PA 10-135—sHB 5436

Commerce Committee

Planning and Development Committee

Environment Committee

AN ACT CONCERNING BROWNFIELD REMEDIATION LIABILITY

SUMMARY: This act expands the scope of several brownfield clean-up programs, establishes a working group to study brownfield issues, and makes a technical correction ( 4).

The act qualifies municipal and nonprofit development agencies for directors' and officers' liability and general liability insurance under an existing brownfield clean-up program. And it allows the Department of Economic and Community Development (DECD) commissioner to use the funds for an established brownfield program for two newer brownfield programs opened to municipalities and private developers.

The act allows municipalities to (1) fix the assessment on contaminated property before the owner begins to remediate it and (2) to forgive back taxes on a contaminated property if a developer proposes to remediate it under a state-approved plan.

The act sets narrow conditions under which a regulated activity must be permitted on municipally owned sites undergoing remediation in aquifer protection areas.

Lastly, the act establishes an 11-member working group to examine brownfield issues and requires it to report its findings and recommendations to the Commerce Committee by January 15, 2011. It requires the governor and legislative leaders to appoint the members and designates three state officials as ex-officio members.

EFFECTIVE DATE: July 1, 2010, except for the provisions establishing the working group, which are effective upon passage; the provisions concerning the Urban Site Remediation Fund, which are effective October 1, 2010; and the provisions for fixing property tax assessments, which are effective July 1, 2010 and applicable to assessment years beginning on or after October 1, 2010.

PROGRAM EXPANSIONS

1 & 5 — Brownfield Clean-up Programs

The act expands the range of activities that qualify for funds under the Urban Sites Remediation Program and the Special Contaminated Property Remediation and Insurance Fund. It allows the Department of Environmental Protection (DEP) commissioner to use the former to reimburse municipal and nonprofit development agencies for directors' and officers' liability insurance and general liability insurance. Under prior law, she could use the program only to acquire, assess, and remediate contaminated sites acquired by DECD or a regional economic development agency.

Municipal economic development agencies and those formed specifically to plan and implement redevelopment and municipal development projects qualify for reimbursement. Nonprofit organizations qualify if they were formed to promote a municipality's economic development and receive funds or in-kind services in part from the municipality, its economic development or redevelopment agencies, or a nonstock corporation or limited liability company the municipality established or controls.

The act also allows the DECD commissioner to tap the Special Contaminated Property Remediation and Insurance Fund for brownfield projects approved under the existing Remedial Action and Redevelopment Municipal Grant Program and the Targeted Brownfield Development Loan Program. The former provides grants to municipal and nonprofit agencies for assessing and remediating contaminated property. The latter provides up to $2 million in financing to municipal, nonprofit, and for-profit developers for investigating and remediating brownfields.

3 — Property Tax Incentive

The law specifies conditions under which municipalities can abate or forgive property taxes on contaminated property being cleaned up and redeveloped. The act also allows them to fix the assessment on this property as of the last assessment date before the clean-up activities begin. The assessment is that portion of the property's fair market value subject to taxation. Connecticut law requires all municipalities to assess property at 70% of its fair market value. Fixing the assessment on contaminated property freezes its value, thus allowing the owner to improve it without paying taxes on the improvement's value.

A municipality may fix the assessment for up to seven years if (1) its finance board, legislative body, or the board of selectmen, as applicable, approves it and (2) the DEP commissioner or a licensed environmental professional approved the plan for cleaning up the property. The municipality must notify the DEP and DECD commissioners and the Office of Policy and Management (OPM) secretary within 30 days after it fixes the assessment. The law already requires it to notify these officials when it forgives back taxes, as discussed below.

The act also expands the circumstances under which municipalities can forgive some or all of the back taxes plus interest on a contaminated property. Prior law allowed them to do so only when a property was up for sale. A municipality could forgive some or all of the taxes if the parties to the sale assessed the property's environmental condition and cleaned up the contamination according to a plan approved by DEP or a licensed environmental professional.

The act extends this option to any abandoned or underutilized property, regardless of whether it is up for sale, if its condition discourages developers from redeveloping it (i. e. , brownfields). As under prior law, the municipality's board of finance, legislative body, or board of selectmen, as applicable, must approve the tax forgiveness and notify the DEP and DECD commissioners and the OPM secretary within 30 days after forgiving the taxes.

6 — REGULATED ACTIVITIES IN AQUIFER PROTECTION AREAS

The act sets narrow conditions under which a regulated activity must be permitted in an aquifer protection area. By law, a regulated activity is any action, process, or condition that the DEP commissioner determines involves the production, handling, use, storage, or disposal of material that may pose a threat to groundwater in an aquifer protection area, including structures and appurtenances used in conjunction with the activity (CGS 22a-354h).

Under the act, the activity must be permitted if:

1. it is conducted on a municipally owned site where the process of cleaning up hazardous waste began when the area was designated on a municipal zoning or inland wetland map;

2. the regulated activity did not substantially begin, or actively operate for five years, before the area was designated on these maps; and

3. anyone conducting the activity for 10 years, starting on the designation date, registers the activity on a DEP form, as its regulations require.

WORKING GROUP

The act establishes an 11-member working group to examine how brownfields are being cleaned up and developed in Connecticut and how permits and liability affect these activities. It requires the governor to appoint two members and the legislative leaders to appoint one each. The members must be experts in environmental law, engineering, finance, consulting, insurance, development, or other relevant fields. They must be appointed within 30 days after the act takes effect. The governor and leaders must fill any vacancies to their appointments. The act also designates the OPM secretary and the DEP and DECD commissioners, or their designees, as ex-officio members.

The members must appoint the group's chairpersons who must call the first meeting within 60 days after the act takes effect.

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