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2006 Brownfields Legislation Eases Burdens

July 26, 2006

On May 19, 2006, Gov. Jim Doyle signed Senate Bill 546, which amends and expands existing brownfields legislation designed to identify and clean up properties that are contaminated. The new legislation should ease certain burdens associated with the cleanup and reuse of contaminated properties by expanding protections to certain parties; creating a new exemption; amending the Environmental Remediation Tax Incremental District (ER TID); and changing the implementation of Department of Natural Resources (DNR), Department of Agriculture, Trade & Consumer Protection (DATCP) and Commerce closures. Wisconsin municipalities, developers, corporations and businesses may want to consider the implications of these new provisions in planning future development and remediation activities. The majority of the provisions become effective on June 3, 2006, while the ER TID provisions become effective October 1, 2006. Several key provisions are more specifically addressed below.

Environmental Remediation Tax Incremental District
Senate Bill 546 amends the ER TID provisions by making them more consistent with other types of Wisconsin tax incremental districts. ER TIDs were previously limited to a period of certification, or reimbursement period, of 16 years. The new legislation extends the period of certification to 23 years. The legislation also amends the definition of “eligible costs” to include the cancellation of property taxes making it clear that political subdivisions are no longer expected to absorb costs associated with delinquent taxes. Thus, in addition to costs such as capital, financing, investigation, remediation and professional services, “eligible costs” now include the “cancellation of delinquent taxes if the political subdivision demonstrates that it has not already recovered such costs by any other means.”

Expanded Environmental Liability Protections
The DNR’s Voluntary Party Liability Exemption (VPLE) program currently has protections in place for local governments and private parties working through the program. Senate Bill 546 repeals several sections of Wis. Stat. 292.15 and amends or creates others to extend the liability protections. Currently, the VPLE program limits the available exemption to sites with hazardous substance spills and a small portion of sites with certain landfills. The revisions are intended to broaden the types of sites eligible for exemptions to include certain unlicensed landfills.

New Environmental Liability Exemption
The same unlicensed landfills that are eligible for the expanded VPLE liability exemptions are also eligible for a new environmental liability exemption. The new exemption applies to local governments that acquire property through specific means, such as tax delinquency, blight or slum purposes, and condemnation. Modeled after the spill law exemption created in 1994 for similar acquisitions, the new exemption limits liability where an unlicensed landfill is or may be present on property acquired by a municipality. It applies both to properties owned prior to the implementation of this legislation and to newly acquired properties.

Similar to the provisions of the spill law, the exemption does not apply if, for example, the governmental unit caused the pollution or discharge. However, the new legislation is not a blanket exemption as DNR retains certain oversight. For example, the exemption does not apply if “after considering the intended development and use of the property, the department determines that action is necessary to reduce to acceptable levels any substantial threat to public health or safety….” Finally, the DNR anticipates developing a list of all licensed waste sites in Wisconsin, including historically and currently licensed sites. To be eligible for either the VPLE exemption or the new municipal exemption a site cannot be on this list. These new exemptions may provide a greater array of properties available for development without the typically associated liability concerns.

Changes in the Implementation of Closures
The new legislation will eliminate the reliance on deed restrictions to ensure that land use conditions associated with residual contamination are maintained. Currently, case closures through the DNR, Commerce or DATCP often utilize deed restrictions that are intended to ensure that owners maintain conditions of closure. The new system makes it clear that the applicable agency has statutory authority to impose conditions on closure, such as engineering controls and future investigation and remediation of the property in accordance with rules established by the department and without the reliance on deed restrictions. Furthermore, the statute makes clear that the closures are to be maintained over time by any person that owns the property. Thus, if the property is sold subsequent to the issuance of the conditions, the new owner is responsible for maintaining the established conditions. The legislation provides that a “person who owns property…shall comply with the requirements…that are imposed by an agency with administrative authority without regard to when the person obtained the property, unless another person has a legally enforceable responsibility to comply with the requirements.”

The new system is intended to centralize information regarding contaminated sites in the state within a single database. The DNR will utilize its Geographic Information System (GIS) Registry to keep an internet registry of properties that have closures, including property specific restrictions and conditions. The registry will include information and the detailed case closure letters listing the conditions that must be maintained at each property. However, although deed restrictions will no longer be necessary, it should be noted that the new system would not completely replace the existing system. Specifically, there is not a mechanism allowing for previously recorded deed restrictions to be removed so that a property can be subject to the new law. Thus, although new closures will not require deed restrictions and will be listed in the GIS Registry, previously closed properties will still be subject to due diligence including a search of the County Register of Deeds Office or state agency files on the property.

If you have any questions or would like additional information concerning the 2006 brownfields legislation, please contact Arthur J. Harrington (414-287-9414 or aharrington@gklaw.com), or any other member of the Godfrey & Kahn Environmental and Energy Law Practice Group.

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