With a vote of 99-0, the U.S. Senate has moved to change the way so-called "brownfield" properties are regulated. Without such reform, developers and lenders have largely refused to handle environmentally-damaged land, properties usually clustered in urban areas.
"Brownfields" are areas which contain various environmental pollutants as a result of past use -- an old factory site or perhaps the location of a former service station. While such sites can often be cleaned up, prospective buyers shy away from such properties because they fear future liability under the so-called "Superfund" law.
Under the current Superfund law, companies or individuals who own or acquire brownfield sites are potentially liable for the entire cost of remediating any hazardous substances on those sites -- even if they did not cause any part of the pollution.
The threat of unlimited cleanup liability can potentially turn a $500,000 investment into a $10 million burden for would-be brownfield re-developers. Faced with unlimited liability, many investors won't touch real estate transactions involving any degree of environmental contamination and lenders will not provide funding. The result is that such properties are not cleaned up.
The Senate bill, S. 350, would ease real estate owners' and prospective purchasers' environmental cleanup liability under the 1980 Superfund law -- including the liability that faces landowners whose properties become contaminated by pollution migrating from adjacent sites. It would, say advocates, provide real estate owners with a greater sense of "finality" on voluntary brownfields cleanup projects approved by state authorities. Additionally, the bill would provide some financial incentives for the investigation and remediation of these types of sites.
Experts estimate there are between 400,000 and 500,000 mildly contaminated brownfield sites throughout the U.S. that could be returned to productive, economic use if the underlying environmental issues were addressed in ways that make recovery efforts cost-effective.
Changes to brownfields policies have the potential to greatly impact urban land use. Currently, large tracts of land lie undeveloped because of the great expense involved in remediating environmental damage. By revising the Superfund laws, Congress could drive development in more densely populated areas. Moderate environmental groups tout the legislation as a partial cure for sprawl since it would make more urban land available for productive use.
"Redeveloping abandoned brownfields to viable sites will alleviate growth pressures and rejuvenate local economies," said Richard Mendenhall, president of the National Association of Realtors.
Superfund rules impose draconian policies and unaffordable cleanup costs on owners of contaminated land, even if those owners did nothing to cause the pollution. Under the law, anyone who has ever owned a piece of land that is now polluted can be required by the government to pay for its remediation. Typically, this has caused the owner with the deepest pockets to pay millions of dollars.
But the Senate bill would reduce landowner liability, including the liability facing those whose properties become contaminated by pollution migrating from adjacent sites. The bill also would provide real estate owners with a greater sense of finality on voluntary brownfield cleanup projects approved by state authorities by limiting the U.S. Environmental Protection Agency's authority to second-guess these projects. Additionally, the bill would provide some financial incentives for the investigation and remediation of these types of sites.
What's more, the bill nearly doubles the annual funding for brownfields cleanup to $150 million. It also grants an additional $50 million to state cleanup programs and extends protection from legal and financial liabilities to innocent property-owners and developers who undertake cleanup projects.
"[The] Senate vote represents a win for the environment, a win for responsible economic development and a win for communities struggling to overcome the stigma of environmental contamination," said Nelson Rising, chairman of the Real Estate Roundtable. "If enacted, this legislation will go a long way toward removing the specter of Superfund liability from potential brownfields transactions and generate much-needed economic investment in distressed communities."
Not everyone, however, is happy with the legislation.
The National Association of Home Builders wants the legislation expanded to include liability protection for the cleanup of sites contaminated with petroleum.
Petroleum, says NAHB, is not considered a hazardous substance under the Superfund law and is regulated under the Resource Conservation and Recovery Act (RCRA). But they argue that S. 350 only provides liability protection to "hazardous" substances as defined under the Superfund law. By not extending liability protection to petroleum, builders say S. 350 could eliminate the redevelopment of nearly half the brownfield sites in the country.
"Without petroleum liability protection, builders will continue to see a lot of risk and little reward in cleaning up brownfield sites contaminated with petroleum," says NAHB President Bruce Smith.
The homebuilders also claim that S. 350 allows EPA to "reopen" if a "new" information suggests a potential "threat." NAHB says these terms are undefined and could mean anything.
"We need some sense of certainty and finality," Smith said. "If you satisfy the requirements of a state brownfields program and earn state environmental liability protection, then you should earn federal liability protection, too."
The bill, which was sponsored by a bi-partisan coalition of senators, enjoys strong support from President Bush. The bill now goes to the Republican-controlled House for consideration. It's expected that the homebuilders will try to modify the legislation to include gasoline liability protection.