Categories: Environmentally Sensitive Businesses
March 26, 2020
Last week the NJDEP issued a Compliance Advisory reminding the regulated community that, despite the COVID-19 concerns, all of the requirements to notify NJDEP remain in effect.
The reason for the reminder is so that the regulated community continues to be diligent in their efforts to notify NJDEP in accordance with applicable environmental statutes, rules and their operating permits. As these are unpredictable times, there could be operational disruptions, shutdowns or other failures that unintentionally cause permit exceedances or additional concerns that may require notification to NJDEP, such as spills or discharges of hazardous substances. These notifications are critical to inform NJDEP as well as other specified governmental agencies about potential impacts to the environment and human health and safety.
As such, there is no reprieve to notify NJDEP if notification obligations are triggered by circumstances, whether or not a true emergency exists. NJDEP has indicated that they may pursue enforcement action and penalties against those entities that fail to comply with the NJDEP mandated notification requirements. Although it is unclear how aggressive NJDEP will be in enforcing these notification requirements, it would be prudent to continue to effectively monitor your business’s reporting and notification obligations during this chaotic time. If you need assistance in evaluating whether a reporting obligation exists for your business, please feel free to reach out to one of our environmental attorneys.
Related Practice: Environmental Law
Category: Environmental Liability, Environmental Remediation, Real Estate Development, Environmental Regulatory Compliance, Contaminated Property Transactions, Environmentally Sensitive Businesses
February 28, 2020
Businesses conducting soil and fill recyclable material services that do not already possess an A-901 license have until April 20, 2020 to register with the New Jersey Department of Environmental Protection as a first step to comply with a newly enacted licensing law requiring greater oversight of those activities, DEP Commissioner Catherine R. McCabe announced today. An A-901 license is issued by the state after the Attorney General's Office, New Jersey State Police and the DEP review the application filed by the business that is designed to demonstrate that the business is not involved with organized crime.
Governor Phil Murphy signed the law - known as the "Dirty Dirt Bill" on Jan. 21, expanding the DEP's oversight of companies that engage in, or provide, soil and fill recycling services including collection, transportation, processing, brokering, storage, purchase, sale or disposition of soil and fill recyclable materials.
Commissioner McCabe said that now “the DEP and our local partners are in a better position to take action to address problematic fill material and companies engaged in these activities. These new tools will empower the state and local governments to ensure that the soil and fill brought into our communities is clean and safe, while helping us defend against illegal dumping of soil and fill."
The law also requires affected companies that do not already possess an A-901 license to submit an application and a disclosure statement to the Attorney General's Office detailing their work with soil and fill material in order to receive a soil and fill recycling license for operations in New Jersey by Oct. 19, 2020. Businesses that do not register by the April 20, 2020 deadline or businesses that apply for a license thereafter and do not meet the license review requirements will no longer be allowed to perform soil or fill recycling services work in New Jersey.
The part of the law most favorable to businesses allows those that register to continue their services while awaiting a license. Those who apply for a license after the deadline will have to wait for the license before continuing soil and fill recycling services.
The law firm of Mandelbaum Barrett has experience assisting businesses with obtaining the licenses and approvals from the DEP, including A-901 licenses.
January 17, 2019
Recently, in Morris Plains Holding VF, LLC v. Milano French Cleaners, Inc., the New Jersey courts held the sole shareholder of a corporation personally liable for the cost to clean up the property on which his business operated. The defendant operated a dry cleaning business in a shopping center. When dry cleaning solvents were discovered in 1999, the defendant spent $140,000 over 10 years remediating the property before closing its business and filing for bankruptcy in 2012. At that point, the corporate defendant had no assets to complete the cleanup. Plaintiff, who owned the shopping center and assumed responsibility for the remediation, sued the dry cleaner’s sole shareholder, individually, and the trial court found he was personally liable under the New Jersey Spill Compensation and Control Act. Thus, the corporate shareholder was required to spend his own money on the cleanup costs.
Defendant argued that the facts proven at trial did not show that he was a “discharger” as defined in the Spill Act, was responsible for the discharge of hazardous substances or that there was a basis for piercing the corporate veil to hold him personally liable. The Appellate Division affirmed the trial court’s decision that there was no need for a “smoking gun witness” who had seen the sole shareholder actually discharge the solvents onto the property, since the dry cleaning business used 15 gallons of dry cleaning solvent annually for 25 years, was the only dry cleaning business ever on the property, the machinery sat on a concrete floor with no drains, and the soil located directly beneath the machinery was contaminated with the dry cleaning solvents. The Appellate Division agreed that the evidence supported holding the sole shareholder personally liable because he was ”everything” vis-à-vis this business: its sole shareholder, the operator of the business, responsible for handling the dry cleaning solvents and charged with ensuring legal and regulatory compliance. The court concluded that by imposing liability on persons “in any way responsible,” the New Jersey legislature intended to expand the scope of liability under the Spill Act “without regard for corporate veils and the like.” Thus, the court concluded that a shareholder of a close corporation could not contaminate property, put his corporation in bankruptcy and walk away from the problem.
This case expands the liability of corporate shareholders under the Spill Act. Previously, courts had required that the test for corporate veil piercing must be met to hold shareholders, officers or directors personally liable under the Spill Act for cleanup costs. Basically, those cases refused to hold shareholders personally liable where they were acting for the corporation, not for themselves individually, so that they would not be personally liable unless the corporation was used to perpetrate fraud, to accomplish a crime or to otherwise evade the law. Previously, under the federal Comprehensive Environmental Response, Compensation and Liability Act which was modelled after New Jersey’s Spill Act, the most significant exception to the rule that the shareholders, officers and directors could not be held personally liable absent veil piercing was where the shareholder, officer or director was shown to have personally participated in the hazardous substance disposal activities so that he or she was held to be an “operator.” The court in the Morris Plains Holding held that New Jersey’s Spill Act imposes the same liability on shareholders as “operators,” without the need to pierce the corporate veil. Those operating businesses that involve hazardous substances should take affirmative steps to insulate themselves from liability arising either from being an “operator” or the piercing of the corporate veil, including by buying environmental insurance to protect their businesses and personal assets.