Brownfields Redevelopment in Kentucky – What’s Next?

Posted on October 24, 2013 by Carolyn Brown

Last year the Kentucky legislature passed a bill that was designed to make it easier for blighted property to be redeveloped.  The intended targets of the legislation were old gas station sites and similar vacant properties in communities around that state.  The goal of the legislation was to encourage redevelopment of these parcels by providing relief from liability under the Kentucky statutes for cleanup of releases of hazardous substances and petroleum for the new owner.  The new owner must meet certain requirements and implement a property management plan so that use of the property will not interfere with the site remedy or result in increased impacts or unacceptable risks to human health and the environment.  The legislation was codified at KRS 224.1-415 and the Kentucky Energy & Environment Cabinet’s Division of Waste Management was charged with development of implementing regulations.

The Division has proposed three implementing regulations that are currently out for public comment with a public hearing set for October 23rd:  401 KAR 102:005 Definitions, 401 KAR 102:010 Brownfield Redevelopment Program, and 401 KAR 102:020 Property Management Plan Requirements. 

Key aspects of the proposal are:

Scope of the relief and eligibility – The program provides protection from obligations under state law to investigate, characterize and correct the impact of releases including contamination associated with petroleum storage tanks.  Both current and prospective property owners can use the program.

Application procedures – The applicant must complete the Brownfield Liability Relief Eligibility Form (DEP 6056) and must certify among other things that:

•    The release occurred prior to the applicant’s acquisition of the property and that the applicant made all appropriate inquiries into prior ownership and use of the property;
•    The applicant, or a responsible party, gave all legally required notices;
•    The applicant is in compliance with all land use restrictions and will not impede or disturb any remedial measures for the site and has complied with agency information requests;
•    The applicant did not cause or contribute to the release and is not affiliated with any potentially liable party.

A property management plan and an application fee of $2,500 are also required.

The Division will review the application and advise the applicant in writing of its determination.  A Notice of Eligibility is issued to applicants who do not yet hold legal title to the property.  The Notice of Eligibility is effective for 180 days, with the possibility of an extension of up to a year, from the date of the all appropriate inquiry.  The Notice of Eligibility is essentially a bridge to a Notice of Concurrence.  The Notice of Concurrence is issued to applicants that hold legal title to the property and contains the Division’s finding that the applicant will not be liable for characterizing or correcting the effects of the releases that have resulted in contamination of the site.   This relief is granted only with respect to the releases covered by the certification in the application.  If new releases are discovered after the acquisition and after the issuance of a Notice of Eligibility or Notification of Concurrence, the owner may still be eligible for the statutory protections.  To qualify, the owner must give timely notice and must satisfy the same certification requirements for the newly discovered release as were addressed in the initial application.

Property Management Plan (PMP) requirements – Under the proposal, the PMP must describe the intended use of the property, provide all available information about the known releases, areas of potential releases, a description of all controls or remedial actions that are in place or proposed for the site and a schedule to periodically inspect and report to the agency that the controls remain in place and effective.  The plan must be certified by a licensed professional engineer or geologist.  Amendment of the plan is required if it is found to be inadequate.

Concluding thoughts - The program should have a positive impact on redevelopment of long vacant gas station and similar sites throughout the state.  The liability protection from state obligations is significant and may provide solace to otherwise reluctant lenders.  However, ease of implementation of the application process and approval of PMPs will be critical to actual success.  As always, the devil is in the details.