Compromise Bill--S. 5702--Key Elements

Key Elements of 2003 “Compromise” Brownfields Bill

For detailed analysis, see: http://www.ny-brownfields.com/Compromise%20Bill--Issues.htt

Ken Kamlet – July 7, 2003

1. Disincentives for Site Owners: The DiNapoli bill treated current owners as “responsible parties,” directed DEC to pursue enforcement action against RPs when third-party volunteers entered into cleanup agreements (at least at “significant threat” sites), and imposed other requirements likely to discourage brownfield site owners from selling to prospective redevelopers.  The Compromise bill largely, but not entirely, eliminates these disincentives.  Current owners who did not acquire the property until after it was contaminated and had nothing to do with the contamination are treated as “volunteers” (as opposed to “participants,” who were contributory RPs, or site owners at the time of contamination).  Instead of DEC having to determine whether the site is a “significant threat” site before allowing an applicant to enter the brownfields cleanup program, it need not do so until 20 days after completion of the final investigation work plan.  At significant threat sites, DEC must pursue enforcement action against any responsible parties.  Although the Legislature intended to exclude “volunteer” current owners from this directive, such exculpatory language is provided in one place (in the Brownfields title--title 14) that refers to the enforcement directive, but not in another (title 31--concerned with a new “Groundwater Protection and Remediation Program”).  Several provisions make it essentially obligatory for innocent owners to become parties to brownfield cleanup agreements entered into by third-party prospective purchasers or redevelopers.  For example, a covenant not to sue issued by the state after a successful brownfield site cleanup does not extend to legal RPs “unless that person was a party.”  Innocent owners of class 1 and 2 Registry sites are encouraged to enter the brownfield cleanup program prior to July 1, 2005 because such sites lose their eligibility after that date.  Registry-listed sites in other classifications are encouraged to enter the cleanup program by having their annual DEC assessment or reassessment deferred as long as an applicant is engaged in good faith negotiations to enter the cleanup program and/or having entered the program remain in compliance with the agreement’s terms.  One disincentive is that DEC is given the discretion to require legal RPs to bear the cost of $50,000 technical assistance grants to concerned not-for-profit organizations. 

2. Overall Program Stringency: The DiNapoli bill set a stringent and unworkable remedial goal of “complete and permanent cleanup,” including the long-term restoration of all non-saline groundwater to “drinking water quality.”  It avoided any reference to “volunteers” or to a “voluntary cleanup program.”  The Compromise bill encourages persons “to voluntarily remediate brownfield sites for reuse and redevelopment” and requires all remedies to be “fully protective of public health and the environment,” with a “preference” for remedies that achieve a “permanent cleanup.”  It expresses the intent that groundwater “be protected for its classified use, the highest of which is drinking water” and directs DEC to develop and publish within 3 years a strategy to “address the long-term remediation of groundwater contamination.”  The DiNapoli bill called for the creation of three cleanup “tracks,” none of which made provision for use-based cleanups.  (Even the Marcellino bill sidestepped the issue of use-based cleanups.)  The Compromise bill establishes four cleanup tracks, including “track 4” which “achieves a cleanup level that is protective for the site’s current, intended or reasonably anticipated residential, commercial or industrial use.”  Those wishing to implement anything other than an unrestricted-use (“track 1”) cleanup must do an alternatives analysis, comparing the costs and benefits of the proposed cleanup with those of a “track 1” cleanup.  For “significant threat” sites, DEC may require additional alternatives to be evaluated and may require the applicant to implement an alternative other than its preferred alternative.  For non-significant threat sites, DEC may require consideration (and selection) of a “track 2” cleanup.  (“Track 2” cleanups achieve the same contaminant-specific soil cleanup objectives as for track 1, but with restrictions on site use or reliance on long-term engineering and/or institutional controls.)  DEC is authorized to develop a list of “presumptive remedial strategies” the applicant may use to meet the requirements associated with tracks 1-4.  Soil cleanup objectives for all levels of use must be protective of public health and the environment and the target level of risk for individual carcinogenic contaminants [and for “residual contamination” collectively] may not exceed an excess cancer risk of one in a million—the most stringent such standard in place in any state.  It requires the evaluation of 25 remedy selection factors—about three times as many as are required currently under federal or state superfund.  Where a use-based cleanup is performed, “exposed surface soil” must always be remediated to at least “track 2” levels to a depth of two feet (for sites used for residential use) or one foot (for sites used for commercial or industrial use).  A remedial investigation must “fully characterize” the nature and extent of contamination at or emanating from a brownfield site and include a “qualitative exposure assessment.”  The bill creates a “hierarchy” of source removal and control measures, ranked from most to least preferable—with removal and/or treatment being most preferred and treatment of source at point of exposure being least preferred.  In all cases: (a) all free product, concentrated solid or semi-solid hazardous substances, DNAPL, LNAPL and/or grossly contaminated soil must be removed and/or treated; (b) any residual source material must be contained; and (c) any remaining exposure must be eliminated through additional measures—to the greatest extent feasible.  For all remedies, plume stabilization must be evaluated (and, in the case of a participant, must be implemented to the extent feasible) and further migration of contamination from the site must be prevented to the extent feasible.  At non-significant threat sites, where groundwater contaminants at the site boundary contravene drinking water standards, the owner of a restricted-use BF site must annually certify that no new information has come to the owner’s attention to indicate that the assumptions in the qualitative exposure assessment are no longer valid.  In addition, the owner must affirmatively certify every five years that the exposure assessment assumptions remain valid.  For restricted-use sites, DEC reserves the right to reopen a liability release where the applicant fails to make “substantial progress toward completion” of a proposed development within 3 years or otherwise fails to complete such development “within a reasonable time.  For restricted-use sites (which are required to establish deed restrictions and environmental easements) local officials are prohibited from approving a building permit or other application “affecting land use or development” without notifying DEC and waiting until it receives DEC approval.

3. Miscellaneous Other Provisions: (a) The Navigation Law is amended to allow the owner of an oil spill site to escape strict liability when it is demonstrated by a preponderance of the evidence that a discharge and resulting cleanup costs were caused solely by an act or omission of a third party to whom the liability shifts.  (b) The brownfield site cleanup program remains a time-consuming and red-tape laden process.  For example, although DEC must, upon receiving an application to participate in the cleanup program, make a completeness determination within 10 days, that is followed by a 30-day public comment period, and DEC need only use “all best efforts to expeditiously notify” the applicant whether its application is accepted or rejected within 45 days of elapsed time.  After completion of the final remedial investigation report, DEC has 20 days to determine if the site poses a “significant threat.”  (The public has 30 days to comment on that determination.)  DEC need only use “all best efforts to expeditiously” approve or reject a proposed work plan within 45 days (or 15 days of the close of the 30-day public comment period, whichever is later) to approve or reject the plan.  Before finalizing a proposed remedial work plan, DEC must provide a 45-day public comment period.  For “significant threat” sites, DEC must also hold a public hearing if requested.  Within 10 days after issuance of a certificate of completion at a restricted-use site, the applicant must provide notice to the site contact list describing the institutional and/or engineering controls to be used.  For any restricted-use site, any proposed change of use (including a proposed transfer of title) must be reported to DEC at least 60 days in advance and DEC has 45 days to withhold authorization.  (c) The definition of “hazardous waste” has been expanded to include “hazardous substances,” which could significantly increase the universe of sites eligible for Registry listing.  (d) Secured creditor (lender) and municipal liability exemptions, and a fiduciary liability cap, which have long existed in federal law will now be included in state law for the first time.  (e) The municipal brownfields program under the 1996 Bond Act’s environmental restoration program is revamped to incorporate a number of longstanding reform proposals, including increasing the state share from 75% to 90% (and to 100%, when the state requires remediation of offsite contamination), and allowing municipalities to keep excess revenues from the disposition of a site (after reimbursing the state for its outlays).  Despite the revamped cleanup objectives of the Brownfields title of the new law, the bill retains the provision of the 1996 Clean Water/Clean Air Bond Act specifying that remediation projects under the environmental restoration program must “meet the same standard for protection of public health and the environment that applies to remedial actions [under § 27-1313 of state superfund]” –i.e., “a complete cleanup.”  One positive new element, although eligible sites remain limited to those "held in title" by a municipality, is coverage for purposes of investigative projects of sites for which temporary "incidents of ownership" are acquired by a court order (newly authorized by this bill) staying foreclosure proceedings for delinquent taxes to allow the foreclosing tax district to determine the extent of its environmental liability exposure.  This positive feature is somewhat offset by the requirement of adding "all costs" associated with the site investigation project to the outstanding tax bill and tax lien for the site.  Since local governments have limited, if any, authority to waive outstanding tax bills, the added tax burden tacked on to the property may make it a less attractive candidate for redevelopment.