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July 25, 2002

New brownfields law comes with big changes

  • Developers get enhanced federal liability protection
  • By CHUCK WOLFE
    Foster Pepper & Shefelman

    Wolfe
    Wolfe

    On Dec. 20, 2001, both the United States House and Senate passed H.R. 2869, the Small Business Liability Relief and Brownfields Revitalization Act of 2001. President Bush signed the bill into law on Jan. 11.

    The bill represents the most significant changes to the federal cleanup law since the 1986 Superfund Amendments and Reauthorization Act, and reflects years of effort to achieve legislative amendments.

    The new law was endorsed by many major real estate and local governmental groups, supports the continued use of state voluntary cleanup programs and provides additional federal grant monies to address the contamination of brownfields sites.

    Enhanced Brownfields Revitalization Grant Funds and State Response Program Grant provisions double congressional funding of brownfields grants and provide new monies for qualifying state or tribal cleanup programs.

    More specifically, the new law provides enhanced federal liability protection for developers of brownfields sites:

  • Prospective purchase protection: Purchasers of contaminated properties are protected from federal Superfund liability, even if they knew about the contamination at the time of purchase. In order to obtain this protection, property owners must allow access to and cooperate with regulators as well as exercise care in dealing with the prior releases.

    Although the government cannot recover remediation costs from these purchasers, a lien may be recorded on the property if its unrecovered cleanup costs resulted in an increase of the property’s market value.

    Because petroleum-derived contamination is exempted from the federal cleanup law, the new protection may have limited applicability locally. Such contamination is considered a “hazardous substance” under Washington’s Model Toxics Control Act, which covers most of the brownfields sites in the state. Washington law retains “reopeners,” which allows the state Department of Ecology to require prospective purchasers to clean up property at a later date if changed conditions so warrant.

  • Innocent landowner protection: The new law clarifies that until the United States Environmental Protection Agency (EPA) promulgates required regulations by January 2004, compliance with the American Society for Testing and Materials (ASTM) due diligence standard meets the “all appropriate inquiry” standard to establish an innocent landowner defense for non-residential property. If a purchaser complies with the ASTM standard and finds no contamination, a liability defense would exist if contamination is subsequently discovered.

  • Contiguous property owner protection: The new law provides protection for property owners from liability for contamination that migrated from a property under separate ownership. This protection already exists under Washington’s cleanup law.

  • Strengthens support for state VCPs: The new law protects the property owner from federal enforcement action at the time of a release only when the owner cleans up the property under a state voluntary cleanup program (VCP). This protection would only be extended to eligible properties that have not been currently designated for cleanup under a federal program.

    In rare and limited cases, such as where contamination is migrating across state lines, where the release or threatened release poses an imminent or substantial endangerment environment of public health, and where the EPA determines that there is new information, the federal government could take an enforcement action against an owner who completes a cleanup under a state VCP.

    The new law also reforms historic Superfund liability to exempt from liability three classes of smaller parties who Congress felt had been unfairly subject to strict, joint and several liability over the years. The three classes include small quantity “de micromis” contributors of hazardous substances, certain generators of small quantities of municipal solid waste and contiguous property owners as described above.

    The new law is unclear and regulators and affected parties alike are in the process of understanding implementation details.

    As noted above, state cleanup programs will still control many cleanup efforts, without the level of protection now provided by the federal government. Nonetheless, the new law provides a sea of change in the governmental approach to contaminated properties that may create a significant impact for years to come.

    For more information on the new law, consult EPA’s resources at www.epa.gov/swer osps/bf/index.html.


    Chuck Wolfe chairs the Environmental Practice Group at Foster Pepper & Shefelman PLLC. He is also chair of the Environmental and Land Use Section of the Washington State Bar Association, and chair of the Planning and Law Division of the American Planning Association.



     


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