Summary of 2003 Schimminger Bill

Drafted by Ken Kamlet based on Feb. 12, 2003 Bill Draft

Unofficial SUMMARY OF SCHIMMINGER/ALESI/MARCELLINO

BROWNFIELDS BILL (March 2003)

New Voluntary Cleanup Act (proposed new Title 14 to ECL Article 27)--§ 12 of the Bill:

            Scope: “Eligible” parties are encouraged to conduct cleanups and redevelopment projects.  Any type of contaminated site (hazardous waste, hazardous substance, solid waste, and petroleum) can be addressed.  Excluded sites include Class 1 (always) and Class 2 (when the “volunteer” is a “Type A” volunteer who caused or contributed to the contamination) Inactive Hazardous Waste Registry sites, and sites that are already subject to remediation enforcement orders.  Incentives allowing Responsible Parties (Type A volunteers) to participate during an initial 6-month period are coupled with disincentives for failure to participate (e.g., Registry listing).  An applicant may be rejected by DEC as a cleanup volunteer only if: (a) its application is incomplete; (b) there is a pending action or proceeding against it and the person is “recalcitrant and not cooperating”; or (c) DEC determines that the site doesn’t meet the definition of a “brownfield” site.  “Brownfield site” is defined (§ 27-1401) as an area or structure where hazardous waste and/or petroleum has come to be located that does not fall into various excluded categories.

            On-Site and Off-Site Responsibilities: For a “Type A” volunteer, the investigation work plan must provide for investigation of the nature and extent of contamination emanating from the site as revealed by on-site results.  For a “Type B” volunteer, the investigation work plan need only identify whether the onsite results reveal the potential for off-site contamination.  The remediation work plan will usually provide for implementation of a remedial program for contamination within the site boundaries.  However, a “Type A” volunteer must also provide for developing and implementing a remedial program for offsite contamination emanating from the site.  Where the volunteer is not required to conduct an investigation or perform remediation outside the property boundaries, and DEC demonstrates that the hazardous waste and/or petroleum that have migrated off-site still pose a significant threat (or have the potential to re-migrate back onto the site after it has been remediated), DEC is to require necessary investigation and remediation work to be performed by the responsible parties.  If the responsible parties fail to undertake this work, DEC is to do so (using moneys from the remedial program transfer fund), with the state’s costs being recoverable from the RP(s).

            Cleanup Approach: This bill takes the novel approach of mandating statutorily-defined “source removal” before use-based cleanup standards can be applied to residual contamination.  Source removal is considered complete when the “practical limit” of physical removal of the contamination “source” is accomplished.  “Sources” are free-phase liquids and soils contaminated with such liquids, which are the most significant potential sources of contaminant transfer to other environmental media.  The “practical limit” of removal is accomplished when the mass of contamination recovered from or destroyed at the site is exceeded by the mass of natural resources (e.g., petroleum, natural gas, propane, and coal) consumed in the effort.  Alternative water supplies must be provided if nearby wells are impacted—until engineering controls can be implemented—and any health risks associated with contaminant vapors must be addressed.

If residual contamination after source removal meets applicable cleanup levels, no further action is required and the cleanup volunteer gets a liability release and covenant not to sue (CNTS).  If completion of the source removal fails to satisfy applicable cleanup levels, additional remediation must be done to satisfy use-based cleanup standards—unless source removal cannot be “economically and feasibly performed” because of pervasive area wide soil contamination.  DEC, with the assistance of a technical advisory panel, is directed to develop look-up tables of use-based (industrial, commercial, residential) cleanup numbers for residual contamination, designed to protect human health and the environment.  Multi-category cleanup levels are to be developed.  “Category 1” cleanup levels would require the most complete cleanup and would allow unrestricted use of the site without reliance on institutional or engineering controls.  “Category 2” cleanup levels would protect health and the environment for the site’s current, intended, or reasonably anticipated residential, commercial, or industrial use and would consider the use of institutional or engineering controls.  “Category 3” cleanup levels would be determined using site-specific data (in accordance with pre-set formulas and models) based on the site’s contemplated use and considering institutional or engineering controls. 

The technical advisory panel will also recommend special “presumptive remedies” for pervasive (but low level) contamination which does not meet applicable numerical standards.

The panel is given 18 months to complete its work.  Until DEC promulgates rules and regulations implementing the panel’s recommendations, it is directed to determine cleanup levels for soil contaminants using site-specific data.

            Liability Relief: Once applicable cleanup standards are achieved, brownfield cleanup volunteers will receive: a liability release/CNTS binding on the state; protection against contribution claims by third parties; and immunity from natural resource damage claims.  The release is transferable to subsequent purchasers and redevelopers—except that it cannot be transferred to a Responsible Party that did not participate in the remediation agreement.  The liability release is subject to several narrow “reopeners” or “reservations”: (a) failure to comply with any remaining requirements of the cleanup agreement; (b) fraudulent demonstration that cleanup levels were reached; (c) a new release of contaminants after the cleanup agreement was executed; and (d) a demonstration by DEC that the implemented cleanup standards are no longer protective.  The latter reopener only applies to use-based cleanups under “Category 2” or Category 3,” but not to an unrestricted use cleanup under “Category 1.”  A liability release/CNTS is also available upon DEC’s approval of a final investigation report that demonstrates that no remediation is required, or where source removal results in reducing residual contamination to levels below applicable cleanup standards.  Criteria are also provided for demonstrating that no remediation is required to meet cleanup standards.

            Accelerated Cleanups: Redevelopment of brownfield sites is promoted by setting timetables for expeditious DEC review and approval.  Voluntary cleanup agreements must be accepted or rejected (or returned as incomplete) within 20 days; a proposed work plan must be approved, modified or rejected within 30 days (after the end of the public comment period or a public meeting); and a final report on a remediation work plan must be approved, modified, or rejected within 60 days.  Since time is often “of the essence” in real estate transactions, these time limits will help prevent deals from going “sour” before regulatory reviews are completed.  Cleanup volunteers are required to reimburse the state for all costs they incurred in negotiating and overseeing implementation of the voluntary cleanup agreement—unless DEC fails to comply with the specified timeframes.

            Liability Exemptions: The definition of “persons” subject to hazardous waste and oil spill liability (under ECL Title 13 and under Article 12 of the Navigation Law, respectively) is expanded to include LLCs and joint ventures, but (following the general approach of federal law) it is narrowed to exclude from the definition (and liability) lenders, the State of New York, public corporations, fiduciaries, industrial development agencies, not-for-profits, and offsite sources of contamination—as long as they were not involved in the generation or disposal of contaminants and their interest in the land is other than long-term ownership.

            Institutional and Engineering Controls: Institutional controls, such as deed restrictions, and engineering controls, such as soil vapor extraction, may be approved by DEC as part of a work plan implementing use-based cleanup standards (see discussion above of “cleanup approach”).  However, institutional and/or engineering controls may only be authorized if the work plan: requires the site owner to submit an annual certification (from a qualified engineering or legal professional) that these controls are being properly maintained; and permits reasonable access to the property (by DEC and its contractors) to evaluate continued maintenance of such controls.  DEC is also required to establish and maintain a publicly accessible database of approved institutional and engineering controls.  Any liability release/CNTS where institutional and engineering controls are involved will contain a specific reservation/reopener voiding the liability release if the site owner/operator fails at any point to comply with any ongoing requirements of the cleanup agreement, including institutional and engineering controls.  The liability release will also require advance notification to DEC of any changes of use or changes of title of the site (see below), so that additional cleanup requirements may be imposed if site changes result in increased risks to public health or the environment.

            Change of Use and Change of Title:  The site owner or user must provide written notification to DEC at least 60 days before the start of a physical alteration or construction constituting a “change of use,” and at least 60 days before the transfer of title (if the liability release/CNTS has not yet been issued)—or [within] 30 days after the transfer of title (where the liability release/CNTS is already in effect—to allow DEC to update its records).  In the case of a “change of use” (defined as any new higher use that is likely to disrupt or expose residual hazardous waste and/or petroleum, increase direct human exposure, or any other conduct that will or may tend to significantly interfere with an ongoing or completed voluntary cleanup), the notification must adequately apprise DEC of the contemplated change and how it may affect the property’s proposed, ongoing, or completed remediation.

            DEC Access to Sites: Under the terms of an executed voluntary cleanup agreement, DEC is authorized to require any person to permit DEC representatives to enter a brownfield site to observe implementation activities.  If a volunteer withdraws from the program or otherwise fails to fully investigate or remediate the site, DEC is given access for the purposes of inspecting and taking samples, and/or to implement the investigation and/or remediation—provided the site is determined to pose a “significant threat” to public health and the environment.  Before DEC may access the site for the purpose of inspection, sample-taking, investigation, or remediation—where work under a cleanup agreement has been suspended—DEC must provide the site owner at least 10 days’ written notice.  This period may be shortened to two days if DEC makes a written determination that the longer period will not be protective of public health and the environment.  If DEC incurs costs in connection with such work, it should seek to pursue cost recovery in a contribution action against responsible parties

            Dispute Resolution or Withdrawal: If a cleanup volunteer and DEC are unable to agree on the terms of a voluntary agreement or work plan, or on the implementation of the agreement or plan, after good-faith negotiations, the volunteer may elect in writing to withdraw from the program or may invoke a new dispute resolution procedure.  Under the new dispute resolution procedure, the volunteer may request arbitration or mediation with a DEC administrative law judge (ALJ) to discuss the grounds for the dispute.  Such a proceeding is to be held within 30 days of the volunteer’s request and is subject to public notice and meetings open to the public.  The volunteer must send DEC an advance written statement setting forth the relevant facts and any supporting data, analysis, or opinion.  DEC may send a similar statement of its position to the volunteer no more than 15 days before the date of the proceeding.  At the proceeding, the volunteer will be able to present its responses to DEC’s objections, and DEC will be able to reaffirm, modify and/or withdraw its objections and provide a period of time for revision of the report or other submission.  The ALJ’s decision is final, unless appealed to the commissioner (or his/her designee).    The commissioner’s decision is due within 15 days of the appeal.  (The ALJ’s decision is also subject to judicial review.)

            Public Participation: DEC is required to provide public notice of its acceptance of a submitted voluntary cleanup application, by publication in the Environmental Notice Bulletin (ENB), available online, and in a newspaper of general circulation in the municipality in which the brownfield site is located.  DEC must also notify the chief executive officer of each county, city, town, and village in which the site is located, the public water supplier that services the area, and any person who has asked to be placed on a site contact list.  After a site investigation is satisfactorily completed, but before completion of the final remediation work plan, DEC must notify individuals, groups, and/or organizations that have expressed interest in or are affected by the voluntary cleanup agreement.  DEC must also publish a notice in the ENB and provide for a 45-day public comment period.  If the public expresses a “significant interest” in the site, DEC must also hold a public meeting on the proposed work plan.  DEC must approve or disapprove the proposed cleanup plan within [30] days after the end of the public comment period (or public meeting, if any). 

Expanded Hazardous Waste Definition (§§ 4, 12, 13, 37, and 38): The definition of “hazardous waste” under ECL § 27-1301 is expanded to include “hazardous substances” listed in § 37-0103, but excluding certain natural and synthetic gas materials, engine exhaust emission residues, nuclear materials from a nuclear incident, or petroleum.  Similar changes are made to the “hazardous waste” definition in ECL § 52-0101(8), in the new Voluntary Cleanup program, and in relevant provisions of the Public Authorities Law and the Public Health Law. 

Environmental Restoration Program: Modifies the existing environmental restoration program for municipal brownfields (under the 1996 Clean Water/Clean Air Bond Act) in the following respects, designed to encourage municipal participation:

• Increases the state share from 75% to 90%.  The state share is 100% for any remediation required by DEC outside the property boundary.  Provides for monthly reimbursements of the municipality’s costs.  Costs for the public participation plan are reimbursed 100%.
• Moneys recouped by the municipality against responsible parties need to be refunded to the state only if they exceed the municipality’s 10% share.
• If the proceeds from selling the restored property exceed the state’s outlay, any access is divided equally between the state and the municipality.
• Eliminates the requirement that approved project costs be reduced by any other federal or state funds received for the project.
• Expands the scope of eligible sites to include: (a) not only those owned by municipalities but also those for which fee title “may be acquired”; and (b) hazardous substance and petroleum-contaminated sites.
• Allows the property being restored to continue to be used for the purpose for which it was previously being used as long as the risk posed does not make such use prohibitive and the site’s continued use does not interfere with the environmental restoration project.
• If the municipality sells a restored property to a responsible party, the responsible party must pay the municipality, in addition to any other consideration, the amount of the state assistance plus accrued interest and transaction costs, which must then be paid to the state.
• Modifies the eligibility criteria to give sites in Empire Zones top priority regarding review timeframes and other procedural requirements.
• After the satisfactory completion of restoration, exempts from liability to the state or any third party a municipality receiving state assistance, a successor in title, any lessee, and any lender—provided they did not cause or contribute to the contamination.  This liability release is subject to 4 reopeners.
• Municipalities that caused or contributed to the contamination are not able to receive environmental restoration funding from the state.

Economic Development Incentives:  A package of economic development incentives—most of them expansions of existing state programs—is offered to help true “volunteers” offset the cost of environmental remediation at brownfield sites.  These incentives would not be available to persons who caused or contributed to the contamination.

            Real Property Taxes:  Municipalities are given the authority to provide a real property tax exemption for 100% of the increased value of a parcel that has been remediated under a voluntary cleanup agreement for the first 3 years, and on a sliding scale from 75 to 0 percent for the next 7 years.  This “Brownfield site redevelopment exemption” (§ 41-a) is only available if the municipality passes an authorizing resolution covering sites cleaned up under the VCP.  Tax districts are also given the authority (§ 66), with the consent of the affected municipal corporation, to cancel or reduce delinquent back taxes on properties participating in the voluntary cleanup program.

            Urban Development Corporation Grants (§ 68):  A new “brownfield site assessment, acquisition, and remediation assistance program” is established under the Urban Development Corporation Act to make grants available for brownfields-related project planning and redevelopment, site acquisition, site assessment and revolving loan fund assistance, site remediation, community facilities, and not-for-profit land re-use foundations.  It would allow funds from existing regional revolving loan trusts to be used for loans or loan guarantees for contaminated site remediation.  It would also authorize municipalities to use UDC infrastructure planning grants to identify sites for remediation and redevelopment.

            Investment Tax Credit: Establishes a 10% investment tax credit against Article 9-A taxes, or an 8% investment tax credit against personal income taxes, for the redevelopment of sites that have undergone environmental remediation.  Such incentives, which are presently offered for the redevelopment of sites in Empire Zones, would be doubled for brownfield sites in such Zones.

            Sales Tax Exemption: Provides both a state and local sales tax exemption for purchases related to redevelopment of a site that has been cleaned under this legislation.

            Land Re-Use Opportunity (LRO) Area Incentives (§ 67):  Provides for the designation of LRO areas which include a concentration of brownfield sites at the request of municipalities (or of community-based organizations in conjunction with municipalities).  The LRO designation application must include information in 21 categories and include indications of support from at least 2 brownfield property owners within the proposed area.  It must also reflect a maximum effort to solicit the views of area residents.  State planning assistance grants are available to assist in this effort.  Authorizes the governing board of any city, town, village, or county in which an LRO area is located to adopt a local law establishing a special LRO area tax increment fund to be used for grants, loans, or financial incentives.  (Such a fund can be established only if the LRO area does not exceed 20% of the municipality’s total assessed value or land area.)  At least 75% of available moneys must be used to support or finance area-wide projects such infrastructure improvements or investments.  The rest are to be used to support or finance site-specific brownfield site acquisition, investigation or remediation within the LRO area.  The tax increment fund is based on annual assessments of the area’s incremental value in relation to its “original” taxable value.

Office of Brownfields Redevelopment (§ 69): Establishes in the executive chamber a new governor’s office of brownfields redevelopment.  It is designed to augment the efforts of individual state agencies by coordinating the brownfield programs and efforts of these agencies and of public benefit corporations to promote and accelerate the remediation and redevelopment of brownfield areas.