Local Voluntary Cleanup Agreements in California: How They Can Better Promote State Housing Priorities and Development of Brownfields

Voluntary cleanup agreements have been a staple of cleanups under both state and federal cleanup programs for decades.  In some cases, these agreements are designed to facilitate the purchase and sale of a property and the development of brownfields – and are entered into with a potential purchaser.  These agreements (sometimes termed “bona fide prospective purchaser agreements” or “BFPPs”) typically include features such as covenants not to sue or restrictions on the agency’s ability to reopen the site after closure. In other cases, the voluntary agreement is entered into between the agency and the responsible party in lieu of an enforcement order provided the responsible party complies with the agreement; these agreements offer responsible parties greater flexibility and agencies an opportunity to conserve time and resources.

Local agencies can also enter into voluntary agreements with responsible parties under delegations of authority from the state (e.g., under state underground storage tank (“UST”) programs) or under other grants of authority. Local governments, however, generally cannot regulate matters of state concern[1] – nor do they have authority to bind state authorities. Thus, these local voluntary agreements do not typically provide an alternative to a local agency enforcement action (although the local agency may refer to a state agency for enforcement) nor do they offer the benefits for potential purchasers as do agreements with state agencies – such as BFPPs.

California Health & Safety (“H&S”) Code § 101480 et seq. (“Section 101480”) allows local agencies to enter into voluntary cleanup agreements and recover their oversight costs. Section 101480 provides no framework or authorization for local agencies to adopt their own corrective action requirements but requires that they oversee the investigation and cleanup consistent with the Water Code. Several local agencies in California – including some of the most populous cities and counties – have used Section 101480 as enabling legislation to establish site cleanup programs (“SCP”), including San Francisco City and County, Alameda County, and Orange County.

Section 101480 does not mandate formal state oversight or review of the local programs beyond requiring that local agencies provide an annual certification that they are adhering to Section 101480 and the Water Code.  As implemented, some of the practices under local programs diverge significantly from the practices of the Regional Water Quality Controls ("Regional Boards") who oversee state cleanup programs under the Water Code.

Some local agencies have developed their own policies and protocols – and oversee investigations and remedial actions that may cost millions of dollars and several years to reach closure.  At least one local health department has developed its own protocols for data quality objectives, conceptual site models, and risk assessments for vapor intrusion – independent of state policies adopted under the Water Code.

Further, in some cases, releases from petroleum USTs which include de minimis non-petroleum releases are diverted into the SCP rather than the local agency’s state-delegated UST program. Under federal and state UST laws, petroleum tanks include USTs with de minimis releases of non-petroleum releases. Under State Water Resources Control Board ("State Board") policy, releases from petroleum USTs are subject to the State Board's Low-Threat UST Case Closure Policy (“Closure Policy”). See FAQs, Low-Threat UST Closure Policy. The trajectory to closure for a site with similar risks can be very different depending on whether the site is handled under the local UST program or under a SCP.

The terms of the voluntary agreements under local agency oversight also differ from those under federal or state programs. For example, federal or state agreements typically include provisions about dispute resolution and limit the oversight costs that can be recovered by the agency (e.g., oversight costs must be "reasonable" or "necessary"). Section 101480 does not mandate any such provisions in local agreements and many local agreements do not include any mechanisms for resolving disputes or challenging oversight costs.

Moreover, some local voluntary agreements limit the conditions under which the agreement can be terminated – for example, requiring consent of the agency or payment of pending oversight costs. Further, broad indemnity provisions obligating responsible parties to cover any of the local agency’s costs or damages arising under the agreement raise the stakes for any challenges to agency decisions.

Section 101480 allows local agencies to enter into voluntary cleanup agreements only when a state agency has not asserted oversight. In practice, overburdened state agencies may refuse to oversee a site where a local agency is available to do so. Further, after the local agency has assumed jurisdiction over the site through a voluntary cleanup agreement, the state agency may not agree to accept oversight in the event of termination of the agreement except in cases where these is a significant threat to human health or the environment. Thus, as a practical matter, termination of the voluntary agreement may not be a viable option for owners of sites seeking closure for purposes of sale or refinancing.

Depending on the local health agency involved, it is not uncommon for responsible parties in an SCP to encounter a lengthier and more expensive road to closure than would be the case with Regional Board oversight – and without any viable avenue to challenge agency decisions (e.g., such as whether the source of the release is an on-site or off-site release) or to question oversight costs assessed by the agency.

As California struggles to provide more housing and developers are looking for opportunities to redevelop or build new housing, reforming Section 101480 could better advance these objectives. Some reforms might include closer state oversight over the local programs, a process for alternative dispute resolution incorporated into the agreements, and/or a specific process to challenge oversight costs – and provisions that ensure potential purchasers have access to state programs designed to promote development of brownfields even in communities with Section 101480 programs.

Without such reforms, it is almost inevitable that challenges to Section 101480 oversight will be brought – either under the facts of a particular case or on various statutory or constitutional grounds (e.g., constitutional due process rights, claims an agency is acting ultra vires). Hopefully, reforms can be made to ensure Section 101480 programs are closer in line with Regional Board programs and do not thwart California's objectives to increase housing supply in the state.

[1] Although beyond the scope of this article, some local governments are given specific authority by the state to regulate matters of state concern – known as the “Home Rule” doctrine.