New Jersey’s Industrial Site Recovery Action of 1993 (“ISRA”) requires owners and operators of industrial facilities to perform site assessment and remediation activities whenever a triggering event, such as a cessation of operations or sale of property, occurs. ISRA exempts, however, owners or operators who generate or use minimal amounts of hazardous substances from compliance with its requirements, known as a “De Minimis Quantity Exemption” or “DQE.” Pursuant to recently promulgated regulations, in addition to demonstrating the total quantity of hazardous substances handled at the facility are below specified regulatory thresholds, NJDEP requires all applicants for a DQE to certify that the applicant has no knowledge of contamination on the property above any remediation standard, regardless of the source, as a pre-condition to approval of a DQE.

Last week, in the case of De Champs Laboratories, Inc. v. Martin, Docket No. A-3235-10T4 (App. Div. July 6, 2012), the Appellate Division of the New Jersey Superior Court took what might be considered a surprising step, invalidating that portion of the DQE regulation that requires applicants to submit affidavits that the property is “clean” in order obtain DQE status. Reviewing the history of ISRA and its predecessor, the Environmental Cleanup Responsibility Act of 1983 (“ECRA”), the Court found that the “contamination free” requirement exceeded the scope of authority granted to NJDEP under ISRA. Specifically, the Court noted that similar regulations existed for a time under ECRA, but that the New Jersey Legislature chose not to include the requirement when it enacted ISRA, consistent with the intent and goal of ISRA to streamline the regulatory process and minimize unnecessary governmental involvement in private business transactions.

Notably, however, the Court made it quite clear that nothing in the ruling was to be read as approval or disapproval of the regulation as a policy matter, and almost seemed to invite legislation to add a “contamination free” requirement to the DQE exemption. Whether the NJ legislature will, in fact, look to amend ISRA to add such a requirement remains to be seen. The Court also made it clear that its ruling did not in any way affect the liability of a recipient of a DQE under the Spill Compensation and Control Act or other New Jersey statutes imposing liability for the remediation of contaminated sites.

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