Summer 2002 Update
Progress on brownfields restoration
Since “Restoring Contaminated Industrial Sites” appeared in the Spring 1994 Issues (as well as an update in the Fall 1997 edition), Congress has debated how best to clean and redevelop moderately contaminated properties, known as brownfields. A major advancement occurred in January 2002 when President Bush signed the Brownfield Revitalization and Environmental Restoration Act. Still, a bit more is needed to overcome financial barriers.
The new law opens up the Environmental Protection Agency’s (EPA’s) brownfield program in two significant ways. First, it permits properties with petroleum contamination to take advantage of grant resources, thereby addressing the realities of the reuse process, where mixed contaminants are the norm. Also, grant recipients now will be able to use a portion of the site-assessment or cleanup grants to pay insurance premiums that provide coverage (such as for cleanup cost over-runs) for these sites. This flexibility should help prospective site reusers secure private financing more readily, because it will provide a way to better quantify and manage risk.
From a procedural perspective, the Brownfields Revitalization Act sets the stage for new public-private redevelopment partnerships by clarifying vexing liability issues that deterred site acquisition and redevelopment. Specifically, it exempts from Superfund liability contiguous property owners: those who did not contribute to the contamination and who provide cooperation and access for the cleanup. It also clarifies the innocent landowner defense to Superfund liability, making it easier to determine its applicability in specific situations.
One of the law’s most important provisions exempts prospective purchasers from Superfund liability. Those who did not know about the contamination at the time of acquisition, who are not responsible for it, and who do not impede its cleanup would not be liable. This liability protection, available for persons who acquire property after January 11, 2002, will remove a significant barrier to private-sector participation in brownfield projects and allow new owners to quantify their risk much more precisely.
The new law also clarifies the state-federal relationship regarding cleanup finality, making it easier for innovative remediation technologies and engineering controls to be used as part of a cleanup. Sites addressed through a state’s voluntary response program now are protected from EPA enforcement and cost-recovery actions. The only exceptions are at sites where contamination has migrated across state lines or onto federal property; if releases, or the threat of releases, present an imminent and substantial endangerment; if new information shows that a cleanup is no longer protective; or if a state requests federal intervention. States now will share $50 million annually to support these response programs. In return, states will need to maintain a “public record of sites” addressed through their voluntary response program, and update that record annually.
The new law also provides $200 million annually in grants through fiscal 2006 to carry out essential early-stage activities associated with brownfield cleanups, notably site assessment, remediation planning, and the actual cleanup itself. Still, more attention is needed on the financing side of brownfield reuse. The House Financial Services Committee, for instance, recently reported a bill (H.R. 2941) to decouple the Department of Housing and Urban Development’s brownfield economic development initiative (BEDI) from the Section 108 program, which would open up BEDI to independent applications from small cities for the first time. The Senate soon will mark up a bill (S. 1079) to formalize a brownfield role for the Economic Development Administration (EDA) and to authorize $60 million for EDA to carry out that mission. The House Ways and Means Committee, moreover, is set to consider a proposal making the brownfield tax-expensing incentive (targeted to cleanup, maintenance, and monitoring costs) permanent. All of these proposals, if enacted, would have significant potential to further enhance brownfield revitalization efforts.