[House Report 109-616]
[From the U.S. Government Publishing Office]




109th Congress 
 2d Session             HOUSE OF REPRESENTATIVES                 Report
                                                                109-616
_______________________________________________________________________
                                                 Union Calendar No. 356
 
    BROWNFIELDS: WHAT WILL IT TAKE TO TURN LOST OPPORTUNITIES INTO 
                            AMERICA'S GAIN?

                               __________

                              NINTH REPORT

                                 by the

                     COMMITTEE ON GOVERNMENT REFORM

                             together with

                             MINORITY VIEWS


                                     


                                     

  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform

 September 6, 2006.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
JON C. PORTER, Nevada                C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas                BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia        ELEANOR HOLMES NORTON, District of 
PATRICK T. McHENRY, North Carolina       Columbia
CHARLES W. DENT, Pennsylvania                    ------
VIRGINIA FOXX, North Carolina        BERNARD SANDERS, Vermont 
JEAN SCHMIDT, Ohio                       (Independent)
BRIAN P. BILBRAY, California

                      David Marin, Staff Director
                Lawrence Halloran, Deputy Staff Director
                     Keith Ausbrook, Chief Counsel
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

               Subcommittee on Federalism and the Census

                   MICHAEL R. TURNER, Ohio, Chairman
CHARLES W. DENT, Pennsylvania        WM. LACY CLAY, Missouri
CHRISTOPHER SHAYS, Connecticut       PAUL E. KANJORSKI, Pennsylvania
VIRGINIA FOXX, North Carolina        CAROLYN B. MALONEY, New York
BRIAN P. BILBRAY, California

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                     John Cuaderes, Staff Director
                       Shannon Weinberg, Counsel
                          Jon Heroux, Counsel
            Ursula Wojciechowski, Professional Staff Member
             Linda Caron, Ph.D., Professional Staff Member
                         Juliana French, Clerk
            Adam Bordes, Minority Professional Staff Member
?

                         LETTER OF TRANSMITTAL

                              ----------                              

                                  House of Representatives,
                                 Washington, DC, September 6, 2006.
Hon. J. Dennis Hastert,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: By direction of the Committee on 
Government Reform, I submit herewith the committee's ninth 
report to the 109th Congress. The committee's report is based 
on a study conducted by its Subcommittee on Federalism and the 
Census.
                                                 Tom Davis,
                                                          Chairman.

                                 (iii)

                                     
                            C O N T E N T S

                              ----------                              
                                                                   Page
  I. Executive Summary................................................1
 II. Background.......................................................2
III. Hearings........................................................10
 IV. Findings and Recommendations....................................46

                                 Views

Minority views of Hon. Henry A. Waxman, Hon. Tom Lantos, Hon. 
  Carolyn B. Maloney, Hon. Elijah E. Cummings, Hon. Wm. Lacy 
  Clay, Hon. Diane E. Watson, and Hon. Brian Higgins.............    62
  
                                                 Union Calendar No. 356
109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     109-616

======================================================================


    BROWNFIELDS: WHAT WILL IT TAKE TO TURN LOST OPPORTUNITIES INTO 
                            AMERICA'S GAIN?

                                _______
                                

 September 6, 2006.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

 Mr. Tom Davis, from the Committee on Government Reform submitted the 
                               following

                              NINTH REPORT

                             together with


                             MINORITY VIEWS

    On July 20, 2006, the Committee on Government Reform 
approved and adopted a report entitled, ``Brownfields: What 
Will it Take to Turn Lost Opportunities Into America's Gain?'' 
The chairman was directed to transmit a copy to the Speaker of 
the House.

                          I. Executive Summary

    There are approximately 450,000 to 1 million brownfields 
sites across the Nation. These sites are often located in urban 
areas and sit on valuable pieces of property that would, if 
redeveloped, spur community economic development with new jobs, 
shopping and living choices. The U.S. Environmental Protection 
Agency's [EPA] Brownfields Program was established as an 
independent program with dedicated appropriations in 2002 
legislation to fund redevelopment of these contaminated sites.
    The EPA program reports a significant number of sites 
assessed and remediated utilizing Federal grant dollars. 
Numerous States instituted incentive programs over recent 
years, which spurred further brownfield remediation and 
redevelopment within their borders. Brownfields remediation and 
redevelopment reduces community blight, safeguards the local 
environment, and spurs economic revitalization of the 
communities in which these properties exist. There remains, 
however, a daunting portion of the Nation's brownfields 
untouched.
    Chaired by Representative Michael R. Turner, the 
Subcommittee on Federalism and the Census [the 
``Subcommittee''] held a series of hearings to determine: (1) 
the state of brownfields redevelopment across the country; (2) 
the effect of the Federal and numerous State brownfields 
programs on remediation and redevelopment; (3) and what further 
actions Congress could take to encourage more aggressive 
remediation and redevelopment efforts. The Subcommittee held 
five hearings on the matter, four of which are discussed in 
depth below.\1\
---------------------------------------------------------------------------
    \1\ Final transcript of the fifth and final hearing, held Mar. 13, 
2006 in Bridgeport, CT, unavailable at time of print.
---------------------------------------------------------------------------
    On April 5, 2005, the Subcommittee held its first hearing 
regarding brownfield redevelopment. The hearing, entitled Lands 
of Lost Opportunity: What Can Be Done to Spur Redevelopment at 
America's Brownfield Sites?, focused on determining what 
progress has been made under the EPA program and what can be 
done to spur further redevelopment efforts.
    During its Brownfields and the Fifty States: Are State 
Incentive Programs Capable of Solving America's Brownfields 
Problem? hearing on September 13, 2005, the Subcommittee 
explored the various types of State incentive programs, how 
well they work, and whether these programs, in conjunction with 
current Federal efforts, are enough to address the Nation's 
brownfields.
    The Subcommittee staged three field hearings to gather 
local perspectives on the same questions asked during the first 
hearing. On May 16, 2005, the Subcommittee held its first field 
hearing on the issue, entitled The Ohio Experience: What Can Be 
Done to Spur Brownfield Redevelopment in America's Heartland?, 
in Cleveland, OH. The Subcommittee held its second field 
hearing, entitled The Challenge of Brownfields: What are the 
Problems and Solutions in Redeveloping Pennsylvania's Lehigh 
Valley Communities?, on October 25, 2005 in Bethlehem, PA. On 
March, 13, 2006, the Subcommittee held its third field hearing 
in Bridgeport, CT, entitled The Connecticut Experience: What 
Can be Done to Spur Brownfield Redevelopment in the New England 
Corridor? During these hearings, the Subcommittee closely 
examined the condition of brownfields in the hosting States as 
well as the combined State, local, and private sector efforts 
to address the issue.

                             II. Background


                        A. DEFINING THE PROBLEM

    Brownfields are ``real property, the expansion, 
redevelopment, or reuse of which may be complicated by the 
presence or potential presence of a hazardous substance, 
pollutant, or contaminant.'' \2\ According to the U.S. 
Government Accountability Office [GAO], there are an estimated 
450,000 to 1 million abandoned or underutilized brownfield 
sites across the Nation.\3\ Often these areas are located in 
urban areas and, but for the presence of hazardous substances, 
are valuable pieces of property. Brownfields range in size from 
an abandoned gas station to an abandoned factory. Despite the 
prime location of many brownfield sites, developers often 
choose ``greenfields,'' also called ``greenspace,'' for 
development projects because of liability fears and the 
significant additional project cost to redevelop brownfields. 
Brownfields are thus left untouched, exacerbating community 
blight and resulting in depressed property values and decreased 
tax revenues.
---------------------------------------------------------------------------
    \2\ Comprehensive Environmental Response, Compensation, and 
Liability Act of 1980, Public Law No. 96-510, Sec. 101(39), 94 Stat. 
2767 (codified as amended at 42 U.S.C. Sec. 9601(39) (2006)).
    \3\ Government Accountability Office, Brownfield Redevelopment, 
Report No. GAO-05-94, at 1 (2004).
---------------------------------------------------------------------------

                        B. MISSED OPPORTUNITIES

    Redevelopment of brownfield sites not only reduces urban 
sprawl and preserves open greenspace, it also often has a 
domino effect on the surrounding community and economy. As 
Representative Stephanie Tubbs Jones explained, brownfields 
``are unused properties that can serve as businesses, homes, 
education facilities--the possibilities are endless. A 
brownfield today can be the economic engine for a city 
tomorrow.'' \4\
---------------------------------------------------------------------------
    \4\ The Ohio Experience: What Can Be Done to Spur Brownfield 
Redevelopment in America's Heartland? Before the Subcommittee on 
Federalism and the Census of the House Committee on Government Reform, 
109th Cong. 10 (2005) [hereinafter Ohio Brownfields hearing] [statement 
of Representative Stephanie Tubbs Jones].
---------------------------------------------------------------------------
    For every acre of brownfields that is redeveloped, 4.5 
acres of greenspace is saved.\5\ For every dollar Federal, 
State, and local governments spend on brownfields programs, 
communities see a return of almost $2.50 in private 
investment.\6\ Further, with the new businesses and living 
spaces created by brownfield redevelopment projects comes 
numerous jobs--during the cleanup, development, and post-
development phases--as well as improved or new infrastructure 
and transportation options.
---------------------------------------------------------------------------
    \5\ See Jonathan P. Deason, George William Sherk, and Gary A. 
Carrol, Environmental and Energy Management Program, The George 
Washington University, Public Policies and Private Decisions Affecting 
the Redevelopment of Brownfields: An Analysis of Critical Factors, 
Relative Weights and Areal Differerntials at 5.3 (September 2001) 
(visited June 15, 2006) .
    \6\ See Council for Urban Economic Development, Brownfields 
Redevelopment: Performance Evaluation 2, 28 (1999).
---------------------------------------------------------------------------

                         C. LEGISLATIVE HISTORY

1. The Comprehensive Environmental Response, Compensation, and 
        Liability Act of 1980

    The EPA first addressed brownfields administratively in 
1995 under the Superfund Program created by the Comprehensive 
Environmental Response, Compensation, and Liability Act of 1980 
[CERCLA].\7\ Congress established the Superfund Program for the 
cleanup of the Nation's worst hazardous waste sites.\8\ By 
2000, 92 percent of the sites listed on the Superfund National 
Priorities List [NPL] were either undergoing cleanup, removed 
from the NPL because cleanup was complete, or were removed from 
the list because remediation goals were achieved.\9\ The focus 
of the hazardous waste debate therefore turned to less 
seriously contaminated sites, i.e., brownfields.
---------------------------------------------------------------------------
    \7\ Comprehensive Environmental Response, Compensation, and 
Liability Act of 1980, Public Law No. 96-510, 94 Stat. 2767 (codified 
as amended 42 U.S.C. 9601 et seq. (2006)).
    \8\ See Congressional Research Service, Brownfields and Superfund 
Issues in the 108th Congress, Order Code IB10114, at i (2005).
    \9\ See id. at 5.
---------------------------------------------------------------------------
    The purpose of the EPA's administrative Brownfields Program 
was to address sites contaminated with hazardous waste but 
which did not pose a serious enough threat to public health or 
to the environment to qualify for Superfund assistance under 
CERCLA. Beginning in 1997, Congress officially recognized the 
program with earmarked funding within the annual Superfund 
appropriation.

2. The Brownfields Revitalization and Environmental Restoration Act of 
        2001

    In 2001, Congress passed the Brownfields Revitalization and 
Environmental Restoration Act of 2001 [2002 Brownfields 
Act].\10\ \11\ The 2002 Brownfields Act established a formal 
brownfields program within EPA with a total annual 
authorization through fiscal year 2006 of $250 million. 
Specifically, the 2002 Brownfields Act authorizes $200 million 
for: (1) assessment grants to characterize, assess, and conduct 
planning at brownfields sites; (2) a remediation grant program 
providing direct cleanup grants and revolving loan funds [RLF]; 
and (3) funding for technical assistance, training, and 
research. Of that $200 million, the 2002 Brownfields Act 
authorizes $50 million (or 25 percent of the appropriation if 
the appropriation is less than $200 million) for the assessment 
and cleanup of low-risk sites contaminated by petroleum 
products. The 2002 Brownfields Act authorizes an additional $50 
million for carrying out Sec. 128 of CERCLA (providing 
assistance to States in establishing or enhancing their 
voluntary cleanup programs [VCPs]).
---------------------------------------------------------------------------
    \10\ Small Business Liability Relief and Brownfields Revitalization 
Act, Public Law No. 107-118, 115 Stat. 2356 (codified as amended 42 
U.S.C. 9601 et seq. (2006)) [hereinafter 2002 Brownfields Act].
    \11\ Congress passed the 2002 Brownfields Act on December 20, 2001. 
President George W. Bush signed the bill into law on January 11, 2002.
---------------------------------------------------------------------------
            a. Liability Relief Under the 2002 Brownfields Act
    In addition to authorizing a dedicated stream of funding 
for brownfields remediation, perhaps more importantly, the 2002 
Brownfields Act also addressed liability issues, which are of 
preeminent concern for brownfields owners and developers. Under 
CERCLA, generators of hazardous substances, transporters who 
selected the disposal site, and past and present owners of a 
brownfield site can all be held liable for contamination. 
Superfund liability for cleanup and related costs could also 
extend to parties who may not have been responsible for the 
activities that caused the site contamination. CERCLA allows 
these ``potentially responsible parties'' [PRPs] to sue other 
parties for contribution to the cleanup costs, which may result 
in subjecting hundreds of parties to Superfund liability for a 
single site.
    This vast scheme of liability was an enormous disincentive 
to purchase, cleanup, and redevelop brownfields. The 2002 
Brownfields Act addressed this impediment by limiting liability 
for owners in certain situations.
    First, the act clarified the CERCLA ``innocent landowner'' 
defense by requiring the EPA to issue regulations defining the 
``all appropriate inquiry'' required for a purchaser to be 
considered an innocent landowner.\12\ \13\
---------------------------------------------------------------------------
    \12\ See 42 U.S.C. Sec. 9601 (35)(B)(ii). CERCLA creates a defense 
against liability for a landowner who unknowingly purchased 
contaminated land so long as the purchaser made ``all appropriate 
inquiry'' prior to the transaction.
    \13\ Standards and Practices for All Appropriate Inquiry, 40 C.F.R. 
pt. 312 (2005).
---------------------------------------------------------------------------
    Second, the 2002 Brownfields Act forbid the Federal 
Government from intervening at sites being cleaned up under a 
State VCP except in specific circumstances. EPA describes these 
programs as permitting ``volunteers or private parties to 
initiate the identification and cleanup of sites through the 
use of less extensive administrative procedures. In some cases, 
these private parties can obtain some relief from future 
[S]tate liability for past contamination.'' \14\ The 2002 
Brownfields Act prevents Federal enforcement intervention 
except where (1) the State requests assistance; (2) the EPA 
determines contamination has or will migrate across State lines 
or onto federally-owned or -controlled property; (3) the EPA 
determines that a release or threatened release may present an 
imminent and substantial endangerment to the public health or 
welfare or the environment; or (4) the EPA, after consulting 
with the State, determines that newly discovered information, 
not previously known by the State, requires further remediation 
to protect public health, public welfare, or the 
environment.\15\
---------------------------------------------------------------------------
    \14\ U.S. Environmental Protection Agency, EPA Issues Final Draft 
State Voluntary Cleanup Guidance (Aug. 8, 1997) (last modified Mar. 14, 
2006) .
    \15\ See 42 U.S.C. Sec. 9628 (b)(1)(B).
---------------------------------------------------------------------------
    Finally, liability is limited for owners of land that is 
contaminated by adjoining property as well as for prospective 
purchasers of known contaminated property.\16\
---------------------------------------------------------------------------
    \16\ See 42 U.S.C. Sec. 9607(q), (r)(1).
---------------------------------------------------------------------------
            b. Appropriations Under the 2002 Brownfields Act
    While Congress authorized $250 million per year for the 
Brownfields Program for fiscal years 2002 to 2006, it has yet 
to appropriate that level of funding. Overall, Congress 
appropriated the program only $167.7 million in fiscal year 
2003, $171 million in fiscal year 2004, $165 million in fiscal 
year 2005, and $165 million in fiscal year 2006. The 
appropriation for fiscal year 2007 has yet to be enacted, but 
the House passed legislation on May 18, 2006 appropriating just 
$163.2 million for the fiscal year.\17\ As the chart below 
details, in each of these fiscal years, Congress appropriated 
the full $50 million for carrying out Sec. 128 of CERCLA, 
relating to assistance to States for their VCPs, and 
appropriated only between $115 million and $121 million of the 
authorized $200 million for carrying out Sec. 104(k) of CERCLA, 
pertaining to brownfields revitalization funding.
---------------------------------------------------------------------------
    \17\ Making appropriations for the Department of the Interior, 
environment, and related agencies for the fiscal year ending September 
30, 2007, and for other purposes, H.R. 5386, 109th Cong. Title II. 


                     D. THE EPA BROWNFIELDS PROGRAM

    Through the Brownfields Program, EPA seeks to change its 
role from ``regulatory hammer'' to an enabler of economic 
development and environmental protection. The program currently 
has over 500 cities enrolled in the program, focusing on four 
main themes: protecting the environment, promoting 
partnerships, strengthening the marketplace, and sustaining 
reuse of redeveloped brownfields.
    Between the administrative inception of the EPA's 
Brownfields Program in 1995 and the enactment of the 
Brownfields Act in early 2002 (the act passed both legislative 
chambers in late 2001 but was signed by the President in 
January 2002), EPA awarded 437 assessment grants and 143 grants 
for establishing revolving loan funds to finance cleanups.\18\ 
From fiscal year 2003 to fiscal year 2006, after enactment of 
the 2002 Brownfields Act and the formal creation of the 
Brownfields Program, the EPA selected 628 assessment grants, 
363 cleanup grants, 71 revolving loan fund grants, and 49 job 
training grants for a total of more than 1,100 grants.\19\ \20\
---------------------------------------------------------------------------
    \18\ Federal Grants Wire, Brownfields Assessment and Cleanup 
Cooperative Agreements (66.818) (visited June 15, 2006) .
    \19\ See U.S. Environmental Protection Agency, EPA Announces $73.1 
Million in National Brownfields Grants in 37 States and Seven Tribal 
Communities (June 20, 2003) (last modified Mar. 14, 2006) ; U.S. Environmental 
Protection Agency, 42 States, Puerto Rico, Five Tribes Share Record 
$75.4 Million in Brownfields Grants (June 15, 2004) (last modified Aug. 
2, 2005) ; U.S. Environmental 
Protection Agency, 75.9 Million in Brownfield Grants Announced (May 10, 
2005) (last modified May 20, 2006) ; U.S. Environmental Protection Agency, $70 Million 
in Grants Brings Blighted Property Back to Life (May 12, 2006) (last 
modified May 17, 2006) .
    \20\ See U.S. Environmental Protection Agency, EPA Awards $2 
Million to Seven States for New Brownfields Job Training Grants in Ten 
Communities (May 16, 2003) (last modified Mar. 14, 2006) ; U.S. Environmental 
Protection Agency, 42 States, Puerto Rico, Five Tribes Share Record 
$75.4 Million in Brownfields Grants (June 15, 2004) (last modified Aug. 
2, 2005) ; U.S. Environmental 
Protection Agency, 75.9 Million in Brownfield Grants Announced (May 10, 
2005) (last modified May 20, 2006) ; U.S. Environmental Protection Agency, EPA Announces 
$2 Million in Brownfields Job Training Grants (Dec. 22, 2005) (last 
modified Dec. 22, 2005) .
---------------------------------------------------------------------------
    Overall, the Brownfields Program, since its administrative 
inception in 1995, has touched 50 States and 40 Tribes.\21\ 
Further, the program has leveraged over $8 billion in private 
investment for cleanup and redevelopment costs, supported 
assessments at over 8,300 properties, and created more than 
37,500 jobs.\22\
---------------------------------------------------------------------------
    \21\ See Office of Brownfields Cleanup and Redevelopment (OBCR), 
EPA's Brownfields Program, at 5 (March 2005) (on file).
    \22\ See U.S. Environmental Protection Agency, $70 Million in 
Grants Brings Blighted Property Back to Life (May 12, 2006) (last 
modified May 17, 2006) .
---------------------------------------------------------------------------
    The EPA's Brownfields Program does not exist alone, 
however. EPA works with 23 other Federal agencies for which 
redevelopment is part of their mission. Further, every State 
has a variation of a cleanup program--a VCP. The EPA 
``foster[s] more effective and efficient working 
relationships'' with its State partners and encourages the 
cleanup of sites under VCPs through the use of non-binding, 
formal Memoranda of Agreement [MOAs].\23\
---------------------------------------------------------------------------
    \23\ U.S. Environmental Protection Agency, State Voluntary Cleanup 
Programs (last modified Mar. 23, 2006) .
---------------------------------------------------------------------------
    According to EPA, ``Voluntary cleanup programs . . . are 
typically the State authority to address brownfields.'' \24\ 
These programs are vital to cleanup efforts, as evidenced by 
the estimated 53,000 sites currently enrolled in VCPs and the 
estimated 48,000 sites that have undergone remediation efforts 
in accordance with a VCP.\25\ A MOA links EPA's cleanup and 
enforcement efforts to its State partners' efforts via a VCP. 
``Specifically, MOAs define EPA and [S]tate roles and 
responsibilities and include a general statement of EPA intent 
regarding certain sites cleaned up under the oversight of a 
VCP.'' \26\ Some MOAs also address sites subject to liability 
under the Resource Conservation and Recovery Act [RCRA] while 
some MOAs address sites undergoing cleanups under multiple EPA 
programs in accordance with EPA's One Cleanup Program.\27\ \28\
---------------------------------------------------------------------------
    \24\ Id.
    \25\ See The Reauthorization of the Brownfields Program--Successes 
and Future Challenges Hearing before the Subcommittee on Water 
Resources and the Environment of the House Committee on Transportation 
and Infrastructure, 109th Cong. (June 8, 2006) (visited June 13, 2006) 
 
(statement of Susan Parker Bodine, Assistant Administrator, Office of 
Solid Waste and Emergency Response, U.S. Environmental Protection 
Agency).
    \26\ U.S. Environmental Protection Agency, State Voluntary Cleanup 
Programs (last modified Mar. 23, 2006) .
    \27\ Resource Conservation and Recovery Act of 1976, Public Law No. 
94-580, 90 Stat. 2795 (codified as amended 42 U.S.C. Sec. 6901 et seq. 
(2006)).
    \28\ See id. See also U.S. Environmental Protection Agency, One 
Cleanup Program (last modified Apr. 18, 2006) .
---------------------------------------------------------------------------

                             E. GAO REPORT

    At the request of the Government Reform Committee Chairman 
Tom Davis and now Subcommittee Chairman Michael R. Turner, the 
Government Accountability Office [GAO] reviewed the EPA's 
Brownfields Program and the general state of brownfields 
redevelopment across the Nation. GAO issued its report in 
December 2004.\29\ Specifically, the report focused on (1) 
stakeholder views of the EPA's contribution to brownfields 
cleanup and redevelopment; (2) EPA methodology of measuring 
program accomplishments; and (3) stakeholder views on how to 
improve or complement the EPA Brownfields Program.\30\ GAO 
summarized its findings:
---------------------------------------------------------------------------
    \29\ See U.S. Government Accountability Office, BROWNFIELD 
REDEVELOPMENT Stakeholders Report That EPA's Program Helps to Redevelop 
Sites, but Additional Measures Could Complement Agency Efforts GAO-05-
94 (November 2004) [hereinafter GAO Report].
    \30\ See GAO Report at page 4. See also Lands of Lost Opportunity: 
What Can Be Done to Spur Redevelopment at America's Brownfield Sites? 
Before the Subcommittee on Federalism and the Census of the House 
Committee on Government Reform, 109th Cong. 23 (2005) [hereinafter 
Brownfield Overview hearing] (statement of John Stephenson, Director, 
Natural Resources and Environment, U.S. Government Accountability 
Office).

        Stakeholders reported that EPA's Brownfields Program 
        provides an important contribution to site cleanup and 
        redevelopment efforts by funding activities that might 
        not otherwise occur. EPA grants typically support the 
        initial stages of brownfield redevelopment and are 
        important in that they fund activities and address 
        sites--such as those with more complex cleanup 
        requirements, less desirable locations, or liability or 
        ownership issues--that private lenders and other 
        government programs often do not, according to 
        stakeholders. EPA's site assessment grants provide 
        recipients with seed money for identifying 
        contamination and estimating cleanup costs, while the 
        agency's revolving loan fund grants provide funding for 
        cleanup activities. However, EPA is often one of 
        several funding sources for brownfield cleanup and 
        redevelopment. All of the grant recipients we 
        interviewed used EPA grants in conjunction with funding 
        from [S]tate, local, and/or other [F]ederal sources to 
        address brownfield sites. . . . [O]fficials in all 10 
        of the [S]tates we contacted reported that EPA 
        assistance has been crucial to establishing and 
        expanding the scope of their voluntary cleanup 
        programs. These officials said that without EPA's 
        grants, their voluntary cleanup programs would not have 
        had the resources to undertake activities such as 
        compiling [S]tate inventories of brownfield sites, 
        performing limited brownfield site assessments, and 
        developing needed guidance and information for program 
---------------------------------------------------------------------------
        participants.

        The performance measures EPA has used to date have 
        provided information on accomplishments in some but not 
        all key areas of the Brownfields Program, thereby 
        limiting the agency's--and the Congress'--ability to 
        determine the extent to which the program is achieving 
        its goals. First, EPA's current brownfield performance 
        measures do not fully address the program's central 
        objectives. While EPA has reported to the Congress on 
        the cumulative sites assessed, jobs generated, and 
        cleanup and redevelopment funds leveraged by the 
        program, the agency has not begun reporting data on 
        grant recipients' activities to clean up and redevelop 
        properties, which is one of its primary stated 
        objectives. Second, EPA does not collect or report data 
        on the assistance it provides to [S]tate voluntary 
        cleanup programs. Although this is not one of the 
        program's strategic objectives, these activities are a 
        significant part of EPA's brownfield efforts, 
        accounting for about one-third of the total program 
        funds in each of fiscal years 2003 and 2004. Third, 
        although EPA's overall mission is to protect human 
        health and the environment, the agency has not yet 
        developed measures to determine the extent to which the 
        Brownfields Program helps reduce environmental risks. 
        Acknowledging these limitations, in fiscal year 2004, 
        EPA began collecting additional information--such as 
        the number of acres ready to be reused--which agency 
        officials believe will allow them to develop additional 
        measures to gauge the program's achievements. 
        Similarly, EPA is developing performance measures for 
        voluntary cleanup programs, but the agency has not yet 
        proposed that it include such measures in its 
        performance reports. We are recommending that EPA 
        continue its efforts to develop additional measures to 
        gauge program achievements--especially those addressing 
        the program's environmental and [S]tate voluntary 
        cleanup aspects--and incorporate them into annual 
        performance measures that are reported to the Congress.

        Stakeholders identified three potential options for 
        improving or complementing EPA's Brownfields Program. 
        First, they suggested eliminating the provision in the 
        Brownfields Act that, in effect, makes landowners who 
        purchased a brownfield site prior to January 2002 
        ineligible for EPA grant funding. While the 
        Consolidated Appropriations Act for Fiscal Year 2004 
        temporarily suspended the eligibility date for that 
        fiscal year, stakeholders asserted that the clause 
        continues to discourage brownfield redevelopment by 
        limiting program eligibility. Second, stakeholders 
        suggested changes to address the underutilization of 
        revolving loan funds. As of November 2004, grant 
        recipients had loaned out less than $29 million (about 
        17 percent) of the $168 million in revolving loan fund 
        grants awarded by EPA. According to stakeholders, the 
        stringent technical and administrative requirements to 
        establish a revolving loan fund have discouraged grant 
        recipients from using the funds. While EPA officials 
        maintain that provisions in the Brownfields Act eased 
        administrative requirements, stakeholders believed that 
        technical requirements continue to be the primary 
        impediment to making loans. Additionally, stakeholder 
        comments indicated that EPA could achieve greater 
        results by giving priority to applicants with proven 
        administrative expertise or to coalitions of agencies 
        that could consolidate administrative functions and 
        thereby produce economies of scale. Third, stakeholders 
        believed that a [F]ederal tax credit, which would allow 
        developers to offset a portion of their [F]ederal 
        income tax with their remediation expenditures, could 
        complement EPA's program by attracting developers to 
        brownfield sites on a broader national basis.\31\ \32\
---------------------------------------------------------------------------
    \31\ Id. at 4-6 (citations omitted).
    \32\ Section 1956 of the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users nullified the provision 
defining a bona fide prospective purchaser as a person that acquired 
ownership of land after the January 11, 2002 enactment date of the 2002 
Brownfields Act. Acquisition date is no longer a factor in landowner 
eligibility for Brownfields Program grant funding. See Safe, 
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy 
for Users (SAFETEA-LU), Public Law No. 109-59, Sec. 1956, 119 Stat. 
1144, 1515 (2005).

    The findings of the GAO report are discussed in further 
detail below.

                             III. Hearings


A. HEARING ON FEDERAL BROWNFIELD REDEVELOPMENT PROGRAMS AND THE STATUS 
              OF BROWNFIELDS REDEVELOPMENT, APRIL 25, 2005

    On April 25, 2005, the Subcommittee began its oversight of 
Federal brownfields redevelopment efforts. During the Lands of 
Lost Opportunity: What Can Be Done to Spur Redevelopment at 
America's Brownfield Sites? hearing, the Subcommittee heard 
from two panels of witnesses. On the Federal panel were Thomas 
Dunne, Deputy Assistant Administrator in the Office of Solid 
Waste and Emergency Response of the U.S. EPA; and John 
Stephenson, Director of the Natural Resources and Environment 
office within GAO. The Subcommittee also received testimony 
from the stakeholder community represented by the Honorable Don 
Plusquellic, mayor of the city of Akron, OH, and president of 
the U.S. Conference of Mayors; James E. Maurin, chairman of the 
International Council of Shopping Centers and board member of 
the Real Estate Roundtable; Jonathan Philips, senior director 
of Cherokee Investment Partners, LLC; and Douglas L. Steidl, 
president of the American Institute of Architects.
    At the center of the hearing were the results of GAO's 
report on the EPA Brownfields Program and the general state of 
brownfield redevelopment. The Subcommittee also explored ways 
of spurring further redevelopment outside of current Federal 
efforts.
    EPA's Thomas Dunne launched the hearing with a description 
of the agency's multi-faceted Brownfields Program:

        Assessment grants provide funding to inventory, 
        characterize, assess, conduct planning and community 
        involvement related to brownfields. Environmental site 
        assessments provide the information that communities 
        and property owners need to move forward with reuse. . 
        . . Over the years, EPA has awarded hundreds of 
        assessment grants, generally $200,000 each, to 
        communities large and small. The Brownfields Law 
        expanded the eligibility to new entities such as 
        redevelopment authorities and allowed additional 
        assessment-related activities such as planning to be 
        done by grant recipients. Over the past two years under 
        the new law, EPA has awarded 270 assessment grants for 
        $67.9 million.

        In addition, EPA has the authority to provide Targeted 
        Brownfields Assessments. These single-property 
        assessments are designed to help communities on a more 
        direct basis, especially those lacking EPA assessment 
        grants. EPA provided $6.6 million for Targeted 
        Brownfields Assessment in fiscal years 2003 and 2004.

        Under its new authority, EPA may now provide direct 
        cleanup grants of up to $200,000 per site to public 
        sector and non-profit property owners. In the past two 
        years, EPA has awarded 143 cleanup grants for $25.5 
        million. . . .

        The Brownfields Program also supports property cleanup 
        by providing grants to capitalize cleanup revolving 
        loan funds. The Brownfields Revolving Loan Fund grants 
        provide [S]tate and local governments with capital to 
        make sub-grants or low or no interest loans to finance 
        brownfields cleanup. Over the past two years, EPA has 
        awarded 43 revolving loan fund grants for $47.3 
        million.\33\
---------------------------------------------------------------------------
    \33\ Brownfield Overview hearing at 10-11 (statement of Thomas 
Dunne, Deputy Assistant Administrator, Office of Solid Waste and 
Emergency Response, U.S. Environmental Protection Agency).

    In addition to assessment and cleanup grants, EPA also 
awards grants for brownfields job training, research, and 
technical assistance.\34\ These grant dollars have ``result[ed] 
in the placement of more than 1400 individuals with an average 
wage of $13 an hour,'' Dunne reported.\35\
---------------------------------------------------------------------------
    \34\ See id. at 12.
    \35\ Id.
---------------------------------------------------------------------------
    In total, ``EPA has awarded more than 480 brownfields 
grants in both fiscal year 2003 and fiscal year 2004 totaling 
more than $145 million,'' Dunne testified.\36\ \37\
---------------------------------------------------------------------------
    \36\ Id. at 10.
    \37\ Brownfields Job Training Grants are designed to ensure 
economically distressed communities benefit both from the environmental 
and economic development aspects of redevelopment projects. The EPA's 
Brownfield Job Training Grants ``address the issue of providing 
environmental employment and training for residents in communities 
impacted by Brownfields. EPA's Brownfields Program is an organized 
commitment to help communities revitalize Brownfields properties both 
environmentally and economically, mitigate potential health risks, and 
restore economic vitality to areas where Brownfields exist.'' U.S. 
Environmental Protection Agency, Brownfields Job Training Pilots/Grants 
(last modified Mar. 14, 2006) .
    Brownfields Job Training Grants are also designed to ensure an 
adequate workforce of trained environmental professionals exists. ``EPA 
believes that workforce development and job training are the critical 
links between environmental cleanup and safe and sustainable community 
redevelopment. These efforts help to guarantee that brownfields cleanup 
and redevelopment have the trained workforce needed to revitalize 
contaminated properties, and that local community members have an 
opportunity to compete in the economic mainstream.'' U.S. Environmental 
Protection Agency, Workforce Development Fact Sheet (last modified Mar. 
14, 2006) .
---------------------------------------------------------------------------
    According to stakeholders, these funds, although generally 
not directly involved in redevelopment activities, ``provide[] 
an important contribution to site cleanup and redevelopment by 
funding activities that might not otherwise occur,'' testified 
John Stephenson.\38\ Stakeholders believe these Federal dollars 
are important because they support the initial stages of 
remediation, providing ``seed money for identifying 
contamination and estimating cleanup costs, while its revolving 
loan fund grants support cleanup activities.'' \39\ 
Additionally, Stephenson reported, EPA dollars often fund 
remediation activities of sites ``with more complex cleanup 
requirements, less desirable locations, or liability or 
ownership issues--[sites] that private lenders and others often 
do not [underwrite.]'' \40\ State officials also emphasized the 
vital role EPA funds play in establishing or expanding State 
voluntary cleanup programs. ``[W]ithout EPA's grants, [State] 
voluntary cleanup programs would not have had the resources to 
undertake activities such as compiling [S]tate inventories of 
brownfield sites and performing site assessments,'' Stephenson 
related.\41\
---------------------------------------------------------------------------
    \38\ Brownfield Overview hearing at 25 (statement of John 
Stephenson, Director of the Natural Resources and Environment, U.S. 
Government Accountability Office).
    \39\ Id. at 26.
    \40\ Id. at 25.
    \41\ Id. at 26.
---------------------------------------------------------------------------
    Despite the perceived success of the Brownfields Program 
and the positive remarks from the stakeholder community, GAO 
was unable to measure the actual impact of EPA funding for two 
reasons. First, GAO found that ``the impact of EPA's funding is 
difficult to isolate because it is often combined with funds 
from other sources.'' \42\ Second, GAO determined EPA's 
performance measures for the Brownfields Program are 
inadequate, limiting both EPA's and Congress' ability to gauge 
progress toward the major goals of the program.\43\ Stephenson 
testified, ``[W]hile EPA has reported the cumulative number of 
sites assessed, jobs generated, and amounts of cleanup and 
redevelopment funds leveraged by the program, the agency has 
not begun reporting data on grant recipients' activities to 
clean up and redevelop properties--one of its primary stated 
objectives.'' \44\
---------------------------------------------------------------------------
    \42\ Id.
    \43\ See id.
    \44\ Id.
---------------------------------------------------------------------------
    Additionally, although it is not one of the primary 
objectives of the Brownfields Program, assistance to State VCPs 
represents approximately one-third of the program's fund 
expenditures. However, ``EPA does not collect data on its 
assistance to [S]tate voluntary cleanup programs, for such 
activities as compiling inventories of brownfield sites, 
performing site assessments, and developing guidance for 
program participants,'' Stephenson reported.\45\
---------------------------------------------------------------------------
    \45\ Id.
---------------------------------------------------------------------------
    Finally, GAO noted, ``although EPA's overall mission is to 
protect human health and the environment, the agency has not 
yet developed measures to determine the extent to which the 
Brownfields Program helps reduce environmental risks.'' \46\
---------------------------------------------------------------------------
    \46\ Id.
---------------------------------------------------------------------------
    In addition to describing the successes of the Brownfields 
Program, GAO reported that numerous stakeholders suggested a 
number of improvements or complements to the EPA program. 
Interviewees covered the range of possible stakeholders, from 
site assessment grantees and revolving loan recipients to 
developers, attorneys, nonprofit organizations, and State and 
local government officials.\47\ GAO identified the three 
primary stakeholder suggestions: (1) eliminate the 2002 
Brownfields Act provision making landowners who acquired a 
brownfield site prior to January 11, 2002 ineligible for 
Brownfield Program grant funds; (2) modify the RLF grant 
program to encourage greater program utilization by addressing 
the ``stringent technical and administrative requirements to 
establish a revolving loan'' and by ``giving priority to 
applicants with proven administrative expertise or to 
coalitions of agencies that could consolidate administrative 
functions associated with establishing and managing a revolving 
loan fund and thereby produce economies of scale.'' and (3) 
complement the Brownfields Program by encouraging private 
investment through a Federal tax credit for remediation 
expenses.\48\
---------------------------------------------------------------------------
    \47\ See id. at 25.
    \48\ Id. at 26.
---------------------------------------------------------------------------
    According to GAO, stakeholders suggesting elimination of 
the Brownfields Program's eligibility date provisions argue 
that doing so would expand the impact of the program on 
redevelopment efforts, enabling those who purchased land prior 
to 2002 to obtain funds for remediation and redevelopment.\49\ 
While Congress temporarily suspended this provision in the 
fiscal year 2004, fiscal year 2005, and fiscal year 2006 
appropriations bills, stakeholders contend the clause continues 
to discourage redevelopment.\50\ Stakeholders specifically 
cited the ``many local governments that were actively 
addressing brownfields by acquiring these sites before the law 
was enacted [and now] have been penalized by the act's 
eligibility date.'' \51\ EPA and other organizations reported 
to GAO during its investigation that a number of brownfields 
grant applications were denied in 2003 because of this 
eligibility restriction while numerous other applications were 
not submitted at all.\52\
---------------------------------------------------------------------------
    \49\ See id. at 35.
    \50\ See id. See also Making appropriations for Agriculture, Rural 
Development, Food and Drug Administration, and Related Agencies for the 
fiscal year ending September 30, 2004, and for other purposes, Public 
Law No. 108-199, Title III, 118 Stat. 3, 408 (2004); Making 
appropriations for foreign operations, export financing, and related 
programs for the fiscal year ending September 30, 2005, and for other 
purposes, Public Law No. 108-447, Title III, 118 Stat. 2809, 3332 
(2004); Making appropriations for the Department of the Interior, 
environment, and related agencies for the fiscal year ending September 
30, 2006, and for other purposes, Public Law No.109-54, Title II, 119 
Stat. 499, 531 (2005).
    \51\ Id.
    \52\ See id.
---------------------------------------------------------------------------
    In 2005, Congress nullified the eligibility date provision 
in the 2002 Brownfields Act in the fiscal year 2006 
reauthorization of surface transportation programs.\53\
---------------------------------------------------------------------------
    \53\ See Safe, Accountable, Flexible, Efficient Transportation 
Equity Act: A Legacy for Users (SAFETEA-LU), Public Law No. 109-59, 
Sec. 1956, 119 Stat. 1144, 1515 (2005).
---------------------------------------------------------------------------
    Nearly half of the stakeholders GAO interviewed addressed 
the issue of underutilization of RLF grants.\54\ The 2002 
Brownfields Act authorized grants to eligible units of 
government in the amount of $1 million per entity.\55\ Congress 
intended those grant funds ``be used for capitalization of 
revolving loan funds;'' funds which are then loaned to 
additional eligible entities as ``assistance for the 
remediation of brownfield sites[.]'' \56\ Grant recipients may 
also provide assistance in the form of subgrants using FLF 
grant funds to eligible entities.\57\ EPA guidance limits the 
amount of RLF funds issued as subgrants to 40 percent of the 
RLF grant award.\58\
---------------------------------------------------------------------------
    \54\ See id. at 36.
    \55\ See 42 U.S.C Sec. 9604(k)(1) (``Eligible Entity'' defined); 42 
U.S.C. Sec. 9604(k)(4)(A)(ii) ($1 million per grant authorized).
    \56\ 42 U.S.C. Sec. Sec. 9604(k)(3)(A)(i), 9604(k)(3)(B).
    \57\ See 42 U.S.C. Sec. 9604(k)(3)(B)(ii).
    \58\ See U.S. Environmental Protection Agency, Proposal Guidelines 
for Brownfields Assessment, Revolving Loan Fund, and Cleanup Grants--
Summary of Brownfields Grant Programs (last modified Mar. 14, 2006) 
.
---------------------------------------------------------------------------
    GAO's investigation revealed that only 47 of 154 grantees 
issued loans for a total of 67 brownfields projects.\59\ Grant 
recipients reported that a number of technical and 
administrative requirements play a large role in the 
underutilization of funds. ``Managing a revolving loan fund 
requires a government or nonprofit entity to perform many of 
the functions of a commercial lending institution, including 
establishing interest rates and collateral requirements; 
processing and approving loans; and collecting loan payments 
.Y.Y. staff time and expertise are key to making these loans.'' 
\60\ Further, some grant recipients informed GAO that ``EPA's 
grants were not large enough to justify the time and effort 
required to establish a fund because it is frequently depleted 
after one or two loans are made.'' \61\ Stakeholders suggest 
greater efficiency would result if EPA gave ``priority to 
applicants with proven expertise or to coalitions of agencies 
that can consolidate administrative functions and thereby 
produce economies of scale.'' \62\
---------------------------------------------------------------------------
    \59\ Brownfield Overview hearing at 36.
    \60\ Id. at 37.
    \61\ Id. at 38.
    \62\ Id. at 37.
---------------------------------------------------------------------------
    In addition to improvements to the EPA Brownfields Program, 
stakeholders also suggested to GAO that more financial 
incentives are necessary to attract private investment in 
redevelopment projects. A tax credit ``could attract developers 
to brownfield sites on a broader national basis and enhance the 
[F]ederal, [S]tate, and local brownfields redevelopment efforts 
currently under way'' by ``allow[ing] developers to offset a 
portion of their [F]ederal income tax with remediation 
expenditures[.]'' \63\ A number of stakeholders cited the low-
income housing and historic rehabilitation tax credits as 
successful stimulants to redevelopment and as a model for a 
brownfield redevelopment tax credit.\64\
---------------------------------------------------------------------------
    \63\ Id. at 38.
    \64\ See id.
---------------------------------------------------------------------------
    EPA agreed with the findings of GAO's report and responded 
positively to the suggestions therein.\65\ In response to GAO's 
identification of program weaknesses, Thomas Dunne testified, 
``EPA has developed a new data collection mechanism, the 
Property Profile Form, to collect information from site 
assessment, cleanup, and revolving loan fund grantees.'' \66\ 
Dunne described the agency's efforts to collect data for 
program years 2003 and 2004 on a national basis.\67\ EPA 
``believe[s] that this new data will enable EPA to tie program 
results with property-specific activities to better gauge 
brownfields program [sic] success.'' \68\
---------------------------------------------------------------------------
    \65\ See GAO Report at 27.
    \66\ Brownfield Overview hearing at 7 (statement of Thomas Dunne, 
Deputy Assistant Administrator, Office of Solid Waste and Emergency 
Response, U.S. Environmental Protection Agency).
    \67\ See id.
    \68\ Id.
---------------------------------------------------------------------------
    In addition to its improvement of in-house performance 
measures, Dunne informed the Subcommittee that the agency is 
working with States and Tribes in developing performance 
measures that will tie performance to the number of acres 
remediated and made ready for reuse to gauge the impact of EPA 
funds on State voluntary cleanup programs.\69\
---------------------------------------------------------------------------
    \69\ See id.
---------------------------------------------------------------------------
    Dunne also addressed stakeholder concerns regarding the 
date of eligibility grant provisions under the 2002 Brownfields 
Act, testifying that EPA promotes a change in the law:

        EPA has requested a change to expand the number of 
        brownfields sites eligible for funding under the 
        Brownfields Assessment, Revolving Loan Fund and Cleanup 
        grant provisions in the President's FY 2006 Budget. EPA 
        has supported similar changes in the Consolidated 
        Appropriations Act of Fiscal Years 2004 and 2005. Such 
        a measure expands potential applicants for brownfields 
        grants to include those owning properties acquired 
        prior to the enactment of the Brownfields Law.\70\
---------------------------------------------------------------------------
    \70\ Id. at 17.

    With regard to RLF grants, Dunne testified that ``EPA is 
committed to improving revolving loan fund performance and 
ensuring that, if grant funds are not being used, those grant 
funds will be closed out or grantees will be required to 
transition old loan fund grants to the new Brownfields Law 
program authority.'' \71\
---------------------------------------------------------------------------
    \71\ Id. at 7.
---------------------------------------------------------------------------
    In response to the RLF-specific recommendations of GAO and 
stakeholders, Dunne testified the agency agreed that 
``efficiency and economies of scale often can be achieved by 
Revolving Loan Fund entities with proven track records that 
build upon administrative expertise.'' \72\ According to Dunne, 
``EPA has invited coalitions of eligible entities to pool their 
Revolving Loan Fund grant requests and submit a single grant 
application for consideration.'' \73\ Further, the agency is 
``adjusting ranking criteria for Revolving Loan Fund 
applicants, giving more weight to ranking factors which 
demonstrate an applicant's ability to manage a fund and make 
loans.'' \74\
---------------------------------------------------------------------------
    \72\ Id.
    \73\ Id.
    \74\ Id.
---------------------------------------------------------------------------
    In response to stakeholders' suggestion of a Federal tax 
credit for brownfield remediation expenses, Dunne testified:

        EPA's Brownfields Program serves as an innovative 
        approach to environmental protection, spurring 
        environmental cleanup, reducing neighborhood blight, 
        generating tax revenues, and creating jobs. It has 
        become increasingly clear, however, that successfully 
        addressing brownfields in this country will require 
        ever more interaction and collaboration among all 
        levels of government, the private sector and non-
        governmental organizations.\75\
---------------------------------------------------------------------------
    \75\ Id. at 19.

    ``EPA is not in the tax policy business,'' Dunne concluded, 
``[b]ut certainly if [a tax credit] furthers the objectives of 
the brownfield program [sic], tax incentives would be a very 
viable tool to have.'' \76\
---------------------------------------------------------------------------
    \76\ Id. at 46.
---------------------------------------------------------------------------
    In contrast with Dunne's careful statement, stakeholders 
voiced their adamant support for a Federal brownfield tax 
credit. According to Akron, OH Mayor Don Plusquellic, the 
Brownfields law, ``[b]y providing money to do assessments, 
cleanup, enhancing [S]tate programs, and providing liability 
relief for innocent developers, has resulted in a tremendous 
boost in our efforts to redevelop these sites.'' \77\ As a 
result, the ``low-hanging'' fruit--less seriously contaminated 
properties--have mostly been addressed.\78\ Plusquellic 
testified ``that most developers are not willing to touch'' 
those sites that are more seriously contaminated and/or lie in 
less desirable locations.\79\ ``These are the sites that need 
those added incentives in order to make them competitive in the 
marketplace, especially if one is comparing it to a greenfield 
site.'' \80\ Extra financial incentives will ``turn negatives 
into positives'' \81\ and ``[t]he one thing that has been 
missing is a tax incentive that will really spur private sector 
investment to redevelop these sites,'' Plusquellic noted.\82\
---------------------------------------------------------------------------
    \77\ Id. at 53 (statement of the Honorable Don Plusquellic, mayor 
of the City of Akron, OH, and president of the U.S. Conference of 
Mayors).
    \78\ Id. at 52.
    \79\ Id. at 53.
    \80\ Id.
    \81\ Id. at 53.
    \82\ Id. at 54.
---------------------------------------------------------------------------
    Douglas Steidl of the American Institute of Architects 
echoed Mayor Plusquellic's sentiment that the EPA program has 
created ``noticeable results'' but that more tools are 
necessary to address the widespread problem.\83\ ``[A]s the 
Government Accountability Office's . . . brownfields report . . 
. points out, there are far more brownfield sites requiring 
remediation than the U.S. EPA program could ever hope to 
address in our lifetimes. As a result, Federal legislation is 
needed to expedite site cleanup and foster economic development 
of former industrial properties,'' Steidl testified.\84\ He 
concluded, ``The AIA believes that Federal tax credits for the 
remediation expenditures at brownfields sites would provide the 
needed incentive to induce private parties to undertake the 
clean-up and rebuilding of these sites.'' \85\
---------------------------------------------------------------------------
    \83\ Id. at 124 (statement of Douglas L. Steidl, president of the 
American Institute of Architects).
    \84\ Id.
    \85\ Id. at 131.
---------------------------------------------------------------------------
    James Maurin of the Real Estate Roundtable also praised the 
contribution of the Brownfields Program but likewise noted that 
further incentives such as a tax credit are necessary to 
attract private developers:

        In recent years, changes in Federal laws have 
        successfully addressed many of the barriers that 
        inhibited private sector efforts to clean up and 
        redevelop contaminated sites. As the threat of 
        excessive environmental liability recedes, the 
        remaining problem with most well located brownfield 
        sites is a fairly simple one: Money. Other things being 
        equal, it costs more to clean up and redevelop a 
        brownfield than it does simply to buy and develop a 
        Greenfield.\86\
---------------------------------------------------------------------------
    \86\ Id. at 60 (statement of James E. Maurin, chairman of the 
International Council of Shopping Centers and board member of the Real 
Estate Roundtable).

    ``Real estate development, like any other business venture, 
will invest in projects only where the economic [sic] justify 
it . . . . [I]f the numbers don''t add up, it is very difficult 
to proceed with the project,'' Maurin testified.\87\ 
Additionally, Maurin stated, ``[T]here are continuing concerns 
among some investors and lenders about the uncertainties 
associated with this type of development. For that reason, in 
some cases, the availability of a relatively small number of 
additional dollars . . . can be the difference between a `Go' 
and a `No go' decision by the project investors.'' \88\
---------------------------------------------------------------------------
    \87\ Id. at 65.
    \88\ Id. at 64.
---------------------------------------------------------------------------
    Maurin voiced support for the Brownfield Revitalization Act 
of 2005 (H.R. 4480 in the 108th Congress), stating, ``[T]ax 
credits would be available for up to 50 percent of remediation 
costs, including both demolition costs and the cost of cleaning 
up petroleum contamination.'' \89\ Maurin suggested that a 
carefully crafted tax credit will strike a balance between 
attracting private capital investment and preventing market 
distortion. ``As with the low-income housing tax credit 
program, the private sector would still provide much of the 
necessary funds for cleanup, but the availability of tax 
credits could tip the scales in favor of proceeding with a 
project rather than passing over an otherwise promising site,'' 
Maurin told the Subcommittee.\90\
---------------------------------------------------------------------------
    \89\ Id. at 72.
    \90\ Id.
---------------------------------------------------------------------------
    Additionally, Maurin endorsed expanding the tax credit to 
benefit activities not allowed under the 2002 Brownfields Act. 
First, the proposed legislation would permit parties a tax 
credit for funds expended on petroleum contamination. The 
current tax provisions for expensing brownfield remediation 
costs uses the CERCLA definition of ``hazardous substance,'' 
from which petroleum is excluded, Maurin explained.\91\ 
Consequently, parties may not expense the costs of addressing 
certain materials, petroleum among them. According to Maurin:
---------------------------------------------------------------------------
    \91\ See id. at 75.

        Congress made the decision that it did not want the 
        [F]ederal Superfund used to clean up certain types of 
        substances . . . While the decision not to authorize 
        the spending of [F]ederal funds on these types of 
        cleanups had significance for the administration of the 
        Superfund program, the same rationale does not apply to 
        a statute intended to provide a tax incentive to 
        private parties cleaning up brownfield properties.\92\
---------------------------------------------------------------------------
    \92\ Id.

    ``[T]he problem created by this approach is that it assumes 
that the CERCLA definition of the term is broad enough to 
encompass all types of toxic materials that might be found at a 
brownfield site. That is not the case,'' Maurin explained.\93\ 
He continued:
---------------------------------------------------------------------------
    \93\ Id.

        While it may make sense not to authorize the use of 
        [F]ederal funds under the Superfund program to clean up 
        petroleum and pesticides, these substances often have 
        to be cleaned up at brownfield sites before those 
        properties can be returned to beneficial use. There is 
        no reason not to extend the same type of tax incentive 
        to a private party who is cleaning up petroleum waste 
        or pesticide residues on a brownfield site as to one 
        who is cleaning up other types of contaminants.\94\
---------------------------------------------------------------------------
    \94\ Id. at 77.

    ``Similarly, Superfund money was not to be spent cleaning 
up the interior of buildings,'' Maurin testified.\95\ 
``Congress did not . . . [impose] this limitation because it 
believed that contaminated interiors did not require cleanups. 
Rather, Congress believed that the use of the limited funds set 
aside for Superfund cleanups should be prioritized to deal with 
contamination that had escaped into the general environment.'' 
\96\ Because the current tax law relies upon the CERCLA 
provisions, parties may not expense the removal of hazardous 
materials inside buildings such as asbestos or lead paint. 
Maurin notes, however, that ``brownfield restoration often 
involves the cleanup of existing buildings on the property. 
Expensing costs to clean up buildings would give developers 
more reason to invest in brownfield properties.'' \97\
---------------------------------------------------------------------------
    \95\ Id. at 75.
    \96\ Id. at 77.
    \97\ Id.
---------------------------------------------------------------------------
    Discussing the issue of a tax credit from a ``bottom line'' 
approach, Jonathan Philips of Cherokee Investment Partners 
characterized the tax credit as enabling ``developers to 
attract more capital with the equity created by that credit and 
revitalize otherwise economically marginal projects.'' \98\ 
Philips informed the Subcommittee that a transferable tax 
credit would ``dramatically accelerate the rate at which 
brownfield sites are revitalized in America,'' and, in 
conjunction with certain other tax provisions, has ``the 
potential to prompt cleanup of more brownfield sites in the 
next 5 years than in the last 50 years combined.'' \99\
---------------------------------------------------------------------------
    \98\ Id. at 83 ((statement of Jonathan Philips, senior director of 
Cherokee Investment Partners, LLC).
    \99\ Id.
---------------------------------------------------------------------------
    Turning to a discussion of current liability provisions, 
the Subcommittee noted that the brownfields problem is ``a 
[F]ederally created problem[;] . . . the issue of . . . 
brownfields being areas where a potentially responsible party 
or a landowner has disincentives for its redevelopment . . . 
[is because] our current laws and regulations actually 
encourage abandonment[.]'' \100\ Both Stephenson and Dunne 
agreed.\101\ ``Those liabilities were created in fact by 
Federal law,'' Stephenson testified.\102\
---------------------------------------------------------------------------
    \100\ Id. at 42 (statement of Subcommittee Chairman Michael R. 
Turner).
    \101\ See id. (statements of Thomas Dunne, Deputy Assistant 
Administrator in the Office of Solid Waste and Emergency Response, U.S. 
Environmental Protection Agency and John Stephenson, Director of the 
Natural Resources and Environment, Government Accountability Office).
    \102\ Id. (statement of John Stephenson, Director of the Natural 
Resources and Environment, U.S. Government Accountability Office).
---------------------------------------------------------------------------
    The 2002 Brownfields Act, though, has changed the landscape 
of remediating contaminated properties. The law now encourages 
the redevelopment of sites that would otherwise have been 
abandoned due to Superfund liability. According to Dunne:

        [B]y and large, we are dealing with abandoned 
        properties or . . . with private property owners who 
        have this site who--because of the liability--do not 
        want to let go of the site.

        That has changed because of [the 2002 B]rownfields 
        [Act]. There are people now that are willing to come in 
        as prospective purchasers and take this property over 
        and redevelop it if they [are assured] that they are 
        not going to be liable like they would be under a 
        Superfund project.\103\
---------------------------------------------------------------------------
    \103\ Id. at 44 (statement of Thomas Dunne, Deputy Assistant 
Administrator, Office of Solid Waste and Emergency Response, U.S. 
Environmental Protection Agency).

    These prospective purchasers undertaking remediation are 
generally new parties with little to no knowledge of the nature 
or extent of contamination on a site, however. Chairman Turner 
opined that in many instances, bringing the original property 
owners into the remediation planning would expedite the 
process. ``[T]heir knowledge could be very important for our 
[redevelopment] success,'' Turner noted.\104\ The Subcommittee 
questioned Dunne on existing mechanisms or incentives to bring 
those parties to the table for cooperative rather than punitive 
purposes. Dunne testified that there are no incentives for the 
original property owner to participate in the planning process 
and stated further, ``[W]e don't have anything under the 
statute that is going to relieve them of the liability.'' \105\
---------------------------------------------------------------------------
    \104\ Id. (statement of Subcommittee Chairman Michael R. Turner).
    \105\ Id. at 45 (statement of Thomas Dunne, Deputy Assistant 
Administrator, Office of Solid Waste and Emergency Response, U.S. 
Environmental Protection Agency).
---------------------------------------------------------------------------

B. HEARING ON STATE BROWNFIELD REDEVELOPMENT INITIATIVES AND PROGRAMS, 
                           SEPTEMBER 13, 2005

    On September 13, 2005, the Subcommittee held its second 
hearing in Washington, DC on brownfields redevelopment. At the 
Brownfields and the Fifty States: Are State Incentive Programs 
Capable of Solving America's Brownfields Problem? hearing, the 
Subcommittee explored the various types of State incentive 
programs, how well they work, how they may be improved, and 
whether these programs, in conjunction with current Federal 
efforts, are enough to address the Nation's brownfields. 
Specifically, the Subcommittee reviewed the programs and 
incentives offered by four States: Pennsylvania, Ohio, 
Illinois, and Michigan. Additionally, the Subcommittee 
solicited ideas from practitioners and stakeholders to spur 
further brownfield redevelopment.
    Discussing these issues were nine witnesses divided in two 
panels. Charles Bartsch, senior policy analyst at the 
Northeast-Midwest Institute opened the discussion with an 
overview of State programs. Presenting the State government 
perspective were Kathleen McGinty, secretary of the 
Pennsylvania Department of Environmental Protection; John 
Magill, director of the Ohio Department of Development Office 
of Urban Development; Douglas Scott, director of the Illinois 
Environmental Protection Agency; and Andrew Hogarth, chief of 
the Michigan Department of Environmental Quality Remediation 
and Redevelopment Division. The Subcommittee also received 
testimony from the stakeholder community, represented by Robert 
Colangelo, executive director of the National Brownfields 
Association; Jonathan Philips, senior director of Cherokee 
Investment Partners, LLC; Kevin Matthews, director of 
Association & Governmental Relations, AIG Environmental; the 
Honorable David Cartmell, mayor of the city of Maysville, KY, 
and president of the Kentucky League of Cities; and Charles 
Houder, director of Acquisitions, Preferred Real Estate 
Investments, Inc.
    Charles Bartsch of the Northeast-Midwest Institute 
developed the first national analysis of State programs in 
2001.\106\ ``Encouraged by passage of the [F]ederal Small 
Business Liability Relief and Brownfield Revitalization Act in 
January 2002, all [S]tates now have brownfield or voluntary 
cleanup programs [VCPs] in place, to offer some type of 
liability relief to those wishing to remediate and reuse 
brownfield sites,'' Bartsch testified.\107\ He continued, 
``States are putting many different--but equally effective--
approaches in place to bring the resources together to meet the 
diverse challenges of brownfield reuse.'' \108\
---------------------------------------------------------------------------
    \106\ See Brownfields and the 50 States: Are State Incentive 
Programs Capable of Solving America's Brownfields Problem? Before the 
Subcommittee On Federalism and the Census of the House Committee on 
Government Reform, 109th Cong. 10 (2005) [hereinafter State Incentive 
Programs hearing] (statement of Charles Bartsch, senior policy analyst 
at the Northeast-Midwest Institute).
    \107\ Id. at 11.
    \108\ Id.
---------------------------------------------------------------------------
    Summarizing the primary issue of the hearing, Bartsch 
reported, ``funding gaps are a primary deterrent to site and 
facility reuse; however, creatively crafted and carefully 
targeted incentives and assistance can help advance cleanup and 
reuse activities and achieve significant community benefits.'' 
\109\ The four general categories of State programs, according 
to Bartsch, are tax incentives, targeted financial assistance 
programs, direct financing, and other innovative solutions such 
as site assessment cost offsets or risk-limiting.\110\
---------------------------------------------------------------------------
    \109\ Id. at 9.
    \110\ See id. at 8-9.
---------------------------------------------------------------------------
    Bartsch reported that 23 States offer tax incentives 
including tax credits and abatements. ``These programs have 
worked by helping with a project's cash flow, by allowing 
resources and project revenue to be used for brownfield 
purposes such as site cleanup rather than for tax payments.'' 
\111\ ``State and Federal tax incentives historically have been 
used to channel investment capital and promote economic 
development in areas that have needed it, and brownfield 
targeting is a natural evolution of this type of program,'' 
Bartsch testified.\112\
---------------------------------------------------------------------------
    \111\ Id. at 8.
    \112\ Id.
---------------------------------------------------------------------------
    Existing tax incentives cover such categories as 
remediation expenses, property income, job creation, and 
historic preservation.\113\ The key, according to Bartsch, is 
to ensure ``State incentives are allowed to work in full 
partnership with Federal incentives and are not limited or 
constrained by recapture or penalty provisions.'' \114\
---------------------------------------------------------------------------
    \113\ See id. at 8.
    \114\ Id.
---------------------------------------------------------------------------
    Bartsch also testified that ``[c]apital gaps remain the 
biggest barrier to brownfield reuse, and 22 States have worked 
to address this issue by putting some sort of financing 
incentives in place such as loans or grants to reduce initial 
cash needs.'' \115\ Such incentives, Bartsch continued, ``can 
be used to increase the lender's comfort with projects by 
offering guarantees to limit their risk of potential losses, or 
they can ease the borrower's cash flow by plugging critical 
capital holes or offsetting brownfield costs, and these types 
of incentives can be critical to small sites.'' \116\
---------------------------------------------------------------------------
    \115\ Id.
    \116\ Id.
---------------------------------------------------------------------------
    In addition to indirect financial incentives, some States 
also offer direct financial assistance such as offsetting the 
costs of site assessments.\117\ Bartsch characterizes these 
programs ``as a way to leverage private investment while 
limiting public spending . . . .'' \118\ These programs, 
Bartsch testified, ``represent an important maturation in 
brownfield public-private partnerships.'' \119\
---------------------------------------------------------------------------
    \117\ See id.
    \118\ Id. at 9.
    \119\ Id.
---------------------------------------------------------------------------
    ``Governments at all levels can find creative ways to help 
overcome reuse challenges. However, brownfield reuse will only 
succeed if [S]tate efforts can be complemented by [F]ederal 
initiatives--such as cleanup credits, historic tax incentives, 
and targeted program funding--in a true inter-governmental 
partnership,'' Bartsch concluded.\120\
---------------------------------------------------------------------------
    \120\ Id. at 15.
---------------------------------------------------------------------------
    Robert Colangelo offered testimony both from the 
perspective of a private developer and as the executive 
director of the National Brownfield Association. According to 
Colangelo, ``[S]tate brownfield programs offer three levels of 
assistance: liability relief, financial incentives, and 
technical assistance. Most developers who purchase impaired 
properties have to rely heavily on the liability relief offered 
through [S]tate voluntary cleanup programs.'' \121\ State 
assurances of liability relief provide developers with ``the 
ability to secure debt financing to be used for site 
acquisition.'' \122\
---------------------------------------------------------------------------
    \121\ Id. at 88 (statement of Robert Colangelo, executive director 
of the National Brownfields Association).
    \122\ Id.
---------------------------------------------------------------------------
    While praising State programs for the benefits of liability 
relief, Colangelo opined, ``Technical assistance and financial 
incentives, while great ideas, are often impractical for most 
private developments . . . . It is my experience that most 
financial incentives go directly to cities or non-profit 
development corporations and indirectly flow to private sector 
projects.'' \123\ Further, Colangelo testified, ``The limited 
amount of program funds or technical assistance that is 
available to the private sector comes at a great cost and often 
requires an intense investment of time and the use of expensive 
consultants to help navigate through program eligibility 
requirements . . . .'' \124\ ``Most developers will pass on a 
brownfield site rather than take a chance on a project that 
will only work if government incentives are secured,'' he 
concluded.\125\
---------------------------------------------------------------------------
    \123\ Id.
    \124\ Id.
    \125\ Id.
---------------------------------------------------------------------------
    Echoing Mayor Plusquellic in an earlier hearing, Colangelo 
testified that the ``low-hanging fruit'' was all but gone, 
leaving ``cities . . . with the harder, more complicated 
brownfield sites . . . [T]hese sites will require meaningful 
government incentives if the public sector is to continue to 
attract private sector investment and developer interest.'' 
\126\ Most State programs, however, provide little cost benefit 
to private developers, Colangelo told the Subcommittee. ``The 
exception to this rule is the use of Tax Increment Financing 
[TIF] and [S]tate Tax Credit programs.'' \127\
---------------------------------------------------------------------------
    \126\ Id.
    \127\ Id. at 89.
---------------------------------------------------------------------------
    Colangelo's organization, the National Brownfield 
Association [NBA], analyzed State brownfields and voluntary 
cleanup programs.\128\ The analysis resulted in a position 
paper, recommending program elements that best encourage 
cleanup activities.\129\ Colangelo offered the NBA's 
recommended ``key program elements'' for State programs:
---------------------------------------------------------------------------
    \128\ See id.
    \129\ See id. See generally id. at 90-94; National Brownfield 
Association, What Works: An Analysis of State Brownfield and Voluntary 
Cleanup Programs (visited May 1, 2006) .

        For government incentives to be meaningful to the 
---------------------------------------------------------------------------
        private sector, programs should:

             Be easy to understand and administer

             Apply to a wide type of projects

             Allow flexibility in the use of funds

             Provide funding to be meaningful and that 
        is cost beneficial to the application process and 
        project size

             Allow for unused funds to be transferred 
        or refunded[.] \130\
---------------------------------------------------------------------------
    \130\ Id. at 89 (statement of Robert Colangelo, executive director 
of the National Brownfields Association).

    Currently, no single State program incorporates all 
elements but ``a number of [S]tates have been creative in 
developing specific program elements that work well,'' 
according to Colangelo.\131\ ``When designing incentive 
programs, we encourage you to consider the [report] 
recommendations provided in this paper and support the creation 
of a [F]ederal brownfield Tax Credit Program that would allow 
for demolition and remediation expenses to earn a [F]ederal tax 
credit,'' Colangelo testified.\132\
---------------------------------------------------------------------------
    \131\ Id.
    \132\ Id.
---------------------------------------------------------------------------
    Jonathan Philips of Cherokee Investment Partners provided 
the Subcommittee with an inventory of State program elements 
that, in his view as a private sector redeveloper, have 
encouraged brownfields redevelopment. Philips testified that a 
number of States operate grant programs that assist with the 
characterization of site contamination or assistance in 
planning end-use of remediated properties. ``[T]hese types of 
initiatives are important and undoubtedly help move some 
lightly contaminated sites toward productive use;'' however, 
``for some more difficult sites, informational-type programs 
may not make the difference in determining whether the site is 
remediated and brought back into productive use,'' Philips 
cautioned.\133\
---------------------------------------------------------------------------
    \133\ Id. at 101 (statement of Jonathan Philips, senior director of 
Cherokee Investment Partners, LLC).
---------------------------------------------------------------------------
    Philips also touted the use of ``one-stop shopping'' 
tactics adopted by a number of States. These programs 
streamline the permit process and make a ``real difference in 
the rate at which brownfield sites are remediated.'' \134\ The 
speed at which redevelopers can obtain permits can sometimes 
mean the difference between productive cleanup and reuse of a 
site and leaving a site to sit idle.\135\
---------------------------------------------------------------------------
    \134\ Id. at 102.
    \135\ See id.
---------------------------------------------------------------------------
    Additionally, States have utilized their ``considerable 
latitude to determine the applicable cleanup standards for a 
particular site based on the type of expected reuse.'' \136\ 
This often can result in lower costs and quicker project turn-
around. As States adjust their cleanup standards on a case-by-
case basis for sites registered in a voluntary cleanup program, 
``many [S]tates will couple voluntary cleanup programs with `no 
further action' letters that provide developers with some 
certainty concerning future liability.'' \137\ Philips 
cautioned, however, that ``[d]ue to the overlay of [F]ederal 
environmental laws, these types of liability protections are 
inherently limited in their scope and applicability.'' \138\ At 
the same time, he noted, ``[b]y helping to manage risk . . . 
these types of [S]tate programs inherently improve the 
economics of more difficult brownfield transactions.'' \139\
---------------------------------------------------------------------------
    \136\ Id.
    \137\ Id.
    \138\ Id.
    \139\ Id.
---------------------------------------------------------------------------
    Philips also testified to the effectiveness of financial 
incentive programs. State revolving loan funds or loan 
guarantee programs, ``by directly providing low-cost capital[,] 
can make a critical difference between projects that are 
mothballed and projects that are remediated and revitalized.'' 
\140\ Many States also now provide ``loan guarantees and other 
assurances in an effort to attract investors and lenders to 
transactions that would normally be considered too risky.'' 
\141\ General obligation bonds are also effective for a number 
of States as ``a tool that can go a long way toward helping 
close the cost and risk gap between brownfield development and 
greenfield development.'' \142\
---------------------------------------------------------------------------
    \140\ Id. at 103.
    \141\ Id.
    \142\ Id. at 104.
---------------------------------------------------------------------------
    Tax increment financing has also proved useful as ``a 
powerful driver for brownfield remediation and 
revitalization,'' according to Philips.\143\ ``At least 48 
[S]tates have now enacted some form of tax increment financing 
legislation that permits municipalities or county governments 
to assist with the financing of redevelopment infrastructure 
projects by capturing future increases in tax revenues that are 
expected to flow as a result of the redevelopment project,'' 
Philips reported.\144\ ``However, only a small handful of these 
TIF programs make remediation expenditures eligible for 
funding,'' he advised.\145\
---------------------------------------------------------------------------
    \143\ Id.
    \144\ Id. at 103.
    \145\ Id.
---------------------------------------------------------------------------
    Kevin Matthews of AIG Environmental testified to the 
success of one particular financial incentive mentioned by both 
Robert Colangelo and Jonathan Philips--environmental insurance:

        Environmental insurance is not the silver bullet for 
        Brownfields redevelopment. However, it is one of the 
        ``tools in the tool chest'' that helps to lead to a 
        successful cleanup and redevelopment because it often 
        helps to address some of the greatest concerns of 
        Brownfields redevelopment--environmental liability and 
        uncertainties concerning the cleanup.\146\
---------------------------------------------------------------------------
    \146\ Id. at 117 (statement of Kevin Matthews, director of 
Association & Governmental Relations, AIG Environmental).

    Matthews related AIG Environmental's experience with the 
Massachusetts brownfield program: Massachusetts established a 
fund from which the Commonwealth would make brownfield 
redevelopment loan guarantees.\147\ Massachusetts ``quickly 
learned . . . that capital for Brownfields is available. 
However, what stymied Brownfields redevelopment was the fear of 
environmental liability from historic contamination and the 
concern that cleanup costs could exceed the clean-up cost 
estimate.'' \148\
---------------------------------------------------------------------------
    \147\ See id. at 118.
    \148\ Id.
---------------------------------------------------------------------------
    The Commonwealth determined environmental insurance 
addressed those redevelopment barriers and entered a 
partnership with AIG Environmental.\149\ The Commonwealth's 
pooled funds were then opened to subsidizing environmental 
insurance premiums for policies addressing liability and cost 
over-run concerns.\150\
---------------------------------------------------------------------------
    \149\ See id.
    \150\ See id.
---------------------------------------------------------------------------
    Pollution Legal Liability insurance addresses the first 
concern--liability--by answering the questions, ``What if a 
Pollution Condition is found that no one else knew was there? 
What if the government requires more cleanup of a known 
Pollution Condition after providing a `No Further Action' 
letter? What if there is a toxic tort law suit?'' \151\
---------------------------------------------------------------------------
    \151\ Id. at 119.
---------------------------------------------------------------------------
    Cleanup Cost Cap insurance addresses the second concern--
cost over-runs--by capping a developer's remediation costs and 
answers the question, ``[W]hat if the cleanup of the site cost 
[sic] more than expected?'' \152\ This insurance covers cost 
overruns developers may encounter in a brownfields project, 
``greatly assist[ing] developers as they plan their project.'' 
\153\
---------------------------------------------------------------------------
    \152\ Id.
    \153\ Id.
---------------------------------------------------------------------------
    Matthews also educated the Subcommittee about Voluntary 
Party Liability Exemption [VPLE] insurance. This ``innovative'' 
insurance ``allows the [S]tate to give full releases of 
liability to prospective purchasers of Brownfield sites for 
known groundwater contamination at the site that is being 
cleaned up using natural attenuation,'' Matthews 
testified.\154\ Explaining the mechanics of VPLE insurance, 
Mathews stated, ``If that remedial approach fails, the State . 
. . can look to the policy to cover the costs of cleaning up 
that ground water up to the limits of the policy.'' \155\
---------------------------------------------------------------------------
    \154\ Id. at 120.
    \155\ Id.
---------------------------------------------------------------------------
    As a testament to the success of environmental insurance 
use in brownfields redevelopment, Matthews reported that, over 
the years, Massachusetts invested $4.8 million in environmental 
insurance for 259 projects.\156\ Those projects cost $145 
million in cleanup but yielded 25,000 jobs and $2.1 billion in 
private investment.\157\ ``The ratio, based upon the stated 
number[s]--for every $1 dollar of Commonwealth Funds used to 
subsidize environmental insurance[,] $458 has been leveraged in 
investment and cleanup of sites,'' Matthews testified.\158\
---------------------------------------------------------------------------
    \156\ See id. at 118.
    \157\ See id.
    \158\ Id.
---------------------------------------------------------------------------
    In examining specific examples of successful State 
brownfield programs, the Subcommittee first turned to 
Pennsylvania's brownfield program and incentives. Pennsylvania 
Department of Environmental Protection Secretary Kathleen 
McGinty summarized the four primary reasons for her State's 
achievements:

        [F]irst and foremost, clear, predictable, reliable 
        remediation standards that are geared toward the future 
        land use of the site; second, clear, thorough and 
        effective liability relief for the successful 
        performance of those cleanup standards; third, money . 
        . . in three categories: site assessment, site 
        remediation, but then also especially site 
        infrastructure improvement so that that site is pad 
        ready, ready for redevelopment. . . .

        Fourth and key, time is money. So the extent to which 
        we can streamline permitting and put a thumb on the 
        scale for brownfield redevelopment such that a 
        brownfield either does not need an individual permit, 
        or it would receive priority attention in the 
        permitting process has been a key for us.\159\
---------------------------------------------------------------------------
    \159\ Id. at 16 (statement of Kathleen McGinty, secretary of the 
Pennsylvania Department of Environmental Protection).

    McGinty also noted the contribution of two improvements to 
the program in the prior 18 months. First, the Pennsylvania 
Department of Environmental Protection and EPA entered a 
Memorandum of Understanding, which creates one cleanup 
policy.\160\ The second recent improvement was the expansion of 
the State program to include remediation of greyfields, or 
abandoned mine sites.\161\
---------------------------------------------------------------------------
    \160\ Id. at 16.
    \161\ See id.
---------------------------------------------------------------------------
    The Subcommittee next reviewed Ohio's brownfields 
redevelopment program, the $200 million bond-funded Clean Ohio 
Revitalization Fund.\162\ The program was born of a task force 
effort to address the issues of city cores: brownfields were 
identified as the number one challenge for these areas.\163\ 
Ohio has granted $97 million to 94 assessment and remediation 
projects since 2002.\164\ ``These 94 grants are expected to 
leverage more than $731 million in new investment,'' reported 
John Magill, director of the State's Department of Development, 
Office of Urban Development.\165\
---------------------------------------------------------------------------
    \162\ See id. at 22 (statement of John Magill, director of the Ohio 
Department of Development Office of Urban Development).
    \163\ See id.
    \164\ See id.
    \165\ Id.
---------------------------------------------------------------------------
    Magill emphasized the importance of a partnership between 
Federal and State governments in redeveloping the Nation's 
brownfields. ``A combination of private and public resources 
leads to projects with an economic and environmental return. In 
Ohio, we are fortunate to be able to support projects of both 
State and Federal resources.'' \166\ Specifically, he noted, 
``[M]y office administers a U.S. EPA Brownfield Revolving Loan 
Fund. To date, we have made two loans, with two more expected 
to close this fall.'' \167\ He further acknowledged the EPA 
``for their support and flexibility to meet the needs of our 
borrowers'' in the success of that partnership.\168\
---------------------------------------------------------------------------
    \166\ Id. at 23.
    \167\ Id. at 23.
    \168\ Id. at 23.
---------------------------------------------------------------------------
    In yet another example of a successful redevelopment 
program, the Subcommittee learned how Illinois utilizes funds 
in a variety of ways in addressing brownfields. Illinois 
provides a number of financial incentives to supplement cleanup 
costs and provides site assessments, redevelopment loans, and 
technical expertise.\169\ Douglas Scott, director of the 
Illinois Environmental Protection Agency highlighted the 
importance of brownfield redevelopment programs for the 
Subcommittee:
---------------------------------------------------------------------------
    \169\ See id. at 40 (statement of Douglas Scott, director of the 
Illinois Environmental Protection Agency).

        Obviously there is an environmental benefit to cleaning 
        up areas that have contamination or are abandoned; 
        there is certainly a community benefit in reclaiming 
        property to put it back into productive use to either 
        support new businesses and generate new tax revenue, or 
        to become recreational land. There is a benefit to 
        helping to reduce sprawl not just by putting a 
        particular property back into use, but also by spurring 
---------------------------------------------------------------------------
        other inner-city development and protecting farmland.

        We have seen in recent years a renaissance of cities, 
        and brownfield redevelopment certainly augments that 
        trend.\170\
---------------------------------------------------------------------------
    \170\ Id.

    ``[B]rownfield redevelopment at its heart is a real estate 
transaction, and just as in any development, there are 
associated costs. In these cases, the environmental 
considerations may be very large, but other costs, such as 
infrastructure, may be reduced,'' Scott told the 
Subcommittee.\171\ He continued, ``It is essential for us to do 
those things that entice private developments to the sites by 
providing the conditions and incentives that make these sites 
attractive, or at least comparable to Greenfield areas . . . 
State and local governments alone can't make this happen.'' 
\172\
---------------------------------------------------------------------------
    \171\ Id.
    \172\ Id. at 40-41.
---------------------------------------------------------------------------
    Scott also relayed the importance of non-financial 
incentives to brownfield redevelopment efforts. Illinois 
engages in a comprehensive risk-based remediation process, 
which focuses on future reuse; operates a voluntary cleanup 
program with ``well-established procedures;'' maintains 
partnerships with other government agencies, non-profits, and 
trade associations; and provides site assessment and technical 
assistance for remediation projects.\173\ Further, Scott 
highlighted the State's Memorandum of Understanding with EPA, 
which provides redevelopers some liability relief. When 
Illinois issues a ``No Further Remediation'' letter, the 
Memorandum of Understanding with EPA states that ``except in 
very narrow circumstances . . . [Illinois's] NFR letter will 
also end Federal involvement.'' \174\
---------------------------------------------------------------------------
    \173\ Id. at 41.
    \174\ Id.
---------------------------------------------------------------------------
    Turning to Andrew Hogarth of the Remediation and 
Redevelopment Division of the Michigan Department of 
Environmental Quality, the Subcommittee learned of that State's 
three-prong approach to brownfield redevelopment: financial 
incentives, State funding for site cleanup, and liability 
relief.\175\
---------------------------------------------------------------------------
    \175\ See id. at 60 (statement of Andrew Hogarth, chief of the 
Michigan Department of Environmental Quality Remediation and 
Redevelopment Division).
---------------------------------------------------------------------------
    Real, personal, and State and local income taxes associated 
with properties in specific areas of Michigan are fully 
eliminated through tax credits.\176\ The State also offers 
single-business tax credits for demolition, environmental 
cleanup, and other remediation costs.\177\ ``Since June 2000, 
this program has awarded more than $273 million in single 
business tax credits, which we believe has generated more than 
$3.8 billion of private investment in distressed areas,'' 
reported Hogarth.\178\
---------------------------------------------------------------------------
    \176\ See id.
    \177\ See id.
    \178\ Id.
---------------------------------------------------------------------------
    Additionally, the State offers tax increment financing. 
``Under Michigan's Brownfield Redevelopment Financing Act, 
brownfield redevelopment authorities across the State are able 
to capture local taxes and school taxes to reimburse developers 
for cleanup-related costs,'' Hogarth testified.\179\ ``As 
developers develop a site and increase the value of their 
property, the additional increment in tax--not property tax--is 
captured by the brownfield authorities and used to reimburse 
the developer for their expenses,'' he explained.\180\ ``Since 
1996, more than $300 million in tax increment financing has 
been approved for more than 80 projects throughout the State,'' 
Hogarth reported.\181\
---------------------------------------------------------------------------
    \179\ Id.
    \180\ Id.
    \181\ Id.
---------------------------------------------------------------------------
    Hogarth testified that Michigan also finances some 
redevelopment efforts through cleanup grants and loans as well 
as direct spending.\182\ The State provided $122 million in 
grants and loans for approximately 300 projects since 
1992.\183\ The State spent another $585 million over 17 years 
for the investigation, cleanup, and monitoring of more than 
1,600 brownfield sites.\184\
---------------------------------------------------------------------------
    \182\ See id.
    \183\ See id.
    \184\ See id.
---------------------------------------------------------------------------
    While the financial figures are impressive, Hogarth 
testified that the most important redevelopment stimulus in 
Michigan was a change in the liability laws.\185\ ``In 1995, we 
went from a liability situation where anyone that bought a 
piece of contaminated property, whether they caused the 
contamination or not . . . [was] liable for it, to where they 
would not be liable for it in the future if they did a baseline 
environmental assessment,'' Hogarth explained.\186\ A new 
property owner is thus free from liability for existing 
contamination if they obtain and submit to the State a baseline 
environmental assessment.\187\ Between 1995 and 2005, Michigan 
processed 8,600 baseline environmental assessments for 8,600 
contaminated parcels that were transferred to new hands, which 
Hogarth opined would not have otherwise occurred.\188\
---------------------------------------------------------------------------
    \185\ See id.
    \186\ Id.
    \187\ See id. at 60-61.
    \188\ See id. at 61.
---------------------------------------------------------------------------
    Hogarth also emphasized that Michigan's ``cleanup standards 
are risk-based and land-use-based, which helps assure that 
unnecessary cleanup expenditures are not made.'' \189\
---------------------------------------------------------------------------
    \189\ Id.
---------------------------------------------------------------------------
    A number of barriers to brownfield redevelopment remain, 
Hogarth told the Subcommittee.\190\ First, liability remains a 
deterrent to redevelopment.\191\ ``Many potential property 
transactions fail due to the inability of the buyer to resolve 
liability under RCRA, and to some extent CERCLA,'' Hogarth told 
the Subcommittee.\192\ While his State's MOA with EPA addresses 
CERCLA enforcement, Hogarth testified, ``[T]he inability of a 
prospective purchaser to resolve RCRA liability remains a 
substantial hurdle.'' \193\ According to Hogarth, additional 
impediments to brownfield redevelopment include:
---------------------------------------------------------------------------
    \190\ See id.
    \191\ See id.
    \192\ Id.
    \193\ Id.

        [U]nrealistic expectations on the part of the developer 
        and the buyer or seller, lack of comprehensive planning 
        by communities, lack of sufficient site 
        characterization, overwhelming predevelopment costs, 
        lack of startup funds for small businesses, and lack of 
        State and local government resources.\194\
---------------------------------------------------------------------------
    \194\ Id.

    ``We will not be able to provide the funding we have at the 
State level in the future,'' Hogarth concluded.\195\
---------------------------------------------------------------------------
    \195\ Id.
---------------------------------------------------------------------------
    A number of witnesses on both panels touched upon the 
daunting number of unremediated brownfields remaining despite 
State efforts. While ``well-designed State programs are a 
critical component of this Nation's efforts to revitalize 
lands[,] . . . they are not sufficient to solve this Nation's 
brownfield problem in our lifetime,'' Jonathan Philips 
testified.\196\
---------------------------------------------------------------------------
    \196\ Id. at 95 (statement of Jonathan Philips, senior director of 
Cherokee Investment Partners, LLC).
---------------------------------------------------------------------------
    ``State and local governments have been very creative in 
utilizing all of the myriad resources that they have 
financially to try to assist with these sites,'' Douglas Scott 
reported, ``but it is pretty clear . . . that the number of 
sites isn't being lessened to the rate that any of us would 
like to see.'' \197\ More money is the answer according to 
Scott:
---------------------------------------------------------------------------
    \197\ Id. at 41 (statement of Douglas Scott, director of the 
Illinois Environmental Protection Agency).

        More grant dollars to States and municipalities to 
        specifically target site assessment, infrastructure and 
        cleanup are needed. More sites have been put into play, 
        for example, by simply not forcing loan guarantees of 
---------------------------------------------------------------------------
        Section 108 and making more grant money available.

        In addition, more funds under the Brownfield 
        Revitalization Act would help tremendously as I'm sure 
        . . . [Illinois is] not the only State that has more 
        sites than . . . funds, and more dollars for Superfund 
        site cleanup that are under the Federal guidelines are 
        also needed.\198\
---------------------------------------------------------------------------
    \198\ Id.

    ``But money is only part; the rest must come from tax 
credits and other targeted incentives to the private sector to 
bring them into these sites,'' Scott concluded.\199\
---------------------------------------------------------------------------
    \199\ Id.
---------------------------------------------------------------------------
    Philips similarly testified that a ``national transferable 
credit would be a powerful and fitting complement to State 
efforts.'' \200\ Philips noted the success of Federal tax 
credits in development areas other than brownfields, suggesting 
the model should be extended to brownfields. The ``tax credit 
for rehabilitating historic structures that Congress created in 
1976 . . . has stimulated more than $33 billion in private 
investment, with over 325,000 housing units.'' \201\ The 
success of this program, Philips testified, is, ``First, it is 
uniform across the Nation, and; second, it works in tandem with 
State programs to drive more historic sites from underwater to 
above-water status.'' \202\
---------------------------------------------------------------------------
    \200\ Id. at 96 (statement of Jonathan Philips, senior director of 
Cherokee Investment Partners, LLC).
    \201\ Id.
    \202\ Id.
---------------------------------------------------------------------------
    Applying this mechanism to brownfields makes sense, Philips 
opined. According to Philips, a transferable tax credit in 
particular is valuable because it ``could be leveraged early in 
a project, thus allowing a pioneering developer to attract some 
of the riskiest capital with the equity created by the forward 
sale of the credit.'' \203\ This form of tax credit would 
follow the model of the historic rehabilitation tax credit, 
according to Philips, and would be ``a logical extension'' of 
prior Federal brownfield efforts.\204\
---------------------------------------------------------------------------
    \203\ Id.
    \204\ Id.
---------------------------------------------------------------------------
    Echoing both Philips and Scott, Secretary McGinty testified 
that ``tax credits . . . [are] absolutely essential . . . 
especially to underwrite the purchase of insurance that can 
backstop remediation costs.'' \205\
---------------------------------------------------------------------------
    \205\ Id. at 23 (statement of Kathleen McGinty, secretary of the 
Pennsylvania Department of Environmental Protection).
---------------------------------------------------------------------------
    John Magill likewise testified about the benefits of tax 
credits. ``In active markets, brownfield reinvestment is more 
likely to occur at a lower public cost and with greater 
likelihood of success.'' \206\ Not all brownfield markets are 
active enough to see this formula, however. ``Public policy is 
able in a variety of ways to affect the vibrancy of a 
brownfield market,'' Magill told the Subcommittee.\207\ ``Ohio 
believes tax credits can be a tool to attract additional 
private sector investment by enabling developers to offset 
costs by using or assigning credit. That is why we encourage 
Congress to continue to explore additional flexible brownfield 
tools which are performance-based, enabling local citizens to 
seek tangible results.'' \208\
---------------------------------------------------------------------------
    \206\ Id. (statement of John Magill, director of the Ohio 
Department of Development Office of Urban Development).
    \207\ Id.
    \208\ Id.
---------------------------------------------------------------------------
    ``Access to additional sources of Federal dollars through 
the tax credits or increased resources at U.S. EPA are crucial 
to stretching State funding to undertake additional local 
projects,'' Magill concluded.\209\
---------------------------------------------------------------------------
    \209\ Id.
---------------------------------------------------------------------------
    Second to the need for money, according to the panelists, 
is the need for further liability relief. Douglas Scott 
endorsed the brownfields tax credit bill, introduced as H.R. 
4480 in the 108th Congress, and further endorsed the additional 
provisions therein ``mak[ing] more certain the lines of 
liability and possible exposure to future or reopened claims 
would help tremendously to make these sites more insurable and 
more bankable.'' \210\ ``[O]ne of the major stumbling blocks 
[for developers] is the uncertainty of future liability, which 
is another factor that makes it more desirable to locate to a 
greenfields,'' Scott reported.\211\
---------------------------------------------------------------------------
    \210\ Id. at 41 (statement of Douglas Scott, director of the 
Illinois Environmental Protection Agency).
    \211\ Id.
---------------------------------------------------------------------------
    Secretary McGinty also noted the need for further liability 
relief. Despite the full and effective liability relief in some 
Federal programs pursuant to the Commonwealth's MOA with EPA, 
there is still potential liability under other Federal 
programs. Additionally, ``[Pennsylvania's] understanding with 
EPA is a paper processing agreement'' in which EPA agrees ``to 
process . . . in real time their statues and responsibilities 
as we do, too, on priority sites.'' \212\ While this agreement 
is ``[v]ery helpful, . . . we need to make the next step to 
full liability relief,'' McGinty testified.\213\ ``If we could 
move from what has been an important beginning in our 
Memorandum of Understanding with EPA to full and effective 
Federal and State liability relief, that would add the 
certainty that investors and developers need,'' she 
concluded.\214\
---------------------------------------------------------------------------
    \212\ Id. at 16 (statement of Kathleen McGinty, secretary of the 
Pennsylvania Department of Environmental Protection).
    \213\ Id.
    \214\ Id.
---------------------------------------------------------------------------
    Andrew Hogarth also touched upon Federal liability as a 
remaining obstacle in brownfields redevelopment. ``Federal 
liability continues to be a problem. Many potential property 
transactions fail due to the inability of the buyer to resolve 
liability under RCRA, and to some extent [under] CERCLA,'' he 
testified.\215\ While Michigan has a MOA with EPA addressing 
most liability concerns, ``RCRA liability remains a substantial 
hurdle'' to redevelopment efforts, Hogarth reported.\216\
---------------------------------------------------------------------------
    \215\ Id. at 61 (statement of Andrew Hogarth, chief of the Michigan 
Department of Environmental Quality Remediation and Redevelopment 
Division).
    \216\ Id.
---------------------------------------------------------------------------
    Agreeing with the panelists on the need for liability 
relief, Chairman Turner noted that H.R. 4480 tied the 
remediation tax credit with liability relief by requiring 
remediating parties to enter a State VCP, thereby ``hook[ing] 
into those liability relief provisions.'' \217\ Inquiring 
whether State officials thought this mechanism ``would be an 
effective liability release,'' \218\ Turner noted, ``If the 
State voluntary cleanup program bar of enforcement release is 
sufficient, if you are finding it is successful in giving 
people the confidence to enter into a program, then we wouldn't 
have to reinvent the wheel,'' Turner stated.\219\
---------------------------------------------------------------------------
    \217\ Id. at 81 (statement of Subcommittee Chairman Michael R. 
Turner).
    \218\ Id.
    \219\ Id.
---------------------------------------------------------------------------
    John Magill responded in support of such a liability relief 
provision. ``I think this is a good place to start because it 
is known . . . do not reinvent the wheel and create new 
mechanisms. . . . If it fails, you can make changes. You don't 
create something new and tinker with that.'' \220\ Magill 
warned, though, ``The only caveat would be that in some States 
that the voluntary cleanup program does not cover all cleanups. 
Brownfields are a wider perspective.'' \221\
---------------------------------------------------------------------------
    \220\ Id. at 82 (statement of John Magill, director of the Ohio 
Department of Development Office of Urban Development).
    \221\ Id.
---------------------------------------------------------------------------
    Douglas Scott likewise responded, testifying that kind of 
liability relief provision ``will help greatly because you 
really are just plugging in a new piece to something that 
exists, rather than creating a new program.'' \222\ Scott also 
included a warning, however, noting, ``In order for it 
accomplish all of the things . . . that we are trying to do and 
that you are trying to do, it is going to need to be a little 
bit more broadly based than the MOUs have been to date.'' \223\
---------------------------------------------------------------------------
    \222\ Id. at 83 (statement of Douglas Scott, director of the 
Illinois Environmental Protection Agency).
    \223\ Id.
---------------------------------------------------------------------------
    Charles Bartsch testified, ``What is good about using the 
State voluntary cleanup programs . . . is it really does 
provide a recognized mechanism to provide some assurance to the 
community at large that these things are proceeding properly.'' 
\224\ To the extent existing programs are not broad enough to 
cover all brownfields projects, Bartsch stated, ``Each [S]tate 
has a program in place, and I think what we saw after the 
passage of the national brownfields law a couple of years ago, 
the States will be able to then change [their programs] to 
better fit the Federal structure that is laid out.''
---------------------------------------------------------------------------
    \224\ Id. (statement of Charles Bartsch, senior policy analyst at 
the Northeast-Midwest Institute).
---------------------------------------------------------------------------
    Turning from the liability relief component of the Federal 
tax credit proposal, the Subcommittee sought input from the 
panel's private developers on the ability of a tax credit to 
provide extra capital. Specifically, the Subcommittee 
questioned the utility of a recoverable subsidy versus a non-
recoverable subsidy.\225\
---------------------------------------------------------------------------
    \225\ See id. at 165 (statement of Subcommittee Chairman Michael R. 
Turner).
---------------------------------------------------------------------------
    Chairman Turner noted that State incentive programs vary: 
``[T]here are some programs that provide recapturing grants, 
revolving loan funds, etc.; others provide direct subsidy . . . 
[that] is not recoverable.'' \226\ Turner questioned whether a 
recoverable subsidy could jeopardize the economic viability of 
a project. If a government can recover the subsidy provided to 
the redeveloping party, then the process in many complex 
cleanup projects ``of acquiring . . . and remediating the 
property when compared to the cleaned value prior to complete 
redevelopment is still going to be a negative proposition. In 
other words, you're still going to have a negative value when 
you add in the cost of acquisition and remediation prior to the 
redevelopment.'' \227\ The proposed Federal tax credit ``is a 
straight subsidy. We're not seeking to recover the funds. Do 
you think that is an essential element . . . to redevelop the 
brownfields?'' \228\
---------------------------------------------------------------------------
    \226\ Id.
    \227\ Id.
    \228\ Id.
---------------------------------------------------------------------------
    Robert Colangelo responded first, ``[O]ne of the most 
difficult things to secure is your debt financing on a project, 
and through this tax credit bill, I think it would bring 
additional comfort to banks and the lending community so that 
you would have lesser lines on equity.'' \229\
---------------------------------------------------------------------------
    \229\ Id. (statement of Robert Colangelo, executive director of the 
National Brownfields Association).
---------------------------------------------------------------------------
    In agreement with Colangelo, Jonathan Philips testified, 
``[A] tax credit . . . could be a forward sale situation where 
you can create equity, and that chunk of equity could then be 
leveraged to either attract more equity or to attract debt 
capital, and that is critical to everybody[.]'' \230\ Philips 
noted that the benefit of that equity would be particularly 
helpful ``to a smaller entity because . . . it doesn't start 
the clock of the return investment until . . . you deploy that 
capital later in the project.'' \231\
---------------------------------------------------------------------------
    \230\ Id. (statement of Jonathan Philips, senior director of 
Cherokee Investment Partners, LLC).
    \231\ Id.
---------------------------------------------------------------------------
    Kevin Matthews reported, however, that based on his 
experience with those States that subsidize environmental 
insurance for brownfield projects versus those States that 
offer a tax credit for insurance costs, ``The subsidies are far 
more successful.'' \232\ Using Massachusetts as an example, 
Matthews testified:
---------------------------------------------------------------------------
    \232\ Id. at 166 (statement of Kevin Matthews, director of 
Association & Governmental Relations, AIG Environmental).

        [Y]ou can directly see [the difference between credits 
        and subsidies] in Massachusetts. When they first opened 
        the program, they offered a 50 percent subsidy toward 
        the premium of environmental insurance. Due to budget 
        cutbacks, they had to reduce that subsidy to 25 percent 
        at one point in time. The number of sites coming into 
        the program dropped by 50 percent when they cut the 
        subsidy by that amount, so it is directly 
        corollary.\233\
---------------------------------------------------------------------------
    \233\ Id.

    Echoing the other panelists, Charles Houder testified, 
``[T]he size of the incentives that can be offered by the 
Federal or State government . . . are typically not the 
difference maker in us deciding whether a site works or doesn't 
work, with the exception of tax credits.'' \234\ ``Tax credits, 
certainly the historical tax credit program has been a 
difference maker. That is probably the single incentive program 
that has the ability to tip the scale in undertaking a 
development project,'' Houder told the Subcommittee.\235\
---------------------------------------------------------------------------
    \234\ Id. (statement Charles Houder, director of acquisitions, 
Preferred Real Estate Investments, Inc.)
    \235\ Id.
---------------------------------------------------------------------------

    C. FIELD HEARINGS ON THE PARTNERSHIP BETWEEN FEDERAL AND STATE 
        BROWNFIELD PROGRAMS, MAY 16, 2005, AND OCTOBER 25, 2005

    The Subcommittee staged two field hearings on brownfields 
redevelopment during the first session of the 109th Congress. 
On May 16, 2005, the Subcommittee held a hearing in Cleveland, 
OH, entitled The Ohio Experience: What Can Be Done to Spur 
Brownfield Redevelopment in America's Heartland? On October 25, 
2005, the Subcommittee held a hearing in Bethlehem, PA, 
entitled The Challenge of Brownfields: What are the Problems 
and Solutions in Redeveloping Pennsylvania's Lehigh Valley 
Communities? These field hearings focused on Federal 
brownfields programs and State efforts as well as explored ways 
to enhance those Federal/State partnerships.
    Two panels of witnesses at the May 16 hearing in Ohio 
presented the views of Federal, State, and local government 
stakeholders, as well as private developers and remediated site 
users. Joseph Dufficy, Chief of the Brownfields and Early 
Action Section at the U.S. Environmental Protection Agency 
Region V Office; Amy Yersavich, manager of the Voluntary Action 
Program of the Ohio Environmental Protection Agency; the 
Honorable Frank Sarosy, mayor of the Village of Fairport 
Harbor, OH; the Honorable Daniel Pocek, mayor of the city of 
Bedford, OH; Tracy Nichols, assistant director for Economic 
Development at the Cuyahoga County, OH, Department of 
Development; and Casey Stephens, manager of Public Services and 
Brownfield Coordinator at the city of Toledo, OH, Division of 
Environmental Services testified to the government perspective 
on the first panel. The Subcommittee received testimony from 
industry stakeholders on the second panel, which consisted of 
Alex Machaskee, president and publisher of the Plain Dealer; 
Todd Davis, chief executive officer of Hemisphere Development 
LLC; Thomas Stone, executive director of the Mt. Pleasant NOW 
Development Corp.; Barry Franz, P.E., BCEE, P.G., principal 
engineer of Civil & Environmental Consultants, Inc.; and Craig 
Kasper, chief executive officer of Hull & Associates, Inc.
    Two panels at the October 25, 2005, Pennsylvania hearing 
represented groups with interests similar to those in the Ohio 
hearing. The first panel consisted of Abraham Ferdas, Director 
of the Hazardous Site Cleanup Division at the U.S. 
Environmental Protection Agency Region III Office; Eugene 
DePasquale, deputy secretary for Community Revitalization and 
Local Government Support of the Pennsylvania Department of 
Environmental Protection [DEP]; Jim Seif, vice president of 
Corporate Relations at PPL Corp.; Paul Schoff of Feinberg and 
Schoff, LLP, and chief executive officer of Brownfield Realty, 
Ltd.; and Robert Colangelo, executive director of the National 
Brownfield Association. Kerry Wrobel, president of Lehigh 
Valley Industrial Park, Inc.; Chad Paul, Jr., chief executive 
officer of Ben Franklin Technology Partners; Ray Suhoki, 
president and chief operating officer of the Lehigh Valley 
Economic Development Corp.; and Stephen Donches, president of 
the National Museum of Industrial History presented their views 
as developers and remediated site users on the second panel.
    Both the Ohio and Pennsylvania hearings focused initially 
on the relationship between the Federal, State, and local 
governments. In particular, stakeholders praised the efforts of 
the EPA region offices for fostering better interaction between 
the Federal Government and State and local governments, and for 
taking steps to ease the redevelopment process. While improved 
government relationships and redevelopment processes have been 
helpful, they do not address what stakeholders emphasized as 
the biggest obstacle to redevelopment efforts--the gap between 
the vast number of existing brownfields, the often tough 
economic conditions in which they exist, and the limited public 
resources to address these conditions. Witnesses concluded that 
the Federal Government needs to induce private sector interest 
in redeveloping brownfield sites. Clarifying and expanding 
existing liability protections, as well as creating more 
financial incentives--including Federal tax credits--would 
address the greatest barriers to private investment in 
remediation and redevelopment projects.
    Joseph Dufficy of the EPA Region 5 office testified that 
the agency's program is successful. ``As of March 2005, EPA and 
its grant recipients have performed more than 6,800 
assessments. Brownfield grantees have leveraged $6.6 billion in 
cleanup and redevelopment dollars, leveraging more than 30,000 
jobs.'' \236\ Dufficy emphasized that much of the success of 
this story is due to partnerships with States. ``EPA . . . 
partners with [S]tates to develop Memoranda of Agreement [MOAs] 
that clarify program roles and responsibilities. EPA has signed 
22 MOAs . . . . Here in Region 5, we have MOAs with all 6 
[S]tates and have maintained close partnerships with them since 
the inception of the Brownfield Program.'' \237\ According to 
Dufficy, ``These partnerships are an integral part of our 
success[;]'' \238\ and continuing that success ``will require 
ever more interaction and collaboration among all levels of 
government, the private sector and non-governmental 
organizations.'' \239\
---------------------------------------------------------------------------
    \236\ Ohio Brownfields hearing at 10 (statement of Joseph Dufficy, 
Chief of the Brownfields and Early Action Section at the U.S. 
Environmental Protection Agency Region V Office).
    \237\ Id. at 15.
    \238\ Id.
    \239\ Id. at 17.
---------------------------------------------------------------------------
    Chad Paul of Ben Franklin Technology Partners similarly 
praised partnership as crucial to successful brownfields 
redevelopment projects. Specifically in the case of his 
organization's redevelopment projects, Paul testified, 
``[P]artnership is what makes it work because we don't have all 
the resources that we need under our umbrella. The fact that we 
work with the university, with the city, with all of the other 
economic development organizations in a partnership . . . has 
been the secret to our success.'' \240\
---------------------------------------------------------------------------
    \240\ The Challenge of Brownfields: What Are the Problems and 
Solutions in Redeveloping Pennsylvania's Lehigh Valley Communities? 
Before the Subcommittee on Federalism and the Census of the House 
Committee on Government Reform, 109th Cong. 130 [hereinafter 
Pennsylvania Brownfields hearing] (2005) (statement of Chad Paul, Jr., 
chief executive officer of Ben Franklin Technology Partners).
---------------------------------------------------------------------------
    According to Kerry Wrobel of Lehigh Valley Industrial Park 
[LVIP], his company's campuses, built on redeveloped brownfield 
sites, would not be possible without the work of the multiple 
levels of partners. Further, Wrobel testified, partnerships 
must cross all levels of government. For the LVIP VII site, 
county governments provided matching dollars for roads and 
other infrastructure while municipal government and economic 
development corporations also heavily participated in the site 
redevelopment.\241\
---------------------------------------------------------------------------
    \241\ Id. at 132.
---------------------------------------------------------------------------
    Representative Steven C. LaTourette similarly noted the 
importance of intergovernmental partnerships. The closure of 
Diamond Shamrock in Fairport Harbor, OH in the 1960s shook the 
community, leaving a void of 70,000 jobs and a massive 
brownfield site as its legacy.\242\ ``That really is the key to 
this [redevelopment project - ] . . . partnerships and 
everybody pulling in the same direction.'' \243\ As a result, 
the project will result in ``an exciting mixed use'' of 
residential and business properties as well as retail outlets 
and a golf course.\244\
---------------------------------------------------------------------------
    \242\ See Ohio Brownfields hearing at 75, 6 (statement 
Representative Steven C. LaTourette).
    \243\ Id. at 75.
    \244\ Id.
---------------------------------------------------------------------------
    While government and private sector stakeholders avow the 
relationship between the EPA and the State governments is key 
to continued success in addressing the Nation's brownfields 
problem, those partnerships are only helpful when you have a 
redeveloper willing to take on a project. Liability concerns 
remain a significant barrier to enticing private redevelopment, 
Eugene DePasquale of the Pennsylvania DEP told the 
Subcommittee:

        The reality is that brownfield redevelopment is 
        difficult--both from a perception standpoint and a cost 
        standpoint. Many developers are still hesitant to 
        tackle a brownfield remediation project without strong 
        assurances with regard to resolution of legal 
        liabilities, controlling remediation costs and access 
        to investment capital. Without liability protection, 
        developers, local redevelopment authorities and 
        businesses are hesitant to consider any form or 
        ownership or even redevelopment partnership. Banks and 
        other institutions are unlikely to finance these 
        projects.\245\
---------------------------------------------------------------------------
    \245\ Pennsylvania Brownfields hearing at 46 (statement of Eugene 
DePasquale, deputy secretary for Community Revitalization and Local 
Government Support of the Pennsylvania Department of Environmental 
Protection).

    The 2002 Brownfields Act, according to Paul Schoff, 
however, provided a way for the Federal Government to bow out 
of enforcement actions on brownfield sites enrolled in a VCP 
(an occurrence called ``overfiling'') unless the State requests 
Federal action, there is an imminent and substantial danger to 
health or the environment, or where new contamination 
information requires further remediation.\246\ As a result, 
States now use their VCPs to assuage liability fears.
---------------------------------------------------------------------------
    \246\ Id. at 60-61 (statement of Paul Schoff of Feinberg and 
Schoff, LLP, and chief executive officer of Brownfield Realty, Ltd.).
---------------------------------------------------------------------------
    Todd Davis of the private redevelopment firm Hemisphere 
Development LLC described the State programs as ``gaining in 
popularity because they allow private parties to initiate 
cleanups and work cooperatively with [S]tate agencies, thus 
avoiding some of the costs and delay that would likely occur if 
the sites were subject to enforcement-driven programs.'' \247\
---------------------------------------------------------------------------
    \247\ Ohio Brownfields hearing at 97 (statement of Todd Davis, 
chief executive officer of Hemisphere Development LLC).
---------------------------------------------------------------------------
    Echoing Davis's sentiment, Robert Colangelo of the National 
Brownfields Association testified in a later hearing, ``[S]tate 
programs provide liability relief, financial incentives and 
technical assistance. Most developers who purchase impaired 
properties have come to rely heavily on the liability relief 
offered through [S]tate voluntary cleanup programs[.]'' \248\
---------------------------------------------------------------------------
    \248\ Pennsylvania Brownfields hearing at 74 (statement of Robert 
Colangelo, executive director of the National Brownfield Association).
---------------------------------------------------------------------------
    The 2002 Brownfields Act restricted overfiling on 
brownfield sites enrolled in State programs only in CERCLA 
enforcement cases, however. ``EPA is free to pursue claims and 
enforcement under Federal environmental laws such as RCRA, TSCA 
and the like,'' Paul Schoff explained.\249\ \250\
---------------------------------------------------------------------------
    \249\ Id. at 57 (statement of Paul Schoff of Feinberg and Schoff, 
LLP, and chief executive officer of Brownfield Realty, Ltd.).
    \250\ ``RCRA'' refers to the Resource Conservation and Recovery Act 
of 1976. Public Law No. 94-580, 90 Stat. 2795 (codified as amended 42 
U.S.C. Sec. 6901 et seq. (2006)). According to EPA, RCRA gave the 
agency ``cradle-to-grave'' authority to control the ``generation, 
transportation, treatment, storage, and disposal of hazardous waste.'' 
``RCRA also set forth a framework for the management of non-hazardous 
wastes. The 1986 amendments to RCRA enabled EPA to address 
environmental problems that could result from underground tanks storing 
petroleum and other hazardous substances. RCRA focuses only on active 
and future facilities and does not address abandoned or historical 
sites.'' U.S. Environmental Protection Agency, Resource Conservation 
and Recovery Act (last modified June 12, 2006) . ``TSCA'' refers to the Toxic Substance 
Control Act. Public Law No. 94-469, 90 Stat. 2003 (codified as amended 
15 U.S.C. Sec. 2601 et seq. (2006)). The Toxic Substances Control Act 
[TSCA] of 1976 was enacted by Congress to give EPA the ability to track 
the 75,000 industrial chemicals currently produced or imported into the 
United States. EPA repeatedly screens these chemicals and can require 
reporting or testing of those that may pose an environmental or human-
health hazard. EPA can ban the manufacture and import of those 
chemicals that pose an unreasonable risk. U.S. Environmental Protection 
Agency, Toxic Substances Control Act (last modified Apr. 14, 2006) 
.
---------------------------------------------------------------------------
    That remaining liability proved to be a lingering deterrent 
to development projects in Pennsylvania, and, in 2004, the 
Commonwealth and EPA entered a one-of-its-kind MOA, DePasquale 
reported.\251\ The Pennsylvania-EPA MOA created a ``one-stop 
shop'' \252\ through which Pennsylvania can now ``give 
developers limited comfort with respect to associated [F]ederal 
liabilities.'' \253\ That MOA ``covers Federal involvement 
where CERCLA, RCRA and TSCA legislation is implicated and 
clarifies how sites remediated under Act 2[, Pennsylvania's 
VCP,] may also satisfy requirements for these three key Federal 
environmental laws.'' \254\
---------------------------------------------------------------------------
    \251\ See Pennsylvania Brownfields hearing at 43 (statement of 
Eugene DePasquale, deputy secretary for Community Revitalization and 
Local Government Support of the Pennsylvania Department of 
Environmental Protection).
    \252\ Id.
    \253\ Id. at 46.
    \254\ Id. at 57 (statement of Paul Schoff of Feinberg and Schoff, 
LLP, and chief executive officer of Brownfield Realty, Ltd.).
---------------------------------------------------------------------------
    Deputy Secretary DePasquale testified that while 
Pennsylvania is happy to be the only State in the country with 
this type of broad-ranging MOA because of the competitive 
advantage it creates, ``the reality is that we think every 
State in the country should at some point have that agreement 
with EPA so that we can move projects forward across the 
country on brownfields.'' \255\
---------------------------------------------------------------------------
    \255\ Id. at 43 (statement of Eugene DePasquale, deputy secretary 
for Community Revitalization and Local Government Support of the 
Pennsylvania Department of Environmental Protection).
---------------------------------------------------------------------------
    According to Colangelo, Pennsylvania's program is one of 
the ``strongest'' in the country and most ``innovative'' 
because of the level of liability relief site owners can 
secure.\256\ ``[I]t is so important that . . . [States] can 
offer a broad range of brownfield sites, such as RCRA, CERCLA 
and TSCA [impacted sites] to be included under the brownfield 
program.'' \257\ Echoing DePasquale, Colangelo concluded the 
Pennsylvania ``MOA is a model that other States will start to 
emulate.'' \258\
---------------------------------------------------------------------------
    \256\ Id. at 72 (statement of Robert Colangelo, executive director 
of the National Brownfield Association).
    \257\ Id.
    \258\ Id.
---------------------------------------------------------------------------
    Even as other States explore similar MOAs these agreements 
will only provide developers with ``limited comfort with 
respect to associated [F]ederal liability,'' DePasquale 
warned.\259\ The Pennsylvania-EPA MOA applies only to the 
``joint processing of applications. It does not mean that 
[F]ederal liability can be relieved by successful participation 
in the [S]tate brownfields program. To provide the assurances 
that are necessary to developers, these efforts need to 
progress to genuine liability relief as opposed only to joint 
processing of applications,'' DePasquale told the 
Subcommittee.\260\
---------------------------------------------------------------------------
    \259\ Id. at 46 (statement of Eugene DePasquale, deputy secretary 
for Community Revitalization and Local Government Support of the 
Pennsylvania Department of Environmental Protection).
    \260\ Id.
---------------------------------------------------------------------------
    Asked whether there is ``a need for additional legislation 
to enable EPA to . . . [enter similar MOAs] on a routine basis 
so that the 2002 Small Business Liability Relief and 
Revitalization Act would recognize that both EPA and the States 
are encouraged to have a broader MOA,'' \261\ stakeholders 
responded that the value of liability release to site owners 
and developers was incalculable.
---------------------------------------------------------------------------
    \261\ Id. at 80 (statement of Subcommittee Chairman Michael R. 
Turner).
---------------------------------------------------------------------------
    Paul Schoff of Brownfield Realty, Ltd. testified that 
agreements comparable to the Pennsylvania-EPA MOA would be a 
critical asset in a developer's tool box:

        [B]efore the MOU or MOA came into effect, you still had 
        the concern that, ``Gee, if it was something covered by 
        RCRA or TSCA . . . the legislation which was passed in 
        January 2002 is not going to cover it.'' So you still 
        have that potential risk. In the back of your mind you 
        are thinking, ``Well, the EPA could still come in and 
        do this. They could come in, they could do an 
        overfiling, they could say, `Alright, we know you are 
        under the Pennsylvania program, but under our auspices, 
        now, we don't think that meets muster.' '' To have that 
        one-stop shop is critical from the private sector's 
        standpoint . . . to know that you have complete 
        protection, that you only have to deal with the agency 
        on a one-time basis.\262\
---------------------------------------------------------------------------
    \262\ Id. at 82 (statement of Paul Schoff of Feinberg and Schoff, 
LLP, and chief executive officer of Brownfield Realty, Ltd.).

    Colangelo expanded upon Schoff's statement, suggesting a 
number of brownfield sites remain undeveloped because of fear 
---------------------------------------------------------------------------
of the lingering potential liability:

        According to our research, there is about $4 to $6 
        trillion of industrial property in the United States 
        and corporations own about 40 percent of that . . . . 
        [W]e estimate that somewhere between 20 to 50 percent 
        of it is environmentally impaired. And those sites 
        aren't coming to market because of this reason . . . . 
        [T]he next evolution for the brownfield market is 
        dealing with this liability relief for liability 
        clarity for the potentially responsible parties and . . 
        . the key there is, I think we all agree in polluter 
        pays, the question is how much and there is a whole 
        group of companies out there that are willing to 
        voluntarily clean up their properties to the suggested 
        standards through the State voluntary cleanup programs 
        if they can get off the hook and right now, we have a 
        double standard. A developer or prospective purchaser 
        can buy a property, enter it into the program, clean it 
        up to the standard, get liability relief, but the 
        property owner can't.\263\
---------------------------------------------------------------------------
    \263\ Id. at 83 (statement of Robert Colangelo, executive director 
of the National Brownfield Association).

    Todd Davis simply stated, ``Congress . . . should take all 
actions within its power to clarify liability issues and create 
more attractive and sustainable financial incentives to 
encourage investment in brownfield redevelopment.'' \264\
---------------------------------------------------------------------------
    \264\ Ohio Brownfields hearing at 88 (statement of Todd Davis, 
chief executive officer of Hemisphere Development LLC).
---------------------------------------------------------------------------
    ``[T]he issue . . . of finality and liability release, if 
you don't have that, you are not only not going to get 
developers, you are not going to get anybody to finance the 
projects, either,'' Stephen Donches emphasized.\265\
---------------------------------------------------------------------------
    \265\ Pennsylvania Brownfields hearing at 131 (statement of Stephen 
Donches, president of the National Museum of Industrial History).
---------------------------------------------------------------------------
    To clarify and expand the liability provision would remove 
a barrier for many brownfield redevelopment projects. Schoff 
recommended the simplest solution to achieve this result:

        [A]mend the 2002 legislation to include protection 
        under all Federal environmental laws, not just under 
        CERCLA. . . . [F]or CERCLA not to include petroleum, . 
        . . the vast majority of brownfields out there have 
        some petroleum contamination, some petroleum 
        constituent . . . CERCLA doesn't touch that. That is 
        RCRA and other Federal environmental statutes.

        If the 2002 legislation were to be amended to include 
        protection for under all Federal environmental statues, 
        I think that would go a long way toward easing a lot of 
        people's fears and putting their fears to rest once and 
        for all.'' \266\
---------------------------------------------------------------------------
    \266\ Id. at 82-83 (statement of Paul Schoff of Feinberg and 
Schoff, LLP, and chief executive officer of Brownfield Realty, Ltd.).

    Beyond liability issues, stakeholders all expressed concern 
over lack of adequate funds for brownfields redevelopment. 
According to Todd Davis, ``Current estimates place the cost of 
cleaning up the Nation's brownfields at $650 billion.'' \267\
---------------------------------------------------------------------------
    \267\ Ohio Brownfields hearing at 90 (statement of Todd Davis, 
chief executive officer of Hemisphere Development LLC).
---------------------------------------------------------------------------
    While loosening spending restrictions on EPA funds would 
free more money for remediation and redevelopment activities, 
it would not expand the pool of available funds. ``Public and 
private resources for brownfields assessment and remediation 
are limited--just one more deterrent for would-be developers. 
Therefore, Congress must create a viable broad-based economic 
incentive to make significant, measurable progress in tackling 
brownfield sites,'' Todd Davis told the Subcommittee.\268\ 
Similarly, Barry Franz testified, ``[B]rownfields redevelopment 
is complex and costly as compared to the greenfield property. 
Economic incentives are necessary to spur this redevelopment.'' 
\269\
---------------------------------------------------------------------------
    \268\ Ohio Brownfields hearing at 94 (statement of Todd Davis, 
chief executive officer of Hemisphere Development LLC).
    \269\ Id. at 102 (statement of Barry Franz, P.E., BCEE, P.G., 
principal engineer of Civil & Environmental Consultants, Inc.).
---------------------------------------------------------------------------
    While assessment and remediation costs ``carry a big price 
tag of brownfields,'' Craig Kasper advised, ``other issues 
exist . . . that can be just as critical to a successful 
development. Demolition, upgrading infrastructure, and 
environmental are just a few examples.'' \270\ Kasper urged, 
``Consideration to all critical activities necessary for 
redevelopment should be considered as eligible cost on[ ]sites 
that are ultimat[ly] cleaned up and, of course, with an 
approved State program.'' \271\
---------------------------------------------------------------------------
    \270\ Id. at 113 (statement of Craig Kasper, chief executive 
officer of Hull & Associates, Inc.).
    \271\ Id.
---------------------------------------------------------------------------
    Expounding upon the arguments of Davis, Franz, and Kasper, 
Thomas Stone advised, ``Securing significant funding to return 
brownfields to productive use should be a major part of this 
country's initiative to strengthen America's cities.'' \272\
---------------------------------------------------------------------------
    \272\ Id. at 100 (statement of Thomas Stone, executive director of 
the Mt. Pleasant NOW Development Corp.).
---------------------------------------------------------------------------
    ``As time goes on, fewer easy-to-develop brownfield sites 
are available, and so cities are going to be left with the 
harder, more complicated sites and these have to have financial 
incentives to attract private sector investment,'' Colangelo 
advised the Subcommittee.\273\ Because these sites are so 
complicated, States are limited in how attractive they can make 
such redevelopment opportunities appear. States ``can't . . . 
tackle brownfields alone,'' Colangelo testified.\274\ He 
concluded, redeveloping the Nation's brownfields ``requires a 
partnership with the private sector. And the government's role 
. . . is best as a facilitator and the administrator of 
programs that reduce risk and attract private investment.'' 
\275\
---------------------------------------------------------------------------
    \273\ Pennsylvania Brownfields hearing at 73 (statement of Robert 
Colangelo, executive director of the National Brownfield Association).
    \274\ Id.
    \275\ Id.
---------------------------------------------------------------------------
    ``[T]he private sector has to be the leader in getting 
these deals done. . . . [T]here's a limited amount of grant 
dollars that will ever be available for brownfield 
redevelopment,'' Todd Davis likewise informed the 
Subcommittee.\276\
---------------------------------------------------------------------------
    \276\ Ohio Brownfields hearing at 120 (statement of Todd Davis, 
chief executive officer of Hemisphere Development LLC).
---------------------------------------------------------------------------
    EPA's Joseph Dufficy testified similarly:

        [N]otwithstanding all of the efforts [of] the Federal, 
        State, [and] local units of government, we will never 
        be able in the public sector to clean up the hundreds 
        of thousands of sites that are out there. The only way 
        that will happen is with significant increases in 
        funding and influences from the private sector.\277\
---------------------------------------------------------------------------
    \277\ Id. at 8 (statement of Joseph Dufficy, Chief of the 
Brownfields and Early Action Section at the U.S. Environmental 
Protection Agency Region V Office).

    Echoing Robert Colangelo, Amy Yersavich of the Ohio EPA 
noted that ``the need is now . . . [for] some of the higher 
hanging fruit, some of the more complicated sites that maybe 
need a little push.'' \278\ ``Encouraging private developers to 
take on brownfield redevelopment projects at sites with large 
amounts of contamination or where complex cleanup is needed'' 
remains a large obstacle, said Yersavich.\279\ Unfortunately, 
she testified, ``Most government brownfield incentives are 
available only to local governments or other public entities.'' 
\280\ Therefore, ``a tax credit that would encourage the 
private sector to increase their brownfields redevelopment work 
. . . would provide a tremendous boost to . . . urban core and 
small town revitalization efforts,'' Yersavich concluded.\281\
---------------------------------------------------------------------------
    \278\ Id. at 68 (statement of Amy Yersavich, manager of the 
Voluntary Action Program of the Ohio Environmental Protection Agency).
    \279\ Id. at 21.
    \280\ Id. at 21-22.
    \281\ Id.
---------------------------------------------------------------------------
    Tracy Nichols of the Cuyahoga County Department of 
Development noted that, in the past, her organization provided 
funds only to municipal governments and to non-profit 
organizations. ``As our economy worsened and cities were hard 
hit and did not have funds available to go out and buy 
brownfields to redevelop them, we changed our program to give 
funding directly to developers and to offer them a forgivable 
loan. Once that happened, we saw a huge increase.'' \282\
---------------------------------------------------------------------------
    \282\ Id. at 67 (statement of Tracy Nichols, assistant director for 
Economic Development at the Cuyahoga County, OH, Department of 
Development).
---------------------------------------------------------------------------
    Two of the key obstacles to development are ``lack of 
available capital and financial incentives, such as tax 
deferrals, abatement and/or credits . . . [but they are] common 
to both greenfield and brownfield development efforts,'' 
testified Barry Franz.\283\ A tax credit for the extra costs 
incurred developing a brownfield would aid in reaching the 
often cited goal of ``evening the playing field.''
---------------------------------------------------------------------------
    \283\ Id. at 108 (statement of Barry Franz, P.E., BCEE, P.G., 
principal engineer of Civil & Environmental Consultants, Inc.).
---------------------------------------------------------------------------
    Based on his experience with State tax credits, Craig 
Kasper also expressed his belief that tax credit would create a 
valuable incentive for private developers:

        More than 20 [S]tates already use some form of tax 
        incentives to encourage brownfield reuse; additional 
        [F]ederal incentives could enhance these programs and 
        provide additional resources to promote economic 
        development and reinvestment opportunities in blighted 
        areas. In addition, tax incentives that focus 
        specifically on environmental cleanup of contaminated 
        properties--when coupled with other economic 
        development tools--have the ability to generate renewed 
        interest in brownfield versus greenfield development. 
        Furthermore, developing tax or other financial 
        incentives that would provide a funding tool to help 
        cover the costs associated with assessment, securing 
        environmental liability insurance and conducting 
        demolition could go a long way toward promoting and 
        encouraging new brownfield development in critical 
        regions of Ohio and the Midwest.\284\
---------------------------------------------------------------------------
    \284\ Id. at 117 (statement of Craig Kasper, chief executive 
officer of Hull & Associates, Inc.).

    Comparatively, Kerry Wrobel told the Subcommittee the tax 
credit proposed by ``the Brownfields Revitalization Act of 2005 
. . . would add another weapon to our arsenal,'' filling a 
critical gap in brownfields redevelopment incentives.\285\ 
Wrobel continued:
---------------------------------------------------------------------------
    \285\ Pennsylvania Brownfields hearing at 88 (statement of Kerry 
Wrobel, president of Lehigh Valley Industrial Park, Inc.).

        We can provide local tax incentives, we can provide 
        State funding, we can provide Federal funding. If we 
        can also provide Federal tax incentives, that is a 
        missing link that at the moment we cannot provide. As 
        you know, we cannot provide Federal grants directly to 
        private business, so that is a hole in our incentive 
        program and another form of assistance for those taking 
        the risk--it truly is a risk to step on and develop and 
        put one's equity into a brownfield site.\286\
---------------------------------------------------------------------------
    \286\ Id.

    Joseph Dufficy likewise characterized a Federal tax credit 
---------------------------------------------------------------------------
as a useful tool in brownfields redevelopment:

        I've been doing this for about as long as anybody in 
        Federal Government and what brownfields need is as many 
        tools in the toolbox as you can possibly get. The issue 
        at hand is largely real estate transactions. That's 
        really what a brownfield is. And anything that can 
        impact whether a real estate transaction can go forward 
        is what we really need.\287\
---------------------------------------------------------------------------
    \287\ Ohio Brownfields hearing at 74 (statement of Joseph Dufficy, 
Chief of the Brownfields and Early Action Section at the U.S. 
Environmental Protection Agency Region V Office).

    Jim Seif testified that even a small impact can tip the 
scales for a brownfield project. Whether the tax relief is on 
the Federal, State, or local level, that relief might result in 
a ``few more dollars added [to the deal]. And when you are 
dealing with a decision between this piece of land or that 
piece, $12.50 can swing a deal. It can be the lubrication 
needed to make a decision go faster and the tax element is 
always part of a deal.'' \288\
---------------------------------------------------------------------------
    \288\ Pennsylvania Brownfields hearing at 78 (statement of Jim 
Seif, vice president of Corporate Relations at PPL Corp.).
---------------------------------------------------------------------------
    From a developer's perspective, Todd Davis explained, 
``[I]f you shift the incentive to private marketplace and you 
come up with a self-implementing private tax program, and 
you're doing it as a percentage of cleanup costs, cleanup costs 
defined by . . . however the final definition comes down, then 
you can actually raise those limits of private investment and 
shift the pace dramatically.'' \289\
---------------------------------------------------------------------------
    \289\ Ohio Brownfields hearing at 125 (statement of Todd Davis, 
chief executive officer of Hemisphere Development LLC).
---------------------------------------------------------------------------
    Davis also testified that while a tax credit would not spur 
industrial redevelopment, it would make reuse of properties and 
investment in those sites more attractive:

        Historically, [F]ederal, [S]tate, and local policies 
        have done little to spur industrial redevelopment. 
        Rehabilitation tax credits offered during the mid-1970s 
        provided incentives to invest in real estate and 
        redevelopment. These tax incentives helped stem the 
        exodus of businesses from long-established 
        neighborhoods and made reuse more economically 
        attractive. However, these tax advantages effectively 
        vanished under the 1986 tax code revisions. . . . As a 
        result, investors turned to potentially more lucrative 
        sources of return, such as Wall Street, and many 
        rehabilitation projects failed to materialize. Limited 
        tax relief, allowing current deductibility or remedial 
        costs, offers little incentive to would be brownfields 
        redevelopers or property owners.\290\ (citations 
        omitted)
---------------------------------------------------------------------------
    \290\ Ohio Brownfields hearing at 95 (statement of Todd Davis, 
chief executive officer of Hemisphere Development LLC).

    Davis further explained that the utility of current Federal 
tax credits for brownfield redevelopment ``has not been 
meaningful due to significant limitations placed in [F]ederal 
programs.'' \291\ Consequently, Davis advised the Subcommittee, 
``any proposed tax credit program should not only be limited 
only to the most distressed urban areas, as significant 
brownfields are a problem in every community; the tax credits 
should be freely transferable; and the tax credits should 
provide a substantial enough incentive to encourage investment 
in complex transactions.'' \292\
---------------------------------------------------------------------------
    \291\ Id.
    \292\ Id.
---------------------------------------------------------------------------
    Tracy Nichols also expressed support for a Federal tax 
credit ``as long as the credits are available for all 
brownfield sites and not limited to areas of poverty.'' \293\ 
``Brownfields clearly impact the inner ring suburbs as well as 
[t]he larger urban metropolitan areas,'' she explained, and 
``tax credits would make more funds available for the sites 
which have been very difficult to remediate due to the high 
cost of the remediation.'' \294\
---------------------------------------------------------------------------
    \293\ Id. at 54 (statement of Tracy Nichols, assistant director for 
Economic Development at the Cuyahoga County, OH, Department of 
Development).
    \294\ Id.
---------------------------------------------------------------------------
    While Davis and Nichols both opined a Federal tax credit 
should not be limited to distressed communities, other 
stakeholders suggested securing redevelopment funds from 
private investors is most difficult in economically distressed 
areas.
    ``Our problem is attracting investments to invest into the 
central city area,'' Casey Stephens, brownfield coordinator for 
the city of Toledo, told the Subcommittee.\295\ Stephens 
testified to Toledo's success in ``cleaning up contaminated and 
industrial sites and getting them back into reuse,'' but noted 
they ``found that there are certain areas of the city that have 
been left behind. And those areas of the city are the central 
city area that are most impacted by brownfield locations 
located therein.'' \296\ ``Toledo has found that accessing 
cleanup funds is not as much of an issue as encouraging 
investment in low-income neighborhoods where the residents 
don't have disposable income[.]'' \297\
---------------------------------------------------------------------------
    \295\ Id. at 57 (statement of Casey Stephens, manager of Public 
Services and Brownfield Coordinator at the city of Toledo, OH, Division 
of Environmental Services).
    \296\ Id.
    \297\ Id. at 64-65.
---------------------------------------------------------------------------
    More incentives are necessary to incite interest in 
brownfield sites in the economically distressed areas, Stephens 
said. ``Developers and businesses have invested and redeveloped 
many desirable brownfield sites within Toledo, the ``low-
hanging fruit,'' as it were. But our problem is attracting 
investment into the areas most impacted by brownfield, 
especially in a weak market location.'' \298\ ``So the city of 
Toledo supports anything that the Federal Government can do to 
help attract private investment into the central city areas,'' 
Stephens testified.\299\ ``Toledo believes that additional 
incentives must be in place to stimulate central city 
investment in brownfield sites. These additional incentives 
should not be considered a subsidy to urban areas by suburban 
and rural districts. The suburban fringe cannot prosper without 
a strong urban core,'' Stephens continued.\300\ ``[Y]ou can't 
have a strong suburban area without a strong core area. And we 
feel that anything we can do to attract . . . private 
investment, into the central city, into the core area will go a 
long way in strengthening our whole regional economy,'' 
Stephens concluded.\301\
---------------------------------------------------------------------------
    \298\ Id. at 63.
    \299\ Id. at 57.
    \300\ Id. at 63-64.
    \301\ Id. at 67.
---------------------------------------------------------------------------
    Ray Suhocki of the Lehigh Economic Development Corp. 
related concerns similar to Casey Stephens. Suhocki testified 
that there are ``approximately 100 brownfield sites in the 
Lehigh Valley [region of Pennsylvania],'' \302\ the majority of 
which are located within ``smaller, generally poorer 
municipalities.''\303\ These sites ``are not all as famous and 
large as . . . the LVIP [Lehigh Valley Industrial Park] 
project,'' Suhocki told the Subcommittee, ``but they are very 
important [projects] and each one of those [sites] . . . are 
typically within an urban setting and . . . the tax credit will 
help those kinds of properties be returned to use[.]'' \304\
---------------------------------------------------------------------------
    \302\ Pennsylvania Brownfields hearing at 133 (statement of Ray 
Suhoki, president and chief operating officer of the Lehigh Valley 
Economic Development Corporation).
    \303\ Id. at 109.
    \304\ Id. at 133.
---------------------------------------------------------------------------
    Stakeholders voiced support for tax incentives for other 
redevelopment expenditures as well. Echoing statements of 
earlier witnesses, Deputy Secretary DePasquale and Kerry Wrobel 
emphasized the importance of environmental insurance.\305\
---------------------------------------------------------------------------
    \305\ See id. at 48 (statement of Eugene DePasquale, deputy 
secretary for Community Revitalization and Local Government Support of 
the Pennsylvania Department of Environmental Protection); id. at 91 
(statement of Kerry Wrobel, president of Lehigh Valley Industrial Park, 
Inc.).
---------------------------------------------------------------------------
    Environmental insurance provides a backstop against an 
unanticipated rise in remediation and redevelopment costs or 
against unexpected additional costs. These insurance policies 
are extremely costly, however, and a tax credit for the 
premiums would be a valuable incentive to private developers. 
DePasquale explained:

        Fixed prices provide an incentive to move forward with 
        redevelopment. [Environmental insurance] helps 
        developers prepare budgets and attain financing because 
        it removes the worries that financial institutions have 
        when lending toward contaminated properties. A 
        [F]ederal tax credit would enable developers to 
        purchase the insurance they need to guarantee fixed 
        pricing in remediation. The insurance guarantees that 
        remediation costs to the developer will not exceed a 
        set amount. The tax credit puts the insurance costs 
        within reach and provides assurances needed to move 
        ahead with cleanup, removing a hurdle that developers 
        face when confronted by the decision to take on 
        revitalizing abandoned industrial sites.\306\
---------------------------------------------------------------------------
    \306\ Id. at 47 (statement of Eugene DePasquale, deputy secretary 
for Community Revitalization and Local Government Support of the 
Pennsylvania Department of Environmental Protection).

    The Commonwealth believes this incentive is so important to 
encouraging redevelopment efforts that the legislature ``is 
considering legislation . . . that would create a program for 
the purchase of certain types of environmental liability 
insurance, and for grants to pay the costs of those premiums,'' 
DePasquale reported.\307\
---------------------------------------------------------------------------
    \307\ Id.
---------------------------------------------------------------------------
    As an alternative to a tax credit for environmental 
insurance premiums, Kerry Wrobel suggested permitting the use 
of Revolving Loan Fund moneys to purchase environmental 
insurance. ``Environmental insurance premiums for brownfield 
sites can reach seven figures. Equally challenging, the 
environmental insurance premium must be paid at the time of 
land acquisition, before land sales can generate revenue for an 
organization,'' Wrobel testified.\308\ ``A grant from the 
Revolving Loan Fund could provide critical assistance early in 
the project's life and, once again, offset a premium cost not 
experienced in greenfield development.'' \309\
---------------------------------------------------------------------------
    \308\ Id. at 91 (statement of Kerry Wrobel, president of Lehigh 
Valley Industrial Park, Inc.).
    \309\ Id. at 87.
---------------------------------------------------------------------------
    Deputy Secretary DePasquale also expressed support for tax 
free bond financing:

        Many developers still lack the capital to undertake 
        brownfield ventures. Investors are reluctant to commit 
        money for projects when the return on their investment 
        could be years away. Congresswoman Hart has introduced 
        two pieces of legislation designed to support 
        redevelopment of old industrial sites common to western 
        Pennsylvania. One bill would give tax-exempt status on 
        bonds used to help finance the cleanup of brownfields. 
        That currently is not the case. Bonds provide 
        developers and businesses with the access to capital 
        they need to clean up the sites. The other bill would 
        allow businesses or developers to build savings 
        accounts free of taxation for the cleanup of such 
        sites. The tax advantages would apply only if the money 
        is spent on remediation. The savings accounts would be 
        the business equivalent of Individual Retirement 
        Accounts [IRAs]. Congress should examine both of these 
        bills as a means to enhance support for brownfield 
        remediation.\310\
---------------------------------------------------------------------------
    \310\ Id. at 47 (statement of Eugene DePasquale, deputy secretary 
for Community Revitalization and Local Government Support of the 
Pennsylvania Department of Environmental Protection).

    Explaining the importance of bonding at the State level, 
Stephen Donches testified, ``[I]nfrastructure funding, both 
onsite and offsite, is critical and [it is critical] to get 
that into play early on.'' \311\ In the redevelopment of the 
Bethlehem Steel brownfield site, Donches reported redevelopers 
``were fortunate to have the county . . . push for a bond issue 
that resulted in some $13 million for a road that gets into the 
[redeveloped] area . . . but even with early support . . . [it] 
has taken a long time'' to complete the infrastructure.\312\ 
``[I]t won't do any good to have a remediation plan and go 
through the whole process if you can't get to the site,'' 
Donches concluded.\313\
---------------------------------------------------------------------------
    \311\ Id. at 131 (statement of Stephen Donches, president of the 
National Museum of Industrial History).
    \312\ Id.
    \313\ Id.
---------------------------------------------------------------------------
    In addition to clarifying liability provisions and 
providing more funds for cleanup through new incentives, 
stakeholders stressed the importance of minimizing the time 
businesses spend securing the proper permits for redevelopment.
    Deputy Secretary DePasquale argued that ``all [F]ederal 
departments should streamline permitting to favor redevelopment 
of brownfields.'' \314\ ``Providing incentives and ensuring 
liability are essential,'' DePasquale told the Subcommittee, 
``But streamlining the process is critical to ensure that these 
sites remain competitive on the open market. The faster we move 
brownfield sites through the regulatory process, the quicker we 
reclaim these sites and clean up communities.'' \315\
---------------------------------------------------------------------------
    \314\ Id. at 47 (statement of Eugene DePasquale, deputy secretary 
for Community Revitalization and Local Government Support of the 
Pennsylvania Department of Environmental Protection).
    \315\ Id.
---------------------------------------------------------------------------
    Ray Suhocki explained that the administrative burden 
involved in a redevelopment project often results in greater 
project cost and loss of time because ``[m]ulti-layered 
regulatory programs . . . often times require numerous 
approvals from multiple agencies and departments within 
agencies.'' \316\ Suhocki praised the Pennsylvania Brownfields 
Action Team [BAT] program, which facilitates the review and 
approval process. The BAT ``created a single-point-of-contact 
approach . . . . All permits, plans, reports and submittals 
required to demonstrate compliance under [S]tate environmental 
laws go through one point of contact. That contact is 
responsible for facilitating the review and approval process 
that ultimately reduces the cost and time to complete 
projects.'' \317\ Suhocki recommended a similar approach be 
adopted by the Federal Government through the MOAs between 
States and the EPA. By appointing in the MOA one point of 
contact for projects requiring both State and Federal approval, 
``a `one-stop-shop' can be established where both agencies 
agree to one lead agency and one point of contact that is 
responsible for facilitating all review and approvals required 
to comply with both [S]tate and [F]ederal environmental laws.'' 
\318\
---------------------------------------------------------------------------
    \316\ Id. at 114 (statement of Ray Suhoki, president and chief 
operating officer of the Lehigh Valley Economic Development Corp.).
    \317\ Id.
    \318\ Id.
---------------------------------------------------------------------------
    In his review of the ``the good, the bad, and the ugly'' of 
brownfields redevelopment, Todd Davis identified the time 
consumed by administrative processes as ``the bad.'' \319\ ``In 
part, due to the way the regulatory process is implemented, at 
least from a developer's perspective, the deals are still very 
difficult and it takes way too long to get them done. In many 
cases, Ohio brownfield deals are simply economically unviable 
without significant subsidy.'' \320\ ``The ugly,'' testified 
Davis, ``is the thought of brownfield redevelopment in Ohio 
without significant subsidy . . . I applaud your effort in 
coming up with a creative brownfield tax credit strategy, which 
from my perspective is the only way to get a meaningful shift 
of capital from a private perspective into brownfield 
redevelopment, not only in Ohio, but throughout the country.'' 
\321\
---------------------------------------------------------------------------
    \319\ Ohio Brownfields hearing at 85 (statement of Todd Davis, 
chief executive officer of Hemisphere Development LLC).
    \320\ Id.
    \321\ Id.
---------------------------------------------------------------------------
    Thomas Stone of the Mt. Pleasant NOW Development Corp. also 
cited administrative burdens as a stumbling block for 
redevelopment projects. The time delay caused by administrative 
burdens, Stone said, can make or break a deal.\322\ ``[W]hen we 
tell [investors] basically there's a time horizon of . . . 18 
months to 2 years before we could even potentially clean the 
site, they're saying, thanks but no thanks.'' \323\ 
``Businesses are looking at when they want to put in a new 
store, where they want to create a facility. They're just 
looking for the available site,'' Stone told the Subcommittee, 
``[s]o if we can only present them with the opportunity of, 
well, in 2 years we might have something available for you, 
then we continually miss these opportunities.'' \324\
---------------------------------------------------------------------------
    \322\ See id. at 121 (statement of Thomas Stone, executive director 
of the Mt. Pleasant NOW Development Corp.).
    \323\ Id.
    \324\ Id.
---------------------------------------------------------------------------
    To address this barrier to private investment, Deputy 
Secretary DePasquale suggested the Federal Government ``keep[] 
in mind that we have to level the playing field'' and that ``a 
streamlined permitting process for priority brownfield 
districts at the Federal level'' is one way government can 
``continue to work at ways to equalize that playing field.'' 
\325\ ``[I]f people that are investing feel that they are going 
to have too long a time of getting their permitting up or the 
funding will be too difficult to achieve, they simply will not 
invest in those sites, so we all have to work together to come 
to that common ground,'' DePasquale concluded.\326\
---------------------------------------------------------------------------
    \325\ Pennsylvania Brownfields hearing at 43 (statement of Eugene 
DePasquale, deputy secretary for Community Revitalization and Local 
Government Support of the Pennsylvania Department of Environmental 
Protection).
    \326\ Id.
---------------------------------------------------------------------------

                    IV. Findings and Recommendations


                              A. FINDINGS

1. EPA Brownfields Program assessment, cleanup, job training, research, 
        and technical assistance grants are perceived as successful, 
        but the actual impact is difficult to determine.

    According to stakeholders, EPA funds ``provide[] an 
important contribution to site cleanup and redevelopment by 
funding activities that might not otherwise occur,'' testified 
John Stephenson of GAO.\327\ Despite the perceived success of 
the Brownfields Program and the positive remarks from the 
stakeholder community, Stephenson reported GAO was unable to 
measure the actual impact of EPA funding for two reasons. 
First, GAO found that ``the impact of EPA's funding is 
difficult to isolate because it is often combined with funds 
from other sources.'' \328\ Second, GAO determined EPA's 
performance measures for the Brownfields Program are 
inadequate, limiting both EPA's and Congress' ability to gauge 
progress toward the major goals of the program.\329\ EPA 
reports raw numbers of site assessments, funds leveraged, and 
jobs generated, but the agency is unable to report on one of 
the program's stated objectives--grantees' cleanup and 
redevelopment activities. Additionally, while it is not one of 
the primary objectives of the Brownfields Program, assistance 
to State voluntary cleanup programs represents approximately 
one-third of the program's fund expenditures. However, ``EPA 
does not collect data on its assistance to [S]tate voluntary 
cleanup programs, for such activities as compiling inventories 
of brownfield sites, performing site assessments, and 
developing guidance for program participants.'' \330\ Finally, 
GAO noted, ``although EPA's overall mission is to protect human 
health and the environment, the agency has not yet developed 
measures to determine the extent to which the Brownfields 
Program helps reduce environmental risks.'' \331\
---------------------------------------------------------------------------
    \327\ Brownfield Overview hearing at 25 (statement of John 
Stephenson, Director of the Natural Resources and Environment, U.S. 
Government Accountability Office).
    \328\ Id. at 26.
    \329\ See id.
    \330\ Id.
    \331\ Id.
---------------------------------------------------------------------------
    EPA agreed with the GAO report findings and responded 
positively to the suggestions therein.\332\ Thomas Dunne of EPA 
testified that the agency developed a new data collection 
mechanism to collect more detailed data from its revolving loan 
fund grantees.\333\ EPA designed this new mechanism to enable 
the agency to correlate program results with grantee 
performance in order to measure programmatic success.\334\ 
Dunne also reported that the agency is working with 
administrators of State and tribal programs to develop 
performance measures that will link program performance to the 
number of acres remediated and ready for reuse to gauge the 
impact of EPA funds on State voluntary cleanup programs.\335\
---------------------------------------------------------------------------
    \332\ See GAO Report at 27.
    \333\ See Brownfield Overview hearing at 7 (statement of Thomas 
Dunne, Deputy Assistant Administrator in the Office of Solid Waste and 
Emergency Response, U.S. Environmental Protection Agency).
    \334\ See id.
    \335\ See id. (statement of John Stephenson, Director of the 
Natural Resources and Environment, U.S. Government Accountability 
Office).
---------------------------------------------------------------------------

2. The EPA Brownfields Program revolving loan fund is underutilized.

    GAO reported that nearly half of the stakeholders 
interviewed reported the underutilization of revolving loan 
fund grants.\336\ GAO's investigation revealed that only 47 of 
154 grantees issued loans for a total of 67 brownfields 
projects.\337\ GAO further reported, ``As of November 2004, 
grant recipients had loaned out less than $29 million (about 17 
percent) of the $168 million in revolving loan fund grants 
awarded by EPA.'' \338\ Stakeholders reported the primary 
reason for underutilization is the special technical or 
administrative requirements of administering a fund. ``Managing 
a revolving loan fund requires a government or nonprofit entity 
to perform many of the functions of a commercial lending 
institution, including establishing interest rates and 
collateral requirements; processing and approving loans; and 
collecting loan payments . . . staff time and expertise are key 
to making these loans.'' \339\ Further, some grant recipients 
stated, ``EPA's grants were not large enough to justify the 
time and effort required to establish a fund because it is 
frequently depleted after one or two loans are made.'' \340\
---------------------------------------------------------------------------
    \336\ See id. at 36.
    \337\ See id.
    \338\ See GAO Report at 5.
    \339\ Brownfield Overview hearing at 37 (statement of John 
Stephenson, Director of the Natural Resources and Environment, U.S. 
Government Accountability Office).
    \340\ Id. at 38.
---------------------------------------------------------------------------
    Stakeholders suggest greater efficiency would result if EPA 
gave ``priority to applicants with proven expertise or to 
coalitions of agencies that can consolidate administrative 
functions and thereby produce economies of scale.'' \341\ 
Stakeholders specifically noted:
---------------------------------------------------------------------------
    \341\ Id. at 37.

        [G]rant recipients with in-house technical expertise, 
        such as economic development or regional planning 
        agencies, were more likely to have financial expertise 
        or experience administering other revolving loan funds 
        and were therefore in a better position to set up a 
        fund. Grant recipients that partnered with other 
        [S]tate or local agencies to obtain technical expertise 
        also were successful in this regard. Two revolving loan 
        fund grant recipients also reported that grant 
        recipients who hired contractors to manage the 
        administrative aspects of the revolving loan fund have 
        been successful at establishing a fund framework and 
        were better positioned to make loans.\342\
---------------------------------------------------------------------------
    \342\ U.S. Government Accountability Office, Brownfield 
Redevelopment, Report No. GAO-05-94, at 23 (2004).

    Dunne testified that ``EPA is committed to improving 
revolving loan fund performance and ensuring that, if grant 
funds are not being used, those grant funds will be closed out 
or grantees will be required to transition old loan fund grants 
to the new Brownfields Law program authority.'' \343\
---------------------------------------------------------------------------
    \343\ Id. at 7 (statement of Thomas Dunne, Deputy Assistant 
Administrator in the Office of Solid Waste and Emergency Response, U.S. 
Environmental Protection Agency).
---------------------------------------------------------------------------
    Dunne further testified that EPA agreed that ``efficiency 
and economies of scale often can be achieved by Revolving Loan 
Fund entities with proven track records that build upon 
administrative expertise.'' \344\ Accordingly, ``EPA has 
invited coalitions of eligible entities to pool their Revolving 
Loan Fund grant requests and submit a single grant application 
for consideration.'' \345\ Further, the agency is ``adjusting 
ranking criteria for Revolving Loan Fund applicants, giving 
more weight to ranking factors which demonstrate an applicant's 
ability to manage a fund and make loans.'' \346\
---------------------------------------------------------------------------
    \344\ Id. at 18.
    \345\ Id.
    \346\ Id.
---------------------------------------------------------------------------

3. Congress authorized $250 million per year from fiscal year 2002 
        through fiscal year 2006 for the Federal Brownfields Program. 
        Congress has yet to appropriate the full authorized level of 
        funding, yet even the authorized level of funding is 
        insufficient for the task.

    A number of witnesses in this series of hearings touched 
upon the daunting number of unremediated brownfields remaining, 
despite State revitalization efforts. While ``well-designed 
State programs are a critical component of this Nation's 
efforts to revitalize lands[,] . . . they are not sufficient to 
solve this Nation's brownfield problem in our lifetime,'' 
Jonathan Philips testified.\347\
---------------------------------------------------------------------------
    \347\ State Incentive Programs hearing at 95 (statement of Jonathan 
Philips, senior director of Cherokee Investment Partners, LLC).
---------------------------------------------------------------------------
    Many States have ``more sites than . . . funds,'' testified 
Douglas Scott.\348\ ``State and local governments have been 
very creative in utilizing all of the myriad resources that 
they have financially to try to assist with these sites.'' 
\349\ He continued, ``It is pretty clear . . . that the number 
of sites isn't being lessened to the rate that any of us would 
like to see.'' \350\ However, ``money is only part; the rest 
must come from tax credits and other targeted incentives to the 
private sector to bring them into these sites,'' Scott 
concluded.\351\
---------------------------------------------------------------------------
    \348\ Id. at 41 (statement of Douglas Scott, director of the 
Illinois Environmental Protection Agency).
    \349\ Id.
    \350\ Id.
    \351\ Id.
---------------------------------------------------------------------------
    John Magill also warned the subcommittee that State dollars 
are not enough to address the brownfields problem alone. 
``Access to additional sources of Federal dollars through the 
tax credits or increased resources at U.S. EPA are [sic] 
crucial to stretching State funding to undertake additional 
local projects.'' \352\
---------------------------------------------------------------------------
    \352\ Id. at 23 (statement of John Magill, director of the Ohio 
Department of Development Office of Urban Development).
---------------------------------------------------------------------------
    Likewise, Thomas Stone advised the subcommittee: ``Securing 
significant funding to return brownfields to productive use 
should be a major part of this country's initiative to 
strengthen America's cities.'' \353\
---------------------------------------------------------------------------
    \353\ Ohio Brownfields hearing at 100 (statement of Thomas Stone, 
executive director of the Mt. Pleasant NOW Development Corp.).
---------------------------------------------------------------------------

4. The high cost of brownfields cleanup remains a significant deterrent 
        to private sector investment in brownfield redevelopment.

    Throughout this series of hearings, witnesses frequently 
expressed concern over a lack of adequate funds for brownfields 
redevelopment. According to Todd Davis, ``Current estimates 
place the cost of cleaning up the Nation's brownfields at $650 
billion.'' \354\ ``There's only so much, there's a limited 
amount of grant dollars that will ever be available for 
brownfield redevelopment,'' Davis testified.\355\ ``Public and 
private resources for brownfields assessment and remediation 
are limited--just one more deterrent for would-be developers. 
Therefore, Congress must create a viable broad-based economic 
incentive to make significant, measurable progress in tackling 
brownfield sites,'' Davis concluded.\356\
---------------------------------------------------------------------------
    \354\ Id. at 90 (statement of Todd Davis, chief executive officer 
of Hemisphere Development LLC).
    \355\ Id. at 120.
    \356\ Id. at 94.
---------------------------------------------------------------------------
    EPA's Joseph Dufficy similarly warned,

        [N]otwithstanding all of the efforts [of] the Federal, 
        State, [and] local units of government, we will never 
        be able in the public sector to clean up the hundreds 
        of thousands of sites that are out there. The only way 
        that will happen is with significant increases in 
        funding and influences from the private sector.\357\
---------------------------------------------------------------------------
    \357\ Id. at 8 (statement of Joseph Dufficy, Chief of the 
Brownfields and Early Action Section at the U.S. Environmental 
Protection Agency Region V Office).

    Douglas Steidl of the American Institute of Architects 
testified that while the EPA program has created ``noticeable 
results,'' more tools are necessary to address the widespread 
brownfield problem.\358\ ``[T]here are far more brownfield 
sites requiring remediation than the U.S. EPA program could 
ever hope to address in our lifetimes. As a result, Federal 
legislation is needed to expedite site cleanup and foster 
economic development of former industrial properties.'' \359\
---------------------------------------------------------------------------
    \358\ Brownfield Overview hearing at 124 (statement of Douglas L. 
Steidl, president of the American Institute of Architects).
    \359\ Id. at 124-125.
---------------------------------------------------------------------------
    Amy Yersavich of the Ohio EPA noted that of the hundreds of 
thousands of remaining brownfield sites, it is the more 
complicated sites that require the most need; it is the 
``higher hanging fruit, some of the more complicated sites that 
maybe need a little push.'' \360\
---------------------------------------------------------------------------
    \360\ Ohio Brownfields hearing at 68 (statement of Amy Yersavich, 
manager of the Voluntary Action Program of the Ohio Environmental 
Protection Agency).
---------------------------------------------------------------------------
    Akron, OH Mayor Don Plusquellic agreed, testifying the 
``low-hanging'' fruit--less seriously contaminated properties--
have mostly been addressed.\361\ It is those sites that are 
more seriously contaminated and/or lie in less desirable 
locations ``that most developers are not willing to touch. 
These are the sites that need those added incentives in order 
to make them competitive in the marketplace, especially if one 
is comparing it to a greenfield site,'' according to 
Plusquellic.\362\ Extra financial incentives will ``turn 
negatives into positives'' \363\ and ``[t]he one thing that has 
been missing is a tax incentive that will really spur private 
sector investment to redevelop these sites,'' Plusquellic 
noted.\364\
---------------------------------------------------------------------------
    \361\ Brownfield Overview hearing at 52 (statement of the Honorable 
Don Plusquellic, mayor of the city of Akron, OH, and president of the 
U.S. Conference of Mayors).
    \362\ Id. at 52-53.
    \363\ Id. at 53.
    \364\ Id. at 54.
---------------------------------------------------------------------------
    Robert Colangelo echoed both Yersavich and Plusquellic. The 
``low-hanging fruit'' is all but gone, leaving ``cities . . . 
with the harder, more complicated brownfield sites . . . . 
[T]hese sites will require meaningful government incentives if 
the public sector is to continue to attract private sector 
investment and developer interest.'' \365\
---------------------------------------------------------------------------
    \365\ State Incentive Programs hearing at 87 (statement of Robert 
Colangelo, executive director of the National Brownfields Association).
---------------------------------------------------------------------------
    ``Encouraging private developers to take on brownfield 
redevelopment projects at sites with large amounts of 
contamination or where complex cleanup is needed'' remains a 
large obstacle, reported Yersavich.\366\ Unfortunately, she 
testified, ``Most government brownfield incentives are 
available only to local governments or other public entities.'' 
\367\ Consequently, stakeholders repeatedly advised the 
subcommittee that the Federal Government needs to induce 
private sector interest in redeveloping brownfield sites.
---------------------------------------------------------------------------
    \366\ Ohio Brownfields hearing at 21 (statement of Amy Yersavich, 
manager of the Voluntary Action Program of the Ohio Environmental 
Protection Agency).
    \367\ Id. at 21-22.
---------------------------------------------------------------------------
    Charles Bartsch suggested the most effective way to 
encourage an influx of private investment is through tax 
incentives. ``State and Federal tax incentives historically 
have been used to channel investment capital and promote 
economic development in areas that have needed it, and 
brownfield targeting is a natural evolution of this type of 
program.'' \368\
---------------------------------------------------------------------------
    \368\ State Incentive Programs hearing at 8 (statement of Charles 
Bartsch, senior policy analyst at the Northeast-Midwest Institute).
---------------------------------------------------------------------------
    According to GAO's investigation, a number of stakeholders 
likewise suggested a tax credit ``could attract developers to 
brownfield sites on a broader national basis and enhance the 
[F]ederal, [S]tate, and local brownfields redevelopment efforts 
currently under way'' by ``allow[ing] developers to offset a 
portion of their [F]ederal income tax with remediation 
expenditures[.]'' \369\ These stakeholders also cited the low-
income housing tax credit and the historic rehabilitation tax 
credit as successful stimulants to redevelopment.\370\
---------------------------------------------------------------------------
    \369\ Brownfield Overview hearing at 38 (statement of John 
Stephenson, Director of the Natural Resources and Environment, U.S. 
Government Accountability Office).
    \370\ See id.
---------------------------------------------------------------------------
    James Maurin of the Real Estate Roundtable concluded, ``As 
the threat of excessive environmental liability recedes, the 
remaining problem with most well located brownfield sites is a 
fairly simple one: Money. Other things being equal, it costs 
more to clean up and redevelop a brownfield than it does simply 
to buy and develop a Greenfield.'' \371\ Supportive of a 
Federal tax credit, Maurin told the subcommittee, ``As with the 
low-income housing tax credit program, the private sector would 
still provide much of the necessary funds for cleanup, but the 
availability of tax credits could tip the scales in favor of 
proceeding with a project rather than passing over an otherwise 
promising site.'' \372\
---------------------------------------------------------------------------
    \371\ Id. at 60 (statement of James E. Maurin, chairman of the 
International Council of Shopping Centers and board member of the Real 
Estate Roundtable).
    \372\ Id.
---------------------------------------------------------------------------
    Charles Houder agreed, ``Tax credits, certainly the 
historical tax credit program has been a difference maker. That 
is probably the single incentive program that has the ability 
to tip the scale in undertaking a development project.'' \373\
---------------------------------------------------------------------------
    \373\ State Incentive Programs hearing at 166 (statement of Charles 
Houder, director of acquisitions, Preferred Real Estate Investments, 
Inc.).
---------------------------------------------------------------------------
    Jonathan Philips likewise testified that a ``national 
transferable credit would be a powerful and fitting complement 
to State efforts.'' \374\ Philips noted the success of tax 
credits in development areas other than brownfields, suggesting 
the model should be extended to brownfields. The ``tax credit 
for rehabilitating historic structures that Congress created in 
1976 . . . has stimulated more than $33 billion in private 
investment, with over 325,000 housing units.'' \375\ The 
success of this program, Philips testified, is, ``First, it is 
uniform across the Nation, and; second, it works in tandem with 
State programs to drive more historic sites from underwater to 
above-water status.'' \376\ This form of tax credit would be 
``a logical extension'' of prior Federal brownfield efforts, 
Philips opined.\377\ A transferable tax credit would 
``dramatically accelerate the rate at which brownfield sites 
are revitalized in America'' and, in conjunction with certain 
other tax provisions, has ``the potential to prompt cleanup of 
more brownfield sites in the next 5 years than in the last 50 
years combined,'' Philips testified.\378\
---------------------------------------------------------------------------
    \374\ Id. at 96 (statement of Jonathan Philips, senior director of 
Cherokee Investment Partners, LLC).
    \375\ Id.
    \376\ Id.
    \377\ Id.
    \378\ Brownfield Overview hearing at 83 (statement of Jonathan 
Philips, senior director of Cherokee Investment Partners, LLC).
---------------------------------------------------------------------------
    A tax credit, Robert Colangelo told the subcommittee, 
``would bring additional comfort to banks and the lending 
community so that you would have lesser lines on [sic] 
equity.'' \379\ Jonathan Philips explained, ``[A] tax credit . 
. . could be a forward sale situation where you can create 
equity, and that chunk of equity could then be leveraged to 
either attract more equity or to attract debt capital, and that 
is critical to everybody.'' \380\ According to Philips, the 
benefit of that equity would be particularly helpful ``to a 
smaller entity because . . . it doesn't start the clock of the 
return investment until--or at least a portion of it until you 
deploy that capital later in the project.'' \381\
---------------------------------------------------------------------------
    \379\ State Incentive Programs hearing at 165 (statement of Robert 
Colangelo, executive director of the National Brownfields Association).
    \380\ Id. (statement of Jonathan Philips, senior director of 
Cherokee Investment Partners, LLC).
    \381\ Id.
---------------------------------------------------------------------------
    Barry Franz summarized the issue for the subcommittee. Two 
of the key obstacles to development are ``lack of available 
capital and financial incentives, such as tax deferrals, 
abatement and/or credits . . . [but these obstacles are] common 
to both greenfield and brownfield development efforts,'' 
testified Barry Franz.\382\ A tax credit for the extra costs 
incurred developing a brownfield would aid in reaching the 
often phrased goal of ``evening the playing field.''
---------------------------------------------------------------------------
    \382\ Ohio Brownfields hearing at 108 (statement of Barry Franz, 
P.E., BCEE, P.G., principal engineer of Civil & Environmental 
Consultants, Inc.).
---------------------------------------------------------------------------

5. Liability fears remain a significant deterrent to private sector 
        investment in brownfield redevelopment.

    Second to the need for money in encouraging further 
redevelopment efforts, according to the panelists, is the need 
for further liability relief.
    Andrew Hogarth testified, ``Federal liability continues to 
be a problem. Many potential property transactions fail due to 
the inability of the buyer to resolve liability under RCRA, and 
to some extent [under] CERCLA.'' \383\ While Michigan has a MOA 
with the EPA addressing most liability concerns, ``RCRA 
liability remains a substantial hurdle'' to redevelopment 
efforts, Hogarth reported.\384\
---------------------------------------------------------------------------
    \383\ State Incentive Programs hearing at 61 (statement of Andrew 
Hogarth, chief of the Michigan Department of Environmental Quality 
Remediation and Redevelopment Division).
    \384\ Id.
---------------------------------------------------------------------------
    ``[O]ne of the major stumbling blocks [for developers] is 
the uncertainty of future liability, which is another factor 
that makes it more desirable to locate to greenfields,'' 
Douglas Scott told the subcommittee.\385\ Any Federal 
legislation that would ``make more certain the lines of 
liability and possible exposure to future or reopened claims 
would help tremendously to make these sites more insurable and 
more bankable,'' Scott opined.\386\
---------------------------------------------------------------------------
    \385\ Id. at 41 (statement of Douglas Scott, director of the 
Illinois Environmental Protection Agency).
    \386\ Id.
---------------------------------------------------------------------------
    One method of clarifying the lines of liability is to tie 
any liability relief to the State voluntary cleanup programs. 
Tying Federal liability relief to State VCPs ``will help 
greatly because you really are just plugging in a new piece to 
something that exists, rather than creating a new program,'' 
Scott testified.\387\ While a number of States have negotiated 
this framework tying their VCPs to Federal liability through an 
MOA with the EPA, Scott told the subcommittee, legislation 
clarifying liability relief will ``need to be a little bit more 
broadly based than the MOUs have been to date.'' \388\
---------------------------------------------------------------------------
    \387\ Id. at 83.
    \388\ Id.
---------------------------------------------------------------------------
    Secretary McGinty echoed Douglas Scott and noted the need 
for broader liability relief than is provided through MOAs. 
Despite the full and effective liability relief in some Federal 
programs under Pennsylvania's MOA with EPA, there is still 
potential liability under other Federal programs. While the MOA 
is ``[v]ery helpful . . . we need to make the next step to full 
liability relief,'' McGinty testified.\389\ ``If we could move 
from what has been an important beginning in our Memorandum of 
Understanding with EPA to full and effective Federal and State 
liability relief, that would add the certainty that investors 
and developers need,'' she concluded.\390\
---------------------------------------------------------------------------
    \389\ Id. at 16 (statement of Kathleen McGinty, secretary of the 
Pennsylvania Department of Environmental Protection).
    \390\ Id. at 17.
---------------------------------------------------------------------------
    John Magill also supported tying Federal liability relief 
to State VCPs. ``[It] is a good place to start because it is . 
. . not reinvent[ing] the wheel and creat[ing] new 
mechanisms,'' he testified.\391\ Further, Magill testified, 
``It also then allows for a piloting operation. If it fails, 
you can make changes. You don't create something new and tinker 
with that.'' \392\ Magill warned, however, ``The only caveat 
would be that in some States that the voluntary cleanup program 
does not cover all cleanups. Brownfields are a wider 
perspective.'' \393\
---------------------------------------------------------------------------
    \391\ Id. at 82 (statement of John Magill, director of the Ohio 
Department of Development Office of Urban Development).
    \392\ Id.
    \393\ Id.
---------------------------------------------------------------------------
    According to Charles Bartsch, ``What is good about using 
the State voluntary cleanup programs . . . is it really does 
provide a recognized mechanism to provide some assurance to the 
community at large that these things are proceeding properly.'' 
\394\ To the extent existing programs are not broad enough to 
cover all brownfields projects, Bartsch echoed Magill, arguing, 
``Each state has a program in place, and . . . [similar to] 
what we saw after the passage of the national brownfields law a 
couple of years ago, the States will be able to then change 
[their programs] to better fit the Federal structure that is 
laid out.'' \395\
---------------------------------------------------------------------------
    \394\ Id. at 83 (statement of Charles Bartsch, senior policy 
analyst at the Northeast-Midwest Institute).
    \395\ Id.
---------------------------------------------------------------------------
    In addition to deterring private investment in 
redevelopment projects, liability concerns are also a 
disincentive for responsible parties to participate in the 
planning and redevelopment process. Parties undertaking 
remediation are generally new parties with little to no 
knowledge of the nature or extent of contamination on a site. 
Bringing the original property owners into the remediation 
planning would expedite the process, according to Chairman 
Turner because ``their knowledge could be very important for . 
. . [redevelopment] success.'' \396\ However, there are no 
incentives to bring these parties to the table. ``[W]e don't 
have anything under the statute that is going to relieve them 
of the liability,'' testified Dunne.\397\
---------------------------------------------------------------------------
    \396\ Brownfield Overview hearing at 44 (statement of Subcommittee 
Chairman Michael R. Turner).
    \397\ Id. at 45 (statement of Thomas Dunne, Deputy Assistant 
Administrator in the Office of Solid Waste and Emergency Response, U.S. 
Environmental Protection Agency).
---------------------------------------------------------------------------
    Brownfields are a ``[F]ederally created problem . . . a 
potentially responsible party or a landowner has disincentives 
for redevelopment . . . [because] our current laws and 
regulations actually encourage abandonment,'' noted Chairman 
Turner.\398\ John Stephenson agreed, testifying, ``Those 
liabilities were created by Federal law.'' \399\
---------------------------------------------------------------------------
    \398\ Id. at 42 (statement of Subcommittee Chairman Michael R. 
Turner).
    \399\ Id. (statement of John Stephenson, Director of the Natural 
Resources and Environment, U.S. Government Accountability Office).
---------------------------------------------------------------------------
    Creating an ``incentive for the original responsible 
polluter to participate'' is ``another key component'' to any 
new Federal brownfield legislation, testified Mayor 
Plusquellic.\400\ Without any incentive, property owners will 
continue mothballing brownfield sites, he concluded:
---------------------------------------------------------------------------
    \400\ Id. at 54 (statement of the Honorable Don Plusquellic, mayor 
of the city of Akron, OH, and president of the U.S. Conference of 
Mayors).

        It makes sense to hold the companies who are 
        responsible for contaminating the land to also make 
        them clean up the land. However, as a result, we have 
        many ``mothballed'' sites. Something needs to be done 
        to motivate the holder of that land to at least assess 
        the property and begin to clean it up.\401\
---------------------------------------------------------------------------
    \401\ Id.

    Todd Davis testified that many responsible parties want to 
cleanup their contaminated sites but are afraid of opening 
themselves up to liability. Making an example of a company with 
a large brownfield site in Ohio, Davis told the Subcommittee 
the responsible party did not contaminate the property with any 
---------------------------------------------------------------------------
negligence or mal-intent:

        [The company] was created in the twenties, thirties, 
        forties, which preceded most of the environmental laws. 
        They didn't perceive at the time that they were doing 
        anything that was out of the ordinary in terms of 
        ordinary business. But, after the advent of the Super 
        Fund [sic], obviously, the cost associated with 
        redeveloping . . . fell onto their laps, and 
        appropriately so.

        I think that what you find as we negotiate now with 
        people trying to unlock brownfield opportunities is 
        that, especially in big companies, they're still very, 
        very hesitant, because they're afraid to . . . open up 
        the information publicly.\402\
---------------------------------------------------------------------------
    \402\ Ohio Brownfields hearing at 119-120 (statement of Todd Davis, 
chief executive officer of Hemisphere Development LLC).

    Davis testified that there are a number of corporations 
whose ``intentions are pure and they want to do what's right 
for the community and they want to see the site remediated.'' 
\403\ However, ``[B]ecause there's a lack of predictability, 
there's a significant lack of people who understand how to go 
through this mine field of different funding and the legal and 
demolition and environmental issues all at the same time, that 
their experiences are mixed.'' \404\ It is ``not about leveling 
the playing field, it's about helping the playing field. It's 
tilting the playing field so that it's such a good deal for 
companies and communities to do brownfield redevelopment, that 
it's not an issue. People want to be doing this,'' Davis 
concluded.\405\
---------------------------------------------------------------------------
    \403\ Id. at 120.
    \404\ Id.
    \405\ Id.
---------------------------------------------------------------------------

6. Certain hazardous substances, such as petroleum products, are 
        ineligible for funding under present brownfields programs. 
        Additionally, the cleanup of building interiors is ineligible 
        for funding under current law.

    Additional incentives for private investment in remediation 
can be created by expanding the list of eligible activities on 
which Federal dollars may be used. Stakeholders throughout the 
series of subcommittee oversight hearings urged Congress to 
expand the definition of eligible brownfield remediation 
activities.
    For example, current Federal tax provisions for expensing 
brownfield remediation costs use the CERCLA definition of a 
``hazardous substance,'' from which petroleum is excluded, 
James Maurin testified.\406\ Consequently, parties may not 
expense the costs of addressing certain materials, petroleum 
among them. However, Paul Schoff testified, ``the vast majority 
of brownfields out there have some petroleum contamination, 
some petroleum constituent.'' \407\ Maurin explained the 
rationale for the exclusion:
---------------------------------------------------------------------------
    \406\ Brownfield Overview hearing at 75 (statement of James E. 
Maurin, chairman of the International Council of Shopping Centers and 
board member of the Real Estate Roundtable).
    \407\ Pennsylvania Brownfields hearing at 82-83 (statement of Paul 
Schoff of Feinberg and Schoff, LLP, and chief executive officer of 
Brownfield Realty, Ltd.).

        Congress made the decision that it did not want the 
        [F]ederal Superfund used to clean up certain types of 
        substances . . . . While the decision not to authorize 
        the spending of [F]ederal funds on these types of 
        cleanups had significance for the administration of the 
        Superfund program, the same rationale does not apply to 
        a statute intended to provide a tax incentive to 
        private parties cleaning up brownfield properties.\408\
---------------------------------------------------------------------------
    \408\ Brownfield Overview hearing at 75 (statement of James E. 
Maurin, chairman of the International Council of Shopping Centers and 
board member of the Real Estate Roundtable).

    ``[T]he problem created by this [tax code] approach is that 
it assumes that the CERCLA definition of the term is broad 
enough to encompass all types of toxic materials that might be 
found at a brownfield site. That is not the case,'' Maurin 
testified.\409\ Maurin argued:
---------------------------------------------------------------------------
    \409\ Id.

        While it may make sense not to authorize the use of 
        [F]ederal funds under the Superfund program to clean up 
        petroleum and pesticides, these substances often have 
        to be cleaned up at brownfield sites before those 
        properties can be returned to beneficial use. There is 
        no reason not to extend the same type of tax incentive 
        to a private party who is cleaning up petroleum waste 
        or pesticide residues on a brownfield site as to one 
        who is cleaning up other types of contaminants.\410\
---------------------------------------------------------------------------
    \410\ Id. at 77 (statement of James E. Maurin, chairman of the 
International Council of Shopping Centers and board member of the Real 
Estate Roundtable).

    Schoff recommended Congress ``amend the 2002 legislation to 
include protection under all Federal environmental laws, not 
just under CERCLA.'' \411\ ``If the 2002 legislation were to be 
amended to include protection for under all Federal 
environmental statues, I think that would go a long way toward 
easing a lot of people's fears and putting their fears to rest 
once and for all,'' Schoff concluded.\412\
---------------------------------------------------------------------------
    \411\ Pennsylvania Brownfields hearing at 82-83 (statement of Paul 
Schoff of Feinberg and Schoff, LLP, and chief executive officer of 
Brownfield Realty, Ltd.).
    \412\ Id.
---------------------------------------------------------------------------
    ``Similarly, Superfund money was not to be spent cleaning 
up the interior of buildings,'' Maurin testified.\413\ 
``Congress did not . . . [impose] this limitation because it 
believed that contaminated interiors did not require cleanups. 
Rather, Congress believed that the use of the limited funds set 
aside for Superfund cleanups should be prioritized to deal with 
contamination that had escaped into the general environment.'' 
\414\ Because the current tax law relies upon the CERCLA 
provisions, parties may not expense the removal of hazardous 
materials inside buildings such as asbestos or lead paint. 
Maurin notes, however, that ``brownfield restoration often 
involves the cleanup of existing buildings on the property. 
Expensing costs to clean up buildings would give developers 
more reason to invest in brownfield properties.'' \415\
---------------------------------------------------------------------------
    \413\ Brownfield Overview hearing at 75 (statement of James E. 
Maurin, chairman of the International Council of Shopping Centers and 
board member of the Real Estate Roundtable).
    \414\ Id. at 77.
    \415\ Id. at 77.
---------------------------------------------------------------------------
    Craig Kasper also advised the subcommittee of the need to 
expand the list of activities eligible for Federal incentives. 
``Consideration to all critical activities necessary for 
redevelopment should be considered as eligible cost on[ ]sites 
that are ultimately cleaned up,'' Kasper urged.\416\ ``While 
assessment and remediation costs ``carry a big price tag of 
brownfields, other issues . . . exist that can be just as 
critical to a successful development. Demolition, upgrading 
infrastructure, and environmental are just a few examples,'' he 
concluded.\417\
---------------------------------------------------------------------------
    \416\ Ohio Brownfields hearing at 113 (statement of Craig Kasper, 
chief executive officer of Hull & Associates, Inc.).
    \417\ Id.
---------------------------------------------------------------------------

7. Environmental insurance provides financial assurance to investors in 
        brownfield redevelopment projects and is thus an advisable 
        component of redevelopment projects. The use of Federal grant 
        funds is limited and grantees may not currently use Federal 
        dollars on environmental insurance premiums.

    Stakeholders voiced support for the expansion of Federal 
incentives to redevelopment expenditures other than actual 
remediation costs. In particular, stakeholders repeatedly cited 
the importance of environmental insurance.\418\ Environmental 
insurance provides a backstop against an unanticipated rise in 
remediation and redevelopment costs or against unexpected 
additional costs. These insurance policies are extremely 
costly, however, and a tax credit for the premiums would be a 
valuable incentive to private developers.
---------------------------------------------------------------------------
    \418\ See State Incentive Programs hearing at 17 (statement of 
Kathleen McGinty, secretary of the Pennsylvania Department of 
Environmental Protection); Pennsylvania Brownfields hearing at 47 
(statement of Eugene DePasquale, deputy secretary for Community 
Revitalization and Local Government Support of the Pennsylvania 
Department of Environmental Protection); id. at 91 (statement of Kerry 
Wrobel, president of Lehigh Valley Industrial Park, Inc.).
---------------------------------------------------------------------------
    Explaining the importance of environmental insurance, Kevin 
Matthews of AIG Environmental testified:

        Environmental insurance is not the silver bullet for 
        Brownfields redevelopment. However, it is one of the 
        ``tools in the tool chest'' that helps to lead to a 
        successful cleanup and redevelopment because it often 
        helps to address some of the greatest concerns of 
        Brownfields redevelopment--environmental liability and 
        uncertainties concerning the cleanup.\419\
---------------------------------------------------------------------------
    \419\ Id. at 117 (statement of Kevin Matthews, director of 
Association & Governmental Relations, AIG Environmental).
---------------------------------------------------------------------------

8. Many States have incentive programs for brownfields cleanup. These 
        programs may serve as models for reform of Federal programs.

    Every State in the Union administers some variation of a 
brownfield voluntary cleanup program. These programs are the 
cornerstone of remediation and redevelopment and must be 
allowed to work in tandem with Federal programs and incentives. 
The key to expansive remediation, according to Charles Bartsch, 
is to ensure ``State incentives are allowed to work in full 
partnership with Federal incentives and are not limited or 
constrained by recapture or penalty provisions.'' \420\
---------------------------------------------------------------------------
    \420\ Id. at 8 (statement of Charles Bartsch, senior policy analyst 
at the Northeast-Midwest Institute).
---------------------------------------------------------------------------
    ``Governments at all levels can find creative ways to help 
overcome reuse challenges. However, brownfield reuse will only 
succeed if [S]tate efforts can be complemented by [F]ederal 
initiatives--such as cleanup credits, historic tax incentives, 
and targeted program funding--in a true inter-governmental 
partnership,'' Bartsch concluded.\421\
---------------------------------------------------------------------------
    \421\ Id. at 15.
---------------------------------------------------------------------------
    According to Joseph Dufficy, ``These partnerships [with 
States] are an integral part of our success.'' \422\ ``EPA . . 
. partners with [S]tates to develop Memoranda of Agreement 
(MOAs) that clarify program roles and responsibilities.'' \423\ 
Continuing the agency's success, Dufficy testified, ``will 
require ever more interaction and collaboration among all 
levels of government, the private sector and non-governmental 
organizations.'' \424\
---------------------------------------------------------------------------
    \422\ Ohio Brownfields hearing at 15 (statement of Joseph Dufficy, 
Chief of the Brownfields and Early Action Section at the U.S. 
Environmental Protection Agency Region V Office).
    \423\ Id.
    \424\ Id. at 17.
---------------------------------------------------------------------------
    Douglas Scott explained the importance of the cooperation 
between the States and EPA to redevelopers. Under the MOA 
between the State of Illinois and EPA, when Illinois issues a 
``No Further Remediation'' letter, the MOA with the EPA states 
that ``except in very narrow circumstances . . . [Illinois's] 
NFR letter will also end Federal involvement.'' \425\
---------------------------------------------------------------------------
    \425\ State Incentive Programs hearing at 41 (statement of Douglas 
Scott, director of the Illinois Environmental Protection Agency).
---------------------------------------------------------------------------
    In Pennsylvania, Kathleen McGinty testified that under its 
agreement with the EPA there is now one cleanup policy for 
purposes of both the Commonwealth's and the Federal 
Government's purposes. ``[W]hen Pennsylvania says it is clean 
pursuant to EPA's standards, it is clean for State and Federal 
liability purposes,'' McGinty testified.\426\ Eugene DePasquale 
noted, however, the agreement between Pennsylvania and EPA 
applies only to the ``joint processing of applications.'' \427\ 
The MOA ``does not mean that [F]ederal liability can be 
relieved by successful participation in the [S]tate brownfields 
program. To provide the assurances that are necessary to 
developers, these efforts need to progress to genuine liability 
relief as opposed only to joint processing of applications.'' 
\428\ Even as other States explore similar MOAs, these 
agreements will only provide developers with ``limited comfort 
with respect to associated [F]ederal liability,'' DePasquale 
concluded.\429\
---------------------------------------------------------------------------
    \426\ Id. at 16 (statement of Kathleen McGinty, secretary of the 
Pennsylvania Department of Environmental Protection).
    \427\ Pennsylvania Brownfields hearing at 46 (statement of Eugene 
DePasquale, deputy secretary for Community Revitalization and Local 
Government Support of the Pennsylvania Department of Environmental 
Protection).
    \428\ Id.
    \429\ Id.
---------------------------------------------------------------------------
    Asked whether there is ``a need for additional legislation 
to enable EPA to [enter similar MOAs] on a routine basis so 
that the 2002 Small Business Liability Relief and 
Revitalization Act would recognize that both EPA and the States 
are encouraged to have a broader MOA,'' \430\ stakeholders 
responded that the value of liability release to site owners 
and developers was invaluable. Stephen Donches emphasized, 
``[T]he issue . . . of finality and liability release, if you 
don't have that, you are not only not going to get developers, 
you are not going to get anybody to finance the projects, 
either.'' \431\
---------------------------------------------------------------------------
    \430\ Id. at 80 (statement of Subcommittee Chairman Michael R. 
Turner).
    \431\ Id. at 131 (statement of Stephen Donches, president of the 
National Museum of Industrial History).
---------------------------------------------------------------------------
    Robert Colangelo likewise detailed the need for additional 
liability relief:

        According to our research, there is about $4 to $6 
        trillion of industrial property in the United States 
        and corporations own about 40 percent of that . . . . 
        [W]e estimate that somewhere between 20 to 50 percent 
        of it is environmentally impaired. And those sites 
        aren't coming to market because of this reason . . . . 
        [T]he next evolution for the brownfield market is 
        dealing with this liability relief for liability 
        clarity for the potentially responsible parties and . . 
        . the key there is, I think we all agree in polluter 
        pays, the question is how much and there is a whole 
        group of companies out there that are willing to 
        voluntarily clean up their properties to the suggested 
        standards through the State voluntary cleanup programs 
        if they can get off the hook and right now, we have a 
        double standard. A developer or prospective purchaser 
        can buy a property, enter it into the program, clean it 
        up to the standard, get liability relief, but the 
        property owner can't.\432\
---------------------------------------------------------------------------
    \432\ Id. at 83 (statement of Robert Colangelo, executive director 
of the National Brownfield Association).
---------------------------------------------------------------------------

9. Successful redevelopment of brownfields sites requires accommodating 
        private investors' time schedules that may be derailed by 
        regulatory burdens and administrative processes.

    In addition to clarifying liability provisions and 
providing more funds for cleanup through new incentives, 
stakeholders stressed the importance of minimizing the time 
businesses spend securing the proper permits for redevelopment. 
Ray Suhocki explained that the administrative burden involved 
in a redevelopment project often results in greater project 
cost and lost time because ``[m]ulti-layered regulatory 
programs . . . often times require numerous approvals from 
multiple agencies and departments within agencies.'' \433\
---------------------------------------------------------------------------
    \433\ Id. at 114 (statement of Ray Suhoki, president and chief 
operating officer of the Lehigh Valley Economic Development Corp.).
---------------------------------------------------------------------------
    In particular, Suhocki praised the Pennsylvania Brownfields 
Action Team [BAT] program, which facilitates the review and 
approval process. The BAT ``created a single-point-of-contact 
approach . . . . All permits, plans, reports and submittals 
required to demonstrate compliance under [S]tate environmental 
laws go through one point of contact. That contact is 
responsible for facilitating the review and approval process 
that ultimately reduces the cost and time to complete 
projects.'' \434\ Suhocki recommended a similar approach be 
adopted by the Federal Government through the MOAs between 
States and the EPA. By appointing in the MOA one point of 
contact for projects requiring both State and Federal approval, 
``a `one-stop-shop' can be established where both agencies 
agree to one lead agency and one point of contact that is 
responsible for facilitating all review and approvals required 
to comply with both [S]tate and [F]ederal environmental laws.'' 
\435\
---------------------------------------------------------------------------
    \434\ Id.
    \435\ Id.
---------------------------------------------------------------------------
    Jonathan Philips touted the use of ``one-stop shopping'' 
tactics adopted by a number of States. These programs 
streamline the permit process and make a ``real difference in 
the rate at which brownfield sites are remediated.'' \436\ The 
speed at which redevelopers can obtain permits can sometimes 
mean the difference between productive cleanup and reuse of a 
site and leaving a site to sit idle, Philips explained.\437\
---------------------------------------------------------------------------
    \436\ State Incentive Programs hearing at 102 (statement of 
Jonathan Philips, senior director of Cherokee Investment Partners, 
LLC).
    \437\ See id.
---------------------------------------------------------------------------
    Similarly, Thomas Stone of the Mt. Pleasant NOW Development 
Corp. explained time delay caused by administrative burdens can 
make or break a deal. ``Businesses are looking at when they 
want to put in a new store, where they want to create a 
facility. They're just looking for the available site. So if we 
can only present them with the opportunity of, well, in 2 years 
we might have something available for you, then we continually 
miss these opportunities.'' \438\
---------------------------------------------------------------------------
    \438\ Ohio Brownfields hearing at 121 (statement of Thomas Stone, 
executive director of the Mt. Pleasant NOW Development Corp.).
---------------------------------------------------------------------------
    The number of administrative hurdles also factors into a 
developer's decision to proceed under Federal procedures or 
under a State's voluntary program. ``[W]e struggle sometimes 
with the acceptance of the State's Voluntary Action Program 
versus the Federal Memorandum of Agreement [MOA],'' Craig 
Kasper told the committee.\439\ ``For example, a volunteer in 
Ohio who chooses to remediate a brownfield must go through an 
arduous administrative process to gain Federal Acceptance on a 
cleanup the State would have accepted with fewer administrative 
hurdles,'' Kasper explained.\440\
---------------------------------------------------------------------------
    \439\ Id. at 112 (statement of Craig Kasper, chief executive 
officer of Hull & Associates, Inc.).
    \440\ Id.
---------------------------------------------------------------------------
    David Cartmell, mayor of Maysville, KY, stressed that a 
missing link in the Federal brownfields programs is the 
streamlining of the process by which EPA issues a ``clean bill 
of health.'' \441\ In Maysville's case, this missing link 
continues interfering with the redevelopment of a major 
brownfield site. The city redeveloped at least one major site 
on its own and has a party interested in purchasing the site 
for reuse. The deal is not complete, however, because the city 
has waited for 10 years on a release of liability from the EPA, 
testified Cartmell.\442\ ``[A]s a city, we have used every 
smart growth tool available to us. We have planning and zoning, 
we have stopped growth beyond our urban services boundary. But 
we need help with streamlining this process.'' \443\
---------------------------------------------------------------------------
    \441\ State Incentive Programs hearing at 122 (statement of the 
Honorable David Cartmell, mayor of the city of Maysville, KY, and 
president of the Kentucky League of Cities).
    \442\ Id.
    \443\ Id.
---------------------------------------------------------------------------
    To address this barrier to private investment, 
Pennsylvania's Eugene DePasquale argued that ``all [F]ederal 
departments should streamline permitting to favor redevelopment 
of brownfields.'' \444\ ``Providing incentives and ensuring 
liability are essential,'' DePasquale told the committee, 
``[b]ut streamlining the process is critical to ensure that 
these sites remain competitive on the open market. The faster 
we move brownfield sites through the regulatory process, the 
quicker we reclaim these sites and clean up communities.'' 
\445\
---------------------------------------------------------------------------
    \444\ Pennsylvania Brownfields hearing at 47 (statement of Eugene 
DePasquale, deputy secretary for Community Revitalization and Local 
Government Support of the Pennsylvania Department of Environmental 
Protection).
    \445\ Id.
---------------------------------------------------------------------------
    DePasquale suggested the Federal Government ``keep[] in 
mind that we have to level the playing field'' and that ``a 
streamlined permitting process for priority brownfield 
districts at the Federal level'' is one way government can 
``continue to work at ways to equalize that playing field.'' 
\446\ If investors ``feel that they are going to have too long 
a time of getting their permitting up or the funding will be 
too difficult to achieve, they simply will not invest in those 
sites, so we all have to work together to come to that common 
ground,'' he concluded.\447\
---------------------------------------------------------------------------
    \446\ Id. at 43.
    \447\ Id.
---------------------------------------------------------------------------

10. Tax exempt redevelopment bonds have provided needed extra capital 
        at the State level.

    Numerous States utilize bonds to raise capital for directly 
financing redevelopment projects. According to Charlie Bartsch, 
these ``direct brownfield financing efforts . . . directly 
match resources to needs usually in places where the private 
sector may fear to tread.'' \448\ Ohio, for instance, funded 
its $200 million Clean Ohio Fund through bonds.\449\ From that 
fund, ``Ohio has granted $97 million to 94 projects to cleanup 
and assessment activities'' since 2002.\450\
---------------------------------------------------------------------------
    \448\ State Incentive Programs hearing at 8 (statement of Charles 
Bartsch, senior policy analyst at the Northeast-Midwest Institute).
    \449\ See id. at 22 (statement of John Magill, director of the Ohio 
Department of Development Office of Urban Development).
    \450\ Id.
---------------------------------------------------------------------------
    Local governments have also experienced success raising 
redevelopment funds through bonds. Cuyahoga County, OH funded 
its brownfields redevelopment assistance by issuing a 
brownfield redevelopment bond in 1998. Tracy Nichols reported, 
``Since 1998, 21 projects have been funded, 6 projects are 
cleaned up with a new end user open onsite, over 1,400 jobs 
have been created or retained, and $562,000 in new annual 
property taxes have been generated, even with two projects 
partially tax abated.'' \451\
---------------------------------------------------------------------------
    \451\ Ohio Brownfields hearing at 40 (statement of Tracy Nichols, 
assistant director for Economic Development at the Cuyahoga County, OH, 
Department of Development).
---------------------------------------------------------------------------
    Pennsylvania DEP Secretary Kathleen McGinty characterized 
legislative efforts offering ``tax-exempt financing, tax-free 
financing of brownfield sites . . . are key.'' \452\ While 
Pennsylvania utilizes these financing tools at the State level, 
Pennsylvania is ``pushing up against . . . [the] State volume 
cap, and to the extent that tax-free bond financing opportunity 
could be shared with the private sector, that would help . . . 
substantially,'' McGinty told the Subcommittee.
---------------------------------------------------------------------------
    \452\ State Incentive Programs hearing at 8 (statement of Kathleen 
McGinty, secretary of the Pennsylvania Department of Environmental 
Protection).
---------------------------------------------------------------------------

                           B. RECOMMENDATIONS

    1. EPA should continue to revise and upgrade its tracking 
mechanisms and performance measures for Brownfields grants so 
that the actual impact of this funding can be monitored.
    2. EPA should move forward with revising the technical and 
administrative requirements for establishing a revolving loan 
fund. Applicants with proven administrative expertise or 
coalitions of organizations that could produce economies of 
scale should be rewarded. Technical expertise should be 
provided to organizations whose capabilities hinder revolving 
loan fund utilization.
    3. Congress should re-authorize the EPA Brownfields Program 
beyond fiscal year 2006 and appropriate the full authorized 
level of funding. Congress should consider additional 
programming and funding for brownfield remediation.
    4. A Federal tax credit would be the most useful incentive 
in attracting financial investment in brownfields redevelopment 
projects. Useful models are the low-income housing tax credit 
and the historic rehabilitation tax credits.
    5. Congress should further clarify circumstances in which a 
party may be subject to future liability. The scope of 
liability relief available by operation of a MOA between a 
State VCP and the EPA should be broadened to include relief 
from CERCLA, RCRA, and TSCA. Congress should also provide 
additional incentives in order to encourage a responsible party 
to participate in the remediation process.
    6. Congress should expand the eligibility provisions of 
current Federal programs and incentives to include additional 
hazardous substances, the cleanup of building interiors, and 
other remediation and redevelopment project costs.
    7. Congress should expand the eligibility provisions of 
current Federal brownfields programs and incentives to include 
the purchase of environmental insurance. Any new Federal 
incentives should be designed to include such costs.
    8. Effective State programs should be reviewed as models 
for reforming existing Federal programs and establishing new 
ones.
    9. EPA should streamline its administrative process and 
create administrative partnerships with other Federal agencies 
to reduce administrative burden and delay.
    10. Congress should explore expanding the use of existing 
tax exempt redevelopment bonds to environmental remediation 
projects.

 MINORITY VIEWS OF HON. HENRY A. WAXMAN, HON. TOM LANTOS, HON. CAROLYN 
B. MALONEY, HON. ELIJAH E. CUMMINGS, HON. WM. LACY CLAY, HON. DIANE E. 
                     WATSON, AND HON. BRIAN HIGGINS

    We have serious concerns regarding the report issued by the 
majority entitled, ``Brownfields: What Will it Take to Turn 
Lost Opportunities Into America's Gain?'' We too believe that 
cleaning up brownfields sites in urban areas is an important 
goal. We also strongly agree with the report's recommendation 
that the existing brownfields program should be fully funded, 
which we view as the most important step that must to be taken 
to enhance the program's effectiveness.
    However, the report also makes recommendations that we 
cannot support, such as recommendations that would have the 
effect of shifting responsibility for cleaning up contaminated 
sites from the polluters to the taxpayers, enacting a Federal 
tax credit for brownfields redevelopment that could subsidize 
polluters, and diluting the program's effectiveness by 
expanding the types of activities that are eligible for funding 
under the brownfields program. Additionally, the report makes 
claims about barriers to brownfields redevelopment without an 
adequate factual record of support. For these reasons, we 
oppose the majority's issuance of this report.
Lack of Funding is the Primary Constraint on the Brownfields Program
    While the report supports full funding of the brownfields 
program, it neglects to acknowledge that failure of the Bush 
administration and the Republican Congress to fully fund this 
program has severely limited its effectiveness.
    Appropriations for the brownfields program have 
consistently fallen far short of its $250 million annual 
authorization under the Small Business Liability Relief and 
Brownfields Revitalization Act (Brownfields Act) that was 
signed into law on January 11, 2002.\1\ The report recognizes 
the funding shortfalls and one of its recommendations, which we 
strongly support, is to fully fund the program.
---------------------------------------------------------------------------
    \1\ Public Law 107-118.
---------------------------------------------------------------------------
    However, the report fails to discuss the administration's 
role in requesting inadequate funding for the program, or how 
the persistent funding shortfalls have impacted program 
effectiveness. For example, the administration's fiscal year 
2007 budget request for the portion of brownfields program that 
funds assessment grants, remediation grants, and technical 
assistance is only $89 million, as opposed to the $200 million 
authorized. This is 56 percent less than authorized under the 
Brownfields Act.\2\
---------------------------------------------------------------------------
    \2\ Office of Management and Budget, Fiscal Year 2007 Budget of the 
U.S. Government (February 2006).
---------------------------------------------------------------------------
    These grant programs provide significant assistance to 
participants seeking to clean up sites that are identified and 
deemed qualified. The result of this persistent underfunding is 
that more than two-thirds of the roughly 700 annual grant 
applications have gone unfunded during each of the past two 
budget cycles. The administration's failure to request, and 
Congress' failure to provide, adequate funding to cover the 
substantial majority of current applications sharply limits the 
impact of the program.
    The highest priority for improving the effectiveness of the 
brownfields program is to provide the funding necessary to 
carry it out. Unfortunately, the bulk of the report's findings 
are focused on other perceived shortcomings of the program and 
other measures to expand its impact.
    Specifically, the report's findings and recommendations 
appear to be centered on two issues addressed in more detail 
below: reducing liability for clean-up costs, including for 
responsible parties; and providing Federal tax credits for 
clean up activities. Under each of these proposed approaches, 
the Federal Government could end up paying for cleanup instead 
of the responsible polluters. In addition, these alternative 
approaches would subsidize polluters and developers to conduct 
activities with no prioritization for spending, far less 
assurance of program outcomes, and no requirements for 
community involvement in the remediation process.
Findings and Recommendations on Liability Undermine the Longstanding 
        Principle of ``Polluter Pays''
    Both the body of the report and its findings repeatedly 
claim that liability fears are a significant deterrent to 
investments in cleaning up brownfields sites. The findings cite 
to testimony stating that current landowners who are not the 
polluters, as well as the polluters that created the 
contamination, are deterred from cleaning up their sites due to 
outstanding liability concerns. In response, the report 
recommends that Congress ``clarify'' liability for parties and 
``provide additional incentives'' for responsible parties 
(i.e., polluters) to participate in the clean ups. We have 
serious concerns both about the factual support for these 
findings and the recommendations.
    In the Brownfields Act, Congress identified several clear 
categories of activities and parties that are not liable for 
clean up costs, including innocent prospective purchasers who 
did not pollute the site. While stating that liability concerns 
deter innocent landowners from participating in cleanups, the 
report does not identify or document any specific circumstances 
under which nonresponsible parties might be found liable for 
cleanup costs. Thus, while the report repeatedly cites 
liability concerns as a key barrier to cleanups, there is no 
evidence, apart from general statements in testimony, as to 
whether this is the case, the extent of any such problem, and 
if there is a problem, whether it stems from misinformation or 
an actual shortfall in the law.
    Responsible parties, i.e. the polluters, are currently 
legally liable for clean up costs, so it is questionable that 
``liability'' fears are preventing them from participating in 
the remediation of a site. Moreover, it is also unclear how 
their liability can be ``clarified'' without shifting the costs 
of cleanup from the responsible parties to the taxpayer. In 
fact, as the report indicates elsewhere, with respect to 
responsible parties, several of the witnesses were not calling 
for clarification about when such parties are liable. Rather, 
the witnesses were calling for liability relief as an 
inducement for responsible parties to participate in cleanups.
    In short, this report can be read as supporting liability 
relief for responsible parties, an idea we strongly oppose. 
Such a premise overturns the long-established principle that, 
where the polluter can be identified, the polluter, not the 
taxpayers, should pay for cleaning up contaminated sites. 
Congress recently reaffirmed this principle on a bipartisan 
basis with its near-unanimous passage of the 2002 Brownfields 
Act. We strongly oppose any effort to overturn this tenet of 
environmental law and shift the costs of cleaning up pollution 
from the polluters to the public.
    Furthermore, the report points to State voluntary control 
programs as a mechanism for providing liability relief. As 
discussed below, state voluntary programs vary in their 
requirements for cleanups. Thus, the report's recommendation to 
provide liability relief to responsible parties that clean up a 
site to State specifications, even if it does not meet Federal 
standards, may have the effect of allowing higher levels of 
pollution to remain at the sites. In such cases, the 
recommendation for liability relief is in actuality a 
recommendation to loosen clean up standards as an inducement 
for responsible parties to participate in brownfields 
remediation. Again, the practical effect is to let the 
polluters off the hook for cleaning up some portion of their 
pollution, while leaving communities to bear the burden of that 
pollution. We do not support changes to the Brownfields Act 
that would produce that outcome.
Tax Credits Could Shift Costs from Polluters to Taxpayers
    The report and findings emphasize that more money is needed 
to support clean up activities at the large number of 
brownfields sites. We agree with this assessment, as noted 
above. In response, the majority recommends enactment of a 
Federal tax credit for brownfields redevelopment projects. 
There may well be some circumstances in which a targeted 
Federal tax credit for certain brownfields redevelopment 
activities would be beneficial.
    However, the report does not explicitly recommend that such 
tax credits should be limited to innocent parties, and by 
recommending additional ``incentives'' for polluters, the 
report suggests the contrary. We are concerned that such 
Federal tax credits would simply be another vehicle for 
shifting the cleanup costs from the polluters to taxpayers.
    In addition, if not carefully targeted, a tax credit could 
be an extremely expensive and less effective tool for cleaning 
up brownfields. For example, proposed legislation would provide 
up to $1 billion annually in tax credits for brownfields 
activities.\3\ Under an expansive brownfields tax credit, the 
public would be paying for clean up activities with no ability 
to prioritize projects and much more limited oversight of such 
projects.
---------------------------------------------------------------------------
    \3\ H.R. 4480 Sec. 2.
---------------------------------------------------------------------------
Expansion of Activities Eligible for Brownfields Support Would Further 
        Dilute Limited Funding
    The majority also recommends substantially expanding the 
types of activities that are eligible for funding under the 
brownfields program, such as including coverage of 
environmental insurance and cleanup of building interiors. The 
program, however, is already experiencing a severe shortage of 
funds, and has insufficient funding to cover the majority of 
current project applications. Absent a dramatic increase in 
program funding, expanding the range of eligible activities 
would likely make it even more difficult to fund an adequate 
number of projects on an annual basis. Moreover, the current 
program targets what Congress has judged to be the highest 
priority and highest impact activities of the program. 
Expanding the list of eligible activities could dilute the 
program's effectiveness. While the majority believes these 
activities would benefit from the creation of a tax credit 
subsidy, the costs associated with a tax credit that also 
covered the expanded set of activities could be prohibitive.
State Voluntary Cleanup Programs Vary in Quality and Effectiveness
    The majority recommends that ``effective State programs 
should be reviewed as models for Federal programs.'' We 
certainly agree with the general observation that States have 
produced many valuable policy innovations and often serve as 
models for Federal programs. It is entirely unclear, however, 
which elements of State brownfields voluntary cleanup programs 
the majority is recommending be adopted by the Federal 
Government.
    More importantly, we are concerned that the report's 
findings and recommendations fail to discuss how State 
brownfields voluntary cleanup programs vary in their quality, 
effectiveness, and limitations. For example, only 22 States 
have MOU agreements with EPA that establish agreed-upon 
elements of State programs and the circumstances under which 
EPA agrees to defer to State oversight of cleanup efforts.\4\ 
In addition, different States often have different standards to 
determine site compliance with regulations. Thus, adoption of 
some States' approaches could allow higher levels of pollution 
to remain at sites, or could provide for little or no public 
participation in the decisionmaking process.
---------------------------------------------------------------------------
    \4\ U.S. EPA, Memoranda of Agreement [MOAs] on State Voluntary 
Cleanup Programs [VCPs] (updated July 5, 2006) (online at: http://
www.epa.gov/brownfields/html-doc/statemoa.htm).
---------------------------------------------------------------------------
Conclusion
    In conclusion, the minority believes the report does not 
make the case for several of its recommendations to 
substantially alter the current brownfields program. In 
particular, the minority strongly opposes recommendations to 
shift the costs of brownfields cleanups from the responsible 
polluters to affected communities and all Federal taxpayers.




                                   Hon. Henry A. Waxman.
                                   Hon. Tom Lantos.
                                   Hon. Carolyn B. Maloney.
                                   Hon. Elijah E. Cummings.
                                   Hon. Wm. Lacy Clay.
                                   Hon. Diane E. Watson.
                                   Hon. Brian Higgins.

                                 
