United States: Legislature Passes Key Amendments To The Connecticut Transfer Act

During the last week of the 2019 Connecticut legislative session, the General Assembly passed Senate Bill 1030 (SB 1030) amending one of the most onerous Connecticut environmental laws on the books, the Connecticut Transfer Act, C.G.S. §§ 22a-134 et seq. (the "Transfer Act").

Assuming it is signed into law by Governor Lamont (expected within the next few weeks), the changes to the Transfer Act will take effect on October 1, 2019. While the amendments fall short of a complete overhaul of the Transfer Act (as many would argue is appropriate and necessary), they are a step in the right direction by affirmatively excluding the transfer of certain properties and businesses (that have historically been snared by the broad Transfer Act liability net) from the requirements of the Transfer Act, including, for example, the "one-time" hazardous waste generators.1

What is the Transfer Act?

The Transfer Act applies to the "transfer of an establishment." In order for the Transfer Act to apply, therefore, two questions must be answered in the affirmative. First, is the property or business being transferred an "establishment"? Second, is the transaction a qualifying "transfer of establishment"? If the answer to both questions is "yes," then the transaction would trigger the Transfer Act and certain filings (i.e., a Form I, II, III or IV) must be made with the Connecticut Department of Energy & Environmental Protection ("DEEP") within ten (10) days of the transfer, along with supporting technical documentation (and, of course, a DEEP filing fee!).

Depending on the required form filing, potentially significant, costly and time-consuming post-closing environmental investigations and remediation of the site may be required. As a result, the Transfer Act, which is unique to Connecticut (although there is a similar "cousin" statutory program in New Jersey), has a direct and negative impact on real estate and business transactions in the state.

While the Transfer Act is, in part, intended to ensure: (a) a seller discloses to a buyer (and to DEEP) the environmental status of a property and/or business; and (b) that a party take responsibility to investigate and, if required, clean up the property after closing (referred to as the "Certifying Party"), the Transfer Act has historically cast a wide net, impacting parties and transactions not intended to be subject to the law.2 The amendments to the Transfer Act are intended to help shrink the liability net to exclude such properties and businesses and, hopefully, spur economic development by allowing more deals to close without triggering the requirements of the Transfer Act, thereby saving parties from otherwise expensive and time-consuming post-closing environmental investigations that provide limited (and in some cases, zero) environmental benefit.

As is generally the case, however, the devil is in the details and time will tell how the regulated community and DEEP (and the environmental consultants and lawyers that deal with the Transfer Act every day) interpret these amendments and apply them to real world real estate and business transactions.

The New Exceptions to an "Establishment"

Pursuant to the Transfer Act, an "establishment" includes any real property at which or business operation from which, on or after November 19, 1980, there was generated more than 100 kilograms (220 pounds, or roughly half of a 55-gallon drum of liquid) of hazardous waste in any one month, except as a result of the remediation of polluted soil, groundwater, or sediment, or the removal or abatement of building materials.3

SB 1030 amends the definition of "establishment" to specifically exclude any real property or any business operations from which more than 100 kilograms of hazardous waste was generated in any one month solely as a result of:

  • The one-time generation of hazardous waste as a result of either the first time such waste was generated or the first time such waste was generated since the last Transfer Act filing was made with DEEP;
  • The removal of materials used to maintain or operate a building;
  • The removal of unused chemicals or materials as a result of the emptying or clearing out of a building, provided such removal is supported by facts reasonably established at the time of such removal; and
  • The complete cessation of a business operation, provided the hazardous waste is removed not later than ninety days after such cessation and such cessation is supported by facts reasonably established at the time of such cessation.

DEEP's Audit Period Shortened

In addition, SB 1030 also shortens the period of time that DEEP has to audit the final close out report (known as a "Verification") submitted by a party performing Transfer Act required work. Currently, DEEP may audit a Verification submitted by a Licensed Environmental Professional ("LEP")4 on behalf of the party performing the required Transfer Act investigation/remediation work within three (3) years after the Verification is submitted to DEEP. In another attempt to appease the regulated community (without sacrificing protection of human health and the environment), SB 1030 shortens the time period DEEP has to initiate and complete an audit by requiring that (absent extenuating circumstances) any audit be initiated within one (1) year of submittal of the Verification and completed within three (3) years.

Further Changes to the Transfer Act Possible in 2020

Recognizing that there is more work to be done, SB 1030 also requires that the Commerce and Environment Committee chairpersons create a working group to further examine the Transfer Act and recommend further legislative changes by February 1, 2020. So, stay tuned!

In the Meantime...

While the amendments to the Transfer Act include changes helpful to the regulated community, it is not yet clear how the new exceptions to the "establishment" definition will be applied in practice and what the standard of care will (or should be) for establishing facts to support them. It also remains to be seen how the shortened period for initiating an audit will play out given the budget and personnel contraints at DEEP. While certain types of transactions that previously triggered the Transfer Act no longer will (assuming Governor Lamont signs the bill and after the changes become effective), the Transfer Act is still a very broad-reaching and impactful Connecticut statute, and its potential applicability should be evaluated in connection with most (if not all) real estate and business transactions involving Connecticut properties and businesses. As a result, parties dealing with the potential applicability of the Transfer Act are best served when working with qualified and knowledgeable environmental consultants and lawyers.

Footnotes

[1] Given the negative impacts to real estate and business transactions in Connecticut, we often refer to the Transfer Act, with a nod to the Eagles rock band, as "Hotel California," as "you can [try and] check out anytime you like, but you can never leave [or else it costs a real lot and takes a very long time]."

[2] Two (all too) common examples, include: (1) a property owner who has never generated hazardous waste on site wakes up one morning to find that someone has left a 55-gallon drum of hazardous waste on its property (i.e., the "midnight dumper scenario") could make the site an "establishment" by appropriately sending the waste offsite for disposal as hazardous waste and, therefore, be required to comply with the Transfer Act upon a sale of the property; and (2) a "big box" retail store that accepts returns from customers of household products (e.g., aerosol cans, paint) and appropriately ships the returned and expired products from the site as hazardous waste also could be considered an "establishment" under the Transfer Act for having "generated" more than 100 kilograms of hazardous waste on site within one month simply by accepting returned household products and appropriately transporting and disposing of the material offsite as hazardous waste in a single monthly event.

[3] "Establishments" also include any real property at which or business operations from which: hazardous waste generated at a different location was recycled, reclaimed, reused, stored, handled, treated, transported or disposed of; the process of dry cleaning was conducted on or after May 1, 1967; furniture stripping was conducted on or after May 1, 1967; or a vehicle body repair facility was located on or after May 1, 1967. C.G.S. § 22a-134(3).

[4] LEPs are persons specifically qualified to engage in activities associated with the investigation and remediation of contaminated properties and licensed by the State Board of Examiners of Environmental Professionals to render opinions (or "Verifications") regarding such remediation. C.G.S. § 22a-133v.

Originally published June 10, 2019

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions