Brownfields

1
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

2
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.

3
Small Business Liability Relief and Brownfields
Revitalization Act, January 2002 (Brownfields
Amendments)
4
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
  purchasers 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

5
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

6
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

7
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

8
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

9
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

10
EPA Comfort Letters

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

11
CERCLA 107(r) Windfall Lien

• The lesser of EPAs unrecovered response costs OR
  the increase in fair market value attributable to
  EPAs remediation of the site.
• Applies to property that would be acquired by the
  bona fide prospective purchaser that was
  subject to EPA response

12
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.

13
Applicants may be

• Participant PRP (owner/operator)
• Volunteer Innocent purchaser, or prospective
  purchaser
• NO Bad Actors

14
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.

15
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

16

• 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.

17

• Look-up tables vs. risk-based cleanup standards
• regulations adopted 11/14/2006
• Recall CERCLA standards preference for
  treatment, permanent solutions, compliance with
  ARARs.

18
Certificate of Completion

• The ticket to tax benefits and liability
  limitation.
• 25 issued in 2006, only 3 were unrestricted

19
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

20
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)

21
Criticism 1 Proposed Cleanup Standards dont
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

22
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 Laws 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.

23
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)

24
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