USA – NEW JERSEY Law and Practice Contributed by: Nicole Dory, Christina Sartorio Ku, Meredith Rubin and Camryn Goldstein, Connell Foley LLP
8. Insurance 8.1 Environmental Insurance
as the lenders do not participate in the management of the property. Lenders may engage in certain busi- ness activities on the property pending resale or dis- position, without being subject to liability for clean-up costs. However, it is imperative that lenders carefully adhere to the statutory requirements to avoid expo- sure to liability.
Environmental insurance is widely available in New Jersey. The most common coverage includes pollu- tion legal liability insurance (PLL) and secured credi- tor insurance. PLL insurance policies typically cover activities related to pollution, waste disposal, and con- tamination of soil or water resources covering costs such as cleanup costs, legal expenses related to envi- ronmental lawsuits, and damages awarded by courts or regulatory agencies. Known pollution conditions are typically not covered, and many policies include express exclusions for certain contaminants such as lead. Secured creditor insurance, also referred to as “lenders environmental liability insurance”, provides coverage to lenders for unknown environmental con- ditions. After default, the lender may recover the lesser of the loan balance or the cleanup cost, depending on how the policy is written. While generally there is no broad requirement for environmental insurance in New Jersey, owners and operators of legacy landfills or closed sanitary landfill facilities who accept recyclable materials, contami- nated soil, wastewater treatment residual material, or construction debris must maintain general liability insurance. Further, other New Jersey statutes require an owner or operator of an industrial establishment or any other person required to perform remediation activities to establish and maintain a remediation funding source, which can take the form of an envi- ronmental insurance policy. Lenders may face liability for environmental dam- age in New Jersey under federal and state statutes if found to be actively participating in the management of the property where hazardous substance were dis- charged. 9.2 Lender Protection The New Jersey legislature created safe harbour pro- visions to protect lenders from liability for environmen- tal damage or violations of environmental law so long 9. Lender Liability 9.1 Financial Institutions/Lenders
10. Civil Liability 10.1 Civil Claims
New Jersey has enacted a significant body of envi- ronmental legislation providing various mechanisms for civil claims addressing issues such as hazardous substance discharge, solid waste management, and water pollution, to name a few. For example, the Spill Act permits any person who cleans up and removes a discharge of hazardous substances to pursue contri- bution claims against any other person or entity who is “in any way responsible” for the hazardous sub- stances or discharge. Parties may also seek contribution through the Spill Act’s federal counterpart, the Comprehensive Envi- ronmental Response, Compensation, and Liability Act (CERCLA), which permits cost recovery or con- tribution actions against certain liable parties such as prior owners or operators of a property, or arrangers or transporters of hazardous substances. Of note, while CERCLA excludes petroleum products from its list of hazardous substances, the Spill Act permits claims concerning the discharge of petroleum. Both the Spill Act and CERCLA claims can seek past or future remedial costs as damages. Liable parties pursuant to CERCLA or the Spill Act can also pursue contribu- tion claims through the New Jersey Joint Tortfeasor Contribution Act. The federal RCRA allows two civil actions by citizens: (i) suits against any person, including federal, state, or local governments, that is violating any RCRA permit, standard, regulation, condition, requirement, prohibi- tion, or order; or (ii) suits against any person “who has contributed or who is contributing to the past or present handling, storage, treatment, transportation, or disposal of any solid or hazardous waste which may present an imminent and substantial endangerment to
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