ASSEMBLY APPROPRIATIONS COMMITTEE
STATEMENT TO
ASSEMBLY, No. 5534
with committee amendments
STATE OF NEW JERSEY
DATED: JUNE 19, 2025
The Assembly Appropriations Committee reports favorably and with committee amendments Assembly Bill No. 5534.
As amended and reported, 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.
COMMITTEE AMENDMENTS:
The committee amended the bill to:
(1) authorize the commissioner to issue administrative orders, levy administrative penalties, bring a civil actions seeking injunctive or other relief, and bring actions for civil penalties to enforce the bill’s provisions;
(2) authorize the commissioner to assess a civil administrative penalty, not to exceed $100,000, for violations of the bill’s provisions;
(3) provide that a recipient business found to be responsible for an environmental incident may be required by the commissioner to make a payment to the State and forfeit a portion of its future economic development subsidies if the payment is not made. As introduced, the bill allowed a recipient business the option of making a payment to the State or forfeiting a portion of its economic development subsidies;
(4) require the commissioner to provide the written notice of the requirement to make a payment to the recipient business by certified mail or personal service;
(5) require the written notice to include an explanation of the provision of law under which the violation has 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;
(6) allow a recipient business to request a hearing to dispute the finding, order or penalty of the commissioner, which request is required to be submitted, in writing, within 20 calendar days of receiving the written notice by the commissioner;
(7) require the commissioner to issue a final order, after a hearing and finding a violation occurred, to assess the amount of the penalty, after which the recipient business would be required to make the payment to the State Treasurer within 30 days;
(8) eliminate a provision requiring a recipient business to make a payment to the State if it has utilized the full value of its economic development subsidies for the tax year in which the environmental incident occurred;
(9) clarify that certain provisions of the bill only apply to a recipient business that enters into an agreement with the authority for the issuance of an economic development subsidy on or after the effective date of the bill;
(10) require the adoption of rules and regulations to take effect immediately upon filing for up to 180 days, subject to future amendment, adoption, or readoption;
(11) provide that sections 1 through 4 of the bill remain inoperative until the first day of the sixth moth next following enactment and first apply to economy development subsidy agreements entered into on or after the date sections 1 through 4 become operative;
(12) make technical changes to the bill, including updating references to certain sections in the bill.
FISCAL IMPACT:
The Office of Legislative Services (OLS) finds that the bill would have an indeterminate net impact on State finances.
The actual impact on State finances will be driven by the frequency of environmental incidents, the total amount of payments received by the State, the total amount of payments from the Environmental Incident Recovery Fund, and the value and type of economic development subsidies forfeited by recipient businesses.
To the extent that recipient businesses make payments for the costs incurred to address an environmental incident, the State will collect additional revenues. However, these revenues will be offset by payments from the Environmental Incident Recovery Fund.
The fiscal impact of a forfeiture of economic development subsidies will depend on the type of subsidy surrendered by a recipient business.
The OLS estimates that the State could realize an indeterminate increase in revenue from any penalties collected pursuant to the bill. However, the State may incur additional expenditures in indeterminate amounts related to costs associated with enforcing the provisions of the bill.