So Long Transfer Act: We Won’t Miss You

The following article was provided by McCarter & English LLP. It is reposted here with permission.

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In a move much anticipated by the real estate, financial, and business communities, the Connecticut legislature appropriately acknowledged Earth Day this year with the passage of the state’s new release-based cleanup regulations, replacing the much-maligned Connecticut Transfer Act.

The new regulations, set to take effect March 1, 2026, were designed to address some of the criticism lobbed at the Transfer Act—namely that it created excess regulatory burdens and discouraged owners from trying to sell their businesses or properties by creating costly, time consuming, and unnecessary hurdles.

However, some issues remain and will require further input from the working group that has been advising the Connecticut Department of Energy and Environmental Protection.

DEEP sought participation from leaders in the environmental, legal, and consulting communities in the rulemaking process, and the regulations were negotiated and laboriously drafted over the last four years.

The new regulations call for addressing contamination based on when property owners discover new or historic releases, independent of potential property transfers.

Property owners will be incentivized to investigate and remediate releases quickly to avoid having their sites getting placed into tiers based on risk that will require annual fees to be paid and more professional oversight if the site does not comply with current standards within a year of discovery.

Unresolved Issues

Importantly, property owners may wish to prevent potential purchasers from sharing the results of their environmental due diligence with them to avoid obtaining knowledge of a release that would then require remediation, even if the property were not conveyed, leaving the owners with no funds from a sale to perform the cleanup.

Purchase contracts will have to be meticulously drafted to be sure that sellers don’t obtain information that will trigger reporting obligations and expense.

DEEP has assured the regulated community that it will continue to seek stakeholder input to address issues that were not fully resolved as of the date the legislation was promulgated.

DEEP has assured the regulated community that it will continue to seek stakeholder input.

For example, a de minimis “lower bounds” concept was added to exempt incidental releases from soil (excluding volatile organic compounds) from the reporting requirement.

While this concept was supported by brokers and property owners in theory, the lower bounds numbers are so low that, in practice, it may not be that helpful.

There was no lower bound threshold that DEEP was willing to even consider for groundwater because so many people in Connecticut get their drinking water from wells.

This issue, thus, will need to be evaluated as the regulations are put into practice.

Work in Progress

Fortunately, DEEP agreed to convene with the working group on a quarterly basis until Feb. 1, 2030, seeking the group’s continued input on the efficiency of the new regulations.

Legislation is pending to require the continued involvement of the working group.

DEEP agreed to convene with the working group on a quarterly basis until Feb. 1, 2030.

DEEP is also required to submit a report to the state legislature in 2028 and 2030 on the working group’s recommendations.

Consequently, these regulations are and will remain a work in progress.

Meanwhile, all those properties and businesses that have filed in the past under the Transfer Act and have not successfully verified that their establishments are clean by March 1, 2026, can look forward to a long future together with the act because, for them, it’s just not going away.

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About the author: Jane Kimball Warren is an environment and energy partner based in the Hartford office of McCarter & English LLP. She counsels clients on complex environmental and land use matters, and has worked on multiple committees aiding the working group formed to assist DEEP in developing regulations to sunset the Transfer Act.