August 5, 2010
As a result of tax law provisions enacted as part of the latest New York State budget, participants in the New York State Brownfield Program who are eligible for tax credits will be required to defer credits over $2M. The Budget adopted late Tuesday (August 3, 2010) added sections 33 and 34 to the New York Tax Law, which provide for a deferral of numerous New York State tax credits, including those provided by the Brownfield Cleanup Program (“BCP”). Section 33 provides that cumulative tax credits in excess of $2 million dollars, taking into account all affected credits, will be subject to the deferral. The deferral will apply to credits that could otherwise have been claimed in tax years 2010, 2011, and 2012. While Section 34 provides that credits can be claimed beginning in tax year 2013, such payments will be without interest. Deferred refundable tax credits such as the BCP credits may be applied by claiming 50 percent of the deferred balance in tax year 2013, 75 percent of the remaining deferred refundable credit balance in tax year 2014, and the balance of the refundable credit balance in tax year 2015. The deferral affects all three categories of BCP tax credits: redevelopment, remediated brownfield real property, and environmental insurance.
Taxpayers who are subject to the deferral for multiple categories of tax credits—not just BCP credits—must allocate the $2 million not subject to deferral pro rata based on the relationship that each category of tax credit bears to the total credits that the taxpayer would otherwise have been entitled to claim.
The legislature did not act on any of the other pending proposals that had been advanced, including proposals to cap credits retroactively, restrict the eligibility to obtain qualified tangible property credits, and impose a 50% tax deferral on BCP and other tax credits.
June 23, 2010
The New York State Department of Environmental Conservation (DEC) has released a draft memorandum of agreement (MOA) between DEC and the New York City Mayor’s Office of Environmental Remediation (OER), as well as an accompanying addendum, which together provide for the two agencies’ coordinated oversight of brownfield cleanups in the five boroughs.
The MOA would assign to OER the lead role in supervision and remedy selection for certain contaminated or possibly contaminated properties within the city limits.[1] These cleanups would be conducted through the NYC Local Brownfield Cleanup Program,[2] on behalf of DEC and in accordance with DEC’s brownfield cleanup standards.[3] The MOA’s alignment of City and State cleanup programs represents a success for Mayor Bloomberg, who has sought such coordination as part of PlaNYC since the plan’s unveiling in 2007.[4]
A key element of the agreement is a declaration that DEC “does not plan or anticipate” initiating enforcement actions under state or federal Superfund statutes for sites that are remediated through the City cleanup program and pursuant to the MOA.[5]
The MOA also provides that OER may supply technical assistance to DEC for petroleum spills at sites participating in the City cleanup program, that OER must comply with certain community participation requirements, and that OER must report designated information about sites to DEC over the course of city-supervised cleanups.
DEC is accepting public comment on the proposed MOA and its addendum until Friday, July 9. DEC and OER provide additional information on the MOA and their respective brownfield cleanup programs on their websites.
Dan Mach is a summer associate at Sive, Paget & Riesel, P.C.
[1] Draft MOA, Section III.a.
[2] The Local Brownfield Cleanup Program was created by the New York City Brownfield and Community Revitalization Act, authorized by the City Council and signed by the Mayor on May 11, 2009.
[3] DEC has statutory authority to delegate its functions to local governmental entities. N.Y. Envtl. Conserv. Law § 3-0301(2)(p). Cleanup standards would be defined under the state brownfields cleanup program regulations, codified at 6 NYCRR §§ 375-1, 375-3.
[4] PlaNYC Report 46-47 (Apr. 22, 2007).
[5] Draft MOA, Section IV.a.
May 28, 2010
On May 3, 2010, the New York State Department of Environmental Conservation (“DEC”) released the long awaited revised DER-10: Technical Guidance for Site Investigation & Remediation. The document becomes effective June 18. DER-10 is DEC’s authoritative guidance on how to characterize the nature and extent of contamination at a site and how to design an appropriate work plan to investigate and remediate a contaminated site.
There have been significant changes to the laws governing contaminated site cleanup since DER-10 was first published in draft form in December 2002. The New York Brownfields Cleanup Program (“BCP”) has come into being, and significant changes have been made to the State Superfund statute and its implementing regulations, 6 NYCRR Part 375. DEC has revised DER-10 to reflect these changes, conform its guidance to the newer regulatory regime, and address concerns from the regulated community that elements of the 2002 draft version of DER-10 were unmanageable or confusing.
The revised DER-10 makes significant changes to chapters addressing remedy selection, site management, periodic review and closeout. The first chapter, containing general provisions including definitions, was also significantly revised. In Section 1.3, DEC added definitions and modified others to conform them to the BCP and the modified State Superfund and Part 375 language. For example, “engineering control” and “environmental easement” were added and cite to their regulatory definitions. See 6 N.Y.C.R.R. §§ 375-1.2(q), (p). Other definitions were deleted because they were never used in practice or were poorly defined. The revised DER-10 also better defines certain elements that are not included in the regulations. For example, day care facilities, which are not classified in the regulations, are classified as a restricted residential use in the guidance.
One of the major changes to DER-10 is in Section 1.5, which relaxes certain work plan and report certification requirements. Under the 2002 draft version, DER-10 provided that only a professional engineer licensed or authorized to practice in New York could certify work plans and reports. The revised 2010 version disposes with this restrictive language, and now creates a spectrum of persons who may prepare and certify work plans and reports, which includes: New York State licensed professional engineers; qualified environmental professionals; remedial parties; and site owners at the time of certification. While most plans and reports must still be certified by either a qualified environmental professional or NY licensed engineer, remedial parties and site owners may certify periodic review reports if they relate to land or groundwater use restrictions. The revised DER-10 also includes specific certification language, consistent with the BCP and Superfund Program that must be included on the title page of all submissions and must be fully executed when a document is submitted to DEC’s Division of Environmental Remediation for approval.
Chapter 4 provides the framework for remedy selection and the means and methods to identify, evaluate and select a remedy or alternative remedies to address the contamination at a site. The section provides detailed reporting and documentation requirements based on whether the site is in the Superfund program (state or federal), BCP, Environmental Restoration Program, Voluntary Cleanup Program, or petroleum spills program. It also provides DEC’s Remedial Action Objectives (“RAOs”) and preference hierarchy for removing and containing identifiable sources of contamination – removal and/or treatment at the top; treatment of source at point of exposure at the bottom. See 4.1(d).
Chapter 6 has been significantly revised; sections 6.1 (Site Management), 6.2 (Site Management Plan), and 6.3 (Periodic Review) were added. Site management, the last phase of the remedial program, commences once a Certificate of Completion (“COC”) or closure letter is issued. DER-10 describes necessary activities for proper and effective site management, including inspections by the person responsible for site management and reporting of all results in a periodic review report. The guidance requires that design, implementation, periodic review, and closeout of site management are described in a Site Management Plan (“SMP”); DEC’s website will provide a template for the SMP.
DEC also decided to rescind some TAGMs (Technical and Administrative Guidance Memoranda) developed in the 1980s and 1990s and incorporate the substance of those TAGMs into DER-10. For example, fugitive dust will no longer be monitored pursuant to a TAGM; instead, a fugitive dust and particulate monitoring program has been included as Appendix 1B in the revised DER-10. Consolidating these TAGMs into DER-10 will facilitate access to these materials for the regulated community.
DEC is planning to host a training session in Fall 2010 to answer questions and help the public understand the changes in DER-10. Notice of the meeting will be posted on DEC’s website, and DEC will solicit questions and comments prior to the meeting.
April 20, 2010
DEC recently released its proposed DER-32: Brownfield Cleanup Program Applications and Agreements, which sets forth DEC guidance on the New York State Brownfield Cleanup Program (“BCP”) application process and sets forth the terms and conditions to be included in all Brownfield Cleanup Agreements (“BCAs”). Notable aspects of the draft policy include the following:
- The draft policy clarifies that applications should not be submitted until the Applicant is “ready, willing and able” to advance the remedial project, which DEC defines as being prepared to enter into a BCA within 100 days of submitting the application. BCAs must be signed within 60 days of receipt from DEC, or the application is considered withdrawn without prejudice and the acceptance into the program rescinded.
- The BCP requires Volunteers (i.e., parties not responsible for the contamination at a proposed BCP site) to conduct a limited off-site investigation, but does not require off-site remediation if such contamination is identified. Participants (i.e., parties responsible for the contamination), however, are required to conduct off-site remediation. DEC’s draft policy document requires that, for sites at which there are multiple Applicants and one is a Participant, all Applicants (even those who are Volunteers) will be treated as Participants – DEC will not structure the BCA to clarify that only the Participants have a responsibility for off-site remediation.
- The draft policy explains that DEC has specified that the terms and conditions of the BCA include the schedules set forth in work plans; accordingly, “the failure to initiate, proceed with, or complete the remedial program in accordance with its schedule is cause to terminate the BCA.”
A copy of the proposed policy is available here. DEC is accepting comments on the draft until April 30, 2010.
April 9, 2010
DEC recently released its proposed policy document DER-31: Green Remediation, which sets forth DEC’s preference for remediating sites in a way that promotes sustainability. The new policy would apply to the investigation and remediation of sites under DEC’s Spill Response Program, the Inactive Hazardous Waste Disposal Site Remedial Program, the Environmental Restoration Program, the Brownfield Cleanup Program and the Voluntary Cleanup Program. It would apply to all activities at new sites and to subsequent phases of investigation or remediation at sites currently in those programs.
The draft identifies the major green concepts to be considered, which include reducing greenhouse gas (“GHG”) emissions, increasing energy efficiency, reducing waste and increasing recycling, and maximizing habitat value and creating habitat where possible. In addition, DEC identifies specific techniques that could be employed to “green” a remedial option, such as utilizing clean diesel to reduce emissions, incorporating green building design and utilizing native vegetation to reduce water usage. DEC repeatedly emphasizes that concepts of green remediation cannot be used to justify the “no action” alternative or to support a less protective remedy.
Notably, for state-funded cleanups, DEC would now require the use of renewable energy and/or the purchase of renewable energy credits to offset 100% of the electricity required to implement a remedy. For other remedial projects, DEC would “strongly encourage[e]” compliance with this requirement, unless a site-specific evaluation demonstrated that it was impracticable or favored an alternative green approach.
All remedial alternatives analysis and decision documents would be required to describe those green remediation principles considered in the remedy selection process. In addition, such documents would now have to include an analysis of GHG emissions and options to minimize such emissions. Final engineering reports would also need to include a discussion of the green remediation techniques utilized in the remedial program.
A copy of the proposed policy is available here (pdf). DEC is accepting comments on the draft until April 30, 2010.
February 23, 2010
On February 18, 2010, New York’s highest court held in Lighthouse Pointe Property Associates LLC v. New York State Dep’t of Envtl. Conservation, — N.E.2d –, 2010 WL 546058 (N.Y.), 2010 N.Y. Slip Op. 01377 (Feb. 18, 2010) (“Lighthouse”), that the New York State Department of Environmental Conservation (“DEC”) improperly excluded property in Monroe County from the Brownfield Cleanup Program (“BCP”). DEC contended that the property was not eligible for the program because the level of contamination was not sufficiently high to warrant admission into the BCP.
Rejecting DEC’s argument, the Court emphasized the expansive nature of the BCP statute, which defines eligible property, or a brownfield, as “any real property the redevelopment or reuse of which may be complicated by the presence or potential presence of a contaminant.” N.Y. Envtl. Conserv. L. § 27-1405. The Court noted that this “low eligibility standard” is “consistent with the statute’s legislative history,” which evinces the statute’s aim of remedying development disincentives arising from strict, joint, and several liability for environmental cleanups. The Court declined to remit the matter to DEC for further consideration, and ordered the property admitted into the BCPbased on the extensive record supporting eligibility.
The Court of Appeal’s decision in Lighthouse is consistent with three recent brownfield decisions in which the Appellate Division struck down DEC’s efforts to exclude property from the BCP based on factors not provided in the BCP statute. In HLP Properties, LLC v. New York State Dep’t of Envtl. Conservation, — N.Y.S.2d –, 2010 WL 455321 (1st Dep’t Feb. 11, 2010) (“HLP”) and East River Realty Co., LLC v. New York State Dep’t of Envtl. Conservation, 68 A.D.3d 564, 891 N.Y.S.2d 359 (1st Dep’t Dec. 17, 2009) (“ERRC”), the First Department rejected DEC’s argument that the property in question did not meet the eligibility criteria for a “brownfield” because the site would have been remediated even without participation in the BCP. In Destiny USA Dev., LLC v. New York State Department of Envtl. Conservation, 63 A.D.3d 1568 (4th Dep’t June 5, 2009) (“Destiny”), the Fourth Department rejected DEC’s efforts to exclude property from the program based on non-statutory economic factors set forth in a DEC guidance document.
The Lighthouse decision reflects that New York courts will properly ensure that DEC follows statutory mandates and will invalidate improper exclusion of properties from the BCP.
SPR represented HLP and ERRC in connection with their challenges to DEC’s exclusion of their property from the BCP. For more information, please contact Daniel Riesel, Mark Chertok, Jeff Gracer, or Michael Bogin.
February 16, 2010
On Wednesday, February 11, the First Department of the New York State Supreme Court, Appellate Division, held for the second time that the Department of Environmental Conservation (“DEC”) improperly excluded a Manhattan property from the Brownfield Cleanup Program (“BCP”) HLP Properties, LLC v. New York State Department of Environmental Conservation, — N.Y.S.2d —-, 2010 WL 455321 (1st Dept. Feb. 11, 2010) (“HLP”).
As it has argued in several cases, DEC contended that the property in question did not meet the eligibility criteria for a “brownfield” because the Site was already subject to a voluntary cleanup agreement. In a unanimous decision, the Court held that DEC had “improperly departed from statutory criteria,” noting that this result was “compelled” by its recent decision in East River Realty Co., LLC v. New York State Department of Environmental Conservation, 68 A.D.3d 564, 891 N.Y.S.2d 359 (1st Dept. 2009) (“ERRC”), which rejected such arguments by DEC. As it had held in ERRC, the First Department also held that remand to DEC for a new determination was unnecessary in light of the extensive record before it.
HLP represents the third consecutive Appellate Division decision striking down DEC’s efforts to exclude properties from the BCP based on extra-statutory factors. See also Destiny USA Dev., LLC v. New York State Department of Environmental Conservation, 63 A.D.3d 1568 (4th Dept. 2009) (“Destiny”).
The Court of Appeals will soon address related issues in a different context, having recently heard oral argument in an appeal where DEC’s exclusion of property was upheld based on DEC’s conclusion that the contaminants at issue did not exceed levels that would require remediation. Lighthouse Point Property Assocs. v. New York State Department of Environmental Conservation, 61 A.D.3d 1438 (4th Dept. 2009). HLP, ERRC, and Destiny all involved sites where the contaminant levels were significantly above DEC’s remediation standards, and where DEC conceded that remediation was necessary.
SPR represented HLP and ERRC in connection with their challenges to DEC’s exclusion of their property from the BCP. For more information, please contact Daniel Riesel, Mark Chertok, Jeff Gracer, or Michael Bogin.
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