Brownfields '97 -- Partnering For A Greener Tomorrow Brownfields '97 -- Partnering For A Greener T
omorrow
rownneds
Partnering For A Greener Tomorrow
Track Four:
PURPOSE OF THE TRACK
The existing legal framework of the brownfields program may seem daunting,
but you can understand it easily and use it to your advantage. Discuss legislative
outlooks with congressional staff and navigate complex regulations with seasoned
environmental professionals. Learn about real estate transactions, dispute
resolution techniques, the insurance industry's new attitude about brownfields,
and government comfort and assurance issues.
Brownfields '97 - Partnering For A Greener Tomorrow Brownfields '97 - Partnering For A Greener Tomorrow
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Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
(4A) Heard on the Hill: Brownfields Federal Legislative Outlook
Friday, September 5,1997
8:00 a.m.-10:00 a.m.
Description: Key House and Senate staff will participate in a spirited discussion of different provisions of
proposed Superfund and brownfields legislation. Sit in on the debate everyone is talking about! After staff have
offered their views of current congressional thinking, you will be encouraged to present your vision of what's
needed to perfect a Superfund and brownfields bill.
Location: Room 1203C
Speakers and Affiliation:
Mr. Charles Bartsch (Moderator)
Members of Congressional Staff
Northeast-Midwest Institute
MR. CHARLES BARTSCH
Charles Bartsch is a senior policy analyst at the Northeast-Midwest Institute, specializing in economic development
issues. He is the co-author of numerous publications on brownfields opportunities, including the Institute's
pioneering New Life for Old Buildings: Confronting Environmental and Economic Issues to Industrial Reuse (1991).
. Most recently, he has written a series of papers on brownfields financing, including Financing Brownfield Reuse:
Creative Use of Public Sector Programs, and has co-authored (with Elizabeth Collaton) the landmark Coming Clean
for Economic Development and Brownfields: Cleaning and Reusing Contaminated Properties (the latter published by
Praeger). Mr. Bartsch's writings on economic development and brownfields issues have been published in
Economic Development Quarterly, CUED's Economic Development Commentary, Public Utilities Fortnightly, and
Issues in Science and Technology, among others. Mr. Bartsch has testified several times before Congress on
various aspects of the brownfields issue, and worked closely with key staff to identify appropriate federal strategies
to meet specific brownfields needs. In addition, he has spoken on brownfields redevelopment and finance issues at
dozens of conferences around the country, before lenders, lawyers, state and local officials, and others interested in
promoting brownfields reuse.
MEMBERS OF CONGRESSIONAL STAFF
[Biographies were not available at time of printing. Please refer to conference addendum.]
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
DOCUMENTS THAT SUPPORT
PANEL 4A: HEARD ON THE HILL: BROWNFIELDS FEDERAL LEGISLATIVE
OUTLOOK
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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NORTHEAST
MIDWEST
INSTITUTE
Federal Legislative Proposals to Promote
Brownfield Cleanup and Redevelopment:
Status in the 105th Congress
by Charles Bartsch
and Elizabeth Collaton
Northeast-Midwest Institute
Updated July 22,1997
218 D Street. S.E.
Wasnington, D.C. 20003
TEL: 202.544.5200
FAX: 202.544.0043
http://www.nemw.org
PROVIDED TO EPA BROWNFIELD '97 PARTICIPANTS FOR THEIR USE
SUMMARY BY BILL PROVISIONS
Tax Incentives
full expensing of cleanup costs -- S 235, HR 505, HR 990, HR 997, HR 1049
environmental remediation tax credits HR 523
IDBs/tax-exempt finance for site remediation -- HR 523, HR 996
"brownfield IRA" - HR 990
Capital Attraction Incentives
grants for site assessment -- S 8, S 18, HR 1049, HR 1120, HR 1395
grants for site cleanup HR 1049
capitalization of revolving loan funds for site cleanup S 8, S 18, HR 1049,
HR 1120, HR 1395, HR 1462
give existing federal programs a brownfields "spin" -- HR 1049, HR 1533, S 1034
Liability and Process-Related Initiatives
move toward process finality, by having EPA certify state voluntary cleanup
programs -- HR 990, HR 1120, HR 1206,1392 and/or offer federal liability releases
to sites remediated via state VCPs - S 8, S 23, HR 873, HR 1120, HR 1206,
HR1392
financial assistance to launch or enhance state VCPs - S 8, HR 1049, HR 1120
protect innocent, adjoining property owners and prospective purchasers S 8, S 18,
HR 873, HR 990, HR 1120, HR 1392, HR 1395
Northeast-Midwest Institute
Brownfields Legislative Summary
Page I
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OVERVIEW OF PROPOSALS
Clinton Administration's Brownfield Tax Incentive
the President requested it in his FY1998 budget, transmitted to Congress on
February 6
introduced in the Senate as S. 235 on January 30 and in the House as H.R. 505 on
February 4 (see following)
at this time, brownfield tax incentives (permitting expensing of environmental
remedation costs) are included in H.R. 2014, the Revenue Reconciliation Act of
1997, the budget agreement pending before Congress
uses the tax code to encourage site reuse by permitting non-responsible parties
such as innocent owners and prospective purchasers to fully expense their
cleanup costs (i.e., make cleanup expenses fully deductible in the year incurred)
proposes $2 billion in incentives over seven years
targeted in four ways:
(1) existing empowerment zones and enterprise communities, and to those in a
second round of designations proposed hi the President's FY 1998 budget;
(2) EPA brownfield pilot sites announced prior to February 1997 (the first 40);
(3) census tracts with a poverty rate of 20 percent or more; or
(4) census tracts with less than 2,000 residents, zoned 75 percent industrial or
commercial, that adjoin qualifying poverty areas
assumes 30,000 sites will be cleaned at an average cost of about $400,000
S. 235 ...to "encourage economic development through the creation of additional
empowerment zones and enterprise communities and to encourage the
cleanup of contaminated brownfield sites"
introduced on January 30,1997, by Sens. Carol Moseley-Braun (D-EL), Spencer
Abraham (R-MI), Alfonse D'Amato (R-NY), James Jeffords (R-VT), Joseph
Lieberman (D-CT), Thomas Daschle (D-SD), and Patty Murray (D-WA)
additional co-sponsor: Sen. Dodd (D-CT)
COMMITTEE REFERRAL Finance
Northeast-Midwest Institute
Brawnflelds Legislative Summary ' Page 2
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H.R. 505 ...to "encourage economic development through the creation of
additional empowerment zones and enterprise communities and to
encourage the cleanup of contaminated brownfield sites"
introduced on February 4, 1997, by Rep. Charles Rangel (D-NY)
additional co-sponsors: Reps. Fattah (D-PA), Matsui (D-CA), Coyne (D-PA),
McDermott (D-WA), John Lewis (D-GA), Neal (D-MA), Jefferson (D-LA),
Conyers (D-MI), Dellums (D-CA), Foglietta (D-PA), Towns (D-NY), Serrano (D-
NY), Waters (D-CA), Bishop (D-GA), Clyborn (D-SC), Meek (D-FL), Blumenauer
(D-OR), Jackson (D-IL), Kennelly (D-CT), Kleczka (D-WI), Ackerman (D-NY),
Norton (D-DC), Watt (D-NC), Stark (D-CA), D. Dvis (D-IL), T. Barrett (D-WI),
Bentsen (D-TX), DeLauro (D-CT), and Cardin (D-MD)
COMMITTEE REFERRAL Ways and Means
These companion bills are virtually identical to bills developed during the 104th
Congress, in conjunction with the White House and the Treasury Department. H.R. 2014
contains essentially these components. In addition to the provisions noted above, S. 235
and H.R. 505 would also:
authorize designation of an additional 20 empowerment zones (15 urban/5 rural)
and 80 enterprise communities (50 urban/30 rural) by the end of 1998
allow two additional urban empowerment zones to named under the 1994 authority
authorize a new category of tax-exempt financing for businesses in the new zones;
such issuances would not count under current state bond volume caps, but would be
limited as follows:
(1) $60 million for each rural zone
(2) $130 million for each urban zone with a population under 100,000
(3) $230 million for each urban zone with more than 100,000 persons
SENATE PROPOSALS
105TH CONGRESS
S. 8 Superfund Cleanup Acceleration Act of 1997.
introduced on January 21, 1997, by Sen. Robert Smith (R-NH)
Title I authorizes $65 million annually to address "Brownfields Revitalization" in
three ways:
(1) establishes a grant assistance program for site characterization ($15
million);
Northeast-Midwest Institute
Brownfields Legislative Summary Page 3
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(2) capitalizes revolving loan funds for remediation ($25 million)
(3) offers assistance to state voluntary response programs ($25 million)
eligible entities include local governments, regional councils, redevelopment
authorities, and Indian tribes
site characterization grants to any facility can not exceed $100,000 in any fiscal
year, or $200,000 total
loans distributed from remediation revolving fond resources are limited to $ 150,000
per facility in any fiscal year, or $300,000 total
state applicants for revolving fund grants must pay a 50 percent matching share
establishes criteria for ranking characterization and remediation grant applications
that include:
(1) the site's economic development potential; and
(2) degree to which other cleanup and redevelopment funds will be leveraged
states could get at least $250,000 per year to establish or expand voluntary response
programs that feature:
(1) opportunities for technical assistance
(2) adequate opportunities for public participation
(3) streamlined procedures to expedite voluntary cleanups
(4) mechanisms to ensure that proper cleanups are conducted and completed
(5) mechanisms to approve cleanup plans
(6) "certification" from the state that the cleanup is complete
no enforcement actions or private civil actions could be taken against any sites
certified by states, for "releases subject to a state plan"
liability limitations are included for: (a) owners of properties adjoining a
contaminated site, where migration of pollutants has occurred; and (b) prospective
purchasers
all brownfield funds to be drawn from the Superfund trust fund, with authority
sunsetting after 5 years
additional co-sponsors: Sens. Chafee (R-RI), Lott (R-MS), Abraham (R-MI),
Allard (R-CO), Coverdell (R-GA), Craig (R-ID), DeWine (R-OH), Domenici (R-
NM), Gorton (R-WA), Grams (R-MN), Hagel (R-NE), Hatch (R-UT), Helms (R-
NC), Hutchinson (R-AR), Kyi (R-AZ), Lugar (R-INX Murkowski (R-AK), Roberts
(R-KS), Sessions (R-AL), Thurmond (R-SC), Warner (R-VA), Mack (R-FL), Coats
(R-IN), Bond (R-MO), Inhofe (R-OK), Bennett (R-UT), Faircloth (R-NC),
Kempthorne (R-ID), and Thomas (R-WY)
COMMITTEE REFERRAL Environment and Public Works
S. 18 Brownfields and Environmental Cleanup Act of 1997
introduced on January 21,1997, by Sen. Frank Lautenberg (D-NJ)
would authorize EPA to provide $25 million annually from the Superfund for:
(1) site inventory and characterization grants ($10 million)
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Brownfields Legislative Summary ' Page 4
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(2) grants to capitalize revolving loan programs to encourage site cleanups
($15 million)
eligible entities include state and local governments
site characterization grants (up to $200,000) could be used to inventory
brownfields and carry out assessments of sites targeted for cleanup under a state
voluntary cleanup program; applicants must be able to:
* identify sites;
* describe the impact on the community and the need for financial assistance;
* show the potential to stimulate economic development and leverage
additional resources;
* lay out a plan for implementation
proceeds of revolving loan fund capitalization grants (up to $500,000) could be lent
to public or private owners or prospective purchasers for site cleanup; borrowers
must be unable to secure private financing for cleanups, which must be conform to
the requirements of state voluntary cleanup programs or federal authority; in
making a grant, EPA is to consider factors such as the applicant's ability to:
* administer a revolving loan fund
* ensure appropriate cleanups
* develop and carry out adequate borrower criteria and appropriate
underwriting guidelines
includes non-financial provisions to support brownfield reuse, including:
(1) definition of "bona fide prospective purchasers" and exemption from
liability
(2) guidelines to define innocent landowners, and modifications to the
definition of "contractual relationship" to be consistent with these
guidelines
additional co-sponsors: Sens. Baucus (D-MT), Reid (D-NV), Moynihan (D-NY),
Graham (D-FL), Boxer (D-CA), Wyden (D-OR), Levin (D-M), Torricelli (D-NJ),
Breaux (D-LA), Kennedy (D-MA), Lieberman (D-CT), Mikulski (D-MD), and
Kerry (D-MA)
COMMITTEE REFERRAL Environment and Public Works
S. 23 The New Urban Agenda Act of 1997
introduced on January 21, 19975, by Sen. Arlen Specter (R-PA)
essentially, a comprehensive economic growth bill targeted to cities
Title IV, "Response to Urban Environmental Challenges," provides a federal
liability release to non-NPL urban sites that have garnered a liability release
through a state or local program; and requires EPA to maintain a brownfields
program
additional co-sponsor. Sen. Moseley-Braun (D-IL)
COMMITTEE REFERRAL Finance
Northeast-Midwest Institute
Brownfields Legislative Summary Page 5
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S. 1034 Department of Veterans Affairs and Housing and Urban Development,
and Independent Agencies Appropriations Act of 1998
introduced on July 17, 1997, by Sen. Kit Bond (R-MO)
Section 209 of Title II delineates "BROWNFIELDS AS ELIGIBLE CDBG ACTIVITY,"
permitting block grant funds to be used for "remediation and development activities
related to brownfields projects in conjunction -with the appropriate environmental
regulatory agencies"
COMMITTEE REFERRAL Appropriations; bill passed full Senate on July 22, by a
vote of 99-1
HOUSE OF REPRESENTATIVES PROPOSALS
105th Congress
H.R. 523 Brownfields Redevelopment Act of 1997
introduced on February 4, 1997, by Rep. William Coyne (D-PA)
offers a 50 percent credit to offset costs of carrying out site cleanup according to
remediation plan approved by the EPA or a designated state agency
credit available only to property owners having no association with the
contamination
qualifying sites must meet four criteria:
(1) have had no productive use for at least one year;
(2) be unlikely candidates for redevelopment without tax credits
(3) have strong job-creating, tax-generating potential once redeveloped
(4) have the potential for expeditious cleanup and redevelopment
permits existing tax-exempt redevelopment bonds to be used for cleanup purposes
additional co-sponsor. Rep. Rangel (D-NY)
COMMITTEE REFERRAL Ways and Means
H.R. 873 Land Recycling Act of 1997
introduced on February 28,1997, by Rep. James Greenwood (R-PA)
eliminates CERCLA or RCRA enforcement actions/liability at sites being cleaned
up in accordance with an established state voluntary cleanup program
eliminates federal permit requirements for remediation activities at these sites
state must (1) self-certify to EPA that it has enacted a voluntary cleanup program
and that it has the resources necessary to carry out the program; and (2) notify EPA
about which facilities are being addressed through the program
Northeast-Midwest Institute
Brownfields Legislative Summary Page 6
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ineligible sites include those on or proposed for listing on the NPL, federal
facilities, and sites already subject to existing federal response actions
EPA maintains authority to investigate sites for possible NPL listing
provides liability protection to innocent parties:
* to prospective purchasers that conduct a baseline property assessment as
long as they do not contribute to contamination or impede cleanup; and
* to innocent landowners who have made "all appropriate inquiry," which
includes a site assessment within 180 days of acquisition (ASTM standard
practice Phase I or EPA defined alternative)
additional co-sponsors: Reps. Klink (D-PA), Doyle (D-PA), Quinn (R-NY), B. Franks
(R-NJ), Traficant (D-OH), Holden (D-PA), Rush (D-IL), C. Weldon (R-PA), Ehlers
(R-Nfl), and Goodling (R-PA).
COMMITTEE REFERRAL Commerce, Transportation and Infrastructure
H.R. 990 Brownfields Remediation and Economic Development Act of 1997
introduced on March 6, 1997, by Reps. Jack Quinn (R-NY) and Paul McHale (D-
PA)
establishes a process by which EPA certifies state brownfield cleanup programs and
their review processes, for non-NPL sites contaminated prior to enactment; and
establishes a financing mechanism to promote site assessments and cleanups
certification: to be certified, state programs must:
(1) provide for "good faith" public participation prior to site owner's release
from liability
(2) provide a mechanism for reopeners (when site use changes, when fraud or
improper site maintenance is discovered, or when there is a "significant"
change in scientific standards)
(3) contain standards that protect public health and the environment
(4) promote coordination among state economic development and
environmental agencies
releases site owners and operators from federal liability under Sections 106 and 107
of CERCLA once a state program has been certified, and after the site has been
remediated and released from state liability in conformance with state program
requirements
extends Superfund liability relief to lenders and developers, local governments, and
prospective purchasers if existing site contamination has not been caused by their
actions
if the certified state program includes a waiver from state permitting requirements,
then federal permits may be waived as well
financial assistance: allows taxpayers to establish their own hazardous waste
remediation reserve accounts, called "brownfield IRAs"; site owners, including
ongoing manufacturing concerns, can put up to $5 million into the IRA on a tax-
Northeast-Midwest Institute
Brownfields Legislative Summary Page 7
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exempt basis, to cover the costs associated with (a) site assessment and (b)
brownfield cleanup
also allows brownfield site hazardous waste cleanup costs to be allowed as a
deduction from income in the year such costs occur
additional co-sponsors: Reps. Franks (R-NJ), Meehan (D-MA), Doyle (D-PA),
Kelly (R-NY), Traficant (D-OH), C. Smith (R-NJ), Ehlers (R-MI), Lipinski (D-IL),
Frelinghuysen (R-NJ), Conyers (D-MI), Carson (D-IN), Porter (R-IL), Holden (D-
PA), Kennedy (D-RI), McHugh (R-NY), English (R-PA), Vento (D-MN), Shays
(R-CT), and Molinari (R-NY)
COMMITTEE REFERRAL Commerce, Transportation and Infrastructure, Ways and
Means
H.R. 996 "...to permit the issuance of tax-exempt bonds to finance environmental
remediation of contaminated sites."
introduced on March 6,1997, by Rep. Jerry Weller (R-IL)
establishes tax-exempt "qualified contaminated site remediation bonds" as a
financing mechanism that can be used to acquire or assess and clean contaminated
sites (presumably within the confines of volume caps and bond limits, except that
the restriction against land acquisition will not apply to these bonds)
at least 60 percent of bond proceeds must be devoted to site remediation
total bond proceeds can not exceed fair market value of site after cleanup
additional co-sponsors: Reps. Lipinski (D-IL), Crane (R-IL), Rush (D-IL), Fawell
(R-IL), J. Jackson (D-IL), Manzullo (R-IL), Gutierrez (D-IL), English (R-PA),
Blagojevich (D-IL), Shays (R-CT), Davis (D-IL), Costello (D-IL), Evans (D-JX),
Hastert (R-IL), and P. Kennedy (D-RI)
COMMITTEE REFERRAL Ways and Means
H.R. 997 "...to allow expensing and rapid amortization of certain environmental
remediation expenditures."
introduced on March 6,1997, by Rep. Jerry Weller (R-IL)
permits expensing (first year cost recovery) of the first $500,000 in environmental
assessment and cleanup costs associated with a non-NPL brownfield site
permits a 5-year recovery period for the balance
land acquisition costs are ineligible
additional co-sponsors: Reps. Lipinski (D-IL), Crane (R-IL), Rush (D-IL), Fawell
(R-IL), J. Jackson (D-IL), Manzullo (R-IL), Gutierrez (D-IL), English (R-PA),
Blagojevich (D-EL), Shays (R-CT), Davis (D-IL), Costello (D-IL), Evans (D-JX),
Hastert (R-IL), and P. Kennedy (D-RI)
COMMITTEE REFERRAL Ways and Means
. Northeast-Midwest Institute
Brownfields Legislative Summary Page 8
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H.R. 1049 Brownfield Economic Revitalization Act of 1997
introduced on March 12, 1997, by Rep. Christopher Shays (R-CT)
authorizes HUD and EPA to provide financial assistance for brownfield
assessment, cleanup, and redevelopment activities
EPA would be given $87.4 million annually for:
(1) grants of up to $200,000 to states and local governments to inventory
brownfield sites and conduct assessments and other pre-cleanup activities
* applicants must show development potential of earmarked sites and
offer an implementation plan for proposed activities
(2) grants of up to $500,000 to states and local governments to capitalize
revolving loan funds for site cleanup
* applicants must define the criteria they will use when making loans
(including an affirmation that, but for the loan, the project would not
go forward), define loan terms, explain how they will manage their
fund portfolio, and show the fund's potential to stimulate economic
development
(3) "partnership" grants to states, local governments, other federal agencies,
and private entities to disseminate information about brownfield reuse
issues and strategies
(4) grants and technical assistance to promote brownfield workforce/
environmental education and training programs at colleges and
community-based job training organizations
(5) grants to states to develop, enhance, or expand voluntary cleanup
programs
HUD would be given $25 million annually to:
(1) provide grants to cities and states for brownfield cleanup and
redevelopment activities, to use in conjunction with Section 108 loan
guarantees
* applicants must show how (a) they have developed a brownfield
reuse approach or process, and (b) coordination with appropriate
environmental agencies
* in awarding grant assistance, HUD will give priority to activities
intended for empowerment zones or enterprise communities
permits expensing of environmental remediation costs incurred in target areas that
include:
(1) census tracts with at least a 20 percent poverty rate
(2) adjoining census tracts with less than 2,000 residents, if zoned at'least 75
percent for industrial or commercial use
(3) empowerment zones and enterprise communities
(4) EPA pilot sites designated before February 1, 1997
Northeast-Midwest Institute
Brownfields Legislative Summary Page 9
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claimants must receive a statement from their state agency (as designated by federal
EPA) that cleanup costs were carried out in a target area
additional cosponsors: Reps. J. Maloney (D-CT), DeLauro (D-CT), Gejdenson (D-
CT), Kennelly (D-CT), Meek (D-FL), Dellums (D-CA), Rush (D-IL), Martinez (D-
CA), and G. Miller (D-CA)
COMMITTEE REFERRAL: Commerce, Banking and Financial Services, Ways and
Means
H.R. 1120 - Community Revitalization and Brownfield Cleanup Act of 1997
introduced on March 19,1997, by Rep. John Dingell (D-MI)
would use the Superfund Trust Fund to finance brownfield activities by providing
$45 million annually (for three years) for local governments to:
(1) carry out site assessments ($15 million)
(2) capitalize revolving loan funds to finance site cleanups ($30 million)
eligibility is targeted to local governments, although EPA may award grants to
states if the agency determines that needy jurisdictions do not have the capacity to
participate
site characterization grants (up to $200,000) could be used to inventory
brownfields and carry out assessments; applicants must be able to:
* describe the impact on the community, the need for financial assistance, and
the potential to leverage other resources
* show the potential to stimulate economic or recreational space development
* lay out a plan for implementation
proceeds of revolving loan fund capitalization grants (up to $500,000) could be lent
for site cleanup purposes to public or private borrowers (including prospective
purchasers) who are unable to secure private financing for cleanups; in making a
loan fund capitalization grant, EPA must consider factors such as:
* the method and time needed to clean up the site
* potential of the cleaned site to stimulate economic or recreational space
development
* the applicant's ability to administer a revolving loan fund, ensure
appropriate cleanups, and develop and carry out adequate borrower criteria
and appropriate underwriting guidelines
an additional $ 15 million annually for five years would be provided to states to
establish or enhance voluntary cleanup programs, including creative insurance
mechanisms
state programs can ask EPA to determine if they are suitably "qualified"
* EPA could not seek recovery of cleanup costs at sites remediated through
qualified state programs
liability relief, protects the following parties from liability:
(1) innocent landowners, when they make "all appropriate inquiry" into prior
Northeast-Midwest Institute
Brownfields Legislative Summary Page 10
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ownership and uses, in accordance with ASTM Phase I or comparable
procedures
(2) prospective purchasers
(3) adjoining property owners affected by pollution migration, if they did not
cause or contribute to the release, and if they took reasonable precautions
additional co-sponsors: Reps. Gephardt (D-MO), Oberstar (D-MN), Borski CD-
PA), DeGette (D-CO), Manton (D-NY), S. Brown (D-OH), Towns (D-NY), Rush
(D-IL), Clement (D-TN), Clyburn (D-SC), Waxman (D-CA), Markey (D-MA),
Mascara (D-PA), Boucher (D-VA), Tauscher (D-CA), Pascrell (D-NJ), Furse (D-
OR), Deutsch (D-FL), Blumenauer (D-OR), Eshoo (D-CA), Klink (D-PA), Stupak
(D-MI), Engel (D-NY), Sawyer (D-OH), Wynn (D-MD), Green (D-TX), K.
McCarthy (D-MO), Conyers (D-MI), Rivers (D-MI), Kilpatrick (D-MI), T. Barrett
(D-WI), Kaptur (D-OH), DeLauro (D-CT), Olver (D-MA), Lipinski (D-IL), Doyle
(D-PA), DeFazio (D-OR), J. Johnson (D-WI), Menendez (D-NJ), Gordon (D-TN),
C. Brown (D-FL), Norton (D-DC), Wise (D-WV), Millender-McDonald (D-CA),
Lowey (D-NY), Cummings (D-MD), Rangel (D-NY), E. Johnson (D-TX), Pallone
(D-NJ), P. Kennedy (D-RI), Pelosi (D-CA), Ford (D-TN), McDermott (D-WA),
Strickland (D-OH), Dellums (D-CA), Capps (D-CA), Poshard (D-IL), Andrews (D-
NJ), Bonior (D-MI), Weygand (D-RI), Cardin (D-MD), LaFalce (D-NY), Meek (D-
FL), G. Miller (D-CA), Serrano (D-NY), and Kildee (D-MI)
COMMITTEE REFERRAL: Commerce, Transportation and Infrastructure
H.R. 1206 Brownfield Cleanup and Redevelopment Act
introduced on March 20, 1997, by Rep. Visclosky (D-IN)
would have EPA certify state cleanup programs (within 120 days of state
application), thereby giving states authority over the cleanup, provided the
programs meet certain criteria (specified by EPA within one year of enactment),
including:
(1) offer opportunities for meaningful public participation hi cleanup plans
(2) ensure that technical assistance is available for each voluntary cleanup
(3) ensure that adequate resources are available to carry out cleanup and run
the program
(4) feature adequate oversight and enforcement authority so that cleanups
comply with federal and state laws
(5) provides certification to owner or prospective purchaser that cleanup is
complete
most low- and medium-priority sites are eligible; certain types, such as NPL sites,
federal facilities, and sites subject to corrective action, are ineligible
certified states may modify federal permit requirements for eligible sites to expedite
cleanup
Northeast-Midwest Institute
Brownflelds Legislative Summary Page 11
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additional co-sponsors: Reps. LaFalce (D-NY), Kaptur (D-OH), Sisisky (D-VA),
and Jefferson (D-LA)
COMMITTEE REFERRAL: Commerce, Transportation and Infrastructure
H. R. 1392 ~ Brownfields Reuse and Real Estate Development Act
introduced on April 17,1997, by Rep. Ralph Regula (R-OH)
would have EPA certify state voluntary cleanup programs; and amend CERCLA to
address landowner and prospective purchaser liability
certification: would have EPA certify state cleanup programs (within 120 days of
state application), thereby giving states authority over the cleanup, provided the
programs meet certain criteria (specified by EPA within a year of enactment),
including:
(1) offer opportunities for meaningful public participation and involvement, hi
relation to site risks
(2) ensure that technical assistance is available for each voluntary cleanup
(3) ensure that adequate resources are available to carry out cleanups and run
the program
(4) ensure adequate oversight and enforcement authority
(5) provide documentation to owner or prospective purchaser that cleanup is
complete
this act does not impose any requirements on existing (or future) state voluntary
cleanup programs, although they need to comply with EPA criteria to gain
certification
most low- and medium-priority sites are eligible; certain types, such as NPL sites,
federal facilities, and sites subject to corrective action, are ineligible
* states, "for good cause," may seek eligiblity waivers on a case-by-case basis
liability relief protects the following from liability:
(1) innocent landowners, when they make "all appropriate inquiry" into prior
ownership and uses, not more than 180 days before site acquisition, hi
accordance with ASTM Phase I or comparable procedures defined by EPA
(2) prospective purchasers
(3) owners of contiguous property affected by pollution migration, if they did
not cause or contribute to the release, and if they cooperate and provide
site access to permit cleanup
additional co-sponsor: Rep. Murtha (D-PA)
COMMITTEE REFERRAL: Commerce, Transportation and Infrastructure
H.R. 1395 - Brownfields and Environmental Cleanup Act of 1997
introduced on April 17 by Rep. Rothman (D-NJ)
authorizes $15 million annually (through fiscal 2002) in grants for site
characterization, and $25 million for revolving loan fund capitalization
Northeast-Midwest Institute >
Brownfields Legislative Summary ' Page 12
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site characterization grants (up to 5200,000) could be awarded to states or local
governments to inventory brownfield sites and carry out site assessments;
applicants must, to the extent practical, be able to:
* identify sites and offer a cleanup plan
* show financial need and economic development potential (including the
potential for leveraging other funds)
* describe local commitment, including a community involvement plan
* include a statement on long-term benefits and sustainability
proceeds of revolving loan fund capitalization grants (up to $500,000), awarded to
states or local governments, could be lent to public or private owners or prospective
purchasers to carry out site cleanups; borrowers must be unable to secure private
financing for cleanups, prove they can repay the loans,
in making a capitalization grant, EPA is to consider factors such as the applicant's
ability to:
* administer a revolving loan fund
* ensure appropriate cleanups that comply with applicable state and federal
laws
* develop and carry out adequate borrower criteria (that includes a statement
that, but for the revolving fund, cleanup would not occur), and appropriate
underwriting guidelines
most sites eligible for financial assistance; exceptions include NPL sites, facilities
subject to corrective action, LUST trust fund-eligible sites, and federal facilties
liability limitations the following parties are given liability protection:
(1) prospective purchasers, who acquired the facility after enactment who can
show (a) all disposal took place before acquisition; (b) all appropriate
inquiry was made; and (c) reasonable steps were taken stop or prevent
releases
(2) innocent landowners, who made all appropriate inquiry including a site
assessment not more than 180 days prior to acquisition (in accordance with
ASTM standards or designated alternative standards)
additional co-sponsors: Reps. Olver (D-MA), Hinchey (D-NY), Pastor (D-AZ), C.
Maloney (D-NY), Rush (D-IL), Christian-Green (D-VI), John Lewis (D-GA),
McKinney (D-GA), Mcmtyre (D-NC), and Sisisky (D-VA)
COMMITTEE REFERRAL: Commerce, Transportation and Infrastructure
H.R. 1462 Brownfield Cleanup and Redevelopment Revolving Loan Fund Pilot
Project Act of 1997
introduced April 24, 1997, by Rep. Peter Visclosky (D-IN)
establishes a three-year state revolving loan fund pilot program; $5 million would
be authorized for fiscal 1998, and $7.5 million for both fiscal 1999 and 2000
Northeast-Midwest Institute
Brownfields Legislative Summary Page 13
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states apply to EPA for loan fund capitalization loans; at a minimum, applications
must show evidence of:
* an active voluntary cleanup program
* opportunity for meaningful public participation
* sufficient technical assistance and resources to carry out cleanups
* oversight to ensure that cleanups comply with federal and state laws
* certification to the owner or prospective purchaser that cleanup is
complete
state must match loan with at least a 20 percent share cost from new or existing
state resources
state must describe how revolving loan fund would be used and show its ability to
begin repaying the capitalization loan within five years
public and private parties conducting cleanups are eligible for loans if they cannot
get loans from private lenders or other sources
most low- and medium-priority facilities are eligible to use loan proceeds; certain
types, such as NPL sites, federal facilities, and sites subjective to corrective action
are ineligible
loan priority is given to facilities that:
(1) will be reused for industrial purposes, using environmentally sound
(2) will generate jobs for contractors whose principal place of business is the
political subdivision where the facility is located
loans cannot be used for new construction, environmental fines or penalties,
speculative assessments, or rehabilitation at facilities with little or no potential for
economic redevelopment, or other activites determined by EPA
additional co-sponsors: Reps. LaFalce (D-NY), Kaptur (D-OH), Sisisky (D-VA),
and Jefferson (D-LA)
COMMITTEE REFERRAL: Commerce
H.R. 1533 National Initiative on Surface Transportation and the Environment Act
introduced on May 6,1997, by Rep. Andrews (D-NJ)
Sec. 3 addresses "Assessment and Cleanup of Brownfield Sites"
would permit use of highway and surface transportation funds for:
(1) assessment and cleanup of brownfield sites related to highway and surface
transportation projects
(2) projects for development of brownfield sites that lead to: reduced
congestion; increased transit use; and improved access to a transporation
facility
COMMITTEE REFERRAL: Transportation and Infrastructure
Northeast-Midwest Institute
Brownfields Legislative Summary Page 14
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Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
(4B) A Premium Ideal Can Brownfields Insurance Work for You?
Thursday, September 4,1997
10:30 a.m. -12:30 p.m.
Description: The insurance industry is changing its attitude toward brownfields. Panelists will discuss current
and emerging trends in the industry and insurance products and how these can be matched with the unique
needs of brownfields.
Location: Room 1205
Speakers and Affiliation:
Dr. Peter B. Meyer (Moderator)
Mr. Bruce Amos
Mr. John G. Arlington
The Honorable Joseph Vas
University of Louisville
ECS, Inc.
American Insurance Association
City of Perth Amboy, New Jersey
DR. PETER B. MEYER
Dr. Meyer is professor of Urban Policy and Economics and director of the Center for Environmental Management at
the University of Louisville, where he has been since 1988. He was on the faculty of the Community Development
Program at the Pennsylvania State University from 1968 through 1987, serving as director of the Local Economic
Development Assistance Project from 1978 through 1987. His research centers on the problems and prospects
associated with pursuit of environmentally sustainable economic development and he has been engaged in research
on brownfields redevelopment financing and related public policy issues since 1991. He also serves as the
president of The E.P. Systems Group, Inc., an economic and environmental planning firm.
MR. BRUCE AMOS
Bruce Amos is the brownfields redevelopment manger for ECS, Inc. Mr. Amos is responsible for the identification
and development of projects involving the reuse of both private and public closed, abandoned, or underutilized
industrial sites, with the goal of returning these properties to productive use. Mr. Amos has over twenty-five years'
experience in the consulting and engineering business. Mr. Amos has an undergraduate degree in electrical
engineering from the University of Pittsburgh, a master's degree in business administration from the Keller Graduate
School of Management in Chicago, and a master of science degree in environmental engineering from Drexel
University.
ECS, Inc., is a provider of environmental insurance, consulting, and claims management services to business and
industry.
MR. JOHN G. ARLINGTON
[Biography was not available at time of printing. Please refer to conference addendum.]
THE HONORABLE JOSEPH VAS
[Biography was not available at time of printing. Please refer to conference addendum.]
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
DOCUMENTS THAT SUPPORT
PANEL 4B: A PREMIUM IDEA! CAN BROWNFIELDS INSURANCE WORK FOR
YOU?
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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KIESD
The Kentucky Institute for the Environment and Sustainable Development
203 Patterson Hall, University of Louisville, Louisville, Kentucky 40292
Center for Environmental Management
Notes on Insurance and Brownfields Investment Decisions
These notes are intended to provide some framework for consideration of the role of
insurance in stimulating investment in the redevelopment of urban brownfields. More
accurately, they address the roles, plural, that different types of insurance can play in facilitating
the flow of funds for different stages of redevelopment efforts.
The materials here are extracted from a two sources, and it is appropriate to acknowledge
the financial support that made them possible. Pages 2-6 derive from research conducted by The
E.P. Systems Group, Inc., under U.S. Department of Housing and Urban Development Order
HP97-2665 and are extracted from the Draft Final Report of the "Feasibility Study of
Environmental Insurance for Urban Redevelopment." Pages 7-8 are taken from Center for
Environmental Management Working Paper 97-3, "Small Borrowers and Big Financiers: the
Urban Redevelopment Conundrum." That report, in turn, is based on research conducted under
U.S. Environmental Protection Agency Order 6W-3586-NASA, for Research and Development
of a source book, "The Loan Application Process for Brownfields Financing: What Borrowers
Need to Know," also by The E.P. Systems Group, Inc.
The final two pages in the materials provided here are a list of Working Papers available
from the Center for Environmental Management at the University of Louisville. Please contact
the Center for an order form if you are interested.
Peter B. Meyer
Professor of Urban Policy and Economics
Director, Center for Environmental Management
July, 1997
USI, University of Louisville, 426 West Bloom Street, Louisville, KY 40208 / (502)852-8032 / fax (502)852-4558
Science Engineering Sustainable Urban Neighborhoods Management Health Sciences Education Policy Pollution Prevention
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Insurance Policy Variables
These definitions are not legally precise, but provide a layman's understanding of the
terms for discussion by non-specialists. Each definition is followed by comment on the relevance
of the variable to the insurance coverage purchase decision.
Application Requirements - The information required and any fees or prepayments due from the
would-be insured party at the time of application for insurance coverage. The cost of
acquiring the necessary information can be substantial, and filing fees to pay for
preliminary underwriting may not be refundable if insurance is not purchased.
Coverage - The protection purchased, including a definition of the risks against which protection
is provided and the maximum payments to be made by the insurer. Minimum coverages
may far exceed the needs of small developers or projects on sites with only limited
contamination; maximum coverages may not be sufficient for large and complex projects,
although those maxima have been rising over time.
Coverage Fee - That portion of the cost of insurance that pays for the coverage provided,
typically described in terms of cost per $1,000 in coverage and varying with the coverage
purchased. This amount is not predictable for many forms of environmental insurance;
it may depend on project- and site-specific data employed in underwriting.
Filing Requirements - The requirements governing the filing of a claim, most particularly the
provisions for delayed filing if harm is not discovered until after expiration of the term
of the insurance policy. The broader the provisions for delayed filings on liability
coverages, the more valuable the policy is to the insured since these provisions increase
the protection against future liabilities.1
Policy (Underwriting) Fee - That portion of the cost of insurance that is fixed, regardless of the
amount of coverage purchased, which is charged for the costs incurred in writing the
insurance policy, including any effort committed to assessing the risks and determining
the appropriate level of the coverage fee. This fee can raise the total cost of coverage to
an uneconomical level for small projects or those with relatively low projected site
cleanup costs and similarly limited liability risks. Hence it may limit the value of
insurance to the majority of urban redevelopment sites, those of two acres or less.
1 The filing requirements and potential coverage often depend on whether a policy is written to protect for
"claims' or 'occurrences." For a policy with a limited term, the difference is essential, since the claims may be
made years after the occurrences that generated the damage. Under a pure claims policy, coverage is provided only
for claims made during the insurance term. An "occurrences" policy provides protection for claims made about
damage discovered at a later date, and is subsequently more expensive to buy.
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Renewal or Rollover Conditions - The provisions for renewal of the insurance policy, including
any assurances of guaranteed renewal, the terms of renewal policies, and any assurances
about the cost of renewals. These conditions are important to the extent that insurance
coverage provides protection for long-term investors, since the terms of debt instruments,
or commitments to equity investments, may exceed the maximum term of available
insurance policies.
Retention or Deductible - The unreimbursable expenditure required of the insured prior to the
initiation of payment under the coverage in the event that insurance is activated. This is,
in effect, the "self-insured" portion of the risk and thus represents the remaining cost
uncertainty after the purchase of insurance.
Term - The period of time for which the insurance is in force and effect. Cost savings may be
possible through matching the term for policies covering remedial actions on a site to the
time period scheduled for cleanup; for assurance to longer-term investors, however, the
longer the term of other coverages, such as for liability or possible regulatory
reopenings, the more valuable the policy may be.
Transferability - The conditions under which the insurance coverage provided to an insured
owner of a property or other asset is transferred to subsequent owners of the asset.
Transferability provides protection to financiers in the event of loan default or other
developments that may lead them to become owners of the asset for which insurance was
purchased. The more easily the policy may be transferred, the more valuable it will be.
Umbrella or Pooled Coverage - Provision of insurance protection to a defined group of
properties, currently available to the owner of a number of parcels, but potentially
provided to a single agent acting as the insured and representing a group of individual
parties.
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Broad Categories of Insurance Coverage Types
Professional Liability Coverage
By 1996, environment-specific "errors and omissions" insurance was routinely available
and largely carried by both engineering and legal firms with environmental practices. Such
insurance is generally underwritten at relatively fixed fees for virtually any amount, so smaller
as well as larger firms can now offer their clients the assurance of protection in the event of
professional error.
Owner/Operator Liability Coverage
This coverage is available to protect the parties actually conducting work or operating
on the site in question. It could be provided to the owner of the site, the business(es) operating
on the site, or firms engaged in mitigation or removal and transport of the hazardous materials
found on site. First, coverage may be provided for demonstrable health damage resulting from
exposure to some known toxic materials. Second, coverage may be provided for two types of
economic damage: (i) for actual immediate effects such as income losses associated with inability
to use a site, including adjacent sites, or the need to cleanup an adjacent property due to the
movement of spilled toxics; and, (ii) for so-called "diminution of value," reduction in the value
of the property or adjacent/nearby properties. This coverage may be needed for noise and
aesthetic consequences of mitigation efforts as well as with operations, even if the activities are
not directly associated with the toxics exposures, so long as they involve controlling regulated
substances.
Cleanup Cost-Cap or Stop-Loss Coverage
Any redevelopment project involving a brownfield site may incorporate actions taken to
cleanup past contamination or otherwise to mitigate exposure risks on the property. No projects
proceed without a budget for expenses and some allowance for cost overruns or other
uncertainties. This coverage is designed to limit the cost uncertainties by capping the cost of
cleanup to the redeveloper (or seller of the site). Cost-cap coverage is generally provided with
either a 10% or 25% "retention" by the covered party for cost overruns, with limits starting at
200% of the initially budgeted cleanup cost. The term of the policy, which can vary, may be
critical for multi-year cleanups or mitigations with post-cleanup monitoring that could require
additional action at a later date.
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Legal Defense Coverage
Coverage for the costs of legal defenses may help to prevent settlements that encourage
further suits and reduce the costs of environmentally risky redevelopment efforts. This coverage
is generally incorporated into liability coverages.
Re-opener or Regulatory Action Coverage
Prospective liability is unlimited under CERCLA. While this exposure exists in law in
principle, there is minimal experience of high reopener costs incurred by conscientious
mitigators. Nevertheless, some insurance against the possibility of a future reopening of a
previously approved cleanup may be desirable in order to minimize uncertainties, especially
since such reopeners may not only require expenditures but may limit use of the site, thus
reducing future revenues.
Trends in Coverage
Major changes that have affected the coverages available from urban regeneration and
their value to parties in the redevelopment process include:
Longer terms for many policies, which may now be purchased for coverage extending for ten
years when previously available for a maximum of three to five years;
Portfolio or pooled coverage for multiple properties owned by (or in some instances, simply
insured by) a single covered insured entity;
Increased flexibility in combining coverages and varying the amount of coverage in different
elements of a combined policy - moving away from fixed ratios to tailored mixes; and,
most significantly,
Reduced costs of coverage and lowered minimum premiums for virtually all lines of
environmental coverage.
These shifts have both decreased the cost and increased the value of environmental insurance as
a tool for use in the urban redevelopment process.
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The Stages of a Brownfield Redevelopment Effort
We can distinguish five key stages in the process leading to redevelopment of a
brownfield parcels or other urban sites. Each involves slightly different parties, but all need to
be considered as possible beneficiaries of insurance coverage.
(1) Site selection, by a would-be redeveloper, will, at some point, involve CERCLA-type
site assessment efforts, and thus benefit from professional liability coverage.
(2) Remediation, if needed, is facilitated by both forms of third party liability coverage
and, of course, stop-loss protection.
(3) New construction/rehabilitation costs are more certain if comprehensive
owner/operator liability coverage is available; professionals involved in advising
on such operations, including architects and engineers, may benefit from
professional liability coverage.
(4) Ongoing operations involve uncertainties that are reduced by the availability of
owner/operator liability coverage, and would be further resolved if long-term
regulatory reopener coverage were available as the result of a prior cost-cap
policy.
(5) Refinancing (and lender sale or securitization of a mortgage) will tend to be easier
if long-term and guaranteed renewable owner/operator and reopener insurance
coverage is available.
In all these cases, insurance could facilitate progress with brownfield redevelopment.
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Insurance and Control of Lender Risk Exposures
The "Asset Conservation, Lender Liability, and Deposit Insurance Protection Act,"
passed as part of the Omnibus Consolidated Appropriations Act on September 30, 1996 amended
CERCLA and formalized as law a "lender liability rule" that had previously been passed as a
regulation by the EPA. Although the full effects of the new laws are still uncertain, they are
expected to encourage greater lender willingness to offer loans on previously used properties.
Lenders, however, will still require attention to environmental issues for several reasons:
Concern about the ability of borrowers to repay the loan since a borrower's ability to
do so may be jeopardized by cleanup costs;
Fears that if they do have to foreclose, environmental problems will lower the value
of their collateral;
The danger that they may still be liable, especially if, after foreclosure, they are forced
to get involved in removing hazardous substances from a site;
The lender liability that still could arise under some 25 other federal environmental
laws and myriad state laws; and,
The risk of litigation against lenders by other private parties trying to tap financial
'deep pockets' to recoup cleanup expenses imposed on them.
All these concerns lead to exceptional concerns about securing risks on the part of lenders that
may add to project costs - or render projects impossible without the risk management capacity
provided by insurance. These issues emerge from the three varieties of risk that concern lenders
with regard to any loan, whether or not it involves environmentally suspect properties:
Loan or credit risk, the likelihood that borrowers will be able to make loan payments. Risk
assessment involves looking at the financials of the project, and at the credit rating of the
borrower.
Collateral risk, the possibility that the lender will not recoup the value of the loan if default
and foreclosure occurs. It is often controlled by reducing loan-to-value ratios if the value
of the collateral is uncertain or by requirements that special forms of insurance are
purchased.
Liability risk, the danger that a lender will be somehow exposed to liability claims
(potentially those associated with past contamination), a risk that was reduced a great
deal by the 1996 legislation, but still needs to be controlled through careful exercise of
environmental "due diligence."
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Loan risk may be addressed directly through insurance. The insurance industry has
developed "stop loss" products, protecting developers from cost overruns on cleanups. High
fixed underwriting costs have, until recently, precluded the use of these policies for small scale
projects. Pooled coverage, whether used by municipalities and redevelopment districts or
agencies or by lenders for their portfolios, offers a lower cost per dollar of coverage to
developers with fixed costs underwritten by the public or quasi-public entity promoting local
economic development. Having insurance may even overcome some stigma concerns, albeit
indirectly.
Credit risk may also be eased by insurance coverage, if loan guarantees for some
proportion of loans to redevelopers for defaults attributable to a specified list of causes,
including factors such as undiscovered contamination (if not covered by other insurance) could
be purchased, much as mortgage guarantee insurance is now demanded of home-buyers.
Collateral risk, our second major concern, would also be reduced by the provision of any
loan guarantees, since foreclosure by the institution would not be needed - or the return on the
foreclosure assured. To the extent that loan guarantees do not protect investors from all possible
defaults, however, this form of risk remains.
Finally, liability risk (which has not been fully eradicated by the 1996 amendment to
CERCLA, which protects against federal claims, but not private lawsuits or actions by other
levels of government) remains an issue. Insurance may be the best way to address these concerns
in the current environment, despite potentially high costs of coverage, because:
(1) The impact of the 1996 amendment is not yet clear, and further action should await
evidence of the effects of provision of partial liability relief;
(2) As we have already argued, the effect of reduction in liability risk was to increase
the relative significance of other forms of risk, and we have just identified actions
that could be taken to increase the competitiveness of small scale redevelopments
with respect to those factors;
(3) Some residual environmental liability risk exposure is desirable in light of the
comments of a number of parties, especially attorneys, attesting to the utility of
such concerns in motivating lenders to act as environmental enforcement agents;
and,
(4) Liability risks are associated with any development or redevelopment project, and it
is not clear that the environmental liabilities that remain after the passage of the
1996 Act constitute a significantly greater exposure than would exist on a
greenfield project.
8
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KIESD
The Kentucky Institute for the Environment and Sustainable Development
203 Patterson Hall, University of Louisville, Louisville, Kentucky 40292
Center for Environmental Management
Working Papers Available. April. 1997
92-1, Meyer, P. B., LANDFILLS AND DEVELOPMENT: LOCAL UNIQUENESS AND LONG TERM
SOCIOECONOMIC IMPACT ASSESSMENT (A Preliminary Methodology and Agenda for
Research), October.
93-1, Meyer, P.B., and S.M. Olson, FACTORS AFFECTING HOUSEHOLD WILLINGNESS TO PAY
TO AVOID EXPOSURE TO TOXICS, April.
93-3, Yount, K.R., FEAR AND LOATHING IN URBAN AMERICA: ENVIRONMENTAL RISKS AND
THE CONSTRAINTS ON URBAN REGENERATION, June, 1993.
93-4, Meyer, P.B., THE ROOTS OF ENVIRONMENTAL CONCERNS AND THE PROSPECTS FOR
NEW LANDFILLS AND RENEWAL OF URBAN BROWNFIELD SITES, September.
94-2, Yount, K.R., and P.B. Meyer, WHO WILL PAY FOR RECLAMATION OF URBAN
ENVIRONMENTAL BLIGHT? POLICY POTENTIAL IN LIGHT OF DEVELOPER AND LENDER
RISK PERCEPTIONS, March.
94-3, Yeager, J., and P.B. Meyer, ENVIRONMENTAL RISKS AND URBAN REGENERATION:
REGULATION, RISK PERCEPTION AND THE FLIGHT OF DEVELOPMENT CAPITAL, March.
94-4, Burayidi, M.A., THE QUEST FOR GLOBAL ENVIRONMENTAL SUSTAIN ABILITY, April.
94-5, Meyer, P.B., and K.R. Yount, UNDERINVESTMENT IN THE FACE OF ENVIRONMENTAL
RISKS: CULTURAL AND ORGANIZATIONAL CONSTRAINTS TO URBAN BROWNFIELD
REDEVELOPMENT, July.
94-6, Yount, K.R., MOTHERHOOD AND MARKETPLACE MENTALITIES: AN EMPIRICAL
EXAMINATION OF GENDER-BASED RESPONSES TO HAZARDOUS TECHNOLOGIES, July.
94-7, Meyer, P.B., ECONOMIC "DEVELOPMENT" AND ENVIRONMENTAL THREATS:
INSTITUTIONAL FACTORS SHAPING SOCIO-ECONOMIC IMPACTS, July.
94-8, Meyer, P.B., and Hyung-Ki Ann, ENVIRONMENTAL PLANNING, INDUSTRIAL ACCIDENTS,
RISK COMMUNICATION AND CITIZEN RESPONSES, August.
94-9, Lyons, T.S., and G.A. Lichtenstein, NEW STRATEGIES IN RURAL AND SMALL TOWN
INCUBATION: EXAMPLES OF SUCCESSFUL PRACTICE, October.
95-1, Meyer, P.B., TOWARD ACCOUNTING FOR SUSTAINABLE ECONOMIC DEVELOPMENT:
MEASUREMENT PROBLEMS AT DIFFERENT LEVELS OF AGGREGATION, March.
USI, University of Louisville, 426 West Bloom Street, Louisville, KY 40208 / (502)852-8032 / fax (502)852-4558
Science Engineering Sustainable Urban Neighborhoods » Management Health Sciences Education Policy Pollution Prevention
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95-2, Keil, T.R., V. Andreescu, and D.M. Austin, PERCEPTIONS OF ENVIRONMENTAL QUALITY
AND LOCAL MIGRATION POTENTIAL IN ROMANIA, March.
95-3, Lyons, T.S., and W.J. Rauhe, TOWARDS CREATING A MODEL FOR EMPOWERING
CITIZENS TO SUSTAIN COMMUNITY PLANNING AND DEVELOPMENT EFFORTS: THE
CASE OF MINOMINEE, MICHIGAN, March.
95-4, Meyer, P.B., TOWARD AN ETHICAL ECONOMICS OF ENVIRONMENTAL EQUITY, April.
95-5. Yount. K.R., CONTENDING WITH POLLUTED PROPERTIES: POLICY INSIGHTS FROM THE
EUROPEAN UNION AND UNITED STATES DEBATES, May.
95-6, Meyer, P.B., RESTRUCTURING THE INSTITUTIONS FOR NORTH-SOUTH COOPERATION
THROUGH INCORPORATING SUSTAINABILITY AND EXISTENCE VALUES INTO THE
NORTH'S OPTIMIZATION CALCULATIONS, July.
95-8, Lyons, T.S., G.A. Lichtenstein and S. Chhatre, A BARRIERS-PRACTICES APPROACH TO
UNDERSTANDING THE EFFICACY OF RURAL BUSINESS INCUBATION, October.
95-10, Lyons, T.S., G.A. Lichtenstein andS. Chhatre, SURMOUNTING BARRIERS TO INNER-CITY
MINORITY ENTREPRENEURSHIP: THE ROLE OF BUSINESS INCUBATION, October.
96-1, Meyer, P.B., COPING WITH REALITY: DELUSIONS. DATA. AND DRIFT-AVOIDANCE, March
96-2, Ann, H-K., and P.B. Meyer, ACCIDENT RISKS AND WELFARE LOSSES: TAKING A SECOND
LOOK AT EVACUATION DECISIONS, March.
96-3, Meyer, P.B., T.S. Lyons, and V. Mani, FORECASTING KENTUCKY'S ENVIRONMENTAL
FUTURES - FINAL REPORT EXECUTIVE SUMMARY, June.
96-4, Meyer, P.B., PENNSYLVANIA COPES WITH ITS PAST: ONE STATE'S EFFORTS TO
REDEVELOP URBAN BROWNFIELDS AND CLEAN UP CONTAMINATED LANDS, July.
95-6, Chilton, K.M., THE ROLE OF ECONOMIC DEVELOPMENT ORGANIZATIONS IN BROWNFIELD
REDEVELOPMENT: A COMPARISON OF PENNSYLVANIA AND OREGON, October.
96-7 Meyer, P.B., and C.W. Reaves, BROWNLINING BANKS: THE BANK MERGER MOVEMENT
AND URBAN REDEVELOPMENT, December.
97-1 Meyer, P.B., 'POLLUTER PAYS' - BUT WHO IS IT? ... IMPLICATIONS FOR RECLAMATION
OF ABANDONED INDUSTRIAL SITES, March.
97-2 Yount, K.R., ONE SIZE DOES NOT FIT ALL: DIFFERENTIATING BROWNFIELD PROJECTS
FOR EFFECTIVE POLICY DEVELOPMENT, April.
97-3 Meyer, P.B., SMALL BORROWERS AND BIG FINANCIERS: THE URBAN REDEVELOPMENT
CONUNDRUM. April.
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Brownfields'97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
(4C) Increasing Your Return on Investment Using Federal, State, and Local Tax Incentives
Wednesday, Septembers, 1997
3:45 p.m. - 5:15 p.m.
Description: From brownfields tax incentives to greenfields disincentives, a variety of creative options are being
tested across the country. Get ideas on how to benefit from federal, state, and local tax incentives for cleanup
and redevelopment of brownfields.
Location: Room 1201
Speakers and Affiliation:
The Honorable Michael S. Barr (Moderator)
Mr. George D. Baker
Mr. Michael Finnegan
U.S. Department of the Treasury, Office of Community
Development Policy
Williams & Jensen, P.C.
State of New York, Office of the Governor
THE HONORABLE MICHAELS. BARR
Michael Barr is Deputy Assistant Secretary for Community Development Policy at the U.S. Department of the
Treasury. In that capacity, he helps develop Administration policy with respect to low income households and
communities. The Treasury Department has proposed a new brownfields tax incentive to spur the revitalization of
economically distressed areas, and has worked to reform lender liability laws.
MR. GEORGE D. BAKER
George Baker has been a partner at Williams & Jensen in Washington, D.C. since April 1984. He became
associated with the firm in March 1980 after two and one-half years experience as an attorney with the Office of
Hearings and Appeals of the U.S. Department of Energy.
Mr. Baker concentrates on legislation and administrative policy pertaining to energy, environment, agriculture and
natural resource matters. As Executive Director of Superfund Reform '95, the primary broad-based, national
coalition working on behalf of fundamental reform of Superfund, Mr. Baker has become extensively involved with
brownfields issues including tax-based incentives and other policy approaches at both the state and federal levels.
MR. MICHAEL FINNEGAN
[Biography was not available at time of printing. Please refer to conference addendum.]
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
DOCUMENTS THAT SUPPORT
PANEL 4C: INCREASING YOUR RETURN ON INVESTMENT USING FEDERAL,
STATE, AND LOCAL TAX INCENTIVES
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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SURVEY OF BROWNFIELDS
TAX INCENTIVES
George D. Baker
Williams and Jensen, P.C.
1155 21st Street, N.W.
Washington, D.C. 20036
202-973-5946
Septembers, 1997
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INTRODUCTION
Federal, state, and local environmental regulations designed to protect natural resources and public
health have inadvertently created an atmosphere of hesitation and anxiety for many of our nation's businesses
and investors. Brownfields, generally described as vacant, abandoned, or underutilized commercial and
industrial property that may require an environmental cleanup before being developed, are a perfect example
of unintended but undesirable consequences created by some of our environmental regulations. Almost
every older city in the nation, regardless of size, wrestles with the challenge of reusing contaminated
commercial and industrial sites.
Some of the problems include cleanup costs that often exceed the uncontaminated value of the
property, unrealistic cleanup standards which result in exorbitantly high cleanup costs and risk of immediate
or downstream liability that drives off potential purchasers and lenders. The precise inventory of such
contaminated sites is unknown, but experts have suggested that more than 500,000 sites nationwide show
evidence of at least some contamination which could trigger statutes like the federal Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and its state "Superfund"
progeny that ultimately inhibit owners from selling the site, securing financing, or proceeding with reuse. Such
legal uncertainty often makes it difficult, or impossible, to arrange financing to carry out both cleanup and
redevelopment activities. Although estimates regarding the total cost of cleaning up the nation's brownfield
inventory vary, the General Accounting Office has indicated the price tag for cleanup of U.S. brownfield sites
may be as high as $650 billion.
Virtually every state, city and town that is affected now realizes that brownfields represent a huge
waste of resources as long as they remain unreclaimed. Many urban areas are decaying in part because
abandoned sites result in millions of dollars of lost tax revenue and lost wages from missed employment
opportunities. Additionally, existing streets and roads, water lines, railroads, and other infrastructure systems
go unused or unrepaired resulting in the waste of billions of dollars in public and private investments. By
encouraging reuse of contaminated property, local and state governments generate not only additional jobs
and property taxes based on higher assessed values, but increase much needed sales and business taxes
as well. Frequently, the assessed values of nearby properties will also be increased.
Congress, the Environmental Protection Agency (EPA), and many states have acknowledged that
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environmental laws and regulations contribute to the decay of these contaminated and industrial areas. The
question becomes - How do we remove these barriers and stimulate investors and developers to invest their
resources in redeveloping a brownfield site? What kind of incentives can we give developers that would make
them prefer redeveloping a brownfield rather than the environmentally safe and economically stable
greenfields? States have been passing legislative initiatives to try and find the answers to these very
questions. While the EPA pilot programs are limited in number, the state initiatives have provided a more
powerful incentive for the redevelopment of brownfield sites. However, while many of these state initiatives
allay the fear of liability through Voluntary Cleanup Programs1 they do not necessarily contain the necessary
funds needed for site acquisition, cleanup and redevelopment. Delays can occur because of these
financial shortfalls.
Recognizing this problem, a handful of states have enacted legislation that creates effective tax
policies to redress some of these financial shortcomings. This memorandum (1) summarizes some of the
leading states' efforts to encourage brownfield development through tax-based incentives; (2) summarizes
tax-based proposals in Congress aimed at encouraging brownfield development; and (3) evaluates the likely
successes and downfalls of some of the federal brownfield tax provisions.
STATE BROWNFIELD TAX INITIATIVES
For many years, state and local governments have used or sponsored tax and public finance
mechanisms to stimulate economic activity in certain geographic areas or industries. Now, such economic
development initiatives are targeting environmental improvement, specifically brownfield development.
Several states have also passed legislation providing tax incentives to investors that develop on brownfields.
1 Voluntary programs create incentives for investors to redevelop brownfield sites by
minimizing governmental red-tape and limiting liability. If developed according to a state plan,
the state environmental agency will usually not hold the developer liable for prior contamination
and will release the developer from further liability. As of the fall of 1996, the total number of
state voluntary cleanup programs rose to 37,33 of these having been created or formalized in the
past five years. Several more states are following closely behind and plan to unveil programs
this year. Northeast-Midwest Institute, Coming Clean, 1996 Annual Report, at p.l, Chapter 4.
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These incentives include: tax abatements2, tax credits, and creative tax-increment financing3 rules. Below is
a brief summary of some of the leading state tax initiatives.
Michigan. In 1996, Governor Engler signed legislation encouraging development of brownfields in
urban areas. The legislation created the Brownfields Redevelopment Financing Act which would allow
municipalities to develop and implement brownfields redevelopment financing plans (i.e., tax increment
financing plan or tax capture plan) to capture state or local property taxes from a contaminated site in order
to conduct response activities at the site. (The Act will allow municipalities to establish Brownfield
Redevelopment Authorities to facilitate local initiatives by: (1) leasing or purchasing brownfield sites; (2)
borrowing or lending money from the authority responsible for response activities; (3) reimbursing parties for
response activities at sites; and (4) establishing site remediation revolving loans and grants to fund cleanups.)
The bill also provides taxpayers a credit against their single business tax liability for certain
contaminated properties, provided that the taxpayer makes an economic investment at the site. The amount
of an individual credit is 10% of the eligible investment costs the taxpayer has incurred to redevelop or expand
the eligible property in the tax year, with a $1 milfion cap on total credits a taxpayer may claim. Thus, not only
may the developer of the contaminated property be reimbursed, but the user of the redeveloped property can
qualify for a 10% single business tax credit on its investment. The credit is not available to owners or tenants
who are liable for the contamination at the site.
Delaware. In addition to its voluntary cleanup and financial assistance programs, Delaware provides
2 Tax abatements are reductions in or forgiveness from tax liabilities that are granted for a
specific period of time. Tax abatements are commonly used to stimulate investments in building
improvements or new construction in areas where property taxes or other conditions discourage
private investment.
3 To raise public-sector capital for a project, the tax-increment financing (TIP) process
uses the anticipated growth in property taxes generated by the development project. TIFs are
built on the concept that new value will be created, and that the future value can be used to
finance part of the activities needed now to create that new value. TIFs do not lower the amount
of tax revenues collected, nor do they impose special assessments on the project area. Bonds are
issued to raise the capital needed for the redevelopment, and the new tax revenues generated by
the projects are earmarked to redeem the bonds. Northeast-Midwest Institute, Coming Clean,
1996 Annual Report, at p.13, Chapter 3.
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a brownfield tax credit. For sites demonstrating development potential, tax credits covering up to the full cost
of cleanup may be available. The tax credit amounts to $500/year for each job created through the
redevelopment of a site, and it runs until the cost of cleanup has been recouped.
Ohio. In addition to providing low-interest loans for some brownfields activities, Ohio has enacted
legislation that provides tax abatements and tax credits for brownfield redevelopment. Ohio's Voluntary Action
Program includes a plan for abating taxes on the redevelopment of brownfield sites. The program provides
two types of prospective tax abatements. Property owners may obtain a ten-year tax abatement that applies
to increases in market value attributable to a cleanup. In addition, taxpayers undertaking voluntary cleanups
may secure a ten-year tax abatement for development projects.
Ohio has also enacted a nonrefundable corporate franchise and individual income tax credit for costs
incurred in completing a voluntary cleanup of a contaminated site, pursuant to an agreement with the state
development director. The credit is equal to the lesser of $500,00 or 10 percent of the eligible costs incurred
in performing the voluntary cleanup action. If the action is undertaken in an "economically disadvantaged"
area the credit is the lesser of $750,000 or 15 percent of the eligible costs.
New Jersey. New Jersey recently enacted the Environmental Opportunity Zone Act. The Act permits
municipalities to offer up to a 10-year tax abatement to reclaim abandoned or underutilized industrial tracts
designated as Environmental Opportunity Zones. An Environmental Opportunity Zone can consist of one site
or several that a community wants to revive for industrial or commercial use. Businesses that cleanup and
redevelop Environmental Opportunity Zone properties can receive up to a 10-year tax abatement on the new
project as it is being built, permitting a 100 percent abatement on real estate taxes for the first year, phasing
out to zero abatement in the 10th year.
The abatement runs until the developer recoups the cleanup costs, but cannot exceed the 10-year
cap. In addition, the developer must complete the cleanup according to a state approved work plan.
Participating in the state plan allows zone sites to undergo an expedited approval process and their
developers are not required to post bond at the start of the remediation.
Maryland. In late February 1997, the state of Maryland passed brownfields legislation that
establishes a Voluntary Cleanup program and provides tax abatements for cleanup at brownfield sites. The
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Act allows the state and localities to grant a five-year 50% tax abatement for the increase in value attributable
to cleanup at the site. The tax abatement is only allowed if the taxpayer participated in the state voluntary
cleanup or corrective action plan. Provisions are included in the Act that will allow for an increase in the
abatement up to 80 percent. In certain areas, the tax abatement may be extended for an additional five years.
Idaho. Idaho also offers a 50% tax abatement for remedial activities for investors developing on
brownfield sites. In order to qualify for the abatement, an investor must participate in the state Voluntary
Cleanup plan and agree to a Covenant-Not-To-Sue.
FEDERAL TAX INITIATIVES
Clearly, state and local governments are at the forefront of creating tax initiatives to induce businesses
and developers to invest in brownfields. However, the federal government has indicated its interest in playing
a stronger, more visible role in brownfield redevelopment. In the Administration's FY-98 budget proposal,
President Clinton authorized $87 million to expand brownfield redevelopment initiatives, doubling his FY-97
budget request. The President's budget proposal also includes a proposed targeted tax credit allowing
businesses to deduct, in the year incurred, certain costs associated with the clean up of brownfield sites.
The Congress also has devoted a great deal of attention to the need for brownfield redevelopment.
The relevant subcommittees of the Senate Environment and Public Works Committee and the House
Transportation and Infrastructure Committee have commenced hearings regarding the problems associated
with brownfield development and what approaches should be taken in order to encourage redevelopment.
Additionally, to date, at least nine brownfield redevelopment proposals have been introduced, four of which
contain redevelopment tax incentives. The leading tax proposals are: S. 235 and H.R. 505 introduced by
Senator Moseley-Braun (D-IL) and Congressman Rangel (D-NY) respectively; H.R. 990, introduced by
Congressman Quinn^R-NY); and H.R. 525, introduced by Congressman Coyne (D-PA). A summary of the
leading proposals follows:
President Clinton's Brownfield Tax Incentive. To encourage the cleanup of brownfields, President
Clinton's budget proposal includes a provision that would allow certain remediation costs to be currently
deductible if incurred with respect to a qualified site. Generally, these expenses would be limited to those paid
or incurred in connection with the abatement or control of environmental contaminants. Qualified sites would
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be limited to those properties that satisfy use, geographic, and contamination requirements. The use
requirement would be satisfied if the property is held by the taxpayer incurring the eligible expenses for use
in trade or business or for the production of income, or the property is of a kind properly included in the
inventory of the taxpayer.
The geographic requirement would be satisfied if the property is located in or next to high-poverty
areas, federal empowerment zones and enterprise communities, and areas subject to certain EPA brownfields
pilot programs. And finally, the contamination requirement would be satisfied if hazardous substances are
present or potentially present on the property. To claim this deduction, the taxpayer must obtain a statement
that the site satisfies the geographic and contamination from a state environmental agency, designated by
the EPA, for such purposes. The President's brownfield tax proposal would cost approximately $1 billion over
five years.
The Community Empowerment Act of 1997 (S. 235/H.R. 505). Senator Moseley-Braun (D-IL)
introduced S. 235, the Community Empowerment Act of 1997, which will provide a tax incentive for
businesses and developers who cleanup and redevelop brownfields. The bill is very similar to the
Administration's proposal. The bill was referred to the Senate Finance Committee and to date there are seven
cosponsors. An identical bill, H.R. 505, was introduced in the House by Ways & Means Ranking Minority
Member Range! (D-NY). Rep. Rangel's bill has been referred to the House Ways and Means Committee and
currently has 24 cosponsors. The Community Empowerment Act provides for $2 billion in tax incentives and
is expected to leverage some $10 billion in private cleanups at approximately 30,000 brownfield properties
in the United States (at an average cleanup cost of about $400,000).
Specifically, the Act will make qualified brownfield cleanup expenses fully deductible in the year in
which they are incurred. To qualify for the tax deduction, the cleanup must occur only at certain types of sites:
existing EPA Brownfield pilot areas; in areas with a poverty rate of 20% or more, or in adjacent industrial or
commercial areas; and in empowerment zone/enterprise communities4, both existing ones and those that
4 Empowerment Zones (EZ) and Enterprise Communities (EC) are geographic areas
targeted to receive federal treatment and incentives in to promote private investment and other
economic activity. In December 1995, HUD and the Department of Agriculture named 95 ECs
(65 urban and 30 rural), as well as nine EZs (6 urban and 3 rural). Designation brings $100
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would be designated in the future (the current empowerment zones and communities have attracted more
than $2 billion in private investment). The Act designates an additional 80 enterprise communities and 20
empowerment zones.
Brownfields Remediation and Economic Development Act of 1997 (H.R. 990). Congressman
Quinn (R-NY) has introduced H.R. 990, the Brownfields Remediation and Economic Development Act of 1997.
The bill would create a type of "brownfield IRA" that would permit companies to set aside monies on a tax-
exempt basis to establish a cleanup fund for future use. Like a personal retirement account, the use of a tax-
exempt brownfield IRA would be limited, in this case, to paying for activities associated with site
characterization and cleanup. Rep. Quinn's legislation provides that the amount which a taxpayer may pay
into a reserve for any taxable year shall not exceed $5,000,000. The bill has 19 cosponsors and has been
referred to the House Ways & Means, Commerce, and Transportation and Infrastructure Committees.
The Brownfield Redevelopment Act of 1997 (H.R. 523). The Brownfields Redevelopment Act, H.R.
523, was introduced by Congressman Coyne (D-PA). The bill has been referred to the House Ways & Means
Committee and there is currently one cosponsor. This legislation creates an environmental remediation tax
credit which could be used to offset a variety of costs, such as cleanup, site characterization, or participation
in a state voluntary program. The credit can be used to offset 50 percent of the costs of carrying out a
cleanup plan that has been approved by the EPA or another designated body (a state environmental agency).
The legislation also provides that if the taxpayer determines that due to unforeseen circumstances the actual
cost of completing the remediation plan for a qualified contamination site exceeds 200 percent of the
estimated costs, the taxpayer may cease the implementation of the plan and shall be entitled to an
environmental remediation credit with respect to costs incurred before such cessation. Such credit shall be
taken over the 5-taxable-year period beginning with the taxable year in which cessation occurs.
In addition to the remediation tax credit, Rep. Coyne's legislation clarifies the use of "qualified
million in social service grants for each of the EZ's, $40 million to each rural zone, and $3
million to each EC. In addition, designated communities can compete for as much as $2.5 billion
in new tax incentives to induce investment. Northeast-Midwest Institute, Coming
Clean.1996 Annual Report, at p.3, Chapter 3.
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redevelopment bonds5" (a type of Industrial Development bond issuance). The clarification specifically permits
their use for environmental remediation, including "the clearing and preparation for development of land."
Once federal statutes recognize site remediation activities as eligible uses, states could make brownfield
projects a priority within their own IOB allocation procedure.6
TAX INITIATIVES - WILL THEY WORK?
Most of the state initiatives have been passed by their state legislatures within the last year or two.
Thus, there is no hard-core evidence of the impact the tax incentives will have in encouraging brownfield
redevelopment beyond other non-tax incentives. However, there are some traditional arguments for and
against the specific tax methods some states have chosen to adopt.
Tax Increment Financing. Many states have used the TIP mechanism to revitalize economically
distressed or abandoned areas. Because of TIF's traditional use, the TIF is a natural fit for the brownfield
situation. Many observers believe that the TIF is an ideal financing tool for brownfield projects, and in fact,
many cities with brownfield success stories helped bring them about because of TIF financing. Despite its
successes, many states and localities have hesitated to employ the TIF mechanisms for brownfield projects.
7 If projected development fails to materialize or unanticipated complications occur, it can be difficult to retire
the bonds. Some local economic development practitioners also cite the complexity of many TIF initiatives
as a practical disadvantage. They can require a lot of time to put into place, and involve high levels of
technical expertise and negotiations to move a project from concept to implementation, especially one made
5 States, cities, public agencies and other entities are authorized to issue tax-exempt,
private activity industrial development bonds. The Treasury Department defines a state-wide
volume cap on bond issuances each year the greater of $50 per capita or $200 million.
Companies and local jurisdictions favor IDBs as a source of financing since the interest is not
taxable, which reduces the yield that investors demand, which lowers a project's cost of capital.
These bonds are payable from and secured by the revenues of the projects they finance; if the
company defaults, the bondholders, and not the local taxpayers, absorb the loss. Northeast-
Midwest Institute, Coming Clean, 1996 Annual Report, at p.5, Chapter 3.
6 Charles Bartsch, Paying for Our Industrial Past, Economic Development
Commentary, Winter 1996, at 14,22.
7 Id at 14,18.
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more difficult by environmental concerns.6
Tax Abatements. Tax abatements have been used for initiating economic development for many
decades. Their popularity is partly due to the varying forms available: (1) freezing the assessed value of land
or buildings at some point in time; (2) reducing the tax rate for a certain period of time; and (3) exempting
certain types of property from taxes altogether.9 Some abatement programs feature sliding scales. Tax
abatement incentives generally influence larger businesses to redevelop because many small companies
need greater financial help than reduced tax liabilities can provide. Additionally, the use of tax abatements
still faces opposition by critics on equity grounds. Some argue that they are "giveaways." To be successful,
tax abatement programs must be designed to target intended beneficiaries without offering "unnecessary"
subsidies. If state and local officials can accomplish this, then tax abatements can be a flexible approach to
promote brownfields redevelopment.
Tax Credits. Tax credits can be an effective tool to offset a variety of costs, such as cleanup, site
characterization, and participation in a state voluntary program. The credit allows a company to "legitimatize"
the high costs associated with brownfield redevelopment. The credit also helps balance the economic playing
field between developing old brownfield sites and new greenfield locations. The effectiveness of the credit is
questioned if everyone does not benefit. For instance, many small companies have little tax liability to offset
with the tax credit. The same companies lack the capital needed to initiate the first phase of a brownfield
project.10 Finally, tax credits are expensive to state, local, and federal governments. They "eat up" a lot of
revenue, and offsets for the credit are usually hard to find due to budgetary constraints.
CONCLUSION
Brownfield redevelopment is essential to revitalizing inner cities, fostering economic growth in
depressed areas, and improving the quality of urban environment. Business, government, and community
leaders have a unique opportunity to work together to achieve their common goals through successful
8 Id.
9 Id.
10 Id at 22.
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brownfield redevelopment. Fortunately, some state governments have recognized the untapped resources
brownfields contain, and have developed initiatives that have helped increase brownfield redevelopment
dramatically over the last few years. Initial success stories in New Jersey, Ohio, Pennsylvania, and Maryland
all indicate that brownfield redevelopment tax initiatives can work. It is up to Congress, states, and localities
to continue to provide the necessary tools that make the economics of brownfields available and feasible.
Redevelopment can and will occur if businesses are given the ability to adequately finance such high-risk
endeavors. With the cost of greenfield development comparatively low, it is often sound economic and
environmental policy for the government to remove the economic barriers and provide incentives to put
brownfield and greenfield development on an equal playing field. Building on the state efforts discussed
above, both federal and state governments have the exceptional opportunity to assist developers through
creative tax and financing mechanisms, which will ensure the continued path toward brownfield
redevelopment.
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Brownfields'97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
(4D) CPR - Creating Partnerships in Redevelopment: Breathing Life into Brownfields
Wednesday, Septembers, 1997
3:45 p.m. -5:15 p.m.
Description: Brownfields and alternative dispute resolution (ADR) can work together to encourage sustainable,
community-driven efforts long after the two-year pilot period is over. Get advice on ways ADR can help your
community maintain the momentum. Panelists who have real-world experience will share examples of how ADR
can work for you.
Location: Room 221OA
Speakers and Affiliation:
Mr. William R. Potapchuk (Moderator)
Ms. Teri A. Anderson
Ms. V. Lee Scharf
Ms. Louise E. Smart
Ms. Jane H. Wells
Program for Community Problem Solving
Town of Greenfield, Massachusetts
U.S. Environmental Protection Agency, Office of
Enforcement Compliance Assurance
CDR Associates
State of Massachusetts, Office of Dispute Resolution
MR. WILLIAM R. POTAPCHUK
[Biography was not available at time of printing. Please refer to conference addendum.]
Ms. TERI A. ANDERSON
[Biography was not available at time of printing. Please refer to conference addendum.]
Ms. V. LEE SCHARF
[Biography was not available at time of printing. Please refer to conference addendum.]
Ms. LOUISE E. SMART
Louise Smart is a partner at CDR Associates, a firm which specializes in decision-making, public involvement, and
dispute resolution procedures. Ms. Smart combines extensive mediation and facilitation experience with her
professional trainer as a planner to help groups resolve disputes in the environmental arena, including water
resource, air quality, wetlands, growth, mining, and Superfund clean-up issues. Ms. Smart facilitated discussions
among the U.S. Environmental Protection Agency (EPA), the Utah Department of Environmental Quality, the
potential responsible party, property owners, and municipal government regarding remediation and land use of the
Murray Smelter site.
Ms. JANE H. WELLS
[Biography was not available at time of printing. Please refer to conference addendum.]
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
(4E) RCRA and Brownfields: Waking the Sleeping Giant
Thursday, September 4, 1997
8:00 a.m. -10:00 a.m.
Description: It is said that RCRA is the final frontier in brownfields cleanup. How can stakeholders and
regulators deal with the complexities of the existing law? This panel will explore ways to maximize flexibility to
facilitate cleanup and redevelopment under RCRA.
Location: Room 2201
Speakers and Affiliation:
The Honorable Don R. Clay (Moderator)
Ms. Susan E. Bromm
Mr. Gary P. King
Don Clay Associates, Inc.
U.S. Environmental Protection Agency, Office of
Enforcement and Compliance Assurance
State of Illinois, Environmental Protection Agency
THE HONORABLE DON R. CLAY
Mr. Clay is president of Don Clay Associates, Inc., a public policy consulting firm devoted to solid waste and
hazardous waste issues. He also chairs the RCRA Policy Forum, an organization of private companies, public
interest representatives, states and others interested in exchanging information and ideas on waste regulatory
policy. From 1989 to 1993, Mr. Clay was the assistant administrator of U.S. Environmental Protection Agency's
(EPA) Office of Solid Waste and Emergency Response where he was the National Program manager responsible for
implementing both CERCLA and RCRA. During this time, he was responsible for initiating many "reforms" in both
programs. Mr. Clay is a nationally recognized expert who often speaks and testifies concerning both programs.
Ms. SUSAN E. BROMM
[Biography was not available at time of printing. Please refer to conference addendum.]
MR. GARY P. KING
Mr. King works for the Illinois Environmental Protection Agency (EPA) in its Bureau of Land. He is the senior
manager for the Illinois EPA site cleanup programs: the voluntary cleanup program, the federal and state Superfund
cleanup programs, the Department of Defense (DoD) cleanup program and the Leaking Underground Storage Tank
(LUST) program. Mr. King began the development of the Illinois EPA's Brownfields Initiative in 1993 and has
overseen the creation of one of the best programs in the country. He has been the state's team leader for numerous
legislative and regulatory initiatives, including the state's recently adopted risk based cleanup objectives program -
TACO, or "Tiered Approach to Corrective Action Objectives." He has been a frequent speaker on brownfields topics
on behalf of the Illinois program.
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
DOCUMENTS THAT SUPPORT
PANEL 4E: RCRA AND BROWNFIELDS: WAKING THE SLEEPING GIANT
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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Memorandum of Understanding
between
the Illinois Environmental Protection Agency
and
the United States Environmental Protection Agency Region 5
on
the Illinois Site Remediation Program,
the Illinois Tiered Approach to Corrective Action Objectives,
and
the Environmental Remediation Programs
administered by
the Region 5 Waste, Pesticides, and Toxics Division
under
the Resource Conservation and Recovery Act (RCRA)
and
the Toxic Substances Control Act (TSCA)
I. Introduction
The Illinois Environmental Protection Agency ("Illinois EPA") and the United States
Environmental Protection Agency, Region 5 ("Region 5") entered a Memorandum of Agreement
("MOA") under the Resource Conversation and Recovery Act ("RCRA") Subtitle C, effective
January 31,1986. Illinois EPA and Region 5 have periodically modified that-MO A to reflect
authorization changes. Among other things, the RCRA MOA established operating procedures
for general RCRA program coordination and communication under Subtitle C between Illinois
EPA and Region 5. IBinois EPA and Region 5 do not have a general operating MOA under
Subtitle I, but have maintained a continuous working relationship under successive co-operative
agreements since 1987.
On April 6,1995 the Illinois EPA and Region 5 entered Superfund Memorandum of Agreement,
Addendum No. 1. That agreement specifies how the Illinois EPA Pre-Notice Site Cleanup
Program, precursor of the Site Remediation Program referenced in mis MOU, intersects with
administration of the Superfund program by Region 5 and Illinois EPA.
Effective December 21,1995, the Environmental Protection Act of the State of Illinois-was
amended to add Title XVII: Site Remediation Program (415 Illinois Compiled Statutes 5/58.-
53.12). Title XVII was amended effective June 30,1996. The Illinois EPA and Region 5'have
agreed to establish this Memorandum of Understanding ("MOU") for the following purposes:
(1) to encourage voluntary environmental cleanup, which is protective of human health and
the environment, at contaminated locations in Illinois;
<2) to establish how the State of Illinois Site Remediation Program intersects with RCRA and
the Toxic Substances Control Act ("TSCA"), as administered by the Waste, Pesticides,
and Toxics Division of Region 5; and
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(3) to recognize the Illinois EPA's use of the Tiered Approach to Corrective Action
Objectives (35 111. Adm. Code 742) for sites subject to RCRA or the TSCA1.
This MOU is not intended to alter any other existing agreements between Region 5 and Illinois
EPA, including the Memorandum of Agreement authorizing administration of the State's RCRA
Subtitle C program.
n. Background
The Illinois EPA and Region 5-recognize that revitalization of contaminated property provides a
significant benefit to both the environment and the economy. This is especially true for
"brownficlds". The term "brownfields" refers to properties which are abandoned, idled, or
under-used industrial and commercial facilities, where .expansion or redevelopment is
complicated by real or perceived environmental contamination. Some of the contaminated
properties in Illinois, including some brownfields, are subject to environmental cleanup
requirements which are established by Federal laws (c.g., closure, post-closure, and corrective
action under RCRA; PCB Cleanup Policy under TSCA; the National Oil and Hazardous
Substances Pollution Contingency Plan under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA")).
Both Illinois EPA and Region 5 are mandated to protect human health and the environment and
both play a critical role in Illinois in the cleanup and redevelopment of brownfields. Each
Agency acknowledges the potential benefits that can be achieved by clarifying the liabilities
associated with brownfields as a result of environmental cleanup requirements in both State and
Federal laws. Both agencies recognize each other as key partners in addressing the perceived
uncertainties in the financing, transfer and development of brownfields. Both agencies seek to
facilitate the productive use of .their authorities and jesources.in ways that are mutually
complementary andare-not redundant Both- RegiorrS and Illinois EPA acknowledge their
mutual respect, positive working relationship and commitment to the successful implementation
of the MOU. In particular, both agencies seek to protect human health and the environment by:
(1) Promoting appropriate voluntary investigations and cleanups of brownfields in Illinois.
(2) Developing partnerships between Region 5, Illinois EPA, other Federal, State, local
governmental agencies and other stakeholders, including representatives from the private
sector and citizen/community groups, for the cleanup and redevelopment of brownfields.
(3) Providing information and technical assistance to the key stakeholders to allow for
informed decision making by property owners, prospective, purchasers, lenders, public and
private developers, citizens, municipalities, counties and elected officials.
facilities whichpsrform PCB cleanups under this MOU must, at this-time, be limited to TACO Tier 4
cleanup due to regulatory limitations under The preemption provisions of Section 18 of TSCA and the applicable
PCS disposal rules and polices (e.£. U.S. EPA's Spill Cleanup Policy, 40 CFR 761 Subpart G). Upon adoption of
the pending amendments to TSCA PCB rules. Region V EPA anticipates modifying this MOU to include PCB
cleanups under Tiers 2 and 3 of TACO.
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(4) Ensuring remediation of sites that orotects human health and the environment and
promoting revitalization of contaminated property for an appropriate use.
(5) Promoting processes by which corrective action activities and consistent cleanup
objectives are carried out.
III. Illinois EPA Administration of Title XVU
Illinois EPA's administrative responsibilities under Title XVII are divided into several subject
matters, two of which directly pertain to the purposes of this MOU. First, Illinois EPA is
directed to administer a program that provides standards and procedures forjemediation
activities for sites voluntarily entering the Site Remediation Program.-(See Sections
58.6,58.7,58.8,and 58.10). These standards and procedures arc set forth in 35 111. Adm. Code
740. Second, Illinois EPA is directed to establish, through the Illinois Pollution Control Board,
risk-based remediation objectives. (See Section 58.5). These standards are incorporated in 35 III.
Adm. Code 742.
A. Site Remediation Program (35 111. Adm. Code 740)
Under Title XVII, any "remediation applicant"2 who proceeds under the Tide may choose to
have the Illinois EPA review and approve any of the remediation objectives for any or all of the
"regulated substances of concern"' by submitting plans and reports to Illinois EPA. Illinois EPA
then carries out its review in conformance with Title XVII and its rules. Illinois EPA may
approve, disapprove, or approve with conditions, a plan or report. Under Title XVII, Illinois
EPA administers the Site Remediation Program using 35 III. Adm. Code.740-Part 740, in turn,
requires remediation objectives tb.be established in accordance with 3.5 111. Adm: Code 742.. Part
740 allows sites to enter the Site Remediation Program to the extent allowed by federal law,
federal authorization, or by other federal approval, such as through this MOU.
In the case of Illinois EPA approving, or approving with conditions, a plan or report, Illinois
EPA prepares a document known as a "No Further Remediation Letter." Within 45 days of a
remediation applicant's receipt of such a letter, the remediation applicant must submit the letter
to the Office of the Recorder or the Registrar of Titles of the County in which the site is located.
When the letter is accepted and recorded in accordance with Illinois law so that it forms a
permanent part of the chain of title for the site, the letter becomes effective. The remediation
applicant then submits a copy of the letter, as recorded, to the.IIlinois EPA.
The Illinois EPA's issuance of the No Further Remediation Letter signifies a release from further
responsibilities under the State of Illinois Environmental Protection Act in performing the
'"Remediation Applicant" means any person seeking to perform or performing investigative or remedial
activities under Title XVII, including the owner or operator of the site or persons authorized by law or consent to act
on behalf of or in. lieu of the owner or operator of the site.
3"ReguIared substance of concern" means any contaminant that is expected to be present at the site based
upon past and current land uses and associated releases that are known to the "Remediation Applicant" based upon
reasonable inquiry.
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approved remedial action and shall be considered prima facie evidence that the site does not
constitute a threat to human health and the environment and does not require further remediation
under that act, so long as the site is maintained and utilized in accordance with the terras and
conditions of the No Further Remediation Letter.
B. Tiered Approach to Corrective Action Objectives ("TACCT) (35 HI. Adm. Code 742)
TACO establishes a comprehensive tiered approach to the development of remediation
objectives at sites evaluating cleanup needs in Illinois. This approach sets forth five independent
methodologies for use, singly or in combination, in developing methodologies. The centerpiece
of TACO is a set of Tier 1 baseline objectives for residential and commercial uses that were
drawn directly from the technical concepts and principles established.by:USEPA's-final "Soil
Screening Guidance: User's Guide", EPA/540/R-96/018,PB96-963505 (April 1996)). TACO is
used by the Illinois EPA in developing remediation objectives for remediation activities under
the following programs:
(1) Leaking Underground Storage Tanks (35 111. Adm. Code 731 and 732);
(2) Site Remediation Program (35 111. Adm Code 740); and
(3) RCRA Part B Permits and Closure Plans (35 111. m. Code 724 and 725).
IV. Eligibility for Site Remediation Program Under 35 III Adm. Code 740
This agreement approves the use of 35 III. Adm. Code 740 with regards to contaminated
properties in Illinois subject to RCRA or TSCA except for the following'
(I) facilities which are required to have RCRA permits4 issued by either (i) Illinois EPA, (ii)
U.S. EPA, or (iii) both agencies;
(2) sites at which investigation or remedial action has been required by a Federal court order
or an order issued by the U.S. EPA. Such orders include orders or consent agreement and
consent orders issued under:
- Section 3008(a), 3008(h), 3013,7003, or 9003(h) of RCRA;
Section 16 of TSCA; and
- Sections 106,107,120, and 122 of-CERCLA;
(3) units, and associated releases from such units, at which treatment, storage, or disposal of
hazardous waste-has occurred after November 19,1980rand whose owners and operators
*RCRA Subtitle C permits for the treatment, storage or disposal of hazardous waste shall require corrective
action for all releases of hazardous waste or constituents from any solid waste management unit at the permitted
facility, regardless of the time at which waste was placed in the unit Illinois EPA is authorized by U.S. EPA to
issue, administer, and enforce such permits. U.S. EPA may also enforce such permits.
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are required to (and have not yet) plan, conduct and certify closure and, if necessary, post-
closure monitoring and maintenance pursuant to Subtitle C of RCRA;
(4) properties which are the subject of an order or a consent agreement and consent order
proposed to be issued by Region 5 under section 3008(a), 3008(h), 3013,7003, or 9003(h)
of RCRA; or section 16 of TSCA;
(5) properties approved by, or seeking the approval of, U.S. EPA under TSCA (40 CFR Part
761, Subpart D) for the disposal or commercial storage or polychlorinaied biphenyls
(PCBs);
(6) sites listed in the CERCLA National Priorities List (40 CFR Part 300, Appendix B); and
(7) sites subject to 35 111. Adm. Code 807,810-817, or 830-832 that have not satisfied all
development, operation, and closure requirements (including postclosure) applicable under
35 III. Adm. Code 807,810-817, or 830-832.
V. Principles
A. Although nothing in this MOU constitutes a release from liability under applicable Federal
law, generally Region 5 does not anticipate taking any federal environmental cleanup action
under RCRA or TSCA at a site, or portion thereof where the Illinois EPA has approved a
remediation as having met the requirements of 35 111. Adm. Code 742 through:
(1) a "No Further Remediation" letter issued pursuant to 35 111. Adm. Code 731,732 or 740;
(2) a Part B permit issued pursuant to 35 111. Adm. Code 724; or
(3) a closure certification approval issued pursuant to 35 III. Adm. Code 724 or 725.
This principle shall not apply if Region 5 determines that there may be an imminent and
substantial endangerment to public health, welfare or the environment at a she, or portion
thereof, where Illinois EPA has approved a remediation as having met the requirements of 35 111.
Adm. Code 742. This principle shall not apply if the letter, permit or approval ceases to be in
effect. If, following the issuance of the No Further Remediation Letter, permit or approval by
Illinois EPA, conditions at the site previously unknown to Illinois EPA and/or Region 5 indicate
that the response action undertaken is not protective of human health and the environment,
Illinois EPA and Region 5 reserve the right to take necessary response action to protect human
health and the environment.
B. Pursuant to this MOU, Region 5 approves the use of 35 111. Adm Code 740 for sites subject to
RCRA or TSCA only at eligible sites. In this light, Region 5 acknowledges the use of 35 111.
Adm. Code 740, in conjunction with the applicable requirements of 35 III. Adm. Code 731 or
732, for remediation of sites subject to RCRA Subtitle I, as long as the remediation meets (he
requirements of 35 111. Adm. Code 742.
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VI. Reporting
Upon request, Illinois EPA will provide to Region 5 the following:
(1) The name and location of sites with regard to which remediation applicants are seeking
Illinois EPA review and approval pursuant to 35 III. Adra. Code 740; and
(2) The Illinois EPA review status of applications, and the status of remediation applicants'
compliance with plans or reports approved, disapproved, or approved with conditions, by
Illinois EPA pursuant to 35 111. Adm. Code 740.
To the extent practicable, for those sites identified by the Illinois EPA pursuant to VI,(1), Region
5 will provide notice to Illinois EPA in an enforcement confidential manner when U.S. EPA is
proposing to issue arrenvironmental cleanup order under Section 3008(a), 3008(h), 3"013,7003,
or 9003(h) of RCRA; or Section 16 of TSCA.
VII. Reservation of Rights
Notwithstanding any provision in this MOU, Region 5 and Illinois EPA reserve any and all
rights or authority that they respectively have and nothing in any provision of this MOU limits or
affects the authority or ability of either Agency to take any action authorized by law.
This MOU will be reviewed on an annual basis by Region 5 and Illinois EPA. In addition, at the
request of either Agency, this MOU may be reevaluated and modified as appropriate.
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VIII. Signatures
This MOU has been developed by mutual cooperation and consent, and hereby becomes an
integral part of Illinois EPA's and Region 5's working relationship. The effective date of this
MOU is July 1,1997.
For the Illinois Environmental Protection Agency
Director
Illinois Environmental Protection Agency
Date
For the U.S. Environmental Protection Agency
Acting Regional Administrator
U.S. Environmental Protection Agency, Region 5
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Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
(4F) A Rocky Boat: Navigating Through Brownfield Legal Issues
Thursday, September 4,1997
3:00 p.m. - 5:00 p.m.
Description: Seasoned professionals and novices alike claim that navigating the maze of government rules and
regulations is a major challenge. Listen to the experts discuss how to eliminate delays, untangle the bureaucracy,
and move properties into productive reuse.
Location: Room 1203A
Speakers and Affiliation:
Mr. Kenneth A. Brown (Moderator)
Mr. Robert J. Devaney, Jr.
Mr. Michael R. Goldstein
Mr. Seth D. Kirshenberg
National Association of Local Government Environmental
Professionals
GenCorp, Inc.
Gunster, Yoakley, Valdes-Fauli and Stewart, P.A.
Kutak Rock
MR. KENNETH A. BROWN
[Biography was not available at time of printing. Please refer to conference addendum.]
MR. ROBERT J. DEVANEY, JR.
Mr. Devaney, Jr. is a graduate of the University of Pittsburgh. For more than ten years, Mr. Devaney, Jr. has been
the director of environmental engineering/safety at GenCorp, Inc. His professional associations and memberships
include the Air and Waste Management Association, the American Institute of Chemists, the American Public Health
Association, the National Environmental Health Association, the New York Academy of Sciences, the American
Association for the Advancement of Science, the American Management Association, the National Fire Protection
Association, the Environmental Assessment Association, the Water Environment Federation, and the American
Chemical Society. He has been a contributing author to articles in several professional journals, and his
achievements include the design, development and implementation of safety and environmental programs to assess
and remediate old industrial sites resulting in economic revitalization and environmental restoration.
MR. MICHAEL R. GOLDSTEIN
[Biography was not available at time of printing. Please refer to conference addendum.]
MR. SETH D. KIRSHENBERG
Mr. Seth D. Kirshenberg is an Associate in the national real estate and finance group of the law firm of Kutak Rock in
Washington, D.C. His practice focuses on assisting local governments to finance, reuse, and redevelop brownfields
properties and closing military installations and downsizing Department of Energy facilities. Further, he works with
Congress, the Administration and federal agencies to assist his clients. Mr. Kirshenberg serves as the Executive
Director of the Energy Communities Alliance (EGA), a national organization representing local governments affected
by the downsizing of Department of Energy facilities.
Previously, Mr. Kirshenberg served as the Director of Economic Development for the International City/County
Management Association (ICMA), an organization of professional city and county administrators. He assisted local
governments with brownfields, Superfund and military base reuse issues through direct consulting and representing
them in the public policy arena.
Mr. Kirshenberg regularly speaks at national conferences on brownfields issues including property conveyance,
environmental cleanup, and financing, and has published numerous articles on redeveloping federal facilities,
brownfields, and Superfund. He recently co-authored several books including:
Brownfields Development: A Guide for Local Governments, September 1997
Brownfields: Options and Opportunities - ICMA MIS Report, June 1997
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
Military Base Reuse: A Navigational Guide for Local Governments, March 1997
Cleaning Up After the Cold War The Role of Local Governments in the Cleanup and Reuse of Federal
Facilities, 1996
Mr. Kirshenberg holds a Juris Doctorate degree from the Washington College of Law at the American University and
a Bachelor of Science in business administration from the University of Florida. His bar affiliations include those of
the Florida and the District of Columbia Bar.
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
DOCUMENTS THAT SUPPORT
PANEL 4F: A ROCKY BOAT: NAVIGATING THROUGH BROWNFIELD LEGAL
ISSUES
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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Remediation and Redevelopment Project
GcnCorp Inc. Lawrence Location
Innovative Approach
Under the leadership of Robert J. Devaney, Jr., GenCorp Inc., an Ohio based corporation,
has instituted a phased remediation and redevelopment project for the long-term economic
rcvitalizatton of a significant mill complex in Lawrence, Massachusetts, an old industrial city. By
proactively working with over twenty federal, state and local regulatory agencies and
departments, a unique public/private initiative has been forged to enhance the economic, health,
safety and environmental conditions within the distressed city. With the involvement of an
Interagency Task Force, comprised of the U.S. Environmental Protection Agency, U.S. Army
Corps of Engineers, and Massachusetts Department of Environmental Protection and assembled
for its Lawrence project, GenCorp Inc. has reconciled many physical, technical and engineering
site constraints with the different regulatory and permitting compliance requirements. The
achievements of these efforts have been environmental restoration, economic redevelopment and
other positive results, alt accomplished with significant cost effectiveness. On-going since the
mid-1980's, these evolving efforts rely on a commitment to seeking innovative approaches and
applying them in partnership with the different public stakeholders under the spirit of the national
and state Brownfields agendas.
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The Following is an excerpt from Brovttfieltia Development: A Guide For Local Governments,, ICMA
Publication (September 1997)
Roles Local Governments Can Play In Brownfield Reuse
In order to effectively promote the reuse of brownfields, a local government needs to find a
role in which h can have an impact. In some ways this can be difficult The regulatory
framework that determines the fete of many contaminated sites fells under the jurisdiction of
federal and state agencies, most of the capital that will be needed to fund development is
controlled by the private sector, and many decisions about site reuse will be hi the hands of the
property owner. Nonetheless, local governments are critical players in most successful
brownfield projects. Roles that local governments can play include:
Brokering Reuse
Local governments can help to match sites with prospective reusers. This can be done both
through general efforts to provide information (see Chapter 9) and by identifying specific
potential reusers for particular sites, The city of Trenton, New Jersey, for example, was
looking for a way to reuse a portion of a former electrical components factory. At the same
time the cHy was working with a local swimming pool cover company that was considering
leaving the area. The city was able to facilitate an agreement under which the company moved
into the vacant factory.
Providing Funding
Local governments can use their own resources to fund portions of redevelopment costs. Has
funding is particularly useful if it is used for front end costs, such as assembly, assessment,'
remediation, and preparation of sites. By paying for assessment and remediation, Chicago,
Illinois' Brownfield Pilot Program spurred private companies to invest in and reuse a number
ofbrownfields. Other types of financial benefits, such as tax incentives, can also be used to
encourage reuse. Cook County, Illinois, allows owners of some brownfield sites to pay
reduced property taxes during remediation and redevelopment (See Chapter 13 for more on
Chicago and Cook County and Chapter 6 for more on local financial tools.)
Coordinating Other PubBc Funding Streams
Both state and federal governments have programs that can pay for some of the costs of
brownfield reuse. Local governments can inform private sector parties about these programs,
apply for programs that require local government invohwnient, and look for ways to integratie
different funding sources. Creative use of state funding hdped Lawrence, Massachusetts, to
reuse the site of an old paper factory. By shifting the location of an already planned roadway
by one hundred feet, the chy was able to use state highway fundsfor demolition and
improvements to the brownfield she, (See Chapter 6 for more on pubfic funding.)
Acting as a Liaison With Environmental Regulatory Agencies
Local governments can serve as aUnk between private companies and community groups on
one hand and state and federal environmental agencies on the other. They can also work with
agencies: to ensure that they handle regulatory issues promptly and in a way that reflects local
concerns. For example, the redevelopment of a site in Louisville, Kentucky, was blocked by a
lien EP A held on the property as a result of remediation costs the agency had absorbed eight
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SethKlnheaberg
KutakRock
Page 2
yean eariier. After the city asked that the lien be released, EPA discovered that the statute d**
Hmhatioiu had expired and forgave the lien.
Assuming Liability for Contamination
In some cases, it may make sense for local governments to agree to take on liability for
remediation at sites where the perception of liability is preventing development. This can
quickly remove the primary deterrent to reuse. Because it is potentially extremely costly, this
step should be taken with a great deal of caution. Wichita, Kansas, found that redevelopment
plans for much of hs downtown seemed to have been derailed by the discovery of a
ground water plume. The city entered an agreement under which it divided responsibility for
remediation costs whh the principal responsible party (PUP).
Integrating Brownfidd Development With Other Community Priorities
Local governments are uniquely able to look at a brownfidd in the context of the community's
broader plans and needs. Because of this, it can act to encourage redevelopment projects thai
fit into those plans. The chy government provided financial support for the development oft
shopping center with a full service grocery store in northwest Minneapolis, Minnesota. This
delivered an important benefit to residents, who had previously had to drive outside the
neighborhood or pay high prices at convenience stores. A local government can also identify
high priority sections of the city and focus brownfidd and other development efforts on those
areas.
Involving Community Residents in Development Plans
Most local governments have the capacity to bring community residents into the reuse planning
process. This can provide important benefits to a redevelopment project, and can hdp a local
government to meet Hs obligations to its citizens. Dallas, Texas, will establish twelve to
fourteen brownfidd Citizen Advisory Focus Groups around the city to provide input into the;
city's brownfidd effort.
Assisting in the Transfer of Property
Although most brownfidds transactions are regular real estate transactions, the local
government may be able to assist the devdoper through the process. By assisting whh zonim
or ensuring the proper permits are obtained in a timely manner, the property can become
attractive to prospective devdopers. Some local governments have worked whh larger
devdopen to streamline the permit and zoning process by working whh the devdoper to
create a standardim! zoning and permit process overseen by municipal employees.
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Page 3
Answers To Commonly Asked Brownfields Questions
Queition
Short Answer
What is a
brownfidd?
Generally, brownfields are defined as abandoned, idled, or under-
used industrial or commercial facilities where expansion or
redevelopment is complicated by real or perceived environmental
contamination. Some federal, state, and local programs use other
definitions.
How can a local
government
determine if there
are brownfields
within its
jurisdiction?
There is no easy way to identify all the brownfields in & co;
It is likely that any area with large numbers of older t
facilities will have some brownfields. EPA and many state agencies
maintain inventories of contaminated sites. Old industrial sites that
are in arrears on taxes are likely to be brownfields. Developers will
likely be able to tell whether contamination is an impediment to
development in a community, and residents can often be helpful in
identifying particular sites.
What benefits can
brownfidd
devdopment have
for a community?
Brownfidd redevdopment can increase local tax revenues and
employment, particularly in areas where there is a shortage of
quality sites for commercial and industrial devdopment By
removing blight, brownfidd reuse can provide a boost to the
business climate and the morale of residents. In addition,
redevdopment can remove threats to the health of communitv
residents by speeding cleanup of contaminated sites. Furthermore,
reusing these sites makes efficient use of existing infra-structure
and provides and alternative to devdopment of farmland and open
space.
How can
contamination act as
an obatade to
devdopment?
Contamination or perceived contamination at brownfidds can
impede reuse by increasing financing and devdopment costs,
creating uncertainty about costs and liability for remediation, adding
to the time needed to carry out redevdopment, blocking access to
capital and prompting community concerns.
What roles can a
local government
play in the
devdopment of a
brownfidd she?
As with other economic devdopment projects, local governments
can play a variety of roles in the redevdopment of brownfido4 sites,
including owning and devdoping sites, brokering reuse, financing
devdopment, involving the community, and others.
What departments
within a local
government
typically take the
lead in promoting
brownfidd reuse?
Often economic development, planning, and environment
departments play a leadership role. Many communities have found
that including a range of other departments, such as law or pvblic
health, and dosdy coordinating the activities of different
departments, can make brownfidd efforts more effective. Some
communities have created special authorities to oversee brownfidd
rdated activities.
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SethKinhenberg
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Ptge4
What information
should the local
government have
before becoming
involved with the
redevelop-ment of a
brownfield she?
Key information includes the size of the site, estimated current
value of the property and value if it were clean, inventory and value
of existing buildings and infrastructure, current use and zoning,
potential future land use, owner and investor interest, presence on
state and federal hazardous waste inventories and priority lists,
environmental assessment data, estimated cost of cleanup, and land
use on nearby sites.
What factors should
be considered when
deciding whether to
reuse or demolish an
existing structure?
Important considerations include integrity and adaptability o\
existing buildings and infrastructure, cost of demolition versus
restoration, historical value, and zoning constraints.
What procedures
can a local
government use to
acquire
contaminated
properties?
Brownfield properties can be acquired through many of the same
means as other properties, such eminent domain and tax
foreclosure. Some special considerations, including the assessed
value of a contaminated site and the risk of liability to the local
government, need to be taken into account when acquiring
brownfields
What are potential
reuse alternatives
for brownfield sites?
Brownfields have been successfully reused for industrial,
commercial, residential, recreational, and other uses.
Financing
Why are some
lenders reluctant to
finance
redevelopment of
contaminated sites?
How do banking
regulators affect
financing for
brownfield
development?
What can be done to
reduce lenders'
concerns about
brownfield
redevelopment?
Many lenders are concerned that contamination will endanger the
value of their collateral, will make it difficult for them to
foreclose or take other measures if the borrower is having
difficulty paying back the loan, and will create a risk that they will
be held liable for remediation costs.
State and federal financial regulators require some lenders,
including banks and savings and loans, to limit the level of risk] in
their lending portfolio. As a result, lenders may feel that they are
unable to make loans for activities, such as the redevelopment of
contaminated properties, that are perceived by regulators to be
risky. Several regulatory agencies, including the Federal Deposit
Insurance Corporation, the Comptroller of the Currency, and Hhe
Office of Thrift Supervision, have issued specific policies
concerning environmental risk. _,
Strategies for reassuring lenders include informing them about
protections provided by federal and state laws, providing them.
with examples of lenders who have successfully made loans for
brownfield reuse, and strategies such as environmental insurance
that assure that money will be available to cover unexpected
remediation costs.
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Page 3
What other
incentivea can the
public sector
provide for private
involvement in
brownfield
development?
Many of the incentives that are used for other economic
development projects, such as infra-stricture development and
tax abatements, are equally applicable at brownfield sites. In
addition, some special incentives, including grants forpreliminary
environmental assessments and streamlining of regulatory
processes, may be particularly useful for encouraging brownfield
development.
Are there state or
federal programs
which could be used
to support
brownfield
development?
A number of state and federal agencies provide grants, loans and
tax incentives to developers of brownfields. In addition, many
government programs, such as Community Development Block
Grants, can be used to support brownfield redevelopment evexk
though they are not explicitly brownfield programs.
What is an EPA
brownfield pilot
grant and how can a
local government
apply for one?
A brownfield pilot grant is an award of up to $200,000 to a Ipcal,
state, or tribal government that can be used activities prior to
remediation. Eligible activities include identification, assessment,
characterization, and remediation planning at brownfield sites, Die
grants are awarded through a competitive process. A local
government interested in applying should obtain an application
from EPA.
How can a local
government identify
other area
organizations that are
receiving federal
funding to work on
brownfield related
issues?
There is no single source for identifying recipients of federal
funding, but the regional EPA brownfield coordinator will fa able
to provide some information and suggest contacts at other federal
agencies.
Insurance
What is
environmental
insurance and what
impact can ft have
on brownfield
redevelopment?
Environmental insurance policies protect participants in
redevelopment of contaminated properties from contamination
related risk. They can facilitate brownfield reuse by bringing
added certainty to the development process. Premiums and
deductibles both tend to be very high however, so insurance
only makes sense under certain circumstances.
What role can local
govern-ments play
in facilitating the
use of environ-
mental insurance
policies at
brownfields?
Local government strategies to facilitate use of insurance include
brokering shared risk pools and agreeing to pay for a portion of
the deductible provided in a policy.
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Page 6
Liability
Who is potentially
liable for contami-
nation at a
brownfield site?
Federal law makes a range of parties, including owners and
operators of properties and generators and transporters of
hazardous wastes potentially liable for cleanup costs. Liability
under state law varies.
Who is exempt from
liability at
brownfield sites?
Lenders who do not participate in the management of a property
are exempt from liability in most cases. A provision in the 1986
amendments to the Superfund law also protects "innocent lane)
owners" from liability under some circumstances, but this
exemption is very difficult to invoke. Many state voluntary
cleanup programs allow parties that remediate contamination at a
site to obtain exemption from liability for contamination
discovered later.
Can a local
government be held
liable for
contamination at a
property acquired
involuntarily through
tax delinquency,
bankruptcy, or
abandonment?
In some cases, a local government can be held liable for
remediation costs at a property that was acquired involuntarily
but this is very rare.
Can a local
government provide
effective assurance
of protection from
liability to private
parties?
A local government can not exempt a party from liability for
contamination, but it can work with state and federal officials to
provide assurances that a party will not be held liable, and it can
agree to assume remediation costs itself.
Which state or
federal agencies
need to be involved
in the remediation
of a contaminated
property?
The state environmental agency needs to be involved in most
significant environmental cleanups. The state agency will be ahle
to provide information on whether US EPA or other agencies
need to be notified
What federal or
state laws and
regulations apply to
the redevelopment
of a brownfield site?
The Comprehensive Environmental Response, Compensation,
and Liability Act (CERCLA or Superfund) and the Resource
Conservation and Recovery Act (RCRA) are the two most
important federal laws governing contaminated sites. Most
states have state Superfund, environmental cleanup, and other
laws that affect brownfields.
How do state prog-
rams such as volunt-
ary cleanup affect
redevelopm-ent of a
brownfield she?
State voluntary cleanup programs facilitate redevelopment of
brownfields in a number of ways, including streamlined cleanup
processes, alternate cleanup standards, liability assurances,
technical guidance and financial support. Programs vary from
state to state.
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Technical Expertise
If the local
government staff
does not have the
training and expertise
to deal with environ-
mental issues at a
brownfield she,
where can it go for
assistance?
A local government has several options for obtaining expertise on
environmental issues, including training current staff, hiring
additional staff, relying on state or federal technical expertise, or
contracting-with outside consultants.
What factors should
be considered when
selecting
environmental
consultants?
Important considerations in assessing consultants include
timeliness, competency, experience on similar projects, cost,
willingness and capacity to give good advice, sufficient assets or
insurance to stand behind their work, resources to carry out wprk
quickly and effectively, capability to do remediation as well as
assessment work, willingness to assume some project risks by
contract, and ability to work well with and take directions from
the client.
Cleanup Standards
How clean does a
site need to be to be
redeveloped?
Cleanup standards vary from state to state and from site to site1
What do the terms
risk assessment and
risk management
mean?
Risk assessment is the scientific evaluation of potential threats
caused by environmental hazards. Risk management is the set pf
actions taken .to protect health and the environment based on
information gathered during risk assessment
With specific information about what level of cleanup is needed
to protect health and the environment, it is possible to design
remediation measures that are more cost-effective than they
would otherwise be. Many state hazardous waste laws permit
cleanup standards based on risk.
How can
consideration of risk
affect environmental
cleanup at a
brownfield?
In many states, properties can be cleaned up to standards based
on future land uses.
How do plans for
future land use
affect environmental
cleanup at a
brownfield?
What measures can
be used to control
future land use at
sites where cleanup
standards based on
future use are used?
Future land use controls generally fall into two categories:
proprietary controls such as deed restrictions, and govern-mental
controls such as zoning rules.
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Seth Kinbehberg
KutakRock
PageS
Innovative Technology
How can innovative
environmental
technologies affect
redevelopment at a
brownfield?
Innovative technology can make remediation at brownfield site>
cheaper, faster, and more thorough.
What type* of
innovative
technologies can be
used at brownfields?
A wide range of technologies can be used, including assessment
technologies such as ground penetrating radar, cleanup
technologies such as bioremediation. Because environmental
technology is such a rapidly advancing field, new methods are
constantly being developed.
Community Relations
Why should a local
government involve
citizens in planning
for brownfield
development?
Early and effective citizen involvement in planning brownfield
reuse can generate information and ideas about what will really
benefit communities, ensure that all groups in the community
have the opportunity to have they're voices heard in the planning
process, and avoid unnecessary disputes and delays later.
What is
environmental
justice and how
does it relate to
brownfield
redevelopment?
Environmental justice is the fair treatment and meaningful
involvement of all citizens in environmental issues, regardless Of
race, ethnicity, or income.
How can a local
government
encourage citizen
involVe-ment in
brown-field
devdop-ment
planning?
Tools for promoting involvement include public meetings,
newsletters, Internet sites, public access cable stations, and
outreach to community groups
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Brownfields'97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
(46) Trading Places: A Brownfields Redevelopment Role Play
Thursday, September 4,1997
8:00 a.m. -12:30 p.m. (Please note: this is a double-length session.)
Description: Look at brownfields cleanup and redevelopment issues in a new way. This double-length session
will help stakeholders see the many sides of the issue. Brownfields real estate transaction scenarios involving
publicly and privately owned properties will be the focal point of this extended session. Participants will be
provided actual site histories and facts to build understanding of issues, then engage in smaller group
discussions to come up with solutions.
Location: Room 1203C
Speakers and Affiliation:
Ms. Lori Boughton (Moderator)
U.S. Environmental Protection Agency, Office of
Enforcement and Compliance Assurance
The format of this session is intended as a role play exercise. Various stakeholders and attendees will participate
in interactive scenarios.
Ms. LORI BOUGHTON
[Biography was not available at time of printing. Please refer to conference addendum.]
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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Brownfields'97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
(4H) Comfortable? A Look at Government Comfort and Assurance Issues
Thursday, September 4,1997
3:00 p.m. - 5:00 p.m.
Description: How much comfort do federal and state comfort policies provide for brownfields cleanup and
redevelopment? Investors, redevelopers, and lenders will want to hear leading authorities discuss enforcement
comfort and assurance issues.
Location: Room 1204A-B
Speakers and Affiliation:
The Honorable Steven A. Herman (Moderator)
The Honorable Lois J. Schiffer
Mr. Alan C. Williams
U.S. Environmental Protection Agency, Office of
Enforcement and Compliance Assurance
U.S. Department of Justice
State of Minnesota, Office of the Attorney General
THE HONORABLE STEVEN A. HERMAN
[Biography was not available at time of printing. Please refer to conference addendum.]
THE HONORABLE Lois J. SCHIFFER
[Biography was not available at time of printing. Please refer to conference addendum.]
MR. ALAN C. WILLIAMS
[Biography was not available at time of printing. Please refer to conference addendum.]
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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Brownfields'97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
(41) Smooth Sailing: Case Studies in Brownfields Success
Thursday, September 4,1997
3:00 p.m. - 5:00 p.m.
Description: As a follow-up to navigating through brownfields legal issues, hear key stakeholders discuss the
course they are following as they 'sail' through the maze of government rules and regulations and spotlight the
successes achieved.
Location: Room 1201
Speakers and Affiliation:
Ms. Barbara Coler (Moderator)
The Honorable Rosemary M. Corbin
Mr. Richard A. Kirschner
State of California, Environmental Protection Agency
City of Richmond, California
Sunday Breakfast Mission
Ms. BARBARA COLER
Ms. Coler received bachelor's and master's degrees in biological sciences from the University of Kansas. She was a
research associate for the State of Kansas, primarily involved with environmental monitoring. Subsequently she was
a consultant at the Savannah River Nuclear Production Plant in South Carolina. Ms. Coler has been with the Site
Mitigation Program of California Environmental Protection Agency's Department of Toxic Substances Control (DTSC)
since 1986. She is the chief of the Statewide Cleanup Operations Division of the Site Mitigation Program. She
manages approximately 135 staff of the division who are housed in five regional office locations and headquarters.
Her division is responsible for site identification and prioritization; review and validation of DTSC's "site" database;
investigation and remediation of all DTSC sites (all state Superfund sites, Voluntary Cleanup Program and National
Priority List sites except military facilities and limited special projects); all site mitigation revenue generation through
cost recovery and case development, and development and implementation of the Voluntary Cleanup Program. The
Voluntary Cleanup Program is the primary vehicle used by DTSC to foster brownfields redevelopment. In July 1996,
she assumed management of the Expedited Remedial Action Program, a pilot alternative voluntary program which
provides several creative incentives including liability incentives for responsible parties. She was team leader of the
Quality Improvement Project which addressed the Brownfields Initiative, and completed DTSC's Prospective
Purchaser Policy in July 1996. Ms. Coler is DTSC's primary coordinator on brownfields issues. She is the Chair of
the Voluntary Cleanup Task Force for the nationwide organization, the Association of State and Territorial Solid
Waste Management Officials (ASTSWMO) and has been the lead state person on issues regarding state/U.S.
Environmental Protection Agency's (EPA) roles in Voluntary Cleanup Programs, she also represents California on
ASTSWMO's Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) Committee.
THE HONORABLE ROSEMARY M. CORBIN
Rosemary M. Corbin has been the mayor of Richmond, California, since 1993. Prior to that she was a member of
the Richmond City Council for eight years. During her tenure as an elected official, she has specialized in solid and
hazardous waste issues.
Mayor Corbin represents Richmond on Contra Costa County's Hazardous Materials Commission and on a regional
solid waste joint powers authority. She also serves on the Energy and Environment Committees of the League of
California Cities, the National League of Cities, and the U.S. Conference of Mayors.
The nine San Francisco Bay area counties have joined together to plan for the disposal of hazardous waste and to
reward businesses for efforts they have made to ensure a clean environment. Mayor Corbin chairs that effort.
Mayor Corbin is a librarian by profession with a specialty in government documents. She has worked at Stanford
University, U.C. Berkeley, and Richmond and San Francisco Public Libraries. The American Library Association
published a series of articles she wrote on foreign documents.
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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Brownficlds'97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
MR. RICHARD A. KIRSCHNER
Mr. Richard Kirschner was a former financial analyst for the DuPont Company. Through corporate downsizing and
after 30 years of volunteering, Mr. Kirschner was appointed the executive director of the Sunday Breakfast Mission in
1994. The Mission has served the Wilmington, Delaware, community for 104 years, 365 days a year of supplying
food and shelter to the homeless.
In 1995 the Mission decided to expand its continuum of care through the creation of Gateway House, with the hope
of establishing single room residences for individuals who want to return to the mainstream of society. The Mission
has purchased and is in the process of renovating an abandoned apartment building directly across the street.
Prior to the apartment building, there was a leather processing factory operating from 1868 to 1961. Because of this
industrial use, the soil is contaminated with arsenic, PAHs, lead, and the building contains asbestos.
Mr. Kirschner's presentation will cover the issues around complying with the State of Delaware's environmental
regulations.
Brownfields 'S7 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
DOCUMENTS THAT SUPPORT
PANEL 41: SMOOTH SAILING: CASE STUDIES IN BROWNFIELDS SUCCESS
Brownfields '97 Partnering for a Greener Tomorrow Brownfields '97 Partnering for a Greener Tomorrow
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Richard A. Kirschner
Outline for Brownfields '97
0 History of Sunday Breakfast Mission
9 Expansion of continuum of care.
0 Acquisition of property and building.
a Finding partners
0 Environmental compliance *
0 Hidden hazards
0 Opening new doors.
* Slides depicting compliance
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Environmental Cleanup in Oregon
Oregon Department of Environmental Quality
Environmental Cleanup: What is it and
why you should care...
The environment can be contaminated in many different ways.
A leak from an underground storage tank, a spill of toxic
substances from a tanker truck, or poor waste management
practices at a business, can lead to contamination of soil,
ground water or surface water.
These types of contamination threaten both human health and
the environment and it is the responsibility of the Department of
Environmental Quality (DEQ) Environmental Cleanup Program
to manage these threats properly. Throughout the state, DEQ
staff work cooperatively with owners, operators and government
agencies to address releases of hazardous substances effectively
and efficiently.
Routes to cleanup ...
DEQ's Environmental Cleanup Program has three major
avenues to accomplish cleanup and protect human health and
the environment:
How are we doing?
1/88- 7/91- 7/93- 7/95-
6/91 6/93 6/95 6/97*
CD Sites Discovered
Sites Investigated
No Further Action Determined
With a few exceptions, Oregon state law does not require
that DEQ be informed of existing contamination.
Therefore, the sites that are discovered reflect only those
that DEQ is aware of. Investigations and cleanups can and
do occur without DEQ's knowledge or oversight.
Enforcement
Program
Responsible party
ordered to cleanup
and pay DEQ for
oversight
V
Evaluate
V
Owner/Operator
Initiates
. n
Orphan
Program
No responsible party
available to pay for
cleanup; state takes
necessary action
Voluntary
Program
Responsible party
agrees to clean up
and pay DEQ
for oversight
DEQ also administers a Dry Cleaner Program, an Underground
Storage Tank Program and a Spill Program. In all of these
cleanup programs, DEQ works with responsible parties and/or
prospective buyers to develop cost-effective cleanup approaches
which will protect human health and the environment
Examples of DEQ's efforts ...
As a result of cleaning up or treating contaminated property,
DEQ protects human health and the environment and facilitates
the productive reuse of that property. Here are just a few of the
sites DEQ is working on:
Due to DEQ's involvement...
At a site along the northwest coast, 20 acres of valuable real
estate will be redeveloped for mixed residential and commercial
uses.
In west-central Oregon, people living in 17 households no
longer drink solvent contaminated water.
At a site in southern Oregon, school children no longer play
near leaking drums of hazardous materials.
In southwestern Oregon, at a spill in the Yoncalla River,
wildlife were relocated to protect them from contaminated
habitat.
At a site in the mid-Willamette Valley and through a
cooperative relationship with a local government, 18 acres along
the Willamette River have been developed into a municipal
park.
In south-central Oregon, the Spraguc River, which contains
endangered species, was protected from 3500 gallons of diesel
fuel released from an accident involving a tanker truck.
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How cleanups happen ...
There are three major steps in the cleanup process: (1) gather site
information; (2) determine the appropriate action for the site; and (3)
clean up the contamination.
Site Amrumtnl
Remedial Investigation
Feasibility Study
Removal Aueument
Removal Action
Remedial Action
Gathering site information includes obtaining and evaluating
available information about the site and determining priority for
further action. A Site Screening is a desktop evaluation of available
information and prioritization of the need for further action. A
Preliminary Assessment is a more comprehensive evaluation which
includes a site visit and may include sample collection from
contaminated soil and/or groundwater.
Determining the appropriate clean-up action requires a more
detailed analysis of information regarding the site. A Remedial
Investigation is an in-depth study conducted to determine the extent
of contamination and associated risks. The Feasibility Study
identifies alternatives for managing the site including cleanup. For
each remedial alternative, the feasibility study evaluates
protect! vencss, feasibility and cost reasonableness. A Removal
Assessment identifies and evaluates interim cleanup actions
necessary to address immediate threats to human health and the
environment.
Cleanup can occur through a removal action and/or a remedial
action. A Removal Action is performed when there is an imminent
threat requiring an immediate or quick response to deal with
contamination to remove or stabilize that threat. It may mean
"digging and hauling" contaminated soil, or installing security
fencing to limit human exposure to contaminants. A Remedial
Action includes actions consistent with a permanent solution and is
based on results of the feasibility study and public comments.
DEQ may determine at any point during the cleanup process that No
Further Action (NFA) is required. Typically, this will occur after
completion of the required removal or remedial actions. An NFA
determination can be made earlier if the preliminary assessment or
other information indicates that the contamination does not pose a
threat to human health or the environment, is below "protective
levels" under the law, and will not cause significant adverse impacts
on the beneficial uses of ground water or surface water.
Who pays for Environmental
Cleanup...
When it enacted the Environmental Cleanup Law in 1987, the
Legislature intended that owners or operators pay for cleanup.
The law requires DEQ to recover costs associated with its work
at contaminated properties. "Cost Recovery" replenishes state
funds so more cleanups may be completed. DEQ will pay for
cleanup, using Orphan Site Funds, if the site is a high public
health or environmental priority and if the owner or operator
refuses to do so, or if they are financially unable to conduct the
cleanup.
Snapshot of sites in DEQ's
cleanup process in 1996 ...
Remedial
Investigation/
Feasibility
Study
45
Removal
Action
41
Remedial
Action
11
No
Further
Action
Determinations
Site
Assessment
365
DEQ tracks site information in the Environmental Cleanup
Site Information System (ECSI). ECSI is a permanent
electronic tracking system which contains more than 1800
sites that are in various stages of investigation and cleanup.
This database also includes sites where investigations have
not yet occurred and sites where no further action is
required.
For More Information ...
retarding DEQ'i Environmental Cleanup Programs
or the locations of and/or contact* within Regional Offices
contact (503) 229-5913 or 1-800-452-4011 (within Oregon)
or visit us at:
Oregon Department of Environmental Quality
Watte Management and Cleanup Division (8th floor)
811 SW 6th Avenue, Portland, Oregon 97204
or visit us on the Internet at:
http://www.deq.state.or.ns/wmc/cleanup/clean.htm
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CLEANING UP OREGON'S
BROWNFIELDS
What is a BROWNFIELD?
A brownfield is a vacant or underutilized commercial or industrial property where
environmental, economic and social obstacles hinder use and redevelopment.
Why should Oregon clean up its brownfields?
Contaminated sites can pose health and safety risks to the surrounding community
and degrade the quality of Oregon's natural resources
Redeveloping brownfields helps manage growth by:
making use of the existing infrastructure
discouraging development of uncontaminated properties
preserving farmland and pristine rural areas
Reused industrial sites enhance the community by providing jobs and
increasing the tax base
Neighboring properties are also affected by these unsightly locations and by the
stigma of contamination, which often leads to declining real estate values
What are the barriers to redeveloping brownfields?
Fear that the cost to investigate, control pollution or clean up contamination will be
high relative to the property's potential value
Lack of information about the existence or extent of contamination
Concern about liability for past contamination discourages potential purchasers
Uncertainty about regulatory processes, time-frames and the level of cleanup
required
Difficulty of obtaining financing for sites with unquantified risk
For more information, contact
Alan Kiphut at (503)229-6834
Or, to be directed to a DEQ office in your area
call Waste Management and Cleanup
Information at (503)229-5913
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How does DEQ help brownfield redevelopment?
Ensures that cleanups protect human health and the environment:
Performs site assessments to determine the extent of contamination
Offers an effective Voluntary Cleanup Program which provides oversight of cleanup
efforts outside of the enforcement mode
Cleans up high priority "orphan" sites when owners can't afford to or are not known
Identifies and removes redevelopment barriers:
Provides liability relief to buyers through Prospective Purchaser Agreements
Supports flexible approaches to cleanup, from "cookbook" standards and generic
remedies to site-specific risk-based decisions
Performs cleanup oversight that is responsive to the time lines and other
requirements of individual development projects
Oregon cleanup law provides liability protection for lenders in most cases
Forms partnerships to facilitate the reuse of brownfield properties:
Provides technical assistance to local governments
Coordinates with community groups, businesses and government agencies working
on cleanup projects
Works with other parties to form redevelopment financing strategies
DEQ's Brownfield Redevelopment Projects
DEQ has been involved in a wide variety of brownfield projects, ranging from small rural
industrial sites to a community-based revitalization of a multi-property area. Some
projects turn unused properties into new businesses, while others provide urban
greenspaces. The Astoria Millsite Project is a good illustration.
Focus: Astoria Millsite Project
When operations ceased at this former plywood mill in 1991, the owners
planned to address the contamination through DEQ's Voluntary Cleanup
program. Further investigation revealed more severe environmental
problems and the costs eventually exceeded the owners' ability to pay for
cleanup. Having determined that the site was a high environmental priority,
DEQ used its orphan site funds to mitigate the worst threats.
The City of Astoria began working with DEQ early on in the restoration of this
20-acre site located in a developed area near the Columbia River. The City
plans to purchase the property for mixed residential and commercial
development. As a part of the purchase agreement, the City expects to
reimburse the State for a substantial portion of the cleanup costs, which will,
in turn, provide DEQ funds to clean up additional sites.
Prepared by the Department of Environmental Quality March, 1997
-------
o
OREGON'S
PROSPECTIVE PURCHASER PROGRAM
The Department of Environmental Quality uses Prospective Purchaser Agreements as a tool to
facilitate the cleanup and productive use of properties contaminated with hazardous substances.
< '-'
Investment in properties with existing contamination can be uncertain because of the strict liability
scheme under state and federal laws. Prospective Purchaser Agreements benefit buyers by limiting their
liability, and benefit the State and local jurisdiction by facilitating the cleanup, returning the property to
productive use, and allowing the purchaser to provide substantial public benefits to the community.
Who is a Prospective Purchaser?
A prospective purchaser can be an individual, business, government body, or any other entity with the
interest and ability to purchase contaminated property, where the contamination was neither caused nor
aggravated by the "prospective purchaser."
What is a Prospective Purchaser Agreement?
A Prospective Purchaser Agreement (PPA) is a legally binding agreement between the Department of
Environmental Quality (DEQ) and a prospective purchaser, which limits the purchaser's liability to
DEQ for environmental cleanup at the property.
How do I know if I want a PPA and what are the benefits of having one?
If you are thinking about buying property that you know or suspect to be contaminated with hazardous
substances, you may be interested in a PPA. The liability protections clarify and limit your responsibility
to the State for the existing contamination. PPAs often make obtaining financing for the property
purchase easier. Also, PPAs can be passed on to subsequent owners who will benefit from the
protections provided for hi the agreement, so long as they adhere to its terms.
If I just purchased a contaminated property, and didn't cause the contamination, can I still enter
into a PPA?
No. PPAs must be negotiated and finalized before the property is purchased.
If I'm buying contaminated property, do I automatically get a PPA from DEQ?
No. Every property presents a unique set of circumstances, therefore, not all properties are appropriate
for PPAs. As a starting point, the minimum requirements in the law are:
the prospective purchaser isn't responsible for cleaning up existing contamination at the
property;
there is contamination at the property and the law requires that it be cleaned up;
the prospective purchaser's proposed use for the property will not make contamination
worse or interfere with necessary cleanup; and
4 a substantial public benefit will result from the agreement.
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What is a substantial public benefit?
The law provides the framework for DEQ's evaluations by listing examples of substantial public benefit,
including:
generation of substantial funding or other resources to be used for environmental cleanup at
the property
* commitment to perform substantial environmental cleanup activities at the property
* development of the property by a governmental entity or non-profit to address an important
public purpose
These are typical "substantial public benefits" that are generated as a result of the PPAs DEQ has
negotiated. However, DEQ evaluates each PPA individually to determine substantial public benefit.
There is a wide range of potential "substantial public benefits" and DEQ encourages prospective
purchasers to be creative.
How do I apply for a PPA? Is there an application fee?
You complete the Prospective Purchaser Application and submit a $2,500 deposit to DEQ to begin
formal negotiation of the agreement. The steps:
* Begin the process by contacting DEQ's Prospective Purchaser Program Coordinator to
obtain the program packet and schedule an initial assessment meeting.
During the initial meeting DEQ staff will ask questions to determine whether a PPA is
appropriate for this property.
4 If you and DEQ decide to move forward, you must first submit an application along with a
$2,500 deposit. The deposit is required for DEQ to start working on the PPA; it does not
ensure that a final agreement will be reached.
You then begin negotiations, share technical information about the contamination of the
property, and strive to reach an agreement which meets the needs of both you and the State.
If, as part of the PPA, you agree to conduct the cleanup actions at the property, you will do
so through DEQ's Cleanup Programs.
4 When the PPA is completed, or negotiations cease, any balance remaining from the deposit
is refunded.
How long does it take to get a PPA?
Average time to complete a PPA is 6 - 8 weeks. The length of time depends on: (1) how much DEQ
knows about the contamination at the property; (2) whether DEQ needs to modify the standard PPA
language to accommodate unique circumstances; and (3) the number of PPAs DEQ staff is currently
working on.
What happens after the PPA is finalized?
You have an obligation to properly record the PPA and related documents in the appropriate County
office, and must meet all of the conditions of the PPA. Failure to do either of these may void the PPA
and the liability protections it provides.
Other Questions? Call Prospective Purchaser Program Coordinator, Karin Koslow at 503-229-6461 for a
program packet which includes an application and other program information. For toll free call 1 -800-452-4011.
Prepared by Oregon Department of Environmental Quality
January, 1997
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DEQ'S BROWNFIELD SITE ASSESSMENT PILOT PROJECT
BENEFITS TWO OREGON COMMUNITIES
Summary of Project Period July 1, 1996 to June 30, 1997
THE PROJECT.
The Oregon Department of Environmental Quality (DEQ) has just completed the first year of its Brownfield
Site Assessment Pilot Project (Pilot). The purpose of the pilot is to determine the demand for and
potential effectiveness of an expanded Brownfield evaluation program and to assist redevelopment efforts
at the local level.
WHA T/SA BROWNFIELD:
Brownfield sites are considered to be vacant or under-utilized commercial or industrial properties with
known or perceived contamination of hazardous substances that has affected the sale and/or
redevelopment of the site.
THE ASSESSMENTS:
The pilot provided limited funding for assessments at properties owned by a government entity (City,
County, State, Tribe, Port, etc.) or a non-profit organization. Eligibility was limited to sites where there
had been no prior EPA involvement or where contamination was not only petroleum. Potential applicants
and other interested parties were notified of the project in August, 1996. OEQ received applications for
seven sites. Five of the sites were ineligible due to private party ownership or petroleum contamination.
The remaining two were awarded funding and brownfield assessments were completed. Both sites are
former landfills which are owned by the City of Medford and the City of Nyssa. There was little known
about contamination at the sites including no indication of whether or not a problem existed. This
perceived contamination had already hindered re-development at the Medford site.
Location Of Completed Brownfield Assessments
-------
THE RESULTS OF A COOPERATIVE EFFORT:
At little or no cost to the cities, the assessments identified areas of contamination not previously known.
Both projects involved partnering with, the respective City, DEQ, EPA, and the Oregon Economic
Development Department (OEDD). In the Medford project, a prospective purchaser was also involved. In
both instances, all parties contributed to the overall success of the pilot. Contributions included the use
of equipment, sample analysis, and the sharing of information. Both projects were truly a cooperative
effort
HOW DID NYSSA AND MEDFORD BENEFIT:
Through the pilot, both communities gained more certainty regarding the level of contamination at their
sites. They are now able to plan future development considering this contamination and possibly bring
more parties to the table to investigate and/or clean up a site which may otherwise lay idle and
abandoned.
PILOT PROJECT CONTACTS:
For more information regarding the pilots, please contact:
Nvssa Pilot
Gordon Zimmerman, City Manager, City of Nyssa - 541-372-2264
John Dadoly, Oregon DEQ - Pendleton - 541-278-4616
Medford Pilot
City Manager, City of Medford - 541-774-2000
Claudia Johansen, Oregon DEQ - Medford - 541-776-6010 ext. 228.
HOW CAN MY COMMUNITY BENEFIT FROM THE PROGRAM:
DEQ has received funding to complete up to eight additional Brownfield Assessments for the period of
July 1, 1997 through June 30, 1998. If you know of a site that is owned by a government entity (City,
County, State, Tribe, Port, etc.) or a non-profit organization that has not had prior EPA involvement or
contamination is not just petroleum, please contact Dick Pedersen - DEQ - Portland at 503-229-5332, or
David Bennett - EPA - Seattle at 206-553-2103.
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Brownfield Assessment of the Former Whetstone Landfill
White City, Oregon
Project Overview
The Oregon Department of Environmental Quality (Department) Western Region Site
Assessment Program under a Cooperative Agreement with EPA, conducted an
assessment of the former Whetstone Landfill. The former Whetstone Landfill is
located west of White City, Oregon along Antelope Road approximately 7 miles north
of Medford, Oregon. The site is part of a 200 acre parcel of land owned by the City
of Medford. It is approximately % of a mile from the Rogue River along Whetstone
Creek. The landfill was in operation from 1940 to 1955 as a military landfill. It
continued as a municipal landfill until the mid 1960's. Most recently the area has
been used for cattle grazing. The industrial park had not been selected by a large
manufacturer due to the presence of the landfill.
The assessment was conducted by the Department under a pilot Brownfield project
with EPA funding. The purpose of the pilot was to determine the demand for, and
potential effectiveness of an expanded Brownfield evaluation program and to assist
redevelopment efforts at the local level. Brownfield sites are vacant or under-utilized
commercial or industrial properties with known or perceived contamination of
hazardous substances that has affected the sale and/or redevelopment of the site.
Mile*
Former Whetstone Landfill
White City. Oregon
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What We Did
The project began with a scoping meeting in November 1996 attended by the City of
Medford, the Department, Oregon Economic Development Department and a
prospective purchaser. This was followed by a site visit in February 1997 and
sampling events in February and April 1997. The final report was completed in June
1997. Surface water, sediments, and subsurface soil samples were collected from
several locations within the landfill and Whetstone Creek. Groundwater samples
were also collected.
What We Found
The investigation was focused on accessible areas of the former landfill close to the
active disposal area, not covered by concrete rubble. Two areas of buried ash were
found to contain Dioxin at levels above industrial cleanup standards. One sample
was collected from a thick layer of waste suspected to be log deck waste. The
sample contained benzo(b)fluoranthene, also above industrial cleanup standards.
The Next Step
Due to the presence of contamination in buried ash and log deck waste, further
investigative work is recommended before any decisions regarding cleanup and future
development of the property can be made. Additional soil sampling is needed to
determine the extent of contamination already identified.
After the contamination is addressed, development of the portions of the site outside
of the landfill active disposal area may be possible. It is not recommended that
development occur within this area due to potential stability and contamination
concerns.
For more information or a copy of the report, please contact:
City Manager, City of Medford, 541-774-2000
Claudia Johansen, Oregon DEQ - Medford, 541-776-6010 ext.228
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Brownfield Assessment of the Former Nyssa Landfill
Nyssa, Oregon
Project Overview
The Oregon Department of Environmental Quality (DEQ) Eastern Region Site
Assessment Program, under a Cooperative Agreement with EPA, conducted an
assessment of the former municipal landfill located near the City of Nyssa. The
purpose of the assessment was to asses the current or potential threat posed by
wastes at the site and to identify possible environmental impediments to the
development of the site as an industrial park.
The former Nyssa Landfill is located along Arcadia Avenue approximately 1.75
miles north of Nyssa, OR. The site is part of a 13 acre parcel of land owned by the
City of Nyssa. The site is located approximately % of a mile from the Snake River.
The landfill was in operation from the 1960's until approximately 1972, when all
activities at the site ceased.
The assessment was conducted under a Brownfield Site Assessment project. The
purpose of the project was to determine the demand for and potential effectiveness
of an expanded Brownfield evaluation program and to assist redevelopment efforts
at the local level. Brownfield sites are considered to be vacant or under-utilized
commercial or industrial properties with known or perceived contamination of
hazardous substances that has affected the sale and/or redevelopment of the site.
Former Nyssa
Landfill
Nyssa, Oregon
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What we did
The project began with a scoping meeting in December 1996, which was attended
by representatives from the City of Nyssa, DEQ, OEDD and EPA. The meeting was
followed with a site visit in January 1997, and completed with a sampling event in
March 1997. Surface and subsurface soil samples were collected from ten locations
within the landfill. The final report was completed in June 1997, and is available to
the public.
What we found
Pesticides were detected in all soil samples collected at the site. There appears to
be no obvious pattern to the distribution of the contaminants. Of the eleven
pesticides detected at the site, six were detected at concentrations above the State
of Oregon Cleanup Standards. They are: lindane; heptachlor epoxide; endosulfan I;
pp'- DDE; dieldrin; and p,'-DDT. Some pesticide concentrations were more than
100 times the applicable Oregon Soil Cleanup Standard.
What is the next step?
Due to the presence of pesticide contamination in soil throughout the landfill area,
further investigative work is recommended before any decisions regarding clean up
and future development of the property can be made. Additional soil sampling is
needed to determine the extent of soil contamination. A limited groundwater
investigation involving the installation of on-site wells and possible testing of nearby
private wells for pesticide contamination is also recommended.
After cleanup, development of the portions of the site may be possible.
For more information, please contact:
Gordon Zimmerman, City Manager, City of Nyssa, 541-372-2264
John Dadoly, Oregon DEQ - Pendleton, 541-278-4616
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