PA 07-233—sHB 7369
Commerce Committee
Appropriations Committee
Finance, Revenue and Bonding Committee
AN ACT IMPLEMENTING THE RECOMMENDATIONS OF THE BROWNFIELDS TASK FORCE
SUMMARY: This act expands the state's capacity to clean up and redevelop contaminated property (i. e. , brownfields). It establishes a new program to finance these activities and authorizes the Department of Economic and Community Development (DECD) to administer it. It allows the Connecticut Development Authority (CDA) to guarantee bank loans and issue bonds on behalf of towns for redeveloping brownfields. The act allows tax assessors to reduce the value of contaminated business property when owners agree to remediate it.
The act gives property owners more latitude when voluntarily cleaning up contaminated properties. It expands the role of licensed environmental professionals (LEPs) in overseeing that process and specifies procedures for documenting, verifying, and auditing their work. The act also broadens the conditions under which the Department of Environmental Protection (DEP) commissioner can enter into covenants not to sue with parties that agree to remediate contaminated sites according to DEP standards. It also makes it easier for state agencies to develop contaminated property in floodplains.
The act establishes a pilot program for identifying brownfields in areas where the Office of Policy and Management (OPM) secretary recommends targeting state development dollars. It reestablishes the Brownfields Task Force and requires it to recommend additional brownfield remediation options to the legislature by February 1, 2008.
The act expands Office of Brownfield Remediation and Development's (OBRD) duties and makes it a unit of DECD. It also increases the number of towns OBRD must select for the Brownfields Pilot Program from four to five.
EFFECTIVE DATE: July 1, 2007
FINANCIAL ASSISTANCE PROGRAMS
New Brownfield Remediation and Development Program
§ 3 & 4 — Purpose. The act establishes a program to provide financing for assessing, remediating, and developing contaminated land and structures. This property includes subterranean or subsurface rights and all easements, air rights, and franchises. The program is open to towns, local and regional nonprofit economic development organizations acting on a town's behalf, and for-profit and nonprofit organizations. These entities qualify for funding when proposing a project separately or together.
An abandoned or underused property qualifies for financing if it has not been redeveloped and reused because it is contaminated or potentially contaminated. The contamination could be in the groundwater, soil, or buildings and must be investigated, assessed, and cleaned up while the property is being restored, redeveloped, or reused or before these activities can occur.
The DECD commissioner, in consultation with the DEP commissioner, can provide different types of financing for investigating and cleaning the property. The DECD commissioner can provide grants, loans, loan guarantees, and credit extensions. She can also purchase a portion of a loan CDA made for redeveloping a remediated property. In these cases, CDA can apply for this type of financing on the applicant's behalf. The commissioner can also combine these different types of financing in one package.
§§ 6 & 7 — Funding Sources. The act taps several existing sources to fund the program. It requires the money taken from them to be deposited in a separate, nonlapsing “Brownfield Remediation and Development Account,” which the act establishes in the General Fund for this purpose. The funding sources are:
1. Urban Act bonds issued for economic development programs and earmarked by the governor and the State Bond Commission for the program;
2. principal and interest payments on loans made under the existing Special Contaminated Property Remediation and Insurance Fund, which provides loans for assessing and demolishing contaminated properties; and
3. money the attorney general recovers from the parties that polluted the properties being cleaned up under the program (see below).
The act also requires money from other potential sources to be deposited in the account. These include the proceeds from any state bonds issued specifically for the program and, if the OPM secretary approves, any federal or private dollars provided for a project being assisted under the program. Principal and interest payments on loans made under the program must be credited to the fund as well as the interest and income it generates.
§ 5(d) — Eligible Costs. Developers can use the financing to cover a wide range of tasks, including:
1. investigating and assessing contaminated sites;
2. planning and engineering, including paying for architects, appraisals, attorneys' fees, feasibility and market studies, environmental consultants, laboratory analyses, investigatory and remedial contractors, and related activities;
3. acquiring and improving sites;
4. demolishing structures, abating asbestos, removing hazardous waste and polychlorinated biphenyl (PCBs), and remediating related infrastructure;
5. cleaning the land and monitoring the groundwater, including natural attenuation groundwater monitoring, and the filing of environmental land use restrictions;
6. purchasing environmental insurance; and
7. covering other reasonable costs the DECD commissioner deems necessary to start, implement, and complete the clean-up.
The act limits the total amount of financing for acquiring a site to its appraised fair market value if it were uncontaminated.
DECD can finance the eligible tasks by itself or in conjunction with CDA. It can do this by purchasing a portion of a loan CDA made to a developer for any of these tasks.
§ 5(a), (b), (c), & (d) — Applying for Funds. An eligible applicant must apply to the commissioner for financing on forms she must provide. In doing so, the applicant must describe:
1. the proposed project and its potential benefits;
2. the applicant's technical and financial capacity to undertake it; and
3. the site's condition, including the findings of any environmental assessment conducted on the site and the budget for remediating it.
The applicant must also list the names of the people known to be responsible for cleaning up the property and provide any additional information the commissioner requires.
The commissioner may also provide financing to a developer who also applied for CDA financing. CDA may submit an application to her on the developer's behalf, providing all the information developers must provide when applying directly to the commissioner. In these cases, the commissioner cannot require the developer to submit an additional application.
The commissioner must review each application and decide whether to approve, disapprove, or modify it. If she decides to fund the project, she must determine the type and amount of funding based on:
1. the funds available;
2. the estimated assessment and cleanup costs, if known;
3. the town's relative economic condition;
4. the project's need for financing relative to that of other projects;
5. the extent to which the financing is needed to induce the applicant to undertake the project;
6. the project's environmental and public health benefits;
7. the project's relative economic benefits to the town, region, and the state;
8. when the site became contaminated;
9. the applicant's relationship to the party that contaminated the site; and
10. other criteria the commissioner establishes, which must be consistent with the program's purpose.
The act bases the maximum amount of financing the commissioner can provide on the project's location. She can finance up to 90% of the cost for projects located in the 17 targeted investment communities and up to 50% of the costs for projects in the other towns. The commissioner can finance up to 90% of the costs for planning studies or site assessments, regardless of the project's location. The developer can match the commissioner's financing with real property and other noncash contributions or money a town received under any federal program if federal law allows it.
§ 5(e) — Terms and Conditions. The act authorizes the commissioner to attach any terms and conditions she deems necessary to achieve its purposes. These include stipulations requiring the applicant to:
1. discharge his or her obligations regarding the project and
2. provide DECD with letters of credit; liens; security interest in goods, equipment, inventory, or other property; or other appropriate security.
§ 5(g) — DEP Cost Recovery. The law allows the DEP commissioner to recover money she spent to contain, remove, or mitigate pollution on property included in the hazardous waste disposal site inventory. The act also allows her to do this with respect to property that is subsequently assessed and remediated under the program. She can recover the money from anyone who contaminated the property by asking the attorney general to bring a civil action against that person. He must do this in conjunction with action the commissioner took to address the contamination.
In bringing the civil action, the act specifically allows the attorney general to seek reimbursement for:
1. the actual cost to identify, evaluate, plan for, or remediate a site;
2. the interest on the actual costs at 10% per year from when they were paid;
3. any associated administrative costs DEP incurred up to 10% of the actual costs; and
4. the cost of recovering the reimbursement.
The act prohibits a defendant in these actions from suing anyone who is party to a DEP covenant-not-sue with respect to the pollution on or coming from the site. (Under these covenants, the party that cleaned the site according to DEP standards does not have to clean it again if more pollution is subsequently found on the site. )
As noted above, any funds DEP recovers from these actions must go into the account.
§ 13 & 14 — CDA Programs
The act allows CDA to establish a program specifically for guaranteeing loans banks make for investigating and remediating contaminated sites. The guarantees may cover up to 30% of the loan amount. A borrower qualifies for a guarantee if he or she qualifies for financing under the Brownfield Remediation and Development Program.
The act expands the range of brownfield remediation projects CDA can finance with bonds it issues on towns' behalf. Prior law allowed CDA to issue these bonds only for projects that would clean up and redevelop sites for business uses. A project qualified if it created jobs or increased business in the town or strengthened its and the state's economic base. The act allows CDA to issue bonds for cleaning up sites to be developed as condominiums, including those that are part of a mixed use development.
§ 11 — Property Tax Assessment
The act specifies when property tax assessors may reduce the fair market value of contaminated business property. The law prohibits them from doing so to reflect the contamination's effects. (Because the law requires towns to tax all property at 70% of its fair market value, reducing that value correspondingly reduces property's assessed value or the value at which it is taxed. )
The ban against reducing the fair market value of contaminated property applies when the federal and state environmental protection agencies or a court determines the owner caused the contamination. It also continues after the owner sells the property if its condition was noted in the land records. Under the act, assessors may reduce the value if the owner or his successor in title:
1. volunteers to remediate it under an agreement with DEP,
2. plans to do so under a DEP-approved remediation plan, and
3. files the agreement in the town's land records.
Assessors may increase the fair market value after the property has been remediated to reflect this new condition.
REGULATORY ASSISTANCE
§ 10 — Licensed Environmental Professionals (LEPs)
The act expands the role of LEPs in certifying a property's environmental status before it is sold or transferred. By law, the parties involved in the transaction must report on the property's status to the DEP commissioner if hazardous waste was generated there. They must do so by completing one of four forms depending on the status.
1. The parties must complete a Form I if no hazardous wastes or substances were released on the property or, if there was, the property was remediated according to DEP standards.
2. They must complete a Form II if hazardous wastes or substances were released but were subsequently cleaned up. The clean up must have been approved by the commissioner or an LEP.
3. The parties must complete a Form III if the status is unknown or the property is contaminated.
4. They must complete a Form IV if the contamination reported on a Form III was remediated.
Forms III and IV must identify the party responsible for investigating and remediating the property (i. e. , certifying party).
Under prior law, the commissioner had to decide whether she would review and approve the property's remediation or allow an LEP to do so based on statutory criteria. She had to notify the certifying party about her decision within 45 days after she received a completed Form III or IV. The act instead requires the certifying party to use an LEP unless the commissioner notifies it within 75 days after receiving the completed form that she will review and approve the remediation.
The act expands the LEP's duties regarding properties for which a Form III was submitted before October 1, 1995. In these cases, the law allows the certifying party to submit an Environmental Condition Assessment Form (ECAF), which must be prepared by an LEP. As its name suggests, the form describes the property's environmental state. The certifying party may submit the ECAF with a Form III or IV.
After receiving the ECAF, the commissioner may choose to approve the remediation herself or allow an LEP to verify that it was done according to remediation standards. The act requires the LEP to verify that property was also investigated according to prevailing standards and guidelines.
§ 10 — Documentation and Verification
By law, the commissioner may allow a certifying party to a Form III or IV to verify that the property was properly investigated and its remediation started instead of reviewing and approving these actions herself. She notifies the party about whether it can complete these tasks when she receives a completed Form III or IV. If the commissioner allows the party to verify the tasks, the act requires the party to document as well as verify that they were completed.
If the commissioner allows an LEP to verify a property's remediation, the law requires the certifying party to submit a schedule to the commissioner for completing the investigation and starting the remediation. The schedule must also indicate when the party will notify the public about the remediation, which it must do before starting this work.
The act changes the timeframe for submitting the schedule. Under prior law, the party had to submit the schedule within 30 days after the commissioner notified it that it could use an LEP to verify the remediation. Under the act, the party must submit the schedule within 75 days after she notified it that the Form III or IV was complete.
The act makes a corresponding change to the timeframe for completing the investigation and starting the remediation. Under prior law, the certifying party had to complete the investigation within two years after the commissioner notified it that it could use an LEP to verify the remediation and begin the remediation within three years of that notice. The act imposes this timeframe on the certifying party for submitting documentation that the investigation was completed and the remediation started.
Additionally, the act requires the commissioner to provide the forms for submitting the documentation. The documentation regarding the investigation must show that it was completed according to prevailing standards and guidelines. It must also be approved by an LEP in writing. The documentation for the remediation must be accompanied by a plan for cleaning up the property. The commissioner must provide a form for preparing the plan, which must be approved in writing by an LEP.
Even if the commissioner allows the certifying party to verify the property's investigation and remediation, the law allows her to review and approve this work. The act specifically allows her to do this at any time in the process. As under prior law, the commissioner must notify the certifying party whenever she decides to review and approve the remediation.
After the property has been cleaned up, the law requires the certifying party to verify that fact by submitting a “final verification” to the commissioner. An LEP must prepare the verification even if the commissioner decided to review and approve the remediation. The act requires the LEP to prepare the verification on a form the commissioner prescribes.
§ 10 — Verification Audits
The act explicitly authorizes the commissioner to audit any verification, but limits the circumstances when she can audit a final verification. She can audit a verification without conditions three years after receiving the final verification. This deadline applies to verifications she receives after October 1, 2007.
She may audit these verifications three years after they were submitted only if she:
1. determines that the verification was based on materially inaccurate, erroneous, or misleading information or that misrepresentations were made when the verification was submitted to her;
2. orders the certifying party to submit a final verification for improperly filing a Form I or II or failing to complete remediation or post remediation monitoring under a Form III or IV;
3. determines that the certifying party has not monitored or operated the property as the final verification requires;
4. learns that a required environmental land use restriction was not recorded in the town's land records as the law requires;
5. discovers that the property was transferred without completing the required forms; or
6. determines that information exists showing that the clean-up may have failed to prevent a substantial threat to the public health and environment.
The commissioner may request additional information when auditing a verification. The certifying party must provide the information within 90 days of her request or the date she sets in writing. If the party fails to meet the submission deadline, the commissioner may suspend the audit or complete it based on the information that was previously provided. If the commissioner suspends an audit of a final verification, she also stops the three-year clock for completing that audit. The clock resumes after the certifying party submits the requested information.
The commissioner must submit her audit findings to the certifying party and the LEP.
§ 12 —Covenants Not to Sue
Investigation Plan and Remediation Schedule. The act broadens the conditions under which the commissioner may enter into a covenant-not-to-sue (CNS). CNSs implicitly recognize that investigative methods and remediation techniques are not full proof, that they cannot identify and remove all of the contamination in a property. If a party investigates and remediates the property according to state standards and then finds more contamination, the CNS generally exempts the party from having to remediate it. The party could be the property's owner or potential buyer or a lender holding a security interest in the property.
By law, the commissioner may enter into a CNS with a party if it did not cause the pollution or was not involved with anyone that did. The party must also agree to clean up and redevelop the property. Under prior law, it had to submit its remediation plan or final remediation report to the commissioner, who had to approve both documents before she could enter into a CNS.
The act alternatively allows the commissioner to enter into a CNS before the property is remediated if the party submits a schedule and plan for investigating the property and a schedule for remediating it. These documents must indicate when the party will (1) complete the investigation according to prevailing standards and guidelines, (2) submit the completed investigation report and detailed written remediation plan, and (3) complete the remediation according to DEP standards. The party must submit these documents before the commissioner approves the remediation plan or final remedial action report.
The commissioner must review and, as appropriate, approve the detailed written remediation plan. If she approves the plan, it is considered to be included in the CNS by reference.
The commissioner must decide whether to oversee the investigation and remediation or delegate this task to an LEP. Even if she oversees the investigation and remediation, the party must complete these tasks under an LEP's direction. The LEP must also approve in writing any documents the party must submit to the commissioner regarding these tasks.
Grounds for Requiring Further Remediation. The act expands the grounds under which the commissioner may require remediation of a property that is subject to a CNS. Under prior law, she could require further remediation only if the party provided false and misleading information when it applied for the CNS or failed to:
1. remediate the property according to the plan and schedule referenced in the covenant;
2. substantially comply with the covenant while the property was being remediated or make a good faith effort to do so;
3. meet the remediation standards that were in effect when she approved the covenant; or
4. record a required environmental land use restriction or comply with it.
The act establishes a new ground for requiring further remediation that is not tied to the investigation plan and investigation and remediation schedule. It allows the commissioner to require this action whenever a party fails to pay the entire CNS fee or a scheduled amount (see below).
The act also allows the commissioner to require further remediation when she enters into a CNS based on an investigation plan and an investigation and remediation schedule. As noted above, the remediation schedule requires the party to indicate when it will submit the detailed remediation plan. The act allows the commissioner to require further remediation if she rejects the plan or the remediation did not comply with the standards that were in effect when she approved the covenant or the plan, whichever is later.
She can also require further remediation before she approves the detailed written remediation plan if she finds that the party did not substantially comply with the investigation plan and investigation and remediation schedule and made no good faith effort to do so. As noted above, the party must submit the plan and schedule when it enters into the CNS. The schedule must indicate when the party will submit the remediation plan to the commissioner.
Fee Exemptions and Payment Schedules. The law imposes a fee on CNSs equal to 3% of the property's uncontaminated value. The act exempts towns and their economic development agencies from paying the fee. It also exempts nonprofit economic development corporations acting on a town's behalf.
It also allows this fee to be paid over time. A party may do this if it submits an investigation plan and investigation and remediation schedule and the commissioner approves a written payment schedule, which must be incorporated by reference in the covenant.
§ 9 — Development in Floodplains
The act makes it easier for state agencies to develop contaminated property in floodplains. By law, a state agency must obtain the DEP commissioner's approval before transferring state-owned property in these areas or doing things that could affect land uses there. She may approve the activity if it serves the public interest, will not harm people or property, and complies with the National Flood Insurance Program. Under the act, the activity serves the public interest if the property must be remediated according to DEP standards and is located in an area the State Plan of Conservation and Development designates for development.
PLANNING
§ 8 — New Pilot Brownfield Identification and Assessment Program
By law, the OPM secretary must recommend priority funding areas (PFAs) where the state should target development dollars to the Continuing Legislative Committee on State Planning and Development by 2010. This is the same year he must submit the next revision of the five-year State Plan of Conservation and Development to the committee for approval.
The act requires the DEP and DECD commissioners, in consultation with the OPM secretary, to identify and evaluate brownfields in these areas. After doing so, the commissioners must work with other state and local agencies as a coordinated team to (1) solicit proposals for redeveloping these sites, (2) identify the necessary permits and approvals, and (3) review all requests for funding and permit approvals.
§ 15—Brownfields Task Force
The act reestablishes the Brownfields Task Force to prepare and submit more recommendations to the legislature on how to clean up contaminated properties. The report is due no later than February 1, 2008. The task force terminates on that date or the date when it submits the report, whichever is later. (This provision appears to keep the task force in business if it misses the February 1 reporting deadline. )
The act increases the task force's membership from 9 to 11 by appointing two new members and changing an existing one. Under prior law, the task force consisted for two gubernatorial and six legislative appointees and a DEP representative appointed by the DEP commissioner.
The act adds the DECD commissioner and the OPM secretary or their designees to the task force. It allows the DEP commissioner to be the department's representative. As under prior law, all members must have expertise in environmental law, engineering, finance, development, consulting, insurance, or other relevant areas.
OBRD
§ 1(b) — Expanded Duties
The act expands OBRD's duties and refines and expands some existing ones. The new duties include:
1. providing a single point of contact for financial and technical assistance for state and quasi-public agencies;
2. developing a common application to be used by all state and quasi-public entities providing financial assistance for assessing, remediating, and developing brownfields; and
3. including people, towns, economic development agencies, and other organizations in OBRD's existing outreach program.
The act redefines some of OBRD's existing duties. Prior law required it to create a place where towns and economic development agencies could help developers comply with state and federal clean-up requirements and qualify for state funds. Under the act, OBRD must create an office to provide information and help about the state's technical assistance, funding, regulatory, and permitting programs. Prior law required the office to develop policies and procedures for streamlining the remediation process. The act requires OBRD to do the same for the development process as well.
The act eliminates OBRD's duty to analyze state brownfield programs and to create new funding sources for them.
§ 1(a) — Coordination
The act makes OBRD an organizational unit of DECD. Prior law placed it in that department for administrative purposes only.
The law requires DEP and CDA to assign liaisons to the office. The act requires the Department of Public Health (DPH) to assign a liaison as well. It also requires DECD, DEP, and DPH commissioners and the CDA executive director to enter into a memorandum of understanding regarding their agencies respective responsibilities vis-à-vis the OBRD. The act eliminates a requirement that OBRD's staff and the agency liaisons serve as the office's “response team. ”
Lastly, the act allows rather that requires OBRD to recruit volunteers with brownfield remediation experience to help it achieve its goals.
§§ 1(c) & 2 — Pilot Program
PA 06-184 required OBRD to establish a pilot program to clean up contaminated properties that hinder a town's economic development. It required OBRD to run the program in four towns, one of which must have between 25,000 and 50,000 people, one between 50,000 and 100,000 people, and two more than 100,000. The act increases the number of participating towns to five and changes some of the criteria for selecting them. It drops the requirement that OBRD select a town that has between 25,000 and 50,000 and instead requires it to select one with less than 50,000 people. It also requires OBRD to select one town without regard to population.
The act specifies that the sites in these towns must be assessed and remediated according to prevailing standards and practices.
The act shifts responsibility for the program from OBRD to the DECD commissioner and expands the funding criteria. Prior law required projects to be selected based on their potential economic benefits. The act also requires them to be selected based on their feasibility and environmental and public health benefits.
BACKGROUND
Related Act
PA 07-81 makes changes to the laws governing LEPs. Among other things, it makes the use of an LEP to verify the investigation and remediation of contaminated property a standard procedure unless the DEP commissioner, at her discretion, chooses to review and approve the clean-up herself; requires an LEP to submit documentation to the commissioner when a site investigation required by the Transfer Act has been completed; and to notify her when remediation begins.
OLR Tracking: JR: KM: CR: TS