Posted on March 13, 2015 by Gregory Sharp
Many states and the federal government have struggled with the challenge of how to adapt statutory strict liability schemes imposing clean up obligations on property owners in such a way that will enable new investors to redevelop brownfields sites without fear of litigation over previous releases.
The Connecticut General Assembly has recently provided liability relief to municipal entities to encourage them to redevelop brownfield sites by removing potential liability concerns which might otherwise arise from acquiring title to previously contaminated property.
The Connecticut legislation defines brownfields as “any abandoned or underutilized site where redevelopment, reuse or expansion has not occurred due to the presence or potential presence of pollution in the buildings, soil or groundwater that requires investigation or remediation before or in conjunction with the redevelopment, reuse or expansion of the property.”
Historically, municipalities and their affiliates, such as redevelopment agencies, were reluctant to acquire brownfields properties by foreclosing tax liens, or through arms- length transactions, because the State’s Clean Water Act imposes joint and several liability on owners of contaminated property, even if they did not own the property at the time of the releases. As such, if a municipal entity took title to contaminated property, it would run the risk of receiving an abatement order from the Department of Energy and Environmental Protection (“DEEP”) or being sued by third parties.
Under the new Municipal Brownfield Liability Relief Program, a municipality, or a qualified municipal affiliate, which qualifies for the program may take title to a brownfield property free of claims by the State or third parties for contamination existing on the property prior to the acquisition.
Assuming the property meets the definition of a brownfield under the statute, the municipality must meet four conditions to enter the program: a) that it intends to redevelop or facilitate redevelopment of the property, b) that it did not contribute to the contamination at the site, c) that it has no legal affiliation with a party responsible for the contamination, and d) that it is not under a previous obligation to remediate the property.
Another significant benefit of the new program is that it exempts a participating municipal entity from having to comply with the Connecticut Transfer Act. That Act requires a seller of certain classes of property defined as an “establishment” under the Act to make a filing with the Department of Energy and Environmental Protection. The filing requires that if there has been a release of hazardous waste at the property which has not been remediated, a party to the transaction must provide a certification that it will accept responsibility to conduct a full investigation and remediation under prevailing standards and guidelines.
Another benefit of the program is that a municipal entity is not required to fully investigate and remediate the property under the State’s Remediation Standard Regulations. However, it must make good-faith efforts to minimize the risk to public health and the environment. It also must submit a plan and schedule to facilitate both redevelopment and remediation, and it must also notify DEEP of any exceedances of Significant Environmental Hazard thresholds.
The legislature authorized the program in 2013, and DEEP provided application forms for the program in September of 2013. So far the response has been discouraging, with only two municipalities entering a total of three sites in the program to date. The lack of a robust response is likely attributed to the difficulty an underfunded DEEP faces in reaching out to the state’s 169 towns.
Whether the new liability relief program will eventually encourage more municipalities to participate in redeveloping and remediating brownfield properties remains to be seen. However, along with a recently announced round of grants from the Department of Economic and Community Development of up to $7.5 million, it should at least open the door for municipalities to take a second look at unproductive properties.
Tags: brownfields, strict liability, municipality, remediation