27:1A-5.2. Indemnification of public contractors

The Commissioner of Transportation, in consultation with the Attorney General, may agree to defend and indemnify any person who, pursuant to a written contract with the Department of Transportation, constructs public works or improvements or provides services to the department for claims, causes of action, demands, costs or judgments against that person arising as a direct result of the contamination of the environment by hazardous substances if the contamination is a direct result of the construction or services. The commissioner shall not agree to indemnify a person unless the commissioner determines that adequate environmental liability insurance is either unavailable to that person in connection with a particular contract or that the cost therefor is prohibitive.

The commissioner is authorized to enter into an agreement to defend and indemnify a person upon the terms and limitations the commissioner deems reasonable and appropriate. The commissioner shall not enter into an agreement after January 1, 1990 to provide legal defense and indemnification to any person pursuant to this section. The commissioner shall not agree to defend or indemnify any person for acts which arise from gross negligence, willful misconduct, fraud, intentional tort, bad faith or criminal wrongdoing or for claims for punitive or exemplary damages.

An agreement to defend and indemnify pursuant to this section does not bar, reduce, limit or affect any remedies which the department may have to enforce its contract or to assert a claim for damages to which the department may be entitled arising out of the person's failure to perform the contract, or for the recovery of funds expended for the defense of a person if the defense was undertaken in response to a claim or cause of action brought against the person which is proven to have arisen from gross negligence, willful misconduct, fraud, intentional tort, bad faith, or criminal misconduct.

No one other than the person performing construction or services pursuant to a written contract with the department has the right to enforce any agreement for defense or indemnification between that person and the commissioner. For purposes of this section, the term "person" means public or private corporations, companies, associations, societies, firms, partnerships, joint stock companies, individuals, public authorities, the United States, the State of New Jersey and any of its political subdivisions or agents. The term "services" means work performed by design or other expert consultants and work or technical functions performed by nonexperts on projects for public works, building or improvements, including work preliminary to construction under a contract and work which results in or from a contract modification. The term "hazardous substances" shall have the same meaning as provided in section 3 of P.L. 1976, c. 141 (C. 58:10-23.11b).

L. 1986, c. 81, s. 1; amended 1987,c.417,s.1.