The Small Business Liability Relief and Brownfields Revitalization Action1 effective on January 11, 2000 provided amendments to the liability scheme under Comprehensive Environmental Responsibility, Compensation & Liability Act ("CERCLA"), also known as the Superfund statute.2 Thereafter, to provide significant reforms and refinancing of New York's environmental programs and to coordinate New York's environmental programs with federal initiatives, New York enacted comprehensive legislation to amend the Environmental Conservation Law (the "Act").3 The Act created the Brownfield Cleanup Programs, as discussed in Part I of the Article in the April 2004 issue, along with amendments to the New York Environmental Conservation Law ("ECL"). The amendments focus on remediation of contaminated sites, amending certain liability schemes under the Navigation Law and developing a statewide database regarding impacts to groundwater. The focus of the various amendments is to enhance the New York State Department of Environmental Conservation's ("DEC") ability to address and remediate contaminated sites and develop a strategy for future management of groundwater resources. A summary of the various significant amendments are set forth below.
Amendments To The State Superfund Program
The Act provides legislative reforms to the State Superfund Program4 initially enacted in 1979. The legislation stimulates the superfund program by authorizing up to $120 million annually to finance the program. The State Superfund Program had been essentially idling along, since it ran out of funds for remediation of new sites as of March 31, 2001. The source of the new annual funding is to be financed 50% from fees on business and industry and the other 50% from bond funds and state General Fund dollars. Previously, the program received funding from an environmental bond act approved in 1986, which resulted in a large debt service of approximately $75 million per year.
The Act expands the type of sites which will require cleanup under the State Superfund Program, by expanding the definition of hazardous waste to included all hazardous substances identified by DEC pursuant to ECL § 37-0103, except for petroleum, which is covered by the Navigation Law.5 This will allow the DEC to require cleanup at hazardous substance disposal sites in addition to hazardous waste disposal sites.
Slight differences between the CERCLA and the State Superfund Program definitions remain even after the amendments. For instance, the definition of "site" under that State Superfund Program limits the area to where the hazardous waste was disposed,6 in contrast to the CERCLA definition of "facility," which encompasses where the disposed hazardous substance has "otherwise come to be located."7 Moreover, unlike CERCLA, a "release" alone will not trigger liability, there is a requirement that DEC make a "significant threat determination" as a result of the release to trigger liability under the statute.8
The new amendments provide additional flexibility for remedy selection for sites, setting forth requirements that institutional or engineering controls shall be included as components of an approved proposed remedial work plan.9
Finally, the new amendments set forth liability exemptions and defenses consistent with CERCLA. The exemptions and affirmative defense amendments refer to sites where a "significant threat determination" has been made requiring permanent remedies. Like CERCLA, parties exempt from liability are:
1.Lenders, who do not participate in the management of the property but hold indicia of ownership primarily to protect its security interest in the property.10 This is substantially the same provision as in CERCLA provisions, enacted as part of the Asset Conservation, Lender Liability and Deposit Insurance Act of 1996. (The CERCLA amendments were enacted to address the 11th Circuit decision in United State v. Fleet Factors, 901 F.2d 1550(11th Cir. 1990)). Lenders should be aware that if they make managerial decisions while the borrower is still in possession they may be deemed a manager of the contaminated site. A list of activities that do not constitute participation in management includes monitoring or inspecting the site and conducting response actions at the direction of a regulatory agency; and
2.Municipalities that are exempt from owner or operator liability at hazardous waste disposal sites is clarified by the amendments and is similar to CERCLA 101.20(D).11 The amendments further provide that a public corporation acquiring a site involuntarily and retaining it without participating in the development of such site will not be held liable, unless it caused or contributed to the release or threatened release of hazardous waste.
The innocent landowner or third-party affirmative defenses under the new amendments are now consistent with CERCLA so that persons otherwise liable will not be held liable if they can establish that the significant threat to the environment was caused by (1) an act of god; (2) an act of war; or (3) an act or omission of a third party other than an employee or agent of such person.12 For the innocent landowner to prevail on this defense, the party must establish by a preponderance of the evidence that (1) the person exercised due care with respect to the hazardous waste concerned; and (2) took precautions against any foreseeable acts or omission of any third-party. Parties are deemed innocent landowners if they are (1) an acquiring party that had no reason to know that any hazardous waste which is the subject of a "significant threat determination" was at such site; (2) a government entity that acquired the site by escheat or other involuntary transfer; or (3) a person who inherits the property.13
The amendments to the State Superfund Program highlight New York's policies aligning its environmental remedial programs to be more consistent with the federal Superfund program and to provide funding to the DEC to implement the State Superfund Program.
Amendment To The Navigation Law - Oil Spill Act
Article 12 of the New York Navigation Law, also known as the Oil Spill Act is also amended.14 The Act amends the defenses which may be asserted against claims for discharges of petroleum. Previously, the Navigation Law only allowed a defense for persons responsible whose acts or omissions were caused by war, sabotage or government negligence.15 The Act broadens the defenses to include a third-party defense.
The third-party defense is available to any responsible party, except those with whom the discharger has a contractual relationship. To assert the third-party defense, the responsible party must establish by a preponderance of the evidence that responsible person "exercised due care with respect to the petroleum concerned, taking into consideration the characteristics of petroleum and in light of all the relevant facts and circumstances" and took precaution against the acts or omissions of a third party.16 The third-party defense is not available to a person who fails to report a discharge or cooperate and assist in DEC's cleanup.17
This amendment is a shortened version of the innocent landowner or third-party defense set forth in CERCLA § 101(35)(A)(i) and in ECL § 27-1323.4(A)(3). Because the Legislature chose to shorten rather than insert the exact same language, it may require further clarification or statutory interpretation by either the Legislature or the courts. The amendment, however, statutorily settles the issue addressed by the New York Court of Appeals in State v. Green.18
In State v. Green, the Court of Appeals held that the owner of a trailer park where kerosene spilled from an above-ground kerosene tank, which was maintained by a trailer park lessee, was liable under the Navigation Law for cleanup and removal costs; even though the owner was not directly responsible for the spill.19 The Court of Appeals reasoned that the language is sufficiently broad to include landowners who have both control over activities occurring at the property and reason to believe the tenants are using petroleum products. The Court of Appeals found that the owner had the ability to control the potential sources of contamination, including the lessee's tank, and its failure to do so, unintentional or otherwise, rendered it liable. Notably, the decision asserts the proposition that landowners are not strictly liable in all instances for petroleum discharges on their property. The Court's stated as an example "a landowner who falls victim to a 'midnight dumper', or an errant oil truck that spills fuel, would not be liable as a petroleum discharger" because the landlord could not control those events.20
Groundwater Protection Act
The new legislation also establishes the Groundwater Protection Act ("GPA").21 The GPA requires the DEC and the Department of Health ("DOH") to develop a strategy to address contaminated groundwater, including long-term remediation and protection from future degradation from contaminated sites with the goal of sustainability of groundwater resources throughout the State.22
The GPA requires DEC to create and maintain a geographic information system. The GIS is intended to incorporate information regarding groundwater from all of DEC's remedial programs, the source water assessment program collected by DOH, data from annual water supply reports, data from well logs, information from databases for easements or institutional controls, and any other data related to contaminated soils or groundwater.23 This proposed comprehensive database, may assist in coordinating actions under the various remedial programs and may provide information to responsible parties to demonstrate that the groundwater contamination at a site is related to off-site sources as opposed to on-site contamination, to limit a parties responsibility to remediate such groundwater contamination.
Conclusion
The comprehensive amendments to New York's various environmental programs, the increased funding, information gathering and database creation and the formation of the Brownfield Cleanup Program will likely have the effect of revitalizing the New York DEC's enforcement programs and policies. The intent of the Act was to address both environmental and economic concerns in amending New York's environmental policies and redevelopment of contaminated sites. The likely effect for businesses in New York is increased costs in the form of fees, record keeping and reporting and increased costs associated with remediating contaminated properties and groundwater, unless such businesses are exempt or can successfully assert the third-party defenses.1 Pub. L. No. 107-118, 115 Stat. 2345 (2002) and codified to various sections of CERCLA, 42 U.S.C. §§ 9601 et seq.
2 42 U.S.C. §§ 9601 et seq.
3 A.9120, effective October 7, 2003 and codified into various sections of New York Law.
4 Known as the Inactive Hazardous Waste Disposal Sites Act, Environmental Conservation Law ("ECL") Art. 27, Title 13.
5 ECL § 27-1301.1.
6 ECL § 27-1301.2.
7 CERCLA, 42 U.S.C. § 9601(9).
8 ECL § 27-1313.3(a).
9 ECL § 27-1323.
10 ECL § 27-1323.1.
11 ECL § 27-1323.2.
12 ECL § 27-1323.4.
13 ECL § 27-1232.4(B).
14 Navigation Law, Art. 12.
15 Navigation Law §181(4) is repealed by the Act.
16 Amended Navigation Law §181(4).
17 Id.
18 96 N.Y.2d 403, 729 N.Y.S.2d 420, 754 N.E.2d 179 (2001).
19 Id.
20 Id. at 407.
21 ECL, Article 15, Title 31.
22 ECL § 15-3105.
23 ECL § 15-3107; ECL § 3-0315.
Published May 1, 2004.
