Jan 10 2020

Amendments to the Connecticut Transfer Act

By KKC Business Attorneys / In Real Estate, Business

At the close of the 2019 legislative session, the Connecticut General Assembly made significant changes to one of Connecticut’s more extensive (and burdensome) environmental laws, the Connecticut Transfer Act. These changes, that went into effect October 1, 2019, will help simplify the Transfer Act’s environmental and regulatory requirements that often accompany commercial real estate and business transactions.

Connecticut Transfer Act: a Brief Overview
The Transfer Act was enacted in 1985 with two broad objectives in mind:

  • to promote the disclosure of environmental conditions prior to the transfer of any property or business defined by the Transfer Act as an “establishment”
  • to create a process for remediating environmental conditions once the establishment is transferred.

Before the Transfer Act was revised, it defined an establishment as any property or business that, on or after November 19, 1980 (i) generated more than 100 kilograms of hazardous waste in any one month (except when the waste was produced in connection with the cleanup of polluted land or water, or the removal or abatement of building materials); (ii) treated or disposed of hazardous waste that was produced at an offsite facility; or (iii) was home to a furniture stripping operation, dry cleaner, or motor vehicle repair facility on or after May 1, 1967.

The Transfer Act requires the owner of an establishment to file a certain document—i.e., a Form I, II, III, or IV—with the Connecticut Department of Energy & Environmental Protection (“DEEP”) within 10 days from the date the establishment is transferred to new ownership. At the time of filing, one of the parties in the transaction must certify to DEEP that they agree to assume responsibility for the investigation and, if necessary, the cleanup of the establishment.  Depending on the environmental conditions at the establishment—and much to the frustration of the parties to the transaction—the Transfer Act can create potentially expensive and lengthy remediation initiatives following the sale of the establishment.

Revisions to the Transfer Act
Effective October 1, 2019, the Transfer Act contains several revisions, including but not limited to the following:

  1. The definition of an establishment now excludes any real estate or business operation from which over 100 kilograms of hazardous waste was produced in one month due to:
    1. The one-time production of hazardous waste as a result of either the first time the waste was produced, or the first time the waste was produced since the last Transfer Act filing with DEEP; or one or more of the following:
      1. The remediation of polluted soil, groundwater or sediment;
      2. The removal of materials used for maintaining or operating a building;
      3. The removal of unused chemicals or materials as a result of the emptying or clearing out of a building; or
      4. The termination of a business operation, so long as hazardous waste is removed no later than 90 days after the termination.
  2. There is now a shortened time period in which DEEP may commence an audit of the remediating party’s report verifying that the establishment has been fully remediated. Under the current version of the Transfer Act, DEEP must commence the audit within 3 years from the receipt of the remediating party’s report. Under the revised Transfer Act, DEEP’s audit must be commenced within 1 year from its receipt of the report. 
  3. A working group now exists to review the Transfer Act and propose additional revisions for future legislative sessions.  The working group is required to report its findings and recommendations to the General Assembly by February 1, 2020.

Despite these revisions, the Transfer Act remains a complex and challenging body of law to navigate. If you are preparing to buy or sell real estate or a business that could potentially be subject to the Transfer Act, please consult with an experienced attorney. 

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