During 2004, the State of Delaware has enacted significant new legislation designed to promote brownfields development and to fund environmental improvement projects. Other legislation that would have instituted mandatory recycling failed to gain passage in the General Assembly. On the administrative front, DNREC issued a regulation governing "chronic violators" that was several years in the making. A description of these new developments is set forth below.
I. The Brownfields Development Program Act.
On August 3, 2004, the Governor signed Senate Bill No. 328, known as the "Brownfields Development Program Act" (the "Act").[1] This legislation updates existing Delaware brownfields laws by extending certain liability protections to developers of properties that the Secretary of the Department of Natural Resources and Environmental Control ("DNREC") has certified as brownfields.[2] This law also provides for a "brownfields development agreement," which is distinct from the prospective purchaser and other agreements already permitted under the Delaware Hazardous Substance Cleanup Act.[3] Additionally, the Act modifies the Delaware Economic Development Office ("DEDO") matching grant program, which helps to underwrite the costs of environmental assessment and remediation of certified brownfields.[4]
A. Liability Protection for Brownfields Developers.
Under the Act, brownfields developers who undertake the redevelopment of certified brownfields pursuant to a brownfields development agreement[5] with DNREC will be insulated from liability for pre-existing environmental conditions if certain criteria are met.[6] Generally, the criteria include that: (1) the brownfields developer has submitted a plan or plans for approval by DNREC to address the actual or perceived presence of hazardous substances at a site; and (2) any land disturbing activity by the brownfields developer at the site areas has been performed in accordance with the plan as approved by DNREC.[7] The liability protection is not absolute, because any brownfields developer "who causes any exacerbation of the existing environmental condition" may be responsible for costs of mitigating the effects of the exacerbation.[8] Other similar pitfalls exist in the Act, which should lead a cautious developer to seek the advice of counsel before embarking on any brownfields redevelopment project.
B. Increase of Matching Funds for Individual Brownfields Sites.
Section two of the Act authorizes DEDO to increase the size of a matching grant for a single brownfields site. DEDO now may approve grants in amounts up to $100,000 (increased from $50,000), but not to exceed 50% of assessment and remediation costs.[9] The maximum amount available for all DEDO grants during a single year to assist with the costs of environmental assessment and remediation at certified brownfields sites remains $1 million.[10]
The Act imposes a new restriction that all matching grants for brownfields assessment or remediation must be devoted to projects within the State of Delaware that meet one of the three purposes of the Delaware Strategic Fund.[11] Those purposes include: (1) retention or expansion of existing firms; (2) recruitment of new firms; and (3) formation of new businesses.[12]
II. Community Environmental Project Fund.
The General Assembly passed, and on February 3, 2004 the Governor signed into law, House Bill No. 192, the Community Environmental Project Fund bill (the "CEPF Bill").[13] Prior to enactment of the CEPF Bill, all civil and administrative penalties collected in environmental cases were appropriated in their entirety to the Penalty Fund Account, and could be used by DNREC to carry out its general environmental programs.[14] The CEPF Bill appropriates to a new fund 25% of the civil and administrative penalties collected by DNREC and requires that all moneys within the new fund be applied to Community Environmental Projects.[15] With certain exceptions, penalty funds are to be expended on projects in the same community where the violation occurred.[16] A Community Environmental Project may be undertaken for a variety of purposes, including: "pollution elimination, minimization, or abatement; . . . or improving conditions within the environment so as to eliminate or minimize risks to human health; or enhancement of natural resources for the purposes of improving indigenous habitats or the recreational opportunities of the citizens of Delaware."[17]
III. Chronic Violator Regulation.
On March 11, 2004, a regulation went into effect that defines criteria and establishes a process for determining when a facility or party regulated by DNREC should be declared a "chronic violator" (the "Regulation").[18] Generally, a chronic violator is an individual or entity that has been unable to maintain compliance with, or has willfully neglected or disregarded, Delaware environmental permits, laws or regulations ("Chronic Violator").[19] The Regulation implements the chronic violator legislation that was enacted in 2001.[20]
Initiation by DNREC of the chronic violator review process can be discretionary or mandatory. At any time, DNREC may, in its discretion, initiate a review of a regulated facility or party to determine if the facility or party is a Chronic Violator.[21] However, DNREC must review a facility or party under certain specified conditions.[22] If DNREC undertakes a review, it will notify the facility or party being reviewed and publish a public notice stating that a review has commenced and the reason for the review.[23] When making a determination of Chronic Violator status, DNREC must consider several criteria, such as the nature and extent of harm caused, the duration of noncompliance, and the number of violations.[24] In addition to the specified criteria, DNREC may consider other relevant and reliable information.
If, after examining the specific criteria enumerated in the Regulation, along with other relevant and reliable information, DNREC determines that a regulated facility or party is a Chronic Violator, DNREC will notify the chronic violator and will publish a public announcement of this determination.[25] Among other terms, the public announcement will summarize the penalties, limits, requirements or restrictions being imposed on the Chronic Violator.[26] DNREC has discretion to prescribe the form and number of penalties and restrictions to be imposed on a Chronic Violator. The more severe penalties permitted by the Regulation include: (1) denial, modification, suspension or revocation of a permit; and (2) the requirement of capital improvements and imposition of associated performance standards.[27] DNREC also may impose a fine of up to $10,000 for each day of violation.[28]
The Regulation also specifies a process by which a person or facility may seek de-listing as a Chronic Violator.[29] First, the Chronic Violator must petition DNREC for removal of the Chronic Violator designation.[30] The petition must: (1) demonstrate directly, or through an audit conducted by a third party, compliance with DNREC imposed limits, requirements or restrictions; (2) describe the actions taken to prevent future violations of the kind that led to the Chronic Violator designation; and (3) identify other violations that have occurred since the party was determined to be a Chronic Violator.[31] Second, DNREC must issue a public notice announcing the de-listing petition and request public comments.[32] Finally, DNREC will review the petition for completeness and inspect the facility for compliance before issuing a final decision regarding removal of the Chronic Violator designation.[33]
IV. Senate Bill No. 245 - Recycling.
On June 16, 2004, the Delaware Senate passed Senate Bill No. 245; however, after two amendments to the bill were introduced in the House, the bill was not put to a final vote, and, therefore, was not enacted in the 142nd session.[34] The bill would have mandated a statewide recycling program and established targeted waste diversion rates for the State. Under the provisions of the amended bill, the Delaware Solid Waste Authority ("DSWA"), or its successor agency, would have been required, by July 1, 2007, to achieve a total diversion rate for residential solid waste of 30% and a total diversion rate for all other solid waste of 50%.
*Mr. Drane is a partner in the Wilmington, Delaware law firm of Potter Anderson & Corroon LLP. Mr. Skouvakis was a summer associate with the firm in 2004, and will be joining the firm as an associate in 2005. The views expressed in this article are those of the authors alone and may not reflect the views of Potter Anderson & Corroon LLP or its clients.
[1] S.B. 328, 142nd Gen. Assem., 2nd Sess. (Del. 2004).
[2] See DEL. CODE ANN. tit. 7, § 9125(a)
[3] DEL. CODE ANN. tit. 7, § 9123(2); see also 7 Del. C. § 9105(f).
[4] Act. §§ 1,2, codified at DEL. CODE ANN. tit. 29, § 5028(a)(4), (c).
[5] There are public notice requirements for DNREC if the department enters into negotiations for a brownfields development agreement. See Act at § 4.
[6] Id.
[7] Id.
[8] Id.
[9] Id. at § 2.
[10] DEL. CODE ANN. tit. 29, § 5028(a)(4).
[11] Act at § 1.
[12] See DEL. CODE ANN. tit. 29, § 5028(a)(1) – (3).
[13] H.B. 192, 142nd Gen. Assem., 2nd Sess. (Del. 2004) (codified at DEL. CODE ANN. tit. 7, §§ 6005, 6041 (2004)).
[14] See 7 DEL. CODE ANN. tit. 7, § 6005(d).
[15] DEL. CODE ANN. tit. 7, § 5028(a)(4).
[16] DEL. CODE ANN. tit. 7, § 6041(d).
[17] DEL. CODE ANN. tit. 7, § 6041(c).
[18] DNREC Secretary's Order No. 2004-A-0004, 7 DE Reg. Issue 9 (03/01/04).
[19] Chronic Violator Regulation, C.D.R. 70-100-286 § 3.1, 4.0 (2004).
[20] 73 Del. Laws Ch. 117 (2001).
[21] Id. at § 5.1.
[22] Id. at §§ 5.2.1, .2.
[23] Id. at §§ 6.1, .2.
[24] Id. at §§ 7.0-9.0.
[25] Id. at §§ 10.1, .2.
[26] Id. at § 10.2.
[27] Id. at §§ 11.1.1, .3.
[28] Id. at § 11.3.
[29]Id. at § 12.0.
[30]Id. at § 12.1.
[31] Id. at §§ 12.1-12.1.3.
[32] Id. at § 12.2.
[33] Id. at §§ 12.5, .6.
[34] S.B. 245, 142nd Gen. Assem., 2nd Sess. (Del. 2004).