One Pager: Brownfields, Superfund and Redevelopment George S. Hawkins, Esq. 1.

What are Brownfields? Brownfields are “abandoned, idled or underused industrial and commercial sites where expansion or redevelopment is complicated by real or perceived environmental contamination that can add cost, time or uncertainty to a redevelopment project.” U.S. Environmental Protection Agency Region 5. a. Key comparison: Consider what is a “Greenfield.” b. Four categories: i) sites that remain viable due to market demand despite contamination; ii) sites that have development potential, provided financial or legal incentives; iii) sites that have limited market potential, even after remediation; and iv) currently operating sites that may become brownfields because historical contamination.

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What is the Importance of Brownfields? a. Number of Sites. US Conference of Mayors estimates that there are 130,000 to 450,000 contaminated industrial and commercial sites in the United States. A survey of Toledo, Ohio found that 62% of the areas commercial or industrial real estate transactions are encumbered by environmental issues. b. Tax Revenues: Conference of Mayors estimates that 33 cities lose nearly $121 million tax dollars from brownfield sites, estimated by others at $386 million. Nationwide, this is billions of dollars in the 20,000 cities and municipalities.

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What is the cycle of Brownfields? a. Contamination. Environmental liability makes it difficult for an existing owner to sell or use contaminated property. Lack of use undermines the tax base and jobs. b. Vacancy. Vacant, unused property deteriorates and becomes abandoned, inviting vandalism, further dumping and contamination, and further destruction of the property. Value of the property continues to decline. c. Neighborhood. Vacant property decreases the quality of life and value of properties in the vicinity, a root cause of urban blight. Contamination, vandalism and other negative behaviors can migrate to adjacent properties. d. Greenfields. Developers do not consider redevelopment in these areas in favor of development of “Greenfield” sites.

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How has Superfund contributed to this problem? (Also, remember analogous state statues.) a. What is Superfund? Superfund is name for the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, as amended. Superfund was devised as a liability and remediation program. b. What are the key provisions? i. Strict Liability: Responsible parties that produced hazardous substances can be liable for the clean-up, even for waste disposed prior to the statute, for wastes not regulated at the time of disposal, and for discharges properly disposed in their time. No “fault” is necessary. CERCLA Section 107(a) ii. Joint and Several Liability: Any one responsible party can be liable for the cost of an environmental clean-up. iii. Lender Liability: lenders who foreclose a property have been held liable if they participate in the financial management to a level that indicates a capacity to influence waste disposal practices. iv. Past Owners: Sale of land does not absolve past owners of potential liability. v. Current Owners: Current owners can be held responsible for clean-ups, even for contamination that was first generated by a prior owner, unless the owner can demonstrate due diligence prior to purchasing the property and mistakenly concludes the site is clean (the innocent-owner exception). vi. Process: A complicated and expensive process for clean-up is outlined in the National Contingency Plan (NCP), which must be followed to recover clean-up costs. CERCLA Section 105. vii. Clean-Up Standards: Flexible and variable at each site, defined by “applicable and relevant and appropriate” standards (ARARs). In EPA Region 1, goal was to “Eat the Dirt, Drink the Water, Breath the Air.”

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Challenges a. Ownership. Existing owners can’t use or sell. New owners are afraid to buy. Sites become mothballed. b. Cost: Any owner that does seek to develop brownfields saddled with high and uncertain costs. c. Lenders: Lending institutions avoid lending to brownfield projects over concern about return and potential liability. d. Competition: Municipalities chasing ratables offer greenfields with little liability concerns and clear financial returns. e. Neighborhoods: Communities are caught between the hope to revitalize brownfield sites and the need to have them remediated to reduce the risk from environmental contamination.

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Do we have solutions? The Brownfields Revitalization and Environmental Restoration Act (BRERA) a. Funding mechanism. Funding provided to spur local and state efforts to clean-up and redevelop brownfield sites. b. Liability protections. Relief for purchasers and property owners for prior releases to spur purchase and redevelopment. c. Enforcement bar. Limitations of liability for parties who clean-up under state voluntary clean-up programs d. Key remaining question: Should we relax clean-up standards for brownfield sites to spur development? Reference: Brownfields: A Comprehensive Guide to Redeveloping Contaminated Property, Todd S. Davis, Editor, (American Bar Association, Section of Environment, Energy, and Resources, 2002).