On October 2, after the recently concluded Special Session of the Connecticut General Assembly, Gov. Ned Lamont signed House Bill No. 7001, "An Act Revising Provisions of the Transfer Act and Authorizing the Development and Implementation of a Release-Based Remediation Program" (the Public Act). Effective immediately, the Public Act adopts important changes to the Connecticut Transfer Act (C.G.S. §§ 22a-134 et seq.) (the Transfer Act) and also provisions for an eventual transition from remediation under the Transfer Act to a new release-based reporting and remediation program in Connecticut.
Connecticut is one of only two states where environmental investigation and remediation are statutorily triggered by a sale or other transfer of property or operations meeting the definition of an "establishment" under the Transfer Act. Determining whether the Transfer Act applies does not depend on whether there has been a release but rather on the volume of hazardous waste generated and whether activities before the transfer included dry cleaning operations, furniture stripping or vehicle body repair. The General Assembly has amended the Transfer Act multiple times since its enactment in 1985. These amendments have resulted in the 29 exclusions or exceptions to the definition of a "transfer of an establishment" subject to the Transfer Act. As we reported in a prior alert, Public Act No. 19-75 adopted revisions to the Transfer Act and created a legislative working group charged with recommending additional Transfer Act changes to the legislature. The Transfer Act Working Group Report to the legislature proposed consensus amendments to the definitions of an "establishment" and a "transfer of an establishment" under the Transfer Act. These consensus amendments are in the Public Act.
Sections 1 through 14 of the Public Act set forth revisions to the Transfer Act and are effective as of October 2, 2020. Definition of a Transfer of an Establishment The Public Act consolidates, clarifies and eliminates a number of the 29 exclusions from the "transfer of an establishment" definition in the Transfer Act. The revisions include (1) the exclusion of the transfer of a unit in a residential common-interest community, (2) the exclusion of transfers of ownership interests of 50 percent or less, (3) the transfer to and from municipalities using specified mechanisms, and (4) a name change for a limited liability company (LLC). In connection with the clarification of the exclusion for transfers of residential units, the Public Act revises statutory provisions setting forth the obligations of the common-interest community's declarant. Definition of an Establishment The Public Act further revises the "establishment" definition, the prerequisite for the triggering of the Transfer Act. The amendments clarify that "universal waste" is excluded from the definition of "hazardous waste" when determining Transfer Act applicability. And for industrial/commercial condominium properties and multitenant properties, the Public Act defines the extent of the regulated area requiring investigation and, as necessary, remediation to comply with the Transfer Act by reference to the footprint of the industrial/commercial unit or the areal extent of the space leased by the establishment along with any other areas within the common-interest community or the multitenant space used by the establishment as part of its operations. The Public Act further clarifies the point at which a transfer of a property will no longer trigger the need to comply with the Transfer Act.
Liability Protections
The Public Act provides certain liability protection for persons who did not create a release but properly report and clean up the release. This protection will be unavailable to a property owner if, for example, the owner fails to comply with EURs or variance requirements.
Section 22 of the Public Act provides that except with respect to the innocent landowner defense, nothing in the Public Act "shall be construed to infringe upon or otherwise limit any liability limitations or protections" pursuant to other Connecticut statutes. Within Sections 15 through 22, there are references to protections afforded because of, for example, state brownfield programs and covenants not to sue.
DEEP Regulations and Convening of a Working Group
The Public Act identifies some of the components of the regulations to be adopted by DEEP. DEEP is directed to establish tiers of releases, taking into consideration the significance, extent and potential risk of the release. The regulations will also address applicable fees and DEEP's auditing of release response activities.
Section 19(b) directs DEEP, in conjunction with the Department of Economic and Community Development, to convene a working group to provide advice and feedback on the regulations to be adopted by DEEP. This working group is to meet monthly until the regulations are adopted.
Intended goals of the transitioning from remediation under the Transfer Act program to a new release-based reporting and remediation program include the continued protection of human health and the environment; the alignment of Connecticut statutory cleanup provisions with those of other states; and benefit to the Connecticut economy as a result of increases in property transfers, property development and redevelopment, and potential expansion of existing businesses. DEEP indicates that with the new release-based reporting and remediation program, which will rely significantly on Connecticut's Licensed Environmental Professionals, DEEP will be able to better focus its limited resources on contaminated sites posing the greatest risk. Many critical details are yet to come. The potential impact of the unavoidable uncertainty and unpredictability, at least in the short term, is not clear. But in the interim, the consensus revisions to the Transfer Act in Sections 1 through 14 are available when determining the applicability of the Transfer Act to transfers of ownership interests.
If you have any questions regarding the above, please feel free to contact any of the attorneys listed in the sidebar.
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