Is this the end of the Connecticut Transfer Act?
Good News for Our Clients!
Connecticut legislative actions have set the groundwork for sunsetting the Property Transfer Act and replacing it with a new release-based environmental cleanup program. Meanwhile, updates to the Transfer Act increase the number of sites excluded from the program and reduce the scope of investigation/remediation for certain sites. Owners and prospective purchasers hope that once the released-based program is fully adopted, there will be more certainty and less perceived risk in Connecticut property transactions. This should open opportunities for deals at numerous sites, previously affected by the Transfer Act, from which developers had previously shied away.
A Stumbling Block for Connecticut Real Estate
The Transfer Act governs the transfer of hazardous waste sites in the state and has two broad purposes:
- to disclose environmental conditions prior to transfer of a business or property meeting the definition of an establishment, and
- to regulate post-transfer investigation and remediation of environmental conditions, i.e., contamination.
The Transfer Act is seen by many as casting too wide a net and capturing parties which are not subject to the law’s intent. Many commercial and some residential properties fall into the program, not just factories and mills. Owners may refrain from selling potential establishments while buyers may find it easier to purchase property in a different state. Also, the extent of contamination and associated cost to remediate is often poorly defined at the time of the transaction, leading to increased uncertainty and risk. Compounding this uncertainty is that the Connecticut Department of Energy and Environmental Protection (DEEP) reserved the right to commence an audit up to three years following a verification by a Licensed Environmental Professional (LEP) that the site meets applicable state standards.
Recent Legislative Improvements
Public Act 19-75 was signed by Gov. Lamont and became effective in October 2019. The act provides additional exclusions for businesses and properties that would otherwise have been required to comply with the Transfer Act including exclusion for ‘one-time’ hazardous waste generators and reduced obligations for multi-tenant properties where not all tenants were generators. P.A. 20-9 of the September 2020 Special Session of the Connecticut General Assembly made additional changes to the Transfer Act and authorized DEEP to draft regulations that, once adopted, will sunset the Transfer Act and create a new release-based cleanup program, aligning Connecticut with systems used by 48 other states. Under the new program, investigation and remediation obligations will no longer be tied specifically to transfer of specific property types. The obligation to clean up contamination will fall upon any person who creates or maintains a release. In order for the release-based program to become implementable, DEEP must adopt, amend and repeal regulations to administer the program.
GEODesign Can Help
GEODesign is fully equipped with the expertise to assist our clients in navigating the maze of Connecticut environmental regulations including the Transfer Act and the future release-based program. We provide a full suite of environmental and engineering consulting services from property acquisition due diligence to remedial design and implementation. Please contact GEODesign for any questions or assistance.