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Kentucky Brownfields Redevelopment Program Encourages Property Redevelopment by Limiting Cleanup Liability of Owners of Contaminated Properties

House Bill 465, which was passed by the General Assembly during the 2012 regular session, established the Kentucky Brownfields Redevelopment Program. HB 465, now codified as KRS 224.1-415, limits the liability of property owners to perform site characterization and corrective action at properties where a release or potential release of petroleum, or a release of a hazardous substance, has or may have occurred. The new legislation provides relief from liability for both prospective and retrospective property acquisitions so long as the program’s requirements are met.

Proposed regulations offer liability protection

The Division of Waste Management (DWM) filed proposed regulations implementing the Brownfields Redevelopment Program with the Legislative Research Commission on Sept. 13, 2013. The proposed regulations establish the requirements for purchasers of contaminated or potentially contaminated property to receive liability protection from DWM under the Brownfields Redevelopment Program. Generally, the release or potential release must have occurred prior to the owner’s acquisition of the property, the owner must have made all appropriate inquiries into previous ownership and uses of the property, provide all legally required notices, comply with all land use restrictions applicable to the property, and comply with information requests from DWM. In order to be eligible to participate in the program, the property owner can have no affiliation with any person who is liable or potentially liable for the release.

Program eligibility

DWM’s proposed regulations outline the process and procedures for obtaining determination that a property and owner are eligible to participate in the program. An application must be made to DWM, which includes the following:

  1. a completed Brownfield Liability Relief Eligibility Form, DEP 6056;
  2. a copy of the most recent recorded deed for the property;
  3. a property management plan;
  4. an application fee of $2,500; and
  5. documentation that the applicant made all appropriate inquiries into the previous ownership and uses of the property in accordance with 40 CFR Part 312 or generally accepted practices.

Within 30 days of submission of a complete application, DWM will issue either:

  1. a Notice of Eligibility;
  2. a Notice of Concurrence; or
  3. a final determination that the application fails to meet the requirements of KRS 224.1-415.

Notices of Concurrence and Eligibility

A Notice of Concurrence will be issued to current owners of the property if DWM concurs that the intended future use of the property will not interfere with the remediation of the contamination, increase the impacts of the release on human health or the environment, or expose the public and environment to unacceptable harm. The Notice of Concurrence will provide that the applicant “shall not be liable for performing characterization, correcting the effects of the release of petroleum, a hazardous substance, or pollutant or contaminant on the environment, or performing corrective action pursuant to KRS 224.1-400 or 224.1-405.”

An applicant who receives a Notice of Concurrence must also comply with the terms of the property management plan, which must be approved by DWM. The Notice of Concurrence applies to all releases certified by the applicant in the application as well as releases or evidence thereof discovered subsequent to the acquisition of the property by an applicant who has been issued a Notice of Concurrence. However, the applicant must timely notify DWM in writing of the release and certify that the release was not caused by the applicant, if the release is not covered by the applicant’s certification in the original application.

A Notice of Eligibility provides the same liability protection as a Notice of Concurrence; however, these letters will be issued to future property owners who do not yet hold legal title to the subject property.

Property management plan requirements

DWM’s proposed regulations also outline the requirements for property management plans. At a minimum, the property management plan must include:

  1. a description of the historical and current use of the property;
  2. a description of the intended future use of the property;
  3. all available information related to known releases of petroleum and hazardous substances, pollutants or contaminants and the potential presence or perceived presence of a release that occurred prior to the acquisition of the property;
  4. a map that identifies the location of all known hazardous substances, pollutants, contaminants or petroleum on the property;
  5. a map that identifies known locations on the property where usage, processes or activities that occurred prior to the acquisition indicate the potential or perceived presence of a release;
  6. a description of all engineering controls, institutional controls, site characterization activities or remedial actions;
  7. a description of the methods employed and data collected to ensure that the property use will not interfere with the remediation of the release, increase the impacts of the release on human health and the environment or expose the public and environment to unacceptable harm; and
  8. a certification statement from a professional engineer or professional geologist that the property management plan meets the requirements.

Although the proposed regulations implementing the Brownfields Redevelopment Program were recently filed, DWM has already been making use of the program. Current or prospective owners of contaminated or potentially contaminated properties should strongly consider making use of the liability protections afforded by the program. Public comments on the draft regulations will be accepted through Oct. 31, 2013.

If you have questions about how this program may affect you or your business, please contact a member of the Environmental and Natural Resources Practice Group at Bingham Greenebaum Doll LLP.

DISCLOSURE REQUIRED BY CIRCULAR 230. This Disclosure may be required by Circular 230 issued by the Department of Treasury and the Internal Revenue Service. If this article, including any attachments, contains any federal tax advice, such advice is not intended or written by the practitioner to be used, and it may not be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. Furthermore, any federal tax advice herein (including any attachment hereto) may not be used or referred to in promoting, marketing or recommending a transaction or arrangement to another party. Further information concerning this disclosure, and the reasons for such disclosure, may be obtained upon request from the author of this article. Thank you.

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