March 24th, 2015
A two-year effort to extend the state Brownfield Cleanup Program (BCP) reached fruition when Governor Andrew Cuomo and both houses of the Legislature struck a deal on sweeping reforms to the BCP. The legislation may be viewed here. The compromise addressed the concerns about the costs of the BCP but limited some of the more draconian aspects of the Governor’s proposed legislation. Two key definitional terms remain to be addressed so the true impact of the changes will not be known until later in the year.
The principal changes are as follows:
1. Tangible Property Tax Credit (TPCC) Gates-Governor Cuomo prevailed on his proposal that BCP applicants will only be eligible to claim the tangible property tax credit (TPCC) if their projects fall into one of the three categories: Sites that are at least 50% located within Environmental Zones, sites that meet the upside-down test or sites that qualify as affordable housing projects. However, the so-called gates apply to sites in cities with a population of more than one million (i..e, New York City) so applicants for sites located outside New York City will still be entitled to the TPCC as of right when they are accepted into the BCP. Applicants for NYC sites will have to submit information sufficient to demonstrate it qualifies for one of the TPCC gate criteria.
The “upside-down” gate includes an “under-utilized” TPCC gate. This term as well as the term “affordable housing” project will be defined in regulations to be issued by DEC. Thus, key terms for two of the three gates are undefined.
A site is not eligible for the TPCC if NYSDEC has determined that the property has previously been remediated pursuant to the RCRA corrective action program, the state superfund program, the BCP, the Environmental Restoration Program and the Navigation Law and where the site may be developed for its then intended use.
2. TPCC Percentage Changes- The TPCC base percentage for sites accepted into the BCP on or after July 1st shall be ten percent for all eligible sites. Applicants shall be entitled to an additional 5% for sites: in the En-Zone at the date of the notice of acceptance, that achieve track 1 cleanup, that are to be used “primarily” for manufacturing activities projects, that are developed for affordable housing project, or are located in a brownfield opportunity area (BOA) provided the project complies with the is developed in conformance with the goals and priorities established for that applicable BOA. Applicants seeking to qualify for the BOA tax credit enhancement will have to submit a certification from the secretary of state that the development is in conformance with such brownfield opportunity area.
3. Site Preparation Limitations– The governor also prevailed on a revised definition of site prep so that costs will only be eligible for the site preparation tax credit (SPC) if they are incurred to implement the remedy. In other words, if an applicant excavates a site to a depth of 15 feet to accomodate its building design but only the first five feet are contaminated, only those costs associated with the five feet of excavation would be eligible for the SPC. This in turn would lower the “soft cap” for the TPCC since the soft cap is 3x the SPC.
4. Eligible Sites– Class 2 sites and RCRA sites will now be eligible for the BCP where the applicant is a volunteer and DEC has determined no financially viable party is available.
5. Brownfield Site Definition- applicants must now show that the sites have contamination that requires remediation. In other words, some sampling data will have to accompany the application. Sites impacted by off-site contamination (e.g., vapor intrusion, groundwater) will be eligible for the BCP but the applicants of those sites will not be eligible for the TPCC. However, they will be eligible to claim the SPC.
6. COC Dates– Sites that were accepted into the BCP prior to the 2008 amendments would have to obtain a COC by 12/31/17. Sites accepted into the BCP before the effective date of the 2015 amendments will have to obtain COCs by 12/31/19. Sites accepted under the new program will have to obain COCs by 03/31/26.
7. Effective Date– The changes will become effective on July 1st though if DEC fails to publish its under-utilized definition by this date, the start date for the new program will be pushed back to the date the proposed regulations are published. While DEC is required to publish its affordable housing project definition by June 8th, the effective date for the BCP changes will not be delayed if DEC misses this target date.
Applicants who want to be grandfathered under the current program– perhaps because their sites would not qualify for one of the new gates– will need to obtain a notice of acceptance from the DEC prior to July 1st. Since applications must undergo a 30-day public comment period and DEC usually takes one to two weeks to issue a notice of acceptance after the public comment period, an application will have to be published no later than the May 13th Environmental Notice Bulletin (ENB) to be able to be grandfathered under the current program. This, in turn, means requests to participate in the BCP will have to submitted to DEC no later than May 1st to complete the ten-day application complete determination in time for the May 13th ENB.
8. Oversight Costs– Volunteers will not be charged oversight costs after July 1st. Participants must pay NYSDEC for past response costs incurred before the effective date of such agreement provided that such costs may be based on a reasonable flat-fee for oversight, which shall reflect the projected future state costs incurred in negotiating and overseeing implementation of such agreement.
9.BCP–EZ- NYSDEC is authorized to promulgate regulations to establish a BCP-EZ program for expedited investigation and remediation of sites that do not pose a significant threat. The applicant must waived its rights in writing to any tax credits and the work satisfies the technical requirements of Part 375. For parties seeking to implement a Track 4 cleanup where the soil cleanup objectives, site-specific data may be used to demonstrate that the contaminant concentrations are consistent with background levels. In such cases, the remedial objectives may be set at such levels provided the NYSDEC determines that the levels are protective of human health and the environment. Parties that comply with the BCP-EZ will be entitled to a COC;
10. Hazardous Waste Program Fee Exemption– The exemption for the program fee for remediation waste that qualifies as a hazardous waste is extended to cleanups performed pursuant to an oversight document with EPA or with a municipality that has entered into a memorandum of agreement as of August 5, 2010;
11. Miscellaneous Provisions-
- The NYSDEC may reject an application if the person seeking to enroll in the BCP was terminated from a NYSDEC remedial program by NYSDEC or a court for failing to substantially comply with an order or NYSDEC oversight agreement;
- The NYSDEC will now have 30 days to determine if an application is complete;
- Likewise, DEC will now have 45 days from receiving a complete application to notify the applicant if the request is either for participation has been accepted and if the applicant meets the criteria for the tangible property tax credit;
- COCs may only be transferred to subsequent legal or equitable title holders, or leasehold of all or a portion of the brownfield site but may not be transferred to a responsible party. The current law simply refers to the applicant’s successors or assigns;
- COCs may be revoked or modified if DEC determines that the applicant made a misrepresentation of material fact concerning its status as a volunteer or its eligibility for the tangible tax credits;
- The liability release not only applies to successors and assigns of the applicant bur now specifically extends to lenders who acquire indicia or ownership primarily to protect the lenders’ security interest in the brownfield site after the effective date of the brownfield site cleanup agreement for the site;
- NYSDEC may waive local permit requirements to implement an investigation and/or remediation of contamination at or emanating from a brownfield site. Current law did not extend to off-site contamination;
- NYSDEC is authorized to have access to sites to ensure compliance with site management plans, verify site use and to collect samples;
- An applicant shall include with every report submitted to the department a schedule for the submission of any subsequent work plan required to meet the requirements of this title;
- Environmental easements must be executed at least three months prior to the anticipated issuance date of the COC or within 180 days of the start of the remedial program;The Department of Labor is required to update the En-Zones within 90 days of the effective date of the law.