Governor Perry recently signed into law a bill that offers developers, lenders, real-estate professionals, and property owners the opportunity to return environmentally impacted properties to productive use more quickly. House Bill 3152, which became effective September 1, 2003, authorizes the Texas Commission on Environmental Quality (TCEQ) and local governments to create "municipal setting designations" (MSDs). An area is a candidate for MSD status when groundwater is contaminated but is not used as potable water and where clean water is available from another source. The new law will result in lower costs for site investigation and remediation in qualified MSDs - without any increased risk to human health – and improve the marketability of properties with groundwater issues.
The legislation, authored by Rep. Dennis Bonnen and sponsored by Sen. Mike Jackson, was developed by Jim Morriss and Matt Knifton, attorneys at the law firm of Thompson & Knight and by a former leader of the state’s Voluntary Cleanup Program (VCP). Victor Alcorta, also an attorney at Thompson & Knight, led the successful lobbying effort. In past sessions of the legislature, Thompson & Knight has worked on other brownfield initiatives, including the Innocent Owner/Operator Program and the incorporation of lender and fiduciary protections into the state’s "Superfund" law.
Many otherwise valuable commercial and industrial properties in municipal areas are underlain with unusable groundwater that has become contaminated. The high cost of site investigation and remediation groundwater to state standards, the risk of being saddled with the cost of groundwater cleanup, and the threat of long-term environmental liability often discourage purchasers and developers from investing in such properties. House Bill 3152 provides a tool for removing those barriers to redevelopment by authorizing the creation of MSDs for properties within the corporate limits or extraterritorial jurisdiction of municipalities that have a population of at least 20,000 and that have public drinking water supplies. The public health is protected because an MSD may only be certified after the municipality containing the proposed MSD adopts an ordinance restricting the potable use of groundwater in the proposed MSD area. Individuals are authorized to restrict potable use of groundwater on individual properties by deed restrictions enforceable by the municipality containing the property, provided that the municipality passes a resolution supporting the designation.
The cost of remediating a contaminated site to a drinking-water standard is often so expensive that all remediation ceases and properties are abandoned. This is a particularly troubling outcome when, in some municipalities, the groundwater will not be used as a drinking-water source. By using MSDs, parties responsible for contaminated properties within the MSD will no longer have to consider the risks associated with human consumption of the contaminated groundwater that is not a drinking water source when developing a response action to address the contamination. According to Morriss, "With the environmental risks reduced and regulatory hurdles eliminated, brownfield properties within MSDs should become more attractive to prospective purchasers and to the lending community. Many properties that would have been abandoned in the past will now be put to productive use."
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