Wisconsin DNR to Launch Industrial and Commercial Facilities Recovery Initiative
Environmental Law Update 01/12/10 George J. Marek
In February 2010, the Wisconsin Department of Natural Resources ("DNR") will launch a new program focused on industrial and/or commercial facilities that have recently closed. Called the Wisconsin Plant Recovery Initiative ("WPRI"), this initiative is designed to help businesses - and the municipalities in which they are located - speed up the cleanup and revitalization of plants that have shut their doors.
The DNR is emphasizing its willingness to collaborate with closing facilities and local government officials in managing environmental issues that may arise due to the plant closings. However, the WPRI will also result in increased departmental scrutiny on those facilities, adding concerns to company personnel at the already difficult time of a plant shutdown.
Elements of the Initiative
Similar to other states across the country, Wisconsin has seen a large number of recent business and plant closings. The impacts are enormous: lost jobs, decreased tax revenue and an impaired local business climate. Additionally, plant closings can result in real or perceived environmental contamination that may inhibit subsequent efforts to clean up and redevelop those properties. In short, this can create new "Brownfields" sites.
The WPRI was designed with the goal of speeding up the return of shuttered industrial and other commercial facilities to productive use which will, in turn, encourage new jobs.
The WPRI is spearheaded by the DNR's Remediation and Redevelopment ("RR") program, which oversees the cleanup of contaminated properties, including Brownfields sites. Under WPRI, RR program staff will coordinate with other programs within the DNR, as well as other state agencies, to assist communities and businesses address environmental issues early on, at the front end of the facility closure process
How will the WPRI prioritize its efforts? The DNR first plans to address facilities that are currently in the process of closing, and those plants that announce future closings. Previously closed facilities will be addressed later. Wisconsin law requires larger employers to provide certain notices to its employees, collective bargaining representatives and the State when the work force is being reduced, either by a layoff or a plant closing. The DNR's RR staff will review the plant closing notices, and will work on a two-pronged basis to contact both the company officials and local government officials where the closing facility is located. Separate letters will be sent to the closing facility and the municipality, outlining the company's responsibilities to safeguard public health and the environment, and to discuss the legal and financial resources available to assist in the assessment, cleanup and redevelopment of the property.
Among the specific cleanup and redevelopment tools offered to closing facilities and municipalities are the following:
- DNR staff assistance on identifying regulatory, environmental and financial issues, including Green Team meetings with RR program staff;
- Emergency assistance with a spill or contamination that presents an immediate threat to public health or the environment;
- Financial assistance for investigating the scope of contamination and the subsequent cleanup of that contamination;
- Providing liability exemptions and liability clarification letters for local governments and private parties; and
- Technical oversight to insure that contamination at shuttered properties is cleaned up to meet state standards.
DNR Will Contact the Closing Facility
When the DNR learns that an industrial or commercial facility is closing, it will review its files for the facility to determine if there are any current cleanup matters at the site; whether there are air, water, or other permits that need to be considered; and what type of solid and hazardous waste has been generated at the facility. The DNR will then send a brief standardized letter to the closing facility, identifying the environmental responsibilities for the owner of the facility, and offering assistance. The letter will point out the following areas to be considered:
- If there has been a discharge of hazardous substance at the facility, the owners and operators of the properties are required to notify the State, and take action in regard to the discharge.
- The company must follow appropriate solid waste storage and disposal requirements, and asbestos management at the closing plant. If there are plans to salvage or demolish a facility, the plant must contact the DNR's air management program for proper management of asbestos issues.
- If a company stops generating or managing hazardous waste, state and federal law must be followed. For example, all hazardous waste and cleanup residue must be shipped offsite to an approved hazardous waste management facility, and on-site equipment used to manage hazardous waste must be decontaminated, including containers, piping, tanks or secondary containment facilities.
- If a facility has permits, including air emissions and waste water discharge permits, there will be specific closure requirements, likely including notification of closure and paying certain fees.
- Financial reporting and Sarbanes-Oxley act provisions - Certain recent changes to accounting and disclosure standards may require a company to report cleanup costs related to contamination at a closing facility.
The DNR letter will provide contact information and an offer to schedule a Green Team meeting to discuss both the closing responsibilities and possible resources. Also, DNR staff will telephone officials at the closing facility shortly after mailing these letters.
DNR Will Contact the Host Municipality
Under the WPRI, the DNR will also contact the municipality where a closing facility is located. Why would a local government wish to become involved in a Brownfield site? Because municipal ownership of a Brownfield property opens doors to federal and state grants while protecting the municipality from liability under certain provisions. Under Wisconsin law, a local government unit ("LGU") can take control of, and redevelop, a Brownfield site without incurring liability for environmental investigation and cleanup if it follows certain acquisition methods: tax delinquency; condemnation; bankruptcy proceedings; eminent domain; slum clearance or blight elimination, among others. A local government is not responsible for investigating or cleaning up hazardous substances, including contaminated soil and groundwater, at property acquired through one of these methods, as long as it meets certain requirements, including the following: It did not cause the contamination; it restricts access to the property; it samples and analyzes unidentified substances in aboveground containers; it removes and properly disposes of, or properly stores, hazardous substances in aboveground containers that are leaking or likely to leak; it immediately reports the presence of hazardous substances to the DNR; and it takes other necessary actions to reduce substantial threats to the environment.
On a practical level, in many instances ownership of a Brownfield site by the local government is considered beneficial for interested developers, rather than negotiating with the private owners of those sites. Additionally, an LGU who owns a Brownfield can obtain certain grants for Brownfield investigation and cleanup, thereby making the property more attractive for redevelopment.
The DNR letter to the municipality will focus on how a municipality may wish to become involved to expedite the return of the closing facility to productive use. The letter will again offer the opportunity for a Green Team meeting, and will also point out certain tools that - depending on the circumstances of the closing facility, and the specific desires of the municipality - could be of use, including: financial assistance tools to assist communities and private individuals with the investigation, cleanup and redevelopment of closed or closing facilities, and possible liability exemptions for local governments in regard to contaminated properties.
Other liability protection and clarification tools are available, both to municipalities and future private redevelopers, to manage and limit the scope of environmental liability associated with a Brownfield site. Some of these tools include the Voluntary Party Liability Exemption ("VPLE") program, General Liability Clarification ("GLC") letters, and the Wisconsin Brownfields Insurance Program ("WBIP"), designed to help protect against unknown environmental liability at sites.
How Will This Initiative Impact Businesses and Municipalities?
Although the WPRI is being presented as a collaborative effort, the program is also meant to reduce the risk that owners of closing facilities will simply walk away from environmental problems. By contacting closing facilities before they have completely shut their doors, the DNR hopes to persuade business owners to properly dispose of current wastes, clean and mothball equipment, and not leave such items untended. The Department also hopes that local governments may become more proactive in addressing environmental concerns that could be an impediment to future development.
While some elements of WPRI are still being finalized, there may be financial "carrots," such as priority for site assessment and/or cleanup funds, to counter the "sticks" of DNR's involvement - namely, possible enforcement if known current environmental issues at the facility are not properly addressed by the site owner.
In conclusion, the WPRI is the Wisconsin DNR's attempt to clarify and spotlight environmental responsibilities at
closing industrial and commercial facilities. A company undergoing such a plant closing - or the municipality in which
it is located - should not rely solely upon the information and guidelines provided by the DNR. There are multiple legal responsibilities and practical considerations surrounding a plant closing, and the redevelopment of a Brownfield site. To fully understand those obligations and opportunities, one must address technical, legal and business factors. If you have any questions, please contact George J. Marek at 414-277-5537 / [email protected] or your Quarles & Brady attorney.