The Connecticut Transfer Act seems to get all the press when it comes to remediation of commercial and industrial properties. There is good reason for this. The Transfer Act affects every sale of commercial property in the State of Connecticut, and even some residential properties. More about the Transfer Act can be found on at the DEP website. But there is an alternative to Transfer Act compliance. It is voluntary remediation under Sections 22a-133w and 22a-133y of the Connecticut General Statutes. One statute is for areas in which the groundwater is GA/GAA, or clean, and the other statute is for where the groundwater is GB/GC, or not so clean. There are some slight differences between the two programs, but the procedure is pretty much the same. The property owner hires a licensed environmental professional (LEP), who investigates the contamination at the property and develops a remediation plan, which is filed with DEP. The property owner, under the guidance of the LEP, completes the clean up of the property in accordance with the DEP standards. When everything is completed, the LEP files a final report. If the DEP has no objections to the report, then the remediation is complete. There is a $3,000 fee payable to DEP for participating in the program, but this fee may be credited against a subsequent Form II fee under the Transfer Act. More information on the voluntary program can be found at the DEP website.

 

What are the advantages of the voluntary remediation program? If a property owner knows that the property is subject to the Transfer Act and compliance will be required upon a sale of the property, the voluntary program allows the owner to be proactive. The clean up of the property can be completed prior to a sale. This will enhance the property’s market value and marketability. In addition, it will to help to avoid lengthy (and expensive) negotiations with a potential buyer about remediating the property, as well as escrows. It also allows the owner to retain total control over the clean up without the buyer wanting to be involved.

 

There is another advantage to using the voluntary program. When the Transfer Act was new some sellers may have filed Form I’s, certifying that there has been no spill at the property, when in fact there may been some contamination. This was especially true where the amount of contamination was very small. But DEP is now very careful about reviewing Form I’s and will reject a Form I if there is any evidence of contamination, regardless of how small. So it is better to address the issue head on.

 

When the owner decides to sell the property, it will still have to comply with the Transfer Act. But the owner will be able to file a Form II, in which the owner certifies that the property has been remediated in accordance with DEP requirements. The advantage of the Form II is that the owner has no post-closing obligations. The filing of the form is all that is required. 

 

Please note that the owner is still responsible for any activities that may have happened at the property since the clean up was completed. For example, if there has been a spill since the completion of the clean up, then on a sale the owner is going to have to file a Form III under the Transfer Act.