The existence of groundwater or soil contamination on commercial property is common in Florida and often can throw a monkey wrench into a commercial real estate transaction. The Florida Department of Environmental Protection (“FDEP”) has two rules, Chapters 62-777 and 62-780, Florida Administrative Code, setting forth the FDEP’s cleanup requirements. The satisfaction of those rules is often necessary to sell the property, finance it, or even establish a reasonable fair market value for it. Rule 62-780 sets forth the FDEP criteria for how a property owner must go about cleaning up the site (“site rehabilitation”), and Rule 62-777 establishes cleanup target levels (“CTLs”) for a variety of contaminants.
Together the two rules establish “how clean is clean” in order to determine what it will take to release the property from contamination purgatory. Thanks to a legislatively-established principal called “Risk Based Corrective Actions,” also known as “Rebecca” based upon its acronym, RBCA, the rules allow for cleanups to less than FDEP cleanup standards if certain controls are put on the property. These may include limiting uses to commercial rather than residential, not withdrawing groundwater, and maintaining impermeable caps (a parking lot might do) to limit human exposure to contaminated soils and seepage from the soils into groundwater. These controls are generally enforced through the execution an recording of Restrictive Covenants in favor of FDEP. Obtaining from FDEP a “Site Rehabilitation Completion Order” (“SRCO”) with these types of controls can significantly improve the value of the property for purposes of sale and financing, even if the property has not been completely cleaned up, while saving substantial cleanup costs.
On June 15, 2015, FDEP advertised two Notices of Workshop advising the public that it intended to hold a workshop as a prelude to initiating rulemaking to modify the two rules, with the first workshop scheduled for June 30. The Notices were published in the Florida Administrative Weekly at https://www.flrules.org/gateway/View_Notice.asp?id=15496349 and https://www.flrules.org/gateway/View_Notice.asp?id=15496543. The Rule 62.780 Notice gives as its purpose to take the “lessons learned” from implementing RBCA to date and see how the Rule can be “modernized … to facilitate contaminated site closure.” With regard to Rule 62-777, the stated intent is to “reduce the amount of conservatism in some previous estimates [of CTLs] to suitable levels thereby providing sufficient protectiveness while minimizing potential cleanup costs.”
In other words, FDEP says it is looking for ways to make contaminated site cleanup cheaper and easier, and thereby facilitate the sale and financing of properties that have been contaminated. Problems certainly do exist with the current rules. For example, if a property owner has sold the property before cleanup is complete, a subsequent purchaser may not be willing to execute a Restrictive Covenant to complete site rehabilitation efforts, thereby preventing the previous property owner from obtaining a SRCO.
Therefore, persons who now or in the future may be engaged in property transactions involving contaminated property should keep track of the changes that may be afoot.