Brownfields: Information on the Programs of EPA and Selected States
(Letter Report, 12/15/2000, GAO/GAO-01-52).

The Environmental Protection Agency (EPA) and several states reviewed by
GAO have established financial assistance programs to encourage the
assessment, cleanup, and redevelopment of brownfields. The programs run
by EPA and the states differ in certain aspects, however. Namely, there
are differences in the forms of assistance provided, the eligibility
criteria, and overall strategies. From fiscal years 1995 through 2000,
EPA provided $246.9 million for brownfields assistance while the five
states reviewed by GAO provided a combined total of $136 million. GAO
found that EPA and the states have difficulty in determining whether
their programs are achieving their overall goals. Although EPA maintains
a database to track the progress of its program, the data it collects
are limited because recipients of EPA's assistance are not required to
report on the status of their cleanup projects. The states also have
limited information, primarily because they do not track the economic
benefits of the assistance they provide or they use forecasted results,
rather than actual results, to measure progress.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GAO-01-52
     TITLE:  Brownfields: Information on the Programs of EPA and
	     Selected States
      DATE:  12/15/2000
   SUBJECT:  Program evaluation
	     Environmental monitoring
	     Financial management
	     Industrial pollution
	     Reporting requirements
	     Performance measures
	     Waste disposal
IDENTIFIER:  Superfund Program
	     Massachusetts
	     Michigan
	     New Jersey
	     Pennsylvania
	     Wisconsin

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GAO-01-52

Report to the Chairman, Committee on Commerce, House of Representatives

December 2000 BROWNFIELDS Information on the Programs of EPA and Selected
States

GAO- 01- 52

Letter 3 Appendixes Appendix I: EPA's Brownfields Program 26

Appendix II: Massachusetts' Brownfields Program 35 Appendix III: Michigan's
Brownfields Program 43 Appendix IV: New Jersey's Brownfields Program 48
Appendix V: Pennsylvania's Brownfields Program 54 Appendix VI: Wisconsin's
Brownfields Program 61 Appendix VII: Comments From the Environmental
Protection Agency 68

Tables Table 1: EPA Brownfields Assistance Obligations, Fiscal Years 1995-
2000 11

Table 2: Number and Amount of Grant and Loan Awards at Selected States 12
Table 3: Data on Assessment- Related Program Performance in the

Brownfields Management System, as of March 31, 2000 15 Table 4: Data
Reported by Brownfields Assessment Pilots on

Six Measures, as of June 2000 16 Table 5: EPA' s Brownfields Financial
Incentives and Federal

Tax Incentive 27 Table 6: Selected BMS Accomplishments as of March 31, 2000
31 Table 7: Eligibility Certification Requests, as of August 31, 2000 34
Table 8: Massachusetts' Brownfields Financial Incentives 37 Table 9:
Massachusetts' Brownfields Financial Incentives Awards

and Requirements 38 Table 10: Massachusetts' Brownfields Program
Accomplishments,

Fiscal Year 2000 42 Table 11: Michigan's Brownfields Financial Incentives 45
Table 12: Michigan's Brownfields Financial Incentives Awards

and Requirements 46 Table 13: New Jersey's Brownfields Financial Incentives
50 Table 14: New Jersey's Brownfields Financial Incentives Awards

and Requirements 51 Table 15: Pennsylvania's Brownfields Financial
Incentives 56 Table 16: Pennsylvania's Brownfields Financial Incentives
Awards

and Requirements 57 Table 17: Wisconsin's Brownfields Financial Incentives
63

Table 18: Wisconsin's Brownfields Financial Incentives Awards and
Requirements 64 Table 19: Brownfields Grant Program Accomplishments 67

Abbreviations

BCRLF Brownfields Cleanup Revolving Loan Fund BMS Brownfields Management
System CERCLA Comprehensive Environmental Response, Compensation and

Liability Act of 1980 EPA Environmental Protection Agency NPL National
Priorities List

Lett er

December 15, 2000 The Honorable Thomas J. Bliley, Jr. Chairman, Committee on
Commerce House of Representatives

Dear Mr. Chairman: “Brownfields” are properties with real or
perceived environmental contamination that hampers redevelopment efforts and
encourages development in suburban “greenfields.” Brownfields
are often abandoned, urban industrial properties whose redevelopment for
commercial or residential uses could create jobs and increase tax bases in
cities. In the past decade, the Environmental Protection Agency (EPA) and
some states have established financial assistance programs, including grant
and loan programs, to encourage the assessment, cleanup, and redevelopment
of brownfields.

You asked us to provide information on (1) how the assistance 1 provided
under EPA's program to encourage the assessment and cleanup of brownfields
compares with the assistance provided by selected states with respect to
overall strategy, the forms of assistance, eligibility, and other factors;
(2) the amounts of assistance provided by EPA and these states; and (3) the
results reported by EPA and these states. To do this, we selected five
states that were identified by EPA and other knowledgeable organizations as
operating some of the largest or most innovative brownfields programs in the
nation: Massachusetts, Michigan, New Jersey, Pennsylvania, and Wisconsin. We
also contacted brownfields program managers in five cities that, according
to EPA records, had achieved large numbers of cleanups, major redevelopment
investments, or other results from their EPA funding. In addition, you asked
us to provide information on other incentives, such as federal and state tax
benefits for brownfields cleanup and state cleanup and liability rules
intended to facilitate brownfields cleanups. We are providing information on
these incentives in appendixes I through VI.

1 Throughout this report, we refer to grants and cooperative agreements as
assistance or awards. Both provide organizations with funding to undertake
certain activities. EPA uses grants when it does not expect to be
substantially involved in the activities and cooperative agreements when it
does expect to be involved.

Results in Brief The EPA and state brownfields programs each provide
financing (1) to assess environmental contamination at brownfields
properties and (2) if

necessary, to clean them up. However, the EPA and state programs differ in
certain significant respects. For example:

Overall strategy. EPA's assessment assistance, referred to as assessment
pilot project awards, can be used to support brownfields assessment programs
and to conduct site- specific assessments. For instance, assessment awards
may be used to pay the salaries of municipal brownfields staff who work on
assessment- related activities. In contrast, the selected states generally
provide assistance to assess particular properties.

Forms of assistance. EPA's cleanup funds are available to the parties
cleaning up brownfields only as loans. In the states, most cleanup funds
have been provided as grants.

Eligibility. EPA provides all of its assessment and cleanup assistance to
state, local or tribal governments, although these governments may lend
funds to private parties for cleanup. Most of the selected states provide
assistance directly to private parties and to local governments.

Other aspects. EPA does not impose matching requirements on the recipients
of its assessment assistance; the selected states do for their recipients.
Because EPA administers brownfields assistance under the law authorizing its
program to clean up hazardous waste sites- Superfund- recipients and
borrowers in the brownfields cleanup loan program must comply with certain
Superfund program restrictions, such as a prohibition on using funds to
clean up sites contaminated solely by petroleum products. State grants and
loans are not subject to such restrictions.

From fiscal years 1995 through 2000, EPA provided a total of $246. 9 million
for brownfields assistance:

$123.6 million in pilot project assessment and related assistance to help
identify, assess, characterize, and plan cleanup activities at contaminated
brownfields sites targeted for redevelopment. $64. 8 million to capitalize
revolving loan funds to assist government

agencies and private parties clean up brownfields properties.

$58. 5 million for brownfields- related job training, the development of
state cleanup programs, and other purposes.

According to the most recent available data at the time of our review, the
five states combined had provided about $136 million for brownfields
assessments and cleanups to public and private entities. Of this total,
about $114 million was provided in grants and about $22 million in loans.
The states provided most of their grants to local governments.

Currently, the information EPA has collected on the results of its
brownfields program is limited for a variety of reasons:

While EPA maintains a database to track measures of program activities and
outcomes reported by recipients of funds- such as the number of properties
with cleanups completed or with redevelopment underway- the database is
incomplete because most recipients have not reported on many of the
measures. EPA has not required recipients to report on a specific set of
program measures, partly out of concerns about imposing a burden on
recipients, but it has encouraged them to report. Also, several years may
elapse after an award before certain results, such as the creation of jobs,
are realized. EPA data provided to us in June 2000 show that 48 recipients
of pilot project assessment awards (about 16 percent of the 306 awards made
at that time) had reported using their awards to help leverage cleanups at
130 properties, while 84 recipients (27 percent) reported that their awards
helped leverage nearly $2.2 billion for redevelopment.

Prior to September 1999, EPA did not have nationwide guidance to help ensure
its results were consistently recorded. We found inaccuracies in the results
recorded in EPA's database for three of the five cities we contacted that
had reported major results prior to September 1999.

Brownfields program managers in these five cities generally believed that
their EPA assessment funds had been useful or essential to their programs.
However, measuring the results of brownfields assistance programs more
quantitatively is difficult because it cannot be known with certainty
whether cleanup and redevelopment might have occurred without government
assistance.

States' information on the results of their brownfields programs was also
limited. Two of the five states do not track the economic benefits of their

brownfields loan and grant programs, and the data collected by the other
three states represent forecasted, rather than actual, results.

We are making recommendations to EPA aimed at improving its information on
the results of its brownfields program.

EPA provided us with written comments on a draft of this report. EPA said
that the five states we selected did not represent state brownfields
programs nationwide, many of which have smaller brownfields programs. EPA
also said that it is striving to improve the accuracy of its results data
and has instituted quality controls over the data. EPA generally agreed with
the substance of the report's recommendations.

Background The Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (referred to as CERCLA or Superfund) authorizes the
cleanup

of hazardous waste sites and, to fund these cleanups, holds the parties
responsible for the contamination liable for the cleanup costs. The act also
gives EPA enforcement authority. Many states have laws with similar
liability and enforcement provisions. In the 1990s, many of the states
amended their cleanup laws and rules to encourage parties to clean up sites
without direct enforcement action. They created “voluntary cleanup
programs” that made cleanup rules less stringent and increased
liability protection for the parties that cleaned up sites. According to
officials in the five states, some of the properties cleaned up under their
state voluntary cleanup programs are brownfields properties. Some states
began to further encourage the cleanup and redevelopment of brownfields
though financial assistance and tax incentives. (See app. I for information
on federal brownfields cleanup tax incentives, and apps. II through VI for
information on tax incentives in the five states.)

EPA also joined the effort to revitalize brownfields. It issued a
“Brownfields Action Agenda” in 1995 and began an initiative that
now includes assistance to states, local governments, and tribes to assess
and clean up brownfields sites, build voluntary cleanup programs, and carry
out other brownfieldsrelated activities. In an effort to encourage the reuse
of brownfields, EPA also issued guidance explaining that it would not hold
property owners liable for cleanup under CERCLA in certain circumstances.
(See app. I.) EPA defines brownfields as “abandoned, idled or
underused industrial and commercial facilities where expansion or
redevelopment is complicated by real or perceived environmental
contamination.”

In addition to providing financial assistance through its brownfields
program, EPA helps support the assessment and cleanup of hazardous waste
sites through other programs whose primary purpose is not brownfields
redevelopment. Such sites, while not considered to be part of the
brownfields program, could meet EPA's definition of brownfields. For
example, the Superfund program assesses sites being considered for possible
Superfund cleanup.

EPA and State EPA and the states we selected provide various forms of
financing and

Brownfields Programs other assistance to encourage brownfields
redevelopment. EPA's programs

are similar to those in the states in one major respect: They both provide
Differ in Key Aspects

funds for assessing and cleaning up sites. However, the federal and state
efforts differ significantly in other respects. Some of the major
differences are discussed below.

Overall Strategies The assessment and cleanup assistance programs operated
by EPA and the selected states have different overall strategies. EPA's
brownfields program

focuses on funding assessments, building local capacity for planning and
conducting brownfields activities, and developing brownfield program models
in local governments that can be emulated by others. For example, EPA
assessment assistance to state, local, and tribal governments may be used to
pay staff salaries, revise regulations, and develop inventories of
brownfields sites. Also, EPA does not target particular properties for
cleanup assistance; rather, EPA provides money to capitalize state and local
government revolving loan funds. Loans are available to local government
agencies or private parties to clean up specific sites. In contrast, the
states generally focus both their assessment and cleanup assistance on
specific properties.

EPA also offers assistance to governmental entities and nonprofit
organizations for job training in hazardous waste cleanup and to the states
to develop their voluntary cleanup programs. The states generally do not
have similar programs.

Forms of Assistance EPA and the states differ in the forms of assistance
provided. EPA provides assistance to states, political subdivisions, or
Indian tribes for assessments and cleanups through the following programs:

Assessment Pilot Projects: EPA makes awards to pilot projects in state,
local, and tribal governments to identify and assess potential contamination
at brownfields and to plan cleanup if needed. Initial awards can be up to
$200,000 and may be followed with an another $150,000 award. An additional
$50, 000 is available for applicants who redevelop sites as greenspace, such
as parks, playgrounds, or open space.

Showcase Communities and Finalists: EPA provides awards to communities that
serve as models for collaborative efforts to assess, clean up, and reuse
brownfields. Sixteen awards were made in fiscal year 1998, and 12 more will
be made in fiscal year 2001. In fiscal year 1998, EPA committed to provide
up to $400,000 to each showcase community, including up to $200,000 to pay
for the temporary assignment of a federal staff person to assist the
program. In fiscal year 2000, EPA offered $100,000 in additional funding for
the assignment of federal staff. Showcase finalists are those communities
that submitted applications and were selected as finalists but not as
showcase communities. The 24 finalists in fiscal year 1998 received up to
$200,000 each as either a supplement to an existing assessment pilot project
or as a new assessment pilot award.

Cleanup Revolving Loan Fund: EPA awards up to $500,000 to state, local, and
tribal governments to help them create revolving loan funds that provide
low- interest loans to public and private entities for site cleanup.

Targeted Brownfields Assessments Awards: EPA hires, or provides funds to
states to hire, contractors to identify the extent of contamination at
properties, when this option is preferable to awarding a pilot award. For
example, a targeted assessment might be done at a property in a small town
that did not plan to develop a general brownfields program. As of September
2000, EPA had funded 500 targeted assessments for about 470 properties.

In addition, EPA provides funds to the U. S. Army Corps of Engineers and the
Department of the Interior's Bureau of Reclamation to provide technical
assistance for brownfields redevelopment projects. 2 For a listing of EPA's
brownfields assistance programs, see appendix I.

Each of the states we visited operates grant and/ or loan programs to assist
brownfields assessments and cleanups. States vary in the number of these

programs that they offer. Some of the states also address brownfields in
other ways. For example, Michigan is starting a major program in which it
will conduct brownfields cleanups; Massachusetts has created a special
insurance program; and Pennsylvania funds contractors to conduct site
assessments and prepare cleanup plans to facilitate the cleanup of abandoned
industrial sites in prime locations. Pennsylvania's program is similar in
purpose to EPA's targeted brownfields assessment program. Finally, some of
the states have established brownfields inventories to assist in attracting
developers. For a more detailed description of the five states' brownfields
programs, see apps. II to VI. 3

Eligibility In general, both EPA and the states limit eligibility for
assistance to parties that did not cause or contribute to the release of
hazardous substances on the property or that were not subject to cleanup
enforcement action. For example, Massachusetts officials stated that parties
that caused or contributed to a hazardous substance release are prohibited
from receiving state grant or loan assistance.

In other ways, EPA and the states' programs differ in their eligibility
requirements. EPA makes assessment and cleanup awards only to governmental
units. 4 In contrast, three states, Massachusetts, New Jersey, and
Pennsylvania, also lend private parties money for assessment and cleanups;
and two states, New Jersey and Wisconsin, make grants to private parties for
assessments or cleanups. Michigan was the only state that limited both grant
and loan assistance to public entities.

Some of the states have other eligibility requirements, such as geographic
location or economic potential. For example, Massachusetts limits grant and
loan assistance to projects located in state- designated economically
distressed areas. Funds awarded under Wisconsin's sustainable urban
development zone program are reserved for five large communities in the

2 EPA also uses its brownfields funds for grants to nonprofit organizations
for outreach, technical assistance and research, and tribal support related
to hazardous and solid waste issues. Little of this money, according to EPA
officials, is directly related to brownfields.

3 The state programs discussed in these appendixes are those aimed at the
environmental assessment and cleanup of brownfields. The appendixes do not
include state assistance and tax relief programs directed at economic
revitalization that may encourage brownfields' reuse but do not provide
special assistance for assessment and cleanup.

4 As indicated above, recipients of cleanup funds may lend the funds to
private parties.

state. To obtain financial assistance, some of the states require the
applicant to demonstrate that the project will create jobs or contribute to
the economic well- being of the community. For example, Michigan requires an
applicant to demonstrate the project's potential to create jobs and
regenerate economic activity. Likewise, Massachusetts requires project
applicants to generate jobs or contribute to the economic or physical
revitalization of the area where the project is located. EPA officials said
that EPA does not have geographic limits on the use of its assessment or
cleanup awards.

Other Aspects Other differences in EPA and the selected state brownfields
programs include the following:

Matching requirements. EPA does not require recipients to provide matching
funds for assessment assistance. The states impose matching requirements for
assessment grants, with the size of the award or the specific requirements
of the program determining the amount of the match.

Special federal requirements. Because EPA administers brownfields assistance
under CERCLA, recipients must comply with certain Superfund restrictions.
These restrictions include prohibitions on the use of funds at certain
sites, such as those contaminated solely by petroleum products. In addition,
recipients of money from EPA- assisted revolving loan funds are required to
file certain documents, including a community relations plan and a sampling
and analysis plan. Officials in the five states said they require recipients
of state brownfields funds to provide similar documents, but they believed
their documents did not have to be as detailed or extensive as EPA's.

Amounts of Grants and From fiscal year 1995 through fiscal year 2000, EPA
awarded assistance for

Loans Provided for brownfields- related purposes totaling $246.9 million. Of
this amount, $155.6

million was accounted for by pilot project assessment awards, showcase
Assessments and

community and finalist awards, and cleanup revolving loan fund awards.
Cleanups

These are the forms of assistance most similar to the state assessment and
cleanup grant and loan programs. The five states combined have made grants
and loans for assessment and cleanup totaling about $135. 9 million over the
lives of their programs. 5

Table 1 presents EPA's obligations for brownfields assistance for fiscal
years 1995 through 2000.

Table 1: EPA Brownfields Assistance Obligations, Fiscal Years 1995- 2000

Dollars in millions

Fiscal year Initiative 1995 1996 1997 1998 1999 2000 Total a

Pilot Project $5.0 $7.9 $7.6 $22. 2 $15. 3 $20. 8 $78.9

Assessment Showcase 3.0 0. 2 4.7 $7. 9

Communities b Showcase Finalists 4.0 $4. 0

Revolving Loan 9. 1 30.9 24.9 $64.8

Fund Targeted 6.5 d 11. 9 6. 1 8. 3 $32.8

Brownfields Assessments

State Voluntary 11.5 d 10. 3 10. 3 9. 5 $41.6

Cleanup Program Job Training 0. 4 2. 1 1. 5 2. 8 $6. 9

U. S. Army Corps of 2.5 2. 5 3.5 $8. 4

Engineers and Bureau of Reclamation

Other c 0.4 0. 9 0. 3 $1. 6 Total a $5.0 $8.3 $35.1 $52. 9 $66. 8 $78. 8
$246. 9

a Totals may not add due to rounding. b Includes the salary of federal staff
assigned to communities and paid over a number of years. c Because of unique
circumstances, EPA regions have awarded additional resources to some pilots.
d Includes all amounts awarded before 1998. Annual amounts were not
available for this period.

Source: GAO's analysis of EPA's data.

5 The five states began these programs on various dates over the last
several years. See apps. II to VI for details.

EPA's cleanup revolving loan fund program, which began in 1997, has awarded
$64. 8 million to recipients through fiscal year 2000. Recipients had lent
about $1 million for five cleanup projects though September 2000.

Table 2 shows, for each of the five states, the numbers and amounts of
grants and loans made for site assessment and cleanup. For each state, the
data are cumulative from the beginning of the program through the most
recent period for which the state provided data at the time of our review. 6

Table 2: Number and Amount of Grant and Loan Awards at Selected States

Dollars in millions

Assessment Assessment

Cleanup Cleanup Grants Loans Grants Loans Total a

State grants and loans No. Amount No. Amount No. Amount No. Amount No.
Amount

Massachusetts 0 $0.0 5 $0. 1 0 $0.0 3 $0.7 8 $0. 9 Michigan 101 8.0 15 5. 0
59 34.5 0 0.0 175 $47. 5 New Jersey b 24. 0 b 0.0 b 7.0 b 11.5 610 b $42.5
Pennsylvania 120 7.7 5 0.3 60 17.1 5 3.5 190 $28. 6 Wisconsin 0 0.0 c c 39
15.8 1 0.6 40 $16. 4

Total a 221 $39.7 25 $5.4 158 $74.4 9 $16.3 1023 $135. 9

a Totals may not add due to rounding. b New Jersey has made 518 grants and
92 loans for a total of 610 grants and loans made. New Jersey did not
provide us with the individual number of assessment grants, assessment
loans, cleanup grants, and cleanup loans made.

c Wisconsin does not provide loans for site assessments.

Source: GAO's presentation of state data.

As the table shows, in total, two- thirds of the states' money, about $91
million, was used for cleanups rather than assessments. Although individual
states differed with respect to whether they favored grants or loans, most
of their combined funding was provided as grants rather than loans. Michigan
distributed the largest amount of cleanup funds, all as grants. Wisconsin
and Pennsylvania also had substantial cleanup grant

6 Massachusetts data are as of March 2000, Pennsylvania as of June 2000,
Wisconsin as of January 2000, Michigan as of May 2000, and New Jersey as of
January 2000.

programs. New Jersey made most of its cleanup financing in the form of
loans. The Massachusetts program was recently established, and the state had
limited its assistance to loans rather than grants so as to preserve its
capital.

EPA and the States Determining the results of EPA and state brownfields
programs is difficult

Have Limited Data on because the data are limited. Most recipients of EPA's
brownfields pilot

assessment assistance have not reported on measures of program results,
Results

such as sites cleaned up or redevelopment investments made. 7 Reporting has
been incomplete because assistance agreements did not require full reporting
of results and because redevelopment may take several years or more to be
completed. We also found inaccuracies in the results data for three of the
five pilot assessment recipients that we reviewed. These pilot recipients
reported some of the largest accomplishments in the program. Data on the
results of the other EPA programs, such as the revolving loan fund program,
are also limited. Two of the five states did not track the economic benefits
of their loan and grant programs, and the data collected by the other three
represent forecasted rather than actual results. Assessing the impact of
brownfields programs is also difficult because reported results may be due,
at least in part, to factors other than government assistance.

EPA's Data Are Limited Information on brownfields program results is
important for demonstrating program effectiveness and accountability.
According to EPA, performance data are used to justify current activities,
advocate future funding, and report progress under the Government
Performance and Results Act. This act requires federal agencies to establish
performance goals and measures to help move them toward managing for
results. Performance goals and their associated measures are often expressed
as end outcomes, intermediate outcomes, or outputs. End outcomes are the
results of programs and activities compared with their intended purpose.
Intermediate outcomes show progress toward achieving the end outcomes.

7 As we reported in April 1999, other federal agencies also generally do not
have the comprehensive data necessary to determine the extent to which
brownfields programs' economic benefits will be achieved. See Environmental
Protection: Agencies Have Made Progress in Implementing the Federal
Brownfield Partnership Initiative( GAO/ RCED- 99- 86,

Apr. 9, 1999).

Outputs are typically activities or products, such as the number of
regulations promulgated, and do not directly measure results. 8

In part to compile information on the brownfields program's performance, EPA
maintains a database- the Brownfields Management System- containing
information on program outputs, such as the number of awards made, and
outcomes, 9 such as cleanups completed and redevelopment dollars leveraged.
(App. I contains information as of March 31, 2000, on measures tracked by
the system.) However, for a variety of reasons, program results data are
limited.

Assessment Results EPA's data on the results of its assessment assistance
are derived from quarterly reports and other documents submitted by
recipients; the data are accumulated in the management system. Not all
recipients have reported on all data elements because they have not been
required to and because some results may not occur for some time after
awards are made. In addition, we noted some inaccuracies in data reported by
three of the five recipients we contacted.

Recipients reported that assessments had been completed at 1, 939 properties
10 associated with the pilot projects through March 31, 2000. Table 3 shows
the data reported for assessment awards through March 31, 2000.

8 We have issued several reports and testimonies discussing EPA's lack of
reliable data for assessing the results of its environmental programs. For
example, see Environmental Information: EPA Is Taking Steps to Improve
Information Management, but Challenges Remain( GAO/ RCED- 99- 261, Sept. 17,
1999); Managing for Results: EPA Faces Challenges in Developing Results-
Oriented Performance Goals and Measures( GAO/ RCED- 00- 77, Apr. 28,

2000); and Environmental Information: EPA Needs Better Information to Manage
Risks and Measure Results( GAO- 01- 97T, Oct. 3, 2000). 9 In this report, we
use the term “results” to signify intermediate and end outcomes.
10 This number represents the total of 1,666 properties with brownfields
assessments completed with pilot funding, and 273 properties with
brownfields assessments completed with other funding. See table 3.

Table 3: Data on Assessment- Related Program Performance in the Brownfields
Management System, as of March 31, 2000

Dollars in millions

Measure Total

Assessment demonstration pilots awarded 306

Properties with brownfields assessments

1,998

started with pilot funding Properties with brownfields assessments

1,666

completed with pilot funding Properties with brownfields assessments

273

completed with other funding Properties assessed that do not require

623

cleanup activities Properties with brownfields cleanup

236

activities started Properties with brownfields cleanup

127

activities completed Properties with redevelopment activities

221

underway Cleanup dollars leveraged $147. 6

Cleanup/ construction jobs leveraged 1,541

Redevelopment/ construction dollars

$2, 189.4

leveraged Redevelopment jobs leveraged 5,104

Source: GAO's analysis of EPA's data.

EPA Does Not Have Results Data At our request, EPA disaggregated its data on
six measures of program

From All Pilot Assessment results by the pilot projects- cities, states, or
tribes- that reported them.

Recipients The six measures are the number of (1) properties with cleanups

completed, (2) properties with redevelopment underway, (3) cleanup dollars
leveraged, (4) redevelopment and construction dollars leveraged, (5) cleanup
jobs leveraged, and (6) redevelopment and construction jobs leveraged. As
shown in table 4, 27 percent or less of the 306 pilots that had received
awards reported results on any one of these six measures through June 2000.

Table 4: Data Reported by Brownfields Assessment Pilots on Six Measures, as
of June 2000

Number of Percent of

pilots 306 pilots

reporting on reporting on the

Measure the measure

measure

Properties with completed cleanups leveraged 48 16 Properties with
redevelopment underway 64 21 Redevelopment/ construction dollars leveraged
84 27 Cleanup dollars leveraged 76 25 Cleanup jobs leveraged 24 8
Redevelopment/ construction jobs leveraged 30 10 Note: We received these
data from EPA in June 2000. According to EPA, these data were the most
recent information reported by the grantees and entered into the database at
that time.

Source: GAO's analysis of EPA's data.

The results reported by the pilot projects varied widely. For example, the
pilot projects reported that their awards had helped to leverage from as
little as $6,700 to as much as $650 million in redevelopment and
construction funding, and from as few as 1 to as many as 1,400 jobs. Five
pilot projects accounted for 75 percent of the redevelopment dollars
leveraged, and 26 projects accounted for 75 percent of the reported
cleanups. According to EPA officials, a larger portion of recipients, an
estimated 85 percent or more, have reported on the number of assessments
accomplished than on the program measures shown in table 4.

EPA requires pilot assessment recipients to report on how they spent award
funds and the work accomplished but does not require recipients nationwide
to report the results (intermediate and end outcomes) achieved from their
use of the awards. According to EPA officials, the Paperwork Reduction Act
and Office of Management and Budget rules on collecting information from
recipients limit the agency's ability to require national, uniform reporting
of results. However, according to EPA officials, the regional offices
administering the assessment awards have encouraged recipients to report
their results. In September 1999, EPA defined a set of accomplishment
measures that regions could require of pilots in new or amended agreements
after September 30, 1999. However, headquarters' officials in charge of the
brownfields program do not track the extent to which regions have
incorporated these optional requirements and

therefore do not know the extent to which recipients will be expected to
report on such measures in the future.

Moreover, data on certain measures- for example, redevelopment dollars
invested or numbers of jobs created- may be available only from
privatesector entities that may not wish to divulge the information. In
addition, reporting may be limited in the six categories because some
results, such as cleanups completed and investments in redevelopment, might
not occur for some years after an award is made, and thus it would not yet
be possible for the recipients to report such information. EPA made 121
awards in fiscal year 1997 or earlier; 71 percent of the pilots that
reported results in one or more of the six categories received awards in
that period. Pilot project recipients that received awards in later years
may report results as time goes on.

Some Reported Results Were To discuss reported results, we contacted five
recipients, all city

Inaccurate governments, that reported large numbers of sites cleaned up,

redevelopments underway, and redevelopment/ construction dollars and jobs
leveraged. These cities are Dallas, Texas; Houston, Texas; Emeryville,
California; Shreveport, Louisiana; and Baltimore, Maryland. According to the
EPA data provided to us in June 2000, these cities represented 36 percent of
the reported properties with cleanups completed, 30 percent of the number of
properties with redevelopment underway, 80 percent of the redevelopment and
construction dollars leveraged, and 35 percent of the jobs leveraged.

The managers of three of these cities' brownfields programs said that some
of the results recorded in the Brownfields Management System were
inaccurate. In particular:

In the case of Shreveport, the reported number of properties with cleanups
completed was overstated. This number of properties with completed cleanups
should have been reported as 2, not 22. According to EPA, the city had been
counting the cleanups performed on segments of properties; however, under
EPA's current guidelines, pilots report the number of properties with
completed cleanups instead of segments of properties. According to the
information EPA provided to us in October 2000, Shreveport had continued to
clean up properties, bringing its total of properties with completed
cleanups to seven at that time.

In Baltimore, the amount of cleanup dollars leveraged, reported as $4
million, was incorrect. Of the $4 million, $3 million was leveraged from a

fund that pays for cleanup and noncleanup actions on brownfields. According
to the city's brownfields program manager, $2.4 million of the fund had been
expended mostly for noncleanup actions and was incorrectly counted as
dollars leveraged for cleanup actions. According to EPA, the $2.4 million
should have been counted as redevelopment or construction dollars leveraged.

In Houston, the number of redevelopment/ construction dollars reported as
leveraged was inaccurate. According to EPA data, $175 million of the city's
reported leveraged redevelopment/ construction dollars was funds received by
the city from the Department of Housing and Urban Development under the
Department's Section 108 loan guarantee program. According to the city's
brownfields coordinator, the $175 million was not leveraged through the use
of EPA brownfields funds. EPA told us that the $175 million accomplishment
was erroneous and has been removed from the city's total count of
redevelopment/ construction dollars leveraged. According to the city's
brownfields coordinator, the city has actually leveraged over $500 million,
but this was not reflected in the EPA data we received in June 2000.

EPA's 1999 guidance to pilot assessment recipients defines in some detail
the requirements for such measures as cleanups completed and dollars
leveraged. These guidelines may facilitate more consistent, accurate
reporting. EPA also operates a quality control process for its program
results data that EPA officials said involves reviews of the data by
regional and headquarters officials and discussions of any questionable
items with recipients. Also in 1999, EPA began to review the results data
reported by recipients in the past. According to EPA officials, most of the
errors detected in this review have been corrected and they are currently
attempting to resolve remaining issues.

Limited Reporting of Results for The Brownfields Management System also
contains information on awards

Other Forms of Brownfields to capitalize revolving loan funds, such as the
numbers of sites with

Assistance cleanups started and with cleanups completed using loans from a
revolving

fund. According to EPA data, recipients of revolving loan fund
capitalization awards had made three loans as of March 31, 2000, and these
loans contributed to the completion of the cleanup of one property. Through
September 30, 2000, recipients had made five loans of about $1 million in
total, but results data through that date were not available.

EPA officials believe that the program's relatively recent start, a lack of
loan administration capability in the recipient governments, and
restrictions associated with the award money have impeded lending. For
example, according to EPA's Director of the Office of Special Programs,
which oversees the brownfields program, the prohibition against using
revolving loan funds to clean up petroleum products is a significant barrier
to cleaning up brownfields because it prevents using the funds at sites
formerly occupied by gas stations. Such sites are often brownfields
properties. Officials in the states we visited believed that other Superfund
requirements, such as those related to community relations and environmental
sampling, were also limiting loans from the EPA- assisted revolving loan
funds. EPA has implemented a number of administrative changes to make its
cleanup assistance less restrictive, such as highlighting areas of
flexibility within the program, issuing guidance, and providing training.
EPA is also supporting proposed legislation that would provide greater
flexibility in using award funds. In fiscal year 2001, EPA will begin making
awards to states from its Leaking Underground Storage Tank Trust Fund to
assist in cleaning up gasoline- contaminated brownfields.

The management system also contains information on the Job Training and
Development Demonstration Pilot awards. Measures reported for these awards
include the number of participants completing training or obtaining
employment. For example, the report for the job training awards shows the
number of participants obtaining employment- 378 through March 31, 2000.
(See app. I.)

Linkages Between Program and Brownfields program managers in the five cities
we contacted generally

Results Are Difficult to Establish believed that the EPA funds were useful
or even essential to their

programs. Four said that their cities would not have had brownfields
programs without EPA funds. However, tying the cleanup or redevelopment of a
particular property, or other result, to an award can be difficult.

According to EPA guidance, results are leveraged if there is a “link
or nexus” to the efforts of an EPA- pilot funded activity or the EPA-
pilot funded activity is a “catalyst” for the results. However,
it cannot be known with certainty whether private money or other federal
money might have been invested, at some time, in a given property without
EPA's help. It is especially difficult to link EPA's assessment awards to
the redevelopment of specific properties because these awards can be spent
for assessmentrelated purposes, such as preparing inventories of brownfields
properties or facilitating community involvement, rather than for assessing
the

particular property whose cleanup and redevelopment are counted as program
results. In addition, results such as cleanup or redevelopment may occur
because of funding provided jointly by EPA and other sources. EPA's
Brownfields Management System collects data, for example, on the number of
“partnerships” formed with other government and nongovernment
entities and on the amounts of funding leveraged through such entities.

State Data Are Also Limited Three of the five states we contacted-
Wisconsin, Massachusetts, and Michigan- attempt to measure the impact of
their brownfields financial assistance programs on jobs or other economic
benefits. Wisconsin reports the accomplishments of its brownfields grant
program in terms of potential jobs created, potential increase in taxable
property values, and potential acres returned to productive use.
Massachusetts reports potential private investment and potential jobs
created as a result of its brownfields redevelopment fund assistance and its
insurance subsidy program. Michigan reports the amount of estimated private
investment and estimated jobs created at sites where state funds were used
to assess and clean up brownfields. (See apps. II, III, and VI.) However,
the source of the estimates for each state is information submitted by
assistance applicants. In contrast, according to EPA officials, results from
the agency's pilot assessment awards are recorded in its database only if
they have been achieved or recipients have demonstrated that there has been
a redevelopment commitment, such as a contract. State attempts to track
program accomplishments are limited, as are EPA's, by an inability to know
with certainty whether the government's assistance was essential to
achieving a cleanup, redevelopment, or other result.

Conclusions EPA has taken steps to obtain information on the results of its
brownfields program, but the data available thus far are limited. In prior
reports, we

have pointed out that EPA has long used activity, or output measures, such
as awards made, to manage its programs, and has found it challenging to
develop more results- oriented performance measures. Spurred by the
requirements of the Government Performance and Results Act of 1993, EPA has
made some progress in recent years in measuring the outcomes of its
programs, although- as we recently reported 11 -relatively few of its
performance measures are end outcomes. EPA is now attempting to track
certain outcomes of its brownfields program in terms of jobs created and
redevelopment investments. This effort is worthwhile and could produce data
useful for managing the program and assessing its results. However,

most recipients have not reported on these program measures, and small
proportions of those that have account for most of the program's reported
results in these areas. Also, we found inaccuracies in the data for
recipients that accounted for some large reported results- data that were
reported before EPA's existing reporting guidelines were developed. Accurate
data on the results achieved by recipients are useful for evaluating the
success of the program overall and the effectiveness of individual
recipients' programs. Comparative information about the recipients would be
useful for identifying best practices among their programs and for making
decisions about further funding. EPA instituted new quality control
procedures in 1999 and began a review of previously reported data and is in
the process of resolving remaining data issues.

EPA officials acknowledge the need for accurate data on the results of the
brownfields program. Recently, EPA authorized its regions to require new
fund recipients to report their results and developed definitions of
performance measures, which may improve both the quantity and quality of
data reported. However, brownfield program managers at EPA will need to
follow through on regional efforts to improve recipients' results reporting.
At present, the extent to which all regions are incorporating reporting
requirements in recipient agreements is unknown. We recognize that EPA faces
a challenge in balancing the need for data with the need to avoid placing
overly burdensome reporting requirements on recipients. However, the
importance of information for evaluating the success of the program
justifies greater efforts by EPA to obtain more complete data on the results
recipients achieve.

Recommendations for In order to produce better information on the impact of
the brownfields

Executive Action assistance program, we recommend that the Administrator,
EPA,

continue to review data reported by recipients before EPA's new guidelines
for results were put in place and make any corrections needed to ensure that
the data are consistent with the current guidelines; and monitor the extent
to which EPA regions succeed in improving

recipients' reporting of data on key results measures and, if warranted, 11
Environmental Information: EPA Needs Better Information to Manage Risks and
Measure Results( GAO- 01- 97T, Oct. 3, 2000).

consider additional action to encourage reporting, such as making it clear
to recipients that follow- on awards depend on reported results.

Agency Comments We provided a draft copy of this report to EPA for its
review and comment. In written comments, EPA said it had a number of
concerns about our

review's methodology and findings. EPA's principal concerns and our
responses are summarized below. The full text of EPA comments and our
detailed response are presented in appendix VII.

EPA said national conclusions could not be drawn on the basis of the five
states we selected, which have more established brownfields programs than
many other states. As our report indicates, we selected states that operate
some of the largest or most innovative brownfields programs in the nation.
Our intent was to compare the practices of EPA's program with these state
programs, and our report draws no national conclusions on the basis of our
review of the five state programs. EPA also said that our review of the
program results reported for five assessment recipients was too small and
too unrepresentative to justify our characterization of the quality of the
program's results data as “uncertain.” Based on further
information provided by EPA officials about their efforts to correct errors
in program results data, we have removed this characterization from the
report. However, we believe our findings indicate that EPA should continue
its effort to improve its data because (1) we found inaccuracies in three of
the five pilots we examined, (2) these pilots represented a significant
portion of the results reported for the program, and (3) most of the
program's results were reported before EPA established national definitions
for program measures. EPA said that it did not disagree with the substance
of our recommendations but had some concerns with their wording. We
discussed these concerns with EPA officials and made changes where
appropriate.

Scope and We performed our work at EPA headquarters in Washington, D. C. and
in

Methodology five states. To develop information on EPA's brownfields
program,

including the financial assistance provided and EPA's cleanup and
enforcement policies relevant to brownfields, we contacted officials in
EPA's Office of Special Projects Staff within the Office of Solid Waste and
Emergency Response. We obtained and reviewed various program and funding
documents. To obtain information on the program's reported results, we
discussed reporting policies with staff from the Office of

Special Projects and reviewed reporting instructions on the accomplishments.
We also asked EPA to prepare a report from its Brownfields Management System
showing which of the recipients had reported results in certain categories:
properties with completed cleanups, jobs leveraged, dollars leveraged, and
properties with redevelopment underway. We examined the recipients' reports
to EPA, which were the source of these data, and contacted some of the
recipients by telephone to discuss their use of the EPA award and its
contributions to the reported results.

We selected five state brownfields programs to compare with the EPA program
in terms of financial assistance provided and results reported. We selected
states that were known to have large active brownfields programs or that
offered unique forms of assistance and that offered grants and loans for
site assessments and cleanup. We identified these states through
consultation with EPA and professional organizations, such as the U. S.
Conference of Mayors and the National Governors Association. For each of the
states we selected- Massachusetts, Michigan, New Jersey, Pennsylvania, and
Wisconsin- we contacted officials in the state departments of environmental
protection and commerce to discuss the states' brownfields programs and
activities. Details on the state programs are contained in appendixes to
this report. The material in these appendixes is based on discussions with
state officials and the documents they provided. In addition, we provided
officials in each state with a draft version of the report sections
describing that state's programs; the officials provided technical
clarifications, which we incorporated where appropriate.

We did not independently verify the data provided by EPA and the states. We
performed our work from March through November 2000 in accordance with
generally accepted government auditing standards.

As arranged with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days after
the date of this letter. At that time, we will send copies of this report to
the Honorable Bob Smith, Chairman, and the Honorable Max Baucus, Ranking
Minority Member, Senate Committee on Environment and Public Works; the
Honorable John D. Dingell, Ranking Minority Member, House Committee on
Commerce; and the Honorable Carol M. Browner,

Administrator, EPA. We will also make copies available to others upon
request.

If you or your staff have any questions about this report, please contact me
at (202) 512- 3841. Key contributors to this report were Jim Donaghy,
Stephen Jones, and Les Mahagan.

Sincerely yours, David G. Wood Director, Natural Resources

and Environment

Appendi Appendi xes xI

EPA's Brownfields Program Program Authority and The Environmental Protection
Agency (EPA) established its Brownfields Structure

Economic Redevelopment Program administratively under the aegis of the
Superfund program in 1993 to help communities restore less seriously
contaminated sites that have the potential for economic development. EPA
administers its brownfields program under the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA). Fiscal year 1997 was the
first year the brownfields program became a separate budgetary line item.

According to EPA, the brownfields program helps states, localities, and
other agents of economic redevelopment revitalize brownfield properties both
environmentally and economically, mitigate potential health risks, and
restore economic vitality to surrounding areas. Through brownfield
agreements, EPA awards funds to eligible states, political subdivisions, or
Native American tribes. Assistance is provided for site assessment, site
cleanup, job training, community outreach, and for other purposes.

EPA has also developed guidance to provide some assurance that, under
specified circumstances, prospective purchasers, lenders, and property
owners do not need to be concerned with Superfund liability. This guidance
states that EPA will use its enforcement discretion not to pursue certain
parties associated with a site. EPA expects that these statements about its
position will alleviate concerns parties may have in becoming involved in
the cleanup and redevelopment of previously used properties.

The Outreach/ Special Projects Staff within EPA's Office of Solid Waste and
Emergency Response is responsible for managing the brownfields program.
Award oversight is done by designated staff within EPA's 10 regional
offices.

The federal government also provides a tax benefit to encourage brownfields
cleanup and redevelopment. Under federal law, certain environmental cleanup
costs at targeted sites may be fully deducted from federal income taxes by
eligible taxpayers in the year in which they are paid or incurred. The tax
incentive is applicable to properties that meet specified land use,
geographic, and contamination conditions.

Major Program The major elements of EPA's brownfields financial assistance
are presented

Elements below.

Table 5 describes, for each applicable element of the program, the number of
awards made, the amount of obligations incurred by fiscal year, and the
purpose of the program element.

Table 5: EPA' s Brownfields Financial Incentives and Federal Tax Incentive

Dollars in millions

Total number Total amount

of awards of obligations

fiscal years fiscal years

Initiative 1995- 2000

1995- 2000 Purpose

Assessment Pilot 362 $ 78.9 Through cooperative agreements, EPA provides
funding to state, local, Projects and tribal governments. Each pilot, as the
recipients are called, can be

funded for up to $200,000 over 2 years. In fiscal year 2000, an additional
$50,000 could be awarded to an applicant to assess the contamination at
sites that will be used for green space. Starting in fiscal year 2000,
previous recipients could receive a supplemental award of $150,000. Funds
must be used to identify, assess, characterize, and plan

responses or plan cleanup activities at contaminated sites targeted for
redevelopment or can be used for a broad range of support activities. Funds
may only be used at sites where there has been or may be a

release of a CERCLA hazardous substance or of a pollutant or contaminant
that may present an imminent and substantial danger to the public health or
welfare. Funds may be used for public/ community involvement activities to

explain site selection, assessment, characterization, or cleanup planning
activities at a site or set of sites. No recipient match is required.

(Continued From Previous Page) Dollars in millions

Total number Total amount

of awards of obligations

fiscal years fiscal years

Initiative 1995- 2000

1995- 2000 Purpose

Cleanup Revolving 105 $ 64.8 EPA provides funds to state, local, and tribal
governments to create Loan Fund revolving loan funds to provide public and
private entities with lowinterest loans to facilitate the cleanup and
redevelopment of brownfields.

Each pilot may be funded at up to $500, 000. Eligible applicants are states;
political subdivisions (including, cities,

towns, and counties); and Native American tribes that were awarded
Assessment Pilot assistance and political subdivisions that received
Targeted Brownfields Assessment funds. Eligible properties are brownfields
sites where there has been or may be

release of a hazardous substance or of a pollutant or contaminant that may
present an imminent and substantial danger to the public health or welfare.
Any entity, public or private, may borrow from a loan fund. Funds may be

loaned to an owner/ operator of the site only if the owner/ operator is not
liable for cleanup under CERCLA or EPA could use its enforcement discretion
not to pursue the party in question under CERCLA, as described by EPA
guidance. Brownfield Cleanup Revolving Loan Fund (BCRLF) cleanups must meet

the regulatory requirements identified for non- time- critical removal
actions for which a planning period of at least 6 months exists. a BCRLF
pilot funds may not be used to clean up products that are part of

the building structure and result in exposure within residential buildings
or business or community structures, for example, interior lead- based paint
contamination or asbestos, which results in indoor exposure. BCRLF pilot
funds may not be used to clean up petroleum products,

unless they are believed to be commingled with a hazardous substance,
pollutant, or contaminant. No recipient match is required.

State Voluntary $ 41.6 EPA provides funds to state and tribal governments to
enhance and Cleanup Programs develop voluntary cleanup programs that
frequently address brownfields.

States and tribes use the funds to complete regulations for voluntary
cleanup programs, purchase equipment to support program administration, pay
the salaries of agency staff to develop program procedures, build their own
capacity to oversee cleanups, and promote greater community involvement.

(Continued From Previous Page) Dollars in millions

Total number Total amount

of awards of obligations

fiscal years fiscal years

Initiative 1995- 2000

1995- 2000 Purpose

Targeted 500 $ 32.8 EPA uses these funds to enter into agreements whereby
states can hire

Brownfields contractors to identify the extent of contamination at
brownfields,

Assessments especially those that have not received funding under EPA's
Assessment

Demonstration Pilots program. EPA may also hire the contractors itself.
Funds can only be used at sites that are, or are suspected to be,

contaminated with hazardous substances. Funds are subject to CERCLA
requirements. Funds are generally not available for assessments at sites
where the

owner is responsible for the contamination on the site unless there is a
clear means of recouping EPA expenditures. Funds may not be used to conduct
cleanup or building demolition

activities. Job Training 37 $ 6.9 EPA makes awards to colleges,
universities, nonprofit training centers,

community job training organizations, and governmental units. Each job
training pilot can be funded up to $200,000 over 2 years. Funds may be used
(1) to train residents in communities affected by

brownfields in the procedures for handling and removing hazardous substances
and (2) for outreach to improve participation in training. Recipients must
be located within or near one of the brownfields

assessment pilot communities. Proposed training programs must establish
procedures to ensure that

participants are recruited from the neighborhoods where the brownfields
sites are located and graduates are employed in cleaning up hazardous waste
facilities. Funds should, whenever possible, be used to ensure that those
training

participants include, but are not limited to, the unemployed; those in
welfare- to- work programs and environmental justice communities, and those
who are members of other disadvantaged populations.

Showcase 16 $ 7. 9 EPA provides funds to showcase communities that represent
national Communities models for collaborative efforts to assess, clean up,
and reuse

brownfields. The funds can be used for the same activities that are allowed
under EPA's assessment pilot projects initiative. EPA announced additional
showcase communities in October 2000.

Showcase Finalists 24 $ 4. 0 Of 40 showcase finalists, only 16 were chosen
in fiscal year 1998 as showcase communities. The remaining 24 finalists also
received financial support from EPA, but in smaller amounts than the
showcase communities.

U. S. Army Corp of $ 8. 4 EPA funds the U. S. Army Corps of Engineers and
the Department of the

Engineers and Interior's Bureau of Reclamation to provide technical
assistance in

Bureau of connection with brownfields redevelopment projects.

Reclamation Other $ 1.6 Because of unique circumstances in certain pilots,
EPA regions have

awarded additional resources to some pilots. For example, at the closeout of
one pilot, another pilot was awarded the remaining funds to allow it to
continue brownfields efforts that benefit both communities.

(Continued From Previous Page) Dollars in millions

Total number Total amount

of awards of obligations

fiscal years fiscal years

Initiative 1995- 2000

1995- 2000 Purpose Total $246.9 b

Brownfields Tax The Brownfields Tax Incentive allows taxpayers to deduct
from their Incentive income eligible cleanup expenses in targeted areas.
Such expenses

might otherwise have to be capitalized and depreciated over a period of
years. This incentive was created by the Taxpayer Relief Act of 1997. The
taxpayer must hold the property for business or income generation. A state
agency must certify that the property for which a deduction is

being claimed is located in certain low- income or industrial areas or in a
jurisdiction that received an assessment pilot award prior to February 1997.
Incentives are only available at sites where there has been a release or

threat of a release of a hazardous substance. All eligible expenses must be
incurred after August 5, 1997 and before

January 1, 2002.

a The Superfund program has two basic types of cleanups: (1) remedial
cleanups, which are generally long- term cleanup actions at sites on the
National Priorities List (NPL), EPA's list of the nation's worst hazardous
waste sites, and (2) removal cleanups, which generally mitigate more
immediate threats at both NPL and non- NPL sites. EPA's removal cleanups
include (1) emergency removals for threats requiring immediate action, (2)
time- critical removals for threats requiring action within 6 months, and
(3) non- time- critical removals for threats where action can be delayed for
at least 6 months in order to adequately plan for cleanups.

b EPA also uses brownfields funds for awards to nonprofit organizations for
outreach, technical assistance and research and tribal support related to
hazardous and solid waste issues. Little of this money, according to EPA
officials, is directly related to brownfields.

Source: GAO's analysis of EPA's information.

Accomplishments EPA tracks its accomplishments through its Brownfields
Management

Resulting From System (BMS). BMS contains information on the Brownfields
Assessment

Demonstration Pilots, Brownfields Showcase Communities, Brownfields
Brownfields Program

Cleanup Revolving Loan Fund pilots, and Brownfields Job Training and
Development Demonstration pilots. Data in BMS is taken from applications,
quarterly reports submitted by recipients, and other documented sources.
According to EPA, the data collected serve as performance indicators and
allow EPA to justify current activities, advocate future funding,
demonstrate vital success stories, and allow a large number of communities
to benefit from successful brownfields innovations.

Table 6 shows selected accomplishments reported by BMS for the program
through March 31, 2000, the latest information available at the time of our
review.

Table 6: Selected BMS Accomplishments as of March 31, 2000

Dollars in millions

Total through Accomplishment March 2000

Assessment demonstration pilots and showcase communities Demonstration
pilots awarded 306 Properties with assessments started or completed

Properties with assessments started with pilot funding 1,998

Properties with assessments completed with pilot funding 1,666

Properties with brownfields assessments completed with other

273

funding Properties assessed that do not require cleanup activities 623
Properties with cleanup activities started or completed

Properties with brownfields cleanup activities started 236

Properties with brownfields cleanup activities completed 127

Properties with redevelopment activities underway 221 Cleanup and
redevelopment jobs and dollars leveraged

Cleanup/ construction jobs leveraged 1,541

Cleanup dollars leveraged $147. 6

Redevelopment jobs leveraged 5,104

Redevelopment/ construction dollars leveraged $ 2, 189. 4 Job training and
development demonstration pilots Training and development demonstration
pilots

Pilots announced 21

Pilots awarded 21 Participants in job training and development demonstration
pilots

Entered in training 725

Completing training 529

Obtaining employment 378 Cleanup revolving loan fund Pilots awarded 68
Number of loans

Applications received 5

(Continued From Previous Page) Dollars in millions

Total through Accomplishment March 2000

Loans made 3

Amount of funds loaned $0. 5

Source: GAO's analysis of EPA's data.

EPA Efforts to Address The potential for being held liable under CERCLA for
the contamination on

Liability and Cleanup brownfield properties is a significant barrier to
redevelopment, according

to lenders; property purchasers, such as developers; and property owners.
Issues

Most brownfields are not likely to be added to the list of potential NPL
sites because they are not severely contaminated. However, investors are
still wary of the cleanup liability provisions of both federal and state
legislation because these can apply even at non- NPL sites. As a result,
lenders and developers may avoid investing in potentially contaminated
properties, and current owners may avoid selling them. Some of the actions
EPA has taken to lower the barriers to brownfield redevelopment include the
following guidance:

A general policy statement on the liability of owners of uncontaminated
property containing groundwater that has been contaminated by a neighboring
property. This policy statement provides assurance that EPA does not
anticipate suing the property owner for groundwater contamination if the
owner did not cause or contribute to the contamination. Guidance that
expands the circumstances under which EPA will enter

into agreements with prospective purchasers of brownfields. The guidance
states the conditions under which EPA will not sue prospective purchasers
for contamination that existed before the purchase. A policy explaining when
lenders and municipalities that are involved

with brownfields are exempt from CERCLA. Soil screening guidance to help
decision makers quickly determine

which portions of a site require further study and which pose little risk to
human health and therefore may be ready for development without extensive
cleanup. A rule that limits the regulatory obligations of financial
institutions and

others who hold security interests in property on which petroleum
underground storage tanks are located.

In addition, EPA removed about 30, 000 sites from its list of potential
Superfund sites. By reducing the possibility of Superfund liability for
purchasers of these properties and others, EPA may encourage the properties'
redevelopment.

Federal Tax Incentive Under the Taxpayer Relief Act, environmental cleanup
costs for properties in targeted areas are fully deductible in the year in
which they are incurred,

rather than having to be capitalized. To take advantage of the deduction,
taxpayers must get an eligibility certification from the state environmental
agency prior to filing their tax returns.

To qualify for the federal tax deduction, the taxpayer must meet the
following criteria:

The property must be "held by the taxpayer," i. e., owned by the taxpayer.
Some types of long- term lease arrangements may qualify. The taxpayer must
hold the property for business or income generation

purposes. This may include trade or business property, investment property,
or property held for inventory, but it does not include personal use
property. There must have been a release, or threat of a release, of a
hazardous

substance on the property. The eligible property must be located in an area
that falls into at least

one of the following four categories: A census tract with a poverty rate of
20 percent or more; A census tract with a population of less than 2, 000
people that has

more than 75 percent of the tract zoned for commercial or industrial use and
that is located next to another census tract with a poverty rate of 20
percent or more; A federally designated Empowerment Zone or Enterprise

Community; or An EPA brownfields pilot site designated prior to February
1997.

According to officials in the Department of the Treasury, the Department
does not regularly track how often this deduction has been used or the
dollar amount of the deductions claimed. However, we asked officials in the
states we visited how many eligibility certifications had been requested by
taxpayers. Table 7 shows the total number of requests for these states as of
August 31, 2000.

Table 7: Eligibility Certification Requests, as of August 31, 2000 State
Number of requests

Massachusetts 3 Michigan 3 New Jersey 3 Pennsylvania 6 Wisconsin 8

Total 23

Source: GAO's analysis of EPA's information.

Appendi xII

Massachusetts' Brownfields Program Program Authority and Massachusetts'
brownfields program, enacted in 1998, provides various Structure

forms of financial assistance to encourage the cleanup and redevelopment of
brownfield properties. The legislation created a Brownfields Redevelopment
Fund to make grants and loans to public and private entities to clean up and
redevelop brownfield properties in economically distressed areas and
authorized state subsidies to purchase insurance to protect parties that
conduct or finance brownfields cleanups. The state also gives state income
tax credits for brownfields cleanup expenses and authorizes local real
estate tax abatements for brownfields developers. These benefits are
available at any site subject to the state superfund law. While there is no
statutory definition, program documents defined brownfields as properties
that are contaminated with oil or hazardous materials and have been used for
commercial or industrial activities.

Legislation in 1992 and 1998 amended the state's cleanup and liability rules
to encourage the cleanup and redevelopment of contaminated properties. The
law authorized licensed site professionals to oversee cleanups and provided
flexible, risk- based cleanup standards. The statutory changes also provided
greater liability protection for parties that cleanup brownfields and
exemptions for certain parties, such as lenders, who finance site cleanups.

Responsibility for the state's brownfields program is distributed among the
following state offices and agencies and a private corporation:

The Governor's Office for Brownfields Revitalization markets the benefits of
the state's brownfields program and provides technical assistance by helping
brownfields developers locate financing and sites. The Massachusetts
Development Finance Agency, referred to as

MassDevelopment, approves specific projects to receive grants or loans from
the Brownfields Redevelopment Fund. The Department of Environmental
Protection, through its Bureau of

Waste Site Cleanup, is responsible for all hazardous waste site cleanup
programs and regulations as well as for developing cleanup standards. Most
cleanups, including those done at brownfields, are overseen by licensed site
professionals and are subject to audit by the Department. The Office of the
Attorney General has authority to enter into

individually tailored brownfields covenants, known as not- to- sue
agreements, to provide liability relief to current or prospective property
owners.

The Massachusetts Business Development Corporation, a private sector company
that provides private financing and financial services, is responsible for
all aspects of the state's environmental insurance program.

Major Program The major components of the state's brownfields program,
including

Elements financial and non- financial incentives are described below.

Financial Incentives Grants and loans are available from the Brownfields
Redevelopment Fund for public and private entities to conduct site
assessments and cleanups in state- designated economically distressed areas.
MassDevelopment is responsible for establishing the terms and conditions for
receiving and using grants and loans. Because the fund has been given a one-
time state appropriation, MassDevelopment, in order to preserve the fund
principal, has awarded only loans thus far.

To further encourage brownfield site cleanup and redevelopment, the state
provides tax incentives both at the state and local level. The state allows
private entities a credit against their state income taxes for 25 or 50
percent of cleanup costs, depending on the thoroughness of the cleanup. The
state has also given municipalities the authority to negotiate with
developers to reduce or eliminate delinquent real estate taxes on
brownfields properties in exchange for cleaning up and redeveloping them.

The state encouraged brownfields cleanup and redevelopment further by
negotiating an environmental insurance policy with an insurance company that
is available to developers, including potentially responsible parties, and
lenders at reasonable premiums. In addition, the state will pay 50 percent
of the insurance premiums. This incentive is available to any party in the
state that undertakes a cleanup or lends funds for the cleanup of a
contaminated site.

Table 8 describes the state's brownfields financial assistance programs, the
amount of authorized funding, the source of program funds, and the purpose
of the program.

Table 8: Massachusetts' Brownfields Financial Incentives Amount of funding
Program authorized Source of funding Program purpose

Brownfields $ 30,000, 000 One- time state

Authorized to provide low- interest and no- interest loans and Redevelopment
Fund appropriation in fiscal

grants to public and private entities for site assessment and year 1999

cleanup. Brownfields

$ 15,000, 000 One- time state Provides environmental insurance for parties
that are involved

RedevelopmentAccess appropriation in fiscal

in cleanup and redevelopment to cover cleanup cost overruns to Capital

year 1999 and for the lenders of cleanup and construction loans to cover

loss owing to a default. The state will pay 50 percent of the insurance
premium.

State Tax Credit 25 percent or 50 Reduction in state

Provides credit to private entities that clean up and redevelop percent of
eligible

income tax contaminated sites in economically distressed areas. cleanup
costs

Municipal Tax Reduction in property

Enables municipalities to negotiate reductions in outstanding Abatement tax
tax obligations at contaminated sites in exchange for a

commitment from a new party to clean up and redevelop the sites and return
them to the community's tax rolls.

Source: GAO's analysis of Massachusetts' information.

Table 9 presents available data on each financial assistance program, such
as the number and amount of grants and loans awarded, and describes
recipient eligibility and other requirements for the programs.

Table 9: Massachusetts' Brownfields Financial Incentives Awards and
Requirements Cumulative number of

Cumulative award Program

awards amounts Selected program requirements Brownfields Redevelopment Fund

Assessment grants 0

Common requirements for site assessment and cleanup funding: Assessment
loans

5 $148, 168

Project proponents must not have caused or contributed to the releases or
have owned or operated the sites when the Cleanup Grants

0 releases occurred. Projects must generate jobs or contribute to the
economic or Cleanup Loans

3 $ 732, 300

physical revitalization of the area. Projects must result in a significant
level of community

benefit. Brownfields redevelopment funding must be necessary to

make the proposed reuse feasible. Projects must be located in an
economically distressed area. Projects must not be eligible for funding
under the state

program that provides funds to cleanup petroleum spills. Special
requirements for site assessment and cleanup funding: The maximum amount for
site assessments is $50,000. The maximum amount for site cleanups is
$500,000. 30 percent of funds is earmarked for grants and loans for site

assessments. For grants, 20 percent match by the recipient is required. For
loans, some match by the recipient is required and is

determined by the specific project. The match may be waived.

(Continued From Previous Page)

Cumulative number of

Cumulative award Program

awards amounts Selected program requirements Brownfields Redevelopment
Access to Capital

Brownfields Insurance 25 policies Value of insurance

Environmental insurance for parties conducting cleanups and Premiums
coverage:

redevelopment covers: $142.5 million

Any party performing a site cleanup. Cleanup costs that exceed the planned
costs for an approved Value of premium:

cleanup plan. The standard deductible is 15 percent of $ 1. 0 million

cleanup costs but is negotiable. Cleanup costs for unknown pollution
conditions discovered State share of

during cleanup within the property boundaries. premium:

Coverage for cleanup costs, property damage, and personal $ 0. 3 million

injury resulting from preexisting, unknown conditions beyond the insured's
property boundaries; a deductible applies. Developer share of

Business interruption because of pollution discovered outside premium:

the planned cleanup area; a deductible applies. $ 0. 7 million

Legal defense for claims arising from pollution conditions outside of
planned cleanup area. Maximum five- year term, but is negotiable.

Secured creditor coverage provides: Protection for lenders against loss on
cleanup loans and

contemporaneous related construction loans. This coverage protects the
lender from default on project loans arising from unanticipated
environmental costs in the unlikely event that the environmental insurance
coverage is insufficient.

State Tax Credit

Tax Credits Not available at Not available at the

Project proponents, or other persons, must not have caused the time of our

time of our visit or contributed to the releases or have owned or operated
the visit

sites when the releases occurred. Projects must be located in an
economically distressed area. Properties must be owned or leased for
business purposes. A 25- or 50- percent tax credit is available for project
cleanup

costs depending on whether the use of the property is restricted after
cleanup. Tax credit is available for cleanup costs incurred between

August 1, 1998 and January 1, 2005. Cleanup must begin on or before August
5, 2001. Tax credit may be taken upon completion of cleanup

conducted in accordance with applicable laws. Cleanup costs must be equal to
or exceed 15 percent of the

preremediation assessed value. Tax credit may be carried forward for 5
years.

(Continued From Previous Page)

Cumulative number of

Cumulative award Program

awards amounts Selected program requirements Municipal Tax Abatements

Municipal taxes abated Not available at Not available at the

Eligible entities are municipalities and private purchasers that the time of
our

time of our visit did not cause or contribute to the release and did not own
or visit

operate the site when the release occurred. Property must be zoned for
commercial or industrial use. Agreement must specify details such as the
amount of

outstanding tax obligation, payment term, interest rate, and any other
contractual obligations.

Source: GAO's analysis of Massachusetts' information.

Nonfinancial Incentives The state offers three major nonfinancial incentives
to parties performing site assessments and cleanups: flexible, risk- based
cleanup standards, greater liability protection, and reduced state
oversight.

The state's current cleanup rules, adopted in 1993, establish flexible,
riskbased cleanup standards that permit parties performing the cleanups to
more accurately determine the costs of the cleanups in advance and may make
cleanups less costly. For example, the regulations establish numerical
standards for deciding “how clean is clean enough” for 107 of
the most common contaminants in soil and groundwater. The changes also
provide the ability for parties to factor in site- specific information to
modify the numerical standards when appropriate.

In addition to revised cleanup standards, the state provides statutory
liability protection to parties that did not cause or contribute to the
contamination at a site, or that were not the owners of or operators at the
site at the time of the release, but who clean up the site. Upon achieving a
permanent cleanup or a remedy operation status, the parties are protected
from state claims for cleanup costs and natural resource damages and from
third- party claims for cleanup costs and property damage. The liability
protection is transferable to subsequent property owners that meet the same
eligibility requirements noted above. In addition, the amended rules
clarified liability protection for lenders whose loans are secured by
brownfields. These revisions encourage cleanups by providing a more certain
exemption from liability, resulting in more opportunities for parties to
obtain financing from institutions that were once reluctant to provide loans
for brownfield projects because of the threat of potential liability.

The Attorney General has authority to enter into individually tailored
brownfields covenants, referred to as not- to- sue agreements. These
agreements provide liability protection from suits brought by the
Commonwealth as well as contribution protection from third- party claims
under state law and common law property damage claims. Brownfields covenants
offer additional liability protection beyond that offered by the statute
itself, including increased flexibility, and broader eligibility and
liability relief. For example, agreements can provide liability limits prior
to completing the cleanup, as compared with the liability relief available
directly under the statute, which comes at the end of the cleanup process.
Moreover, parties that actually caused the contamination are eligible for
the brownfields covenant program even though they are generally not eligible
for relief offered by the statute.

One of the key features in the 1993 changes was the reduction in direct
state oversight of site assessments and cleanups. The state relies on
statelicensed site professionals, experts in assessment and cleanup, to
oversee the assessments and cleanups of most sites. According to the state,
using a licensed site professional allows the assessment and cleanup to
proceed at most sites without the delay sometimes resulting from the need to
obtain state approvals before initiating the work. The state audits 20
percent of the sites where licensed site professionals oversee the cleanup
and directly oversees the worst sites. Massachusetts is one of a small
number of states that rely upon these licensed environmental professionals
to oversee waste site cleanups.

Accomplishments of MassDevelopment, in its 2000 annual report to the state
legislature,

State Program reported on the number of potential jobs and the potential
private

investment that may result from loans made from the Brownfields
Redevelopment Fund. The Massachusetts Business Development Corporation, a
private company that administers the insurance program, also reported to us
information on the number of potential jobs and the potential private
investment that may result from participation in the state's environmental
insurance program. The information being reported comes from applications
for assistance.

Table 10: Massachusetts' Brownfields Program Accomplishments, Fiscal Year
2000

Dollars in millions

Accomplishments Number or amount Brownfields Redevelopment Fund:

Potential private investment $ 74. 0 Potential jobs created 325

Insurance Program:

Potential jobs created 2, 000 Potential private investment $ 50 Source:
GAO's analysis of Massachusetts' information.

Appendi xI II

Michigan's Brownfields Program Program Authority and In the early 1990s,
Michigan began to offer grants and loans to Structure

municipalities to assess and clean up brownfields. In 1995, as an incentive
to brownfields redevelopment, Michigan amended its laws to offer
nonfinancial incentives to cleanup and redevelopment through the use of
state- established cleanup standards and relief from liability from past
contamination on a site. In 1999, the state supplemented these earlier
programs with the Clean Michigan Initiative program to fund state- run
cleanups of brownfields with the potential for redevelopment. This program
was just getting started at the time of our review. The Department of
Environmental Quality oversees the operation of the state's brownfields
programs, including grant and loan assistance.

Michigan has also authorized local tax incentives for brownfields cleanup.
Municipal and other local government organizations can form agencies that
can pay for cleanup costs incurred at a site by capturing local tax funds
generated by newly redeveloped properties.

Major Program The major elements of the state's brownfields program:
financial

Elements incentives, liability relief, and cleanup standards are discussed
below.

Financial Incentives The state conducts cleanups of brownfields and offers
grants and loans to municipalities to assess and remediate brownfields.
Through the Clean Michigan Initiative, a state bond issue in 1999, the state
obtained $235 million to fund state cleanup of contaminated publicly owned
sites with the potential to be redeveloped. Under the program, the state
selects sites that have been nominated by municipalities, and it cleans up
the sites. As of July 2000, the state had selected sites for cleanup under
the program, but no site cleanups had yet been completed. Also, through the
state bond issue, the state obtained $20 million to provide brownfields
redevelopment grants to municipalities to assess and clean up brownfields.

According to state officials, the Clean Michigan Initiative and Brownfields
Redevelopment Fund program replace earlier state programs for assessment and
cleanup that may run out of funding in the near future. For example, since
1994, the state has provided over $7 million in grants to municipalities
through its Site Assessment Program. The state originally appropriated $10
million for the program. The state legislature does not plan to provide
additional funding to the program once the funding runs

out. Since 1997, the state has offered loans to municipalities under the
Revitalization Loan Program to fund site assessments as well as removal
actions needed for site assessment and demolition.

Under the Site Reclamation Program, the state has provided grants to
municipalities to conduct cleanups at the site of a new development. The
state has provided $32 million of the $35 million that was originally
appropriated for the program. The state legislature does not plan to provide
additional funding to the program once the funding runs out.

The state offers tax incentives to conduct assessments and cleanups at
brownfields through the Brownfield Redevelopment Authorities. The
authorities are municipalities that have the ability to capture the revenue
generated by new taxes created by redeveloped properties. The authorities
can use the tax revenues to reimburse the cleanup costs on the redeveloped
property. After the expenses are paid, the authorities can continue to
capture taxes for 5 years and use these funds for remediation costs at other
sites.

Table 11 describes the state's brownfields financial assistance programs,
the amount of authorized funding, the source of program funds, and the
purpose of the program.

Table 11: Michigan's Brownfields Financial Incentives

Dollars in millions

Amount of funding Program

authorized Source of funding Program purpose

Site Assessment $10 1988 state bond

Grants to municipalities for assessments Program issue Brownfields

$5 State appropriation Loans to municipalities for site assessments and
demolition and removal Redevelopment

actions needed for site assessment and demolition Loans

Site Reclamation $35 1988 state bond

Grants to municipalities to conduct cleanups Grants issue Clean Michigan

$20 1999 state bond Grants to municipalities to conduct assessments or
cleanup. This program Initiative (CMI)

Issue replaces the Site Reclamation Program. According to state officials,
once Brownfields

funding for the Site Reclamation program runs out, the state legislature
will Redevelopment

not provide additional funding. Grants

CMI $ 235.0 1999 state bond State selects sites with redevelopment potential
that are nominated by issue municipalities, and state conducts cleanup.

Brownfields Capture of property

These authorities are municipal entities that reimburse cleanup costs by
Redevelopment

taxes capturing tax revenues from newly redeveloped properties and can
capture Authorities

taxes for up to 5 years after reimbursement for cleanup expenses at other
properties.

Source: GAO's analysis of Michigan's information.

Table 12 presents available data on the number and amount of grants and
loans awarded for each financial assistance program and describes recipient
eligibility and other program requirements.

Table 12: Michigan's Brownfields Financial Incentives Awards and
Requirements

Dollars in millions

Cumulative Cumulative

number of award

Program awards

amounts Selected program requirements Site Assessment Program

Assessment grants 101 $ 8 Maximum grant of $1 million per project. In
applying for funds, municipality must demonstrate a potential for economic
development on property.

Revitalization Loan Program

Assessment loans 15 $ 5 Loans must be repaid in 15 years at an interest rate
of 2. 5 percent. No payment has to be made on the loan for the first 5 years
of the repayment term. Loans may be issued to a Brownfield Redevelopment
Authority and repaid with tax increment financing.

Site Reclamation Program

Cleanup grants 57 $33 Maximum grant of $1 million per project and maximum of
1 grant per community per fiscal year. According to Michigan program policy,
at a minimum, private investment must be twice the amount of the grant or
loan the person receives. Funded projects must also create jobs and/ or
increase property value. Funded projects must show economic development,
such as having an operational building on the property within 2 years of
completing activities using grant funds or the state can ask for repayment
of some or all of grant.

Brownfields Redevelopment Grants

Cleanup grants 2 $ 1. 5 Maximum grant of $1 million per project and maximum
of 1 grant per community per fiscal year. According to Michigan program
policy, at a minimum, the private investment must be twice the amount of the
grant offered to the community. Funded projects must also create jobs, and/
or increase property value. Funded projects must show economic development,
such as having an operational building on the property within 2 years of
completing activities using grant funds or the state can ask for the
repayment of some or all of the grant.

Clean Michigan Initiative Bond Fund

State- funded cleanups 85 $34. 4 Eligible sites must have potential to be
redeveloped and must be publicly owned. Eighty- five brownfield properties
were approved for funding through 9/ 30/ 99. According to state officials,
cleanup contractors were being selected for these cleanups during the summer
of 2000.

Source: GAO's analysis of Michigan's information.

Nonfinancial Incentives According to Michigan officials, state cleanup
standards and state laws that provide relief from liability of past
contamination at a site encourage the

assessment and cleanup of brownfields. The state cleanup standards dictate
the amount of contaminant that has to be removed from the site for it to be
considered safe for humans and the environment under state law. According to
state officials, these standards provide certainty in estimating cleanup
costs and reduce the cost of sitespecific environmental studies. The state
has defined generic and limited cleanup standards that are based on the end
use of the property and its current zoning.

Under state liability rules, purchasers of property who are not responsible
for causing contamination are not held liable for cleaning up past
contamination of the site if they conduct a baseline environmental
assessment of the property. This assessment, provides the basis for
identifying any new contaminant release for which the new owner or user
would be responsible. In addition, new users of a property must ensure that
“due care” is taken in the use of the property. Due care
requires that existing releases are not exacerbated and that the users of
the property and third parties are not exposed above the applicable
standard. According to state officials, prior to the passage of state
liability amendments, the fact that persons who did not cause the
contamination on a site could be held liable for past contamination was the
major impediment to encouraging people to clean up and redevelop
brownfields.

Accomplishments of Michigan tracks the estimated private investment and
estimated jobs

State Program created at sites where state funds were used to assess and
clean up

brownfields. As of May 2000, Michigan estimated that the properties at which
its grant and loan programs were used produced $1. 3 billion in private
investment and 6,436 jobs. The state obtains these estimates of private
investment and jobs created from the recipients of the funds at the time
they apply for the state funding. The state requires recipients of state
funds to report every 6 months for 2 years after the completion of state
funded work on the status of development- including the amount of private
investment and jobs created- at the sites where the funds were used.
According to state officials, many recipients are not reporting these data
to the state.

Appendi xI V

New Jersey's Brownfields Program Program Authority and Since 1994, New
Jersey has provided grants and loans to municipalities and Structure

private citizens for assessing and cleaning up hazardous waste sites,
including brownfields, through its Hazardous Discharge Site Remediation
Fund. In addition, the state offers tax incentives for brownfields
redevelopment. The state defines brownfields as “any former or current
commercial or industrial site that is currently vacant or underutilized and
on which there has been, or there is suspected to have been, a discharge of
contamination.”

As a further incentive for brownfields redevelopment, in 1998, the state
legislature passed a law that provides certain liability protection from
past contamination for persons who are not in any way responsible for
causing the contamination at a site that clean up contaminated properties,
including brownfields. According to state officials, using state- developed
cleanup standards, entities can easily determine the approximate cleanup
costs at a site and use of the state technical requirements for cleanups
offer predictability in the cleanup process by providing a definite endpoint
to many cleanups. This may encourage entities to become more involved in
cleanups.

The New Jersey Department of Environmental Protection and the New Jersey
Economic Development Authority jointly administer the state grants and loans
for assessment and remediation. According to state environmental officials,
the state environmental department performs a technical review of
applications for funding to make sure that the applicant is eligible and
that cleanup plans are appropriate. The state economic development authority
performs a financial review of the application.

Major Program The major elements of the state's brownfields program:
financial

Elements incentives, cleanup standards, and liability relief are discussed
below.

Financial Incentives New Jersey provides grants to municipalities to conduct
assessments of brownfields. To qualify for assistance, the municipalities
must have a development or redevelopment plan for the site or be able to
demonstrate a realistic opportunity for redeveloping the site.

The state offers both municipalities and private parties funding to conduct
cleanups. Municipalities can receive loans to conduct a cleanup if they

used an assessment grant. Also, municipalities are eligible for loans to
clean up sites that present an imminent threat to public health or the
environment. Municipalities can receive up to $2 million per year in
financial assistance from the state for assessing and cleaning up
brownfields.

Private parties are eligible for grants and loans to conduct cleanups. They
can receive grants to conduct cleanups if they use innovative technology;
acquired the site before December 31, 1983, and it had existing
contamination that they did not cause; or if they do cleanups that do not
require engineering controls- physical barriers, such as soil caps- to
prevent exposure to contaminants.

New Jersey provides cleanup loans to private parties in specific situations.
First, parties conducting cleanups in qualifying New Jersey municipalities,
as defined by state law, are eligible for loans. Second, private parties and
municipalities are eligible for loans to clean up sites that contain an
imminent threat to health or environment. Third, private parties are
eligible for loans if they conduct voluntary remediation that is not
required by the state or a court. Fourth, private parties that conduct
cleanups required by the state as a condition of closure, transfer, or
termination of operations can receive loans to pay for the cleanup costs.

Under the Brownfields Reimbursement Fund program and Environmental
Opportunity Zone program, New Jersey offers tax incentives to parties that
clean up contaminated sites. Under the Brownfields Reimbursement Fund
program, a party that conducts a cleanup can enter into an agreement with
the state to receive up to 75 percent of the cost of the cleanup from state
property tax revenues from the site that has been cleaned up. To be eligible
for the program, the site must be an integral part of a local redevelopment
strategy. Under the Environmental Opportunity Zone program, municipalities
can offer abatements of local property taxes for up to 15 years to parties
that clean up sites. Environmental Opportunity Zones are created by
municipal ordinance.

Table 13 describes the state's brownfields financial assistance programs,
the amount of authorized funding, the source of program funds, and the
purpose of the program.

Table 13: New Jersey's Brownfields Financial Incentives Amount of

funding Source of Program

authorized funding Program purpose

Hazardous $75,000,000 State

State offers 10 categories of grants and loans to municipalities and private
Discharge Site

appropriations persons to conduct assessments and cleanups of contaminated
sites. Each

Remediation Fund and bond fund

year the state allocates a percentage of the fund to each of the categories
as follows: Grants for assessments and loans for remediation to
municipalities (10

percent) Loans to private parties to conduct cleanups in qualifying
municipalities

selected by the state (15 percent) Loans to private parties or
municipalities to remediate imminent

environmental threats (15 percent) Loans to private parties to conduct
voluntary remediations that have not

been required by the state or a court (10 percent) Loans to private persons
for state- required remediation as a condition of

the closure, termination of operations, or transfer of the property (15
percent) Grants to innocent private parties for up to 50 percent of
remediation

costs, maximum $1 million per grant (15 percent ) Loans to private parties
for cleanup in a New Jersey Environmental

Opportunity Zone (5 percent) Grants to private parties of up to 25 percent
of project costs for cleanup

using innovative technology, maximum $100, 000 (5 percent) Grants to private
parties up to 25 percent of project cost for cleanups

without engineering controls, maximum $100, 000 (5 percent) Reserve fund
category- money in this fund can be allocated to the other

nine funds if needed (5 percent) Brownfields

Taxes generated The site must be an integral part of a local redevelopment
strategy.

Reimbursement from the property

Fund cleaned up

Environmental Abatement of

Municipalities can offer tax abatements of local property taxes for up to 15
Opportunity Zone property taxes years to parties that clean up sites.

Source: GAO's analysis of New Jersey's information.

Table 14 presents available data on each financial assistance program, such
as the number and amount of grants and loans awarded, and describes
recipient eligibility and other program requirements.

Table 14: New Jersey's Brownfields Financial Incentives Awards and
Requirements

Dollars in millions

Hazardous Discharge Site Remediation

Cumulative Cumulative Fund number of awards award amounts Selected program
requirements

Assessment a $24. 0

grants For municipalities to be eligible, they must create a development
plan or

be able to demonstrate a realistic opportunity for redeveloping the site.
Municipalities are not required to provide matching funds.

Cleanup grants a $7. 0 Private parties are eligible for grants to conduct
cleanups if they use innovative technology, are innocent parties b , or
conduct cleanups that do not use engineering controls- physical barriers
such as a soil cap to prevent exposure to contamination. For innovative
technology cleanups, a person must provide matching funds equal to 25
percent of the amount provided by the state and have net worth less than $2
million. The grants are up to 25 percent of remediation costs and cannot
exceed $100,000. To receive innocent party grants, a person must own the
property and have acquired the property before December 31, 1983, and must
not have used or discharged the hazardous substance on the site. New Jersey
provides grants to innocent parties of up to 50 percent of a site's
remediation cost and up to $1 million. To receive grants for cleanups that
do not require engineering controls, a party must provide matching funds
equal to 25 percent of the grant provided by the state and the party must
have less than $2 million in net worth. The grants are up to 25 percent of
costs of a cleanup and cannot exceed $100, 000.

Cleanup loans a $11. 5 Private parties are eligible for cleanup loans if
they conduct cleanups in qualifying New Jersey municipalities as defined by
the state; conduct voluntary remediation of sites that are not required by
the state or a court; clean up sites that contain an imminent threat to
public health or the environment; or conduct a cleanup required by the state
as a condition of closure, transfer, or termination of operations of a
facility.

Municipalities are eligible for cleanup loans if they received an assessment
grant or clean up sites that contain an imminent threat to public health or
the environment. Municipalities are eligible for up to $2 million per year
in grants to assess sites or loans to remediate properties. The state
requires loans be paid back within 10 years and charges an

interest rate that is 2 percent below the federal discount rate, with a
minimum of 3 percent charged.

a New Jersey has made 518 grants and 92 loans for a total of 610 grants and
loans made. New Jersey did not provide us with the individual number of
assessment grants, assessment loans, cleanup grants, and cleanup loans made.

b The state defines innocent parties as persons who acquire a site where
there has been a discharge of a hazardous substance that was not used by the
new property owners.

Source: GAO's analysis of New Jersey's information.

Nonfinancial Incentives According to state officials and documents, three
nonfinancial incentives to cleaning up and redeveloping contaminated sites,
including brownfields,

are state cleanup standards guidance, the state voluntary cleanup program,
and state laws that provide purchasers who conduct cleanups relief from
liability for past contamination not caused by the purchaser. According to
state officials in the Department of Environmental Protection, using the
state's cleanup standards guidance, a party can easily determine the cleanup
costs at a site, which may encourage developers to become involved in
cleanups. Furthermore, according to state officials, the new standards
guidance offers a sense of finality and predictability in that there is an
endpoint to the cleanup of a site and to the state's involvement at the
site. The standards guidance does not require a site- specific study to be
used at the site. In addition, the cleanup remedy is based on the planned
end use of the site.

According to the state, its voluntary cleanup program encourages cleanups of
contaminated properties, including brownfields. Under the Voluntary Cleanup
program, private parties and municipalities clean up contaminated sites
under state oversight. Under the program, parties enter into voluntary
agreements with the state to establish the scope and schedule of cleanup
activities. The agreements may encourage cleanups because they are not state
enforcement documents and, thus, do not contain penalties, which, according
to state documents, may have prevented cleanups from occurring in the past.

Other incentives to encourage cleanup and attract private investment in
brownfields are state laws that provide purchasers who conduct cleanups with
relief from liability. Under a 1998 state law, purchasers who did not cause
the past contamination on the site can clean it up and will not be required
by the state to conduct additional cleanup work in the future on previously
undiscovered contamination.

Accomplishments of New Jersey tracks the accomplishments of its brownfields
incentives by

State Program tracking the amount of funds it gives to municipalities and
private parties

each year and the program's success stories. In the annual report for the
Hazardous Discharge Site Remediation Fund and in other documents, the state
publishes examples of sites that have been cleaned up or assessed using
state funds. According to state officials, the state does not currently
track the amount of private investment or jobs created at brownfields where
state funds were used for assessment or cleanup.

Appendi xV

Pennsylvania's Brownfields Program Program Authority and Pennsylvania
provides financial assistance in various forms to stimulate Structure

the cleanup and redevelopment of brownfield properties. It makes grants and
loans to municipal and other developers for property assessments and
cleanups and publishes an inventory of brownfields properties to assist in
marketing the properties. Grants and loans for assessing and cleaning up
brownfields were authorized by the state in 1995. While the state has not
defined brownfields in its statutes or regulations, according to a
Pennsylvania official, it targets its brownfields assistance to the same
types of sites as EPA's brownfields program.

In 1995, the Pennsylvania legislature also amended the state's cleanup
requirements to authorize more flexible cleanup standards and to provide
greater protection from further liability for parties that cleaned up
contaminated properties. These changes applied to all contaminated sites
cleaned up under state law, not just brownfields. The flexible cleanup
standards and liability relief are intended to encourage cleanups by
reducing costs and providing certainty in the cleanup process.

The Department of Community and Economic Development is responsible for
administering grants and loans for site assessments and cleanups, developing
regulations to administer these incentives, and determining which sites will
be funded. The Bureau of Land Recycling and Waste Management, within the
Department of Environmental Protection, is responsible for the state's
hazardous waste site cleanup programs, including establishing cleanup
standards and overseeing site assessments and cleanups performed at
brownfields and other properties by private parties. The state does not
accept any funding from EPA for its brownfields program.

Major Program The major elements of the state's brownfields program,
financial

Elements incentives, flexible cleanup requirements, and liability relief for
certain

parties, are discussed below. Financial Incentives Grants and loans are
available from the Industrial Sites Cleanup Fund for

government and private entities to conduct environmental assessments and
cleanups. Grants are also available from the Industrial Sites Environmental
Assessment Fund for government entities and nonprofit economic development
agencies to conduct environmental assessments located in targeted areas. The
two funds are administered through the Industrial Sites

Reuse Program. Money for the assessment and cleanup funds comes out of the
Hazardous Cleanup Fund, the state's main cleanup fund, which receives the
proceeds from waste disposal fees. The Department of Environmental
Protection, through the Key Sites Initiative, uses state- funded contractors
to conduct environmental assessments on publicly owned sites that are
contaminated, or suspected to be contaminated, and have a high potential for
redevelopment.

The state recently revised its Industrial Sites Reuse Program to allow the
Department of Economic and Community Development to make performance- based
loans for the cleanup of nonhazardous waste or debris at brownfield sites. A
performance- based loan may be forgiven to the extent that agreed- upon
performance measures are met by the loan recipient. Performance measures are
based on the magnitude and timeliness of the cleanup, resulting economic
benefit of the cleanup to the state, and method used to dispose of the waste
or debris.

In an effort to market brownfield properties for redevelopment, the
Department of Environmental Protection established the Brownfields Inventory
Grant Program. Municipalities and economic development agencies receive a
$1,000 grant payment from the state for each brownfields property they list
on the Pennsylvania Brownfields Directory. The Directory, which is available
on the Internet, will provide an estimate of the number of brownfield sites
in the state and increase the opportunity for sites to be assessed, cleaned
up, and redeveloped.

Table 15 describes the state's brownfields financial assistance programs,
the amount of authorized funding, the source of program funds, and the
purpose of the program.

Table 15: Pennsylvania's Brownfields Financial Incentives

Dollars in millions

Amount of funding Program

authorized Source of funding Program purpose

Industrial Sites $ 2 Transfer of funds

Grants are provided to public entities for site assessments of Environmental

from the properties located in designated communities as well as targeted

Assessment Fund Hazardous Sites

areas. Cleanup Fund

Key Sites Initiative No limit Hazardous Sites State- funded contractors
conduct site assessments and prepare Cleanup Fund cleanup plans to encourage
and facilitate the voluntary cleanup

and reuse of abandoned industrial sites in prime locations. No maximum
authorization has been established for the program.

Industrial Sites $ 39 Transfer of funds

Grants and low- interest loans are provided to public and private Cleanup
Fund from the

entities for site assessments and cleanup. Hazardous Sites

State statute requires that 20 percent of the yearly amount Cleanup Fund

appropriated be used for grants and the remaining 80 percent for loans.

Brownfields Inventory $ 2 Transfer of funds

Grants are available to municipalities and economic development Grants from
the

agencies to inventory brownfield properties in their areas. Hazardous Sites
Cleanup Fund

Source: GAO's analysis of Pennsylvania's information.

Table 16 presents available data on each financial assistance program, such
as the number and amount of grants and loans, and describes recipient
eligibility and other requirements for the program.

Table 16: Pennsylvania's Brownfields Financial Incentives Awards and
Requirements Cumulative number of

Cumulative award Program

awards amounts Selected program requirements Industrial Sites Reuse Program

Assessment grants 120

$ 7, 664, 661 Grant and loan conditions: Grant and loan applicants must not
have caused or contributed to the Assessment loans

contamination at a site. 5

$ 278, 062 The maximum grant or loan amount for assessments may not exceed

75 percent of the assessment cost, or $200,000, in a single fiscal year,
whichever is less. The maximum grant or loan amount for remediation may not
exceed

75 percent of the remediation cost, or $1, 000, 000 in a single fiscal year,
whichever is less. Cleanup grants

60 $ 17, 144,408

A 25- percent match is required. Cleanup loans

5 $ 3, 529, 792

Special grant conditions: Grants for site assessments are available to
municipalities, counties,

municipal authorities, redevelopment authorities, and economic development
agencies for projects located in targeted communities as designated by the
Department of Community and Economic Development. Grants for site
remediation are available to municipalities, counties,

municipal authorities, redevelopment authorities, and economic development
agencies for projects that they own and provided they oversee the cleanups.

Special loan conditions: Loans are available to all eligible applicants,
government and private

sector. Loan interest rate is 2 percent. The maximum loan term for site
assessments is 5 years. The maximum loan term for site remediation depends
on the loan

awarded but may not exceed 15 years. All loans must be sufficiently secured
with business or personal

guarantees, real estate mortgage, letters of credit, or other forms of
collateral. As of June 2000, the program had pending 31 loan requests for

$20. 4 million and 64 grant requests for $4. 3 million, for a total of $24.
7 million.

Key Sites Initiative

Site Assessments 9 sites $ 3 million expended State assistance is available
to municipalities and redevelopment authorities that own contaminated
properties but lack the funding or the expertise to implement site
assessment and planning.

(Continued From Previous Page)

Cumulative number of

Cumulative award Program

awards amounts Selected program requirements Brownfields Inventory Grants

Grants 40 $ 51,000 Grants are for local governments and economic development
approved

agencies to inventory the brownfield properties in their areas. applicants

Grant recipients may receive up to $1,000 for each brownfield site listed in
the state's brownfields directory. Each grant is limited to $50, 000 per
year. Applicant must submit a claim for reimbursement of expenses

incurred in inventorying the sites. Source: GAO's analysis of Pennsylvania's
information.

Nonfinancial Incentives The two primary nonfinancial incentives that the
state provides to parties that clean up and redevelop brownfields are (1)
flexible and more clearly defined cleanup requirements and (2) liability
relief. The state's current cleanup rules and liability standards were
adopted in 1995, in an effort to encourage more cleanups of hazardous waste
sites by private parties and to get the sites back into productive use.

Prior cleanup policies required that contaminated sites be restored to
“pristine” conditions- a standard so rigorous that compliance
was prohibitively expensive and virtually unattainable, according to
Pennsylvania program information. According to the state, these policies
were impractical and contributed to the abandonment of thousands of
industrial sites throughout Pennsylvania. According to state officials,
cleanups under the Pennsylvania's new cleanup standards may be less costly
than if performed under EPA's Superfund program.

For example, state laws and regulations establish statewide cleanup
standards that prescribe the maximum concentrations of contaminants by
environmental media, such as soil and water. These standards may be used at
most sites instead of cleanup levels determined by site- specific studies.
The standards permit the party performing the cleanup to more accurately
determine cleanup costs in advance and to do less site- specific study. The
standards have proven popular with parties performing cleanups and have been
used at 75 percent of sites in recent years, according to Pennsylvania
program reports.

In addition, special cleanup provisions are available for parties developing
properties formerly used for industrial activities where there is no

responsible party to pay for cleanup or the property is located within a
state- designated area. A baseline remedial investigation of the property
must be done by the developer and documented in a report. The developer is
only responsible for remediating immediate, direct, or imminent threats to
the public health or the environment that would prevent the property from
being used. The developer is not responsible for any other contamination
identified in the report.

Pennsylvania also changed its liability rules. Prior laws held current
owners responsible for cleanup, even though the contamination on their
properties may have been caused by previous owners. This unlimited liability
often made it preferable to abandon a site rather than to restore it,
according to the state. The revised liability rules encourage cleanups by
providing a more certain end to liability after cleanup by limiting future
liability when cleanup standards are achieved and by expanding the
opportunities for parties to obtain financing from institutions that were
once reluctant to provide financing for brownfields because of the threat of
potential liability.

According to the revised Pennsylvania liability rules, any party that
demonstrates compliance with the state's cleanup standards is to be relieved
of further liability for the site cleanup and is not to be subject to
citizen suits or actions to force a contribution to cleanup costs. The
liability relief attaches to the property and continues with the property
through future property transfers. This protection applies to

the current or future owner or any other party who participated in the
remediation of the site, a party that develops or otherwise occupies the
site, a successor or assignee of any party to whom liability protection

applies, and a public utility to the extent that it performs activities on
the identified

site. The scope of liability relief has certain limitations. Liability
relief received from the state does not affect the responsible parties'
liability under CERCLA. Contaminants not identified prior to and during the
cleanup action that are later identified are not covered by the liability
relief. Nor is there any release of liability for contamination caused by a
party after cleanup.

The revised Pennsylvania rules expands liability relief for certain parties,
such as lenders and economic development agencies that hold an interest in
properties, unless they directly cause an immediate release or directly
exacerbate a release of contaminants.

Accomplishments of Neither the Department of Environmental Protection nor
the Department

State Program of Community and Economic Development formally tracks

accomplishments that arise from the state's program of brownfields financial
assistance. At the time of our review, the Department of Community and
Economic Development was developing a database that will track the
activities and accomplishments resulting from its financial assistance at
properties.

Appendi xVI

Wisconsin's Brownfields Program Program Authority and Wisconsin's
brownfields initiative comprises a number of programs that Structure

provide financial assistance and technical assistance to parties cleaning up
and redeveloping brownfield properties. These programs provide funding to
public and private parties for site assessments and cleanups, and tax relief
for parties that cleanup and redevelop brownfield properties. The state has
also enacted legislation to bring finality to liability after cleanup. A
state statute defines brownfields as abandoned, idle, or underused
industrial or commercial facilities or sites, the expansion or redevelopment
of which is adversely affected by actual or perceived environmental
contamination, a definition very similar to EPA's. Wisconsin officials
estimate that 10,000 brownfield sites exist throughout the state.

The state's brownfields initiative is administered by three state agencies:
the Department of Commerce, the Department of Natural Resources, and the
Department of Revenue.

The Department of Commerce, Division of Community Development, is
responsible for the following programs.

The Wisconsin Brownfields Grant Program, the most mature of the state's
financial assistance programs, provides grants to local development
agencies, municipalities, and private parties for cleanup and redevelopment.
The Wisconsin Community Development Zone Program assists those

seeking to start or expand a business in, or relocate a business to,
designated areas in Wisconsin. The program offers a tax credit against
income taxes of 50 percent of all eligible cleanup costs. The Wisconsin
Enterprise Development Zone Program also encourages

businesses to locate their projects in areas designated as high economic
distress areas. The enterprise development zones are smaller than the
community development zones and comprise only a single business. The program
offers a tax credit against state income taxes of 50 percent of all eligible
cleanup costs. The Department of Commerce is preparing a listing of
brownfield

properties in a state- developed inventory to assist in marketing these
properties.

The Department of Natural Resources' Bureau for Remediation and
Redevelopment has full responsibility for the following initiatives:

The Site Assessment Grant for Local Governments is a new program that
provides funding to local government units to make preliminary assessments
at brownfields sites. The Land Recycling Loan Program is also a new program
that provides

loans to local governments to investigate and remediate municipalowned
contaminated properties, including landfills. The funding for this program
is provided by a set- aside of $20 million from the state's clean water
revolving fund 1 to assist the municipalities. The Sustainable Urban
Development Zone Program is a pilot program

that provides grants to five Wisconsin communities to promote the cleanup
and redevelopment of certain brownfields in their communities.

The Department of Revenue is responsible for administering the Environmental
Remediation Tax Incremental Financing Program. This program allows political
subdivisions to pay for site investigations and cleanups from the increased
property taxes generated by redeveloped properties. In addition, Wisconsin
counties and the city of Milwaukee have authority from the state legislature
to cancel all or part of delinquent property taxes and the associated
interest and penalties on contaminated properties in exchange for getting
the properties cleaned up and redeveloped.

Major Program The major elements of the state's brownfields program
including various

Elements forms of financial assistance, state- developed inventories of
brownfield

sites, and expanded liability protection, are discussed below. Financial
Incentives Table 17 describes the state's brownfields financial assistance
programs,

the amount of authorized funding, the source of program funds, and the
purpose of the program.

1 States establish state clean water revolving funds through capitalization
grants provided by EPA and a state match. Loans are made from the funds to
address wastewater treatment and water quality issues.

Table 17: Wisconsin's Brownfields Financial Incentives Amount of

funding Source of Program

authorized funding Program purpose

Site Assessment $ 1. 45 million One- time state

New program that began in the summer of 2000. Funds are available to Grants
for Local

appropriation local government units to assess contaminated brownfield
properties. Governments

Brownfields Grant $ 22.2 million Biennial state

Funds are available to public and private parties to clean up brownfields
Program appropriation projects that promote economic development.

Land Recycling $ 20.0 million Clean water

Low- interest loans are available for investigating and remediating Loan
Program revolving loan fund municipal- owned contaminated properties,
including landfills.

Sustainable Urban $ 2. 38 million State appropriation New pilot program that
provides grants to five Wisconsin communities Development Zone

to create a comprehensive set of financial incentives to promote the Program

cleanup and redevelopment of certain brownfield areas in a community.
Cancellation of

Reduction in Wisconsin counties and the city of Milwaukee can cancel all or
part of Delinquent Taxes property tax delinquent property taxes, interest,
and penalties on a contaminated

property in exchange for cleanup and redevelopment. Of the 10,000 estimated
brownfields in the state, 1, 500 are believed to be tax delinquents.

Environmental No limit on the

Reduction in Governmental entities, such as counties, cities, villages, and
towns, can Remediation Tax

amount of eligible property tax recover their cleanup costs on properties
they transfer to other parties

Incremental costs

through the increased property taxes produced by subsequent Financing

redevelopment. Community

$38. 16 million in Reduction in state

An environmental remediation tax credit is available to parties Development
Zone

tax benefits income tax expanding or starting businesses in, or relocating
current businesses Program

available to, 1 of 20 community development zones. Enterprise

Maximum of $3 Reduction in state

A tax credit is available for environmental remediation to parties that
Development Zone

million per each of income tax start or expand businesses in distressed
areas. A zone is “site- specific”

Program the 79 designated

and applies to only one business. zones

Source: GAO's analysis of state information.

Table 18 presents available data on each financial assistance program, such
as the number and amount of grants and loans, and describes recipient
eligibility and other requirements for the program.

Table 18: Wisconsin's Brownfields Financial Incentives Awards and
Requirements

Dollars in millions

Cumulative number Cumulative Program of awards award amounts Selected
program requirements

Site Assessment Grants for Local Governments

Grants Not available at the time of Not available at

Eligibility is limited to local governments that did our visit the time of
our visit not cause the contamination at the site.

Applicant may be awarded up to 15 percent of the funds available in each
fiscal year. The party causing the contamination must be

unknown, unable to be located, or unable to pay for the cleanup. Local
governments are reimbursed for 80 percent

of the assessment costs. The state has received 85 applications requesting

$1. 8 million. Only $1 million is available.

Brownfields Grant Program

Grants 39 $ 15.8 Eligible parties are local development authorities,
municipalities, and private parties. Grants are awarded competitively and
can be used for environmental remediation and redevelopment. Matching
requirements increase from 20 to 50 percent as the size of the grant
increases. Program has received 106 requests totaling $51.5 million during
the first three rounds of competition. Of the 106 requests, only 39 grants,
totaling $15. 8 million, were awarded.

(Continued From Previous Page) Dollars in millions

Cumulative number Cumulative Program of awards award amounts Selected
program requirements

Land Recycling Loan Program

Loans 1 $ 0. 6 Eligible entities are local governments, including community
development and housing authorities, that own the property and, except for
landfills, did not cause the contamination. Funds are loaned at no interest
to pay for site assessments and remediation. The maximum loan term is 20
years. An applicant can receive no more than 25 percent of the $20 million
program funds authorized. Only 40 percent of the loans in each fiscal year
can be used for landfills. Awards are based on a project's ability to reduce
environmental pollution, threats to human health, and for non- landfill
projects, the extent to which the project will prevent the development of
undeveloped land. Funds are to be used for projects that remedy
contamination that affects or threatens to affect groundwater or surface
waters. No recipient match is required. Preliminary applications received
exceeded the $20 million set aside for this program. State officials
anticipate that not all applicants who submitted a preliminary application
will submit a full application.

Sustainable Urban Development Zone Program

Grants 3 communities Not available at Program eligibility is limited to the
following the time of our visit communities: Milwaukee, Green Bay, Oshkosh,
La

Crosse, and Beloit. Fund provides grants to assess, investigate, and

clean up brownfield properties. No recipient match is required. To date,
three communities have contracts with the

state and have started their projects. The state is negotiating contracts
with the remaining two communities. Each community gets a share of the $2.
38 million.

(Continued From Previous Page) Dollars in millions

Cumulative number Cumulative Program of awards award amounts Selected
program requirements

Cancellation of Delinquent Taxes

Property Tax Abatements 5 sites Not available Eligible parties are property
owners or potential owners. Authorized bodies may forgive a portion or all
of the delinquent property taxes.

Environmental Remediation Tax Incremental Financing

Tax Credit 3 communities are Not applicable Counties, cities, villages, and
towns can establish considering this program environmental remediation tax
increment districts

on one or more contiguous properties they own and clean up to recover
property assessment and cleanup costs. A district is created once the
property is sold to a private party. Eligible project costs include
environmental

investigation and remediation costs, as well as other costs. There are no
limitations on the amount of costs

eligible for financing. The maximum life of the tax increment financing is

16 years or when all eligible costs have been paid, whichever occurs first.

Community Development Zone Program

Property Tax Credit Not available at the time of Not available at

Eligible parties are individuals and businesses our visit the time of our
visit who locate their new or expanded business

projects within one of 20 development zones. The credit is 50 percent of all
eligible remediation

costs. Credits for remediation plus nonremediation credits provided to
business cannot exceed $38 million for all zones.

Enterprise Development Zone Program

Property Tax Credit Not available Not available Eligible parties are
individuals and businesses who locate or expand their businesses in an
economically distressed area. The Department of Commerce can designate up to
79 zones, 10 of which must be for environmental remediation and can vary the
zone benefits to encourage projects in areas of high distress. Zones can
exist for up to 7 years. The credit is 50 percent of all remediation costs.
Credits for remediation plus nonremediation credits provided to businesses
that locate in a designated area cannot exceed $3. 0 million for each zone.

Source: GAO's analysis of Wisconsin's information.

Nonfinancial Incentives In addition to financial incentives, Wisconsin
provides nonfinancial incentives to further encourage the cleanup and
redevelopment of

brownfield properties: an inventory system that links properties with
potential developers and expanded liability protection.

The Department of Commerce is developing a Web- based system, the
Brownfields Location Information System, to list brownfield sites in order
to promote their potential reuse by allowing users to locate properties that
meet their specific redevelopment criteria. Any party owning a brownfield
site in the state can complete and submit a form to the Department to have
the property listed.

The state has created a number of specific liability protections to
facilitate brownfields redevelopment. For example, Wisconsin law exempts
lenders, owners of properties contaminated by off- site sources, and local
governments from cleanup liability in certain circumstances. Parties that
conduct cleanups of contaminated properties are also given protection from
further liability, such as for contamination unknown at the time of cleanup.

Accomplishments of At the time of our visit, the Department of Commerce had
only provided

State Program accomplishments for the Brownfields Grant Program. Table 19
shows the

accomplishments reported under this program as of January 2000. The source
of the accomplishments is grant applications.

Table 19: Brownfields Grant Program Accomplishments Accomplishments Number
or amount

Potential jobs created 3, 364 Potential increase in taxable property values
$227 million Potential acres returned to productive use 507 Source: GAO's
analysis of Wisconsin's information.

Comments From the Environmental

Appendi xVII

Protection Agency Note: GAO's comments supplementing those in the report
text appear at the end of this appendix.

See comment 1. See comment 2.

See comment 3. Now on p. 6.

See comment 4.

Now on p. 17. See comment 5. Now on p. 17.

See comment 6. Now on p. 6.

See comment 7. Now on p. 16.

See comment 8. Now on p. 7.

See comment 9. Now on pp. 11 and 12.

See comment 10. See comment 11.

The following are GAO's comments on the Environmental Protection Agency's
letter dated November 22, 2000.

GAO's Comments 1. We believe that our methodology is appropriate for the
findings presented in our report. Our report presents data on the awards
made

by EPA and states for assessments. It does not compare the number of
assessments done by EPA or the states or compare the cost of assessments. We
agree with EPA that it is not accurate to draw national conclusions on the
basis of our review of five states, and we note that the report does not
reach any such conclusions. We also agree with EPA that the five states we
reviewed are not necessarily representative of other state programs, and, as
we indicated at the beginning of our report, the states we selected were
identified by EPA and other knowledgeable organizations as operating some of
the largest or most innovative brownfields programs in the nation.

2. Our report briefly discusses state superfund and voluntary cleanup
programs in the background section to provide some historical context for
the state brownfields programs. It also presents information on the cleanup
and liability standards adopted by the states for their voluntary cleanup
programs because these standards govern the cleanup of sites that receive
state brownfields financial assistance and because they are regarded by the
states as incentives for brownfields cleanups. However, our comparison of
funding provided by EPA and the states and our discussion of state
accomplishments use data only from the states' brownfields programs. Our
report does not discuss the need for a national program because this issue
is not related to the objectives of our review.

3. Our report discusses the data EPA and the states have obtained on program
results and the systems that EPA and the states have established to measure
results, and concludes that data on both EPA and state programs are limited.
We do not criticize EPA for attempting to collect program results data and,
in fact, recommend that they increase efforts to get it.

4. We added more information to our report on EPA's efforts to assure data
quality and to indicate that it is making a special review of the accuracy
of previously reported data. EPA provided data to us from its Brownfields
Management System in June 2000 showing that Shreveport had completed
cleanups at 22 properties. EPA did not disclose to us in

June that the number of properties with completed cleanups was overstated
for Shreveport nor had it revised its brownfields database. In September
2000, we contacted the Shreveport brownfields coordinator, who informed us
of the overstatement. In October 2000, when we questioned EPA about the
discrepancy, EPA told us for the first time that it had discovered the error
in April 2000.

5. Our selection of the five assessment pilots was not intended to be a
representative, random sample of pilots. Instead, we chose pilots to whom
EPA had attributed some of the largest accomplishments in the program. This
selection allowed us to review a substantial percentage of the program's
reported results in a short period of time. For example, according to data
EPA provided to us in June 2000, the pilots we selected represented 36
percent of the properties with cleanups completed, 30 percent of the
properties with redevelopment underway, 80 percent of the redevelopment/
construction dollars leveraged, and 35 percent of the jobs leveraged. We
found substantial overstatement of cleanups completed in Shreveport and of
redevelopment/ construction dollars leveraged in Houston. We also found a
misclassification of results in the data for Baltimore. Also, as we noted in
our report, prior to September 1999, EPA did not have nationwide guidance
that would help to ensure the consistent reporting of results. Based on
further information provided by EPA officials about their efforts to correct
errors in program results data, we have deleted from our final report a
characterization of EPA's data as uncertain. EPA officials told us that they
are reviewing data reported in the past by pilots and are in the process of
resolving issues about the accuracy of the data.

6. Our report does indicate that one reason for the limited data EPA has on
program results is that some of these results can take some time to occur.
For example, we noted that several years may elapse after an award before
certain results, such as the creation of jobs, are realized. In addition,
our report notes that the reporting of results may be limited because some
results, such as cleanup and redevelopment, might not occur for some years
after an assessment award is made. The report also cites one of our past
reviews showing that most federal agencies generally do not have the
comprehensive data necessary to determine the extent to which brownfields
programs' economic benefits will be achieved. EPA also said that we had not
faulted the states for not collecting information on program results. Our
report indicates that only three of the five states we selected were
reporting data on the results of their brownfields loan and grant programs
and that state data

on program results are limited. EPA said that its efforts to collect data on
the results of its brownfields program should be recognized. We have revised
our conclusions to recognize the efforts that EPA has made.

7. Our report defines “results” as intermediate or end outcomes,
such as cleanups completed or redevelopment activity begun. EPA said that it
has required recipients to submit quarterly reports on activities delineated
in the scope of work for their awards. For example, EPA officials said that
recipients have been required to report on how they spent their awards.
However, EPA does not have a national requirement that recipients report
program results as we have defined them in this report. In September 1999,
EPA defined a set of accomplishment measures that regions could require of
pilots in new or amended agreements after September 30, 1999. EPA also said
that it disagreed with statements made in our report implying that EPA does
not have a functioning performance measurement system in place and the tone
that implies some “fault” on the part of the agency for
pioneering efforts to collect information. The report does not imply that
EPA does not have a functioning performance measuring system in place. It
indicates that the data collected so far by the system for certain key
parameters are limited. In addition, we disagree that the tone of our report
faults EPA for attempting to collect data. In fact, we recommend further
efforts at data collection.

8. We have revised our description of EPA's brownfields initiative in light
of EPA's comment.

9. The data in our report cannot be used to compute costs per assessment
because the report shows only the number of assessment grants and loans made
by states not the number of assessments performed. State grants and loans
may have been used for more than one assessment.

10. We do not regard our comparison of EPA and state brownfields programs as
pitting the programs against each other.

11. As an agency of the U. S. Congress, GAO does not generally make
recommendations to state governments. We discussed the recommendations with
EPA officials and made changes where appropriate to address their concerns.

(160515) Lett er

GAO United States General Accounting Office

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Appendix I

Appendix I EPA's Brownfields Program

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Appendix I EPA's Brownfields Program

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Appendix I EPA's Brownfields Program

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Appendix I EPA's Brownfields Program

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Appendix I EPA's Brownfields Program

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Appendix I EPA's Brownfields Program

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Appendix I EPA's Brownfields Program

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Appendix I EPA's Brownfields Program

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Appendix II

Appendix II Massachusetts' Brownfields Program

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Appendix II Massachusetts' Brownfields Program

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Appendix II Massachusetts' Brownfields Program

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Appendix II Massachusetts' Brownfields Program

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Appendix II Massachusetts' Brownfields Program

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Appendix II Massachusetts' Brownfields Program

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Appendix II Massachusetts' Brownfields Program

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Appendix III

Appendix III Michigan's Brownfields Program

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Appendix III Michigan's Brownfields Program

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Appendix III Michigan's Brownfields Program

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Appendix III Michigan's Brownfields Program

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Appendix IV

Appendix IV New Jersey's Brownfields Program

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Appendix IV New Jersey's Brownfields Program

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Appendix IV New Jersey's Brownfields Program

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Appendix IV New Jersey's Brownfields Program

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Appendix IV New Jersey's Brownfields Program

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Appendix V

Appendix V Pennsylvania's Brownfields Program

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Appendix V Pennsylvania's Brownfields Program

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Appendix V Pennsylvania's Brownfields Program

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Appendix V Pennsylvania's Brownfields Program

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Appendix V Pennsylvania's Brownfields Program

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Appendix V Pennsylvania's Brownfields Program

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Appendix VI

Appendix VI Wisconsin's Brownfields Program

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Appendix VI Wisconsin's Brownfields Program

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Appendix VI Wisconsin's Brownfields Program

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Appendix VI Wisconsin's Brownfields Program

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Appendix VI Wisconsin's Brownfields Program

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Appendix VI Wisconsin's Brownfields Program

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Appendix VII

Appendix VII Comments From the Environmental Protection Agency

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Appendix VII Comments From the Environmental Protection Agency

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Appendix VII Comments From the Environmental Protection Agency

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Appendix VII Comments From the Environmental Protection Agency

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Appendix VII Comments From the Environmental Protection Agency

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Appendix VII Comments From the Environmental Protection Agency

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Appendix VII Comments From the Environmental Protection Agency

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Appendix VII Comments From the Environmental Protection Agency

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