AN ACT CONCERNING BROWNFIELDS DEVELOPMENT PROJECTS.

This bill makes many changes affecting the regulatory framework for identifying, investigating, remediating, and developing contaminated property (brownfields). It expands the protections from liability for municipalities when they take various steps to promote brownfield remediation. These steps include entering and inspecting property and acquiring and conveying it to other parties.

The bill makes it easier for parties acquiring a brownfield to recover investigation and remediation costs from those responsible for contaminating the property. It does so by reducing the criteria for obtaining recovery and establishing procedures and deadlines for starting recovery actions. The procedures include allowing the responsible parties to participate in the investigation and remediation.

The bill establishes a program protecting brownfield developers from liability for contamination that escapes from a brownfield before they acquired it. The program is open to developers who agree to remediate the brownfield according to state standards. The bill also creates a regulatory mechanism allowing developers to remediate the soil and use the property while conducting long-term groundwater monitoring and remediation. It also allows any party, rather than just the owner or a municipality, to complete a environmental condition assessment form.

Lastly, the bill reduces the regulatory criteria state agencies must meet when developing contaminated mill sites in floodplains. It also requires state agencies and quasi-public agencies to provide for the use of green remediation technologies when soliciting bids, requesting proposals, or negotiating contracts for remediating brownfields.

*House Amendment “A” establishes deadlines and procedures for recovering investigation and remediation costs, expands the range of municipal entities exempted from the transfer act, creates the floodplain exemption for mill projects, expands liability protections for parties acquiring brownfields from municipalities, extends innocent third party status to more municipal entities, and expands liability protections for municipalities inspecting contaminated property. It also adds provisions (1) specifying the local agencies and organizations allowed to acquire and convey property, (2) establishing the Abandoned Brownfield Cleanup Program, (3) authorizing interim verifications for ongoing groundwater remediation, (4) allowing any party to prepare environmental site assessment forms, and (5) authorizing state brownfield remediation contracts to provide for the use of green remediation technologies. Lastly, the amendment eliminates provisions making Connecticut Development Authority's Tax Incremental Financing Program permanent and limiting the scope of work under a covenant not to sue.

EFFECTIVE DATE: October 1, 2009, except for the floodplains, Transfer Act, and municipal inspection provisions, which are effective upon passage, and the municipal liability protections, innocent third party status, and reimbursement provisions, which are effective July 1, 2009.

The bill imposes a deadline for remediating property under the Transfer Act, which requires the parties involved in the transfer of certain property to assess its environmental condition and provide for any necessary remediation. The parties must do this if the property was used for dry cleaning, furniture stripping, vehicle repair, or generated at least 100 kilograms of hazardous waste per month. They must also comply with the act if hazardous waste generated at another site was recycled, reclaimed, reused, stored, handled, treated, transported, or disposed of at the property.

The parties must notify the Department of Environmental Protection (DEP) commissioner about the transaction and their knowledge of the property by submitting a “Form III. ” The form must also indentify the party responsible for investigating and remediation the property (i. e. , certifying party). The commissioner must notify them if the form is complete. Parties must submit a “Form IV” if the contamination reported in Form III was remediated.

After the commissioner notifies the parties that the form is complete, they must submit to a schedule to her for investigating and remediating the property. They must finish investigating the property within two years after receiving the commissioner's notice, and begin remediating it within three years of that date. The bill additionally requires them to finish remediating the property within eight years of the commissioner's notice, unless she specified a later date. The bill specifies that the remediation must meet DEP standards. These requirement applies to certifying parties submitting Form IIIs and Form IVs on or after October 1, 2009.

Current law imposes no deadline for completing the remediation but requires it to meet DEP standards. The certifying party or a licensed environmental professional (LEP) acting on its behalf must verify the remediation by submitting a final verification report to the commissioner. The bill creates an alternative remediation procedure. It allows a LEP to certify that the soil has been remediated and that the groundwater is being remediated under a long-term remedy (i. e. , interim verification).

To meet this standard, an LEP must submit a written opinion to the commissioner stating that:

1. the investigation was performed according to current standards and guidelines;

2. the property, except for the groundwater, was remediated according to DEP standards;

3. a long-term remedy for remediating the groundwater is being implemented; and

4. there is no pathway by which the polluted groundwater can escape.

The written opinion must also identify the remedy and how long it is expected to take. It must described what needs to be done to operate and maintain the remedy.

The certifying party must operate and maintain the remedy according to the remedial action plan, the interim verification report, and any approvals by the commission. It must also prevent exposure of the groundwater plume and submit annual status reports to the commissioner. A party submitting a Form IV must also submit a schedule for monitoring the groundwater and recording an environmental land use restriction, as applicable.

The certifying party must achieve the standards for interim verification within eight years of the commissioner's notice, unless she specified a later date in writing. The requirement applies to Form III and Form IVs submitted on or after October 1, 2009.

The current law grants various powers and protections to municipalities and, in some cases, municipal economic development agencies involved different aspects of brownfield remediation. The bill extends these powers and protections to other municipal development agencies and private organizations acting on a municipality's behalf (i. e. , municipal development organizations (MDOs)).

MDOs are (1) redevelopment, municipal development, and implementing agencies and (2) nonprofit economic development corporations and non stock or limited liability companies (LLCs). A nonprofit economic development corporation qualifies as a MDO if it was formed to promote the municipality's common good, general welfare, and economic development and receives funds or in-kind services from the municipality. A non stock corporation or LLC qualifies if it was established by the municipality or its economic development, redevelopment, or municipal development agencies and operates under their control.

The bill allows specific MDOs to seek recovery (i. e. , reimbursement) for the cost of investigating and remediating contamination caused by another party. Current law allows municipalities, as well as people, firms and corporations, to seek recovery; the bill allows economic development, redevelopment, and municipal development agencies and nonprofit economic development corporations and non stock companies or LLCs a municipality established or controls. The bill labels this group, “eligible parties. ”

The bill appears to contemplate situations where the parties that actually investigate and remediate a property may not be an eligible party. It labels the parties that perform these tasks, “performing parties,” and limits them to people, firms, and corporations.

Lastly, the bill labels the parties responsible for the contamination, “potentially responsible parties. ” Under current law, they include any person, firm or corporation that contaminated the property by a negligent or other action. The bill includes in this group municipalities; economic development, redevelopment, and municipal development agencies; and nonprofit and non stock and LLCs a municipality establishes or control.

The bill specifies the conditions under which an eligible party may seek to recover investigation and remediation costs. The party may do so only if:

1. the contamination existed or occurred on the property before the party acquired it,

2. the party is not responsible for causing the contamination, and

3. it is not affiliated with the party that is.

The bill changes the grounds for seeking recovery and establishes deadlines and procedures for doing so. Current law allows recovery only for the reasonable costs they incurred to contain, remove, or mitigate contamination. The bill allows parties to seek recovery for the costs they expect to incur while performing these activities.

The bill also expands the types of costs for which parties can seek recovery. As noted above, current law allows them to seek recovery for containing, removing, or mitigating contamination. The bill allows them to seek recovery for investigating and remediating the contamination. These include the costs of assessing and investigating the contamination and post remediation monitoring. Remediation costs include those incurred as part of a remedial action plan.

The bill changes the standard for seeking recovery. Current law allows recovery only for contamination caused by negligent or other acts; the bill allows recovery for acts or negligent omissions that directly or indirectly caused, contributed to, or exacerbated the contamination.

The bill also applies this standard when a party seeks recovery from two or more parties responsible for the contamination. By law, these parties are liable only for their pro rata share of the cost of containing, removing, or otherwise mitigating the contamination. The bill limits their liability to their pro rata share of the investigation and remediation costs and requires them to be based on equitable and site-specific factors, including:

1. all the things done to the property;

2. the time it takes to do these things or the property's ownership;

3. compliance with the laws, regulations, and other standards that existed when the responsible party owned or operated the property;

4. the type and amount of pollution that was caused during that time; and

5. prior efforts to prevent, contain, mitigate, or remediate the property.

The bill allows a party to start a recovery action only if it notified the parties it believes are responsible for contaminating a property about its plans to investigate and remediate it. The party may start the action only if the other parties decide not to participate in the investigation and remediation. In that case, the party must start the action within the bill's deadlines.

Notice to Responsible Parties. The bill establishes a procedure a person, firm or corporation (i. e. , performing party) must follow before it can start a recovery action. The procedure requires the performing party to notify all potentially responsible parties about its plans to investigate and remediate a property at least 120 days before starting these activities. The bill prohibits the party from starting a recovery action if it fails to provide this notice.

The notice must go to any person, firm, corporation, municipality, or MDO that is liable for contaminating the property (i. e. , responsible parties). A party is liable for contaminating the property if an act or negligent omission directly or indirectly caused, contributed to, or exacerbated the contamination.

1. identify the property and its relationship to the potential responsible parties,

2. how the property will be investigated and remediated and the estimated costs, and

3. when these activities will begin.

The party must send the notice by certified mail, return receipt requested to each potentially responsible party at its last known address on file with the Secretary of the State or its agent for service of process. If that party is no longer on file with the secretary, the eligible party must send the notice to other specified addresses, depending on how each potentially responsible party organized itself. If the party is a corporation, the notice must go to its president's last known address; if it is a partnership, to each partner's last-known address; and if it is an individual, to his or her last known residential address.

The party must also send a copy of the notice to the Attorney General and the DEP commissioner. It must also notify any other potentially responsible parties it learns of after sending the initial notices within 45 days after learning about them.

Responsible Party's Response. A potentially responsible party must respond to the notice within 90 days after receiving it. In doing so, the party must indicate if it intends to negotiate about its share of the investigation and remediation costs. The party is liable for recovery of these costs if it fails to:

1. offer and share in its pro rata costs,

2. respond to the notice or participate in sharing those costs, or

3. respond to the notice or pay according to a pro rata share.

If the party fails to do either, it automatically waives it right to challenge whether a cost item is reasonable in a recovery action. It also becomes liable for any damages the performing party suffers, including those resulting from the loss of business opportunities. Lastly, if the recovery action succeeds, the party must pay attorneys fees, if the court awards them, and court costs. The bill authorizes the Superior Court to order the responsible party to pay its pro rata share.

Deadline for Seeking Recovery. The bill imposes deadlines for starting recovery actions. An eligible or performing party must start an action before the later of

1. six years after notifying potentially responsible parties that it intends to seek recovery or

2. three years after remediating the property, not including any long-term groundwater monitoring.

Eligible Parties. The bill protects these parties from liability for damages or claims arising from any pollution or pollution source that existed or emanated from the property before they acquired or took control over it. The bill protects these parties only if they:

1. did not establish or create a condition or facility on the property that could reasonably be expected to create a pollution source and

2. are not affiliated with anyone responsible for the pollution or pollution source through any direct or indirect familial, contractual, corporate, or financial relationship other than one formed to transfer or convey the property.

Potentially Responsible Parties. These parties are liable for their pro rata share of necessary and reasonable investigation and remediation costs. The bill authorizes the Superior Court to order these parties to pay these costs.

As discussed above, they are not liable for recovery costs if the performing party failed to notify them as the bill requires. But this liability protection does not apply when the owner must act immediately to investigate and remediate an imminent and substantial danger or one that arises from polluting spreading beyond the property's boundaries. In these cases, the potentially responsible parties are liable for the recovery costs.

The bill exempts potentially responsible parties from paying the extra cost of remediating the property above the land use that existed when it owned or operated it (e. g. , the remediation costs an eligible party incurs when it plans to convert a contaminated mill or warehouse into homes or apartments).

Assisting Parties. The bill expands the current liability protections for parties that help mitigate pollution (i. e. , assisting parties). Current law protects people, firms, and corporations from liability for civil damages for any act or omission except gross negligence or willful misconduct when they receive compensation only for their actual expenses. The bill extends this protection to any cost an eligible or performing party incurs to investigate or remediate the pollution.

The bill extends the protection for assisting parties to municipalities and MDOs. It also extends the protection to assisting parties that help mitigate the discharge or prevent the potential discharge of hazardous wastes or substances. Under current law, the protection applies only to oil; petroleum; chemical liquids; or solid, liquid, or gaseous products or hazardous materials.

The law does not protect assisting parties when helping to mitigate contamination they caused. Nor does it protect them when they negligently use a motor vehicle. The bill similarly does not protect municipalities and MDOs in these situations.

The bill's recovery provisions do not supersede other laws. Responsible parties may use any defenses the law provides against any action, including recovery. But they remain liable to third parties for property damage or personal injury under common law.

The bill imposes deadlines for starting a recovery action under the Transfer Act, which requires the party transferring a potentially contaminated property (the transferor) to do so only after it assess the property's environmental condition and, if contaminated, identifies who will clean it up. As explained above, the transferor must do this by filing one of four forms depending on the property's environmental status. The law holds the transferor strictly liable for all cleanup costs and direct and indirect damages if he or she fails to comply with the Transfer Act's requirements. It also entitles the party acquiring the property (the transferee) to recover damages from the owner.

The bill requires a transferee seeking recovery for damages under the act to begin doing so within six years after the later of:

1. the due date for filing the appropriate Transfer Act form or

2. the date the transferee filed the form.

The bill appears to apply these deadlines to any recovery action for investigation and remediation costs except those that are closed and no longer appealable on or before October 1, 2009.

Current law extends limited liability to municipalities (or licensed environmental professionals acting on their behalf) to enter and inspect contaminated property. The bill extends this authorization to municipal economic development agencies and MDOs.

The bill also changes the grounds under which an owner may appeal a municipality's decision to enter and inspect his or her property. By law, the municipality must notify the owner before it or the LEP can enter the property.

In bringing the appeal under current law, the owner must represent that he or she is diligently investigating the property in a timely manner and will pay all delinquent property taxes. Under the bill, the owner must show that access is not necessary and prove that he or she:

1. has completed or is completing a comprehensive environmental site assessment or investigation report;

2. gave a copy of the report to the partying intending to enter the property (i. e. , the municipality, MDO, or LEP) or plans to do so within 30 days after the owner received a copy of the assessment report; and

3. paid any back taxes on the property.

The bill changes the extent to which municipalities and licensed environmental professionals (LEPs) are liable for their actions when entering and inspecting a property. Under current law, a LEP acting on a municipality's behalf may enter and inspect a property without liability to anyone except the environmental protection commissioner. The bill allows the LEP to enter and inspect the property without any liability.

The bill broadens a municipality's protection from liability when entering and inspecting property. Under current law, the municipality is not liable for any preexisting contamination or pollution unless it causes this condition to spread by negligently or recklessly inspecting the property. But the municipality receives this protection only when it acts under orders the DEP commissioner issues to address a potential pollution source.

The bill extends the protection to more types of corrective orders addressing preexisting conditions. It includes orders to address potential pollution sources, orders to a property's owner to correct actual or potential pollution sources when another party is responsible for the pollution, and recovery actions initiated by the commissioner and other parties. The municipality is not liable to the property owner or third party for preexisting conditions under these orders if it:

1. did not cause or contribute to the contamination or pollution,

2. did not negligently or recklessly exacerbate it, and

3. complies by reporting pollution on or emanating from the property to the commissioner as the law requires.

If the municipality negligently or recklessly caused the contamination to spread, it must address only the contamination resulting from its activities.

The bill broadens the circumstances under which municipalities are exempt from the Transfer Act when acquiring and conveying brownfields. Current law exempts them when acquiring a property by foreclosing on a tax lien or through a tax warrant sale. It also exempts municipalities when they convey this property to another party who will remediate and redevelop it under the Department of Economic and Community Development's (DECD) Brownfield Pilot Program.

The bill extends the Transfer Act exemption to property a municipality acquires and conveys by eminent domain or through any foreclosure action. The eminent domain exemption applies only to property they acquire under a legislative body resolution authorizing the taking of a specific brownfield site or the redevelopment, municipal development, or the Manufacturing Assistance Act statutes. By exempting property taken under these statutes, the bill extends the municipal Transfer Act exemptions to the agencies that plan and implement projects under those statutes.

The municipality is also exempted from the act when it conveys property if two conditions are met. First, the municipality or the party acquiring the property began remediating the property under DEP's voluntary remediation program before the municipality conveyed it. Second, the acquiring party is neither responsible for the contamination nor affiliated with the party that is. The exemption applies when the municipality, an economic development agency, or a MDO transfer property among themselves.

§ 3 — Liability Protections for Developers Acquiring Remediated Property

The bill also expands the circumstances under which developers are protected from liability when acquiring a brownfield remediated under DECD's Brownfield Remediation Pilot Program, under which selected municipalities receives funds and technical assistance to investigate and remediate contaminated property according to DEP standards. Current law protects developers from liability when acquiring property from the municipality or its economic development agency. The bill extends the protection to developers when they acquire the property from a MDO.

In doing so, the bill extends an additional benefit to these developers. Under current law, DEP must enter into a covenant not to sue with a developer who acquires a property from the municipality or its economic development agency after remediating it according to DEP standards. DEP do so without charging the statutory fee, which equals 3% of the property's value. The covenant protects the developer from future DEP orders to investigate and remediate pollution on the site. The bill extends this benefit under the same conditions to developers who acquire remediated property from MDOs.

The bill also extends a benefit to municipal development organizations that is currently limited to the municipalities and their economic development agencies. It allows them to keep 20% of the sale proceeds for economic development capital improvements. (As under current law, the organizations must remit the remaining 80% to DECD's Brownfield Office for deposit in the General Fund. )

The bill broadens the circumstances under which municipalities qualify as innocent third parties, a designation that protects them under current law from liability to DEP for cleanup costs if the property was already contaminated when they acquired it or subsequently became contaminated due to an act of God or the actions of a third party. Current law limits this designation to municipalities and municipal economic development agencies that receive investigation and remediation funds under DECD Brownfield Remediation Pilot Program for investigating and remediating contamination. The designation applies only if the parties did not cause, contribute to, or exacerbate the contamination and comply with DEP's reporting requirements.

The bill broadens the circumstances by extending it to MDOs that receive grants under any DECD program to investigate and remediate contaminated property. It also applies the designation if these entities did not establish, as well as cause, contribute to, or exacerbate the contamination and comply with DEP's reporting requirements.

The bill also specifies the circumstances under which the entities are liable for cleanup costs. It does so by:

1. specifying that the innocent third status applies only to conditions that existed or exist on the property when an entity acquired or took control of the property as long as they did not establish, cause, contribute to, or exacerbate the pollution and

2. requiring the entity to address any contamination they exacerbated by negligent or reckless action.

The bill establishes a program protecting developers from liability for investigating and remediating pollution that emanated from a property before they acquired it. The DECD commissioner must establish the program in consultation with the DEP commissioner.

A developer must apply to DECD commissioner for the program's benefit on forms she provides. The commissioner has up to 60 days after receiving the application to determine if it is complete and notify the developer. The commissioner has 90 days after determining the application is complete to decide whether to award the program's benefit.

The bill specifies that the commissioner's approval does not disqualify the developer or the property from funding under other brownfield remediation programs administered by the DEP, Connecticut Development Authority, or DECD.

The property and the developer must meet the bill's criteria to qualify for the program. The property must have been unused or significantly underused since October 1, 1999 and its redevelopment must benefit the municipality and the region.

The property must also meet the statutory definition of brownfield. Under that definition, a property is a brownfield if it has not been redeveloped or reused because it is contaminated or potentially contaminated. The contamination could be in the groundwater, soil, or buildings. It must be investigated, assessed, and cleaned up while the property is being restored, redeveloped, or reused or before these activities can occur. Lastly, the property must meet any other criteria the DECD commissioner establishes.

The developer qualifies for the program if the person or organization responsible for polluting the property cannot be identified, no longer exists, or cannot remediate the property. In addition, the developer qualifies if he or she:

1. intends to acquire title to the property so that it can be redeveloped;

2. did not establish or create a facility or condition at or on the property that could reasonably be expect to pollute water;

3. is unaffiliated with the party responsible for the pollution or its source through any direct or indirect familial or contractual, corporate, of financial relationship other than the one through which the property is conveyed or financed; and

4. is not required to remediate the pollution on or emanating from the property under a law, order, DEP consent order, or stipulated judgment to under no DEP or court order.

The commissioner may approve the developer for the program if he or she meets the above criteria and takes title to the property. If she does, the developer must:

1. remediate the property under DEP's voluntary remediation program,

2. investigate the property according to current standards and guidelines and remediate it according to state standards, and

3. eliminating any pollution that emanated or migrated from the property before the party took title.

The bill makes it easier for state agencies to develop or allow other to develop contaminated mill sites in floodplains. Under current law, an agency cannot implement or assist any type of project in a floodplain without first certifying to the DEP commissioner that the project meets certain criteria and that the agency will take steps to mitigate or prevent increased flooding. Among other things, the agency must certify that the project promotes long-term nonintensive uses and does not encourage new development in the floodplain by constructing or extending utilities needed to support that development.

The bill exempts the agency from having to certify this condition if it can show that:

1. the mill will be remediated according to DEP standards,

2. the project site falls within the site of the mill's historic uses,

3. all critical activities (e. g. , residential dwellings) are above the 500-year flood elevation, and

4. the project complies with the National Flood Insurance Program.

If the agency cannot show that the project meets these criteria, the agency may, as under current law apply to the commissioner for an exemption from the certification requirement.

SB 271 (as amended by Senate “A” and House “A”) makes identical changes to the floodplain law.

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(03/12/2009)

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(04/27/2009)

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