Jeffrey Orrell, Partner
In February 2016 the law firm of Brown & Winters assisted the City of Stockton in entering one of the first, if not the first, environmental oversight agreements (EOAs) with the California Department of Toxic Substances Control (DTSC) under newly-enacted Assembly Bill 440 (Cal. Health and Safety Code §25403, et seq .). The EOA is allowing the City to take a lead agency role in resolving blighted conditions at a former shipyard on the Stockton Channel.
This success echoes prior historical landmarks in Brownfields law. In 1992, Bill Brown of Brown & Winters executed the first Polanco Act agreement with CalEPA on behalf of the Chula Vista Redevelopment Agency (RDA). In 2002 and 2008, Mr. Brown collaborated with the Stockton RDA on projects that won the prestigious U.S. Environmental Protection Agency’s Phoenix Award for excellence in Brownfields redevelopment.
Statutory Background
During the last decade, the Stockton RDA had great success in cleaning up and redeveloping contaminated properties on the Stockton Waterfront. The RDA accomplished much of this through the Polanco Redevelopment Act (Polanco Act) (Cal. Health and Safety Code §33459, et seq .) Under the Polanco Act, redevelopment agencies were able to force responsible parties to pay for investigation and cleanup of contaminated sites, or conduct their own cleanups and recover costs. However, redevelopment agencies around the state were officially dissolved in 2012, and with that, the Polanco Act ceased to be available for new remediation projects.
In response, concerned parties banded together to inform the legislature of the importance of the Polanco Act’s provisions in addressing Brownfields. The legislature listened, and in October 2013 Governor Brown signed into law AB 440. AB 440 is similar to the Polanco Act, but importantly, it directly provides cities and counties with the types of powers that once belonged to redevelopment agencies.
Benefits of AB 440
An important distinction between the Polanco Act and AB 440 is that, while the Polanco Act empowered redevelopment agencies to act, AB 440 allows cities and counties, acting in their own capacity, to assume the role of local lead agency. These municipalities may now directly address properties where they have made a finding of “blight” � i.e ., properties where vacancies, abandonment or impacted uses are due to the presence or perceived presence of hazardous material releases. (Health and Safety Code §§25403(a)-(b); 25403.1(a)(1)(A).)
Under AB 440, cities and counties now have several powerful tools for curing blighted properties. By issuing AB 440 notices, they may order responsible parties to respond to contamination on a strict timeline, requiring the responsible party to create and implement an investigation and cleanup plan. (Health and Safety Code §25403.1(b).) If the responsible party meets these timelines, the result is timely progress towards cleanup. However, if the responsible party fails to comply with the notice, municipalities may compel compliance by obtaining a civil injunction. (Health and Safety Code §§25403.1(b); 25403.5(a).) Alternatively, they may conduct their own investigation and cleanup and seek cost recovery through a civil action. (Health and Safety Code §§25403.1(a)(2); 25403.5(a).) Both options allow the city or county to recover their costs from the responsible party, including recovery of attorneys’ fees. (Health and Safety Code §25403.5(a).) Responsible parties are jointly and severally liable for the contaminant releases, and their defenses to liability are extremely limited. (Health and Safety Code §25403.5(b)-(c).) Using these tools, municipalities are able to assist overworked state environmental agencies by assuming a local lead agency role, thereby reducing delay in Brownfields restoration.
Under AB 440, the investigation and cleanup plan processes are subject to public participation guidelines, to ensure that the effected community is heard. (Health and Safety Code §25403.7.) Once a cleanup project is finalized and approved by the appropriate state agency, the city or county is protected from further liability for those contaminant releases addressed by the cleanup plan. (Health and Safety Code §25403.2(a).) These same immunities are extended to prospective developers of the property, as well as to lenders. (Health and Safety Code §25403.2(c).) These immunities create the added benefit of peace of mind, encouraging future development and positive economic uses for Brownfields.
The City of Stockton is using AB 440 to address a Contaminated Shipyard
The former Colberg Boat Works Site is located on the Stockton Channel, where the operator constructed and serviced vessels from the late 1800s until 1996. As a result of these operations, the soils on Site are contaminated with various hazardous substances.
The Stockton RDA initiated cleanup efforts in 2007 by issuing a notice to the Colbergs under the Polanco Act, pursuant to an EOA with DTSC. Site investigations have been ongoing. However, with the statutory dissolution of the Stockton RDA, DTSC informed the City that a revised EOA would be required before DTSC could proceed with its oversight activities.
DTSC worked directly with Brown & Winters and counsel for the City in drafting and approving a new EOA, which will likely serve as a template for future agreements under AB 440. The City executed the EOA in February of 2016, and is now moving forward with mandating response actions by responsible parties. The City believes that its AB 440 notices will also trigger coverage under the responsible parties’ historic liability insurance, allowing the responsible parties to use those funds for further investigation and cleanup. These actions, in total, will lead to timely Site remediation, and allow for a modified, economically beneficial reuse of the former shipyard.
Conclusion
Prior to the legislature’s dissolution of redevelopment agencies, the Stockton RDA was a leader in Brownfields redevelopment. Brown & Winters is now assisting the City in finishing the job for the former Colberg Boat Works Site, using AB 440 to empower the City directly. AB 440 is a powerful new tool for the next wave of Brownfields redevelopment. A new Brownfields chapter is being written.
Colberg Boat Works, circa 1943
DeCarli Waterfront Square, Stockton, Ca, Phoenix Award Winner