Brownfields Program: Cleaning up Urban Industrial Sites

Mark Reisch
Analyst in Environmental Policy
Environment and Natural Resources Policy Division
95-454 ENR
April 3, 1995

SUMMARY

The Brownfields Economic Redevelopment Initiative is a pilot project to return idle or underused industrial and commercial facilities back to productive use, in situations where redevelopment is complicated by potential environmental contamination. The program is flexible, allowing cities to use a variety of approaches in utilizing grants of up to $200,000 to develop abandoned and underused sites, neighborhoods, and small regional areas. States and Indian tribes are eligible as well as local governments.

BACKGROUND

The Brownfields Program is an administrative initiative by the Environmental Protection Agency (EPA) to improve the effectiveness of the Superfund program. It is one of a series of actions by the Agency, first enunciated in June 1993, to improve the fairness of enforcement and reduce transaction costs, enhance the role of States and the general public, and improve cleanup effectiveness and consistency. There are no bills in the 104th Congress specifically on the brownfields issue.

The sites, referred to as "brownfields," are generally in urban areas, and have the potential to be developed for industrial, commercial, recreational, or residential use. The Brownfields Program also hopes to preserve more pristine rural areas (''greenfields'') from industrial development by making the old industrial sites more attractive to new industrial users. Another intent of the initiative is to overcome the reluctance of prospective developers to move in because of the fear of incurring expensive environmental cleanup liability, since the property may have been contaminated by previous owners.

EPA is conducting the pilot projects to gather information on the best ways to return old industrial sites to productive use. The communities will perform initial work to seek developers to restore the sites, and will also incorporate the efforts of lenders, regulators, and other groups. Ideally, the projects could create jobs and improve the local economy, generating more tax income and stimulating property values, according to EPA.

EPA made the first three grants of $200,000 each to Cleveland, Richmond, and Bridgeport, Connecticut, in FY 1994. Fifty pilots are planned in all, an additional 22 by the fall of 1995, and 25 more in 1996.

APPLICATIONS

Applications can be obtained by calling the Superfund hotline at 800/424-9346 (Washington, D.C. area: 703/412-9810), or writing to:

U.S. EPA
Brownfields Application
Superfund Document Center 5201 G
401 M Street, SW
Washington, D.C. 20460

The application deadline for the current round of grants has been extended from March 1, 1995, to April 17, 1995. From those applications received by March 1, EPA will select five pilot projects by May 17, 1995. From all applications received by April 17, including those that met the March 1 deadline, EPA will select an additional 10 pilots by July 21, 1995.

Project proposals must include the following:

• -A demonstrated commitment of public and private entities to the project;
• -Plans to involve the local community;
• -A clear indication of how Federal support will help the project;
• -Local government support;
• -Potential sources of cleanup funding;
• -Contributions to environmental justice goals;
• -A well-defined approach to environmental assessment; and
• -Sufficient technical, legal, and political resources to accomplish the project's goals.

Additional details are in the application booklet.

THE BROWNFIELDS ACTION AGENDA

At the same time EPA Administrator Carol Browner said that the Brownfields Economic Redevelopment Initiative would be expanded to 50 projects, she also announced a "Brownfields Action Agenda." It contained a new element, removal of 25,000 sites from CERCLIS, and a restatement of several previously announced administrative activities.

CERCLIS is the acronym for the Superfund program's Comprehensive Environmental Response, Compensation, and Liability Information System. It is the Environmental Protection Agency's (EPA) computerized inventory of about 38,000 sites suspected of being contaminated by hazardous substances. The sites that score high enough, using the Hazard Ranking System, are placed on the Superfund National Priorities List (NPL) to be cleaned up under the Superfund program. There are currently about 1,300 sites on the NPL. Other CERCLIS sites may be cleaned up under State programs. Thousands of sites have proven to have no contamination at all, and require no further action.

The 25,000 sites being removed have been screened out of EPA's active investigations category and are designated "No Further Removal Action Planned" (NFRAP). EPA Region I headquarters in Boston announced the removal of 655 sites in the New England region on February 21.

The list remains open, and sites continue to be added as they are reported to EPA. Until recently there was no procedure for removing sites from CERCLIS, even the ones that were clean to begin with. Increasingly, and especially in the last few years, this has proven to be a burden to any further use of the land. Many developers and lenders have been reluctant to have anything to do with property tainted by any relationship with Superfund whatsoever, for fear that they may be drawn into the Superfund law's broad liability net and be required to pay cleanup costs.

Other elements of the Brownfields Action Agenda scheduled for 1995 also focus primarily on facilitating the transfer of property. They are:

• - A Lender Liability guidance document is scheduled to be promulgated in summer 1995. The guidance will detail actions that lenders can and cannot take with contaminated properties on which they foreclose without incurring Superfund liability. An earlier rule was struck down by the D.C. Circuit Court (Kelley v. EPA, 15 F.3d 1100, cert. denied). While the new guidance will not have the status of a regulation, the Agency states that courts have deferred to EPA's position, and this will provide assurance to lenders until Congress clarifies the law. In the present Congress, H.R. 200 and S. 394 have been introduced on lender liability.
• - New Prospective Purchaser Agreements broadening the circumstances under which the Agency will promise not to file a lawsuit against a possible buyer of contaminated property for pollution that existed before the purchase. The guidance will clearly define the specific situations and sites at which EPA believes it is appropriate to enter into an agreement with a prospective purchaser.

-- Municipal Acquisition Liability rules will clarify the circumstances under which a local government can "involuntarily" take over a property (such as through tax delinquency). The Superfund law specifies that "a unit of State or local government which acquired ownership or control involuntarily ... by virtue of its function as sovereign" will not be liable, but it is not completely clear what constitutes an "involuntary acquisition." The result has been that municipalities have been reluctant to take over abandoned properties for fear of becoming liable for cleanup costs. The new rules will encourage the local governments to clean up and restore these properties to useful purposes.

-- Owners of property situated above an aquifer that has been contaminated by a neighboring property have sometimes been concerned about cleanup liability. EPA will issue a general policy statement in 1995 assuring that EPA does not anticipate suing these parties, allowing them to be bought and sold free of Superfund liability.

While the Environmental Protection Agency is proceeding with these and other administrative initiatives to improve the working of Superfund, the Agency is still seeking reform of the law.