent" party grant, it has no bearing as to whether an applicant is liable or in any way responsible for a discharge.

Performance of a PA/SI/RI will identify the discharges at a site. Therefore, no awards for an "innocent" party grant will be made by the Department until the completion of the RI. If the applicant meets all three criteria, the Department will reimburse the applicant up to 50% of the reasonable costs incurred for the PA/SI/RI as long as the work was performed after June 16, 1993 (the effective date of the HDSRF legislation) and the work was conducted with DEP oversight. In addition, if an applicant wants to apply for an "innocent" party grant for the remainder of the remediation, the applicant would have to apply prior to the work being conducted. The Department would review requests for total remediation costs up to $1 million in financial assistance.

A prime example of an applicant who would qualify for an "innocent" party grant is a developer who acquired a piece of property in 1983 or before and during the ownership never operated at the site. The developer, who never used any hazardous substances or hazardous wastes anywhere at the site, would be eligible, if money were available, for an "innocent" party grant.

HDSRF and UST Legal Fees

The Hazardous Discharge Site Remediation Fund and the Underground Storage Tank Fund do not consider attorney fees to be remediation activities that are eligible project costs for funding under either of the programs. The Department had approved some attorney fees in the past when the Department determined the costs were directly related to the remediation. These types of costs will no longer be approved in future requests for funding from either of the Funds. The application for the Hazardous Discharge Site Remediation Fund has been modified to reflect that legal fees are not an eligible cost for reimbursement.

HDSRF Municipal Grants

On January 6, 1998, the Hazardous Discharge Site Remediation Fund expanded the category under which a municipal government entity or the New Jersey Redevelopment Authority can acquire a grant to perform a Preliminary Assessment, Site Investigation or Remedial Investigation. This includes properties that are voluntarily conveyed to municipalities for the purpose of redevelopment. The statute states that:

"At least 10% of the moneys shall be allocated for financial assistance and grants to municipal governmental entities and the New Jersey Redevelopment Authority that owns or holds a tax sale certificate on real property or have acquired real property through foreclosure or other similar means, or by voluntary conveyance for the purpose of redevelopment on which there has been or on which there is suspected of being a discharge of hazardous substances or hazardous wastes."

The Hazardous Discharge Site Remediation Fund Program has received several applications from municipal governmental entities requesting grants to conduct Preliminary Assessments on properties that they plan to redevelop. Many of these properties have been owned by the municipal governmental entity for a number of years. Although the statute does allow HDSRF to award grants to municipal governmental entities that have acquired properties for the purpose of redevelopment, the statute does not address those properties that were acquired prior to the effective date of the statute. Therefore, the Department will approve a grant to a municipal governmental entity applying for a PA/SI/RI on a property that was voluntarily conveyed for redevelopment, if the property was conveyed after the effective date of the statute, January 6, 1998.

Fees/Oversight Costs and the UST Fund

In November 1996, the New Jersey Legislature adopted amendments to the State's constitution regarding the funding of several environmental projects using 4% of the Corporate Business Tax. Projects that were funded include the Underground Storage Tank Remediation, Upgrade and Closure Fund that provides for loans and grants for petroleum underground storage tanks. The constitutional amendment requires that no moneys appropriated for the UST Fund be expended on any direct or indirect administrative costs of the State or any of its departments, agencies or authorities. Therefore, the Department cannot allow any of its fees or oversight costs to be paid from the UST Fund.

Based on historical oversight cost data on homeowner cases, the Department has calculated the average cost of overseeing an underground storage tank case at a private residence that involves only soil contamination to be approximately $500 to review the remedial action report. Therefore, homeowner cases that receive grants from the UST Fund for soil only remediation will have the review of their remedial action report capped at $500. Any subsequent remedial action reports will be an additional $500 for each submission. Any other party receiving a grant will be routinely billed by the Department's Direct Billing Unit and will be responsible for paying the amount specified on the bill. For those parties that may have difficulty paying the oversight costs, the Direct Billing Unit will discuss the option of a payment plan to meet these financial obligations.

Any applicants that receive a loan from the UST Fund will be responsible for paying the bill in its entirety. However, as with the grant recipients, the Direct Billing Unit will discuss the option of a payment plan when a bill for oversight costs is received.

UST Fund and Enforcement of December 22, 1998 Deadline

The UST Fund legislation requires that those parties that are applying for financial assistance from the UST Fund take certain actions if they will not be able to meet the December 22, 1998 deadline for upgrading a regulated tank to avoid enforcement from the Department. The statute requires all of the following actions be taken:

1. The applicant submits an application for financial assistance from the UST Fund prior to December 22, 1998;
   
   
2. The New Jersey Economic has not acted on the application as of December 22, 1998;
   
   
3. The applicant agrees to enter into an administration consent order with the Department to comply with the upgrade, closure and remediation requirements;
   
   
4. The applicant complies with the provisions of the administrative consent order; and
   
   
5. The applicant maintains an acceptable method of release detection for the regulated tanks that are the subject of the application for financial assistance.

The UST Fund Program will be forwarding an administrative consent order to all those applicants who have applied to the UST Fund for financial assistance for regulated tanks. If an applicant will not be in compliance with the December 22, 1998 deadline, it will be up to the applicant to return the completed administrative consent order to the Department and to comply with the other requirements listed above to avoid enforcement actions.

Contacts for the Funds

Questions concerning the Hazardous Discharge Site Remediation Fund should be directed to Edward Stankiewicz at (609) 633-1487. General information regarding the fund as well as the application is provided on the Site Remediation Program's home page at www.nj.gov/dep/srp/finance.

Questions regarding the Underground Storage Tank Remediation, Upgrade and Closure Fund should be directed to Dominic Picardi at (609) 984-4464. General information regarding the fund as well as the application is provided on the Site Remediation Program's home page at www.nj.gov/dep/srp.