This bill ensures the continued protection of public health and the environment through the reform and enhancement of the Inactive Hazardous Waste Disposal Site Program (State Superfund Program), and the Oil Spill Program. It will assure the most efficient utilization of public and private funding sources for the investigation and remediation of sites under such programs and will ensure remediation efforts are completed as quickly as possible; will provide the statutory authority and funding to address sites contaminated with hazardous substances, not currently authorized under the existing State Superfund Program; and will clarify the authority for a Voluntary Cleanup Program within the Department of Environmental Conservation (DEC).
The bill also proposes programmatic adjustments in the areas of remedy selection, liability and citizen participation for each of the existing remedial programs. It includes financial incentives to encourage non-responsible parties or responsible parties whose liability results only from ownership or operation of the site subsequent to the discharge or disposal at the site to redevelop contaminated sites under the Voluntary Cleanup Program.
This bill also provides for the waiver of petroleum bulk storage (PBS) registration fees and the waiver of the special assessment fee for the recovery of any hazardous waste under specified circumstances where a site is being remediated under one of the DEC's remedial programs.
This bill incorporates recommendations of the Superfund Working Group that was convened by Governor George E. Pataki in August 1998 and issued its report to the Governor on June 2, 1999.
This bill provides tax credits under the corporate franchise taxes and the personal income tax to developers of remediated brownfields.
This bill also provides for amendments to the Environmental Restoration (Brownfields) Program, authorized under Title 5 of the 1996 Clean Water/Clean Air Bond Act (Article 56 of the ECL), targeted at enhancing participation by municipalities in the program.
Section 1. Environmental Conservation Law (ECL) §17-1009(2) is amended to allow the DEC to waive the registration fee for a facility, which is being remediated under one of the DEC's remedial programs and at which the tanks are to be removed or otherwise permanently taken out of service.
§ 2. ECL § 27-0923(3)(c) is amended to clarify instances where a party can avail itself of the exemption from the special assessment imposed pursuant to 27-0923 on the generation of any hazardous waste. The exemption is further clarified to expressly include the Voluntary Cleanup Program under the new Title 14 and the Brownfields Program under Title 5 of Article 56 of the ECL.
§ 3. ECL § 27-1301(1) is amended to expand the definition of "hazardous waste" to include all hazardous substances identified by DEC pursuant to ECL § 37-0103, with the exception of certain natural or synthetic gases, the residue of emissions from engine exhausts, source, byproduct or special nuclear material, and petroleum, consistent with Federal law.
KK Comment: This is probably an appropriate change going forward, but (without grandfathering) it will result in a large number of new sites suddenly becoming subject to registry listing and mandatory cleanup.
ECL § 27-1301(3) is amended to clarify DEC's authority to include institutional and/or engineering controls as components of an inactive hazardous waste disposal site remedial program if the owner of the property provides reasonable access to the site and submits an annual statement, certifying that the controls are unchanged from the previous certification and that nothing has occurred that would constitute a violation of any of the controls. DEC must also maintain a database with relevant information on such controls and make the information on that database available for public inspection in each county.
ECL § 27-1301(4) is amended to provide that certain parties, including:(1) lenders who do not participate in the management of a site and hold indicia of ownership primarily to protect a security interest in the site; (2) the State or a public corporation which acquires a site involuntarily in its capacity as a sovereign or in response to an emergency created by another person; (3) a fiduciary acting solely in its fiduciary capacity; and (4) an industrial development agency acting as a conduit financier, shall be excluded from the definition of "person" for purposes of ECL Article 27, Title 13.
KK Comment: These are very beneficial and long overdue provisions.
§ 4. ECL § 27-1303(1), which requires municipalities to provide the DEC with a report identifying the suspected inactive hazardous waste disposal sites, is amended to explicitly require municipalities to provide such information to DEC annually. This amendment will codify and clarify existing practices. In addition, the amendments require municipalities to survey their jurisdictions after the first year of the effective date of this bill to determine the existence and location of suspected inactive hazardous waste disposal sites, including hazardous substance sites, and provide DEC such information annually thereafter.
KK Comment: Many municipalities lack the resources and expertise to identify hazardous waste (and hazardous substance) sites.
§ 5. ECL § 27-1305(4)(b) is amended to expressly allow DEC to defer listing a site on the Registry of Inactive Hazardous Waste Disposal Sites if the site is the subject of ongoing good faith negotiations or an existing voluntary agreement for remediation under proposed Article 27, Title 14 (Voluntary Cleanup Program) and the person subject to the agreement is in compliance with its terms; the site shall be assessed or reassessed upon completion of the remediation.
KK Comment: This will force many more sites into the Voluntary Cleanup Program. This would be beneficial--IF DEC had an appropriately structured, effective Voluntary Cleanup Program. Unfortunately, the current program is ineffective and cumbersome.
§ 6. ECL § 27-1305(5) is amended to require the Department to prepare an updated state inactive hazardous waste remedial plan on an annual basis, and also omits the reference to the State Superfund Management Board, whose term has expired, in the approval process of such plan.
§ 7. ECL § 27-1309(3), (4) and (5) are amended to allow the DEC to extend its access rights to an employee, agent, consultant or contractor of a responsible person acting at the direction of the Department.
§ 8. ECL § 27-1313(1)(b) is amended to provide that the objective of an inactive hazardous waste disposal site remedial program shall be the protection of the public health and environment, with the minimum objective being to eliminate or mitigate all significant threats to the public health and environment presented by the contamination through proper application of scientific and engineering principles. A list of factors that must be considered by DEC in selecting a remedy is provided. These factors are currently required to be considered by DEC except for the following new addition: the current, intended, and reasonably anticipated future land uses for the property and its surroundings, if ascertainable. In addition, this section provides for a presumption that any soil contamination will be cleaned up to residential soil cleanup levels at Classification 1 and Classification 2 Registry sites that: (I) are not in active industrial or commercial use; (ii) are being remediated by a person responsible; and (iii) are adjacent to residential areas. This presumption may be overcome by a written finding of the DEC Commissioner after citizen participation.
KK Comment: While protection of health and the environment is an appropriate goal, it is NOT appropriate to place the onus on a cleanup volunteer who is not a responsible party (or not a contributory owner/operator) to remediate in full conformity with the same standards, criteria and guidelines to which a Superfund responsible party would be subject.
§ 9. ECL § 27-1313(3) is amended to authorize the DEC to offer technical assistance grants of up to $50,000 per site to a non-responsible municipality and/or a community group. These grants may be used by the recipients to obtain technical assistance in interpreting existing information with regard to the nature and extent of the contamination at the site and the development and implementation of a remedial program.
KK Comment: This is appropriate for high hazard potential sites--as long as cleanup volunteers are not made to underwrite the cost of such grants.
ECL § 27-1313(4) is amended to provide a defense to liability under State law for: any person otherwise liable who can establish by a preponderance of the evidence that the significant threat attributable to hazardous waste disposal was caused by an act of God, an act of war, or an act or omission of a third party other than an agent or employee or a person in a contractual relationship, and that, at the time the site was acquired, appropriate inquiry into the previous ownership and uses of the site was undertaken; a governmental entity which acquired the site by escheat or other involuntary transfer or acquisition; or a person who acquired the site by inheritance or bequest and exercised due care with respect to the hazardous waste. These defenses are consistent with Federal law.
ECL § 27-1313(8) is amended to allow the DEC to extend its access rights to an employee, agent, consultant or contractor of a responsible person and to clarify its current authority.
§ 10. ECL § 27-1313 is amended by adding a new subdivision 10 to provide that if DEC conducts the remediation of a site after the owner and/or any person responsible for the disposal of hazardous wastes at such site have failed to do so, the State is entitled to recover, in any court of competent jurisdiction, all of its costs respecting such site plus a penalty in an amount no less than one and no more than three times all such costs (often referred to as treble damages). To obtain the penalty, the State must prove by a preponderance of the evidence that DEC expended reasonable efforts to obtain a voluntary commitment from such owner and/or any person responsible before conducting the remediation. In addition, an owner or person responsible at a multiple party site that voluntarily commits to conduct the remediation is entitled to seek contribution, in any court of competent jurisdiction, of the excess paid by that person over and above such person's equitable share of costs, from other persons responsible who failed to enter into a settlement agreement with the person conducting the remediation. Such owner or person responsible also may seek to recover three times such amount if one-third of any such award is paid into the Remedial Program Transfer Fund.
KK Comment: Treble damages authority should not extend to non-contributory owners who are unreasonably asked by DEC to remediate a site that was contaminated by other parties.
ECL § 27-1313 is amended by adding a new subdivision 11 to provide that any person who is subject to an order to implement a Department-approved inactive hazardous waste disposal site remedial program or who entered into a voluntary agreement with DEC may seek contribution from any other person responsible for costs incurred to implement the remedial program or voluntary agreement.
ECL § 27-1313 is amended by adding a new subdivision 12 to provide that the State may seek to recover damages for injury to, destruction of, loss of, or loss of use of the State's natural resources from the owner of an inactive hazardous waste disposal site or any person responsible for the disposal of hazardous wastes at such site. Damages recovered would be paid into the Remedial Program Transfer Fund. This cause of action is similar to the natural resource damages cause of action found in Federal law.
KK Comment: Non-contributory owners should not be subject to NRD claims.
ECL § 27-1313 is amended by adding a new subdivision 13 to clarify the DEC's authority to exempt a person from the requirement to obtain any State or local permit or other authorization necessary to implement the remedial program.
§ 11. A new ECL § 27-1314 is added to require DEC to provide a covenant not to sue to a party that remediates a site to DEC's satisfaction under the terms of an order on consent. The covenant not to sue would apply to any liability or claim by the State for further remediation of hazardous waste at or from the site that was the subject of such order, would be binding upon the State, and would be subject to certain reservations and reopeners. In addition, a party receiving a covenant not to sue would not be liable for claims for contribution regarding matters addressed in the order. A person responsible according to applicable principles of statutory or common law liability would not be released from liability for natural resource damages. The covenant not to sue would extend to the successors and assigns of such person but would not extend and could not be transferred to any person responsible for the remediation of hazardous waste at the site as of the date of the issuance of the order on consent.
KK Comment: A non-contributory owner (even though considered a "responsible party" under CERCLA) should not be subject to NRD claims.
§ 12. ECL § 27-1315 is amended so that the definition of "hazardous waste" in existing regulations promulgated to carry out Article 27, Title 13 would be deemed revised to include the statutory definition.
§ 13. Existing ECL § 27-1316, which directed DEC and the Department of Health (DOH) to conduct the Hazardous Substances Sites Study, is repealed since the study has already been completed. A new § 27-1316 is added to require the Commissioner of Environmental Conservation to establish a technical advisory panel, which will provide advice on the development of, and recommend, soil cleanup levels that will provide for a multi-category approach to the remediation of soil contamination at inactive hazardous waste disposal sites, sites subject to a voluntary agreement for remediation, and cleanup and removal actions under article 12 of the Navigation Law. Cleanup levels for soil category 1 will be protective of the public health and environment and would allow the property to be used for any purpose without restriction and without reliance on institutional or engineering controls. Cleanup levels for soil category 2 will be protective of the public health and environment and allow for the property's current, intended or reasonably anticipated residential, commercial or industrial use with consideration of institutional or engineering controls to reach these levels. Soil category 3 would consist of a process for determining cleanup levels that would be protective of the public health and environment, using site-specific data for the site's current, intended, and reasonably anticipated residential, commercial or industrial use. The panel would be required to submit its recommendations within 18 months of its first meeting; all such recommendations would be subject to public comment. After the close of the public comment period, DEC and DOH would promulgate regulations setting forth the required cleanup levels, taking into consideration the recommendations of the technical advisory panel and any other information deemed relevant.
KK Comment: It is essential that the technical advisory panel have a balanced composition--including qualified representatives of both the industry / development community and the environmental community, downstate and upstate interests, economic development and environmental protection advocates, etc.
§ 14. A new ECL Article 27, Title 14, Voluntary Cleanup Program is added to codify the existing voluntary cleanup program and set forth the requirements for participation, voluntary agreements and work plans.
A new ECL § 27-1400 is added to set forth the policy and findings of fact regarding the voluntary cleanup program. It also states that the remedial goal of the voluntary cleanup program shall be the same goal as set forth in the State Superfund Program, as amended herein, which is the protection of public health and the environment, with the minimum objective being to eliminate or mitigate all significant threats to public health and the environment presented by the hazardous waste and/or petroleum through proper application of scientific and engineering principles.
KK Comment: Although the goal in both cases is protection of health and the environment, it must be made clear that it is NOT necessary to apply the same cleanup standards to a slightly contaminated brownfield site as would be appropriate for a highly contaminated Superfund site--especially where there are compelling public policy reasons for promoting the cost-effective, accelerated cleanup of the brownfield site.
ECL § 27-1401 provides the definitions for certain terms used in the title.
A new ECL § 27-1403 describes the application process for the Voluntary Cleanup Program, including a description of the types of information that will be required to determine eligibility for the program. DEC will determine if the affected site should be included in the Registry of Inactive Hazardous Waste Disposal Sites. If the DEC determines that the affected site should be listed as a classification 1 or 2 site, and if the affected person commits to enter into an agreement which requires the elimination or mitigation of all significant threats to the public health and environment, DEC will defer listing the site and continue to defer listing such site on the Registry as long as the affected person is negotiating an agreement in good faith and is in compliance with such agreement once it is in effect.
A new ECL § 27-1405 sets forth procedures for determining the applicant's eligibility for the Voluntary Cleanup Program. The application shall be rejected if the site is listed in the Registry as a classification 1 or 2 site and the applicant is an owner and or any person responsible for the disposal of hazardous waste at the site; if insufficient information is provided by the applicant; if the applicant is subject to a pending enforcement action; or if the site does not meet the definition of "affected site" under ECL § 27-1401(2).
KK Comment: Owners should be ineligible under such circumstances only if they were owners at the time the original contamination occurred.
A new § 27-1407 describes the provisions to be included in a voluntary agreement. The voluntary agreement must require the affected person to pay for State costs incurred overseeing and reviewing the voluntary agreement. A voluntary agreement may contain a provision that allows the affected person to offset against the State's costs any technical assistance grant, as provided under new § 27-1313, for a site that DEC has determined poses a significant threat to the public health and environment. The voluntary agreement must also include, but is not limited to, provisions concerning dispute resolution, State indemnification, voluntary agreement termination, State permit exemptions, and cost recovery as well as a provision requiring any work at the affected site to be conducted pursuant to one or more work plans which are approved by the DEC.
KK Comment: While the affected person (cleanup volunteer) should be ALLOWED to apply funds toward technical assistance grants, this should not be a requirement.
The minimal requirements for work plans are also set forth under this provision. A work plan for an investigation must provide for the investigation and characterization of the nature and extent of the contamination within the affected site's boundaries. However, an affected person who is responsible for the disposal of hazardous waste or discharge of petroleum, must also investigate and characterize the nature and extent of off-site contamination unless such affected person's responsibility results solely from ownership or operation of the affected site subsequent to the disposal or discharge. An affected person who is not responsible or an affected person who is liable solely as a result of ownership or operation of the affected site subsequent to the disposal or discharge at the site would be required to perform an exposure assessment for off-site contamination. Such work plan shall require the submission of a final report which describes the nature and extent of the contamination and states whether remediation is required to meet the remedial goal of the voluntary cleanup program. To the extent that the affected person certifies that no remediation is required, then the final report shall also demonstrate the same requirements as required under a final report for a work plan for remediation.
KK Comment: This provision would have the effect of requiring affected persons (cleanup volunteers) to obtain certifications of their final reports by registered New York State professional engineers. This is an excessive and unwarranted requirement that is imposed neither by the Federal Government nor by any other state. Any qualified environmental consultant should be able to certify such reports.
If it is determined that hazardous waste and/or petroleum migrating from the affected site poses a significant threat to the public health or environment, DEC will require the person responsible, except an affected person whose liability results solely from ownership or operation of the site subsequent to the disposal or discharge, to conduct off-site investigation and/or remediation. If the person responsible cannot be located or fails to take or takes but fails to complete such action, DEC may undertake the off-site investigation and/or remediation and seek recovery of costs from the person or persons responsible.
A proposed work plan for remediation must provide for the development and implementation of a remedial program for the contamination within the affected site's boundaries. The cleanup objective for affected sites remediated under the Voluntary Cleanup Program will be the same as proposed for inactive hazardous waste disposal site remedial programs in § 27-1313(1)(b). If the affected person subject to the voluntary agreement is a person responsible for the disposal of hazardous waste or discharge of petroleum, that affected person must also conduct any necessary off-site remediation, unless such liability results solely from ownership or operation of the site subsequent to the discharge or disposal. Such work plan must also include an analysis that the proposed remedy was assessed using the evaluation factors set forth in proposed amendments to § 27-1313. The affected person subject to the voluntary agreement must submit a final remediation report for a work plan for remediation, other than one for an interim remedial measure, that, at a minimum, demonstrates that there is no contamination in concentrations exceeding remediation requirements; that the remediation was conducted in accordance with the voluntary agreement; that any land use restrictions are properly recorded; and that an operation and maintenance plan has been approved by DEC for any required engineering controls.
KK Comment: Making the cleanup objectives the same for modestly contaminated sites under the Voluntary Cleanup Program the same as those for heavily contaminated Superfund sites eliminates any incentive for voluntary cleanups by non-responsible parties.
A work plan for an interim remedial measure shall contain such provisions as the DEC determines are necessary and shall provide for a final report to be submitted to the DEC.
The Commissioner must use best efforts to approve, modify or reject a proposed work plan within 60 days after receipt, except that the commissioner must use best efforts to approve, modify or reject a proposed work plan for remediation, other than one for an interim remedial measure, within sixty days after completion of the public comment period or the close of the public meeting, whichever is later, and after evaluating any comments received.
KK Comment: Setting a deadline for DEC action is good, but 60 days is too long. If the VCP is to work, it must promote accelerated cleanups.
A new § 27-1409 sets forth citizen participation and public notification procedures for the Voluntary Cleanup Program. Upon receipt of a request to participate in the program, the Department must publish a notification in the Environmental Notice Bulletin (ENB). Upon finalization of a work plan for investigation, and again upon completion of the investigation, the Department must notify individuals, groups and/or organizations that are interested or affected by work plan and publish a notice in the ENB. Before finalization of a proposed work plan for remediation, other than one for an interim remedial measure, the Department must notify individuals, groups and/or organizations that are interested or affected by such work plan, and publish a notice in the ENB requesting comments on such proposed work plan and providing for a 45 day public comment period. A public meeting is also required for any affected site that constitutes a significant threat to the public health or environment.
KK Comment: A 45-day public comment period eats up precious time. It would be greatly preferable to set a basic 15- or 3-day comment period, with the ability to extend this period by up to 15 days in cases of major public health risk or community concern.
A new ECL § 27-1411 requires DEC to provide a covenant not to sue to an affected person that remediates an affected site to DEC's satisfaction under the terms of a voluntary agreement. The covenant not to sue would apply to any liability or claim for further remediation of hazardous waste and/or petroleum at or from the affected site that was the subject of such voluntary agreement. It would be binding upon the State, and would be subject to certain reservations and reopeners. In addition, an affected person receiving a covenant not to sue would not be liable for claims for contribution regarding matters addressed in the voluntary agreement. An affected person responsible according to applicable principles of statutory or common law liability would not be released from liability for natural resource damages. The covenant not to sue would extend to the successors and assignees of such affected person but does not extend and cannot be transferred to any person responsible as of the effective date of the agreement.
A new § 27-1413 authorizes DEC, upon application by an affected person subject to a voluntary agreement, to issue a "remediation certificate" upon a determination that the remedial goal of the program as well as the requirements of the work plan and Voluntary Cleanup Program statute have been achieved. The certificate would state that such affected person is eligible for certain tax credits. An affected person who is not a person responsible for the disposal of hazardous waste or the discharge of petroleum, or an affected person whose liability results solely from ownership or operation of the site subsequent to the disposal or discharge, is eligible for such certificate. If the soil has been remediated to soil category 1, when not specifically required by DEC, the remediation certificate would state that the affected person receiving the certificate is eligible to receive an additional 2 percent credit.
KK Comment: This is good. The possibility of receiving tax credits provides an incentive to do voluntary cleanups. (However, if the applicable cleanup standards are too stringent, no amount of tax credits will induce a rational prospective site owner or developer to volunteer to do a cleanup under State supervision.)
A new § 27-1415 requires that the affected person pay the State's costs to oversee implementation of the voluntary agreement. An affected person who is a person responsible (except a person whose liability results solely from ownership or operation of the site subsequent to the disposal or discharge) must also pay all costs incurred by the State up to the effective date of the voluntary agreement.
KK Comment: In its zeal to save taxpayers money, the State should not be too eager to weigh down prospective cleanup volunteers with burdensome costs. Studies have shown that every dollar spent by states to promote brownfields redevelopment yields $10 to $100 in benefits. VCP programs should be designed to encourage maximum participation.
A new § 27-1417 is added to state the requirements regarding change of use of an affected site after the issuance of a covenant not to sue under this title. This requirement mirrors the change of use requirements under Title 13 and Title 5 of Article 56 of the ECL. A new § 17-1419 is added to provide the DEC with immunity, subject to limited exceptions, with respect to its activities conducted pursuant to this title. The immunity is similar to the immunity provision contained in Title 13 and Article 12 of the Navigation Law. A new § 27-1421 is added to authorize the DEC to waive any state or local permit or authorization for activities conducted under the voluntary cleanup program. This authority is similar to that found under the State Superfund Program and the Brownfields Program. A new § 27-1423 is added to authorize access to affected sites and records relative to the contamination at or mitigating from such affected sites for activities conducted under this title. The access provision is similar to that provided under Title 13.
KK Comment: Local governments can and should play a more significant role in initiating and promoting brownfields redevelopment. This would be facilitated if local governments were extended the sort of immunity this provision would give to DEC.
§ 15. ECL § 52-0101(8) is amended to refer to the new definition of "hazardous waste" in section 27-1301 rather than the definition in Title 9 of Article 27.
§ 16. ECL § 52-0103(1) is amended to remove the authorization to spend up to $100,000 of 1986 Environmental Quality Bond Act funds for the Hazardous Substances Waste Disposal Sites study since the study has already been completed.
§ 17. ECL § 71-2705 is amended to include the voluntary cleanup program access provisions (27-1423) under this section providing for civil and administrative sanctions for non-compliance of Titles 9, 11 and 13 of Article 27 of the ECL.
§ 18. ECL § 71-2727(1) is amended to clarify that DEC's authority to issue orders under this subdivision does not preclude DEC from settling any matter under Article 27 by stipulation, agreed settlement, consent order, default, or other informal method.
§ 19. ECL § 71-3601 - 71-3611 are added to provide the DEC with the authority to create an easement, covenant, restriction or other interest in property for the purpose of protecting the public health or safety or natural resources of the environment from pollution affecting the real property. The applicable definitions, common law rules which are not applicable, procedures for modifying or extinguishing an environmental easement, the scope of the title and the severability of the various sections are all set forth in the foregoing sections. This statutory language is patterned on present Article 49, Title 3 (Conservation Easements).
§ 20. The section heading of Section 213 of the Civil Practice Law and Rules (CPLR) is amended to refer to claims pursuant to ECL § 27-1313 and to claims for natural resource damages.
§ 21. New subdivisions 9, 10 and 11 are added to § 213 of the CPLR. Subdivision 9 establishes a six-year statute of limitations, triggered by the initiation of physical on-site construction of the remedial program, on State actions to recover costs and penalties under ECL § 27-1313(10). Subdivision 10 establishes a six-year statute of limitations on actions for contribution under ECL § 27-1313(11), triggered by the later of the date of any judgment regarding the costs that are the subject of the claim for contribution or the date of issuance of an order by DEC regarding the costs that are the subject of the claim or the date of issuance of an agreement by DEC regarding the costs or activities that caused the expenditure of the costs. Subdivision 11 establishes a six-year statute of limitations on actions under ECL § 27-1313(12) to recover natural resource damages, triggered by the completion of remedial construction at the site.
§ 22. A new section 970-r is added to the General Municipal Law to authorize the Secretary of State, in consultation with the Commissioner of Environmental Conservation, to provide technical and financial assistance, using available monies, to municipalities and to not-for-profit corporations acting in cooperation with municipalities to conduct brownfield redevelopment area planning. The local cost share is 25 percent of the cost of such plans.
Funding can be used for:
Funding preference shall be given based on the benefit to human health, the benefit to the environment, the potential for economic benefit to the State including the creation of new jobs or a new public resource, and the strength of local support.
§ 23. A new § 172-a is added to the Navigation Law to conform liability exclusions to those contained in proposed amendments to ECL § 27-1301(4). Accordingly, the following shall be excluded from the definition of "person" for purposes of article 12 of the navigation law:
KK Comment: Does the second-listed provision clearly cover all local governmental entities? If not, it should. Nor should a municipal liability exemption be limited to "involuntary" property acquisitions. Is acquisition by foreclosure or condemnation in furtherance of a public purpose "involuntary"? The key should be whether the locality is acting in its sovereign capacity or in its capacity as a landowner.
§ 24. And § 25. Navigation Law § 176 is amended to provide that the objective of a cleanup program for a spill site, other than one constituting an immediate response, shall be the protection of the public health and environment, with the minimum objective being to eliminate or mitigate all significant threats to the public health and environment presented by the spill through proper application of scientific and engineering principles. This cleanup objective is consistent with the cleanup objective for contaminated sites addressed under the State Superfund Program and the Voluntary Cleanup Program. This section also sets forth the factors that must be considered in selecting a remedy, which are the same as those set forth in ECL § 27-1313(1)(b) as proposed in this bill. The cleanup objective for immediate response cleanups under the Oil Spill Program will be to effectuate prompt cleanup and removal of contamination to ensure restoration of the environment to pre-spill conditions.
KK Comment: Again, it is counterproductive to subject voluntary cleanups by non-RPs to the same standards and objectives as mandated cleanups by Responsible Parties.
The amendment will also provide enhanced citizen participation regarding cleanup and removal actions under the Navigation Law. For all cleanup and removal actions other than immediate response cleanups, the Department must notify individuals, groups and/or organizations that are interested or affected by the cleanup or removal action and publish a notice in the ENB upon initiation of an investigation, upon successful completion of an investigation, and upon submission of a proposed remedy, with a 45 day public comment period prior to the approval of a remedy.
KK Comment: The nature and extent of citizen participation should be geared to the magnitude and significance of the response action.
§ 26. Navigation Law § 176 is amended by adding a new subdivision 9 to provide the DEC with the authority to waive any state or local permit or authorization for activities conducted under this Article. This language is similar to the DEC's authority under the Brownfields Program and the State Superfund Program.
§ 27. Navigation Law § 181(1) is amended to provide that if DEC conducts a cleanup and removal of a petroleum discharge after the person responsible for the discharge has failed to do so, the State shall be entitled to recover, in any court of competent jurisdiction, all of its costs of cleanup and removal plus a penalty in an amount no less than one and no more than three times all such costs. To recover the penalty, the State must prove by a preponderance of the evidence that it expended reasonable efforts to obtain a voluntary commitment from the person responsible before conducting the cleanup and removal. In addition, an owner or person responsible that voluntarily commits to conduct the cleanup and removal may seek to recover the excess paid by that person over and above such person's equitable share of costs from other persons that failed to enter into a settlement agreement with the person conducting the cleanup and removal as well as three times such amount if one-third of any such award is paid into the Remedial Program Transfer Fund.
KK Comment: Before punitive damages are imposed, it should be first necessary for a Responsible Party to act in "bad faith" and receive from DEC a "recalcitrance notice," as proposed in S.4788/A.7498-A. Punitive damages should not be available from non-contributory RPs.
Navigation Law § 181(1) is further amended to provide a defense to liability under State law for any person otherwise liable who can establish by a preponderance of the evidence that the discharge was caused by an act of God, an act of war, or an act or omission of a third party, to parallel the defense established by proposed amendments to ECL § 27-1313(4).
KK Comment: Good.
§ 28. A new subdivision 6 is added to Navigation Law § 180 to direct the administrator of the New York Environmental Protection and Spill Compensation Fund to submit an independent audit of the Fund to the Governor and Legislature on an annual basis.
§ 29. Navigation Law § 181(4) is amended to clarify that other than liability exemptions and limitations, and the innocent party defense added by this bill, an act or omission caused solely by war, sabotage or governmental negligence are the only defenses against liability that may be raised by an owner or operator of a major facility or vessel responsible for a discharge. A new subdivision 7 is added to establish that any party receiving a newly added liability exemption or limitation is deemed to have waived any claim the party may have against the New York Environmental Protection and Spill Compensation Fund.
§ 30. Navigation Law § 183 is amended to require DEC to provide a covenant not to sue to a person that performs a cleanup and removal action to DEC's satisfaction under the terms of an order on consent. The covenant not to sue would apply to any liability or claim for further cleanup or removal of petroleum relating to the discharge that was the subject of such order, would be binding upon the state, and would be subject to certain reservations and reopeners. In addition, a person receiving a covenant not to sue would not be liable for claims for contribution regarding matters addressed in the order on consent. A person responsible according to applicable principles of statutory or common law liability would not be released from liability for natural resource damages. The covenant not to sue would extend to the successors and assigns of such person but does not extend and cannot be transferred to any person responsible as of the effective date of the order.
KK Comment: The provision of contribution protection is good. However, non-contributory RPs should not be liable for natural resource damages.
§ 31. The definitions of "hazardous waste," "inactive hazardous waste disposal site," and "inactive hazardous waste disposal site remedial program" in § 1281 of the Public Authorities Law are amended to conform such definitions to the ECL definitions.
§ 32. The definitions of "hazardous waste," "inactive hazardous waste disposal site," "inactive hazardous waste disposal site remedial program," "person" and "waste" in Public Health Law § 1389-a are amended to conform such definitions to existing and proposed ECL definitions.
§ 33. Public Health Law § 1389-b (4) is amended to provide a defense to liability under State law for any person otherwise liable who can establish by a preponderance of the evidence that the significant threat attributable to hazardous waste disposal was caused by an act of God, an act of war, or an act or omission of a third party to parallel the defense established by proposed amendments to ECL § 27-1313(4).
§ 34. Public Health Law § 1389-e, which directed the State Department of Health to cooperate with DEC in conducting the Hazardous Substances Sites Study, is repealed because the study has been completed.
§ 35. Real Property Law § 316-b is amended to require the recording officer of each county to record and index such instruments as may be required to be recorded under ECL Article 27 Titles 13 and 14; ECL Article 56 and Navigation Law Article 12, or any Order or Agreement entered into under such laws.
§ 36. Subdivision 1 of § 97-b of the State Finance Law is amended to add a "hazardous waste cleanup account" to the Hazardous Waste Remedial Fund.
Subdivision 2 of § 97-b of the State Finance Law is amended to delete the provisions directing the deposit of waste end assessment revenue collected pursuant to ECL § 27-0923, and fees and penalties collected pursuant to ECL § 72-0201, into the industry fee transfer account of the Hazardous Waste Remedial Fund. A new provision is added authorizing the hazardous waste cleanup account to receive moneys transferred from the Remedial Program Transfer Fund.
Subdivision 3 of § 97-b of the State Finance Law is amended to make money in the Hazardous Waste Remedial Fund available to all State agencies and departments rather than to DEC only, allowing all State agencies and departments involved in the remedial programs to access the Fund. The provision authorizing the use of funds to conduct the Hazardous Substance Waste Disposal Sites Study is deleted and two new provisions are added authorizing the use of the fund for the costs associated with the Voluntary Cleanup Program and the Brownfield Redevelopment Area Program.
Subdivision 6 of § 97-b of the State Finance Law is amended to require that any moneys recovered or reimbursed for funds expended from the Hazardous Waste Cleanup Account be deposited in the Remedial Program Transfer Fund.
Subdivision 12 of § 97-b of the State Finance Law is amended to delete the requirement that the Comptroller notify the State Superfund Management Board when the Comptroller determines that the industry fee transfer account will lack sufficient funds to make debt service payments.
Subdivision 13 of § 97-b of the State Finance Law, which describes the actions the State Superfund Management Board would take upon receiving the notification under subdivision 12, is deleted.
A new subdivision 15 is added to § 97-b of the State Finance Law to establish procedures for the use of revenue currently deposited in the industry fee transfer account once the balance in that account has reached the amount necessary to fund 50 percent of the debt service of the 1986 EQBA. The proposed amendment would require the Comptroller to estimate the total debt service on the bonds and notes and the State fiscal year in which the sum of the special revenues received will exceed fifty percent of the estimated debt service when the 1986 EQBA bonds issued exceed 95 percent of the authorized bond act amount. The estimated State fiscal year must be certified to the Governor and the Legislature.
A new subdivision 16 is added to § 97-b of the State Finance Law to provide that all moneys currently deposited in the industry fee transfer account shall be redirected to the Remedial Program Transfer Fund effective April 1 of the State fiscal year succeeding the State fiscal year certified in subdivision 15.
A new subdivision 17 is added to § 97-b of the State Finance Law authorizing and directing the Comptroller, upon the request of the Director of the Budget, to transfer moneys from the site investigation and construction account to the hazardous waste cleanup account of the Hazardous Waste Remedial Fund.
§ 37. A new § 97-yyy is added to the State Finance Law establishing the Remedial Program Transfer Fund consisting of revenue from registration fees, license fees, fines, penalties and other moneys paid pursuant to certain provisions of the Environmental Conservation Law and the Navigation Law, funds previously deposited in the industry fee transfer account, cost recovery proceeds and various other sources of revenue.
Subdivision 3 of § 97-yyy of the State Finance Law authorizes the Comptroller, upon the request of the Director of the Budget, for each State fiscal year to transfer from the General Fund to the Remedial Program Transfer Fund an amount equivalent to the projected amount of moneys to be deposited or transferred to the Remedial Program Transfer Fund by the revenue sources identified in subdivision 2 during that fiscal year.
Subdivision 4 of § 97-yyy of the State Finance Law requires that the revenues in the Remedial Program Transfer Fund be kept separate and not commingled with other funds, that all deposits be secured by Federal or State government obligations if required by the Comptroller, and that all revenue, in the discretion of the Comptroller, be invested in authorized obligations.
Subdivision 5 of § 97-yyy of the State Finance Law authorizes the Comptroller to transfer, upon the request of the Director of the Budget, money deposited in the Remedial Program Transfer Fund to the Environmental Protection and Spill Compensation Fund or to the Hazardous Waste Cleanup Account of the Hazardous Waste Remedial Fund.
§ 38. Navigation Law § 179(2) is amended to authorize the New York Environmental Protection and Spill Compensation Fund to receive money transferred from the Remedial Program Transfer Fund pursuant to subdivision 5 of the proposed § 97-yyy of the State Finance Law. A new subdivision 3 is added to § 179 to redirect revenues that are currently deposited into the New York Environmental Protection and Spill Compensation Fund to the Remedial Program Transfer Fund beginning April 1, 2002.
§ 39. ECL § 17-1009(2) is amended to increase petroleum bulk storage registration fees from a maximum of $250 to a maximum of $500 per facility. The fees, which are currently deposited in the New York Environmental Protection and Spill Compensation Fund, will be deposited in the Remedial Program Transfer Fund beginning April 1, 2002. The five-year fee for an owner with a combined storage capacity at a facility of 1,000 to 2,000 gallons is $100 per facility; greater than 2,000 but less than 5,000 gallons is $300 per facility; greater than 5,000 but less than 400,000 gallons is $500 per facility.
§ 40. Subdivision 3 of § 362 of Chapter 83 of the Laws of 1995 is amended to remove the provision that repeals, as of April 1, 2004, DEC's authority to use the New York Environmental Protection and Spill Compensation Fund to pay for the expenses of the Petroleum Bulk Storage Program.
§ 41. ECL § 71-2725(1)(b) is amended to redirect revenue from fines and penalties collected pursuant to §§ 71-2705, § 71-2721, and § 71-2723 from the General Fund to the Remedial Program Transfer Fund.
§ 42. ECL § 72-0201(1)(b) is amended to redirect one-half of revenue from hazardous waste generator fees and hazardous waste transporter fees from the Hazardous Waste Remedial Fund to the Remedial Program Transfer Fund. A new paragraph (e) is added to ECL § 72-0201(1) to direct all revenue from the hazardous waste generator surcharges to the Remedial Program Transfer Fund. ECL § 72-0201(9) is amended to redirect one-half the revenue from penalties and interest related to hazardous waste generator or transporter fees and surcharges from the Hazardous Waste Remedial Fund to the Remedial Program Transfer Fund. Conforming amendments are made to ECL § 72-0201(11).
§ 43. ECL § 72-0202 is amended by adding a new subdivision (4) to provide a transitional billing procedure for hazardous waste generator surcharges. This provision is similar to existing ECL § 72-0202, (1)-(2).
§ 44. A new ECL § 72-0403 is added to impose hazardous waste generator surcharges. Generators of hazardous waste will be required to submit an annual fee to the department based upon the amount of waste generated per year. These annual surcharges will range from $4,000 up to $360,000.
§ 45. ECL § 27-0923(4)(b) is amended to redirect revenue collected from waste end assessments from the industry fee transfer account of the Hazardous Waste Remedial Fund to the Remedial Program Transfer Fund.
§ 46. A new section 21 is added to the Tax Law to provide for a brownfield redevelopment tax credit, to be allowable against tax imposed under Tax Law Articles 9 (franchise taxes on transportation and transmission companies and agricultural cooperatives), 9-A (general business corporations), 22 (personal income tax), 32 (banking corporations) and 33 (insurance corporations). The credit would be subject to carry forward, and in the case of a new business a taxpayer may elect to treat 50 percent of the amount of any carryover as a refundable overpayment of tax.
KK Comment: This is a commendable addition to the law.
Subdivision (a) of new Tax Law section 21 provides for the allowance and computation of the credit. The credit consists of the sum of up to two credit components:
1. Site preparation credit component: This credit is equal to the applicable percentage (10 percent in the case of credits claimed under Articles 9, 9-A, 32 and 33; 8 percent in the case of credits claimed under Article 22 of the Tax Law; and an additional 2 percent, respectively, if the taxpayer has remediated the soil on the site to soil category 1) of site preparation costs paid or incurred by the taxpayer with respect to a qualified site. A qualified site is a brownfield which has been cleaned up and with respect to which a remediation certificate has been issued by the Commissioner of Environmental Conservation. Site preparation costs do not include the costs of acquiring the land.
2. Tangible property credit component: This credit is equal to the applicable percentage (either 10 or 8 percent, and an additional 2 percent, as above) of the cost or other basis for Federal income tax purposes of tangible personal property and other tangible property, including buildings and structural components of buildings, principally used for commercial (including the commercial development of residential housing), industrial, recreational or environmental conservation purposes on a qualified site.
To be eligible for this credit, the taxpayer must have obtained a remediation certificate from the Commissioner of Environmental Conservation with respect to such site pursuant to the new ECL § 27-1413.
Subdivision (b) of section 21 contains definitions of terms.
Subdivision (c) of section 21 provides that property which qualifies for the credit under this section and also for a credit under Tax Law section 210.12 (investment tax credit) or Tax Law section 210.12-B (Empire Zone investment tax credit), or both, (or the parallel sections under Article 22, 32 or 33) may be the basis for only one of such credits.
Subdivision (d) of section 21 provides the rules with respect to recapture of the credit where the qualified property is disposed of or ceases to be in qualified use.
Subdivision (e) of section 21 contains cross-references to the applicable credit provisions within each of the affected articles of the Tax Law.
§ 47 through § 50, § 55 and § 56 add provisions to Articles 9, 9-A, 22, 32, and 33 of the Tax Law, respectively, to allow taxpayers under each of those articles to claim the credit provided for under section 21 of the Tax Law, and to provide for the proper administration thereof. Section 47 adds a new section 187-f to Article 9. Section 48 adds a new section 210.33 in Article 9-A. Section 49 of the bill amend section 606(i) of the Tax Law, in Article 22, to render the credit under the personal income tax available to S corporation shareholders. Section 50 adds a new section 606 (dd) to Article 22. Section 55 adds a new section 1456(q) to Article 32. Section 56 adds a new § 1511(u) in Article 33.
§ 51 Section 683 of Article 22 of the Tax Law is amended to permit the Commissioner of Taxation and Finance to assess any tax liability that may arise if DEC modifies or revokes a remediation certificate. Such liability may be assessed within one year after a determination revoking or modifying such a certificate becomes final. In the event such liability is assessed, the taxpayer would have the right to offset against it any of the investment tax credits which would have been allowed for the investment had the taxpayer not elected to take the credit provided for by new section 21.
§ 52. Section 687 of Article 22 of the Tax Law is amended to permit a taxpayer to file a claim for credit or refund where it has been finally determined that DEC erroneously denied a remediation certificate. The taxpayer may file such a claim within (i) three years from the time the return was filed, (ii) two years from the time the tax was paid, or (iii) two years from the time the final determination that DEC's denial was erroneous has been made and is no longer subject to judicial review, whichever period expires latest.
§ 53. Section 1083 of Article 27 of the Tax Law is amended to correspond to Section 683 of Article 22 as amended by § 51 above. Article 27 contains procedural provisions applicable to taxpayers under Article 9, 9-A, 32 and 33.
§ 54. Section 1087 of Article 27 of the Tax Law is amended to correspond to Section 687 of Article 22 as amended by § 52 above.
§ 57. A new section 25 is added to the Tax Law to describe two new credits to developers of remediated brownfields, denoted in the bill as "qualified sites". A "qualified site" is defined as a site with respect to which a remediation certificate has been issued by the Commissioner of Environmental Conservation pursuant to section 27-1413 of the ECL and which is located in its entirety outside the boundaries of the Metropolitan Commuter Transportation District. The first new credit is available to developers of small qualified sites. The second is available to developers of large qualified sites.
A small qualified site is a qualified site, which on the effective date of the remediation certificate issued with respect to such site, consists of at least 10 but no more than 100 acres. A large qualified site is any qualified site which consists of more than 100 acres. A developer of a qualified site is a taxpayer under Article 9, 9-A, 22, 32 or 33 who either has been issued a remediation certificate with respect to a qualified site or has purchased all or any portion of a qualified site from a taxpayer who was issued a remediation certificate with respect to a qualified site, provided that, in the case of a small qualified site, that purchase occurs within five years of the effective date of the remediation certificate issued with respect to the small qualified site, and in the case of a large qualified site, that purchase occurs within ten years of the effective date of the remediation certificate issued with respect to the large qualified site. However, the taxpayer which is purchasing all or any portion of a qualified site and the taxpayer who was issued the remediation certificate may not be related persons, as that term is defined in section 465(b)(3)(C) of the Internal Revenue Code.
The credit available to a developer of a small qualified site which is taxable under Article 9, 9-A, 22, 32 or 33 is for eligible real property taxes imposed on the small qualified site. This credit is allowed for a benefit period of 14 years, commencing either in the taxable year next following the year in which the developer is issued a remediation certificate with respect to a qualified site or, in the case of a developer who has purchased all or any portion of a qualified site, in the taxable year in which such developer purchases the small qualified site. The amount of the credit is equal to the product of (1) a benefit period factor (essentially providing for a phase-out of the credit in years 11-14), (2) an employment number factor, and (3) the eligible real property taxes paid or incurred by the developer of the small qualified site during the taxable year but may not exceed the credit limitation. The credit limitation is defined as the greater of the employment increase limitation or the capital investment limitation. The employment increase limitation shall be equal to the product of $10,000 and the developer's average employment at the small qualified site during the taxable year in excess of twenty-five. The capital investment limitation is equal to 10 percent of the cost or other basis for federal income tax purposes, determined on the last day of the taxable year, of the real property which consists of the small qualified site.
The employment number is determined by the average number of full-time employees employed by the developer of the qualified site at the qualified site during the taxable year. If the average number of those employees is at least 25 but less than 50, the employment number factor is .25. If the average number of those employees is at least 50 but less than 75, the employment number factor is .50. If the average number of those employees is at least 75 but less than 100, the employment number factor is .75. If the average number of those employees is at least 100, the employment number factor is 1.0.
The second new credit is available to a developer of large qualified site taxable under Article 9, 9-A, 22, 32, or 33 of the Tax Law. This credit is for the eligible real property taxes imposed on the large qualified site and is available for a benefit period of 19 years, commencing on the same date as the benefit period for the credit for the small qualified sites. The amount of the credit is equal to the product of:
The credit limitation is defined as the greater of the employment increase limitation or the capital investment limitation. The employment increase limitation shall be equal to the product of $10,000 and the developer's average employment at the large qualified site during the taxable year in excess of 25. The capital investment limitation is equal to 10 percent of the cost or other basis for federal income tax purposes, determined on the last day of the taxable year, of the real property which consists of the large qualified site. The employment number factor is the same for this credit as for the credit available to developers of small qualified sites.
Under section 15 of the Tax Law, "Qualified Empire Zone Enterprises" (QEZEs) are allowed a credit for real property taxes. If the qualified site is located in whole or in part in an Empire Zone and a taxpayer qualifies for both the QEZE real property tax credit and the remediated brownfields real property tax credit, with respect to the same real property, that taxpayer may claim only one of these credits. The taxpayer is required to elect one of the credits in the first year the taxpayer is allowed the credit under section 25. Once that election is made, it is binding on the taxpayer for all future years in the benefit period for the credit under section 15 or section 25, whichever is applicable, with respect to that property. A taxpayer which claimed the QEZE credit for real property taxes under section 15 with respect to real property which subsequently becomes a qualified site will not be precluded from claiming a credit under section 25.
§ 58 through § 63 incorporate these two new credits into the provisions of Articles 9, 9-A, 22, 32 and 33. Under Article 9, the credits are allowed against the taxes imposed by sections 183, 184 and 185 of the Tax Law. The credits may not reduce the tax to less than the applicable minimum tax fixed by section 183 or 185. Any excess may be refunded without interest. Under Article 9-A, these two new credits may not reduce the tax to less than the alternative minimum taxable base or the fixed dollar minimum tax. However, any excess may be refunded, without interest. Under Article 22, these two new credits may reduce the tax to zero and any excess may be refunded, without interest. Under Articles 32 and 33, the two new credits may reduce the tax to the fixed dollar minimum tax of $250 and any excess may be refunded, without interest.
§ 64 through § 72 are amendments to Article 56 of the Environmental Conservation Law and subdivision 2 of § 97-b of the State Finance Law to:
In addition, this bill adds new provisions to the ECL granting the State immunity with respect to certain activities to authorize the Department to require access to properties that contain hazardous substances for the purpose of inspection or cleanup; to require that any person furnish information regarding current and past hazardous substance activities to the Department, and makes other technical adjustments.
KK Comment: Municipalities, which are being asked to assume greater regulatory, assessment, and remediation responsibilities, should be given similar immunity.
§ 73. This section provides that the bill will take effect immediately, provided that sections 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 64, 65, 66, 67, 68, 69, 70, 71 and 72 shall be deemed to have been in full force and effect as if enacted on April 1, 2002; sections 46, 47, 48, 50, 55 and 56 will apply to taxable years beginning on or after January 1, 2003, but only to site costs incurred and property placed in service on or after January 1, 2002; sections 57, 58, 59, 61, 62, and 63 will apply to taxable years beginning on or after January 1, 2004; sections 49 and 60 will take effect on the same date as section 3 of part E of chapter 63 of the laws of 2000 takes effect (January 1, 2002). Further, Subdivisions 13 and 14 of section 97-b of the State Finance Law, as designated in section 36 of the bill, will be repealed effective April 1 of the State fiscal year following the certification provided for in subdivision 15.
DEC administers two distinct remedial programs: the inactive hazardous waste disposal site remediation program authorized by ECL § 27-1301 et seq., known as the State Superfund Program, and the Oil Spill Program authorized by Navigation Law §§ 170 et seq. The Department of Health (DOH) also administers a counterpart inactive hazardous waste disposal site remediation program authorized by Public Health Law § 1389-a et seq. The State Superfund Program is intended to address health and environmental threats attributable to contamination by hazardous waste, and is funded via the Hazardous Waste Remedial Fund created by State Finance Law (SFL) § 97-b. The Oil Spill Program is intended to address health and environmental threats attributable to contamination by petroleum, and is funded via the Environmental Protection and Spill Compensation Fund created by Navigation Law § 179. Both programs are administered by DEC's Division of Environmental Remediation. The two programs sometimes overlap in practice because it is common to encounter a site at which there exist health and environmental threats resulting from both the disposal of hazardous waste and petroleum.
The Environmental Restoration Program authorized under the 1996 Clean Water/Clean Air Bond Act at ECL § 56-0501 et seq. provides grants to municipalities to investigate and cleanup hazardous waste, hazardous substance and petroleum contamination.
DEC also administers a Voluntary Cleanup Program under the provisions of the ECL which authorizes such Program through the DEC's general powers.
The Tax Law does not presently contain a credit comparable to the brownfields redevelopment tax credit.
The Tax Law presently contains no credits specifically available to developers of remediated brownfields. QEZEs are allowed a credit which is measured in part by eligible real property taxes, but which contains an employment increase factor (as opposed to an employment number factor). That credit is available for a total of 14 years, with a phase out in years 11 through 14.
The Environmental Restoration (Brownfields) Program is authorized under Title 5 of the 1996 Clean Water/Clean Air Bond Act (Article 56 of the ECL). Current law provides that:
A similar proposal was included in the Governor's SFY 2001-02 Executive Budget. It was also submitted to the Legislature as a Governor's Program Bill (S.5274-A) in the 2001 legislative session.
New York has made significant progress in remediating contaminated sites. The State Superfund Program has reduced or eliminated the threat of contamination from hundreds of inactive hazardous waste disposal sites across New York State. The Oil Spill Program coordinates with a local and regional network and responds to thousands of petroleum spills annually. The Voluntary Cleanup Program enables parties to remediate contaminated sites with private funding and return these sites to productive use. The Clean Water/Clean Air Bond Act of 1996 provides funding to municipalities to investigate and remediate contaminated properties, and to return the properties to productive use. The reforms and enhancements included in this bill will serve to accelerate and strengthen the effectiveness of site remediations in New York State.
Currently, the State Superfund Program can only address sites contaminated by "hazardous waste" as defined in ECL § 27-1301. DEC has recognized the need to address hazardous substance sites (that do not contain hazardous waste) that nonetheless pose a significant threat to the public health and environment, and has worked to clean up hazardous substance sites through other DEC programs or through the Federal Superfund Program. However, the number of hazardous substance sites requiring remediation, the cost of remediating these sites, and the lack of a dedicated funding source have precluded DEC from addressing many of the hazardous substance sites requiring remediation.
A March 1994 law directed DEC and the DOH to study the scope of hazardous substance
sites that may pose a significant threat to the public health or environment
and to estimate the cost to remediate such sites. DEC and DOH issued the
"Hazardous
Substance Waste Disposal Site Study Final Report" in June 1995. An addendum
to the report, which updated the information contained in the original report,
was completed in December 1998. The addendum concludes that between 118 and
161 hazardous substance sites in this State may pose a significant threat to
the public health or environment. DEC has estimated that, if it received the
authority to remediate hazardous substance sites, the State's share of the remediation
costs (that portion for which the State would not be able to obtain either federal
funding or funding from persons responsible for the contamination) would be
$252 million to $326 million.
This bill provides DEC with the authority to address hazardous substance sites
that pose a significant threat by expanding the definition of "hazardous
waste" to include any hazardous substance presently defined in ECL Article
37.
This bill will result in more uniform cleanups under all of New York's remedial programs. Cleanups will be at least as protective of the public health and environment as the current programs and can be expected to remove more contamination from the environment overall.
KK Comment: Greater uniformity among very different programs and more "protective" (i.e., restrictive) cleanup standards may be appropriate when directed at contributory Responsible Parties. However, when they encompass low-risk sites being remediated by non-culpable Cleanup Volunteers, they become significant negatives because they eliminate any incentive to volunteer.
To provide certainty, predictability and consistency among the State's many cleanup programs, this bill establishes one cleanup objective for the State Superfund Program, Voluntary Cleanup Program, and remediations which do not constitute an immediate response cleanup under the Oil Spill Program. The bill provides that the cleanup goal be protection of the public health and environment and, at a minimum, elimination or mitigation of all significant threats to the public health and environment. For immediate response actions at oil spill sites, the cleanup goal is restoration of the environment to pre-spill conditions.
KK Comment: The desire for "consistency" is not a sufficient justification for setting "one cleanup objective" for very different programs. One size does not fit all.
The bill provides that the current, future or reasonable anticipated land uses of a site and surrounding properties will be one of nine criteria used when proposing, selecting or approving a cleanup plan. Consideration of land uses is consistent with EPA practices at Federal Superfund sites.
KK Comment: As long as one of the cleanup criteria applied to VCP sites is adherence to Standards, Criteria and Guidance established under other programs in different contexts, consideration of "current, future or reasonable anticipated land uses" will seldom drive the cleanup process. Until use-based standards become the primary determinant of cleanup requirements, New York State's VCP will never realize its full potential.
The bill also establishes a technical advisory panel to recommend soil cleanup levels and methodologies that would be protective of the public health and environment. The panel has 18 months to provide its recommendations to DEC and the DOH, which would then promulgate soil cleanup standards in three categories: Category I would allow a site's use to be unrestricted; Category 2 would allow a site's current, intended or reasonably anticipated use (e.g., industrial, commercial and residential) to occur; but such use would be restricted, and Category 3 would be a process to establish standards on a site-by-site basis using site-specific data that would assure standards are protective for the site's current, intended or reasonably anticipated use.
KK Comment: Categories 2 and 3 are irrelevant as long as Part 375 criteria are used to assess the adequacy of proposed cleanups.
The current liability standards contained in the State Superfund Program and Oil Spill Programs are based on the "polluter pays" principle, using a strict, joint and several liability scheme. However, these standards are widely perceived as unfair because in practice the potential exists that, even though many persons are factually responsible for the contamination of a site, only one person, even a factually innocent person, will bear the burden of paying for the cleanup. Each person responsible has a right to obtain contribution from other persons responsible but this right can be practically valueless when the other parties who should help bear the burden are unidentifiable or without assets. The result is that prospective purchasers, developers, lenders and others often avoid any involvement with sites that are or may be contaminated since these parties would acquire liability as an owner or operator of the site.
KK Comment: The unfairness of the current system has less to do with applying the "polluter pays" principle--which is appropriate--than with treating a prospective purchaser, developer, or lender the same as a responsible "polluter."
Although the modifications to the liability standards contained in this bill will maintain the "polluter pays" principle, they are designed to encourage the cleanup and reuse of contaminated property through private investment. The lender liability exemption will increase the lending community's willingness to lend money at sites that are contaminated and at facilities that may have a high risk of future contamination. The liability limitation for fiduciaries (trustees, executors, administrators, conservators, etc.) will increase the participation of fiduciaries when an estate's assets include a site that is contaminated or that has a high risk of future contamination. It will also remove real or perceived concerns regarding the purchase of contaminated properties by fiduciaries.
KK Comment: The proposed liability limits for lenders and fiduciaries are commendable and long overdue, but they don't go far enough.
The municipal liability exemption will enable a municipality to acquire title in the event of tax delinquency or similar circumstances to a contaminated site in order to exercise control over its future in the public interest, without exposing its citizens to the financial burden of remediation. This would eliminate a significant barrier to the clean-up and redevelopment of contaminated sites. The liability protection for industrial development agencies (IDAs) acting as "conduit financiers" will enable IDAs to take title to property as an accommodation to developers, for the purpose of conferring certain tax benefits to the developer, without becoming liable as an owner or operator of the property. This would have the effect of increasing development opportunities at contaminated properties.
KK Comment: Expanding liability protections to municipalities and Industrial Development Agencies is commendable. However, the legislation must make clear that municipalities are immunized from liability for all "sovereign" actions--and not simply for "involuntary" acquisitions of contaminated properties. (Tax foreclosure and condemnation actions can reasonably be considered "voluntary" even if the public purposes that motivated them would be frustrated if the acquisition fails to go forward.)
DEC currently provides limited releases from liability to volunteers who complete the remediation of a site under the current Voluntary Cleanup Program to DEC's satisfaction. With few exceptions, persons responsible for the contamination under the State Superfund Program or the Oil Spill Program currently are not provided with liability releases from DEC upon the successful completion of the remedial objectives.
KK Comment: It would be better to continue to withhold liability releases from responsible parties in exchange for easier-to-obtain releases for cleanup volunteers and others not responsible for the contamination.
Currently, if a person seeks a release from liability once a site's contamination is addressed, that person must separately negotiate such a release from the DEC, the Attorney General and, in the case of sites being addressed under the Oil Spill Program, the State Comptroller (who acts as the Oil Spill Fund Administrator). It would be more desirable if a person who remediated a site could receive one liability release binding upon the State of New York. Under this bill, DEC would be authorized to provide a single, binding covenant not to sue to parties conducting cleanups under the State Superfund Program, the Oil Spill Program, and the Voluntary Cleanup Program. Responsible parties, other than those parties who are responsible as a result of ownership or operation of an affected site subsequent to the cessation of the disposal of hazardous waste or discharge of petroleum and are addressing such affected site's contamination under Title 14, still would not receive a liability release for natural resource damages. The reservations would be structured to provide an incentive for parties conducting remediation to remediate a site to unrestricted use soil cleanup levels (soil category 1). The new authority provided to DEC in the bill to recover up to treble damages from recalcitrant persons responsible for the contamination will create an effective incentive for such persons to come forward and finance remedial programs, thereby expediting remediation projects and reducing the need for additional State resources. This new authority would target persons responsible that are either unwilling to enter into remedial negotiations with the State, or that are acting in bad faith in the negotiations process in order to delay having to spend money on site investigations or remedial activities. It could not be applied to persons responsible who are engaged in productive, ongoing negotiations with the State.
KK Comment: The fact that DEC liability releases are not currently binding on the State of New York as a whole has little practical significance for most brownfields sites. (Where it is of concern, cleanup volunteers currently have the option of entering into a Consent Decree that DOES bind New York State.) Similarly, withholding releases from contributory Responsible Parties for Natural Resource Damage liability (unless cleanups are done to "unrestricted use" standards) is not much of an incentive, except for very high-hazard sites--because (a) NRD claims are pretty rare, and (b) the requirement that all cleanups must be evaluated in accordance with stringent Part 375 criteria effectively ensures that EVERY cleanup must be done to "unrestricted use" standards.
Brownfields are abandoned, idled, or under-used properties where redevelopment is complicated by real or perceived environmental contamination. They typically are former industrial or commercial properties where operations may have resulted in environmental contamination. Brownfields often pose not only environmental, but legal and financial burdens on communities. Left vacant, contaminated sites can diminish the property value of surrounding property and threaten the economic viability of adjoining properties.
In an effort to spur the cleanup and redevelopment of brownfields, New York State has implemented the Clean Water/Clean Air Bond Act Brownfields Program and the Voluntary Cleanup Program. Each of these programs has been highly successful; however, modifications to the programs would further enable additional private sector investment in the cleanup and redevelopment of contaminated sites. The impediments to brownfield redevelopment are complex. Some of these may be addressed administratively, and are being addressed through the current DEC Voluntary Cleanup Program. However, aspects of the barriers to brownfield redevelopment require statutory amendment. The existing liability scheme, which holds all owners of contaminated property liable for cleanup costs, regardless of when or how the property was acquired relative to the contamination, contributes to the reluctance of developers to purchase even minimally contaminated sites. So, too, does the potential cost of cleanup, which may not be known at the time of purchase. In addition, lenders are often reluctant to extend credit for the purchase and cleanup of brownfield sites, fearing future liability or diminution of the value of the property held as collateral should the site prove to require more extensive and costly cleanup than initially thought. Consequently, financing such a purchase may be more difficult than financing a purchase of a greenfield site.
KK Comment: The assertion that the Voluntary Cleanup Program has been "highly successful" is debatable. DEC's own data indicate that the numbers of Investigation-VCAs and Remediation-VCAs actually completed have declined significantly in each of the past three years. This suggests that there is something in DEC's administration of these programs that either causes Volunteers to drop our prior to completion, or that places so many requirements in the path of Volunteers that it is very difficult to reach the finish line.
The voluntary agreement, tax credits and liability protection concepts contained in this bill address major barriers associated with redevelopment of brownfield sites. The Voluntary Cleanup Program eliminates the exposure to future open-ended cleanup costs and provides financial incentives for remediating and reusing these sites. These measures would make brownfield sites competitive with greenfield sites. The program should encourage persons not previously involved with brownfield sites to consider them for the location of new commercial, industrial, residential or public uses. It will provide assurances to financial institutions willing to lend the capital needed for redevelopment projects. The Program will also assure that the community benefits in many meaningful respects from reuse of such sites, consistent with appropriate public health and environmental protections and with community needs, both during implementation of the remedy and redevelopment activities and in the future. Moreover, it will allow program participants to recover their costs from the site's responsible parties. Finally, it will provide notice in the chain of title so that any potential purchaser, lender, or member of the community will know what uses have been approved for the reclaimed site.
KK Comment: Brownfield sites will never be competitive with greenfield sites in New York State as long as the Legislature and/or DEC try to force Cleanup Volunteers to clean up lightly-contaminated brownfield sites to the same stringent standards as heavily contaminated Superfund and Oil Spill sites.
These modifications will dovetail with Federal legislation which was enacted on January 11, 2002 (The Small Business Liability Relief and Brownfields Revitalization Act). The new Federal law provides liability protections for prospective purchasers, contiguous property owners, and innocent landowners as well as authorizing increased funding for State and local programs that assess and clean up brownfields. The new Federal law, when coupled with the State's modifications, provide the potential for cleaning up contaminated properties in New York faster and more effectively. The recent approval of this important Federal brownfields legislation heightens the long-standing need for the amendments to New York's programs. Absent these amendments, New York will likely not capitalize on the full benefits afforded under the landmark Federal law.
This bill is designed to remove much of the short and long-term risk inherent in reusing a brownfield site and to encourage more private sector involvement and funding. Provisions in this bill provide an important tool in redeveloping and reclaiming our economically disadvantaged urban areas, promoting job development, impeding the sprawl of development outward into our valuable open space areas, and reducing the economic pressure of infrastructure construction on local governments.
KK Comment: These are indeed the objectives this bill SHOULD be designed to accomplish. However, they will never be achieved under a program that places a higher value on "consistency" than on fairness.
Urban areas that are experiencing a transition from once active industry to new uses often have sizeable areas of contiguous brownfields in those former industrial areas. An area-wide strategy to accommodate the environmental and redevelopment needs of the community in those areas could be more efficient than addressing each site as a separate initiative. Area-wide brownfield redevelopment programs will lead to appropriate redevelopment and reuse of brownfields as expeditiously as possible once the sites are remediated. The Secretary of State would be responsible for the brownfield redevelopment area program employing the successful model created by the Local Waterfront Revitalization Program.
KK Comment: This is a positive and beneficial initiative.
This bill will provide tax incentives to business entities and individuals to remediate and develop a brownfield site by providing a tax credit for site preparation costs and tangible property placed on a brownfield site. In addition, once a site has been remediated, the bill provides a tax credit that is equal to all or part of the amount of the real property tax imposed on that site. The potential for the development of the site will be further enhanced by virtue of the fact that a purchaser of a site from the person or entity that remediated the brownfield site will also be eligible for a like tax credit relating to the real property tax imposed on the site.
KK Comment: These are desirable and commendable tax incentive programs.
The 1996 Clean Water/Clean Air Bond Act authorized $200 million to assist municipalities in addressing contaminated sites and returning them to productive use. To date, approximately $25 million in Bond Act funding has been approved for more than 100 projects to investigate or remediate brownfield sites. Experience with the program has shown that the cost, uncertainty, and concerns about incurring additional liability associated with these projects impede greater utilization of Bond Act funding. This bill addresses these concerns by providing significant incentives for municipalities to undertake remediation of these sites as follows:
This bill increases the reimbursement for eligible project costs from 75 percent to 90 percent, and allow the use of other State or Federal assistance for the required 10 percent local match, thereby greatly increasing the total resources available to municipalities for these projects and reducing the costs borne by municipalities.
KK Comment: Good.
Uncertainty about the extent and cost of remediation that could be required at a particular site, coupled with concerns about incurring legal liability as the title holder, currently impedes municipalities from taking title to contaminated sites and undertaking remediation through the Brownfields Program. This bill removes the requirement that a municipality have title to a property to be eligible for funding to investigate a brownfield site. It allows municipalities to conduct preliminary investigations on potential sites and make informed judgments about the potential costs and risks associated with potential brownfield projects.
KK Comment: Good--but it would be better to also provide broad immunity to municipalities acting in their sovereign capacities to clean up and/or revitalize brownfield properties.
Current and potential brownflelds projects often involve contamination which has migrated "off-site" into a nearby parcel to which the municipality does not hold title. This "off-site" contamination can be many times greater than the contamination present on the property remediated under the program, and, if left unaddressed, could present health and safety concerns. This bill allows municipalities to receive up to 100 percent State assistance from the Bond Act for costs incurred to remediate "off-site" contamination. This will help ensure that the full scope of contamination is addressed, and that the financial burden for the clean-up will not be unfairly placed upon the municipalities.
KK Comment: Good.
This bill further maximizes incentives for a municipality to undertake brownfields projects. It allows a municipality to recoup its costs from the proceeds of the disposition of the property prior to the State receiving funds for its assistance for the project. Additionally, the bill removes the requirement that any profit be shared equally with the State and allows the municipality to retain any profits after its costs and the State's assistance payments have been covered.