The New Jersey Department of Environmental Protection (“NJDEP”) has again received legislative approval for an extension of time to file “natural resource damage” claims against companies and property owners, who have already remediated their properties. Several business groups opposed this legislation. Despite these objections, the NJDEP has convinced the Legislature that “natural resource damage” claims, for sites which have already been remediated and which have received the NJDEP’s “No Further Action Letter,” will be allowed to be pursued.

This legislation significantly impacts businesses that have already reached agreements with their insurance carriers for the cost of cleanup. As a precondition to receiving insurance funds for the cost of remediation, insurance carriers often require businesses to enter into agreements with complete site releases or a buyback of the policies.

These agreements preclude the policyholder from looking to the insurer to cover the costs of responding to “natural resource damage” claims. A site release agreement with an insurance carrier means that any future claims in regard to that particular site will not be covered by insurance. The buyback of the policies is even more onerous. It means that the business may not look to the insurance carrier for any purpose.

The NJDEP will be pursuing these claims in the Superior Court of New Jersey. Businesses expressed strong opposition to these types of claims since many voluntarily cleaned up all contamination on their properties. The NJDEP has taken the position that cleaning up contamination in the soil and groundwater is insufficient, and the NJDEP is demanding “natural resource damage” claims as well. These claims can be rather amorphous, covering general damage to the environment, as well as the more specific damage to wildlife.

When cleaning up contaminated property, it is essential to have a clear understanding of the parameters of any “No Further Action Letter,” issued by NJDEP. In addition, negotiations with any insurer must provide the necessary protection against later asserted natural resource damage claims. Purchasers of industrial property must also be wary of the possibility of such claims growing out of the conduct of their predecessors.

Mary Lou Delahanty, Esq. heads the environmental law practice at Szaferman Lakind Blumstein Blader & Lehmann, P.C., 101 Grovers Mill Road, Lawrenceville, NJ 08648. 609-275-0400. Fax: 609-275-4511.

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