At Issue
Closing out cleanups for good
Breaking free from environmental liability
By Brian Burke
A chain of title need no longer link property owners to unlimited
liability for environmental contamination. That connection now can be
broken.
With the new environmental liability limits, the state is taking bold
steps to encourage remediation and break the economic paralysis caused
by environmental contamination.
Effective July 1, 1998, any business, individual or
government entity that did not "intentionally or recklessly" cause the
release of a hazardous substance can close the book for good on the
state's spill law1 - after cleanup occurs
and the Wisconsin Department of Natural Resources (DNR) issues a
certificate of completion.2
Once a certificate of completion is secured, the owner of the
property where cleanup occurred no longer is responsible for taking
subsequent action to restore the environment or minimize harmful effects
of past discharges. Moreover, the property owner is not responsible for
any expenses incurred if additional steps are needed later to clean up a
site or remedy an emergency situation.3
This liberation from future liability applies even if environmental
standards change, the cleanup action fails or additional contamination
associated with the original discharge is found at some future
time.4 Further, the liability protection is
transferable and runs with the land.
Who can you call?
For more information, readers can call these offices.
-
Land Recycling Hotline: (800) 367-6076 for in-state calls, (608)
264-6020 for out-of-state calls.
-
Liability questions: (608) 266-7019.
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Financing and tax questions:
(608) 261-6422.
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General information: (608) 267-6713.
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DNR cleanup publications:
(608) 264-6009.
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To order regulations: (800) 362-7253.
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DNR bulletin board system:
(608) 261-6455.
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Built on the footings of 1993 Wisconsin Act 453 (the Land Recycling
Act) and associated administrative rules, which limited liability only
for purchasers and certain "innocent" landowners, the new and more
sweeping liability limits are not evidence of forgiveness for past
environmental sins, but rather a circumspect reprieve to encourage
remediation and recapture the economic potential of contaminated
land.
Tucked away in the biennial budget act,5
this momentous shift in state policy is designed to end the fear of
open-ended environmental liability that strangles the urban
marketplace.
The choice is now clear: Do nothing, wait for a responsible party
letter from DNR and face an uncertain future; or voluntarily enter the
contaminated land recycling program, clean up the property and be done
with it.
Grant and loan programs established
No matter how significant, however, liability changes alone will not
move everyone's mountain. So, $10 million in grant funding now is
available for businesses, government entities and individuals to
redevelop "brownfields" and conduct associated environmental remediation
activities.6
If grant funding runs out or eligibility is denied, municipalities
can turn to the newly created land recycling loan program for surface
water and groundwater cleanups. DNR will make $20 million available with
interest at 55 percent of current market rates.7
For purposes of the grant and loan programs, and in general parlance,
the term "brownfields" is considered to mean abandoned or underused
commercial and industrial facilities or sites that are not being
expanded or redeveloped due to actual or perceived environmental
contamination.8
Other financial components of the new law include $4 million to
support principal guarantees of private bank loans up to
$500,000,9 $44.3 million for state-funded
cleanups,10 $750,000 for DNR to provide
municipalities with environmental assessment services for tax delinquent
or bankrupt properties, and preference for brownfield projects in
various local community block grant and state stewardship program
categories.11
Sen. Brian Burke,
Georgetown 1981, is cochair of the Joint Committee on Finance. He
authored the Land Recycling Act of 1993 and helped draft related
revisions in the 1997 biennial budget act.
Tax incentives
On the tax front, up to 50 percent of cleanup costs for projects in
designated development zones now can be credited against state income
and franchise taxes.12 At the federal
level, environmental cleanup costs for properties in targeted areas are
fully deductible in the year in which they are incurred, rather than
having to be capitalized.13
Counties and the city of Milwaukee are authorized to cancel
delinquent taxes, interest and penalties on contaminated
property,14 and the availability of tax
incremental financing is broadened to include single municipal
properties in need of environmental remediation.15
Off-site discharges and partial cleanups
Further augmenting an urban developer's arsenal in the battle to
rebuild our cities, any person who owns property that is contaminated by
a discharge originating on another property now is exempt from
responsibility to clean up the contamination, and may obtain a written
statement from DNR to that effect.16
The choice is clear: Do nothing, wait for a responsible party letter
from DNR and face an uncertain future; or voluntarily enter the
contaminated land recycling program, clean up the property and be done
with it.
In addition to off-site source letters, DNR may issue a variety of
other redevelopment assistance (or deal-closing) correspondence,
including prequali-fication letters for voluntary party status,
liability clarification letters, technical assistance letters, no
further action letters and partial cleanup close-out letters.17
Other less conspicuous but still significant modifications to the
state's land recycling laws include expanded liability protection for
municipalities and nonprofit economic development corporations,18 limited municipal civil immunity for discharges
on previously owned property,19 creation of
a reimbursement program for investigation and cleanup costs at dry
cleaning facilities,20 more options for
lenders who acquire contaminated property,21 and opportunities for flexible cleanup
enforcement agreements.22
Conclusion
The state is taking bold steps to encourage remediation and break the
economic paralysis caused by environmental contamination. With
infrastructure, services and a workforce already in place, central city
sites could become the new hotbed of economic growth and
opportunity.
Endnotes
1Wis. Stat. § 292.11.
21997 Wis. Act 27, §§
3662-3669; Wis. Stat. § 292.15. (Note: A partial veto was used to
correct a drafting error and avoid a contradiction in the definition of
voluntary parties that are eligible for liability exemptions. The veto
leaves no definition of voluntary party in the statutes between the
effective date of the budget act and July 1, 1998. As such, the governor
has directed DNR to provide assurance letters to potential voluntary
parties on a case-by-case basis during this interim period.)
31997 Wis. Act 27, § 3674;
Wis. Stat. § 292.15(2)(c). (Note: The owner is not exempt from the
responsibility of notifying DNR or other appropriate agencies of
belatedly discovered or future discharges. In addition, any person who
possesses, causes or controls a discharge that occurs after issuance of
a certificate of completion is responsible for all necessary response
actions to restore the environment.)
41997 Wis. Act 27, §§
3672 & 3673; Wis. Stat. § 299.15(2)(b).
51997 Wis. Act 27.
61997 Wis. Act 27, § 4351;
Wis. Stat. § 560.13.
71997 Wis. Act 27, § 3569;
Wis. Stat. § 281.60. (Note: The governor vetoed language expanding
eligibility for the land recycling loan program to individuals,
corporations, partnerships, associations and commissions.)
8See 1997 Wis. Act 27,
§§ 764, 3569, 4351, 4444, 4478; Wis. Stat. §§
23.09(19)(a)(1), 281.60(2), 560.13(a), 560.41(1), 560.60(1v).
91997 Wis. Act 27, §§
3377-3386; Wis. Stat. § 234.88.
10See 1997 Wis. Act 27,
§ 731; Wis. Stat. §§ 20.866(2)(tg), 20.370(2)(dv).
11See 1997 Wis. Act 27,
§§ 765, 768, 1140, 4344; Wis. Stat. §§
23.09(19)(cm), 23.175(4m), 30.277 (3)(k), 560.045.
121997 Wis. Act 27, § 2262;
Wis. Stat. § 71.07(2)(dx).
13See Taxpayer Relief
Act (HR 2014/PL 105-34), signed Aug. 5, 1997.
141997 Wis. Act 27, § 2373;
Wis. Stat. § 75.105.
151997 Wis. Act 27, § 2216;
Wis. Stat. § 66.462.
161997 Wis. Act 27, § 3661;
Wis. Stat. § 292.13.
17See 1997 Wis. Act 27,
§§ 3670, 3678m, 3720; Wis. Stat. §§ 292.15(2)(am),
292.15(5m), 292.55.
181997 Wis. Act 27, §§
3656-3660c; Wis. Stat. § 292.11(9)(e).
191997 Wis. Act 27, § 3683g;
Wis. Stat. § 292.26.
201997 Wis. Act 27, § 3721e;
Wis. Stat. § 292.65.
211997 Wis. Act 27, § 3681;
Wis. Stat. § 292.21(1)(c)1.d.
221997 Wis. Act 27, § 3651;
Wis. Stat. § 292.11(7)(d).
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