You might not be aware of it, but every time you drive by an abandoned factory or former industrial parcel, you are probably passing a brownfields site. However, thanks to the Building Owners and Managers Association (BOMA) International and its real estate allies, those very same blighted sites may soon return to productive use due to a major change in Superfund law.
Knowing that brownfields legislation was badly needed by the country and would be politically non-controversial, Congress approved far-reaching brownfields legislation as one of its final legislative acts for 2001. President Bush then quickly signed the bill into law. Known as the Small Business Liability Relief and Brownfields Revitalization Act, it is the first significant brownfields legislation ever approved in the Superfund era. It is an important victory for the real estate community – one that BOMA International worked several years to achieve.
The Background on Brownfields
America’s brownfields dilemma originated in 1980 when Congress, in response to environmental debacles such as Love Canal, enacted the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). This act, known as the Superfund, authorized the federal government to deal with inactive waste sites whose hazardous substances posed a threat to public health. However, with the passage of this law, though not specifically mentioned by the legislation, lesser-contaminated sites known as brownfields were pulled into Superfund’s sphere.
Brownfields are formally defined as commercial and industrial properties that are vacant, abandoned, or under-utilized due to real or perceived environmental contamination. According to the U.S. Conference of Mayors, an estimated 400,000 such polluted tracts exist within the United States. These properties are under-utilized because of contamination, clean-up costs, and buyers’ fears of liability under Superfund law. However, these properties represent land that can be readily returned to use. By cleaning up these sites, we can create land suitable for redevelopment.
Private-sector interest in these properties, by parties like BOMA’s own builders and developers, has been retarded by Superfund’s severe liability requirements. The statute was intended to force actual polluters to pay for clean-up efforts, but it ensnared anyone who was financially involved with the property. As such, innocent real estate parties, such as prospective purchasers, innocent landowners, and contiguous property holders, were viewed under the Superfund’s liability provisions as no better than the actual polluters themselves. Thus, BOMA sought to remove the liability threat that prevented brownfields from being reutilized by real estate entities.
The Details of the Law
The legislation that Congress produced was a combination of two bills – the House’s small business liability relief bill, H.R. 1831, and the Senate’s far-reaching brownfields clean-up legislation, S. 350. BOMA and its real estate allies had long supported S. 350, which was created by a bipartisan coalition of Senate Environment and Public Works Committee members led by Senator Lincoln Chafee (R-RI). Demonstrating how non-controversial this effort was in the end, when offered the combined bill, both houses of Congress passed it without dissent and sent it to the President for his signature.
So what does this new law mean for real estate? Though its implementation is still being charted by the U.S. Environmental Protection Agency, there are some extremely important benefits. The law will result in the following:
• Clarification that innocent landowners are not exposed to clean-up liability.
• Protection from Superfund law for prospective purchasers of brownfields, which will occur even if the purchaser is aware of the contamination.
• A liability exemption for owners of contiguous properties – land adjacent to contaminated sites – if the nearby pollution migrates into their site.
• Additional federal funds for brownfields clean-ups.
• Enhanced commitment by the federal government for state voluntary remediation programs.
The Outcome for Real Estate and America
This legislation is truly a tremendous win for both real estate and America, as it will enhance the development of previously unusable land, thus creating jobs, increasing tax revenues, and preserving greenfields. Moreover, real estate developers will not have to worry about the massive costs of lawsuits, site clean-ups, and environmental remediation efforts.
For more information on this or other issues discussed in this column, visit BOMA International’s website (www.boma.org).