1. The benefits of brownfields development;
2. State initiatives supporting brownfields development;
3. The need for federal brownfields legislation; and
4. An evaluation of certain limitations in S. 350 along with suggested amendments.
I. THE BENEFITS OF BROWNFIELDS DEVELOPMENT
Brownfields are agricultural, commercial or industrial properties which have been impacted by contaminants, including hazardous substances as defined under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. ("CERCLA" or "Superfund") and petroleum products. Developers historically avoided such properties because of several legitimate concerns primarily relating to the uncertain environmental liabilities at those properties under state and federal environmental laws.
Because of these concerns, brownfields properties were typically overlooked in favor of previously undeveloped "greenfields" sites, such as farmland or woodland, where potential contamination and the related liability and costly remediation would not present obstacles. These environmental and financial policies that lead developers to pursue previously undeveloped properties, rather than to rehabilitate abandoned agricultural, commercial and industrial sites, caused deleterious results. On the one hand, contaminated sites were left as blights on the surrounding communities and, in some cases, threats to public health and the environment, while contributing little or nothing to the local economy. On the other hand, pressures mounted to develop more and more open space.
To the extent these obstacles to brownfields development can be minimized or mitigated significant benefits will surely follow. First, redevelopment of brownfields property has the potential to slow the development of open space and farmland. Second, redevelopment of brownfields property creates a potential "win, win, win" situation: property owners and developers will gain access to brownfields sites located in desirable locations, with existing infrastructure and affordable pricing; contaminated properties will be remediated; and local governments will receive increased real estate tax revenue (assuming no tax abatements are granted). Third, brownfields redevelopment is consistent with the notion of reestablishing our communities. Many brownfields sites are located in areas within walking distance or in close proximity to existing amenities (restaurants, shops, the arts). This proximity both fosters the sense of community and satisfies the increasing needs of our aging population (including the growing number of young "empty-nesters").
II. STATE BROWNFIELDS INITIATIVES
During the last five years, state legislatures and environmental protection agencies have acted vigorously to promote brownfields development through legislative and regulatory initiatives. Currently at least 43 states have some form of brownfields legislation or voluntary cleanup programs that actively encourage the remediation, reuse or redevelopment of environmentally impaired property. Brownfields and Housing: How Are State VCPs Encouraging Residential Development?, Bartsch and Dorfman, Northeast-Midwest Institute, April, 2000. See also, Hazardous Waste Sites - State Cleanup Practices, GAO/RCED-99-39. These State programs encourage brownfields redevelopment through a combination of techniques including (1) credible financial incentives for investigating, remediating and reusing contaminated properties; (2) flexible, yet certain remediation standards which allow cleanups to reflect the actual risk posed by the contamination at a site; and (3) transferable liability protection to property owners and tenants once these remediation standards have been attained. In essence, developers of contaminated property want to know that the cost of cleanup will not render the development financially untenable, and, as or more importantly, that once remediation is completed to the satisfaction of the state environmental agency, they and future owners and tenants will not be subject to further remediation liability.
III. THE NEED FOR FEDERAL BROWNFIELDS LEGISLATION
State brownfields programs provide liability protection under state law only. The question, then, becomes what protections exist under federal environmental statutes for owners and tenants of brownfields sites after cleaning up the property in compliance with state remediation standards? It is with respect to this last question that federal brownfields legislation becomes essential.
Federal environmental statutes which require remediation of contaminated property [e.g., CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C. § 9609 et seq. ("RCRA") and the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq. ("TSCA")] typically impose strict liability on those parties owning contaminated property, even where those parties did not cause the contamination. As an empirical matter, the United States Environmental Protection Agency ("EPA") rarely requires additional remediation of brownfields properties under these federal authorities once a property has been remediated to State cleanup standards. However, nothing forecloses EPA from doing so. Therefore, it is the perceived threat of EPA intervention, rather than EPA's actual enforcement activities to date, that significantly inhibits developers from approaching candidate brownfields sites. In this case, perception is reality. Developers rightfully ask: "Why should I acquire a brownfields site, remediate it to the satisfaction of a State environmental agency and still face the potential for EPA enforcement?"
Recognizing this fact and seeking to create incentives to develop brownfields property, EPA actually has adopted a series of brownfields policies and guidelines. These programs provide, among other things, funding for brownfields assessment and remediation, job training, tax incentives, and guidance on those circumstances where EPA may exercise its discretion not to impose liability on a developer of a brownfields site under federal environmental statutes.
EPA is to be commended for these regulatory initiatives; however, EPA's policies simply do not go far enough. In short, they do not provide any binding liability protection for developers or owners of contaminated property under federal environmental statutes who remediate property to state standards,1 and therefore do not remove the perception that EPA may seek to impose additional remediation requirements at brownfields sites. Indeed, even where a developer has remediated contamination at a brownfields site to the satisfaction of a State environmental agency under a well established, well funded, stringent State brownfields program, EPA retains its authority to independently require further remediation under federal environmental statutes.
Fundamentally, then, federal brownfields legislation must ensure that for those sites where (a) EPA is not currently requiring remediation under federal environmental statutes, and (b) remediation has been completed to the satisfaction of a State environmental agency, EPA will, as a matter of law, not seek further remediation under federal statutes. This framework provides the essence of needed federal brownfields legislation: creating the requisite certainty to developers of brownfields property, removing the perception of EPA overfiling, and providing finality in the form of statutory liability protection. At the same time, this framework necessarily must retain appropriate enforcement authority for EPA, a so-called federal "safety net", under clearly defined circumstances.
IV. EVALUATION OF S. 350
S. 350 proposes to fill the above-referenced need for federal brownfields legislation. S. 350 provides certain important elements to satisfy the framework identified above. First, S. 350 provides substantial grants and loans for brownfields assessment and remediation. Second, S. 350 establishes clarifications to CERCLA's liability provisions providing potential exemptions (subject to lengthy qualifying criteria) for bona fide prospective purchasers, contiguous property owners and innocent landowners. Third, S. 350 provides a limited bar to EPA enforcement, under CERCLA only, at sites remediated to the satisfaction of a State agency.
Despite these useful provisions, S. 350 does no go far enough in significant and important ways. Accordingly, set forth below is an evaluation of six provisions of S. 350 along with suggested amendments aimed at providing the required certainty, finality and liability protection while at the same time maintaining an appropriate federal "safety net". By no means is this an exhaustive evaluation of all issues raised by S.350, but rather represents an attempt to highlight certain salient issues.
A. S. 350 Should Be Amended To Remove Reopener Provisions With Insufficient Standards
As set forth above, federal brownfields legislation must provide not only certainty and finality for site developers and owners, but also an appropriate federal "safety net" authorizing EPA to exercise its enforcement authorities under federal environmental statutes in clearly defined circumstances. These provisions, sometimes referred to as reopeners, are contained in Section 129(b)(1)(B) of S. 350. The specific reopener provided for in Section 129(b)(1)(B)(iv) of S. 350 is overly broad and as a result threatens to significantly undermine the finality and certainty that S. 350 correctly seeks to achieve.
Specifically, Section 129(b)(1)(B)(iv) provides that EPA may bring an enforcement action if:
The Administrator determines that information that on the earlier of the date on which cleanup was approved or completed, was not known by the State, as recorded in documents prepared or relied on in selecting or conducting the cleanup, has been discovered regarding the contamination or conditions at a facility such that the contamination or conditions at the facility present a threat requiring further remediation to protect public health, welfare or the environment. (emphasis added)
There are two fundamental problems with this provision. First, information known to the State "on the earlier of the date on which cleanup was approved or completed" forms the baseline for determining whether "new" information has been discovered subsequently. In many instances, a State environmental agency approves a cleanup plan and the remediator thereafter continues to generate data during the course of designing and implementing the approved cleanup. Pursuant to Section 129(b)(1)(B)(iv), any and all data generated during remedial design and remedial action will be newly discovered and potentially subject the remediator to EPA enforcement. Accordingly, Section 129(b)(1)(B)(iv) should be amended to read "on the later of the date on which cleanup was approved or completed. . ."
Second, and more significantly, the mere existence of any new information such that the contamination or conditions present any "threat" is a standard without boundaries. Several examples illustrate this point. First, assume a report issued by an organization, whether or not peer reviewed, alleges that a particular contaminant at a site poses a marginally greater risk than previously thought. In that circumstance, the reopener contained in Section 129(b)(1)(B)(iv) potentially applies notwithstanding the validity of the report or whether the risk remains with the range documented as part of the State approved cleanup. Second, any migration of contaminants within a site, a normal occurrence, would potentially be subject to this same reopener. Finally, any fluctuation in sampling results, within the same order of magnitude (even expected seasonal fluctuations) could potentially subject a particular site to a reopener.
In sum, there is no standard contained within Section 129(b)(1)(B)(iv) which constrains the quality, reliability, authority or environmental significance of the new information. As such, this reopener is potentially so broad as to eliminate the very protections S. 350 seeks to create. It should therefore be deleted.
B. S. 350 Should Be Amended To Expand The Enforcement Protections To Future Owners and Tenants
The enforcement limitations provided by Section 129(b)(1)(A) of S. 350 apply only to a person who "is conducting or has completed a response action regarding the specific release" under a State brownfields program. See 129(b)(1)(A)(ii). Read literally, this language potentially excludes from S. 350's enforcement protections both current developers of a brownfields site as well as future owners and/or tenants of that site. Two examples illustrate this problem.
First, assume a property owner seeks to sell contaminated property and agrees with the proposed buyer/developer that the property owner will complete the required remediation under State law prior to closing. In that circumstance, the developer will not be a person "conducting" or "completing" the required response action and would fall outside the protections of Section 129(b)(1)(A).
Second, now assume that the proposed developer, not the property owner, conducts and completes the response action. Subsequently, the developer sells the property to another developer who leases the property to a tenant. Again, neither the second developer nor the tenant fall within the language of Section 129(b)(1)(A) because they did not "conduct" or "complete" the response action. For these reasons the provisions of S. 350 should be amended to expressly apply to all parties who participate in the response action and all future owners or tenants of that property.2
C. S. 350 Should Be Amended To Apply To Petroleum Contaminated Sites
Proposed Section 129(b)(1)(A) of S 350 provides that the President may not use the authorities under sections 106(a) or 107(a) of CERCLA against any person conducting or completing a response action regarding a specific release in compliance with a State brownfields program. This section represents the cornerstone of S. 350's attempt to restrict EPA's enforcement authority where a brownfields property is remediated under a State brownfields program.
However, Section 129(b)(1)(A) restricts EPA's enforcement authority under CERCLA alone. CERCLA expressly applies to remediation of a release or threatened release of hazardous substances. 42 U.S.C. §§ 9604, 9606(a), 9607(a). Hazardous substances, as defined under CERCLA, expressly exempts petroleum products, including crude oil or any fraction thereof, natural gas and natural gas liquids. 42 U.S.C. § 9601(14). Therefore, S. 350 does not provide any liability protection regarding petroleum contaminated sites.
The absence of any protections for petroleum contaminated sites represents an extremely significant limitation to S. 350. The General Accounting Office estimates that there are approximately 450,000 brownfields sites nationwide. Out of these sites, EPA estimates that 100,000 to 200,000 sites which contain abandoned underground storage tanks or are impacted by petroleum leaks. EPA USTfields Initiative, www.epa.gov/swerosps/bf/index.html. In addition, petroleum contaminated sites are obvious targets for redevelopment because of the their prime locations and the well-known and cost-effective remediation technologies available for petroleum contamination.
As a matter of policy and logic, there is no apparent basis for treating hazardous substance contamination under CERCLA more favorably than petroleum contamination. On the contrary, since there are numerous petroleum contaminated sites and these sites present attractive development opportunities, federal brownfields legislation should provide at least the same liability protections for petroleum contaminated sites as for sites contaminated with CERCLA hazardous substances.
S. 350 can be amended easily to rectify this problem. Petroleum contamination is subject to liability under RCRA's general enforcement authority, 42 U.S.C. § 6973, and under RCRA's provisions relating to a release of petroleum from underground storage tanks, 42 U.S.C. § 6991b(h). Therefore, S. 350 should be amended to include protection for petroleum contaminated sites by including RCRA Sections 6973 and 6991b(h) within the provisions of Section 129(b)(1)(A).3
D. S. 350 Should Be Amended To Provide More Complete Finality
The clear intent of Section 129(b)(1)(A) of S. 350 is to provide a strong measure of finality for persons remediating hazardous substance contamination in compliance with State brownfields programs. By limiting EPA's enforcement authorities under CERCLA, S. 350 partially accomplishes this goal. However, without similar limitations on EPA enforcement authorities under RCRA and TSCA, S. 350 lacks the certainty and finality necessary to overcome the perception of EPA intervention which currently inhibits brownfields development.
Simply stated, by limiting Section 129(b)(1)(A) to CERCLA, a person remediating hazardous substance contamination under a State brownfields program will be subject to potential federal intervention under both RCRA and TSCA for the exact same hazardous substances. As an example, assume that a site is contaminated with benzene in soil and groundwater and that a developer remediates that contamination to the satisfaction of a State environmental agency. Section 129(b)(1)(A) provides a developer with certain protections from CERCLA enforcement. The developer does not, however, receive any protections against an enforcement action under RCRA, 42 U.S.C. § 69734 or TSCA, 15 U.S.C. § 2606(a)(1)(B)5.
For this reason, providing a limitation on EPA's CERCLA enforcement authority alone does not resolve the concerns regarding EPA intervention that gave rise to Section 129(b)(1)(A) of S. 350 in the first instance. Accordingly, Section 129(b)(1)(A) of S. 350 should be amended to include enforcement limitations under Section 6973 of RCRA and Section 2606(a)(1)(B) of TSCA.6
E. Sites Impacted By Polychlorinated Biphenyls ("PCBs") Should Not Be Excluded From the Definition of Brownfields Sites
Section 101(a) of S. 350 provides a new definition for brownfields sites by adding Section 101(39) to CERCLA's definitions. Proposed Section 101(39)(B)(viii) states that brownfields sites subject to the protection of S. 350 do not include facilities where there has been a release of PCBs that is subject to remediation under TSCA. Presumably, PCB sites have been specifically excluded because EPA has, unlike for other hazardous substances under CERCLA, promulgated specific cleanup standards for PCB cleanups under TSCA. However, EPA's cleanup standards under TSCA are in no way inconsistent with including PCB impacted sites within S. 350.
Specifically, S. 350 should provide that EPA cannot exercise its enforcement authority under TSCA at PCB impacted sites, except where (1) PCB contamination is subject to TSCA and the State approved or completed remediation does not meet TSCA's cleanup standards, or (2) where the reopener conditions in Section 129(b)(1)(B) of S. 350, as amended, are satisfied. Under this approach, PCB sites would be on equal footing with other sites, subject to caveat that where applicable, the TSCA PCB cleanup standards must be satisfied.
F. The Savings Provision Relating To Existing MOAs Should Be Amended
Section 129(b)(2)(B) provides that:
Nothing in Section 129 modifies or affects the memorandum of agreement, memorandum of understanding or any other similar agreement relating to this Act between a State agency . . . and the Administrator that is in effect on or before the date of enactment of this Section. . ..
As noted above, there are at least fourteen existing MOAs between EPA and the States. Each of these MOAs has unique and distinctive provisions. Most significantly, these MOAs do not provide the full enforcement protections provided for by S. 350 as it currently stands and/or as suggested for amendment herein. Accordingly, Section 129(b)(2)(B) undermines the more complete liability protections offered by S. 350. For this reason, Section 129(b)(2)(B) should be amended to state that the existing MOAs should provide no less complete enforcement prohibitions than that provided by S. 350 as amended.
Brownfields developments provides a unique opportunity for a wide variety of interest groups, government, developers, site owners, community groups and environmentalists to reach common ground. While S. 350 provides certain important elements toward that end, the specific suggested amendments herein, including inclusion of petroleum contaminated sites, inclusion of protections under RCRA and TSCA, explicit recognition of protections for future owners and tenants, elimination of ambiguous reopeners and inclusion of PCB contaminated sites, would strike an appropriate balance between providing certainty, finality and liability protection to brownfields developers and maintaining the federal "safety net".
Robert D. Fox, Esquire Manko, Gold & Katcher, LLP 401 City Avenue - Suite 500 Bala Cynwyd, PA 19004 (484) 430-2313
1 EPA has entered into Memoranda of Agreement ("MOA") with certain states (approximately 14) whereby EPA agrees not to take enforcement action against an owner of contaminated property who has remediated its property to the satisfaction of a state environmental agency under state law. However, these MOAs contain broad reservations of rights for EPA which do not fully insulate property owners against liability under federal environmental statutes.
2It could be argued that future owners and tenants are protected by the new provisions relating to prospective purchasers. See Section 202 of S. 350. However, the new prospective purchaser provisions contain detailed requirements and prerequisites not contained in Section 129(b)(1)(A). Therefore, as currently written, S. 350 provides that an innocent future owner or tenant would be subject to more stringent requirements than the initial seller or developer of the property. There is no basis for this distinction.
3Of course, this proposed amendment to S.350 is not intended and should not be construced to modify, amend or alter the petroleum exclusion under CERCLA.
4Section 6973 of RCRA authorizes EPA to bring suit requiring remediation against any person who has contributed to or is contributing to storage, handling, treatment, transportation or disposal of any solid waste or hazardous waste, (which term is included within CERCLA's definition of "hazardous substances"), that may present an imminent and substantial endangerment to human health or the environment.
5Section 2606(a)(1)(B) of TSCA authorizes EPA to bring suit requiring remediation against any person who uses or disposes of an imminently hazardous chemical or mixture (which term is also included within CERCLA's definition of "hazardous substances").
6Any such limitation explicitly should not affect EPA's ability or authority to enforce other regulatory requirements of RCRA or TSCA, including those discussed in Section IV.E. below.