- REAL ESTATE EDUCATION
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The Department of Environmental Conservation’s Proposed Regulations of 6 NYCRR Part 375 – Environmental Remediation Programs
April 21, 2022
The Real Estate Board of New York (REBNY) is the City’s leading real estate trade association representing commercial, residential, and institutional property owners, builders, managers, investors, brokers, salespeople, and other organizations and individuals active in New York City real estate. REBNY appreciates the opportunity to submit comments on the Department of Environmental Conservation’s proposed rules on environmental remediation programs (NYCRR Part 375).
The Brownfields Cleanup Program (BCP) has proven to be an incredibly successful program that has supported the cleanup and redevelopment of sites across New York. Since the 2015 reauthorization of the program alone, over 400 sites have participated in 40 counties throughout the State, generating more than $17 billion in economic development and creating more than 6,000 units of affordable housing.
REBNY appreciates the New York State Department of Environmental Conservation’s (DEC) efforts to administer and improve the program. To that end, we offer the following comments on the proposed regulations.
The proposed regulations generally provide DEC with greater authority to determine if a site is sufficiently contaminated such that it “requires remediation” and should therefore qualify for the BCP. Under the proposal, DEC would determine if a site is sufficiently contaminated to be eligible by considering (1) the number of samples that exceed applicable remedial standards; (2) the magnitude by which the concentrations exceed the applicable remedial standards; (3) the magnitude by which the concentrations exceed site-specific background concentrations; (4) the potential for human or ecological exposure to contaminants; and/or (5) the potential for a contaminant to migrate within or off the site or to partition into other media.
The requirements of the proposed regulation are not grounded in the authorizing statute. Specifically, the Environmental Conservation Law defines an eligible site as a site with contamination “at levels exceeding the soil cleanup objectives or other health-based or environmental standards, criteria or guidance” and
further requires that demonstration that a site requires remediation, based on the “current, intended and reasonably anticipated future land use of the site.”
The proposed regulation exceeds the requirements of the statue by adding subjective factors that could lead to sites being determined to be ineligible for the program based on subjective judgement rather than the objective statutory criteria. As a result, it would serve to limit participation in the program resulting in fewer sites benefiting from the BCP.
Site Preparation Credits:
The proposed regulations provide that the Site Preparation Credit would only be provided for the cost equivalent of covering the site with one foot of clean soil (at commercial or industrial sites) or two feet of clean soil (at residential sites) and that other, more permanent and effective forms of site cover systems (e.g., hardscapes such as concrete slabs and foundations and asphalt pavement) will not count for BCP remediation purposes. As a result, the proposed changes would limit the compensation calculation for tax credit purposes for cap/cover systems to what it would cost to cover the site in one or two feet of dirt, regardless of how much the actual cap/cover system costs.
If adopted, this proposal would significantly weaken the BCP and discourage participation in the program. Under the proposal, the applicant would not be able to claim the site preparation credit for actual material being used, reducing the site preparation credit and the amount of tangible property tax credits that can be claimed. As a result, participation in the program will become less appealing. This change is particularly harmful to Track 4 remediation projects that are common throughout the State.
Furthermore, the proposal is inconsistent with current tax law that allows a portion of foundation materials to count as remedial cover systems. By preventing foundation materials from counting toward the credit entirely, the proposed regulation is inconsistent with Tax Law.
The proposed regulation would require that a volunteer (defined in statute as an applicant not responsible for causing the contamination) may be required to perform off-site sampling to complete its qualitative assessment of off-site contamination. The Environmental Conservation Law provides that the onus of investigating and remediating off-site contamination falls upon either the responsible party or the DEC in the event they are unable to locate a responsible party. As such, these proposed amendments undermine the policy considerations of the program and are contrary to the express intent of the legislature to limit the remedial obligations of volunteers.
This proposal will also result in challenges completing cleanup and redevelopment projects in a timely manner. In addition to the added costs that will be required to undertake this work, off-site investigations often require access agreements with numerous third parties and may require taking samples from within neighboring properties’ homes or businesses. These added costs, liability, and time will discourage volunteers from participating in the program.
It is important to keep in mind that the protections that volunteer status provides to legitimate prospective purchasers have driven the assumption of remedial obligations by innocent purchasers seeking to reinvest in underserved communities disproportionately impacted by contaminated sites. Without the certainty
that remedial activities will be contained within the four corners of the BCP site, the risk of investing in brownfield projects increases. Without such participation, the State would have to rely primarily on enforcement actions to drive the remediation of brownfield sites, which are far less efficient and more costly to the general public than privately driven and financed brownfield cleanups.
Groundwater and Soil Vapor Pollution
Under current practice, projects that achieve a Track 1 soil remedy where there is residual groundwater or soil vapor contamination are granted a conditional Track 1 Certificate of Completion (COC). In doing so, sites are eligible for the largest percentage of remedial tax credits, and the extra 5% credit on tangible costs once all contaminated soil is removed from a project site and have 5 years to address the residual groundwater and soil vapor contamination. If such contamination is not addressed, projects can then be demoted to Track 2 and a portion of the tax credit can be clawed back.
Under the proposed regulations, however, sites burdened with groundwater and soil vapor pollution would be unable to access the benefits afforded to Track 1 projects. This is the case because the proposed regulation would instead grant only a Track 2 COC. While the proposed regulations consider the party requesting an upgrade to Track 1 within five years once the pollution reaches the required levels, this proposed change is unworkable as there is no mechanism to upgrade the tax credits to Track 1 levels within the current tax law.
Certification of Final Engineering Reports
The proposed regulation establishes a new limitation on qualified parties authorized to complete oversight on remediation projects by requiring that all personnel working on these projects be employed by the same company as the professional engineer retained on the project. In doing so, the proposal would limit the ability of smaller firms, including women and minority owned businesses (MWBE), to participate in the program as subcontractors or subconsultants. While there may be reasons to improve project oversight and improve the quality of submittals to DEC, including Final Engineering Reports, eliminating the ability of small firms and MWBEs to participate in the program does not accomplish that goal.
Thank you for considering these points.