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[Protecting the Environment 97]

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Will changes speed brownfield cleanups?

By TOM NEWLON
Port of Seattle

Love Canal, Times Beach, the Valley of the Drums -- these names are synonymous with environmental threats from unwise handling and disposal of hazardous wastes.

The national-level response to the threats posed by this disposal was the passage in 1980 of the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), also referred to as Superfund. Washington state followed suit with the Model Toxics Control Act (MTCA), which was passed as a citizen's initiative in 1988.

CERCLA and MTCA rely on the "polluter pays" principle to force the cleanup of sites either through the government ordering the cleanup, or the government performing the cleanup and seeking reimbursement for the costs. This approach is quintessential enforcement-style regulation: Bad people did bad things and after the good guys make them put it right, we can all go home happy.

Of course, nothing is quite that simple. Although there can be no doubt that CERCLA and MTCA have been successful in greatly reducing health and environmental hazards at a significant number of extremely dangerous and highly contaminated sites, the approach used in these laws has had unfortunate and unintended consequences.

In particular, the practically legendary unfairness of the liability scheme (among property owners and facility operators who do not view themselves as "polluters") has held back the redevelopment and consequent cleanup of the extremely large number of more moderately contaminated properties commonly referred to as "brownfields."

Evaluating potential ownership and use of these properties, which are estimated to number in the hundreds of thousands nationwide, is now much more complicated due to the threat of cleanup liability that can be imposed without regard to fault or relative contribution to the problem.

When contemplating expansion or relocation, many businesses now look to clean, undeveloped "greenfield" sites in order to avoid the various open-ended cleanup and liability issues at historically industrial sites. This is occurring even when the historically industrial sites are in extremely favorable locations and are not obviously or grossly contaminated.

Each decision to avoid brownfields and look instead to areas of new development brings with it direct environmental costs due to sprawl and habitat loss, as well as the environmental "opportunity costs" of failing to take advantage of the chance to address issues at a blighted parcel of old industrial property. Every cleanup or partial cleanup that doesn't happen due to the threat of liability is an opportunity for environmental improvement that is lost.

Terminal 5 site

The Port of Seattle's accelerated cleanup and redevelopment of Terminal 5 has been called "the poster child of brownfield success stories." The project called for the cleanup of the old West Seattle landfill, pictured above.
Photo provided by the Port of Seattle.


Advocates of even greater reliance on the enforcement-based approach to site cleanup might point out that the federal or state government simply needs to use the enforcement tools they have in the Superfund laws to address these brownfields properties. However, there are simply too many sites for the current cumbersome and costly enforcement-based approach to effectively deal with more than a minute fraction of the total.

The state Department of Ecology recognized this problem and has from the beginning of the MTCA program allowed voluntary cleanups under MTCA. These cleanups are frequently motivated by the desire to redevelop or sell property, and have far exceeded the number of cleanups that have come about due to Ecology enforcement measures.

However, the vast majority of voluntary cleanups are simple measures such as removing an underground storage tank and some associated soil contamination. Major redevelopment projects with more comprehensive cleanup measures have lagged behind in areas such as Seattle's Duwamish Corridor. Many observers believe that the uncertainties associated with environmental cleanup liability are a major factor in the underutilization and abandonment of properties in these areas.

Changes to facilitate market-driven cleanups

In recent years, changes to MTCA have been enacted by the Legislature to help promote and facilitate voluntary, market-driven cleanups. These changes include a 1994 bill promoted by Washington's Port Districts that expressly authorized "prospective purchaser agreements" (PPAs) whereby a prospective purchaser of contaminated properties would be able to obtain liability relief in exchange for bringing new resources to the cleanup (provided the purchaser was not already liable at the site).

The bill, which was passed unanimously by both the Washington State House and Senate, also directed Ecology to apply industrial cleanup standards at industrial sites, and gave the agency authority to employ deed restrictions and other "institutional controls."

The MTCA Policy Advisory Committee, which completed its work in late 1996 with recommendations to Ecology and the Legislature, also recognized the value of promoting voluntary brownfields cleanup and redevelopment efforts. Among the PAC recommendations were various measures designed to make brownfields projects easier to accomplish.

These included making MTCA covenants not to sue expressly transferable, removing the need for a project to provide "substantial public benefit" before the proponent could qualify for a PPA, and authorizing Ecology to take an "areawide" approach to cleaning up brownfields areas such as the Duwamish Corridor, rather than insisting that each property be cleaned up as if the property were an isolated island of contamination.

This year, the Washington Legislature enacted a bill implementing many of the PAC legislative recommendations, including those related to brownfields.

Ecology reaction

Unfortunately, the Department of Ecology and the Washington Attorney General's office have not been quick to fully embrace an approach to cleanup that is so fundamentally different from the enforcement-based approach that MTCA and CERCLA were founded on.

In implementing the changes mandated by the 1994 and 1997 bills, Ecology has consistently taken positions in its rulemaking efforts and its policies that seem to be concerned more with retaining the maximum amount of enforcement discretion, rather than maximizing market-driven cleanup opportunities.

The very clear message from both Ecology and the Attorney General's office has been that giving away anything to anybody on the liability front is a very big deal, and if you even want to talk about it you'd better have a big deal project and a lot of time. The result has been very few PPAs, with each one generally being a custom-designed effort that is heavily negotiated at great cost in time and effort on all sides.

What is missing from Ecology's approach is a recognition that the enforcement-based approach is inadequate to the task of even beginning to address the very large number of moderately contaminated sites, and that every requirement, obligation or prerequisite that is placed in the path of voluntary cleanup and redevelopment efforts means that less of them will happen.

If the goal is to maximize cleanups, not just maximize cleanups with a heavy Ecology involvement, creative facilitation of market-driven cleanups must be actively pursued by Ecology.

Comparing the two approaches

A "two worlds" analysis can be used to compare the future of brownfields cleanup efforts under, for instance, Ecology's current approach and attitude towards PPAs with a different world in which Ecology promotes these efforts by freely granting liability relief in exchange for pragmatic incremental improvements in environmental protection.

In World 1 (the current approach), a few prospective purchaser agreements per year will continue to dribble out of Olympia, mostly for public projects or very large developments. The cleanups that accompany these PPAs will be fairly comprehensive since under Ecology's current approach, PPAs must provide a comprehensive cleanup of the site, including both soil and groundwater.

Although many of these projects would have happened anyway, sophisticated and well-funded prospective purchasers will opt for the added protection of a PPA from Ecology, and will have the clout to get one.

In World 2, Ecology is much freer with PPAs. Standard forms are used for PPAs involving standard sorts of remedies for repeatedly-seen types of properties. Ecology recovers its costs for the PPA through fees for review of PPA proposals, much as it does now in the Independent Remedial Action Program.

Want to buy a piece of industrial property in the Duwamish? Willing to slap down paving over the property and provide a deed restriction limiting it to industrial use? Willing to throw in a little groundwater monitoring? Then write out a check and get in line for your quickie PPA.

In World 2, Ecology would still, of course, prefer full investigations and full cleanups at all of these properties. But in this world, Ecology is realistic enough to recognize that the vast majority of the risk can be ameliorated by simple measures such as capping and land use restrictions.

These are "interim remedies," and are not given final sign-off from Ecology as permanent cleanups. However, the new owner (who was not formerly responsible for the property's contamination in any way) nonetheless gets a release from ever being forced by Ecology to do further remedial measures related to the pre-existing contamination (subject to reopeners related to possible stupid actions on his part). After all, he wasn't responsible for the contamination before he bought the property, he's made the environment safer and cleaner by his actions, and it was not a site Ecology was contemplating addressing through enforcement (i.e., it wasn't about to get cleaned up anyway).

So why isn't everybody happy here in World 2?

Well, one possible source of discontent is what happens in World 2 in the unlikely event that the interim cleanup measures provided by the new owner under a PPA turn out to be inadequate to address a severe problem that crops up.

Jed Clampett strolls around the back, shoots at a squirrel, and up from the ground comes a bubblin' crude. Only this time it's black death instead of black gold. In World 1, Ecology has the easy target of the current property owner to go after to address the problem, and will look there first even if that property owner didn't dump the black death there in the first place. In World 2, the current property owner is probably protected against Ecology enforcement by his PPA. The former property owner, however, would still be liable, and is likely the party Ecology would be going after anyway if the PPA had not facilitated transfer of the property.

So how is Ecology disadvantaged in this situation (since the target is likely the same as it would have been -- he just doesn't happen to own the property anymore)?

Ecology is disadvantaged because enforcement is made more difficult by the liquidity of the asset. The former owner may have squandered or squirreled away the sale proceeds elsewhere, making it a more nimble target for the enforcement arrows to hit. Of course, even if he still owned the property, the now-nearly-valueless property may be the only asset that isn't squirreled away or squandered, making enforcement difficult in World 1 as well (as it frequently is).

Let's return to Jed Clampett in World 2. The new owner with the PPA has a choice of either addressing the black death oozing from the ground in an adequate fashion to at least allow the property to be safely used, or closing up some or all of his operations and writing off the asset.

If he takes more interim measures in order to preserve the utility of his property (such as removing free product and capping residual soil contamination), the immediate health and environmental hazard will be ameliorated without need for Ecology enforcement action. And he's much more likely to take these measures than the owner in World 1 who has not recently invested in a significant development on the property and may view it as a write-off already anyway.

The bottom line

The bottom line from this two-world comparison is that a great deal of new environmental cleanup may well be facilitated by Ecology's approach in World 2. Impacts on greenfields would be avoided, and industrial development would be more focused in the historically industrial areas that already have the infrastructure to handle greater industrial production.

The tradeoffs are that Ecology must spend time and effort establishing and implementing an as-yet-unfamiliar approach to cleanup promotion, and the rare enforcement action at a property with a PPA will perhaps be marginally more difficult.

PPAs are not a panacea. They are an example of a non-enforcement measure with great promise to facilitate a large number of voluntary environmental cleanups.

In a world of institutional inertia and increasingly limited governmental resources, Ecology's resistance to PPAs is understandable. PPAs do seem to conflict somewhat with the agency's enforcement prerogatives, and no matter how much simpler the process becomes, and even with cost recovery through fees, someone within the agency will need to initiate and manage the program to achieve the hoped-for benefits.

For now, however, the agency seems intent on making a big deal out of these agreements. The environmental cost of maintaining Ecology's current emphasis on the enforcement-driven approach is potentially huge in terms of lost opportunities to facilitate cleanups that are associated with the redevelopment of brownfields sites.

Other brownfields measures, including offsite points of compliance, presumptive remedies and areawide contamination approaches have been strongly recommended by the PAC and authorized by the Legislature. Their success in actually getting results is largely dependent on Ecology's willingness to leap into the unknown and embrace approaches to leveraging cleanup that are unfamiliar and somewhat counter-intuitive.

To the extent the agency and its lawyers remain focused on enforcement prerogative, these measures will be nice window dressing, but will fail to fulfill their vast promise for helping clean up the environment.


Tom Newlon is an environmental attorney for the Port of Seattle.

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