Recommendations to Reform and Finance New York State’s Remedial Programs

From Riker Danzig Environmental UPDATE, August 1999.

On June 2, 1999, the Superfund Working Group established by Governor George E. Pataki issued its report and recommendations for reform of New York State.s Superfund and other remediation programs. The New York State Department of Environmental Conservation (.NYSDEC.) strongly supports the recommendations of the Superfund Working Group, which was chaired by John P. Cahill, Commissioner of NYSDEC. No schedule to implement the recommendations, however, has been set.

The Working Group focused its study and recommendations in several areas targeted for reform in New York, including statutory liability reforms, cleanup standards, and redevelopment incentives. The Working Group consisted of state environmental, public health and economic experts, municipal interests, financial experts, environmentalists and business representatives. The mission of the Working Group was to study and make recommendations about the NYSDEC.s programs to remediate contaminated sites, including the Inactive Hazardous Waste Disposal Site Remediation Program (the .State Superfund Program.), the Voluntary Cleanup Program, and the Spill Prevention and Response Program (the .Oil Spill Program.), and to make recommendations about refinancing the State Superfund Program. The Working Group made the following specific recommendations:

1. The Working Group proposed a number of significant exemptions to liability under New York.s environmental statutes:

• New York should adopt exemptions and other protections from liability for innocent parties and landowners, lenders and fiduciaries, and municipalities that acquire title involuntarily, as presently set forth under CERCLA. These exemptions and protections are currently unavailable under New York law.
• New York should provide liability protection for county industrial development agencies under certain circumstances where the agencies serve as a .conduit financier..
• New York should provide a liability exemption to prospective purchasers who conduct a remedial investigation under an agreement with NYSDEC and the Voluntary Cleanup Program.
• New York should adopt de minimis and de micromis settlement polices.
• The above liability protections should be adopted consistent with CERCLA, but include petroleum and petroleum products in addition to hazardous substances and hazardous wastes.

2. The State, through the Attorney General.s office, should provide releases from liability to all parties conducting cleanups under the State Superfund Program, the Oil Spill Program, and the Voluntary Cleanup Program for the nature and extent of contamination identified and remediated. Innocent landowners and other non-responsible parties also should be released from claims for natural resource damages.

3. The Working Group recommended that treble damages be made available to NYSDEC to be assessed against recalcitrant responsible parties who decline to act in good faith once directed to develop and implement a cleanup program.

4. Under New York.s existing state Superfund law, NYSDEC has the authority to compel responsible parties to develop and implement a remedial program for sites contaminated with hazardous waste, as defined under the State.s RCRA program, but not hazardous substances defined by CERCLA. The Working Group recommended that the State.s statutory authority be extended to all hazardous substances, consistent with CERCLA.

Cleanup Standards
The Working Group made several recommendations with respect to cleanup standards for surface water, groundwater, sediments, and soils:

The Working Group recommended that NYSDEC continue to use as remedial objectives the promulgated environmental quality standards for surface water and groundwater, the public health standards for drinking water, and guidance values for sediments and air. The Working Group also recommended that a technical advisory panel be convened to provide advice to NYSDEC on the development and promulgation of regulat ory cleanup standards for soil, which should include three tiers of cleanup standards based on future use of the site (i.e., unrestricted, commercial or industrial, and site-specific). Currently, NYSDEC.s remedial soil cleanup objectives are contained in agency guidance.

With respect to groundwater, the Working Group recommended as cleanup objectives the continued conformance to environmental and public health standards. At the same time, the Working Group recommended that NYSDEC continue to consider cost effectiveness and technical feasibility when selecting a remedy and striving to attain groundwater quality standards. Finally, the Working Group recommended that NYSDEC reissue for public comment its draft Strategy for Groundwater Remediation Decision Making, including a strategy to address groundwater contamination in urban brownfields areas where contamination is regional and pervasive and where groundwater is not a source of drinking water.

Financial Incentives
The Working Group recommended that the State adopt a brownfields policy to encourage redevelopment, that a task force of State agencies involved with contaminated properties be established to coordinate State resources and to provide assistance to municipalities and private party efforts, and that two financial incentive strategies be implemented. The Working Group did not recommend any specific new sources of funding for remediation. The Working Group recommended that:

1. The Empire State Redevelopment Corporation be empowered to develop standards, criteria, and incentives (e.g., tax incentives) to be available for use at private party sites; and

2. A financial incentive program for .Brownfield Redevelopment Areas. be established by municipalities and the State. The program would rely on existing grants to provide monies for the assessment and redevelopment of brownfields.

Under either program, incentives would be available only to parties who are not .responsible parties. under New York.s cleanup programs.

Financing the State Remedial Programs
The Working Group made recommendations regarding the funding for NYSDEC.s remedial programs. NYSDEC has estimated that, by the end of State fiscal year 2000/01, all State bond monies available to remedy inactive hazardous waste sites will be obligated and that, at the same time, 300 inactive sites will remain for which remediation will not be initiated or completed due to a lack of funding. In addition, regulatory fees and cost recovery efforts have been insufficient to support the Oil Spill Fund.

The Working Group recommended that funding for NYSDEC.s remedial programs be conducted on a pay-as-you-go basis, rather than through bonding. The Working Group recommended that the General State Fund provide, on average, 50% of the revenue needed to fund the remedial programs annually and that the remaining 50% be provided, on average, by special revenue sources. In addition to existing special revenue sources, the Working Group recommended that existing hazardous waste generator fees be increased by 50%, that a $1,000 annual fee be assessed on the approximately 12,000 generators of less than 15 tons per year of hazardous waste, that petroleum bulk storage and major oil storage facility program fees be increased, and that treble damages, oversight costs, and cost recovery funds all be used to finance the remedial programs.

Conclusion
Several of the Working Group.s recommendations, if adopted, would bring significant improvements to NYSDEC.s remedial programs, promoting fairness in allocating responsibility for site cleanups and increasing the likelihood of returning underutilized former industrial properties to their best uses. For example, the proposed liability exemptions and releases for parties conducting remediation under the Voluntary Cleanup Program would spur redevelopment of Brownfields by providing greater certainty for redevelopers. Liability protection for fiduciaries, lenders, and county industrial development agencies also would improve the range of financing available for these properties. Similarly, providing liability releases to non-responsible parties for natural resource damages claims removes another disincentive to the redevelopment of contaminated properties and properly allocates the burden of these claims to responsible parties. Finally, the Working Group.s recommendation that NYSDEC reissue a Strategy for Groundwater Remediation Decision Making that addresses cleanup objectives where groundwater contamination is ubiquitous represents an important step towards addressing this difficult aspect of New York.s efforts to address brownfield sites.