Environmental Law Update

Environmental Law Update provides information on developments in environmental law as it applies to property, probate and trust matters. The editors of Probate & Property welcome information and suggestions from readers.

Brownfields Legislation on the Hill

In recent months, the pace of efforts to enact legislation to clean up the nation's "brownfields" has increased on Capitol Hill. Both Republicans and Democratics are floating proposals. At this writing, bills filed include S. 8, The Superfund Cleanup Acceleration Act of 1997, introduced by Republican Sens. Lott, Chafee and Robert Smith; S. 18, The Brownfields and Environmental Cleanup Act of 1997, introduced by Sen. Lautenberg (D.-N.J.); H.R. 1120, The Community Revitalization and Brownfields Cleanup Act of 1997, introduced by Democratic Reps. Dingell and Gephardt; and H.R. 873, The Land Recycling Act of 1997, introduced by Reps. Greenwood (R.-Pa.) and Klink (D.-Pa.).

Although it is unclear which, if any, of the bills will eventually become law, the focus on brownfields is a welcome sign for real estate lawyers and their clients. Concern over brownfields_abandoned or underutilized sites with environmental problems, often in urban areas_began several years ago. Developers argued that it was too risky to develop these sites, given the potential environmental liability. Mayors complained that the sites were a blight on their cities and produced no property tax revenue. Planners lamented the loss of urban redevelopment that moved to pristine suburban and exurban "greenfields" sites.

Although EPA offered some administrative incentives to brownfields developers, no federal legislation has been enacted. The states moved out in front of the federal government on brownfields: to date, about 30 states have enacted brownfields legislation. Congress is now catching up with the states. Despite differences between the bills that are currently before the 105th Congress, there are many areas of agreement, especially on "innocent purchasers," "prospective purchasers" and abutting neighbors.

Innocent Purchasers

Under Superfund law, "innocent landowners" are parties who performed appropriate environmental due diligence but found no contamination. The proposed brownfields bills largely codify existing law by conferring innocent purchaser protection status on parties who made "all appropriate inquiry" into the previous ownership and uses of the property by performing an environmental site assessment at the time of property acquisition.

Several of the new bills provide that the assessment will be deemed adequate if it was conducted in accordance with the commonly used American Society for Testing and Materials (ASTM) Phase I environmental site assessment standards. The article by Stephanie Karen Payne in this issue discusses the ASTM standard.

Prospective Purchasers

Innocent purchasers are buyers who saw, heard and smelled no environmental evils on their sites. The parties given "prospective purchaser" protection under the brownfields bills discovered contamination but chose to purchase the sites anyway. These are the developers that the government wants to encourage to clean up brownfields sites and return them to productive uses.

The bills generally provide that, as long as the prospective purchaser is not related to the parties who contaminated the property and does not impede any ongoing cleanup performed by the government or by anyone else, the prospective purchaser will not be liable under Superfund merely by virtue of its ownership of the property. This is a significant change to Superfund, under which a property owner could be liable for remediation costs, even though the owner did not cause the contamination. Some of the proposed bills grant the government a lien on remediated property. This is based on a belief that the prospective purchaser should not have a windfall by escaping liability and reaping the benefits of the government's remediation efforts.

Adjacent Property Owners

EPA's administrative brownfields program promulgated a "contaminated aquifer" policy, providing that if contamination on Brownacre seeps into the groundwater and then flows beneath Greenacre, the owner of Greenacre should not be made to clean up that contamination. Even within the liability scheme of Superfund_which provided for liability that is joint, several and without fault holding the hapless owner of Greenacre liable seemed excessive. The proposed bills would codify this policy.

Effect of State Closures

The main difference between Republican and Democratic versions of brownfields legislation deals with the effect of a state approving site closure under its own brownfields program. Republicans generally believe that if a state signs off on remediation, EPA should accept the state's actions. Developers have argued that they will only develop brownfields sites if they can budget cleanup costs; they therefore need to know that EPA will not undermine the state's approval. Environmental groups, an important Democratic constituency, do not trust the commitment of all states to environmental protection, especially states with antiregulatory governors. They want to give EPA the ability to require additional cleanup when it believes that a state has not required adequate remediation.

The Democratic bills contain greater restrictions on the types of acceptable state programs. The bills require the states to provide adequate resources and oversight, as well as meaningful opportunities for public participation on issues that affect the community. These bills provide fail-safe mechanisms that allow EPA to become involved in a state cleanup when EPA believes the site may present an imminent and substantial danger to public health or welfare, or when the state cleanup no longer protects human health or the environment because of a change in site use. Regardless of the differences between these bills, any legislation that offers certainty and liability relief to brownfields developers should provide an important incentive for getting those sites back into use.

Environmental Law Update
Editor: James B. Witkin, Linowes and Blocher, 1010 Wayne Ave., Silver Spring, MD 20910.

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