Connecticut Department of Energy & Environmental Protection Takes Another Step Forward to Sunsetting the Transfer Act

Key Takeaways

• On January 14, 2025, DEEP issued a Notice of Decision to move forward with the revised Release Based Cleanup Regulations (RBCRs). That same day, DEEP also released its long-awaited responses to public comments on the draft RBCRs.
• The revised RBCRs incorporate several significant changes, including setting specific “lower bound” numerical criteria and lessening the burden on some residential property owners by exempting owner-occupied single-family homes from certain requirements.
• Lender liability protections are now explicitly incorporated.
• DEEP has tentatively set March 1, 2026, as the “effective date” for the RBCRs and the final sunset of the Connecticut Transfer Act (CTA) for subsequent transactions but the date is subject (and likely) to change.

The Revised RBCRs – The Good, the Bad and the Ugly

1. Lower Bound Numerical Criteria Introduced

One of the most significant (and positive) changes DEEP made in the revised RBCRs is to incorporate lower bound numerical criteria to limit de minimis conditions (i.e., low levels of contamination) from triggering the applicability of the RBCRs and leading to potentially costly and time-consuming regulatory requirements.  Several of the commenters raised this concern, noting that any detection above laboratory reporting limits could potentially require regulatory action, creating unnecessary burdens for property owners, developers and other regulated entities. The inclusion of lower bound numerical criteria in the revised RBCRs should benefit both the regulated community and DEEP as property owners will face less of a burden to characterize and report a de minimis condition and DEEP will not be inundated with filings that pose minimal risk to public health and the environment and can instead focus on more significant releases.

2. Adjustments for Residential Properties

DEEP removed certain obligations for owner-occupied single-family properties to address historical releases. The revised regulations clarify that existing contamination on owner-occupied residential properties will not trigger cleanup obligations unless it presents an immediate risk or is migrating off-site. This change alleviates concerns that the RBCRs would create new liabilities for homeowners who were not the cause of the contamination.  Notably, however, the exception is narrow (e.g., it would not apply to duplexes or other multi-family homes).

3. Audit Provisions and Ongoing DEEP Oversight

The revised regulations continue to include multiple layers of audits (e.g., focused, screening, tier, full) but now also include an expedited audit timeline of three (3) days to help facilitate residential transactions.  That said, DEEP would retain the authority to reopen any verification or certification, which raises concerns about long-term regulatory uncertainty for property owners.

4. Revised Discovery and Reporting Provisions

Public comments expressed concern that the previous iteration of the RBCRs would force sampling based on a subjective and unclear standard. The revised RBCRs maintain a “multiple lines of evidence” standard for discovering a release, but DEEP narrowed the circumstances under which a release is considered “discovered” by limiting discovery to “in the course of an investigation.” This change aims to strike a balance between ensuring contamination is addressed while reducing unnecessary regulatory burdens; however, the standard for discovery continues to be somewhat subjective, which likely will result in continued regulatory uncertainty.

5. Fees and Administrative Relief

In response to concerns about excessive fees, DEEP proposed changes to the fee structure by including options for grouping multiple releases together for administrative purposes and reducing administrative costs for property owners that address multiple releases as part of a site-wide remediation.

6. Lender Liability Protections

Recognizing concerns from lenders, realtors and others, DEEP included a specific reference to existing statutory liability protections to ensure that lenders who acquire contaminated properties through foreclosure are not automatically deemed responsible parties. In general, to benefit from this lender liability protection, however, lenders that foreclose on a property cannot direct the day-to-day management of the property or business operations thereon. These protections align with existing state and federal secured creditor liability protections and provide financial institutions with greater certainty and comfort when lending on environmentally impacted properties.

Where are we now and what happens next?

As discussed in more detail in prior alerts, Public Act 20-9 (codified at Conn. Gen. Stat. §§ 22a-134pp et seq.) required DEEP, in consultation with the Department of Economic and Community Development and a formal legislatively created “working group,” to develop the RBCRs as a replacement to the CTA.  The RBCRs represent a fundamental shift in how certain spills and their cleanup will be regulated across the State and are intended in part to bring Connecticut in line with how other states regulate historic releases.  The latest iteration of the draft RBCRs reflect four years of work by DEEP and the working group, which Shipman participates in, along with numerous other stakeholders.

The revised regulations will now undergo legal sufficiency review by the Attorney General’s (AG) office before moving to the Legislative Regulation Review Committee (LRRC) for review and approval. The AG’s office has until February 15, 2025, to review the proposed RBCRs and either approve or return the latest draft to DEEP with comments for additional revisions. Once that process is completed, the RCBRs will be transmitted to the LRRC and will undergo a similar review including for consistency with the initial legislative authorization. The below figure depicts an overview of where we are in the regulatory adoption process:

When ultimately adopted, Connecticut will join 48 other states that already operate under a release-based cleanup framework, finally moving away from the transactionally-triggered CTA.  In furtherance of its 20BY26 initiative, DEEP is pushing hard to get the RBCRs adopted this year. That said, there will be a gap in time between: (i) formal adoption of the RBCRs; and (ii) when the regulations become effective.  This gap should allow the regulated community time to more fully prepare for the new program (and for DEEP to finalize any remaining guidance documents and other forms needed for proper implementation).  While the precise timeline is still unknown (and will depend in large part on feedback from the AG’s office and the LRRC), DEEP has proposed March 1, 2026, as the anticipated effective date.

In the meantime, DEEP issued its draft Release Characterization Guidance (RCG), which will be key to the new program.  DEEP is currently accepting public comments on the draft RCG and recently extended the deadline for submitting comments to February 14, 2025​.  DEEP also recently proposed what it describes as “minor legislative realignments” in order to ”smooth the transition to a release-based cleanup program.” DEEP’s proposed legislative amendments are available on the Office of Policy and Management’s webpage.

Additionally, DEEP is in the process of developing a new public database to report releases and track cleanup progress, which online system will be vital for the success of the new program.  DEEP is also focusing efforts on finalizing the qualifications and credentials that will be required for “Permitted Environmental Professionals” (PEPs), a new category of environmental professionals who, along with Licensed Environmental Professionals (LEPs), will be delegated authority to oversee, address and close out certain releases under the RBCRs.  Ultimately, while DEEP has taken a significant step toward formal adoption of the RBCRs, a lot of work remains to ensure a smooth transition.

What should we do now? 

While the revised RBCRs reflect progress in addressing public concerns, uncertainty and challenges remain.  As the regulations continue to move forward toward eventual adoption and implementation, stakeholders should continue to:

• review the revised RBCRs and DEEP’s response to the public comments to understand how the changes may impact pending and future transactions;
• assess transaction timing and evaluate whether to accelerate due diligence and/or closings before — or delay until after — the RBCRs take effect;
• incorporate protective language into transaction agreements, loan documents, leases, etc., to manage the potential risks associated with the new program;
• consider lender requirements, as financial institutions may tighten environmental due diligence standards, requiring additional site assessments or environmental insurance, particularly with respect to emerging contaminants (e.g., per- and polyfluoroalkyl substances, “PFAS”);
• monitor the regulatory approval process and the development of related DEEP forms, guidance and proposed legislative developments, including statutory amendments to existing laws;
• continue to provide feedback to DEEP and/or the organizations that represent you or your clients interests to advocate for further improvements to try and ensure the RBCRs are as practical and implementable as possible while also appropriately protecting human health and the environment; and
• remember, properties (or businesses) already in the grip of the CTA (or that enter the program before the official sunset) must complete their journey through the CTA regardless of when the RBCRs go into effect.

As always, for any questions on how the CTA or RBCRs may impact you or your business, please contact Aaron Levy, a member of the Working Group, at alevy@goodwin.com or your Shipman environmental attorney.