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Kentucky Resources Council, PO Box 1070, Frankfort, KY 40602 Phone [502] 875-2428

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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

AN OVERVIEW OF SB2: THE VOLUNTARY ENVIRONMENTAL REMEDIATION ACT  Posted: March 13, 2001
Senate Bill 2, awaiting signature from the Governor, is the "Voluntary Environmental Remediation Act." The law builds on existing Kentucky law to define the process for approval of a plan to identify and manage or remove contaminants on, in and under lands within the Commonwealth, and to define the extent to which the state's decision approving a clean-up or remediation plan will protect the landowner or future landowners from further liability.

Existing law allows any individual the option to voluntarily remedy pollution on land and water, including the options of removing the contamination completely, or partially and managing the remaining contamination in place.

What has been missing is a defined timeframe and process for moving a property through the review and approval stages, and for defining the degree of certainty one may have about future liability for the site contamination.

The Kentucky Voluntary Environmental Remediation Act addresses these concerns, providing an appropriate degree of protection from future liability.

The key provisions of the new law are these:

* The program is available to any property with a releaseof a hazardous substance, pollutant or contaminant, except for:

- Superfund sites on the National Priority List;

- sites which are regulated as hazardous waste sites under RCRA, the hazardous waste law;

- sites which are subject to enforcement action relating to the release in question;

- sites presenting an environmental emergency.

Sites which become contaminated due to future releases will also eligible for this law; an issue of significance to industry because of the possibility of limiting enforcement liability under a "covenant not to sue" from the state if the release is remedied to appropriate standards.

* To enter the program, an applicant pays a fee and files an application providing information about the nature and extent of the contamination, and publishes a local newspaper notice. At the time of the application, local government officials will also be notified.

* Within 45 working days, if the property is deemed eligible, the applicant and Natural Resources and Environmental Protection Cabinet will enter into an "agreed order" outlining the timeframe for submittal and review of the major documents involved in this process. Those documents, each of which will be filed locally in the public library, include a plan and a report on "characterization" describing the nature, extent and results of sampling conducted on the site, and a plan and report on "corrective action" describing those combination of removal and management actions to be undertaken to eliminate risk to human health and safety and the environment.

Each step has an internal timetable by which action must be taken by the Cabinet, and the failure to act within that timeframe is subject to administrative review. The Cabinet has 120 working days to review and approve or disapprove a corrective action plan, and the same length of time to review a corrective action report, which is submitted after completion of the activities proposed in the corrective action plan.

Public participation is an important and required component of the site contamination characterization and remediation process, and when the corrective action plan is submitted proposing how the site contamination is to be addressed, local posting of the information at the site, a newspaper notice and thirty-day comment period are required.

Once the requirements in the approved corrective action plan are fully performed, and after the applicant submits the corrective action report and the Cabinet verifies that it has been successfully completed, the Cabinet will issue a "covenant not to sue."

This "covenant" is a promise that binds the Cabinet not to sue the applicant for additional penalties or injunctive relief with respect to the cleaning up the release. The covenant is available to those to whom the applicant transfers the property provided that the covenant, any deed restrictions and any other site controls approved as part of the corrective action plan are made part of the deed, and the subsequent owner complies with those requirements. The Cabinet is required to enforce against any violations of the approved plans and deed restrictions by the applicant or future landowners.

The "covenant" provides a degree of certainty that the applicant won't be required to do more than agreed-upon, but is subject to several important exceptions:

* It doesn't protect the applicant from liability for any criminal acts or omissions;

* It doesn't protect the applicant regarding releases that the applicant fails to identify and correct, or if the applicant fraudulently hides or fails to disclose information from the state;

* It doesn't apply to petroleum storage tanks, which are regulated under a separate program and for which money may be available to reimburse the landowner for removal and correcting contamination;

* It doesn't protect the applicant from any liability for damage to natural resources from spills, such as the coal slurry spill;

* It doesn't protect the applicant from liability for failing to obey release reporting laws;

* It doesn't protect the landowner from liability if they make site conditions worse;

* It doesn't shield the applicant from liability if the site conditions cause an environmental emergency in the future.

* It doesn't shield the applicant or any future land owners from liability to neighbors or other third-parties for injury or damage to the property of others.

The Voluntary Environmental Remediation Act also contains provisions addressing standards for remedying contamination. The "preliminary remediation goals" developed by U.S. Environmental Protection Agency Region 9 are adopted as screening levels for contamination but not as clean-up standards. Within one (1) year of the enactment of the Act, the Cabinet is to issue regulations establishing standards for "hazardous substances, pollutants and contaminants, petroleum and petroleum products" that are protective of human health, safety and the environment, and to define the various options for managing contamination. Nothing in the Act prevents the Cabinet from continuing to review and approve proposals to remedy contamination on a case-by-case basis, and nothing delegates the Cabinet's standard-setting authority to a board or other entity.

The Act also establishes an "Agricultural Warehousing Sites Cleanup Fund" which will provide financial assistance in the form of low-interest loans and grants for up to 75% of the cost, as funds allow, to persons who propose to voluntarily cleanup abandoned agricultural warehouses.

Finally, costs incurred by applicants in remediating a property are deemed eligible for consideration in state economic development inducement programs under KRS Chapter 154.26 and 154.28 and as an infrastructure program if conducted by a governmental entity.

In short, SB 2:

* Makes clear that whatever clean-up option is chosen mustbe fully protective of human health and the environment;

* Places a premium on public and local government notice,access to information, and involvement;

* Provides a reasonable degree of protection from further liability with respect to releases that are remedied, but subjects all "covenants not to sue" to a provision allowing the state to reassert authority to demand further remediation from the current landowner where there is an environmental emergency (i.e. where imminent harm to human health or the environment is occurring or threatened);

* Addresses past and future releases, to help eliminate former

brownfields and minimize creation of new ones;

* Creates meaningful but adequate timeframes for state review and decision on applications for remediation of contaminated lands;

* Will result in adoption of standards defining the levelsneeded to protect human health, safety and the environment, and the options for removing or managing contamination to meet those standards;

* Creates a fund to assist in reclamation of abandoned tobacco warehouses, to prevent them from becoming new "brownfields." Grants and low-interest loans awarded by the fund would pay up to 75 percent of clean-up costs. SB 2 does not provide specifically for warehouse cleanup.

Nothing in current law prevents voluntary cleanups in fact, major projects have been approved on brownfields, such as Papa John's Stadium and the Louisville Waterfront. But the daunting prospect of moving smaller sites through a program without certain timeframes and predictable outcomes has discouraged brownfield remediation.

The law, as enacted, was built on the compromises reached during the 2000 Session. The law eliminated the many problematic and dangerous provisions of SB 2 and SB 290 as introduced bill language that had been advocated by industry and by one Kentucky city. Gone are the standards-setting board stacked with representatives of the regulated industries; gone are the secrecy provisions allowing applications and contamination to be shielded from public scrutiny; gone are provisions allowing applicants to avoid further cleanup liability even where there was human harm resulting.

The law provides reasonable timeframes and defines with more clarity the process for remediating contamination of properties, with no reduction in protection of human health and the environment. Representatives Greg Stumbo, Paul Bather, and Senator Bob Leeper deserve credit for their efforts, as do many employees with the Natural Resources and Environmental Protection Cabinet for their patience and their dedication to protecting the public interest in these matters.

Fundamentally, however, it was the voice of Kentuckians, including many environmental, civic and community-based organizations, with the help of local governments through the Kentucky League of Cities, that helped shepherd the responsible provisions of HB104 into law as Senate Bill 2.


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