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The surprise winners in this year’s legislative sessions in Connecticut are brownfields, under utilized or abandoned properties where the presence of pollutants complicates the properties’ reuse and redevelopment. The Connecticut General Assembly recently enacted two significant environmental laws that provide resources and create incentives for the private sector to clean up brownfields and put them to good use. These new laws are generating excitement, have tremendous potential, and create a critically important governmental office that should serve as the “nerve center” for coordinating and promoting Connecticut brownfield development. Reflecting and augmenting this excitement is the significance that Connecticut Governor M. Jodi Rell has attached to brownfields legislation by signing the flagship legislation, An Act Concerning Brownfields, in a ceremony in Waterbury on August 1, 2006 (despite her having already signed the bill on June 9, 2006). Nonetheless, these brownfields laws are only a starting point and their ultimate impact remains to be seen.

An Act Concerning Brownfields
Most prominently, An Act Concerning Brownfields, Public Act No. 06-184 (“Brownfields Act”), raises the profile of brownfields state-wide by (1) establishing a sub-agency dedicated solely to brownfields, (2) funding a pilot program for municipalities or economic development agencies to remediate brownfield sites; (3) creating a liability exemption for entities that purchase brownfield sites remediated under this pilot program; and (4) forming a task force to study strategies for long-term solutions for Connecticut’s brownfields. This Act also holds out the potential for making manufacturing facilities designated as brownfield sites eligible for “available remediation funds.”

Establishes Brownfields Office
Section 1 of the Brownfields Act establishes an Office of Brownfield Remediation and Development (“Brownfields Office”), administered by Connecticut’s Department of Economic and Community Development (“DECD”), with liaisons from the Department of Environmental Protection (“DEP”) and the Connecticut Development Authority. The Brownfields Office for the first time brings under one roof the three agencies with authority to set the pace of brownfields development in Connecticut. The Act also requires the Brownfields Office to recruit two volunteers from the private sector who have experience in “different aspects of brownfield remediation and development,” one of whom must be a member of the Connecticut Chapter of the National Brownfields Association.

The Act charges the Brownfields Office to develop procedures to: streamline the brownfield remediation process; identify and create funding sources and expedite the funds’ release; facilitate compliance with clean up requirements; identify and prioritize brownfield development opportunities; analyze other states’ actions; and educate property owners about brownfields remediation.

Creates Pilot Program with Liability Exemptions
The Brownfields Office will establish and operate a state-funded pilot program to identify brownfield remediation opportunities in four Connecticut municipalities of varying sizes and to provide them with grants. The Act requires that the DEP review these brownfield sites on a priority basis. After a municipality or economic development agency investigates and remediates a property, it must submit a report with a Licensed Environmental Professional’s verification of the remediation. Within ninety days of this submission, the DEP must determine whether the remediation is complete and whether additional precautions, such as monitoring or environmental land use restrictions, are necessary.

Pursuant to Section 4 of the Brownfields Act, municipalities and economic development agencies receiving grants under the brownfields pilot program qualify as “innocent parties” and therefore are exempt from state environmental liability. In addition, Section 3 provides an incentive for municipalities to enter into the pilot program by expanding an exemption from the requirements of the Connecticut Transfer Act, Conn. Gen. Stat. Sections 22a-134 through 22a-134e. The Transfer Act requires a “certifying party,” who is the seller or buyer of an “establishment” (i.e., a property or business as defined in the statute, including that which generates hazardous waste above a certain threshold), either to certify that the “establishment” is clean or to investigate and remediate it according to the statute’s specifications. Prior to enactment of the Brownfields Act, the Transfer Act did not apply to the conveyance of an “establishment” through a foreclosure (as defined in Conn. Gen. Stat. Section 22a-452f(b) or to foreclosure of a municipal tax lien. The Brownfields Act now additionally exempts municipalities from the strictures of the Transfer Act when they acquire tax delinquent properties that they intend to sell for back taxes at tax warrant sales or when, subsequent to taking title through a municipal tax lien foreclosure or a tax warrant sale, they transfer the acquired “establishment.” The latter exemption applies only if the “establishment” is enrolled in the pilot program.

After remediation is complete, a municipality or economic development agency may transfer the property to anyone who is not otherwise liable under state environmental law. While Section 7 of the Brownfields Act prohibits certain persons who are liable or otherwise responsible under Connecticut’s environmental laws (or affiliated with the liable party or the property) from acquiring a property remediated under the pilot program, Section 6 shields eligible purchasers from liability so long as the purchaser does not cause or contribute to the discharge and is not in any way related to or affiliated with the liable party. The DEP must provide the purchaser with a covenant not to sue and waive fees. Liable parties seeking to acquire title or an interest in a property mediated under the pilot program must reimburse all investigatory and remedial costs plus 18 percent interest.

Available Remediation Funding
Section 9 of the Brownfields Act provides that the owners of Connecticut manufacturing facilities that have been “designated as brownfield sties shall be eligible for any available remediation funds.” Such owners are eligible provided that they (1) did not cause the release of any hazardous substances or petroleum at the site, or (2) did not knowingly injure human health or the environment as a result of their disposal of hazardous substances or petroleum and have never been found guilty of knowingly or willfully violating an environmental law. Owners with limited ability to pay for remediation have priority in receiving funds. In addition, conditions restricting the transfer of title and mandating the continued employment of state residents, as well as a requirement to reimburse the state if the owner receives other funding, may attach to the funds. Under Section 5, to the extent the Brownfields Office has the authority to allocate funds, it must consider the economic development opportunities a project provides and its expected contribution to the municipal tax base.

Section 12 of the Brownfields Act, in conjunction with Section 6, establishes a nonlapsing account for the deposit of proceeds from the sale, by a municipality or economic development agency, of remediated property cleaned up under the pilot program (“Brownfields Account”). The municipality retains 20 percent of the proceeds and must transfer 80 percent of the proceeds to the Brownfields Account. Section 13 authorizes the DECD and DEP to administer the Act within available appropriations and any funds allocated pursuant to the Urban and Industrial Sites Reinvestment Program and the Special Contaminated Properties Remediation and Insurance Fund.

The Brownfields Act, however, does not appropriate any funds, nor does it specify whether and how funds allocated pursuant the programs above are to be transferred to the Brownfields Account. Moreover, this Act does not explain who has authority to designate a facility as a brown field site. Absent further clarification of these issues by either the Brownfields Office or the legislature. Section 9 will likely be difficult to implement.

Brownfields Task Force
Section 11 of the Act creates a nine-member task force to help guide the legislature with regard to long-term brownfield issues. Task force members, appointed by various legislative officials and the Commissioner of Environmental Protection, must have “expertise in brownfield development either in environmental law, engineering, finance, development, consulting, insurance, or other relevant experience.” The task force must submit a report on its findings and recommendations to the General Assembly no later than January 1, 2007.

Legislative Amendments Affecting Connecticut’s Property Transfer Act
Complementing the Brownfields Act are the brownfields provisions buried deep within the Act Concerning Personal Watercraft and Children, Revisions to Environmental Protection Statutes, Lake Patrolmen and the Appointment of Special Conservation Officers, Public Act No. 06-76 (“‘Watercraft Act”). This Act apparently began its “legislative life” as a boating safety bill and obtained its wide-ranging environmental provisions, including those related to brownfields, as the legislative session progressed. These brownfields provisions create two specialized exemptions to the Connecticut Transfer Act, Conn. Gen. Stat. Sections 22a-134 through 22a-134e. As discussed in this article, the Transfer Act requires a “certifying party” who is the seller or buyer of an “establishment” (i.e., a property or business as defined in the statute) either to certify that the “establishment” is clean or to investigate and remediate it as the statute specifies. Thus the Transfer Act serves as a “stick,” while brownfields incentives such as those in the Brownfields Act serve as the “carrot.” The two particular exceptions that the Connecticut General Assembly prudently has carved out of the Transfer Act promote brownfields development without compromising remediation standards. (The Watercraft Act also contains a third provision which exempts from Transfer Act applicability a property or business that would qualify as an “establishment” solely by virtue of its activities involving universal waste, which includes particular types of batteries, pesticides, thermostats, lamps, and used electronics. This provision exempts, for example, certain office buildings).

Exemption for Condominiums on Property with Ongoing Remediation
First, the Watercraft Act exempts from the Transfer Act the sale of individual residential condominium units constructed on property with ongoing remediation so long as the developer remains the “certifying party” for the overall project and secures financial assurance. Sections 11 and 12 of the Watercmft Act make the Transfer Act inapplicable to the conveyance of units in “the residential common interest community,” which include condominium units in apartment buildings. The exemption applies only if the community’s “declarant”— generally, the building’s developer—acts as the “certifying party” for remediation within the community and provides to the DEP a surety bond or some other form of acceptable financial assurance. This bond must cover the cost of remediation, but the required amount may decrease as remediation is completed. A condominium seller must notify a prospective purchaser about the building’s environmental condition, the status of the remediation, and any environmental land use restrictions.

This provision facilitates needed development without compromising environmental protection. The provision protects the environment by continuing to require the developer to complete the remediation for the entire “common interest community” and to ensure that potential buyers receive notification of the property’s environmental status. At the same time, this legislation streamlines residential condominium transactions; it consolidates all Transfer Act obligations in the developer rather than duplicating them for each individual unit’s seller and buyer.

Remediation Verification of a Portion of a Property
Other provisions allow for the release of a portion of a property from the Transfer Act when the remainder of the property is not yet clean. In particular, Sections 13 and 15 of the Watercraft Act permit Licensed Environmental Professionals to verify the “partial” verifications in determining that an entire “establishment” is clean. Again, releasing properties as quickly as possible from the purview of the Transfer Act encourages developers’ involvement by allowing developers to remediate portions of an “establishment” in a step by step fashion. The developer can more easily recoup any initial investment costs by being able to sell off portions of a property as those portions are cleaned up and verified. Importantly, this arrangement in no way diminishes the remediation standards required for all portions of the property.

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The Connecticut Brownfields Office, pilot program, and available funding, along with the Transfer Act amendments, combine to create new and promising tools for developing Connecticut brownfields. More generally, the Brownfields Act and the brownfields provisions of the Watercraft Act provide critically-needed organizational structure and focus governmental and popular attention on the needs of communities across the state to revitalize contaminated properties. The new Brownfields Office, however, must confront the challenge of taking full advantage of the tremendous potential of the pilot program. Hopefully, the Brownfields Office will work to expand the program into a larger-scale, statewide brownfields redevelopment campaign with continued financial and political backing. While more remains to be done, the Connecticut General Assembly has begun to assemble the tools to encourage the private sector to clean up and reuse environmentally contaminated sites so that everyone in Connecticut benefits. CL