NJDEP Enforcement Insights
NJDEP Enforcement Insight
NJDEP NOV vs. AONOCAPA: What’s the Difference?
A Notice of Violation (“NOV”) and an Administrative Order and Notice of Civil Administrative Penalty Assessment (“AONOCAPA”) are both commonly used NJDEP enforcement documents, but they have significantly different consequences. An NOV generally puts a company on notice of an alleged violation and provides an opportunity to achieve compliance. An AONOCAPA is a formal enforcement action that can order corrective action, impose a civil administrative penalty, and provide the recipient with a limited period to request an administrative hearing. If a hearing is not requested, the recipient generally waives objections to the alleged violation and penalty determination. Understanding which document NJDEP has issued is therefore important to determining the appropriate response. What Is an NJDEP Notice of Violation? NJDEP describes an NOV as an enforcement action that advises a regulated party that a violation has occurred. An NOV typically identifies the violation, the date it was discovered, and a compliance deadline. NOVs do not themselves carry civil administrative penalties. NJDEP also states that an NOV cannot be appealed through its administrative hearing process. In many instances, if the violation is corrected, no further enforcement action follows. That does not mean an NOV should be ignored. An NOV may become the basis for additional enforcement if NJDEP concludes that compliance was not achieved or determines that further action is appropriate. For this reason, companies should use the NOV stage to evaluate the factual and technical basis for NJDEP’s allegations and determine what corrective action may be required. What Is an AONOCAPA? An AONOCAPA is more significant. According to NJDEP, an AONOCAPA may be issued after a company fails to comply with an NOV or where NJDEP determines that a violation is not minor. Unlike an NOV, an AONOCAPA carries a civil administrative penalty and may also order specific corrective action. An AONOCAPA must be contested through the administrative hearing process within the applicable time frames. If not, the recipient is generally deemed to have waived all objections to the alleged violation, the required corrective actions, and any penalty assessments. The deadline for requesting a hearing is not uniform across all NJDEP programs. Hearing deadlines may vary depending on the program and document, generally ranging from approximately 10 to 35 days. The specific enforcement document and applicable regulations should therefore be reviewed immediately. Contesting an AONOCAPA through a hearing request should be done in all instances and does not generally require extensive litigation but is essential to preserve objections and provide a basis for negotiating a resolution of the alleged violations. Why the Difference Matters The distinction affects both timing and strategy. With an NOV, the immediate focus may be on investigating the violation, addressing compliance, and determining whether NJDEP’s allegations are accurate. With an AONOCAPA, the company must also consider whether to preserve its right to an administrative hearing, whether the penalty is appropriate, and whether NJDEP’s factual and legal conclusions should be challenged. Companies receiving correspondence from NJDEP should therefore begin by identifying exactly what NJDEP has issued. An NOV and an AONOCAPA may arise out of similar facts, but they do not necessarily create the same obligations, deadlines, or rights.
September 29, 2026
Environmental and Sustainability
Businesses May Face Challenges in Reauthorization of Wetlands Approvals After NJDEP Decision
Businesses in New Jersey seeking reauthorization of wetlands approvals may now be required to go through the more intensive individual permit process following a unique decision involving a wetlands permit issued to the New Jersey Department of Transportation (NJDOT). While this decision is somewhat unique as it involves a state agency as the permittee, it likely will limit the New Jersey Department of Environmental Protection’s (NJDEP) authority to reauthorize previously approved structures, activities, and features. In the latest development of this ongoing legal saga, In the Matter of Reauthorization of The Freshwater Wetlands General Permit #1 and Permit Modifications, Docket No. A-2758-21 (App. Div. June 7, 2024), the Appellate Division vacated the issuance of a Freshwater Wetlands General Permit by the NJDEP to the NJDOT. This permit was intended for the rehabilitation of a Confined Disposal Facility (CDF) to store dredged materials from multiple waterways. (A CDF is a structure planned and designed to receive sediments dredged from a waterway. Its primary function is to safely contain these materials, preventing contamination from reentering the waterway. In New Jersey, CDFs are critical in environmental management and sediment control.) The Permitting of the CDF and Subsequent Challenges The CDF at issue here was initially authorized in 1983 for the storage of dredged material from a single waterway. In 2018, NJDEP issued several permits to NJDOT in connection with the dredging of three waterways: Westecunk Creek, Parkers Run, and Cedar Run. This included a General Permit #1 authorizing the rehabilitation of the CDF. By way of background, a General Permit #1 allows the repair or replacement of a previously authorized, serviceable structure that lawfully existed before July 1, 1988, in freshwater wetlands. Eligibility for a General Permit #1 requires that: “(1) [t]he previously authorized structure... has not been and will not be put to any use other than as specified in any permit authorizing its original construction” and “(2) [t]he activities do not expand, widen, or deepen the previously authorized feature, and do not deviate from any plans of the original activity,” except for certain “minor deviations.” N.J.A.C. 7:7A-7.1(a). In 2021, based on challenges from local residents and environmental groups, the Appellate Division remanded the issuance of the General Permit to NJDEP for further consideration. After additional review, NJDEP reauthorized the General Permit in 2022. The present appeal arises from further challenges to this 2022 approval by local residents and environmental groups. The Appellate Division’s Rejection of the General Permit In a rare rejection of the deference owed to the NJDEP, the Appellate Division determined that NJDEP could not issue a General Permit #1 for the CDF due to differences between the initially authorized CDF activities and the currently proposed CDF activities under the new permit. Specifically, the Appellate Division found that the original 1983 permit only authorized the CDF to store dredged spoils from Westecunk Creek. In contrast, the General Permit allowed the CDF to store materials from three waterways. Therefore, the General Permit violated the requirement of N.J.A.C. 7:7A-7.1(a)(1), which prohibits “any use other than” what was originally authorized. Additionally, the Appellate Division concluded that the General Permit improperly “expanded” the CDF in violation of N.J.A.C. 7:7A-7.1(a)(2) because it authorized storage of nearly five times the originally permitted material. The Appellate Division also made noteworthy determinations regarding the continuity of the CDF’s operations despite the facility remaining dormant for many years, which could benefit developers and businesses in other contexts. Wetlands Approvals: Implications of Recent Appellate Division and Chevron Decisions As noted above, this unique decision may make it harder for businesses and developers to obtain reauthorization of wetlands approvals without pursuing an individual permit. When pursuing any development or rehabilitation projects, it is critical to consult with experienced professionals and legal counsel to develop a permitting strategy. As a final matter, this decision was rendered before the United States Supreme Court overturned the long-established Chevron deference, which also limited an agency’s ability to interpret its own regulations. As a result, while it was not informed by the reversal of Chevron deference, the Appellate Divisions rejection of the determination of NJDEP here may be a harbinger of a shift in treatment of NJDEP decisions by the New Jersey courts.
July 24, 2024
Litigation
NJ Court Evaluates Enviro Insurance Exclusions Amidst Natural Resource Damages
$3 billion dollars annually. That’s how much US businesses are paying for environmental insurance each year. While environmental insurance is an important risk management tool for a wide variety of industries, insurance is only as good as the terms of the policy, and this applies doubly to environmental insurance, which is written and negotiated on a custom basis to provide tailored coverage. To make things more interesting, there have been precious few decisions regarding the terms of environmental insurance policies. Now, in a recent decision, a New Jersey appellate court has interpreted the terms of an environmental insurance policy to deny coverage to the insured. See Handy & Harman v. Beazley USA Services, Inc., Docket No. A-2068-20 (N.J. App. Div. Mar. 2, 2023). Background A metal etching business operated in New Jersey from March 1984 to November 1985, when it decided to sell the property it operated on. The businesses used hazardous substances and also fell within the industries subject to New Jersey’s Environmental Cleanup Responsibility Act (ECRA), the predecessor of the Industrial Site Recovery Act (ISRA). As a result, the sale of the property triggered the obligation to investigate and remediate historical contamination pursuant to ECRA and subsequently ISRA. The business then entered into an Administrative Consent Order (ACO) to set forth its ECRA obligations and allow the sale to proceed. Thereafter, businesses completed much of the investigation and remediation of the subject property. Many years later, in 2017, and for reasons not disclosed in the decision, the business obtained an environmental insurance policy. The policy contained two relevant exclusions: (1) a Prior or Pending Litigation Exclusion, which eliminated coverage for matters arising from prior claims, proceedings, and litigation; and (2) a Specified Coverage and Contamination Exclusion, which eliminated coverage for certain pollution conditions arising from known pollution conditions, and which the policy defined as all conditions associated with the “ECRA/ISRA investigation/remediation.” The policy also decreed that New York law would govern its terms, which may have proved fatal to the insured’s hopes of coverage. A few years passed again, until 2021 when the New Jersey Department of Environmental Protection sued the business owner for natural resource damages and other environmental damages arising from the historical contamination. Natural resource damages (NRD) are damages damage to any natural resource (such as groundwater or other media) because of the discharge of hazardous substances and pollutants at the property. These damages can be distinct from the actual cost of remediating the natural resource and include loss of use and/or permanent damage to the resource. The business requested coverage for these damages under its environmental insurance policy, but the insurer refused coverage as a result of the above-referenced exclusions. Interpreting the Exclusions Both the trial court and the appellate court decided that the Prior or Pending Litigation Exclusion barred coverage because the NRD could be traced back to the business’s obligations under the ACO, and the ACO qualified as a prior “claim” that was subject to the exclusion. Although it did not convince either court, the business argued that natural resource damages were different in nature from the investigation and remediation required by the ACE. Policyholders should be troubled by this result because there is a distinction between first-party cleanup costs and natural resource damages. Policyholders should evaluate existing coverage to see how this result would apply to them, and prospective policyholders should attempt to instill more clarity regarding coverage for NRD in future policies. The courts did not need to address the Specified Coverage and Contamination Exclusion, which is unfortunate as there are so few cases interpreting this type of exclusion. However, the breadth of the exclusion is likely to have precluded coverage and is a reminder to businesses to more narrowly define known conditions where possible. At times, it is possible to define known conditions by contaminant or area of contamination so that newly discovered contamination and areas are covered. As a final matter, the business should have pressed for New Jersey law to apply to the insurance policy during its negotiations. This is something that can be easily done, and New Jersey law is much more friendly to policyholders. Conclusion Businesses will continue to use environmental insurance to manage risks and should work with experienced counsel to obtain an environmental insurance policy that provides the expected coverage. This decision highlights a few points for businesses to consider as they pursue coverage, but there are many other important areas of focus as well, and these areas vary by industry and insurance carrier.
April 5, 2023
Business
NJBPU Issues Proposal for Permanent Community Solar Program
After two successful pilot years of its nascent community solar program, the New Jersey Board of Public Utilities has released a straw proposal and proposed regulations for a permanent community solar program. As the final program will likely match many of the aspects of the straw proposal, below are some preliminary details on what project developers, investors, financiers, and others can expect: Projects will be required to be placed on rooftops, carports, and canopies over impervious surfaces, contaminated sites and landfills, and man-made bodies of water that have little-to-no established floral and fauna. Rather than the competitive application process used during the pilots, applications will be accepted on a first-come, first-served basis until the annual capacity is reached, provided that if the entire capacity is subscribed within the first ten days of the registration period, a tiebreaker will be used. Program capacity will be set at 225 MW for EY24 and EY 25 and at least 150 in EY26 and beyond. Applications will be subject to enhanced project maturity requirements, as only 44% of projects in pilot year 1 reached commercial operation by the expiration date of their conditional approval, and limited extensions of registration expiration dates will be provided. All projects will be required to serve a minimum of 51% low- and moderate-income subscribers. Consolidated billing will be implemented for pilot and future projects through a working group, and utilities will be authorized to charge a fee in connection with the consolidated billing. Co-location of community solar projects will not be allowed with other solar projects by related entities if the total capacity would exceed 5MW. However, the Board will allow co-location of unrelated projects as well as community solar and net-metered projects and will entertain petitions in other co-location circumstances. Incentive values will be maintained at $90/MWh for all community solar projects. Additional consumer protection measures will be implemented, including a minimum 10 percent guaranteed bill credit, prohibition on termination fees with appropriate notice, and certain marketing disclosures. Automatic enrollment will be an option for a municipality that owns and operates a community solar project, but only once consolidated billing is implemented. Geographic distances will not be considered as long as the subscribers are in the same utility territory as the community solar project. Dual-use solar projects on farmland will not be allowed to participate in the community solar program. The straw proposal contains many questions for stakeholders and will go through a variety of stakeholder discussions. The NJBPU will be holding an initial stakeholder meeting on April 24, 2023, and comments on the straw proposal are due by May 15, 2023. Interested parties can review the notice for information on the stakeholder meetings (including registration) as well as the complete proposed regulations. Consult with counsel regarding the impact of the proposal on future projects, as well as existing projects that have not reached commercial operation.
April 3, 2023
Business
Does Litigation Risk Loss of Potential Insurance for Environmental Harm? New Jersey Court Weighs In
Businesses risk losing potential insurance coverage for investigation and remediation of environmental contamination if they pursue claims against third parties without carefully considering and preserving available coverage. In fact, in recent ligation in New Jersey with implications nationwide, two insurance companies tried to avoid providing coverage for environmental expenses incurred by the owner of the contaminated property by arguing that the property owner’s claims were barred by New Jersey’s “entire controversy” doctrine as a result of prior litigation between the property owner and its former tenant and the tenant’s insurance company. See Industrial Corner Corp. v. Public Serv. Mut. Ins. Co., Docket No. 20-06677 (D.N.J. February 8, 2023). New Jersey’s “entire controversy” doctrine is a unique formulation of the more typical doctrine of “res judicata,” which generally bars claims that could have and should have been brought in prior litigation. However, based on the specific facts at issue, the New Jersey federal district court allowed the property owner to continue to pursue insurance coverage from the insurers despite the prior litigation. That is, the property owner has owned the New Jersey property at issue since 1971. From 1971 through 2008, the property owner leased the property to a tenant conducting manufacturing. The tenant discharged perchloroethylene (“PCE”), a solvent used to clean metal and dry-clean fabric, through its operations and thereby contaminated the property. After learning of the contamination, the property owner sued the tenant and the tenant’s insurance company in separate litigation for damages under the terms of the lease and the applicable insurance policies. The property owner successfully obtained compensation from these parties but was unable to recover all of its costs. As a result, following the conclusion of this litigation, the property owner sought coverage from its own insurance providers. As noted above, the providers responded by arguing that the property owner’s claims were barred by New Jersey’s “entire controversy” doctrine. In evaluating the applicability of the “entire controversy” doctrine, the court determined that two of the three elements of the doctrine weighed in favor of dismissing the property owner’s claims. However, the third and final element was not satisfied. In particular, the court determined that the “entire controversy” doctrine did not apply because the claims by the property owner and its insurance providers did not arise from the same transaction or occurrence as the prior litigation against the former tenant and the tenant’s insurer. The court weighed several factors and determined that, even though all of the claims arise from the PCE contamination, the claims differ in certain key regards. The court also found it dispositive that the property owner could not have brought all of the claims in the same action because they were not yet ripe, i.e., because its insurance providers had not yet refused to provide coverage. While this decision is helpful to insureds, it is easy to formulate a set of facts where the property owner’s insurers could have escaped liability based on the “entire controversy” doctrine or otherwise. As such, this decision provides a necessary warning to parties, whether located in New Jersey or beyond: carefully evaluate all potential recovery options, including private parties and insurance providers, before instituting litigation and take precautions to preserve and maintain all recovery options.
February 22, 2023
