On December 22, 2021, the New York State Department of Environmental Conservation (DEC) issued a Notice of Proposed Rulemaking to amend the Environmental Remediation Program regulations at 6 NYCRR Part 375. The notice states that the proposed amendments are designed to implement the 2015 statutory amendments to the brownfield cleanup program (BCP); enhance requirements pertaining to the Inactive Hazardous Waste Disposal Site Remedial Program (the State Superfund Program) and the Environmental Restoration Program (ERP); update DEC’s soil cleanup objectives (SCOs); and incorporate practical modifications to the regulations based on DEC’s historical experience implementing the BCP.

DEC is accepting written public comments on the proposed Part 375 amendments through April 21, 2022, and two public comment hearings are scheduled on April 5 and April 7, 2022.

DEC practices have foreshadowed many of the proposed changes over the past several years. A discussion of certain noteworthy changes follows.

Soil Cleanup Objectives

The proposed regulations revise more than half of the existing SCOs found in 6 NYCRR 375-6.8, many through minor adjustments but some through more substantial changes.

DEC also proposes to add SCOs for four new chemicals: aniline, nitrobenzene, perfluorooctanoic acid (PFOA) and perflurooctanoic sulfonate (PFOS).

PFOA and PFOS are a part of the per- and polyfluoroalkyl substances (PFAS) family of chemicals, which are contaminants of emerging concern that have faced increased regulatory scrutiny in recent years. The proposed interim Protection of Groundwater SCOs for PFOS and PFOA will only apply to the Part 375 remedial programs. The proposed regulations would not make them a requirement of other DEC regulatory programs.

General Provisions

Anticipated Land Use Categories

DEC proposes that the Department, and not the applicant, would determine the appropriate land use category for a site in relation to the appropriate SCOs to apply. When the ground floor use is proposed to differ from the upper floor use, DEC would apply the “less restrictive use” (meaning the use that would result in the least restrictive, and most conservative, SCOs – e.g., residential rather than commercial) as the site’s land use category. Therefore, DEC’s determination of the appropriate land use category for a site would effectively determine the remedial standards that apply to the site. A mixed-use site would be subject to the more stringent cleanup criteria of the two potentially appropriate land use categories.

Remedial Program Filings

DEC proposes to eliminate the environmental easement requirement on sites where the only restriction is a site-specific prohibition on the use of groundwater and the local municipality already restricts groundwater use. This would codify DEC’s current practice and effectively eliminate the requirement for environmental easements at many Track 2 BCP sites in New York City, where such a municipal groundwater use prohibition exists.

DEC proposes that Change of Use submissions for physical alterations must include a work plan for the Department’s review or the identification of a previously Department-approved work plan. The proposed revisions would codify DEC’s current practice for applicants seeking to vest tax exemptions claimed under Real Property Tax Law § 421-a and continues DEC’s trend of moving away from Interim Remedial Measures (IRMs) for some demolition and other physical alteration activities not specifically aimed at contaminant source area removal.

Brownfield Cleanup Program

Applications and Eligibility

In a straightforward process amendment, the proposed regulations would codify DEC’s practice initially implemented in March 2020 due to the COVID-19 pandemic to accept electronic or hard-copy BCP applications. DEC would owe a BCP application completeness response within 30 days instead of within 10 days.

However, most of the DEC’s other proposed amendments are substantive and raise the question whether the Department is proposing to effectively formalize a role in gatekeeping BCP tax credits.

For example, DEC intends to revise the BCP eligibility criteria to exclude from the BCP properties that on their face meet the statutory definition of a “brownfield site”. Instead, the Department would determine a property to be eligible only if the Department finds it “requires remediation” for its reasonably anticipated end use. DEC would require a comprehensive site investigation report, then make its eligibility decision by considering: (i) the number of samples that exceed applicable remedial standards; (ii) the magnitude by which the concentrations exceed the applicable remedial standards; (iii) the magnitude by which the concentrations exceed site-specific background concentrations; (iv) the potential for human or ecological exposure to contaminants; and/or (v) the potential for a contaminant to migrate within or off the site or to partition into other media.

In short, under the proposed regulations, DEC could deny BCP eligibility for a property that satisfies the definition of “brownfield site” but does not, in DEC’s sole discretion, “require remediation” in order to be used as reasonably anticipated.

Site Cover Systems

DEC proposes to add a new definition for “cover system requirements or site cover.” For sites with an anticipated commercial or industrial use, a soil cover system must comprise of a one-foot soil layer meeting the respective commercial or industrial SCOs. For restricted residential uses, a soil cover system must comprise a two-foot soil layer meeting the applicable restricted residential SCOs. A soil cover system could also include components of the site redevelopment (e.g., pavement, building slabs). These soil cover systems may have to meet the Protection of Groundwater or Protection of Ecological Resources SCOs, as applicable.

For BCP sites where a site cover system is a component of the remedy, the proposed regulations provide that a Remedial Action Work Plan (RAWP) must include a site cover system cost calculation; these calculations would not include the costs of backfill for any hot spot excavation beyond the applicable one- or two-foot cover layer. The site cover costs must be calculated as if the entire cover system were comprised of soil, regardless of whether the soil cover would accomplish a site’s remedial objectives.

The accuracy and scope of this calculation will be critical, as the proposed regulations would provide that site cover-related costs exceeding the calculated value would not be eligible for BCP tax credits. These proposed regulations regarding site cover cost calculations would also seem to give DEC a role in administering the Tax Law rather than focusing on purely remedial considerations.

BCP Cleanup Tracks

DEC proposes to modify the BCP cleanup track regulations. The Track 1 unrestricted use regulations would be revised to effectively eliminate the possibility of receiving a conditional Track 1 Certificate of Completion (COC) with the opportunity for it to become an unconditional Track 1 COC through the bulk reduction of groundwater contamination to asymptotic levels within five years of COC issuance. Instead, DEC would issue a Track 2 COC in the first instance with an opportunity to become a modified Track 1 within five years. DEC’s proposed approach of issuing a Track 2 COC with an opportunity to become a modified Track 1 within five years presents new issues regarding the calculation and claiming of the greater Track 1 BCP tax credits for applicable sites, as the Tax Law does not presently have a mechanism to claim retroactive tax benefits beyond three years.

For Track 2 restricted use sites, DEC would require remediation of only the upper 15 feet of soil to the applicable SCOs. DEC would not consider soil below 15 feet a source of contamination. For Track 2 cleanups other than restricted residential, any lingering soil contamination below 15 feet which is also at or below the water table may be addressed through groundwater remediation alone, at DEC’s discretion.

Tangible Property Tax Credits

DEC proposes to codify certain practices regarding tangible property tax credits that it has informally followed for several years. (Since the 2015 BCP amendments, a BCP site located in New York City cannot access tangible property tax credits except through several “gateways”: (i) at least half of the site is located in an environmental zone; (ii) a site is “underutilized” or “upside down”; or (iii) a site is an “affordable housing project”.)

If the contamination at a BCP site is solely in groundwater and/or soil vapor and due to off-site sources, then under the proposed regulations a site would be ineligible for tangible property tax credits. And a site would be ineligible for tangible property tax credits if it has “previously been remediated” under the RCRA Program, the State Superfund Program, the BCP, the ERP, or the Navigation Law Article 12 Spill Response Program “so that it may be developed for its then intended use.” Thus, remediation of an otherwise eligible site to a less restrictive/higher remedial standard to allow redevelopment to a new, more sensitive use could not create eligibility for tangible property tax credits.

SEQRA Applicability

The proposed BCP regulations would revise the provision addressing the applicability of the State Environmental Quality Review Act (SEQRA). The amendments would eliminate certain qualifiers to clarify that “remedy selection and implementation of remedial actions under department approved work plans” are not subject to SEQRA review. However, “any aspect of site redevelopment or reuse” may be subject to SEQRA review. This new SEQRA provision, as drafted, does not clarify whether SEQRA must be completed before a component of site redevelopment that is also an aspect of the site remediation (e.g., a remedial excavation in which a foundation element for redevelopment is installed) may proceed.

The SPR Blog will provide continuing coverage of the proposed Part 375 regulations as developments are announced.