NJDEP Issues Invoices for Oversight Services

April 11, 2008
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A recent audit conducted by the New Jersey State Legislature’s Office of Legislative Services revealed that over the past ten years, the New Jersey Department of Environmental Protection (NJDEP) failed to issue invoices to a large number of parties for oversight services rendered. NJDEP estimates that about 4,000 sites were never (or partially) billed. The Department began sending invoices for previously unbilled oversight services in December 2006 and will continue issuing bills until all entities identified in the audit have been contacted. The Department is seeking to collect roughly $15 million in fees and has instituted a new billing and collections systems to help in this endeavor. More information can be found on the NJDEP’s website at http://www.nj.gov/dep/srp/directbilling. NJDEP will now be withholding No Further Action1 (NFA) letters from parties who have outstanding balances. The Department will also begin charging interest on unpaid oversight bills, which will dramatically increase the indirect cost rate they are charging parties responsible for site contamination2. Homeowners and innocent purchasers will continue to be exempt from paying the indirect cost rate under the new system. If you received oversight services in the past and have not yet been charged, you should expect to receive a bill in the near future. NJDEP has stressed that it understands the hardship this new policy may cause and has expressed some willingness to negotiate. Should you receive a bill and have questions, you may want to consider contacting qualified legal counsel to advise you in this matter. This Scarinci Hollenbeck Client Alert has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel.
1Once NJDEP has completed its oversight of an environmental clean-up and concluded that the site has been adequately remediated, a No Further Action (NFA) letter is issued. This letter is increasingly required in real estate transactions to develop funding. 2In fiscal year 2007, NJDEP charged an indirect rate of 95.29%. NJDEP has now spiked the rate up to 163.09% for fiscal year 2008.