The End of The Transfer Act
October 5, 2020
The End of The Transfer Act
The Connecticut legislature overwhelmingly voted to sunset the Connecticut Transfer Act, the law which has regulated contaminated properties in the state for the last 35 years. Instead, Connecticut will shift to a release-based remediation program where “any person who creates or maintains a release to the land and waters . . . shall, upon discovery of such release (1) Report the release . . . and (2) Remediate any release to the standards identified in [the adopted] regulations.” This massive revision to the environmental laws is theoretically intended to accelerate the cleanup of polluted lands while revitalizing the economy. The program will become effective when implementing regulations are first adopted.
However, the law contains only the most rudimentary guidelines, instead leaving to a Working Group the process of developing the myriad regulations necessary to provide standards, prioritize cleanup sites, and identify contaminant concentration levels. Without any of this information, it remains to be seen whether this release-based system will actually benefit the Connecticut economy or lead to a cleaner environment.
The breadth of this new law also presents increased liability challenges to businesses and property owners. Failing to properly report a release or merely maintaining a polluted property is enough to constitute a violation. Furthermore, the legislature expanded the definition of a "person" for purposes of the release-based remediation program. A person will include "any officer or governing or managing body of any partnership, association, firm or corporation or any member or manager of a limited liability company." An amendment to the bill clarifies that (A) the officer, body, member, or manager must be in a position of responsibility that allows the person to influence corporate policy, (B) there must be a nexus between the individual's actions (or inactions) and the violation of the Act, and (C) the actions (or inactions) of the individual facilitated such a violation.
The largest implication of this expanded definition is the ease with which liability can attach to the individual without having to undergo the difficult process of piercing the corporate veil. Under the release-based system, an entity's officers can face significant liability for creating or maintaining a release even if the conduct was performed within the scope of their corporate authority. This language also conveys that it will be far easier to target parent corporations who may have deeper pockets.
Businesses and their executives must be very careful to avoid inadvertent violations. Those potentially impacted by this new law should reach out to environmental counsel to help guide them through the new laws.