(L-R) Irene Kropp, Dan Borgna, Steven Senior, Peter Rand, & Nick DeRose
When Gov. Jon Corzine signed the Site Remediation Reform Act (SRRA) in May, that signature set in motion a series of radical changes in the way New Jersey's brownfield redevelopment sites are remediated. A NAIOP New Jersey program at the PSE&G Training Center spelled out some of those broad changes, specifically as they relate to the Licensed Site Remediation Professionals (LSRP) program within the SRRA.
"The initial years of the LSRP program will be a learning experience for everyone involved," said Irene Kropp, New Jersey Department of Environmental Protection assistant commissioner for site remediation. She discussed specific details of the LSRP program, which essentially shifts the responsibility for overseeing development site cleanups from New Jersey DEP staffers to private sector professionals licensed by the agency in an effort to break the logjam of 20,000 sites requiring remediation statewide.
"DEP now has 150 applications for LSRP," Kropp reported. "Of those, 35 professionals have been approved and 25 have paid their fees and are now LSRPs. The full regulations will be on the agency's web site in November, and upon publication, LSRPs will be required for all new projects. Existing projects may also opt into the LSRP program."
"New cases will pay an annual fee for the process instead of fees with each document," Kropp continued. "There is a tiered fee structure ranging from $500 to $20,000 based on the number of contaminated areas at a site and the number of media, such as groundwater, that are contaminated."
One area in which concerns have been expressed is that of insurance. Offering a sample insurance agreement to attendees, Dan Borgna, Vice President of Frenkel Environmental, noted, "from an insurance standpoint, LSRP is very similar" to the previous mode of New Jersey DEP PE oversight. "Many of the same issues exist. However, it is an absolute must to have continued professional liability coverage maintaining a retroactive date."
Among the "gray" areas that need to be addressed, according to Borgna, include the hiring of an LSRP who brings a project with them; what if your LSRP leaves for another firm; and what if your LSRP retires.
"While the process is changing dramatically, the best LSRPs will continue to be the best advocates for their clients," said Steven T. Senior, counsel in the environmental practice group of Riker, Danzig, Scherer, Hyland & Perretti, who led a discussion of the numerous other legal issues encompassed by the program change.
On the financial side, "lenders see the LSRP program as a positive because it should speed projects up," said Peter Rand, Vice President and Senior Relationships Manager for KeyBank Real Estate Capital. "Many lenders have not necessarily focused on it because the basic site remediation process will be the same. It is seen as a timing change, and the banks generally have the luxury of not releasing the money until they are comfortable with the project.
"Overall, I would say also that the national banks already have experience in Massachusetts, which has a similar program that was largely copied by New Jersey," Rand said. "KeyBank has been operating in Massachusetts for many years, has gone through the same program, and is comfortable with it."
As far as whether an LSRP should be utilized during the due diligence process for a given project, "the situations in which one would not want to use an LSRP in that process would appear to be very limited," Nick DeRose of Langan Engineering concluded.
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