COVER STORY, APRIL 2006

BROWNFIELDS: RECLAIMING FORMER INDUSTRIAL SITES
A detailed look at acquiring and developing brownfields.
David Lent, CPG

Industrial development during much of the 20th century has left numerous scars on the landscape. With changes in global commerce, shifts in populations, and the move from a manufacturing to a service-based economy, active industrial operations — especially in urban areas — have been closed or abandoned, leaving behind contaminated, unused properties.

The General Accounting Office estimates that there are more than 450,000 such properties in the United States, many located in economically depressed areas. These properties are called brownfield sites, which are generally defined by the U.S. Environmental Protection Agency (EPA) as “abandoned, idled, or under-used industrial and commercial facilities where expansion, redevelopment or reuse is complicated by the presence or potential presence of hazardous substance pollutant or contaminate.” However, not all abandoned, idled, or under-used industrial and commercial facilities are automatically classified as brownfield sites. Exclusions are numerous and include, but are not limited to, facilities that are the subject of planned or on-going removal actions; facilities listed on the National Priority List; facilities that are the subject of a court order, an administrative order on consent or judicial consent decree; a facility that is subject to corrective action or closure under the Solid Waste Disposal Act; a portion of a facility where there has been a release of polychlorinated biphenyls that is subject to remediation under the Toxic Substances Control Act; and, on a site-by-site basis, the president may authorize financial assistance if certain conditions are met.

Regardless, brownfields can be valuable if they can be cleaned up sufficiently and redeveloped with new industrial or commercial enterprises. Their value is frequently enhanced by nearby transportation systems and large populations of potential workers and customers.

Overcoming Fear Of Liability

During the 1980s and early 1990s, potential developers, lenders, and investors shied away from contaminated industrial properties, not wanting to be liable for historic contamination caused by others. The Federal Comprehensive Environmental Response, Compensation and Liability Act (“Superfund”) and state equivalents can impose substantial cleanup costs, even on the new property owner. Although Superfund was designed to help clean up abandoned contaminated sites, it worked as a nonincentive to the remediation and redevelopment of numerous industrial sites that were not immediate threats to public health. What potential developers and investors needed was protection against the unbounded cleanup costs that Superfund or similar state programs can apply.

Although the Small Business Liability Relief and Brownfields Revitalization Act addressed concerns such as funding and liability for assessing and cleaning up contaminated sites, many states have or are taking the initiative to passing Brownfields laws. Under these state programs, the potential purchaser can obtain approval for a finite site remediation plan before purchasing or investing in the property. After site cleanup, the new owner is protected against agency enforcement actions to clean up further. Such protection is frequently written into the agreement as a “covenant not to sue.” Other liabilities such as the impact of off-site migration of contamination can be covered by environmental insurance.

Cleaning Up Without Overdoing It

Historically, the Superfund program imposed very stringent cleanup standards on contaminated sites. The rationale was to control releases of hazardous materials to prevent human exposure that might occur in residential areas. Many brownfield sites are isolated from sensitive receptors such as wetlands, potable water sources, etc., and the recognition of more lenient risk-based corrective action (RBCA) levels is often accepted. By demonstrating a lack of sensitive receptors or by controlling the migration of contaminants from a site, higher RBCA-based concentrations of contaminants may be allowed on a site that will be redeveloped for commercial or industrial use. These sites may also be subject to activity and use limitations such as administrative and engineering controls.

One aspect of standards setting that should be watched is the possible jurisdictional tussle between the local governments, states, and the EPA. Potential owners and investors may strike a cleanup deal with a state, only to see the EPA enter later with additional requirements. Look for future Brownfields development incentives through control of EPA involvement in state-led brownfield projects.

Financial Incentives

Local, state, and federal financial incentives may be available to help redevelop brownfields properties. At the local and state level, tax breaks may be available to spur development of a blighted area with the hope of eventually returning the property to the tax rolls and helping to create new jobs.

At the federal level, the Treasury Department’s Brownfields Tax Incentive program allows developers to treat “qualified environmental remediation expenses” as tax deductible in the year incurred, rather than carrying the costs as a long-term capital expense. The EPA also has provided seed money for dozens of Brownfields projects including, but not limited to, up to $200,000 in grants for assessment per property, up to $200,000 to eligible grantees such as non-profits to clean-up their sites, a revolving loan program that helps developers pay for site remediation, and $50 million annually in grants to assist states and tribes in the development of response programs.

The Future

There is no shortage of dormant contaminated industrial sites to be developed. With the proper financial incentives, liability protection, and risk-based cleanup goals, many potential owners and investors will reap the benefits of a well-developed infrastructure. Information and news about brownfields are available at www.epa.gov/ brownfields.

Case Study

IVI successfully remediated a chlorinated solvent-contaminated groundwater plume utilizing an innovative in-site chemical oxidation (ISCO) technology on behalf of the City of Port Jervis  at the Waters Edge brownfields site located at 200 East Main Street, Port Jervis, New York. The property’s groundwater was contaminated as a result of historic industrial janitorial chemical manufacturing operations.

IVI performed a Phase I Environmental Site Assessment on the property and delineated the horizontal and vertical extent of the 4.43-acre plume contaminated with chlorinated solvents above their respective New York State Department of Environmental Conservation (NYSDEC) Groundwater Quality Standards. This plume appeared to be migrating toward a sensitive receptor: the Neversink River.

A combined Voluntary Investigation Report/Remedial Action Workplan, which proposed risk-based corrective action levels and prevention of further migration of the plume was prepared and submitted to the NYSDEC during June 2003; NYSDEC gave their approval that November.

Based on these efforts, the source area of the groundwater contamination was remediated successfully with approximately 92 percent of the total contamination on-site being destroyed. Although levels of contamination above drinking water standards exist, the residual concentrations in the groundwater were at least 25 feet below ground surface and were deemed not to pose a potential inhalation exposure risk. IVI received a Certificate of Remedial Completion from the NYSDEC designating that no further remedial action is required for this site. This formerly blighted site was redeveloped on schedule with an assisted living facility, and investors received tax credits. 

©2006 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.