N.J.A.C. 7:22 - 4.40 through 4.44 - Penalties
(a) In addition to any other remedies as may be
provided by law or in the Trust loan agreement,
in the event of noncompliance with any loan condition,
requirement of this subchapter, or contract requirement
or specification, the Trust may take any of the
following actions or combinations thereof:
- Issue a notice of noncompliance pursuant to
- Withhold Trust loan moneys pursuant to N.J.A.C.
- Order suspension of project work pursuant
to N.J.A.C. 7:22-4.43;
- Terminate the Trust loan pursuant to N.J.A.C.
- Request that the Department issue administrative
orders of enforcement pursuant to the New Jersey
Water Pollution Control Act (N.J.S.A. 58:10A-1
et seq.) or the Safe Drinking Water Act (N.J.S.A.
58:12A-1 et seq.).
7:22-4.41 Notice of noncompliance
Where the Trust determines that the recipient
is in noncompliance with any condition or requirement
of these rules or with any contract specification
or requirement, it shall notify the recipient,
its engineer, and/or the contractor of the noncompliance.
The Trust may require the recipient, its engineer,
and/or contractor to take and complete corrective
action within 10 working days of receipt of notice.
If the recipient, its engineer, and/or contractor
fails to take corrective action of if the action
taken is inadequate, then the Trust may issue
a stop-work order or withhold disbursement. The
Trust may, however, withhold disbursement or issue
a stop-work order pursuant to N.J.A.C. 7:22-4.42
and 4.43 without issuing a notice pursuant to
7:22-4.42 Withholding of
The Trust may withhold, upon written notice to
the recipient, a Trust loan disbursement or any
portion thereof where it determines that a recipient
has failed to comply with any loan condition,
provision of this subchapter, or contract specification
7:22-4.43 Stop-work orders
a) The Trust may order work to be stopped for
good cause. Good cause shall include, but not
be limited to, default by the recipient or noncompliance
with the terms and conditions of the loan. The
Trust shall limit use of stop-work orders to those
situations where it is advisable to suspend work
on the project or portion or phase of the project
for important program or Trust considerations.
(b) Prior to issuance, the Trust shall afford
the recipient an opportunity to discuss the stop-work
order with Trust personnel. The Trust shall consider
such discussions in preparing the order. Stop-work
orders shall contain:
- The reasons for issuance of the stop-work
- A clear description of the work to be suspended;
- Instructions as to the issuance of further
orders by the recipient for materials or services;
- Guidance as to action being taken on subagreements;
- Other suggestions to the recipient for minimizing
(c) The Trust may, by written order to the recipient
(certified mail, return receipt requested), require
the recipient to stop all, or any part of, the
project work for a period of not more than 45
days after the recipient receives the order, and
for any further period to which the parties may
(d) The effects of a stop-work order are as
7:22-4.44 Termination of loans
- Upon receipt of a stop-work order, the recipient
shall immediately comply with the terms thereof
and take all reasonable steps to minimize the
incurrence of costs allocable to the work covered
by the order during the period of work stoppage.
Within the suspension period or within any extension
of that period to which the parties shall have
agreed, the Trust shall either:
- Rescind the stop-work order, in full or
- Terminate the work covered by such order
as provided in N.J.A.C. 7:22-4.44; or
- Authorize resumption of work.
- If a stop-work order is cancelled or the period
of the order or any extension thereof expires,
the recipient shall promptly resume the previously
suspended work. An equitable adjustment shall
be made in the Trust loan period, and/or the
project, and the Trust loan agreement shall
be modified if necessary. However, additional
project costs as a result of this action shall
be the responsibility of the recipient.
a) Termination of Trust loans by the Trust shall
be conducted as follows:
- The Trust may terminate a Trust loan in whole
or in part for good cause. The term "good cause"
shall include but not be limited to:
- Substantial failure to comply with the
terms and conditions of the Trust loan agreement;
- Default by the recipient;
- A determination that the Trust loan was
obtained by fraud;
- Without good cause therefor, substantial
performance of the project work has not
- Gross abuse or corrupt practices in the
administration of the project have occurred;
- Trust funds have been used for non-allowable
- The Trust shall give written notice to the
recipient (certified mail, return receipt requested)
of its intent to terminate a Trust loan, in
whole or in part, at least 30 days prior to
the intended data of termination.
- The Trust shall afford the recipient an opportunity
for consultation prior to any termination. After
such opportunity for consultation, the Trust
may, in writing (certified mail, return receipt
requested), terminate the Trust loan in whole
or in part.
(b) Project termination by the recipient
shall be subject to the following:
- A recipient shall not unilaterally terminate
the project work for which a Trust loan
has been awarded, except for good cause
and subject to negotiation and payment of
appropriate termination settlement costs.
The recipient shall promptly give written
notice to the Trust of any complete or partial
termination of the project work by the recipient.
- If the Trust determines that there is
good cause for the termination of all or
any portion of a project for which the Trust
loan has been awarded, the Trust may enter
into a termination agreement or unilaterally
terminate the Trust loan effective with
the date of cessation of the project work
by the recipient. The determination to terminate
the Trust loan shall be solely within the
discretion of the Trust. If the Trust determines
not to terminate, the recipient shall remain
bound by the terms and conditions of the
Trust loan agreement.
- If the Trust determines that a recipient
has ceased work on a project without good
cause, the Trust may unilaterally terminate
the Trust loan pursuant to this section.
(c) The Trust and recipient may enter into a
mutual agreement to terminate at any time pursuant
to terms which are consistent with this subchapter.
The agreement shall establish the effective
date of termination of the project and the schedule
for repayment of the Trust loan.
(d) Upon termination, the recipient may
be required to immediately refund or repay
the entire amount of the Trust loan moneys
received from the Trust. If the Trust loan
is guaranteed by a security/deficiency agreement,
such agreement may have to be brought into
effect to ensure the entire repayment of the
Trust loan. The Trust may, at its discretion,
authorize the immediate repayment of a specific
portion of the Trust loan and allow the remaining
balance to be repaid in accordance with a
revised Trust loan repayment schedule.
(e) The recipient shall reduce the amount
of outstanding commitments insofar as possible
and report the Trust the uncommitted balance
of funds awarded under the Trust loan. The
recipient shall make no new commitments without
the Trust's specific approval thereof. The
Trust shall make the final determination of
the allowability of termination costs.
(f) In addition to any termination action,
the Trust retains the right to pursue other
legal remedies as may be available under federal,
State and local law as warranted.