GUEST COLUMN: From Brown to Green. Understanding the Legal Implications of Brownfields
- May 12, 2009
By Martin A. Shelton, Esq.Brownfield property purchasers and developers are wise to have a clear understanding of the legal and regulatory requirements associated with the process. It’s the difference between holding a brown parcel worth its weight in gold or waste. The Resource Conservation and Recovery Act (RCRA) Brownfields Prevention Initiative begun by the U. S. Environmental Protection Agency (EPA) in 2000 was designed to “use opportunities for statutory and regulatory flexibility in the Resource Conservation and Recovery Act to accelerate site cleanup, facilitate dialogue, and integrate reuse and redevelopment issues, as appropriate, into cleanup decisions.”The goal is to accelerate cleanups at brownfields sites as a way to create jobs, businesses and green spaces for communities. In addition, the agency’s brownfields objectives are to clean up contaminated sites through private funding, allow property transfers without transfer of liability for groundwater cleanup, and return idle property to productive use thereby reducing urban sprawl and blight. To further facilitate these goals, a majority of states have implemented their own brownfields programs expanding the scope of qualifying properties and often simplifying the overall process.The impacted properties represent past contamination where complete remediation or elimination of the contamination is often too difficult or expensive. Therefore it is important for anyone considering the purchase of an impacted property to understand that brownfields redevelopment is about managing environmental risk reduction, not the total elimination of contamination.What are brownfields?Brownfields are defined as “real property, the expansion, development or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant.” Brownfields can also include sites contaminated by industrial chemicals, petroleum, or contaminated by past operations such as a dry cleaner.Brownfields redevelopment is only as good as the real estate deal it supports. In most states, the approach to brownfields redevelopment recognizes that it is the considerations of the real estate deal and not contamination that drive redevelopment. Virtually any property is capable of redevelopment if the real estate deal itself otherwise makes economic sense. The regulating agency no doubt recognizes that timing is everything, but interested parties must understand that the sooner environmental issues are put on the table, the better it is for all involved.Prospective purchasers and sellers alike are often confused by what is, and is not, covered under brownfields agreements. In most cases, eligible brownfields property purchasers may not include those who contributed to the release or have any relationship with the current owner or responsible party. For example, the historical owner cannot “sell” a property to a new, related single-purpose entity just to obtain the protections of the brownfield’s designation.In addition, certain sites are excluded from taking advantage of the brownfields program. For example, prospective purchasers of federal facilities cannot seek a brownfield designation from the state. Additionally, sites that are listed on the federal National Priorities List or Superfund list must be addressed through the federal Comprehensive Environmental Response, Compensation and Liability Act (the Superfund law) and are excluded from brownfields designation.Similarly, sites that have active hazardous waste facility permits under the federal RCRA or similar state statute do not qualify and must be addressed under that statute. However, it may be possible to transfer some properties to brownfields jurisdiction depending on the site’s specific condition.Keeping it legalA prospective purchaser should first conduct a high-quality environmental site assessment (ESA) since liability limitation is linked to the ESA results. This process allows for time to become aware of any potential problems, but is important to keep in mind that purchasers are afforded no protection from liability for issues identified after the fact.In general, early informal communication with the regulating agency may clarify the best approach for a particular site. This is very helpful for unveiling potential problems without running afoul of confidentiality agreements that may prohibit disclosure of environmental problems to third parties. While the goal may be to achieve results that accommodate the needs of all stakeholders, the reality is that many sellers choose to avoid an involuntary clean-up. Sellers may prefer not to be made aware of the environmental issues involved since such knowledge can trigger reporting requirements and clean-up liability.Legal issues associated with understanding brownfields laws and guidelines for purchaser transactions can differ by state. For information about regulations in your state, contact the EPA at epa.gov and consult the bar association in your state for a listing of environmental law attorneys who specialize in brownfields law. Martin A. Shelton, Esq. is a partner with Atlanta-based Schulten Ward & Turner, LLP. Shelton founded the firm’s environmental practice group and chairs the State Bar of Georgia’s Environmental Law Section. Shelton’s primary legal focus is on trial and appellate level environmental litigation and compliance in all areas of environmental regulation as well as land use disputes.