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Across the nation, in both urban and rural settings, public officials, community leaders and developers are grappling with the challenges associated with brownfields—abandoned or underused and possibly contaminated industrial and commercial properties. These properties include formerly thriving industrial areas, gas stations and drycleaners, closed mines and timber mills and idle shopping centers and office buildings, many darkened in the current economic downturn. As many as 1 million brownfield sites may exist nationwide.
Developers and investors, cautious of environmental liability, have shied away from such sites. Contaminated properties, which are subject to many environmental regulations and procedures, also are vulnerable to costly construction delays. Pollution concerns have led developers to pass up opportunities in urban centers for greenfields in rural and suburban areas where land is often less expensive and free from known liabilities.
Developers and investors, cautious of environmental liability, have shied away from such sites. Contaminated properties, which are subject to many environmental regulations and procedures, also are vulnerable to costly construction delays. Pollution concerns have led developers to pass up opportunities in urban centers for greenfields in rural and suburban areas where land is often less expensive and free from known liabilities.
In the Beginning
The issue of brownfields first burst onto the economic development scene in the early 1990s following several court rulings related to responsibility for contamination. Court interpretations of the Superfund law forced lightly contaminated properties under the regulatory umbrella governing Superfund sites. Specifically, the lender liability issue first emerged in the Fleet Factors case in which the U.S. Supreme Court decided that the lender, who had seized manufacturing equipment at a small business it had financed and was in the process of selling it off to salvage some of its collateral interest, could be held liable for contamination of the site because it was acting in a way that could be viewed as managing the property. The impact of this ruling was swift and often devastating to community development interests. The fact that a lender was put in the contamination chain simply because he was carrying out routine button-down activities sent a shock wave through lending circles and caused capital to simply dry up in many areas where previously used properties were being considered for redevelopment.
The issue of brownfields first burst onto the economic development scene in the early 1990s following several court rulings related to responsibility for contamination. Court interpretations of the Superfund law forced lightly contaminated properties under the regulatory umbrella governing Superfund sites. Specifically, the lender liability issue first emerged in the Fleet Factors case in which the U.S. Supreme Court decided that the lender, who had seized manufacturing equipment at a small business it had financed and was in the process of selling it off to salvage some of its collateral interest, could be held liable for contamination of the site because it was acting in a way that could be viewed as managing the property. The impact of this ruling was swift and often devastating to community development interests. The fact that a lender was put in the contamination chain simply because he was carrying out routine button-down activities sent a shock wave through lending circles and caused capital to simply dry up in many areas where previously used properties were being considered for redevelopment.
With communities facing significant redevelopment problems, the states stepped in—after Congress failed to address this issue during its sessions in 1993 and 1994. In the absence of federal legislative activity, states began to develop what came to be known as voluntary cleanup programs or VCPs. With the tacit encouragement of the federal EPA, state VCPs began to define a process to bring some certainty and comfort to private parties and encouraged reuse to go forward. Starting in 1995, encouraged by the initial response to state efforts and eager to bring more finality to the VCP process, several states in EPA Region 5 (notably Minnesota, Michigan and Illinois) negotiated memoranda of understanding (MOUs) with the EPA that brought even more finality to the VCP process. The memoranda stated that if private volunteers reached agreement on a cleanup plan with their state environmental agency and executed it accordingly, then the EPA would not step in and override the state’s verdict. These initial MOUs were the beginning of what has become known as the enforcement bar, a key feature in encouraging greater brownfield reuse.
During this time, the EPA administratively encouraged this shift in practical responsibility to the states through policy guidance and funding to state environmental agencies to support voluntary approaches and augmented these efforts by launching its community-based brownfield pilot program in 1993. This program grew from the initial three pilots named that year to more than 500 by the time Congress formally authorized the brownfield program in 2001.
From a bureaucratic standpoint, VCPs represent a significant watershed in community development, addressing head-on the overlap of environment and economic development that was raised by the Fleet Factors decision. In 1994, only four states had VCPs in place; a decade later, all 50 states did—an incredible decade of progress. West Virginia acted early in this process—its Voluntary Remediation and Redevelopment Act and Voluntary Remediation Program took effect in July, 1997. Moreover, the state/EPA cooperation that grew from the necessity of implementing a VCP progress paved the way for additional process innovations that have become key brownfield reuse drivers in many instances, including:
Formalizing the Effort
Congress first considered a brownfield bill in 1993, holding field hearings in Chicago and Pittsburgh to hear from communities and practitioners about what was needed to encourage the reuse of properties stigmatized by real or perceived contamination. Although simple in approach and introduced with bipartisan support, the brownfields bill endured eight years of legislative wrangling—over eligibility, over small business liability, over the need to integrate small underground storage tank sites into the program—before the Brownfield Revitalization Act was signed into law on January 11, 2001. The act essentially codified the policy and administrative approach that the EPA had encouraged and strengthened the role of states by:
What the Trends Say
The brownfields program, originally authorized for five years, ended its successful first run in September 2006. Congress has continued, and even slightly increased, brownfield program funding even in the absence of a new authorization. During 2009, Congress began to take the first steps toward program reauthorization, aiming to build on the program’s track record of success while exploring changes that would streamline grant funding and make the program better reflect real estate redevelopment realities, especially in the current tight economic climate. Program advocates hope that the proposed reauthorization legislation will pass before the 111th Congress adjourns at the end of 2010 and have pushed for a number of changes in the existing program. While Congress seems interested in only modest modifications to the existing EPA brownfields program at this point, there seems to be sentiment for permitting larger grant amounts for cleanup (up to $1 million), making non-profits eligible for all types of grants, including assessments, and increasing the overall funding authorization level for the brownfields program.
A number of organizations have been promoting even greater change, and the changes that might be considered for the next generation of brownfields include:
From a practical standpoint, several trends characterize the state of brownfields today. First, federal brownfield resource strategies are diversifying. In addition to the EPA, programs offered by U.S. Housing and Urban Development (through its Community Development Block Grant program), various rural development programs available through USDA and infrastructure and community development programs offered by the Economic Development Administration have been creatively packaged and leveraged to promote brownfield use at the local level. Second, more and more communities of all sizes are adopting creative initiatives with brownfield reuse in mind—innovative use of tax increment finance, locally capitalized revolving loan funds aimed at brownfield cleanup and reuse (often capitalized with fees or fines paid or program income generated by other successful projects) and even special taxing or development districts established for brownfield revitalization purposes. Third, in many areas the brownfield process is becoming further enhanced as technical environmental and economic development strategies become more complimentary and various parties to a project gain a greater understanding of how the various pieces can fit together to foster reuse.
The Challenge: Confronting the Next Generation
Underused or abandoned industrial facilities are a national concern and certainly a concern in West Virginia. Confronting the environmental and economic issues affecting site reuse requires a deliberate, multi-dimensional approach that often does not neatly fit with the rules and procedures of federal, state or local economic development or environmental programs. Financing has emerged as a key barrier to brownfield reuse. Site assessment and cleanup requires financial resources that many firms lack and find difficult to secure. Without financing, private reuse projects cannot go forward, even if their proponents want them to. This further undermines efforts to revitalize the distressed areas that are home to so many abandoned or contaminated sites.
Yet in spite of the barriers, brownfield reuse opportunities are real. Thousands of diverse projects, including success stories in West Virginia, have been documented. They have been carried out in a way that makes economic sense while achieving environmental requirements and building on the competitive advantage that specific sites boast. Such success stories suggest that liabilities can be worked out, that financing can be secured, that projects can be profitably done and that cleanup can be accomplished—in short, that brownfield redevelopment can be achieved.
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