A2400

An Act concerning the forfeiture of economic development subsidies and supplementing Title 52 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):

“Authority” means the New Jersey Economic Development Authority established by section 4 of P.L.1974, c.80 (C.34:1B-4).

“Commissioner” means the Commissioner of Environmental Protection.

“Costs to address the environmental incident” means any costs incurred to mitigate the impact of an environmental incident on residents of the geographical area in the State impacted by the environmental incident, as determined by the commissioner. “Costs to address the environmental incident” shall include but not be limited to, the costs of environmental remediation necessary to contain and remediate the impact of the incident, housing relocation costs for impacted residents, the installation of air filtration and fire suppression systems within impacted buildings or structures, and the costs of psychological or mental health counseling for impacted residents.

“Department” means the Department of Environmental Protection.

“Economic development program” means any program administered by the authority pursuant to Title 34 of the Revised Statutes, and any rules and regulations issued pursuant thereto.

“Economic development subsidy” means any funds or financial assistance provided to a recipient business by or from a State public body with a value greater than $25,000 under an economic development program, including, but not limited to, any bond, grant, loan, loan guarantee, matching fund, tax credit, or other tax expenditure. “Economic development subsidy” shall not mean any contract under which a State public body purchases or otherwise procures goods, services, or construction on an unsubsidized basis, including any contract solely for the construction or renovation of a facility owned by a State public body.

“Environmental incident” means a violation of the State’s environmental laws that causes a discharge into the air, land or water of this State, which results in a notice of violation from the department, and which has an adverse impact on the environment.

“Fund” means the Environmental Incident Recovery Fund established pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

“Recipient business” means any for-profit corporation, joint venture, limited liability company, partnership, sole proprietorship, or other form of business organization or entity either within or outside this State that receives an economic development subsidy.

“State public body” means the State of New Jersey or any agency, authority, board, commission or instrumentality of the State. “State public body” shall not mean a political subdivision of the State, or an agency, authority, board, commission or instrumentality of a political subdivision of the State.

“State’s environmental laws” means the “Air Pollution Control Act (1954),” P.L.1954, c.212 (C.26:2C-1 et seq.), the “Radiation Protection Act,” P.L.1958, c.116 (C.26:2D-1 et seq.), “Spill Compensation and Control Act,” P.L.1976, c.141 (C.58:10-23.11 et seq.), the “Water Pollution Control Act,” P.L.1977, c.74 (C.58:10A-1 et seq.), P.L.1986, c.102 (C.58:10A-21 et seq.), the “Brownfield and Contaminated Site Remediation Act,” P.L.1993, c.139 (C.58:10B-1 et seq.), as amended and supplemented, the “Industrial Site Recovery Act,” P.L.1983, c.330 (C.13:1K-6 et al.), the “Toxic Catastrophe Prevention Act,” P.L.1985, c.403 (C.13:1K-19 et seq.), the “Solid Waste Management Act,” P.L.1970, c.39 (C.13:1E-1 et seq.), the “Comprehensive Regulated Medical Waste Management Act,” P.L.1989, c.34 (C.13:1E-48.1 et seq.), the “Major Hazardous Waste Facilities Siting Act,” P.L.1981, c.279 (C.13:1E-49 et seq.), the “Sanitary Landfill Facility Closure and Contingency Fund Act,” P.L.1981, c.306 (C.13:1E-100 et seq.), the “Regional Low-Level Radioactive Waste Disposal Facility Siting Act,” P.L.1987, c.333 (C.13:1E-177 et seq.), the “Pollution Prevention Act,” P.L.1991, c.235 (C.13:1D-35 et seq.), the “Safe Drinking Water Act” P.L.1977, c.224 (C.58:12A-1 et seq.), or any other law or regulation by which the State may compel a recipient business to perform containment or remediation activities on contaminated property.

“State Treasurer” means the Treasurer of the State of New Jersey.

“Tax expenditure” means the amount of foregone tax collections due to any abatement, reduction, exemption, credit, or transfer certificate against any State tax, including, but not limited to: taxes on raw materials, inventories, or other assets, taxes on gross receipts, income or sales, and use, excise, or utility tax. “Tax expenditure” shall not mean any credit against any tax liability of an employee; any personal exemption, homestead rebate, credit, or deduction for the expenses of a household or individual; or other reduction of the tax liability of an individual or household.

2. a. Whenever, on the basis of available information, the commissioner finds that a recipient business is responsible for any environmental incident, the commissioner shall:

(1) issue an order requiring the recipient business to comply with subsection b. of this section;

(2) bring a civil action against the recipient business in accordance with subsection c. of this section;

(3) levy a civil administrative penalty in accordance with subsection d. of this section; or

(4) bring an action for a civil penalty in accordance with subsection e. of this section.

b. Whenever, on the basis of available information, the commissioner finds that a recipient business is responsible for an environmental incident, the commissioner may issue an order: specifying the provision or provisions of law, rule, regulation, permit or order of which the recipient business is in violation; citing the action or actions which constituted the violation; requiring compliance with the provision or provisions violated; ordering abatement of the violation; and giving notice to the recipient business of its right to a hearing on the matters contained in the order. The recipient business shall have 20 calendar days from receipt of the order within which to deliver to the commissioner a written request for a hearing. The order shall be effective upon receipt and any person to which such order is directed shall comply with the order immediately. A request for a hearing shall not automatically stay the effect of the order. If no hearing is requested, the order shall become final after the expiration of the 20-day period.

c. The commissioner may institute an action or proceeding in the Superior Court for injunctive and other relief, including the appointment of a receiver for any violation of P.L. , c. (C. ) (pending before the Legislature as this bill), and the court may proceed in the action in a summary manner. In any such proceeding, the court may grant temporary or interlocutory relief. Such relief may include, singly or in combination:

(1) a temporary or permanent injunction;

(2) assessment of the recipient business for the costs of any investigation, inspection, or monitoring survey which led to the commissioner’s determination, and for the reasonable costs of preparing and litigating the case under this subsection; and

(3) assessment of the recipient business for any cost incurred by the State in removing, correcting, or terminating the adverse health and environmental effects resulting from the environmental incident for which the action under this subsection may have been brought.

d. The commissioner may assess a civil administrative penalty in the amount determined pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill). The commissioner shall not assess a civil administrative penalty until the department has adopted rules and regulations, pursuant to section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill), requiring the commissioner, in assessing a civil administrative penalty, to consider the operational history of the recipient business found to be responsible for an environmental incident, the severity of the environmental incident, the measures taken to mitigate or prevent further environmental incidents, and whether the penalty will maintain an appropriate deterrent.

e. Any recipient business found responsible for an environmental incident shall be liable for a penalty pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), to be collected in a civil action commenced by the commissioner.

f. Any person that violates an administrative order or court order issued pursuant to this section is subject upon order of a court to a civil penalty not to exceed $100,000 per day of each violation.

g. Any penalty imposed pursuant to this subsection may be collected, with costs, in a summary proceeding pursuant to the “Penalty Enforcement Law of 1999,” P.L.1999, c.274 (C.2A:58-10). The Superior Court and the municipal court shall have jurisdiction to enforce the provisions of the “Penalty Enforcement Law of 1999” in connection with P.L. , c. (C. ) (pending before the Legislature as this bill).

3. a. Notwithstanding the provisions of any law, rule, or regulation to the contrary, a recipient business that is found to be responsible for any environmental incident may be required to:

(1) make a payment to the State; and

(2) if the payment is not made, forfeit a portion of the value of the economic development subsidies the recipient business is otherwise eligible to receive in the tax years following the tax year in which a determination is made pursuant to subsection c. of this section

b. The amount of the payment or value of the forfeiture required pursuant to this section shall be equal to the greater of:

(1) 20 percent of the total value of the economic development subsidies awarded to the recipient business for the tax year in which the determination is made; or

(2) the total costs to address the environmental incident, as determined pursuant to subsection c. of this section.

c. (1) The total costs to address the environmental incident shall be determined by the commissioner in consultation with the State Treasurer, the chief executive officer of the authority, and any other State officials or officers that the commissioner may deem appropriate. Upon the request of the commissioner, each State agency, authority, county, municipality, and political subdivision of this State shall make any information and materials available to the commissioner as the commissioner deems necessary to determine the total costs to address the environmental incident.

(2) Upon determining the total costs to address the environmental incident, the commissioner shall provide written notice , by certified mail or personal service, to the recipient business that the recipient business is required to make a payment to the State or otherwise forfeit future economic development subsidies. The notice shall include an explanation of the commissioner’s determination, including an explanation of : the provision of law under which the violation occurred; the facts alleged to constitute a violation; the amounts necessary to support each category of costs to address the environmental incident ; the amount of the payment to be provided to the State; and the amount of future economic development subsidies that may be forfeited; and the party’s right to a hearing. The recipient business shall have 20 calendar days following the receipt of the written notice within which to deliver to the commissioner a written request for a hearing to dispute the finding, order, or penalty of the commissioner. After the hearing and upon finding that a violation has occurred, the commissioner may issue a final order after assessing the amount of the penalty specified in the notice. If no hearing is requested, the notice shall become a final order after the expiration of the 20-day period. The commissioner shall also transmit a copy of the written notice and final order to the State Treasurer and chief executive officer of the authority.

d. (1) Not later than 30 days following receipt of the final order issued pursuant to subsection c. of this section, a recipient business shall make the payment to the State Treasurer.

(2) The proceeds of any payment received by the State shall be deposited into the Environmental Incident Recovery Fund established pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), and shall be appropriated by the Legislature to provide reimbursement payments to residents of communities impacted by an environmental incident for costs incurred to address the environmental incident.

e. If a recipient business which has entered into an agreement with the authority for the issuance of an economic development subsidy on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) fails to comply with the requirements of this section, the recipient business shall forfeit all economic development subsidies awarded to the business, and its affiliates, until such time as the requirements of this section are met.

f. Any agreement entered into between the authority and a recipient business for the issuance of an economic development subsidy on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) shall include a provision specifying that a recipient business shall be subject to the provisions of this section.

4. a. There is established in the Department of Environmental Protection a separate, nonlapsing fund to be known as the “Environmental Incident Recovery Fund.” The fund shall be administered by the department and shall be used solely to provide reimbursement payments to residents of communities impacted by an environmental incident for costs incurred to address the environmental incident. The fund shall contain a subaccount for each payment received by the State Treasurer for a specific environmental incident.

b. The fund shall consist of any payments received by the State Treasurer pursuant to subsection d. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), moneys appropriated by the Legislature for the purposes of the funds, investment earnings of the fund, moneys contributed to the fund by private sources, and any other moneys that may become available for its purpose. The moneys in the fund may be invested and reinvested by the Director of the Division of Investment in the Department of the Treasury. All costs of administering the fund, including the necessary and proper expenses incurred by the department in administering the fund, shall be paid from the fund. The department shall not encumber, invest, divest, or disburse moneys from the fund for any purpose not specifically included in this section.

c. Subject to the appropriation of funds by the Legislature, the department shall make distributions from the fund in accordance with the following criteria and any rules or regulations adopted by the department. The department shall establish a process by which residents of communities impacted by an environmental incident may apply for a reimbursement from the fund. Payments from the fund may be made only for costs incurred by residents of a community impacted by an environmental incident to address the environmental incident. Payments may not be made to satisfy a financial commitment for services or expenses that would otherwise have been paid from another public or private source, including, but not limited to, Medicaid or private insurance.

5. The Commissioner of Environmental Protection, in consultation with the State Treasurer and the Chief Executive Officer of the New Jersey Economic Development Authority, shall adopt rules and regulations as may be necessary to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill), which rules and regulations shall be effective immediately upon filing with the Office of Administrative Law, for a period not to exceed 180 days, and may thereafter be amended, adopted, or readopted in accordance with the provisions of the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.)

6. This act shall take effect immediately, except that sections 1 through 4 shall remain inoperative until the first day of the sixth month next following enactment and shall first apply to economic development subsidies for which an agreement is entered into between the authority and a recipient business on or after the sections 1 through 4 become operative.

STATEMENT

This bill provides that a business that has been awarded an economic development subsidy by a State public body and is found to be in violation of the State’s environmental laws may be required to make a payment to the State in an amount equal to the total costs to address the environmental incident. If the business fails to make the payment, then it will be required to forfeit a portion of the value of economic development subsidies to be provided to the business in future years.

Penalty Provisions. The bill authorizes the Commissioner of Environmental Protection (commissioner) to take other actions against any business that has been awarded an economic development subsidy by a State public body and is found to be in violation of the State’s environmental laws. Under the bill, the commissioner may to issue administrative orders, levy administrative penalties, bring civil actions for injunctive relief, and bring an action for civil penalties to enforce the bill’s provisions. The bill also authorizes the commissioner to assess a civil administrative penalty not to exceed $100,000 for violations of administrative or court orders issued pursuant to the bill.

Payments to the State & Forfeiture of Economic Development Subsidies. The bill provides that if the commissioner determines that a recipient business is responsible for an environmental incident, the business may be required to make a payment to the State equal to the greater of: (1) 20 percent of the economic development subsidies awarded to the business for the tax year in which a determination is made under the bill; or (2) the total costs to address the environmental incident. Under the bill, these costs include, but are not limited to, the costs of environmental remediation necessary to contain and remediate the impact of the incident, housing relocation costs for impact residents, the installation of air filtration and fire suppression systems within impacted buildings or structures, and the costs of psychological or mental health counseling for impacted residents.

The bill directs the commissioner, in consultation with the State Treasurer, the chief executive officer of the New Jersey Economic Development Authority (EDA), and any other State officials the commissioner deems appropriate, to determine the costs necessary to address the environmental incident. The bill requires the commissioner to provide written notice to the recipient business that the recipient business is required to make a payment to the State and would forfeit future economic development subsidies if the payment is not made. The notice is also required to include an explanation of the commissioner’s determination, including an explanation of: the provisions of law under which the violation occurred, the facts alleged to constitute a violation, the amount of the payment to be provided to the State and the amount of future economic development subsidies that may be forfeited, and the party’s right to a hearing.

The bill provides that a recipient business may request a hearing to dispute the commissioner’s finding within 20 days of receipt of the written notice. After the hearing and upon a finding that a violation has occurred, the commissioner may issue a final order assessing the amount of the penalty specified in the notice. If a recipient business does not request a hearing, the written notice becomes a final order after the expiration of the 20-day period.

The bill provides that if a business, which has entered into an agreement with the authority for the issuance of an economic development subsidy on or after the effective date of the bill, fails to make a payment to the State or forfeit the required amount of economic development subsidies, the recipient business would be required to forfeit all economic development subsidies awarded to the recipient business and its affiliates until the requirements of the bill are satisfied. The bill also requires future economic development subsidy agreements entered into by the authority to include a provision specifying that a recipient business is subject to the provisions of the bill.

The bill requires any payments received by the State to be deposited into the Environmental Incident Recovery Fund established by the bill and appropriated to provide reimbursement payments to residents of communities impacted by an environmental incident for costs incurred to address the environmental incident.

The bill takes effect on the first day of the sixth month following enactment and applies to economic development subsidy agreements entered into by the authority and recipient businesses after the effective date.