New Jersey's LSRP Program - Would it work in PA?
I just returned from a seminar in Trenton organized by Langan Engineering on New Jersey's recently enacted Site Remediation Reform Act and its use of Licensed Site Remediation Professionals (LSRP) to implement that Act. The LSRP Program was summarized by Irene Kropp, NJDEP's Assistant Commissioner for Site Remediation. Perspectives were also provided by environmental consultants, attorneys, and corporate and business representatives.
My purpose in attending the program was to learn about New Jersey's LSRP program and to form an opinion on whether such a program could be helpful in Pennsylvania. After sitting through four hours of presentations, my opinion is that Pennsylvania doesn't need an LSRP program now, it is unlikely to need one in the future, but Pennsylvania policy makers should closely monitor developments in New Jersey, and if the program turns out to be wildly successful, then elements of it could be considered to fit within Pennsylvania's remediation framework.
When speakers were asked to explain why New Jersey decided to adopt an LSRP program, they explained that New Jersey's regulatory program for addressing contaminated sites was "broken". David Brogan from the NJ Business and Industry Association described the circumstances leading to the adoption of the LSRP program as "the perfect storm", which included a serious backlog in NJDEP reviewing and approving reports, a budget crisis, and political pressure for the state to be more business friendly. Those circumstances do not exist in Pennsylvania. Act 2 is one of the most successful environmental programs in the history of the Commonwealth. The statute already sets specific timeframes for PADEP to review various plans and reports, and DEP has been meeting those deadlines for the last 14 years. You don't hear many complaints about Act 2. You mostly hear praise and envy from practitioners in other states. It works. And while we have had our own budget crisis, it's nothing like that in New Jersey. Even before the adoption of the LSRP program, NJDEP had been cut to the bone and was just a shell of its former self. While PADEP staff has been cut, the levels are now similar to those that existed when I was Deputy Secretary, when Act 2 was first developed and implemented.
The adoption of the LSRP program means that there will no longer be a voluntary cleanup program in New Jersey. Anyone initiating remediation in New Jersey now needs to hire a Licensed Site Remediation Professional. For sites already in the regulatory system, there is a transition period where people can opt in. Starting in May 2012, however, all sites will need to use an LSRP.
One of the most dramatic changes in New Jersey relates to the new duties imposed on LSRPs. There is an LSRP Code of Conduct that says if an LSRP identifies a condition at a contaminated site that, in his or her professional judgment, is an immediate environmental concern, that LSRP must immediately notify NJDEP of the condition. That duty raises significant issues for buyers and sellers in property transactions. Here's an example. If you are Selling a piece of property and the Buyer is allowed to perform due diligence, would you want the Buyer to use an LSRP or someone who isn't an LSRP? If they use an LSRP and the LSRP comes onto the property and sees a sheen on some surface water or they detect odors in a building, that consultant could, and likely would, be required by the Code of Conduct to immediately report those conditions to NJDEP. On the other hand, if the Buyer's consultant was not an LSRP, there'd be no duty to report those conditions to NJDEP. So, if you are a seller, you might be tempted to put in the purchase agreement a prohibition on the buyer using an LSRP to perform the due diligence. The speakers noted that the Code of Conduct leaves many gray areas which will have to be addressed by an as-yet-to-be -created Board that will oversee the LSRPs.
Another significant issue that was discussed is the requirement that NJDEP audit a certain percentage of the site remediation projects being completed with LSRPs. Apparently, the audits will take place within three years after the site remediation is completed and an RAO (Remedial Action Outcome) is issued (the RAOs replace what had been NFAs issued by NJDEP). What happens if the LSRP, in the exercise of its sound professional judgment, issues the RAO and three years later NJDEP audits the site and decides to invalidate the RAO. Who would be responsible? Is the consultant responsible for any added costs? Was that issue addressed in the agreement between the remediator and the LSRP? What if the LSRP decided that the appropriate remedy was to cap the site, and NJDEP later rejects the RAO that approved that remedy and says all the waste material needs to be removed? If the cap cost several hundred thousand dollars, and now it has to be removed to get at the waste material and all of that expenditure was wasted, who is held responsible? What if the property transaction closed upon the consultant's issuance of the RAO, and several years later NJDEP invalidates the remedy and holds the buyer responsible for additional costs? It would seem that every consulting agreement and purchase and sale agreement in New Jersey will now have to be re-evaluated to take into consideration a whole host of new issues arising out of the LSRP program.
My impression of the New Jersey LSRP program is that it is very complex. NJDEP developed 382 pages of rules. You need to read the statute, the rules, and understand the Code of Conduct. There are multiple triggers and timelines for the implementation of different pieces of the program. There are provisions allowing NJDEP to have direct oversight over specific sites, in addition to the sites handled by LSRPs. There is a hope that this will all work because the system in place now in NJ is broken and in need of repair. The bet is that the LSRP program will give brownfield developers more certainty and push sites through the process more quickly. It's a work in progress. Speaker after speaker said the upcoming 2 1/2 year transition period before all sites are required to use LSRPs is seen as a shakedown period, and all stakeholders are encouraged to help improve the system. Based on what Irene Kropp said, NJDEP is committed to the success of the program. As a former Deputy, I appreciate her determination, but the proof is in the implementation. Using LSRPs to implement the remediation program is a transformational change. Part of me thinks that the environmental consulting community is going to be the biggest beneficiary of this program and the jury is still out on whether this is going to work.
As noted above, I don't think PA needs an LSRP program. NJDEP lacked regulatory capacity. PA still has capacity even with the recent budget cuts. NJDEP staff was chided for not making decisions on plans and reports and allowing them to languish without final decisions. PADEP staff has to deal with statutory deadlines and ECP managers make sure those deadlines are met. The new NJDEP program has aspects that would fundamentally change the nature of how sites are addressed in PA. It's heavy handed, very prescriptive, it pulls all sites into the regulatory system with mandatory reporting by consultants. It seemed to me to still be very enforcement driven. I prefer to stick with a voluntary program that combines discretion, flexibility and common sense. In a way, falling into a situation where environmental consultants have to fill the shoes of regulatory officials has to be seen for what is is -- a failure to properly manage the regulatory program and a throwing in the towel. It's an admission of defeat. I would hope that things in Pennsylvania would never come to that point. While I can see privatization in some form in PADEP's future, I don't think it will take the form of LSRPs.
The only time that I could see Pennsylvania considering an LSRP program would be if funding for PADEP continued to be reduced and the ECP program got the to point where it could no longer fulfill its statutory duties. I don't see that happening. Then again, HSCA (from which most of the ECP staff is funded) will be up for funding again shortly and, as of yet, there is no dedicated funding stream for the program. Rep. George had sought to create a dedicated funding stream through a severance tax on Marcellus Shale. That did not go through in the most recent budget, but it may very well be back on the table in next year's budget discussions. A permanent, secure funding stream for HSCA would ensure a responsibly administered and managed brownfield program in Pennsylvania, which would continue to create new jobs and economic opportunities for the citizens of the Commonwealth.
My thanks to Nick DeRose at Langan for inviting me to the seminar.
