LAW PROMOTES REDEVELOPMENT OF OLD COMMERCIAL AND INDUSTRIAL PROPERTIES
GRANTS FOR ASSESSMENT AND REMEDIATION
On January 11 President Bush signed into law the Brownfields
Revitalization and Environmental Restoration Act of 2001.
The Brownfields legislation as it is known is designed to foster
the redevelopment of old unused or abandoned properties, mostly
in urban areas, into viable and productive facilities or greenways
to be used for public enjoyment and recreation.
The law authorizes the United States Environmental Protection Agency
(EPA) to award grants to states to establish programs designed to
respond to releases of hazardous substances. In addition to establishing
response programs, these grants can also be used as loans for the
remediation of Brownfield sites. In order to establish these programs,
Congress has appropriated $50 million each year for the next five
years. Congress also has authorized EPA to give grants to states,
local governments and government sponsored agencies to inventory,
characterize and assess Brownfield sites. Up to $350,000 per site
is available for this. In addition, loans up to $1 million per site
are available for actual remediation activities. Additional grants
may be awarded in
The new law also gives liability protection to prospective purchasers
as well as adjacent and innocent landowners. Under the old Superfund
law, a person buying property could be found responsible and held
liable for the cleanup of environmental contamination originating
prior to the property being purchased or, in some cases, if the
contamination originated beyond the property boundary. These cleanups
have cost unsuspecting buyers and developers millions of dollars.
Because of this, prospective purchasers and land developers shied
away from old properties and tended to look for undeveloped parcels
for constructing new commercial and industrial facilities. The result
was that properties in highly desirable established industrial locations
contained old buildings and factories, which were either abandoned
or not utilized to their full potential.
Under the new Brownfields law, if sites with contamination are cleaned
up according to a state or local response program, EPA cannot impose
the Superfund Law to recover additional response costs or impose
additional liabilities on the new owner or developer.
Another provision of the new law is that a prospective purchaser
of property who did not cause the pollution on the property and
was not aware of it shall not be liable. There are certain
requirements that must be met to qualify for this exemption. Perhaps
the most important of these is the Buyer must conduct a Phase
I Investigation of the property to determine the previous
ownership and uses of the property and the potential for past contamination.
The standards and procedures for this investigation are to be specified
by EPA within two years. In the meantime, the procedures contained
in the American Society for Testing Materials (ASTM) Standard E1527-97
or Standard Practice for Environmental Site Assessment: Phase
I Environmental Site Assessment Process will be considered
adequate to obtain the liability exemption.
The new law also exempts from Superfund liability, purchasers of
property contiguous to a contaminated site. The new owner must meet
certain conditions such as cooperating with those conducting a cleanup.
Here also, the purchaser must conduct a Phase I environmental site
assessment to qualify for the liability exemption. In this case,
even if contamination is found, the liability exemption is still
applicable but remedial efforts may be prudent before making improvements
to the site.
These changes in the law make an environmental assessment prior
to the purchase of property absolutely necessary. If a subject property
is suspected of being contaminated, an assessment of the scope of
a response program to bring the property within acceptable state
and local requirements should be prepared. This assessment can be
evaluated against the assigned property value to determine the potential
for a viable real estate transaction. If the project is economically
viable, the developer can proceed without the fear of additional
costs being imposed under Federal Superfund Law.
C2 REM has assisted many clients in all phases of the assessment,
development process. If you would like more information regarding
contained in this review or about C2 REM, please call us at 949-261-8098
or visit our
website at www.c2rem.com.