Connecticut Enacts Legislation To Support The Phasing Out Of Existing Regulatory Process For Transfer Of Polluted Real Properties Or Business Operations In The State

Greenbaum, Rowe, Smith & Davis LLP

On October 2, 2020, Connecticut Governor Ned Lamont signed into law House Bill No. 7001 (Public Act No. 20-9), concerning that state’s transaction-triggered environmental law commonly known as the Transfer Act, Connecticut’s counterpart to New Jersey’s Industrial Site Recovery Act (ISRA). The new legislation modifies the universe of applicable transactions and events, but more importantly authorizes the development and implementation of regulations to transition from a transaction-triggered to release-based program.

Similar to ISRA, the Transfer Act requires certain filings with the Connecticut Department of Energy and Environmental Protection (CT DEEP) upon the transfer of an “establishment” as defined in the Act, which results in a “change in ownership,” also as defined in the Act.

Public Act No. 20-9 follows amendments to the Transfer Act which took effect in 2019. The 2019 amendments included modification of certain Transfer Act triggers, and to the state’s audit process for final “verification letters” requiring that a decision by the CT DEEP to audit a final verification issued to close a case by the Licensed Environmental Professional (LEP) be made within one year of the issuance of the verification.

Public Act No. 20-9 consists of two distinct parts:

  • The first part, Sections 1-14, took effect immediately and implements further modifications to certain definitions of the Transfer Act (for example, the threshold for the transfer of stock to be a trigger was increased from 40% to 50%).
  • The second part, Sections 15-23, requires the replacement of the Transfer Act with a release-based program under which the “trigger” will be the detection of a release of hazardous substances, rather than the “transfer of an establishment” that results in a “change of ownership.” The transition to a release-based program will not go into effect until the CT DEEP promulgates and adopts implementing regulations, a process that is anticipated to take at least a year or two. Public Act No. 20-9 calls for the convening of a working group to assist with the development of these implementing regulations.

Pending the adoption of implementing regulations by the CT DEEP, the Transfer Act remains in effect as modified by the legislation. Further, for parties and sites already in the system based on transaction-triggered events, it is anticipated that notwithstanding future transition of the program, active matters will still have to remain in the system and be taken to conclusion under the law and its regulations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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