Superfund: Proposals to Remove Barriers to Brownfield Redevelopment
(Testimony, 03/04/97, GAO/T-RCED-97-87).
GAO discussed the Senate Committee on Environment and Public Works'
efforts to support the cleanup and redevelopment of abandoned and idled
business properties, commonly known as "brownfields", focusing on: (1)
legal barriers that the Comprehensive Environmental Response,
Compensation and Liability Act, commonly known as Superfund, present for
redeveloping brownfields; (2) types of federal financial support that
states and localities would like to help them address such properties;
and (3) how liability and funding provisions in two legislative
proposals pending before Congress respond to the legal barriers and
funding needs identified in GAO's work.
GAO noted that: (1) Superfund's liability provisions make brownfields
difficult to redevelop, in part because owners are unwilling to identify
contaminated properties and prospective developers and property
purchasers are reluctant to invest in a redevelopment project that could
leave them liable for cleanup costs; (2) while brownfields are usually
not contaminated seriously enough to be listed as Superfund sites, these
parties still fear that they may be sued under Superfund and state laws
for cleanup costs if they become involved with a contaminated property;
(3) in addition, most of the voluntary cleanup program managers in the
15 states GAO surveyed judged that volunteers' concerns about being held
liable for a property under federal Superfund law, once a cleanup is
complete, discouraged some of them from initiating a cleanup; (4) both
bills include provisions that would help to address these concerns,
including provisions to limit liability for some prospective purchasers;
(5) to help promote the redevelopment of brownfields, states and
localities would like federal financial support to cover some of the
costs of assessing these properties for contamination, cleaning them up,
and developing their voluntary cleanup programs; (6) over the past few
years, the Environmental Protection Agency (EPA) and Congress have
provided some funds which states and localities have used for activities
such as developing an inventory of brownfield properties; (7) funding
provisions in the bills would continue and expand this support and
respond to the states' and localities' needs; (8) for example, Senate
bills S. 8 and S. 18 would authorize EPA to provide grants to support
the characterization and assessment of brownfields; (9) GAO determined
that the amounts of the grants proposed in the bills for these
activities would be sufficient to cover the costs for most brownfield
properties; and (10) additional provisions in the bills for grants to
fund some cleanup costs and provisions in S. 8 to fund the development
of state voluntary cleanup programs should also promote brownfield
cleanup and redevelopment.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-RCED-97-87
TITLE: Superfund: Proposals to Remove Barriers to Brownfield
Redevelopment
DATE: 03/04/97
SUBJECT: Environmental law
State programs
Proposed legislation
Hazardous substances
Waste disposal
Environment evaluation
Grants to states
Pollution control
Urban economic development
Liability (legal)
IDENTIFIER: Superfund Program
EPA State Voluntary Cleanup Program
EPA National Priorities List
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Cover
================================================================ COVER
Before the Subcommittee on Superfund, Waste Control, and Risk
Assessment, Committee on Environment and Public Works, U.S. Senate
For Release
on Delivery
Expected at
9:30 a.m. EST
Tuesday
March 4, 1997
SUPERFUND - PROPOSALS TO REMOVE
BARRIERS TO BROWNFIELD
REDEVELOPMENT
Statement by Peter F. Guerrero, Director
Environmental Protection Issues,
Resources, Community, and Economic
Development Division
GAO/T-RCED-97-87
GAO/RCED-97-87T
(160385)
Abbreviations
=============================================================== ABBREV
GAO -
EPA -
NPL -
============================================================ Chapter 0
Mr. Chairman and Members of the Committee:
I am pleased to be here today to discuss the Committee's efforts to
support the cleanup and redevelopment of hazardous waste properties
across the country. Over the past several decades, manufacturing has
been declining in many of the nation's cities. When businesses
closed, they often left abandoned and idled properties, commonly
known as "brownfields." These properties are sometimes contaminated
with chemical wastes from manufacturing processes. Partly to avoid
the costs of assessing and cleaning up these properties according to
federal and state environmental laws, some new businesses have chosen
to locate in uncontaminated areas outside cities known as
"greenfields." These decisions have led to the loss of tax revenue
and employment in central city neighborhoods.
The Congress has been interested in finding ways to help localities
clean up and redevelop brownfields. This Committee asked us to
provide it with information on the (1) legal barriers that the
Comprehensive Environmental Response, Compensation and Liability Act,
commonly known as Superfund, presents for redeveloping brownfields
and (2) types of federal financial support that states and localities
would like to help them address such properties. This testimony
summarizes the major findings from our June 1996 report on brownfield
redevelopment and information from an ongoing review for this
Committee of states' voluntary cleanup programs.\1 These programs
substitute incentives for enforcement actions to encourage, rather
than compel, private parties to clean up contaminated properties.
States are beginning to use these programs to address brownfields
because they are faster and less costly than enforcement programs.
This testimony also comments on how liability and funding provisions
in two legislative proposals pending before this Committee respond to
the legal barriers and funding needs we identified in our work.\2
In summary, we found the following:
-- Superfund's liability provisions make brownfields difficult to
redevelop, in part because owners are unwilling to identify
contaminated properties and prospective developers and property
purchasers are reluctant to invest in a redevelopment project
that could leave them liable for cleanup costs. While
brownfields are usually not contaminated seriously enough to be
listed as Superfund sites, these parties still fear that they
may be sued under Superfund and state laws for cleanup costs if
they become involved with a contaminated property. In addition,
most of the voluntary cleanup program managers in the 15 states
we surveyed judged that volunteers' concerns about being held
liable for a property under federal Superfund law, once a
cleanup is complete, discouraged some of them from initiating a
cleanup. Both bills include provisions that would help to
address these concerns, including provisions to limit liability
for some prospective purchasers.
-- To help promote the redevelopment of brownfields, states and
localities would like federal financial support to cover some of
the costs of assessing these properties for contamination,
cleaning them up, and developing their voluntary cleanup
programs. Over the past few years, the Environmental Protection
Agency (EPA) and the Congress have provided some funds which
states and localities have used for activities such as
developing an inventory of brownfield properties. Funding
provisions in the bills would continue and expand this support
and respond to the states' and localities' needs. For example,
Senate bills S. 8 and S. 18 would authorize EPA to provide
grants to support the characterization and assessment of
brownfields. We determined that the amounts of the grants
proposed in the bills for these activities would be sufficient
to cover the costs for most brownfield properties. Additional
provisions in the bills for grants to fund some cleanup costs
and provisions in S. 8 to fund the development of state
voluntary cleanup programs should also promote brownfield
cleanup and redevelopment.
--------------------
\1 Superfund: Barriers to Brownfield Redevelopment (GAO/RCED-96-125,
June 17, 1996).
\2 S. 8, the Superfund Cleanup Acceleration Act of 1997, includes
provisions that would (1) limit Superfund liability for prospective
purchasers; (2) clarify the circumstances under which landowners who
did not contribute contamination at a site (innocent landowners) may
avoid liability; (3) limit liability for property owners whose
property is contiguous to a contaminated site; and (4) limit
liability at any site subject to a state cleanup plan. S. 18, the
Brownfield Remediation and Environmental Cleanup Act, also includes
provisions that would limit liability for prospective purchasers and
would clarify liability for innocent landowners. Both bills would
establish grant programs and provide assistance for brownfield
redevelopment.
BACKGROUND
---------------------------------------------------------- Chapter 0:1
Under Superfund, EPA can compel the parties responsible for hazardous
waste contamination to clean up a contaminated property, or pay for
its cleanup, in order to protect public health and the environment.
Also, any party that contributed to the contamination, even if this
action was legal at the time, may be liable and may be held
responsible for the entire cost of the cleanup. The federal
government targets its enforcement and cleanup resources to
properties on the National Priorities List (NPL), a list of highly
contaminated sites. However, parties may be subject to Superfund's
liability and enforcement provisions even if a property is not on the
NPL. Most states have adopted similar liability laws and enforcement
programs. States find that these stringent liability provisions have
provided leverage to convince responsible parties to clean up the
more highly contaminated sites in the states' inventories. As we
reported last year in a separate study of the potential cleanup
workload in eight states, the program managers in these states
pointed out that the threat of having a site placed on the NPL and
identified as one of the most contaminated sites in the country
created a major incentive for responsible parties to clean up their
sites.\3
Brownfields, however, are typically urban properties that are less
contaminated than NPL sites. EPA defines brownfields as abandoned or
underused facilities, usually in industrial or commercial areas,
where redevelopment is hampered by real or perceived environmental
contamination. While we identified no official nationwide count of
brownfields, the states estimated in a study conducted for EPA that
they may have about 85,000 potentially contaminated properties,
including brownfields, that need investigation and may need
cleanup.\4 The federal Superfund program and similar programs in the
states do not have the capacity to address these properties. These
programs have limited resources, which EPA and the states target to
small numbers of highly contaminated properties. As a result, states
and localities are looking for alternative ways to address
brownfields, including voluntary programs.
--------------------
\3 Impact on States of Capping Superfund Sites (GAO/RCED-96-106R,
March 18, 1996).
\4 An Analysis of State Superfund Programs, Environmental Law
Institute under contract with EPA (1996).
SUPERFUND'S LIABILITY
PROVISIONS RAISE A LEGAL
BARRIER TO REDEVELOPING
BROWNFIELDS
-------------------------------------------------------- Chapter 0:1.1
Most brownfields are not likely to be added to the NPL 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 to all sites, including
brownfields. As a result, developers who purchase properties may
become liable for any contamination later found there. Former
property owners may also be liable for cleanup costs if the
contamination occurred while they owned the properties. Thus, even
the suspicion of current or prior contamination may make developers
hesitant to purchase brownfield properties and owners reluctant to
place their properties on the real estate market.
The voluntary program managers in the 15 states we surveyed also
identified Superfund liability as a barrier to attracting volunteers
to accomplish cleanups, including those at brownfields. All but one
of these managers reported that their programs were addressing
brownfields so that they could be returned to productive use through
redevelopment and expansion. Twelve of the managers reported that
the limits on state liability that their voluntary programs provide
are a good incentive to attract volunteers. However, state officials
judged that some potential volunteers would still find Superfund
liability a deterrent to participation. Moreover, managers cited
limiting federal liability as one of the more important ways the
federal government could assist voluntary cleanups.
The Congress has considered actions to help address some of these
issues. For example, because lenders had feared being named as
responsible parties if they foreclosed on contaminated properties,
the Congress passed legislation limiting lenders' liability at such
sites.\5 S. 8 and S. 18 also include various provisions to help
address Superfund liability issues at brownfields, including limiting
the liability of prospective purchasers of these properties and
clarifying circumstances under which current landowners would not be
liable for past contamination.
--------------------
\5 The Asset Conservation, Lender Liability, and Deposit Insurance
Protection Act of 1996, contained in the Omnibus Consolidated
Appropriations Act, 1997 (P.L. 104-208).
FEDERAL FUNDING CAN HELP
SUPPORT BROWNFIELD
REDEVELOPMENT
-------------------------------------------------------- Chapter 0:1.2
During our reviews of brownfields and voluntary programs, we found
that states and localities would like federal funding support to help
them characterize, assess, and clean up brownfields, and establish
and support voluntary programs. Most of the states in our ongoing
review of voluntary programs--even those states that levied fees on
volunteers that were high enough to cover their program
costs--identified federal funding as a key way for the Congress to
promote their programs. Some states said they would use the funds to
help municipalities cover the costs of assessing properties where no
parties had been identified as responsible for the contamination or
where the cleanup costs would otherwise be too high to attract
voluntary cleanups. One state sought to use the support to establish
a revolving loan fund to support brownfield cleanups, similar to
provisions in both the bills. Others said they would use the funds
to, for example, publicize the programs or develop information
systems to better manage and evaluate the programs.
To date, both federal agencies and the Congress have provided some
funds in support of brownfield cleanups and voluntary programs, and
the pending two bills would continue and expand on this support. In
1995, EPA issued a "brownfields action agenda" which, among other
things, currently provides grants of up to $200,000 each to 76 state
and local governments to fund a wide variety of brownfield
demonstration projects. These include developing inventories of
brownfields and establishing policies to govern brownfield
redevelopment. The Department of Housing and Urban Development has
also provided funding to communities to redevelop brownfields once
they have been cleaned up. The Congress, in the House Conference
report accompanying EPA's fiscal year 1997 appropriations act,
indicated that more than $36.7 million of the current Superfund
appropriation would go to support EPA's brownfield activities and
voluntary programs.
The two pending bills would provide substantial amounts of additional
funding that states and localities could directly use to
characterize, assess and clean up sites. Specifically, the bills
give EPA the authority to provide Superfund grants of up to $200,000
per property, to characterize and assess brownfields.\6 Before these
properties can be redeveloped, an assessment must be performed to
determine the nature and extent of the contamination present.
Because the assessment requires research into a property's history
and a technical analysis of its conditions, a substantial expenditure
may be involved. For some brownfields, this expenditure may be
significant enough to discourage developers. We estimated that for
most brownfields, assessment costs could average $60,000 to $85,000
and for some properties with groundwater contamination could exceed
$200,000. Therefore, the grant provisions in the bills to help fund
property characterization and assessment should be sufficient for
most brownfields.
In addition to these assessment funds, both bills would give EPA the
authority to issue Superfund grants to pay for actual cleanup actions
at brownfields. S. 8 would also provide funds to assist states in
establishing and administering voluntary cleanup programs. Although
we asked the states for information on their costs to clean up
brownfield properties and to operate their voluntary programs, most
states did not yet systematically collect such data. Therefore, we
cannot offer a perspective on the sufficiency of the grants proposed
for brownfield cleanup actions or state voluntary programs.
--------------------
\6 The grants would be provided out of the Superfund trust fund which
has been primarily financed from taxes on crude oil and certain
chemicals.
-------------------------------------------------------- Chapter 0:1.3
Mr. Chairman, this concludes my prepared remarks. At this point, I
would be glad to respond to any questions you may have.
*** End of document. ***