Positives and Negatives of New Legislation

September 12, 2003

Positive Features of the Legislation

The compromise legislation (S. 5702/A. 9120) takes a number of positive steps to stimulate brownfields redevelopment:

·         It provides financial incentives to make brownfields redevelopment more viable economically.  (Incentives include: business and personal income tax credits for costs of site preparation, new tangible property and on-site ground water cleanups; credits against utility, corporate franchise, personal income, bank, or insurance taxes; an environmental insurance tax credit; and priority financial assistance for sites in Brownfield Opportunity Areas.)

·         It makes improvements to the environmental restoration program for municipally-owned brownfield sites (e.g., by increasing the state share from 75% to 90% and by liberalizing other elements of the cooperative agreement between a locality and the State).

·         It adopts lender and municipal liability exemptions and a fiduciary liability cap that have long been features of federal law.

·         It allows local taxing districts to obtain stays of foreclosure proceedings to determine the extent of contamination before taking title to tax-delinquent properties.

·         It establishes a workable cleanup goal (protection of public health and the environment) and it provides the flexibility in appropriate cases to tailor cleanup objectives to the risks posed by differing site uses.

·         It relaxes strict legal liability for innocent current owners of contaminated sites (in the case of hazardous substance sites, where the owner acquired the property after it was contaminated and becomes a party to a cleanup agreement; in the case of oil spill sites, where a third party can be shown to be solely responsible for the discharge).

·         It provides a liability release binding, not just on DEC, but on all state agencies.

·         It provides greater certainty and finality as to the rules and standards governing brownfield site cleanups.
 

Potentially Counter-Productive Elements of S. 5702/A. 9120 that Require Close Scrutiny and Possible Future Correction

1.         Several provisions may have a chilling effect on the willingness of current brownfield
owners to market their properties for redevelopment and could encourage “mothballing” rather than revitalization of distressed properties.  Provisions of concern are those that:

(a)    extend liability relief to innocent current owners only if they become parties to cleanup agreements with prospective redevelopers and only so long as the site investigation and cleanup proceed to completion (if the redeveloper withdraws for whatever reason, the status of the current owner reverts from a “volunteer” to a strictly liable “responsible party” against which DEC is mandated to pursue enforcement action if the site is classified as a “significant threat”);

(b)    allow a liability release to be reopened if the redeveloper fails to make “substantial progress toward completion” of the proposed redevelopment within 3 years, or otherwise fails to complete the redevelopment within a “reasonable time” (this could remove the volunteer owner’s liability shield through no fault of its own and subject it to additional investigation and cleanup requirements); and

(c)    subject innocent owners, even if they are cleanup volunteers, to potential liability (as legally responsible parties) for $50,000 technical assistance (TAG) grants to community-based organizations.

2.         Several provisions may discourage real estate transactions involving
            brownfield sites because they will add “red tape,” cost, and delay to
            deals that are usually time-sensitive.  Provisions of concern are those that:

(a)    add 16 new remedy selection criteria beyond what is currently required for high-risk Superfund sites;

(b)    require advance DEC notification and approval for mere transfers of title even if there is no actual change in site use (given the new environmental easements that run with the land and are recorded with the deed, it is unclear why this is necessary);

(c)    give DEC unprecedented veto power over routine land use decisions by local governments, by requiring written DEC approval before a building permit or other local land use approval may be issued for a restricted-use brownfield site (given the new environmental easements, new public information registry, and information-reporting to local officials, it is not clear why at least initial determinations in this regard cannot be made by the local officials, subject to DEC guidance and oversight);

(d)    impose one-size-fits-all public notice and comment requirements (7 public notice steps, including 3 public comment opportunities) on all brownfield cleanups regardless of the level of contamination, complexity, or public interest;

(e)    do not impose firm timetables on completion of review and approval steps by DEC (but merely call for “best efforts” to complete within a certain timeframe); and

(f)     give DEC little discretion to relax, but broad discretion to increase and expand, investigation, evaluation, and cleanup requirements by cleanup volunteers and participants.

3.         Although the Clean Water Clean Air Bond Act (environmental restoration) program for municipal brownfield sites is made more attractive in several respects, municipalities may still be deterred from participating because the more flexible remedy selection approach adopted for privately-owned brownfield sites was not carried over to the municipal program.

4.         While the ability to stay tax-foreclosure proceedings to gather more information about the extent of environmental risks is a beneficial change, the requirement that associated costs be added to the tax bill that must be paid off by a prospective purchaser—with no provision allowing local authorities to waive tax liabilities to promote resale and redevelopment—may complicate the task of finding willing buyers and redevelopers. 

5.         The legislation doesn’t change DEC’s organizational structure, leaving brownfields under the Environmental Remediation Division (which is primarily concerned with remediation and enforcement)—rather than placing them under the jurisdiction of an office with a primary focus on land recycling.  This sends the wrong message because the success of the brownfields program depends on the ability to attract cleanup volunteers who have no legal duty to clean up someone else’s mess.