Due Diligence and the Bermuda Triangle: Getting it Done

April 7, 2016 | No Comments
Posted by Marc D. Policastro

Co-authored by Melissa A. Clarke

As published in the Spring 2016 edition of Dimensions

Due diligence can make or break a deal, and there is a lot on the line for those charged with getting it right.  (1)   From an environmental perspective in New Jersey, that can be daunting. The Bermuda Triangle of diligence occurs when on-site sources, off-site sources and “unknown” sources converge. Diligence “death traps” become more than manageable when the developer takes a disciplined approach, staying within the ambit of the Site Remediation Reform Act (SRRA) regulations and the various guidance documents provided by the New Jersey Department of Environmental Protection (NJDEP). (2)

Off-Site Source Groundwater Investigation
One of the most commonly encountered scenarios in due diligence occurs when contamination is found proximate to a contiguous parcel, where the contamination is subject to a prior approval which, miraculously, stopped exactly at the property boundary line. Although the developer’s Licensed Site Remediation Professional (LSRP) is empowered to issue a final approval where the contamination is from an “off-site” source, investors will generally demand that the contamination be cleaned up prior to construction.

Regulatory requirements for determining the presence of an off-site source of contamination are outlined in N.J.A.C. 7:26E-3.9. During an off-site source investigation, a Preliminary Assessment (PA) is required to evaluate whether the observed contamination is from an on-site source or the result of contamination migrating onto the site from an offsite source. An investigator should consider current and historical use of off-site properties in addition to the on-site property usage, as well as the degradation of compounds and the resulting products. The investigator should also determine ground water flow direction in all relevant water bearing zones or aquifers involved in the off-site source investigation.

Commingled Plumes
A commingled plume is the condition that exists when ground water contaminated from two or more temporally or spatially discrete discharges have mixed or encroached upon one another to the extent that the remediation performed on one plume will necessarily affect the remediation of the other contaminant plume(s). The presence of commingled plumes may pose issues for remediating parties in achieving upcoming timeframes (including the statutory timeframe to complete remedial investigation by May 7, 2016).

To comply with N.J.A.C. 7:26E-3.9, the investigator must demonstrate that potential on-site sources are not contributing to the ground water contaminant plume by performing a PA and, if necessary, a site investigation if potential Areas of Concern (AOC) are identified. When investigating potential contribution from on-site AOCs, ground water samples should be collected in areas that are proximal to and hydrologically downgradient of the AOC; however, the presence of an upgradient plume may make it difficult to differentiate between impact from on-site and off-site sources. The investigator should therefore review the conceptual site model, paying particular attention to flow direction, contaminant degradation, potential pathways, and fate and transport modelling before choosing sampling locations.

Guidance Documents
The NJDEP Off-Site Source Groundwater Investigation Technical Guidance provides information on the investigation necessary to determine if contaminated ground water is migrating onto a site from an off-site contaminant source, tools and strategies to aid the investigator in developing lines of evidence to document off-site contamination, administrative procedures for notifying NJDEP of the condition, and guidance on obtaining a Remedial Action Outcome (RAO). A Commingled Plume Technical Guidance document, expected to be released later this year, will provide guidance to environmental professionals when faced with a ground water plume originating from an off-site source that has combined with another ground water plume originating from an on-site source.

Conclusion
If an off-site source is demonstrated and there are no on-site contributions to the contamination, the party responsible for conducting the remediation is not required to remediate the contamination migrating onto its site. If an off-site source is demonstrated but there is also an on-site source contributing to the plume (or cannot be ruled out as contributing to the plume), then the investigator should refer to the Department’s Commingled Plume Technical Guidance (scheduled to be issued later in 2016). If an off-site source is demonstrated and there is contamination from an on-site source that does not commingle with the off-site plume migrating onto the site, then the party responsible for cleanup is required to remediate only the contamination associated with the on-site source [N.J.S.A. 58:10B-12g (5) and N.J.A.C. 7:26E-3.9(b)].


1.   Landowners seeking to avoid liability under the Spill Act for prior discharges of hazardous substances can attempt to do so by affirmatively establishing the elements of the “innocent purchaser” defense. For purchases made on or after September 14, 1993, the Act requires a showing that owners neither knew about the contamination at issue, nor had reason to know of the contamination, when they purchased the property. This requires a showing that the owner undertook “all appropriate inquiry into the previous ownership and uses of the property,” prior to acquisition, which is defined as “the performance of a preliminary assessment, and site investigation, if the preliminary assessment indicates that a site investigation is necessary.” For purchases prior to September 14, 1993, owners need only show they neither knew, nor had reason to know, about the contamination at the time of purchase, and undertook, “at the time of acquisition, all appropriate inquiry on the previous ownership and uses of the property based upon generally accepted good and customary standards.”
2.  NJDEP’s guidance documents are designed to help the party responsible for conducting remediation comply with the Department’s requirements established by the Technical Requirements for Site Remediation (Technical Rules), N.J.A.C. 7:26E.

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