This has already been an eventful year for stakeholders interested in the New York Brownfield Cleanup Program (BCP). The recently enacted NYS budget included a ten-year extension of the tax credits under the BCP, as detailed in our recent alert. NYSDEC first announced in May 2017 (and then every year since) that it would issue proposed regulations to reflect changes enacted in the 2015 NYS budget. Last December, on the eve of the tax credit sunset, NYSDEC issued long-anticipated proposed amendments to its regulations governing three environmental remediation programs, including the BCP.
Based on our experiences with the BCP, NYSDEC has been implementing the proposed regulations in practice since at least 2018, without making them public. As many BCP applicants know from experience, NYSDEC has consistently sought to use its regulatory authority to curtail BCP tax credits. The draft regulations bear this out. Several provisions in the proposed regulations focus directly on expanding NYSDEC’s authority to control and/or curtail BCP tax credits. The draft would narrow BCP site eligibility, broaden work plan submission and approval for steps now governed by “change of use” notice procedures, curtail allowable site preparation costs by creating a fictional cover system in lieu of actual site-specific engineering controls, and change long-standing practices for track eligibility for sites with ongoing groundwater or vapor treatment. The proposed “cover system” rule would require applicants to conjure up a cost they will not incur – a hypothetical amount to cover the entire site with one or two feet of clean dirt; the project would then be bound to use this imagined cost instead of its actual costs when calculating site preparation costs for tax credit purposes. Finally, the proposed regulations seek to expand the circumstances prescribed by law for a brownfield cleanup agreement can be terminated or a certificate of completion revoked – unforeseen changes which if adopted could result in significant disruption to BCP project financing and development.
We have been working closely with several stakeholders submitting comments, including the Environmental and Energy Law Section of the New York State Bar Association, and many other commentators are expressing concerns similar to those noted above. The period for submitting comments to NYSDEC’s proposed regulations expires on Thursday. We will continue to monitor the status of these draft regulations and report back to you as the process moves forward. Please do not hesitate to contact us if you would like to discuss the above of if you have any questions regarding the potential effect of the draft regulations or this year’s law change on your projects.