We are about two months shy of the first year anniversary of Connecticut’s new Brownfields Revitalization and Remediation Program. This first-of-its-kind program in the country, which came into law via Section 17 of Public Act No. 11-141, has put Connecticut at the head of the class when it comes to incentivizing the remediation and redevelopment of brownfields. So, how are we doing to date and is there room for improvement?
Connecticut defines a brownfield as an abandoned or underutilized property where the presence of or potential for environmental contamination is hampering “redevelopment, reuse or expansion” at that property. The Connecticut Department of Economic and Community Development (DECD) is responsible for the implementation and oversight of the Brownfields Revitalization and Remediation Program. The DECD works closely with the Connecticut Department of Energy and Environmental Protection (DEEP) when reviewing applications to this innovative program and then assisting an accepted applicant and brownfield property as they work their way through the Program.
Where’s the incentive to apply to this new program? The Section 17 Program is not about grants or loans. Eligible parties associated with properties within this program can certainly pursue financial assistance under other Connecticut programs. However, the primary and unprecedented benefits to an applicant accepted into the Brownfields Revitalization and Remediation Program are arguably even more significant than most economic assistance, particularly in the long term.
To be eligible for the program, a property must meet the definition of a brownfield under Connecticut law and it cannot be either the subject of an enforcement action or Resource Conservation and Recovery Act Corrective Action or appear on the Superfund’s National Priorities List or Connecticut’s Superfund List. However, properties with PCB contamination or an underground storage tank release are eligible.
Importantly, an applicant accepted into the program gets liability relief from third party environmental claims under state law, including claims by adjacent and downgradient property owners. Section 17 also releases an eligible party from obligations the party otherwise has under state law to investigate and remediate off-site contamination caused by a source on the property accepted into the program. An eligible party is only required to investigate and remediate on-site impacts of releases that have taken place at the property.
Significantly, the liability protection and the release from obligations to investigate and remediate off-site impacts are both immediate. They are effective with acceptance into the program and they continue even after the eligible party transfers the property. An eligible party must be a bona fide prospective purchaser, an innocent landowner or a contiguous property owner. They cannot be a certifying party under the Connecticut Transfer Act or a party responsible for the creation of the contamination source. However, there is provision for limited liability relief to the prior owner of the property, once investigation and remediation obligations under the program have been satisfied.
Additional benefits include the availability to the eligible party of a permit ombudsman within the DECD. There are also deadlines for the steps in the investigation and remediation process with a goal of keeping the redevelopment as well as the remediation on schedule. A property accepted into the Brownfields Revitalization and Remediation Program is not required to comply with the Connecticut Transfer Act. And the investigation and remediation activities required for a Section 17 property are defined, implemented and verified by a Licensed Environmental Professional, who prepares submittals made to the DEEP under the program.
While there is a fee associated with acceptance into the program, this fee is paid in two installments, the first being due within 180 days of acceptance into the program and the second being due four years from acceptance. Section 17 includes multiple mechanisms whereby an eligible party can reduce the amount of these fees. Municipalities are not required to pay any fees and there is a provision for a municipal waiver of a fee otherwise owed by certain eligible parties. Fees paid are available to the DEEP for investigation and remediation which is not the responsibility of the eligible party under the program.
So far, the DECD has held two application rounds, with Feb. 3, 2012 being the application deadline for the most recent round. During the first round of the new program, the DECD received eight applications, six of which were granted. One application was rejected because it could not meet the application requirements and approval of the remaining application is pending.
The DECD received six applications in the second round. One of those applications was granted in February and remediation is already underway at the property. The DECD will soon be releasing its action on the five other applications from the second round. The DECD can accept up to 32 properties annually.
On the improvement front, a number of revisions under discussion would provide much needed clarification on issues that have arisen in the context of the implementation of the program. Substitute Bill No. 5342 before the Connecticut General Assembly includes a number of these revisions.
Examples of the desired revisions include: (1) a change to the definition of “municipality” so there is consistency among existing state programs; (2) clarification that the so-called portfolio factors considered by the DECD and the DEEP when evaluating Section 17 applications apply only in the event the DECD receives more than the maximum of 32 applications in a calendar year; (3) clarification regarding the process whereby a municipality can nominate a property for inclusion in the program, thereby making the property more attractive to prospective developers; (4) recognition that the obligations of a prospective purchaser who has been accepted into the Program commence with the acquisition of the property that is the subject of the application; (5) further clarification regarding certain fee waivers and fee incentives built into the program with the goal of expediting the investigation and cleanup; and (6) correction of an inconsistency within the existing law as to the outside date for the completion of the investigation and remediation of the property under the program.
The Brownfields Revitalization and Remediation Program is historic. It is a win-win. The Section 17 program emphasizes and recognizes the value of predictability, clarity and expediency when pursuing a development project. It evolved out of a pervasive frustration with the existing procedures triggered with the transfer of a contaminated property. Ideally, all transactions and redevelopment involving Connecticut brownfields would be part of this program. It is already serving us well by putting Connecticut on the map — in a positive way — for property owners, prospective developers and owners, lenders, and even regulators outside Connecticut. It is expediting the remediation and redevelopment of underutilized Connecticut properties with a history of contamination, thereby contributing favorably to desirable economic growth, while creating jobs in the process.