Massachusetts State law requires that owners/operators of land that has environmental contamination clean up the site whether or not the owner/operator caused the contamination. In order to help offset remediation costs, which are often very expensive, Massachusetts enacted the Brownfields Tax Credit (BTC) program which was established to aide landowners/lessees who were forced to remediate land that they did not contaminate. Traditionally, this blog has focused on the 50% tax credit awarded to eligible sites where either a permanent solution called a Response Action Outcome (RAO) or a Remedy Operation Status (ROS) has been achieved. Within the BTC however, there is a 25% tax credit that is awarded to RAOs which have Activity and Use Limitation’s (AULs) imposed on the land.
An AUL is a legal document that is required for land that has been remediated but in which there are conditions that must be maintained in order to remain, “No Significant Risk” to people. Essentially, AUL’s exist to prevent potentially dangerous exposure to contamination left at a site by restricting the possible land use for the future. AUL’s are recorded with Registry of Deeds, thus providing public record of the use limitations for future owners/operators.
In practice, AUL’s are often an option used by landowners who are required by law to remediate their property, but who do not wish to incur the costs related to achieving a permanent solution without any limitation. The permanent solution without any limitation is generally referred to as cleaning up the property for residential use, which implies any use, including those where children are present. The AUL cleanup is a cleaning to industrial use, which would limit the use to commercial and industrial enterprises, and not multi-family housing, day care or such uses. The Commonwealth of Massachusetts recognizes that achieving a status in which the soil is safe for some use, even with limitations and maintenance requirements, is better than leaving contaminated land undeveloped and thus awards landowners who have achieved a RAO with an AUL the 25% state tax credit.