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Recent Colorado Legislation and New Division of Conservation

During the 2018 legislative session, the people of Colorado gained an enormous win for our state as House Bill 1291 was passed. This groundbreaking bill extends many key provisions of the Colorado Conservation Easement Tax Credit Program, clarifies and streamlines previously ambiguous or cumbersome aspects, and moves the oversight of the program to a newly created Division of Conservation. These changes will provide landowners and land conservation organizations the opportunity to continue to protect the critical wildlife habitat and ranchland of Colorado.

The new Division of Conservation is within the Department of Regulatory Agencies and moves the authority, responsibility, and oversite of the conservation easement tax credit program from the state’s Real Estate Division to the Division of Conservation. The opportunities created by the establishment of this new division whose singular directive is to manage the Colorado Conservation Easement Tax Credit Program cannot be overstated.

In addition to the creation of the new Division of Conservation, there are other significant provisions of the bill including:

1. Continuation of the current Conservation Easement Oversight Commission (CEOC) with the same duties and responsibilities, with some changes in the composition of the CEOC;
2. Clarification of educational requirements for qualified appraisers of conservation easements;
3. Streamlining of the certification process for land trusts and other easement holders;
4. Creation of a new and separate conservation cash fund in the State Treasury to retain fees paid to the Division for Conservation, gifts, grants, and other donations;
5. Providing no more than 120 days for the Division of Conservation to either approve or deny an easement tax credit application; and
6. Improving transparency by allowing the Director of the Division of Conservation to share publicly-available information regarding conservation easements with CSU to create a state registry of conservation easements.

The bill was signed by Governor Hickenlooper on May 21st, allowing Colorado to remain a national leader in conserving agricultural lands, wildlife habitat, and scenic landscapes. These changes are in effect for one year, with the expectation that next year the Colorado Legislature will extend the program for at least five years.

Please contact Bill Silberstein or Heather Haney for questions about the bill or for more information on conservation easements.

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Colorado Department of Revenue Revises Proposed Rule on the Income Tax Credit for Environmental Remediation of Contaminated Land and Extends Time for Comment

On March 14, we alerted you that the Department of Revenue Division of Taxation (the “Department”) was soliciting public comments on a new rule for the income tax credit on environmental remediation of contaminated land found in Colorado Revised Statutes §39-22-526. Please refer to our March 14 Brownfields Law Alert for a summary of the proposed rule.

On May 2, the Department held a rulemaking hearing with respect to the proposed rule and is proposing amendments. The amendments now would allow credits claimed for tax years prior to January 1, 2023, to be carried forward to subsequent tax years. In addition, the amendments would allow credits to be transferred to trusts and estates, in addition to individuals and C corporations.

The Department is allowing comments on the proposed amendments until May 18, 2018, at 5:00 p.m. Comments may be submitted to dor_taxrules@state.co.us.

Please contact Polly Jessen or Bill Silberstein if you have any questions about the proposed rule or if we may assist you in commenting.

2018 BUILD Act in Consolidated Appropriations Act Amends CERCLA Liability Provisions and Provides Additional Brownfield Grant and Loan Funding

On March 23, 2018, the President signed into law the Consolidated Appropriations Act, 2018 (“Appropriations Act”) (Public Law No. 115-141). The Appropriations Act includes the Brownfields Utilization, Investment, and Local Development Act of 2018 (“BUILD Act”), which makes some notable changes to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”).

Among other amendments to CERCLA, the BUILD Act broadens the state and local government exception to owner and operator liability under CERCLA, extends the bona fide prospective purchaser defense to liability to lessees, expands eligibility for brownfield redevelopment grants and loans to nonprofit organizations (and those LLCs and LPs wholly comprised of nonprofit managers or members) and to publicly-owned brownfield sites with non-contributory owners, raises the cap on remediation grant funds for eligible brownfield sites, and creates a new multipurpose brownfields grant program.

KEY CHANGES TO CERCLA

The BUILD Act makes significant changes to the following CERCLA sections:

• 42 U.S.C. 9601(20)(D). Section 2 of the BUILD Act amends the CERCLA definition of “owner and operator” to more broadly exclude state and local governments from liability for on-site contamination existing before they acquired title to the property through their sovereign powers. Specifically, the definition excludes “a unit of State or local government which acquired ownership or control through seizure or otherwise in connection with law enforcement activity, or through bankruptcy, tax delinquency, abandonment, or other circumstances in which the government acquires title by virtue of its function as sovereign.” (emphasis added to show amended text). By striking the “involuntarily acquires title” language, Congress has shielded local governments that involuntarily or voluntarily seize contaminated property through their governing powers.
• 42 U.S.C. 9601(20)(E). Section 3 of the BUILD Act adds a new exception to the definition of “owner and operator” from CERCLA liability for facilities conveyed to Alaska native villages and native corporations from the U.S. government.
• 42 U.S.C. 9601(39)(D)(ii)(II). Section 4 of the BUILD Act revises the definition of petroleum contaminated “brownfields” to require that such sites be sites “for which there is no viable responsible party and that is determined by the Administrator or the State, as appropriate, to be a site that will be assessed, investigated, or cleaned up by a person that is not potentially liable for cleaning up the site under this Act or any other law pertaining to the cleanup of petroleum products[.]” (emphasis added to show revised text).
• 42 U.S.C. 9601(40)(A). Section 5 of the BUILD Act extends the definition of a liability-exempt “bona fide prospective purchaser” to include tenants acquiring a leasehold interest in a facility after January 11, 2002. This amendment essentially codifies pre-existing EPA enforcement guidance regarding tenant liability.
• 42 U.S.C. 9604(k). Sections 6 through 13 of the BUILD Act amend Section 104(k) in the following ways:
  • Section 6 of the BUILD Act expands eligibility for brownfield redevelopment funding to include nonprofit organizations, specifically: 501(c)(3) nonprofit organizations, limited liability companies whose managing members or sole members are all nonprofit organizations, limited partnerships whose general partners or sole members are all nonprofit organizations, and qualified community development entities (defined under section 45D(c)(1) of the Internal Revenue Code of 1986).
  • Section 7 extends grant funding to certain publically-owned brownfield sites, even though the eligible entity does not qualify as a bona fide prospective purchaser, as long as the eligible entity (e.g., a state, local government, or subdivision thereof) acquired the property before January 11, 2002, and has not caused or contributed to a release or threatened release of a hazardous substance at the property.
  • Section 8 increases the per-site cap on remediation grant funding from $200,000 to $500,000, and provides that the EPA Administrator may waive this cap and allow a maximum of $650,000 for each site.
  • Section 9 creates a grant program for multipurpose brownfields in which the EPA Administrator can award eligible entities, including state and local governments, up to $1,000,000 in order to “carry out inventory, characterization, assessment, planning, or remediation activities at 1 or more brownfield sites in an area proposed by the eligible entity” provided the eligible entity owns the sites.
  • Section 10 now allows eligible entities to use up to 5 percent of grant or loan funding for administrative costs.
  • Section 11 amended the criteria under EPA’s system of ranking grant applications to consider the extent to which the grant would address sites that are adjacent to a waterbody or flood plain or would facilitate location of renewable energy facilities or energy efficiency improvement projects (such as district energy systems) at a brownfields site.
  • Section 13 allocates $200,000,000 for each of fiscal years 2019 through 2023 for funding under Section 104(k).
• 42 U.S.C. 9628(a).
  • Section 14 makes available technical assistance grants to small communities of 15,000 or less, Indian tribes, rural areas, and disadvantaged areas to help implement brownfield programs under CERCLA Section 104(k)(7).
  • Section 15 authorizes $50,000,000 in funding for state or Indian response programs for each of fiscal years 2019 through 2023.

Please contact Polly Jessen if you have any questions about the BUILD Act amendments.

Kaplan Kirsch & Rockwell publishes Brownfields Law Alerts to announce late-breaking developments in legislation, regulation, and policy for our clients and colleagues. Nothing in the Alerts is intended as legal advice, and readers are reminded to contact legal counsel for legal advice on the matters that appear in our Alerts.

The Computer & Internet Lawyer provides articles on current, fast-breaking topics to resolve the problems that face manufacturers, developers, distributors, and users of computer, telecommunication, and online products and services.  Partner Allison Fultz‘s publication on drones is featured in the April 2018 issue of this journal.

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LAST CALL—Colorado Department of Revenue Requests Comment on Draft Rule on the Income Tax Credit for Environmental Remediation of Contaminated Land by Wednesday, March 21, 2018

The Department of Revenue Division of Taxation (the “Department”) is soliciting public comments on a new rule for the income tax credit on environmental remediation of contaminated land found in Colorado Revised Statutes §39-22-526. This rule seeks to clarify requirements relating to the filing and transfer of the credit. The Department invites the public to review and comment on the proposed rule through Wednesday, March 21, 2018.

BACKGROUND

During the 2014 legislative session, the General Assembly passed Senate Bill 14-073, which re-established an income tax credit of up to $525,000 for approved environmental remediation of contaminated land. The credit is available to taxpayers and may be transferred to another taxpayer. So-called “qualified entities” such as counties, home rule counties, cities, towns, home rule cities, and private nonprofit entities also may transfer a similar “transferrable expense amount” to a taxpayer for use as a tax credit regardless of whether the qualifying entity receives value.

Among other things, the proposed rule:

• Clarifies that tax credits generated in the final year prior to expiration of the credit may not be carried forward past that year (past 2022; the tax credit expires on January 1, 2023).
• Prohibits the transfer of tax credits to pass-through entities and restricts the transfer to C corporations and individuals.
• Prohibits the subsequent transfers of a credit by a transferee.
• Establishes the circumstances in which the tax matters representative may be replaced for unavailability or unwillingness to act.
• Restricts the ability of a transferee to challenge or appeal a determination of the Department with respect to a credit or transferrable expense amount.
• Authorizes the Department to allocate any adjustments to claimed credits among multiple transferees proportionally or “in any manner appropriate to the circumstances.”

HOW TO PARTICIPATE

Review Senate Bill 14-073 and the draft rule. If you have an issue you would like the Department to consider addressing in the draft rule or comments on content in the current draft of the rule, you may submit comments to dor_taxrules@state.co.us

Please contact Polly Jessen or Bill Slberstein if you have any questions about the proposed rule or if we may assist you in commenting.

Kaplan Kirsch & Rockwell publishes Brownfields Law Alerts to announce late-breaking developments in legislation, regulation, and policy for our clients and colleagues. Nothing in the Alerts is intended as legal advice, and readers are reminded to contact legal counsel for legal advice on the matters that appear in our Alerts.

On January 22, 2018, several media outlets reported that they had obtained a copy of the White House’s anticipated infrastructure plan. Although the administration has not yet verified the document, reliable press sources vouch for its validity as a draft of the plan that the administration says it will release publicly late in January. The draft provides a preview of the substance and policy principles that will likely be included in the final infrastructure plan.

The document identifies several new infrastructure funding programs that would collectively account for an as-yet unquantified appropriation, for which airports, passenger rail and transit, highways, water, and other infrastructure facilities would be eligible – subject to meeting new policy based funding requirements.

Half of the proposed appropriation would be dedicated to an Infrastructure Incentives Initiative, which would provide federal funding for up to 20 percent of the costs of projects that encourage significant non-federal investment and commitment of private revenue. The Infrastructure Incentives Initiative would promote competition for additional federal funding by encouraging project sponsors to raise new sources of revenue at the state, local or project level.

A quarter of the appropriation would be designated for a Rural Infrastructure Program, comprising both formula grants to and the states and additional performance-based grants. The remaining quarter would be split between several programs, including a Department of Commerce-run Transformative Projects Program, increased investment from various federal credit programs (including expansion of the popular U.S. DOT TIFIA and RRIF programs, WIFIA and a USDA Rural Utilities Lending Program), and a Federal Capital Financing Fund. The document also proposes several reforms to expand the use of private activity bonds (PABs) for infrastructure projects, including removing existing programmatic caps, increasing flexibility and adjusting rules that might increase PABs pricing competitiveness.

The document notably concludes with a broad list of “principles for infrastructure improvements,” organized by infrastructure sector and mode, which largely focus on streamlining the federal oversight role and providing project sponsors with greater flexibility, with a clear emphasis on increasing private investment in public projects. Among the principles listed are additional authority to toll on interstate highways, higher project cost thresholds to trigger federal major project requirements, requiring value capture financing in federally funded transit projects, enabling more efficient FAA oversight of non-aviation airport activities, and revisiting many requirements of the WIFIA program to encourage lending. To the extent the document it is an accurate reflection of current White House expectations, these principles may provide a useful reference for the parameters of future legislative negotiations over the proposed programmatic elements summarized above.

Kaplan Kirsch & Rockwell continues to closely monitor the White House roll out of its infrastructure plan. While we regard this draft with some circumspection (as one should with all leaked administration documents), its content is worthy of review given that it may be an early indication of the Administration’s forthcoming priorities.