Brownfields

Brownfields are real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant.

Implicitly the CERCLA and other environmental statutes lead to brownfields because of liability concerns

Lender Liability

1996 Asset Conservation, Lender Liability and Deposit Insurance Protection Act codified the secured creditor exception to CERCLA liability so that Banks would make loans to STIGMA properties. BANKERS are very risk-averse.

Small Business Liability Relief and Brownfields Revitalization Act, January 2002 (Brownfields Amendments)

Bona Fide Prospective PurchaserCERCLA 101(40)

Person that acquires ownership of a facility after January 11, 2002

Disposal occurred prior to ownership Potential liability is based solely on the purchaser’s

being an owner or operator of a facility May purchase with reason to know of contamination Must make all appropriate inquiries, exercise

appropriate care wrt hazardous substances, cooperates with authorities, complies with requests, and has no affiliation with PRP

Contiguous Property Owner (107(q))

Applies to property that is contaminated by a release from an adjacent property

No owner/operator liability if the owner did not cause, contribute or consent to the release

Must not be affiliated with PRP Conducted all appropriate inquiry

Innocent Purchaser

Must have bought the property without knowing or having reason to know of the contamination on the property

Government entity that acquires facility by escheat, eminent domain or condemnation

Inheritance or bequest

Common Elements

Must Perform ALL APPROPRIATE INQUIRY Must not be affiliated with PRP Compliance with land use restrictions and

institutional controls Taking reasonable steps Cooperation, assistance, access Compliance with information requests and

administrative subpoenas Providing legally required notices

All appropriate inquiry

Prior to 1997, common commercial practice for due care

2002 Brownfield Act codified the ASTM-1997 standard for Phase I ESA to be sufficient until EPA promulgates rule

New Rule: October 2005– Found ASTM-2000 to be legally insufficient and

devised new procedures– Effective as of November 1, 2006

Continuing Obligations

Compliance with land use restrictions and institutional controls

Take reasonable steps to address hazardous substances on property

Cooperation, Assistance and Access Compliance with Information Requests and

subpoenas

EPA Comfort Letters

No previous Federal Superfund Interest Letter

No Current Federal Superfund Interest Letter Federal Interest letter State Action Letter

CERCLA 107(r) Windfall Lien

The lesser of EPA’s unrecovered response costs OR the increase in fair market value attributable to EPA’s remediation of the site.

Applies to property that would be acquired by the “bona fide prospective purchaser” that was subject to EPA response

NYS Brownfield Act

Contaminated sites– threaten health and vitality of communities– Contribute to sprawl development and loss of

open space Policy is to encourage voluntary remediation

of brownfield sites for reuse and redevelopment

With remedies that are fully protective of public health.

Applicants may be:

Participant: PRP (owner/operator) Volunteer: Innocent purchaser, or

prospective purchaser NO Bad Actors

Ineligible sites

NPL sites Class I NYS Registry sites Class 2 NYS Registry sites (except for those

owned by volunteers) Permitted RCRA sites Sites subject to any enforcement action (fed

or state), cleanup order under Navigation Law (petroleum), etc.

Application Process

Cleanup alternatives analysis: Future use I: Unrestricted use. Look up table for soil

cleanup levels, but use of GW controls OK if GW is asymptotic

II: Commercial/Industrial use. Look up table for soil cleanup levels, but use of GW controls OK. Restricted Residential - new

III: Use of contaminant – specific soil standards consistent with DEC criteria using site-specific data

IV: Site-specific cleanup levels related to intended use (residential, commercial, industrial) and intended site controls – same as now.

Look-up tables vs. risk-based cleanup standards

regulations adopted 11/14/2006 Recall CERCLA standards: preference for

treatment, permanent solutions, compliance with ARARs.

Certificate of Completion

The ticket to tax benefits and liability limitation.

25 issued in 2006, only 3 were unrestricted

Liability Limitations

No liability to NYS “arising out of the presence of any hazardous waste in, on or emanating from the brownfield site, . . . At any time before the effective date of BCA”

Reopeners: Non compliance with BCA requirements Fraud Changes in standards Change in site use that requires additional remediation Failure to develop property

Tax Credits (NYS)

Brownfield Redevelopment Tax Credit: up to 22%

Site preparation costs (inc. legal fees!) Tangible property costs (buildings) On-site GW remediation costs

Remediated Brownfield Credit for Real Property Taxes (varies – up to 100%)

Environmental Remediation Insurance Credit (lesser of $30K or 50% cost of premium)

Criticism 1: Proposed Cleanup Standards don’t protect children, groundwater or natural resources

– The law requires 3 cleanup standards, the DEC made 6

– Ecological protected sites have better protections than sites where human/children exposure is likely

– DEC does not factor in potential vapor intrusion– DEC does not consider off-site impacts

Criticism: Does not provide Complete and Permanent Site Cleanups

Cleanup standards are not protective enough - Should be all inclusive, not either ecological OR public health OR groundwater

Undermines Law’s preference for Permanent Cleanup - Should not allow polluted background levels to guide Track 4 cleanup

Weakens the Superfund and Environmental Restoration Program – slippery slope to consider land use in remedy selection. Should be predisposal cleanup.

Criticism: Off-site testing and cleanup inadequate

Volunteers are held to lesser responsibilities for off-site contamination

DEC will handle off-site contamination, but regs. provide no guidance on how.

Need requirements for vapor intrusion potential (VOC sites)

2005 Eligibility Guidance

Limits definition of brownfield Adds criteria for determining eligibility that

are not found in the statute 2 challenges favored DEC so far