During the waning hours of the legislative session, the Washington State Legislature passed Substitute Senate Bill 5296 (SSB 5296) by large majorities and Governor Inslee signed the bill without changes. The final bill was a compromise that merged two earlier bills.
The amendments in the final SSB 5296 include a variety of important policy changes to the Model Toxics Control Act, RCW 70.105D (MTCA) and is the most significant revision to MTCA in many years. SSB 5296 includes provisions to make large brownfield projects easier to finance and perform, protect MTCA’s dedicated accounts from being swept for non-cleanup purposes, require the Department of Ecology (Ecology) to develop model remedies, and increase Ecology’s accountability to the Legislature for results.
To date, Ecology has rarely exercised its discretion to establish model remedies for certain types of routine cleanups. SSB 5296 removes this discretion and directs Ecology to establish model remedies for common types of sites, hazardous substances, types of media (e.g., soil, groundwater), or geographic areas.
One of the most creative provisions of the new law directs Ecology to actively solicit proposals for model remedies from “qualified persons.” If such a person presents a proposal for a model remedy, Ecology must consider it. The express purpose of model remedies is to “streamline and accelerate the selection of remedies for routine types of cleanups….” Ecology is to develop the model remedies through the rulemaking process. No later than November 1, 2016, Ecology must report to the governor and the Legislature regarding its progress in developing model remedies and whether model remedies have been successful in accelerating cleanups. If a site qualifies for a model remedy, Ecology and the potentially liable parties (PLPs) do not have to engage in the feasibility study stage of the cleanup process.
Developing model remedies and completing the associated rulemaking will not be a fast process. Ecology’s track record is to take several years to develop significant amendments to the MTCA rules, Wash. Admin. Code Ch. 173-340. Determining what types of sites, media, areas and contaminants qualify for model remedies and what the model remedies for those should be will be the subject of discussion in the rulemaking process and will likely be controversial.
An issue to watch for is whether Ecology takes overly cautious positions regarding model remedies and develops conservative remedies that are costly and fail to provide the efficiency the Legislature was seeking. There will likely be significant controversy regarding how Ecology solicits and considers model remedy proposals from “qualified persons.” Theoretically, a private PLP at any site may propose a model remedy for any site, and Ecology must consider it.
SSB 5296 creates incentives for additional brownfield development projects by providing additional funding mechanisms and local government authorities.
The new law defines “brownfield property” as “a previously developed and … abandoned or underutilized real property” where contamination at the property hinders use or reuse of the property. Brownfield properties may include adjacent surface water and sediment. The new law creates the Brownfields Redevelopment Trust Fund (BRTF), which provides a new public fund source that may be used to conduct cleanups in Redevelopment Opportunity Zones (Redevelopment Zone) under a plan approved by Ecology. Redevelopment Zones are geographic areas within the jurisdiction of a local government that meet specific criteria designed to group brownfield properties together and integrate cleanup with local land use planning. Redevelopment zones may be designated by a city, county or port district and may include local, government-owned property and private property, where the landowner agrees to be included in the Redevelopment Zone.
In addition to BRTF funds, SSB 5296 also authorizes Ecology to direct dedicated MTCA account funds to assist prospective purchasers with the costs of cleanup if the property is within a redevelopment zone.
Cities, counties and port districts (individually or collectively) may establish a “Brownfield Renewal Authority” (BRA) to guide and implement cleanup and reuse of the properties within a Redevelopment Zone. The BRA is a separate legal entity, governed by its own board of directors. A BRA generally has the powers of a local government, including the ability to issue bonds.
Taken together, these provisions empower and offer incentives to local governments to more actively pursue brownfield developments and to do so on a larger scale. The new provisions allow local governments to partner with private landowners and prospective purchasers to obtain state funds to clean up contaminated properties within their borders. Because private property can fall within a Redevelopment Zone, it is possible PLPs may see their cleanup costs reduced through the use of the monies in the BRTF.
MTCA Funding Account Changes
In addition to the BRTF, SSB 5296 creates another account and provides additional clarity and direction regarding the purposes for which MTCA funds may be used.
The new MTCA account is the Environmental Legacy Stewardship Account (ELSA). It joins the existing MTCA dedicated accounts, the Local Toxics Control Account (LTCA) that provides grant funds to local governments that are PLPs at cleanup sites to pay for part of the costs of cleanup, and the State Toxics Control Account (STCA) that funds all of Ecology’s MTCA staff and serves as a state-equivalent to the federal “superfund.”
SSB 5296 directs some of the dedicated MTCA funds into the ELSA for use on “performance and outcome-based projects, model remedies, demonstrated technologies, procedures, contracts, and project management and oversight that result in significant reductions in the time to complete [a cleanup]….”
ELSA funds may also be used for stormwater projects that reduce storm water pollution. SSB 5296 is silent as to how much ELSA funding can be made available for a qualifying project. SSB 5296 also authorizes new uses for the LTCA and STCA. These new uses include stormwater projects and longer-term grants to local governments to provide state funds for cleanup projects that will take several years to complete.
These are important changes to MTCA’s funding mechanisms. While it will take Ecology several years to complete rulemaking to implement the model remedies provisions of the new law, there are many new funding tools that should be available in the shorter term. In particular, local governments and prospective purchasers should carefully consider these new funding mechanisms for both brownfield and non-brownfield sites. In addition, whether Ecology may direct ELSA or other MTCA funds to a PLP for a qualifying project given the joint, strict and several liability scheme of MTCA is an open question. SSB 5296 does include a provision that the use of LTCA, STCA and/or ELSA funds does not change the liability of a PLP, or the ability of the state to recover MTCA funds. However, the ELSA funds do not appear to be specifically targeted toward only local governments; the new law is clear about what types of projects are eligible, but it is silent on who may be the recipient of those funds. PLPs should carefully analyze these changes to the funding mechanisms and evaluate possible arguments to receive otherwise qualifying state funds.