THE BROWNFIELDS REVITALIZATION AND ENVIRONMENTAL RESTORATION ACT OF 2001
by David B. Hird*
INTRODUCTION
For several years, all of the legislative activity to promote brownfields restoration occurred in the States, not in Congress. Although brownfields provisions have been proposed, either as part of a comprehensive revision of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)(1) or as stand-alone legislation, in practically each session of Congress since 1994, none of these bills have been enacted. In 2001, however, there was a major break-through: Early in the year, the Senate passed a brownfields bill, S. 350, by a vote of 99-0. But then, the legislation languished for months, as the Democrats and Republicans in the House of Representatives each proposed changes to the Senate bill. In the fall, however, both sides appeared to be close to agreement to accept the Senate bill without change. But following the tragic events of September 11, Congress' attention was focused on other issues. Finally, in the closing days of the year, Congress turned back to the issue of brownfields legislation. On December 20, 2001, the House adopted the Senate bill with a single change; the same day, the Senate passed the House bill. President Bush signed the bill into law on January 11, 2002.(2)
The Brownfields Revitalization and Environmental Restoration Act of 2001 ("BRERA") modifies CERCLA to encourage brownfields development by providing federal liability relief to prospective purchasers of brownfield properties and to persons who undertake cleanups of these properties under state law, and by providing funding both to state brownfield programs and to local governments who seek to return brownfield properties to productive use.
BRERA serves two functions. First, it creates a funding mechanism to assist state and local government efforts to redevelop specific brownfield sites and to aid states in administering their voluntary cleanup programs. Second, it provides relief from liability under CERCLA for new purchasers of contaminated properties, property owners and others who conduct cleanups under voluntary cleanup programs, as well as the owners of properties that are affected by contamination migrating from contiguous sites.
In the past, concerns about CERCLA liability have discouraged many property owners and developers from getting involved with brownfield projects. BRERA's liability reform provisions are intended to allay those concerns by providing substantial protection for new purchasers and property owners undertaking voluntary cleanup. But the liability reform protections are not absolute: each comes with qualifications and exceptions, so that the federal government may take enforcement action in unusual cases. Nonetheless, the very existence of these protections (even though incomplete) should encourage purchasers and developers to undertake brownfield projects.
SUMMARY OF MAJOR PROVISIONS
The major provisions of BRERA include the following:
1. Protection from CERCLA liability for purchasers (and their tenants) of contaminated properties, as long as they meet certain requirements, including taking appropriate care with respect to prior releases. Although the government may not recover its costs from these purchasers, it will have a lien on the property to the extent that its unrecovered cleanup costs increased the value of the property.
2. A bar against federal enforcement of CERCLA against any person - including a party who owned or operated property at the time of a release - who cleans up a contaminated property under a state voluntary cleanup program. This enforcement bar is limited to eligible properties which do not include any site that has been already designated for cleanup under CERCLA or other federal programs. Also, this enforcement bar is not absolute; in certain exceptional instances, the federal government could bring enforcement proceedings against a party who had completed a voluntary cleanup under state law.
3. Protection from CERCLA liability for the owners of property that has become contaminated only through the migration of pollution from other property under separate ownership. In particular, owners of property contiguous to sites with contaminated groundwater cannot be required to undertake a ground water investigation or cleanup if the contamination flows under the property, except in unusual circumstances.
4. Clarification of the "all appropriate inquiry" standard required to establish the innocent landowner defense under CERCLA. With respect to non-residential property, a new purchaser may satisfy this defense by complying with the American Society for Testing and Materials (ASTM) due diligence standard until U.S. EPA promulgates new regulations.
5. Providing $50 million a year in federal grants to state voluntary cleanup programs.
6. Providing eligible entities, such as local governments, regional authorities and States with grants of $200,000 (or in exceptional circumstances, $350,000) for the characterization and assessment of brownfield properties, and up to $1 million for remediation.
ANALYSIS
I. Prospective Purchaser and Innocent Landowner Liability Protection
Perhaps the most important provision in BRERA for encouraging the redevelopment of brownfield properties is the one providing immunity from CERCLA liability for purchasers of contaminated property. Many recyclable brownfield properties remain unused because of the potential buyer's fear of acquiring CERCLA liability along with the property. Historically, CERCLA imposed liability on the current owner of contaminated property, regardless whether that owner contributed to the contamination. Although Congress created an innocent landowner defense when CERCLA was amended in 1986,(3) that defense was only available to property owners who did not know of the presence of hazardous substances when they bought the land;(4) therefore, the defense did not protect a knowing buyer of a contaminated brownfield site. Thus, to encourage new owners to buy and redevelop brownfield sites, BRERA creates an express exemption from liability as an owner or operator under section 107(a)(1) of CERCLA,(5) for "bona fide prospective purchasers."(6) In order to qualify as a "bona fide prospective purchaser" under BRERA, a person must acquire property (or be the tenant of a person who acquires property) after the date of enactment of the proposed new law, and must be able to prove, by a preponderance of the evidence, each of the following:
(1) stop continuing releases;
(2) prevent any threatened future release; and
(3) prevent or limit human, environmental, or natural resource exposure to any previously released hazardous substances.
Although some of these requirements apply at the time the property is acquired (e.g., the purchaser must conduct appropriate inquiry into the history and use of the property), many of these provisions relate to the purchaser's conduct after acquiring the property. Specifically, the bona fide prospective purchaser continues to have the obligation to cooperate with the government with respect to the property, including providing information and legally required notices, allowing access to the government or private parties to perform cleanups, and complying with land use restrictions and institutional controls.
The most significant of these ongoing obligations is the purchaser's responsibility to undertake "appropriate care" with respect to hazardous substances on its property. A "bona fide prospective purchaser" is not expected to undertake the full scale cleanup obligations of a responsible party under CERCLA; otherwise, there would be little purpose in creating the defense. Rather, the new law requires the prospective purchaser to take "appropriate care" of the hazardous substances on the site by taking reasonable steps to stop ongoing releases, prevent threatened releases, and limit human and environmental contact with hazardous substances. This "appropriate care" standard, as proposed in prior brownfield bills, is intended to impose less stringent obligations on a prospective purchaser than the "due care" standard demanded of defendants seeking to establish the third-party defense of section 107(b)(3) of CERCLA.(7) Purchasers qualifying for this protection are expected to undertake short-term, less expensive measures that could be performed most expeditiously and cost-effectively by a property owner, not to undertake the type of long-term measures that would be part of a cleanup program.
There is some confusion, however, whether Congress intended in BRERA to use "appropriate care" standard in this way. Although the Senate Committee Report describes the concept of "appropriate care" as a more modest level of care in connection with the defense crated for contiguous property owners, there is no discussion in the report of what is meant by the concept of "appropriate care" with respect to the prospective purchaser defense.(8) Further complicating the issue, Congress in BRERA revises the pre-existing innocent landowner defense of CERCLA, so that a person who qualifies for that defense has to meet both the "appropriate care" standard and the "due care" standard required under prior law.(9) Because innocent landowners have to meet both care standards, the implication could arise that the new "appropriate care" standard is more stringent than the "due care" obligation under prior law. Such a construction, however, would be inconsistent with the original concept behind the "appropriate care" standard and the discussion of that standard in the Senate Committee Report.
Although BRERA protects a purchaser from liability under CERCLA, it does not protect against liability under the Resource Conservation and Recovery Act (RCRA).(10) In the House, the Republicans had proposed expanded BRERA's liability protection to cover the underground storage tank provisions of RCRA(11) and RCRA's imminent and substantial endangerment provisions,(12) but not provide protection against liability under RCRA's hazardous waste or corrective action requirements. But this approach was not incorporated into the final bill. This is a significant omission since many brownfield sites have been contaminated solely or principally through leaks from underground storage tanks (USTs). Providing prospective purchasers with protections only from CERCLA liability, but not from liability under the provisions of RCRA relating to USTs, would do little to encourage purchasers to buy these UST sites.
Also, while BRERA protects the purchaser of contaminated property from CERCLA liability, the Act does not allow the purchaser to reap the financial benefit of a government funded cleanup that enhances the value of the property. Rather, BRERA authorizes the federal government to recoup its unrecovered response costs by imposing a "windfall lien" on the property.(13) The lien would last until the prospective purchaser resold the property, at which time, the government would receive from the proceeds of the sale amount of its unrecovered costs not to exceed the increase in the fair market value that is attributable to the government's response action. Thus, if the government spent $5 million on cleanup, but the cleanup only increased the fair market value by $2 million, the maximum amount the government would recover on its lien would only be $2 million. This approach prevents the prospective purchaser from reaping a windfall at the government's expense because the government cleanup improved the value of the property; at the same time, it prevents the government from reaping a windfall at the owner's expense if the property appreciates because of owner-funded improvements or other real estate factors unrelated to the cleanup.
II. CERCLA Enforcement Bar Protecting Persons Who Cleanup Property Under State Voluntary Cleanup Programs
One of the most controversial provisions of BRERA is the section which creates an enforcement bar against federal enforcement action under CERCLA against any one who performs a cleanup at a site under a state voluntary cleanup program.(14) This provision, in some respects codifies and in some respects extends the approach that the US Environmental Protection Agency (US EPA or the Agency) has taken on a state by state basis by entering into Memoranda of Understanding (MOUs) with individual states, in which the Agency has agreed not to take enforcement actions at certain sites that have been cleaned up under that state=s voluntary cleanup program.(15)
Many in the development industry and local government have argued that this enforcement bar should be codified by statute, should apply in all states, not just those states who have entered into MOUs with the US EPA, and should cover as many properties that are cleaned up under voluntary programs as possible. Advocates of this approach contend that protecting purchasers alone from CERCLA liability is not enough to encourage the development of many brownfield properties without relief to sellers and current owners who might undertake the development themselves. Many current owners of contaminated property are reluctant to sell their sites to developers, because they are concerned that any development activity will draw the attention of regulators and thereby lead to greater liability for them. Thus, supporters of the enforcement bar believe that if current owners are not protected from CERCLA liability, many of them are likely to keep their properties undeveloped and unsold, and therefore out of the regulators" attention. But if these current owners are offered protection from CERCLA enforcement when they bring sites through state voluntary programs, proponents of the provision argue, more brownfield sites will be cleaned up faster.
But environmental groups and others have been concerned that, if such a provision became law, current owners of highly contaminated property could use less rigorous state voluntary programs to avoid the more rigorous cleanup requirements that exist under CERCLA or other federal laws. They argued that owners of properties that are slated for cleanup under CERCLA or RCRA's corrective action program should not be able to avoid their obligations under those statutes by performing cleanups that would not pass muster under those programs. Opponents of the enforcement bar have also claimed that not all state voluntary programs provide adequate protection for the environment, and that US EPA should be able to review and approve those voluntary programs for which liability protection is extended, as it does now through the MOU process. Finally, they argued that, unlike the prospective purchaser provision, the enforcement bar under this section should not be absolute; rather, the federal government should be able to take enforcement action against the party who is responsible for the pollution, if necessary to protect human health and the environment.
In response to these arguments, several states have protested that they should not have to submit their voluntary cleanup programs to US EPA for its approval and that such a requirement would undermine their sovereignty. Also, the development industry has responded that if the exceptions to this liability bar are too broad, then it will not have the desired effect of encouraging current owners to bring sites into voluntary cleanup programs.
The approach Congress adopted in BRERA represents a compromise among these positions. BRERA provides that the federal government may not take enforcement action under CERCLA with respect to a specific release at an eligible site against any person, not just a new purchaser, who has conducted or is conducting a response action in accordance with a state program that governs response actions to protect public health and the environment.(16) But compared to the liability protection provided to prospective purchasers, the enforcement bar provided to cleanup volunteers under this provision is much more limited:
A. Eligible Sites
Under BRERA, the category of "eligible sites" for the enforcement bar is defined by the exclusion of sites, rather than the inclusion. The intention is to exclude any site that is likely to be the subject of a cleanup under CERCLA or another federal program. The starting point for determining eligibility is the definition of a "brownfield site."(17) An eligible site or "brownfield site" does not include:
US EPA would be able, however, to exclude additional sites from eligibility, either by regulation, or on a site by site basis, by conducting a preliminary assessment and concluding that a site qualifies for listing on the National Priorities List.(21) US EPA could also determine to include sites as eligible, on a site by site basis, if it determined that an enforcement bar would protect human health and the environment and promote economic development or facilitate the use of property for nonprofit purposes, such as parks and recreation.(22)
B. Eligible State Cleanup Programs
In order for the enforcement bar to apply, not only must the site itself meet eligibility requirements, but so must the state program under which the cleanup is performed. An eligible state program must contain the following elements:
This list of program elements reflects the concern of environmental and who have criticized the concept of an enforcement bar that voluntary cleanup programs in several states are not sufficiently rigorous, and that if an enforcement bar were provided, unscrupulous land owners will take advantage of these deficient programs to avoid the greater expense of federal cleanups. But the list of elements is so extensive that even rigorous programs in some states may not qualify.
BRERA preserves the existing MOUs between US EPA and specific states in which US EPA agreed not to take enforcement action with respect to sites that had been cleaned up under voluntary programs and would not prevent US EPA from entering into similar MOUs in the future.(25)
C. Limits on the Enforcement Bar
Even where a cleanup is performed at an eligible site under an eligible state cleanup program, BRERA's bar against federal enforcement under CERCLA would be fairly limited. First, the bar only operates against enforcement by the federal government under sections 106 and 107 of CERCLA;(26) it does not preclude state enforcement action under CERCLA or private cost recovery or contribution litigation. Second, the bar only precludes enforcement actions under CERCLA itself, not actions under section 7003 of RCRA,(27) which like section 106(a) of CERCLA allows the federal government to seek injunctions where the disposal of hazardous waste or substances creates an imminent and substantial endangerment.
Finally, the enforcement bar is subject to multiple exceptions (or "reopener provisions") which would enable the federal government to take enforcement action against cleanup volunteers. The list of exceptions includes:
The last two of these exceptions establish especially low thresholds for US EPA to cross if it determined to take enforcement action. First, US EPA may take enforcement action if it concludes that the property in its current condition presents an imminent and substantial endangerment and something more can be done to mitigate the release. Because a finding of an "imminent and substantial endangerment" is already a necessary precondition before US EPA may seek an injunction or issue an administrative order under section 106 of CERCLA,(30) this exception does not require much more of a showing than US EPA would need to bring a section 106 action in the first place. Second, US EPA can always claim that new information justifies an enforcement action against a party who has performed a voluntary cleanup.
In sum, BRERA's enforcement bar would only come into existence in a limited number of situations, and even then, US EPA could easily find a basis for taking enforcement action if it decided to do so. The true benefit of this provision for cleanup volunteers does not come in the form of absolute legal protection from federal enforcement, but through the creation of institutional barriers that US EPA will be reluctant pass to take action. Specifically, under the new law, any time that the federal government decides to bring an enforcement action against a cleanup volunteer, it would first have to give 72-hour notice to the state of its intent to do so (except in situations requiring immediate action). The state would have an opportunity to explain that the release is subject to a cleanup under a state program and the state is planning to address that release through the program. Moreover, any time the federal government takes enforcement action against a cleanup volunteer, it must report to Congress that it did so and explain why an exception to the enforcement bar applied.(31) Thus, although BRERA would technically provide US EPA with a means to take enforcement action against cleanup volunteers in most cases, the existence of these state and congressional notification provisions create political barriers that would make the Agency reluctant to exercise that power, except in a highly unusual case.
III. Liability Protection for Contiguous Landowners
One of the issues in brownfield development has been the potential liability of property owners whose land has been contaminated by pollutants that have migrated from contiguous sites. Although these property owners are the victims of contamination caused by others, some have argued that they are liable under the language of CERCLA as the current owners of facilities at which there has been a release of hazardous substances. Substantial arguments exist under prior law that these property owners would not be liable.(32) Nonetheless, in the absence of a well developed body of case law on this issue, these property owners face the uncertainty that they might be considered liable and subject to enforcement. This risk also impedes their ability to transfer property to others who fear liability.
Although the federal government has not generally brought enforcement actions against these owners of contiguous properties (except to obtain access to their property to conduct cleanups), the federal government has sometimes used the uncertainty about liability to persuade these landowners to cooperate. In recent years, however, US EPA has been more understanding of these landowners' situation. In specific instances, the Agency has written letters to the owners of these properties indicating that the Agency does not intend to undertake enforcement actions. Moreover, in 1995, US EPA published its Final Policy Concerning Owners of Property Containing Contaminated Aquifers. In that policy, US EPA announced that, as a general rule, it would not take an enforcement action against the owners of property solely because ground water containing hazardous substances from another source had flowed under their property. US EPA reserved the right, however, to take enforcement action in certain exceptional circumstances that remained largely undefined.
In recent years, many brownfield bills have contained provisions to protect these contiguous landowners from liability. Two different approaches have been suggested: the first approach is to adopt a provision that simply clarified that these contiguous property owners were not liable under CERCLA; the second is to create an affirmative defense for which these parties could qualify. BRERA takes an approach that falls in between these alternatives; BRERA contains an affirmative defense for which these contiguous landowners may qualify,(33) but the language of the new statute also makes clear that by creating this defense, the legislature does not intend to foreclose arguments that exist under preexisting law that the owners of contiguous properties are not liable parties under CERCLA.(34)
To establish the new affirmative defense created in BRERA, the owner or operator of a property that has been contaminated solely by a release from another property which the person claiming the defense does not own or operate would not be liable if:
To establish the defense, the contiguous property owner must prove each of these elements by a preponderance of the evidence.(37)
This provision has been the subject to some controversy, because it imposes numerous affirmative obligations on a party who is really a victim. Of specific concern is the obligation that a contiguous landowner would have to take reasonable steps to stop continuing releases, prevent a threatened future release and prevent human, environmental and natural resource exposure to hazardous substances on the property. In the committee report accompanying S. 350, the Senate Committee on the Environment and Public Works explained:
It is not intended to require parties raising section 107(o) as an affirmative defense . . . to undertake full-scale response actions with respect to migrating contaminated plumes passing through their property. It requires only that they take reasonable steps, which typically will include actions such as notifying appropriate Federal, State and local officials regarding the situation; erecting or maintaining signs or fences to prevent public exposure, or maintaining any existing barrier or other elements of a response action on their property . . . .(38)
Moreover, the language of the statute itself makes clear that a contiguous property owner is not required to conduct ground water investigations or to install ground water remediation systems.(39)
Another controversial point in the provision included in BRERA is the requirement that the contiguous landowner have undertaken due diligence before acquiring the property and not have known or had reason to know of the contamination from another source. On one side, the argument has been made that since a contiguous property owner is innocent of the contamination, that person should not be held liable even if he or she knew of the contamination before acquiring the property. The countervailing argument is that an owner of a contiguous property who buys property knowing that it is contaminated should be treated no differently than any one else who knowingly acquires contaminated property. BRERA would accept the second argument and provide that a person who knowingly purchases property that has been contaminated from another source may not satisfy the contiguous property owner defense, but may take advantage of the liability protection provision for prospective purchasers.(40)
Finally, BRERA codifies a practice that US EPA has implemented administratively, by expressly authorizing US EPA to provide assurances to these owners of contiguous properties that no enforcement action will be taken against them. It also empowers US EPA to provide these property owners with protection against private contribution actions.(41)
IV. Modifications to Appropriate Inquiry Standard Used in the Innocent Landowner Defense
BRERA modifies the "all appropriate inquiry" or due diligence requirements for invoking the innocent landowner defense. This change has significance beyond the innocent landowner defense itself, because the "all appropriate inquiry" standard has been incorporated into the new prospective purchaser and contiguous property owner provisions.
Congress created the innocent landowner defense when it amended CERCLA in 1986. This defense was devised as a subcategory of the third-party defense set out in section 107(b)(3) of the statute.(42) A person who purchased property without knowledge of contamination would not be considered to have had a contractual relationship with the seller and could invoke the third-party defense. But Congress in creating the innocent landowner defense in 1986 did not want to reward persons who bought property knowing of contamination or who blindly purchased property without reasonable investigation. Accordingly, to qualify for the defense in the 1986 statute, a person buying property "must have undertaken at the time of acquisition, all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice to minimize liability."(43)
But this language is vague, and over the years, there has been an increasing need to identify more specifically what activities met the "all appropriate inquiry" obligation. The American Society for Testing and Materials (ASTM) issued its own "Standard Practice for Environmental Site Assessment: Phase I Environmental Site Assessment Process" (Standard E 1527-97), which over time has become a customary industrial standard for these investigations, but has no regulatory status.
BRERA includes provisions designed to clarify what investigations will meet the "all appropriate inquiry" standard; these provisions are even more important under the new legislation because meeting this due diligence requirement is a component of the new prospective purchaser and contiguous property owner defenses, as well as the innocent landowner defense.
BRERA requires US EPA to promulgate by regulation within two years standards and practices of inquiry into the prior operations of sites that innocent landowners and prospective purchasers must follow in order to qualify for these liability exemptions.(44) The new statute sets forth the following general criteria that would have to be included in US EPA's new standards and practices:
Until such time as US EPA promulgates these new standards and practices by regulation, BRERA establishes interim standards and practices. With respect to property acquired after May 31, 1997, BRERA declares that the ASTM Standard E1527-97 ("Standard Practice for Environmental Site Assessment Process") is the statutory benchmark for showing that an innocent landowner or prospective purchaser conducted "all appropriate inquiry" about a facility before buying it.(46)
Although US EPA would not be required to follow the ASTM standard when it promulgates its own regulations, many observers expect US EPA to formulate an approach that would follow the ASTM standard closely. In this field, it is important that there be a norm within the industry that can be followed and relied upon. The ASTM standard has become such a norm on a customary basis; US EPA would be reasonably expected to adopt something very much like it on a regulatory basis.
Also, BRERA imposes certain new affirmative obligations on innocent landowners in addition to the "due care" requirements imposed on anyone who qualifies for the third party defense in the preexisting section 107(b)(3).(47) An innocent landowner, like a prospective purchaser or contiguous property owner would be required to provide full cooperation, assistance and access to persons who are authorized to conduct a response action at the facility, to be in compliance with any land use restrictions relied on in connection with the response action, and not impede the effectiveness of any institutional controls.(48)
Also, the innocent landowner would have to satisfy the requirements of the "appropriate care" standard that BRERA would impose on prospective purchasers and contiguous property owners as well. The standard requires an innocent landowner to take reasonable steps to stop any continuous release, prevent any threatened future release, and prevent or limit any human, environmental or natural resource exposures to previously released hazardous substances.(49) The decision to impose this obligation is especially puzzling because innocent landowners, unlike prospective purchasers and contiguous landowners, are subject to the "due care" obligations of section 107(b)(3) of CERCLA.(50) Indeed, the Senate committee report, accompanying S.350, states that these "appropriate care" obligations "are in addition to the due care requirement of section 107(b)(3)."(51) This language might suggest that the "appropriate care" obligation is more stringent than the "due care" requirement already in the statute because there would be no reason to impose this additional obligation on innocent landowners unless it was more rigorous than the care standard already imposed by existing law. But this interpretation would run contrary to the original concept behind the "appropriate care" standard, which was devised to provide a less onerous and less expensive standard than the "due care" obligation in section 107(b)(3) in order to attract prospective purchaser of brownfield properties.(52) If the "appropriate care" standard were construed to be more onerous than the "due care" standard in current law, that would discourage prospective purchasers of brownfield properties who would fear that they would be obligated to undertake expensive cleanups in order to meet statutory care obligations.
V. Federal Funding of Brownfields Cleanup and State Voluntary Cleanup Programs
BRERA also creates a new program to provide funding to local governments to undertake characterization and assessment of brownfield sites, and in some instances, remediation. This program is intended to provide grants to local governments so that they can begin the process of investigating and remediating mildly contaminated sites in order to make them more attractive for development. Many cities and counties have old industrial sites that are going unused and undeveloped because of the uncertainty about how contaminated they are and how much it would cost to address that contamination. Through this program, local communities would have access to funding to undertake the investigation, and for low cost remediation in order to make these sites more marketable for development.(53)
An "eligible entity" may apply to US EPA for a grant to undertake site characterization and assessment of eligible brownfield sites, or for remediation of the sites.(54) "Eligible entities" include a general purpose unit of local government, a land clearance authority or other quasi-governmental entities that operate under the supervision of a local government, entities created by a State legislature or chartered by the State, such as a redevelopment agency, regional groups of local governments, a state or an Indian tribe.(55) The "eligible entity" may in turn use the grant funds to provide its own grants or loans to other "eligible entities", site owners or developers to perform the site assessments or remediation.(56) Grants for site characterization and assessment would be generally subject to a limit of $200,000, but US EPA may waive that limit and award up to $350,000 per site. Grants for remediation would be limited to $1 million.(57)
For a site to be eligible for the funding program, it would have to meet the new statutory definition of a "brownfield site." The apparent definition of a "brownfield site" seems plain enough: "real property the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant or contaminant."(58) But, as discussed above, the term is really defined by a list of exclusions from the very simple definition.
BRERA also provides $50 million a year in funding for state voluntary cleanup programs for five years.(59) In order to qualify for federal funding, however, a state voluntary program would have to meet the same requirements as would be necessary for the application of the federal enforcement bar; specifically, the state program must include:
VI. Deferral of Additions to the National Priorities List
Finally, BRERA provides that, at the request of a state, US EPA must defer listing an eligible site(61) on the National Priorities List (NPL) if the state, or a private party acting under an order from or agreement with the state, is performing a response action under a state program governing response actions for the protection of public health and the environment, and will provide long term protection.(62) US EPA must also defer listing an eligible site if the state is actively pursuing such an agreement with a person whom the state has reason to believe is capable of performing such a response action.(63)
This provision will enable states to keep potentially useful brownfield sites off the NPL, thus avoiding the stigma of being labeled a CERCLA site, while a cleanup under a state voluntary cleanup program is underway. However, in order for US EPA to continue to defer listing for more than a year, the state must be able to show to US EPA that reasonable progress toward cleanup is being made.(64) This deferral provision is not available in situations in which the state itself is the owner or operator of the site or otherwise contributed to the contamination, or where the criteria under the National Contingency Plan for issuing a health advisory are met.(65)
*David B. Hird is a partner in the Washington, D.C. office of Weil, Gotshal & Manges LLP. He formerly worked as a trial attorney in the Environmental Enforcement Section of the US Department of Justice. His work is concentrated in the areas of environmental law, the environmental aspects of business transactions, insurance, bankruptcy, and environmental and commercial litigation. For the past several years, Mr. Hird represented clients in the real estate development industry seeking reform of the federal environmental laws to encourage the redevelopment of brownfield properties.
1 42 U.S.C. § 9601 et seq.
2 The Brownfields Revitalization and Environmental Restoration Act is actually Title II of The Small Business Relief and Brownfields Revitalization Act, Pub. L. No. 107-118. Title I provides liability relief to small businesses who contribute minute amounts of waste to landfills.
3 CERCLA § 101(35), 42 U.S.C. § 9601(35).
4 Id.
5 Id. § 9607(a)(1).
6 Pub. L. No. 107-118, § 222, 42 U.S.C. §§ 9601(40), 9607(r) (creating new CERCLA §§ 101(40), 107(r)).
7 42 U.S.C. § 9607(b)(3).
8 S. Rep. No. 107-2, 107th Cong., 1st Sess. 10-13 (Mar. 12, 2001) (accompanying S. 350).
9 Pub. L. No. 107-118, § 223, 42 U.S.C. § 9601 (35) (revising CERCLA § 101(35)).
10 42 U.S.C. § 6901 et seq. (sometimes called the Solid Waste Disposal Act).
11 Id. § 6991 et seq.
12 RCRA § 7003, 42 U.S.C. § 6973.
13 Pub. L. No. 107-118, § 223(b), 42 U.S.C. § 9607(r) (creating a new CERCLA § 107(r)).
14 Pub. L. No. 107-118, § 231(b), 42 U.S.C. § 9628(b) (creating a new CERCLA § 128(b)).
15 Presently, US EPA has MOUs in effect with 17 states: Arkansas, Colorado, Delaware, Florida, Illinois, Indiana, Kansas, Maryland, Michigan, Minnesota, Missouri, New Mexico, Ohio, Oklahoma, Rhode Island, Texas and Wisconsin.
16 Pub. L. No. 107-118, § 231(b), 42 U.S.C. § 9628(b) (creating a new CERCLA § 128(b)).
17 Pub. L. No. 107-118, § 211(a), 42 U.S.C. § 9601(39) (creating a new CERCLA § 101(39)).
18 The reference to the Clean Water Act (or Federal Water Pollution Control Act) in this provision of BRERA is cryptic. Although the entire statute is identified by name, the only section identified is section 311, 33 U.S.C. § 1321, which concerns cleanups of spills of oil or hazardous substances into navigable waters under the authority of the US Coast Guard. There is no reference to other provisions of the Clean Water Act, such as section 402, 33 id. § 1342, which relate to the National Pollutant Discharge Elimination System ("NPDES") permit program. This raises the question whether Congress intended to exclude sites that held NPDES permits (or stormwater permits) from the definition of a "brownfield site."
19 This exclusion is actually duplicative of the immediately previous one listed.
20 The definition of the term "brownfield site" also excludes any portion of a facility where a cleanup has been funded with monies from the federal Leaking Underground Storage Tank Trust Fund, established as a financial backstop to pay for cleanups under the UST program of RCRA. But for purposes of determining whether a site is eligible for the enforcement bar with respect to voluntary cleanups, such sites, although not "brownfield" sites, would be considered eligible. Pub. L. No. 107-118, § 231(a), 42 U.S.C. § 9601(41) (creating a new CERCLA § 101(41)).
21 Id.
22 Id.
23 Pub. L. No. 107-118, § 231(b), 42 U.S.C. § 9628(b) (creating a new CERCLA § 128(b)).
24 Id. This last requirement would not be a necessary component for the state program to qualify for federal funding, but would be necessary for the CERCLA enforcement bar.
25 Id.
26 42 U.S.C. §§ 9606, 9607.
27 Id. § 6973.
28 This exclusion would allow a state that had previously agreed that a voluntary cleanup was complete and that it would take no further action against the cleanup volunteer to renege on its agreement by asking the federal government to take enforcement action.
29 Pub. L. No. 107-118, § 231(b), 42 U.S.C. § 9628(b) (creating a new CERCLA § 128(b)).
30 42 U.S.C. § 9606.
31 Pub. L. No. 107-118, § 231(b), 42 U.S.C. § 9628(b) (creating a new CERCLA § 128(b)).
32 Section 107(a)(1) of CERCLA, 42 U.S.C. § 9607(a)(1), holds liable the owner or operator of a site "from which there is a release" of a hazardous substance. Arguably, the owners of properties that have been affected by migrating contamination are not liable under this provision because the release did not occur on their properties. Under section 101(22), 42 id. § 9601(22), a release occurs when a hazardous substance enters "into the environment." In the case of a property owner whose land is affected by migrating contamination, the hazardous substance has already been released into the environment before it crosses the property line. Moreover, these property owners may be able to invoke successfully the third party defense in section 107(b)(3) of CERCLA, 42 id. § 9607(b)(3).
33 Pub. L. No. 107-118, § 221, 42 U.S.C. § 9607(q) (creating a new CERCLA § 107(q)).
34 Id. The new section 107(q) includes the following language: "nothing in this subsection . . . imposes liability on the person that is not otherwise imposed by subsection (a)," thereby allowing contiguous landowners to argue that they are not liable under section 107(a) of CERCLA, 42 U.S.C. § 9607(a), regardless of this defense. Pub. L. No. 107-118, § 221, 42 U.S.C. § 9607(q) (creating a new CERCLA § 107(q)).
35 This requirement is similar to the "appropriate care" obligation imposed under the prospective purchaser provision, with a significant difference in that the obligation to prevent exposure to hazardous substances is limited to substances on the property owned by the contiguous landowner itself.
36 Pub. L. No. 107-118, § 221, 42 U.S.C. § 9607(q) (creating a new CERCLA § 107(q)).
37 Id.
38 S. Rep 107-2, 107th Cong., 1st Sess. 10-11 (Mar. 12, 2001) (accompanying S. 350).
39 Pub. L. No. 107-118, § 221, 42 U.S.C. § 9607(q) (creating a new CERCLA § 107(q)). The bill would create a strange exception - a contiguous property owner could be required to undertake these activities "in accordance with the policy of the Environmental Protection Agency concerning properties containing contaminated aquifers dated May 24, 1995." But the policy itself does not describe the situations in which a property owner would be required to do so. Instead, it simply states that US EPA may require response actions from owners whose property is affected by migrating ground water contamination in exceptional circumstances, without saying clearly defining what those exceptional circumstances might be. The only instance specifically discussed is where the owner of the contiguous site operates a ground water well which may effect the movement of the contaminated ground water.
40 Id.
41 Id.
42 42 U.S.C. § 9607(b)(3).
43 CERCLA § 101(35), 42 U.S.C. § 9601(35).
44 Pub. L. No. 107-118, § 223, 42 U.S.C. § 9601(35) (revising CERCLA § 101(35)).
45 Id.
46 Id. For sites purchased prior to May 31, 1997, no specific interim standard or practice is adopted; rather, courts would make an ad hoc determination considering the purchaser's specialized knowledge and experience, the relationship of the price paid to the value of the property if not contaminated, commonly known or reasonably ascertainable information about the property, the obviousness or likely presence of contaminants, and the ability of the purchaser to detect contamination by appropriate inspection. Id.
47 42 U.S.C. § 9607(b)(3).
48 Pub. L. No. 107-118, § 223, 42 U.S.C. § 9607(35) (revising CERCLA § 101(35)).
49 Id.
50 42 U.S.C. § 9607(b)(3).
51 S. Rep No. 107-2, 107th Cong., 1st Sess. 13-14 (Mar. 12, 2001) (accompanying S. 350).
52 42 U.S.C. § 9607(b)(3).
53 This statutory program builds upon US EPA's existing administrative program for making loans for brownfields development.
54 Pub. L. No. 107-118, § 211, 42 U.S.C. §§ 9601(39), 9604(k) (creating new CERCLA §§ 101(39), 104(k)).
55 Pub. L. No. 107-118, § 211(b), 42 U.S.C. § 9604(k) (creating a new CERCLA § 104(k)).
56 Id.
57 Id.
58 Pub. L. No. 107-118, § 211(a), 42 U.S.C. § 9601(39) (creating a new CERCLA § 101(39)).
59 Pub. L. No. 107-118, § 231(b), 42 U.S.C. § 9628(a) (creating a new CERCLA § 128(a)).
60 Id.
61 A site is "eligible" for this provision if it is "eligible" for purposes of the federal enforcement bar.
62 Pub. L. No. 107-118, § 232, 42 U.S.C. § 9605(h) (creating a new CERCLA § 105(h)).
63 Id.
64 Id. If a cleanup agreement is not negotiated within a year from the date when US EPA first proposed NPL listing, US EPA may defer listing an additional 180 days to allow the completion of negotiations. Id.
65 Id.