Legislative Historical Background

October 17, 2002                                                        Prepared by Jody Kass*

An Analysis of NYS Brownfields Legislation

The following summary evaluates various provisions in the legislative bills and language most recently advanced by the Governor, the Senate and the Assembly from the perspective of the ability to attract private developers and investors to voluntarily clean up and achieve the productive reuse of NY’s thousands of brownfield sites. 

Overview Status of Key Legislation:

·        S. 7686A – This bill started out as the Governor’s Program bill, (S.7798), which emerged from the Superfund Working Group. It contains Superfund and brownfields provisions and had been introduced every year as a budget bill since 1999.  In June 2002, the proposed title 13 enforcement provisions were dropped and liability protections were strengthened. At that time, the waste tire bill was amended to include this amended version of the Governor’s bill, and it passed the Senate in June 2002 with support from the Governor. 

·        June 2002 Assembly Language –This language was advanced by the Assembly in June 2002 in three-way negotiations but never formally introduced. As such, it is believed to reflect the most recent position of the Assembly. It contains soil and groundwater provisions for brownfields only. 

·        A. 11048 – This bill contains Superfund provisions only.  It was introduced by Assemblyman DiNapoli and passed the Assembly in 2002.

·        A. 9265B – This is a brownfields bill that was introduced by Assemblyman Brodsky and passed the Assembly in 2001.

·        A. 9203A – This bill contains brownfields funding programs only.  It was introduced by Assemblyman Lopez, and passed the Assembly in 2001.

Summary of Analysis:

·        S.7686A – This bill, which has the support of the Governor and Senate, contains the key provisions necessary for NY to establish a comprehensive brownfields program and clear, consistent, cleanup standards.  It closely tracks federal liability protections, though falls short on bona fide prospective purchasers, and does not go far enough providing liability exemptions for municipalities and nonprofits. The bill is also missing groundwater provisions that provide clear remedial and liability end points. The bill falls short on provisions to streamline the process; and could use improvement in the crafting of financial incentives that would position NY to more effectively compete for federal dollars and private investment.    

·        The Assembly – As a whole, the Assembly package falls short on every fundamental provision necessary to promote private investment and the voluntary cleanup of brownfields.  The Assembly package would create so many new costs and uncertainties that it would be significantly worse than no legislation at all, as it would curtail the number of cleanups that occur under the current administrative program.  The only bright spot in the Assembly package is A.9203A, which contains provisions that would effectively position NY’s localities to compete for federal brownfields dollars. This brownfields Analysis relies on the June 2002 Assembly Language for soil and groundwater provisions, on A.9265B for liability and process provisions, and on A.9203A for financial incentives. 

The Details:

I.             Soil Cleanup

New York needs highly protective, yet readily achievable cleanup standards that are established up front in a series of tables that vary based on a number of factors relating to the characteristics of a site, and that are applied consistently to all communities, regardless of the community’s income level or the amount of money the applicant has to spend on the site.  Financial incentives should be made available to provide the gap financing that might be needed in weak-market areas to achieve standards.   In addition, a peer review system that encourages the use of the best and most cost-effective technologies and science, but discourages politics would help ensure that NY’s cleanup standards are as good as can be, yet will remain achievable by developers. 

S.7686A would rely on a technical advisory panel to establish soil cleanup levels 
upfront based on the most stringent level of risk, as prescribed by the U.S. Environmental 
Protection Agency, (for individual contaminants, an excess cancer risk of one in one million
 for carcinogenic end points, and a hazard index of one for non-cancer end points).  
It would also draw on the State’s 20 years experience remediating sites.  Overall, 
it would provide developers with clear, consistent soil cleanup levels that can be used to 
quantify project costs, upon which investment decisions can be made. 

While a remedial program that has “pre-disposal” as a goal (A. 9265B) sounds good, 
it is nearly always impossible to achieve, and so it results in back-room deal-making.  
Moreover, it does not provide the certainty that developers need to enable them to quantify 
the costs and secure the financing for a project.  

The more recently advanced June 2002 Assembly Language also contains highly 
problematic soil cleanup provisions:

Ø      The cleanup goal in the June 2002 Assembly Language calls for “complete and permanent cleanup…” which is defined as allowing a site “to be used for any purpose without restriction and without reliance on the long-term employment of institutional or engineering controls.”  Moving from a remedial goal of ‘pre-disposal,’ to a goal of ‘unrestricted use’ is a significant step in the right direction by the Assembly.  Unfortunately, the program that emerges from this goal is still unworkable due to the time and cost uncertainty that is associated with requiring all developers to try to achieve this goal.  

Ø      The June 2002 Assembly Language draws a distinction between cleanups conducted in “minority communities and/or economically distressed areas,” and cleanups conducted in the rest of the state.  Presumably, the reason for this distinction is because these areas have been impacted the most by brownfield sites. This approach is misguided because the primary result of these additional requirements and alternative cleanup thresholds will be fewer cleanups in areas with high concentrations of ethnic groups.  A much better approach to address the historic inequities in these neighborhoods is to prioritize and make available funding to achieve the same level of cleanup in these areas.  

Ø      The remedial investigation should require that the applicant characterize the contamination.  To the extent that additional steps are added to the investigation process (such as the measurement of the degree of contamination in plants and animals) the program becomes more and more unworkable.  The requirement that the applicant gather “sufficient information to determine the necessity for, and the proposed extent of, the remedial program and to support the evaluation of proposed alternatives,” is highly problematic.   

Ø      The feasibility analysis provisions seem an attempt to import the Superfund program into the Voluntary Cleanup Program.  The RI/FS process of the current Superfund program takes many, many years and costs thousands and thousands of dollars.  Although the language does draw distinctions between significant threat sites and those sites deemed by the DEC not to pose a significant threat, the remedy selection process for non responsible parties is still unworkable. For example, language in Track 3 would require the DEC to determine whether a site constitutes a significant threat, and even for those that do not, the applicant must “…document the evaluation of at least two remedial alternatives.”  And, one of these alternatives must be an evaluation of a “complete and permanent cleanup.”  This would add years to the process and waste thousands of dollars paying for consultants, instead of paying for cleanup. Rather, there should be a provision that requires a thorough investigation and the remedy selection should be at the discretion of the applicant provided it complies with the DEC’s rules and regulations. 

Ø      The preference for permanence that is embedded in the language (e.g., in the hierarchy of remedial technologies ranked from most preferable to least preferable on p.5; and in Track 2, the requirement that an applicant explain the use of a lower ranked remedy over a higher ranked remedy), also moves the program in the direction of a Superfund-level feasibility study. 

Ø      The requirement that all applicants conduct “source removal” is fraught with uncertainty and infeasibility.   

Pervasively Contaminated/Historic Fill areas - In many urban areas, there exists property that has contaminants that are widespread, for example where the soil is contaminated as a result of historic fill or airborne contaminants.  Special provisions are needed for these “pervasively contaminated” sites, particularly when the site will be used for housing, since for most of these sites, it would not be practicable to meet the numerical soil standards for residential or unrestricted use.   While other states have passed laws and regulations that contain special provisions for these sites, neither S.7686A nor A.9265B, nor the new June 2002 Assembly Language identify the special needs nor contain solutions necessary to ensure the productive reuse of these sites.  

Special presumptive remedies which do not require the use of deed restrictions should be promulgated for those areas where there exist low levels of contamination, but where the site might not meet numerical standards.  The presumptive remedy should provide remedial approaches to eliminating exposure pathways, and delineate those circumstances where, with the use of the presumptive remedy, a deed restriction would not be required.   

II. Groundwater

Developers need clear, consistent, achievable remedial requirements, and to know that they can secure a tightly crafted liability release or exemption from further groundwater cleanup once a site has been remediated.  Where groundwater has been impacted by the site, developers should be required to conduct short term, on-site source remediation, and a special tax credit should be available to help offset the costs of this remedial work.  This will ensure that the site is safe for its intended use, and that even in ubiquitously contaminated areas, the site will not make the area-wide contamination problem worse. The State should be responsible for carrying out any long-term remediation and for remediating off-site contamination, and securing reimbursement from responsible parties. Developers should be exempt from liability where there is long-term remediation of groundwater. 

On a programmatic level, a more thorough understanding of the State’s groundwater resources should be undertaken, and in high priority areas, i.e., areas where the groundwater is used for drinking water, resources should be prioritized, and notification requirements and enforcement should be strengthened.  For example, water districts & water authorities should be notified by DEC when there is an oil spill or chemical spill that might affect the drinking water supply, and DEC should prioritize resources and enforcement in these areas. 

S.7686A has few provisions regarding groundwater, and consequently falls short 
of providing clear, predictable groundwater remedial requirements and the necessary 
state signoff on groundwater.  The bill would require responsible parties to investigate off 
site contamination and non-responsible parties to conduct an off site exposure assessment.  
Responsible parties would be required to investigate and remediate off site contamination 
to be protective of public health and the environment, and if a responsible party fails to 
conduct the site investigation or remediation, the State is authorized to spend money to 
undertake the work if the site poses a significant threat.   There are no special provisions for 
ubiquitously contaminated groundwater areas.  Two important provisions concerning groundwater 
that were included in Senator Marcellino’s bill (S.7745) are missing from S.7686A.  Liability 
exemption for developers for long term groundwater remediation (while retaining the polluter 
pays principle for groundwater) is needed; and for those developers who undertake groundwater 
remedial activities, there should be a special groundwater tax credit. 

A.9265B contains one sentence regarding groundwater on p.22, Section 0113(1), and would require that “all remedies shall be protective of groundwater according to its classification pursuant to section 17-0301 of this chapter.” Since the state classifies nearly all fresh water as potential drinking water, this provision could be interpreted to require that all groundwater cleanups achieve drinking water standards. There is neither the technology nor the resources to achieve drinking water standards in most urban areas.  Not only does A.9265B fail to provide clear, consistent, achievable remedial requirements, but the bill would actually make it harder for developers to ever achieve finality on a brownfield site.

While more thoughtful, the language pertaining to groundwater in the June 2002 Assembly Language is also highly problematic and would discourage voluntary testing and cleanup:   

Ø      The requirements for short term groundwater remediation that would be required of a non responsible party are egregious and an enormous disincentive to developers to participate in the program. Short term groundwater remediation should consist of source remediation only, and a technical panel should be charged with defining “source.” 

Ø      The DEC would be responsible for short term off site groundwater contamination and all long term groundwater remediation where the applicant is a non responsible party.  But the requirement on p.12 (d)(iii) that all non responsible parties would have to pay an open-ended fee into the groundwater fund commensurate with the estimated cost of long term and off site groundwater contamination at the site means that the real burden for off site and long term groundwater cleanup would be borne by the developer, making the Assembly’s groundwater program unworkable.  

Ø      The point of providing financial incentives to developers is to make brownfields as attractive as greenfields for development.  The open-endedness of the fee is also counter to the goals of the program, as any financial incentives available would be more than used up by this new cost.    

Ø      There is a particularly troublesome provision affecting urban areas on p.14 (3)(iii) that would provide DEC with new authority to sue a non responsible new owner (i.e., a developer) for the costs to the state to clean up a multi-source contaminated groundwater area that is attributable to the site.   It is likely to be impossible to underwrite or insure over this new risk.

Ø      The groundwater investigation should be required only where on-site conditions demonstrate the potential for impacts to groundwater.   

Ø      A provision is missing which would indicate when a short term on-site groundwater remediation is complete; and the provision for a liability release at this point is also missing.  

Ø      A provision is missing that would make non-responsible parties exempt from long term remediation liability.

Ø      A provision is missing for groundwater tax credits for groundwater cleanup conducted by the non-responsible party.

III.     Liability  

Lender Liability Exemption – The cleanup and productive reuse of most brownfield sites is expensive, which usually means getting a bank to loan the majority of the funds for the project.  To encourage banks to lend on these sites, the federal government and states around the country have passed laws that exempt lenders from liability provided they do not participate in the management of a site.  S.7686A provides this lender liability protection, and would go beyond federal law, by providing this exemption for petroleum sites as well. The Assembly Bill A.9265B falls short in that it would provide lender liability exemption only for those sites remediated under a new voluntary program, and would provide no liability protection to lenders on sites outside of designated Brownfield Redevelopment Areas or on sites that would end up in foreclosure.  Lenders would continue to avoid foreclosing on contaminated sites since they would not be exempt from liability under state law until the site is cleaned up. Although A.9265B would provide this exemption once a site has been remediated, in a foreclosure situation, there is generally no money to bring a site through a remedial program, so this will result in sites being stuck in a state of limbo, unremediated, and unproductive for many years. 

Insufficient Liability Protection for Bona Fide Prospective Purchasers – There needs to be a prospective purchaser liability exemption that provides bona fide prospective purchasers with liability protection that tracks the liability protections provided in the new federal brownfields law.     

Nonprofit Liability Exemption – The nonprofit liability exemption provision is important because it will encourage nonprofits to take the actions necessary to make sites “developable,” particularly where the private market is not functioning.  Congress and the federal government have recognized the important role that nonprofits play in community development and have authorized and appropriated funding specifically for nonprofits to conduct cleanups.   This year, for the first time, nonprofit organizations are eligible to apply for up to $200,000 per site for cleanup.  But liability is a huge obstacle.  Both S.7686A  and A.11048 would provide liability exemption for nonprofits acting in the public interest, but would erode the exemption if the nonprofit engages in site assessment or cleanup.  While this is heading in the right direction, eroding the liability exemption at the stage of site assessment/remediation would mean that NY’s nonprofits will be ill-positioned to apply for federal cleanup dollars.  Rather, the provision should encourage nonprofits to aggressively acquire and promote the assessment, cleanup and re-use of brownfield sites by exempting nonprofits from liability, until the point that the site is being developed.   

There are a growing number of nonprofits around the country (such as Phoenix Land Recycling in Pennsylvania, Chicagoland REDI, California Center for Land Recycling, Conservation Law Foundation Ventures in Boston) which have been effectively facilitating the reclamation of brownfield sites.  The basic formula for these groups is the same:  to remove some of the uncertainties upfront and get sites to the point where they can be developed, which often requires site assessment, negotiating voluntary cleanup agreements, and sometimes, carrying out remediation.  New York has a rich history of public-private-community partnerships, with nonprofit intermediaries playing important roles in affordable housing and community development.  Now is the time to provide nonprofits with this very important liability exemption in a way which will promote their active participation in brownfields re-use and position NY’s nonprofits to seek maximum federal cleanup dollars.  

Municipal Liability Exemption - Liability exemption should be provided to municipalities for property acquired voluntarily and involuntarily.  Similar to nonprofits, municipalities are crucial to the revitalization of areas where the private market is not functioning.  Liability exemption for municipalities would help promote urban renewal and site assemblage, rezoning and other local land use activities necessary to create value and bring these sites back to productive re-use.  S.7686A provides liability exemption to municipalities only where a site was acquired involuntarily.  The Assembly bill A.9265B would provide liability exemptions for involuntary and voluntary acquisition by a municipality.   

Petroleum sites – Petroleum contamination from old gas stations, auto repair properties and other uses is pervasive in NY.  The new federal brownfields law does not resolve liability on petroleum sites, and consequently, tens of thousands of sites will remain unable to attract private investment, unless liability protection is provided in NYS law.  Both A.9265 and S.7686A agree on the need to allow sites with old petroleum spills into the voluntary program and would provide liability signoff on these sites, but both bills would leave it to DEC to determine whether or not a site is eligible to enter the program by determining if the petroleum is an “historic” (A.9265) or “immediate” (S.7686A) release.  This historic vs. immediate determination by DEC adds another step to the eligibility process, and more importantly, it leaves the applicant with little or no certainty as to whether a site will actually be permitted into the voluntary program.   

Rather than employing this uncertain, temporal measurement, the program should be structured so that an applicant has the option of cleaning up any petroleum site through the voluntary program and acquiring a statewide liability signoff through that program, while leaving the current Oil Spill program intact.  This approach would ensure that the DEC can still respond to emergency situations, it would not add a lot of “process” where none now exists on sites that are being cleaned up under the current Oil Spill program, and it would also encourage applicants to clean up sites that might otherwise go un-addressed.   

IV.      Expedited Process  

Turnaround Timetables - Reliable turnaround timetables are of the utmost importance to developers and investors.  Both A.9265B and S.7686A would provide timeframes for DEC to “use their best efforts” to conduct the reviews within allotted timeframes, but the developer has no recourse if DEC fails to meet the timetables.  The timetables in both bills are not particularly aggressive, (though S.7686A has shorter timeframes), but even these timetables will be impossible to achieve if there is not sufficient staff to review submissions and run the program.  At a minimum, the oversight costs that are paid by the applicants in the voluntary program should be dedicated to hiring staff for the voluntary program.  (There are already provisions requiring applicants to pay the State’s oversight costs, but these funds are not earmarked.)

In addition, turnaround timetables are needed for the department to review and approve the investigation workplan and the final report and certification in S.7686A.   When the department does not comply with timetables, the oversight costs should be returned to the applicant.    

Mothballing of Most Polluted Sites – Despite the provision that allows the DEC to defer listing a site on the Registry, the provision in S.7686A requiring the DEC to determine whether or not a site should be listed on the State’s Registry of Inactive Hazardous Waste Disposal Sites upon entering the VCP (p.24, line 20), will discourage the cleanup of heavily contaminated properties because owners of such sites will be unwilling to take the risk of having their sites listed.  Requiring this determination upfront as part of the application process will also delay the process for months since it is unlikely that there will be sufficient information about the site to determine whether it should be listed through a preliminary site assessment.    

Eligibility & Process – Both S.7686A and A.9265B would establish a 60-day period for the DEC to determine whether or not a project is eligible for the program.  This needlessly adds 2 months to every project.  A.9265B would also require any site that enters the program to be located within a Brownfield Redevelopment Area (BRA) that has been formally designated as such by the Empire Zone Designation Board.  The bill does not include timeframes for such designation, and the eligibility criteria for being designated a BRA are so broad as to be virtually meaningless.  Indeed it makes no sense to allow some brownfield sites to enter the voluntary program and secure a Covenant Not to Sue, while others, solely because they are located in a different part of the state, would not be permitted to participate in the program.  Moreover, requiring designation as a BRA just adds more bureaucracy, time and process to the program. 

Creates Unpredictability – The provision in S.7686A that allows the DEC to reject any site from participating in the VCP that DEC determines is not in the “public interest” (p.24, line 53) creates enormous uncertainty.   There are no criteria for such determination, and, more importantly, there is no need for this provision.    

The provision in S.7686A on p.27, line 34, that would in some cases require that the final report demonstrate that “there is no contamination by hazardous waste or petroleum…” is problematic.  This is much more stringent than any of the remedial goals or programmatic requirements, and there is no criteria defining which sites would require such demonstration.   

Presumptive Remedies – The presumptive remedies in A.9265B will not speed up the process for the simple reason that the way the provision is written means that there is nothing “presumptive” about the remedies. The theory behind a presumptive remedy is that if a site is eligible for the remedy, the use of that remedy, regardless of any other remedies that might also be effective, would be acceptable to the DEC, and a developer could rely on (and presume) DEC’s approval of that remedy.  The hierarchical process outlined in A.9265B would require applicants to examine a range of remedies and explain why a “lower” remedy was selected over a “higher” remedy, moves the voluntary program in the direction of the RI/FS process in the current Superfund program, which takes years.  (The June 2002 Assembly Language has similar provisions and is discussed under soil cleanup above.)  Rather, the DEC should be directed to publicly promulgate presumptive remedies and the applicant should be permitted to employ any presumptive remedy solely upon the demonstration that the site is eligible for such remedy.   

SEQRA Exemption – Cleanups conducted under the title 13 (Superfund) program are already exempt from SEQRA under current law, and it makes no sense to require the cleanup of brownfield sites to go through SEQRA, (particularly when the cleanup of Superfund sites, which present a much more significant threat to the public, do not).   The specific provision in Title 13 that exempts Superfund cleanups from SEQRA is at ECL section 8-0105.5.  Cleanups under title 13 (the Superfund program) are exempt because they are considered enforcement actions since these cleanups result in enforceable consent orders.  A provision in A.9265B might be construed as requiring voluntary cleanups to go through SEQRA, (p.20 line 38), in that “such (voluntary) agreement shall not constitute an enforcement proceeding or the exercise of prosecutorial discretion by the Department.”   A requirement for a SEQRA review prior to site investigation and remediation unfairly penalizes brownfield sites over greenfield sites.  If developers are required to go through SEQRA as part of the cleanup process, it would significantly detract from the attractiveness of the voluntary program, as the SEQRA analysis involves a full evaluation of the project and its impacts, which the developer generally would not be prepared to conduct at the time that he/she begins the remedial site investigation.   If a developer must take the site through SEQRA as part of the voluntary cleanup, it forces the developer to either make a number of important development decisions when he/she otherwise might not be ready to do so, or the developer would simply wait to conduct the investigation and cleanup, or, find an uncontaminated site which would not trigger SEQRA so early in the process.  It would be far better to allow the developer to conduct the site investigation and remediation and comply with the very extensive public participation requirements in the remedial process.  Then, if the project is subject to SEQRA, once the developer is ready, the project would still be required to go through SEQRA.   

V. Financial incentives

Pre-Planning, Planning and Implementation - Pre-planning and planning are the cornerstones of an area-wide approach to brownfields re-use, and the foundation of smart growth and quality communities.   But planning is not enough. Without implementation, the brownfields program will be a failure and communities from Long Island to Buffalo will find themselves with raised expectations, but an empty tool-box to achieve their goals.  Typically there are many obstacles associated with turning these areas around and without programs and resources designed to address the extraordinary problems, the obstacles are often insurmountable.  In addition to being saddled with the costs, liabilities and uncertainties associated with contamination from illegal dumping and historic and obsolete uses, localities plagued by brownfields must overcome additional issues typically associated with these sites, including extensive and expensive demolition, infrastructure improvements, back taxes, enforcement of proximate ongoing noxious uses, etc. The Assembly bill A.9203A contains the key provisions necessary to implement the collaborative plans that would emerge from an area-wide approach.  In summary, what is needed are provisions that integrate the basics of community development with the extraordinary and incremental resources and tools needed to address the brownfields issues: 

-         A grant and loan program for non-profit and for-profit developers to undertake site assessment, remediation and seed funding, consistent with the Brownfield Redevelopment Area Plan (BRAP). Government assistance should be structured to leverage private investment, where the private sector shares the risk and should be linked to re-use of the property.

-         A grant program for local government to undertake demolition, acquisition/site assemblage and infrastructure investment associated with the carrying out of the BRAP.  In addition, a tax forgiveness provision and tax increment financing provision are needed to promote creative financing and the leveraging of more federal resources.

-         Tax credits and Bond Act funding should have set-asides and prioritization for projects consistent with the BRAP.

 Comments or questions relating to this Analysis may be directed to Jody Kass at JodyKass@yahoo.com.  Ms. Kass currently co-directs a brownfields initiative, known as New Partners for Community Revitalization, which involves the collaboration of non-traditional partners to advance the sustainable reuse of brownfield sites in NY.  She also provides technical assistance to nonprofits and local government in the NY metropolitan area.  She has close ties with the building and community development industry and has collaborated with environmental and environmental justice leaders on brownfields policy issues and projects.  In 1998-99, Ms. Kass served on Governor Pataki’s Superfund Working Group, and in 2001, she helped in the preliminary drafting of the Assembly bill A. 9265. Ms. Kass also created and coordinated the Pocantico Roundtable for Consensus on Brownfields, from which the Brownfields Coalition bill emerged.  The Brownfields Coalition bill (A.7498A/S.4788) was introduced by Assemblyman Vito Lopez and Senator Carl Marcellino in 2000 and 2001 (and was supported by over 100 diverse groups around the state).  Parts of that bill are reflected in each of the brownfields bills discussed above.