Superfund and the Brownfields Issue

Congressional research reportJan 16, 2001

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97-731 ENR

CRS Report for Congress

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Superfund and the Brownfields Issue

Updated January 16, 2001

Mark Reisch

Analyst in Environmental Policy

Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

Superfund and the Brownfields Issue

Summary

Congress has before it numerous bills to expand the Environmental Protection

Agency’s (EPA) brownfields program to help communities restore less seriously

contaminated sites that have the potential for economic development. EPA defines

brownfields as abandoned, idled, or under-used industrial and commercial facilities

where expansion or redevelopment is complicated by real or perceived environmental

contamination. A combination of potential environmental, economic and social

benefits gives this program broad support among governments, environmentalists,

developers, and communities.

The brownfields program was established administratively by EPA under the

aegis of the Superfund program; without explicit authority for it in the law, it has been

financed by the Superfund appropriation. The program has expanded to include 363

brownfields assessment grants (most for $200,000 over 2 years); 106 $350,000

revolving loan fund grants to help finance the actual cleanups; 47 job training grants;

and 28 Brownfields Showcase Communities where technical and financial assistance

from 20 participating federal agencies is being coordinated with state, local and nongovernmental efforts.

FY1997 was the first year brownfields became a separate budgetary line item,

at $37.7 million. For FY2000 the appropriation was $91.7 million. In the FY2001

budget, the Administration requested and was appropriated $91.6 million.

The 106th Congress extended the brownfields cleanup tax incentive to December

31, 2003, and expanded it to make all brownfields certified by a state environmental

agency eligible for the tax break. Other brownfield bills introduced in the 106th

Congress appeared to confirm the general direction EPA has taken. Two Superfund

reauthorization bills were reported in the House, each of which contained a title on

brownfields. The Transportation and Infrastructure Committee reported H.R. 1300

on September 30, 1999 (H.Rept. 106-353, Part I), and the Commerce Committee

ordered H.R. 2580 reported on October 13, 1999 (H.Rept. 106-775, part I).

Negotiations on S. 1090 in the Senate Environment and Public Works Committee did

not produce an acceptable bipartisan compromise and the committee agreed to end

their deliberations on August 4, 1999.

This report provides the history, background, and operations of the brownfields

program and briefly reviews its current status. For regularly updated information on

legislative activity, see CRS Issue Brief IB10011, Superfund Reauthorization Issues

in the 106th Congress.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Voluntary Cleanups vs. Brownfields . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Why Brownfields Is an Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Unclear Legal Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Expansion of the Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

The Brownfields Action Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Pilots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Partnerships and Outreach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Jobs and Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

The Brownfields National Partnership . . . . . . . . . . . . . . . . . . . . . . . . 6

The Brownfields Showcase Communities . . . . . . . . . . . . . . . . . . . . . . 8

Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Impact of Voluntary Cleanup and Brownfield Programs in the States

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

How Congress is Responding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Brownfields Tax Incentive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

106th Congress Legislative Proposals . . . . . . . . . . . . . . . . . . . . . . . . 16

List of Figures

Figure 1. Brownfields Funding: FY1993 to FY2000 . . . . . . . . . . . . . . . . . 14

List of Tables

Table 1. A Comparison of Agencies’ PlannedInvestment in the Partnership Agenda,

and Obligations and Loan Guarantees for Brownfields During Fiscal Years 1997

and 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Table 2. Brownfield and Voluntary Cleanup Program Benefits . . . . . . . . . . . . 13

Table 3. Brownfields Bills in the 106th Congress . . . . . . . . . . . . . . . . . . . . . . . 18

Table 4. Bills with Characterization Grants and Revolving Loan Fund Grants . 19

Superfund and the Brownfields Issue

Introduction

The Brownfields Economic Redevelopment Initiative is an effort begun in 1993

by the U.S. Environmental Protection Agency (EPA) to address sites that may be

contaminated by hazardous substances,1 but do not pose a serious enough public

health risk to warrant cleanup under the Superfund program. 2 EPA defines

brownfields as abandoned, idled, or under-used industrial and commercial facilities

where expansion or redevelopment is complicated by real or perceived environmental

contamination.3 They range in size from a corner gas station to abandoned factories

and mill sites. Estimates of the number of sites range from the tens of thousands to

as high as 450,000; they are often in economically distressed areas. Brownfield sites

face a paradox: they are generally not eligible for remediation funding under the

Superfund program because they pose a low public health risk while, at the same time,

developers may avoid them because of cleanup costs, potential liability, or related

reasons, thereby stalling economic development.

With bipartisan support, the 106th Congress considered a variety of bills, and the

Clinton Administration adopted certain initiatives, which sought to remove

disincentives that impede economic development of these sites. Brownfield issues

have been the specific subject of hearings, and have been discussed in Superfund and

appropriations hearings.4

Support for the brownfields concept comes from a wide array of states and

localities, environmental groups, business, developers, and community activists.

Proponents argue that the program has the potential to leverage federal, state, local

and private funds to improve the environment by addressing low-level, low-risk

contamination that otherwise might not be remediated. Once the environmental

The degree of contamination ranges from nonexistent to very contaminated but not serious

enough to warrant listing on Superfund’s National Priorities List.

The Superfund program was created by the Comprehensive Environmental Response,

Compensation, and Liability Act (CERCLA, or the Superfund law).

For an overview, see EPA’s brownfields

[http://www.epa.gov/swerosps/bf/index.html]

home

page,

available

at:

See, for example: Senate. Committee on Environment and Public Works,

Subcommittee on Superfund, Waste Control, and Risk Assessment. Brownfield Liability and

Resource Issues. Hearing, 105th Cong., 1st sess. 1997; House. Committee on Commerce,

Subcommittee on Finance and Hazardous Materials. Field Hearing on Federal Barriers to

Common Sense Cleanups. (February 14, 1997, Columbus, Ohio), available at:

[http://www.house.gov/commerce/finance/hearings/021497/witness.htm]

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problems are remedied, the economic potential can be realized, they argue. This might

include a wide range of economic uses, possibly creating jobs, recreational

opportunities, and local tax revenues. From this, there may be positive social benefits

for affected communities negatively affected by environmental contamination and

economic decline. Environmental groups and EPA want assurance that EPA will

retain the authority to intervene in cases of threats to public health or the

environment, but otherwise objections to the brownfields legislation are primarily

directed more at specific procedural matters, such as whether the program should go

beyond characterizing sites (i.e., determining the degree and nature of any

contamination) and fund cleanup as well, and whether legislation should be separate

from Superfund amendments.

Two major legislative issues in the congressional debate have been: (1) should

the program be authorized explicitly, and if so how; and (2) should certain tax

incentives be adopted to encourage more cleanups. There is also the strategic and

political question of whether to treat the popular brownfields legislation within overall

Superfund reform legislation or to consider it separately. 5

One way states are dealing with contaminated sites is through voluntary cleanup

programs, which had been adopted by 44 states as of the end of 1997. There are, of

course, a variety of federal programs that target urban renewal,6 and the brownfields

program is designed to supplement, not duplicate them. The program itself does not

aim to perform the cleanups. It generally provides grants which are to serve as

catalysts to bring together other resources in the communities to provide the

environmental cleanup component of redevelopment efforts. Overall, the brownfields

program is intended to fill a previously unmet need and to offer hope for a cleaner

environment, new jobs, a stronger tax base, and economic recovery.

Voluntary Cleanups vs. Brownfields. Voluntary cleanup programs are statesponsored programs that encourage owners or developers to work cooperatively with

the state outside of the state’s enforcement-driven cleanup program, and thereby

avoid some of the costs and delays associated with that approach. Cleanup standards

are usually identical to those used at state-lead enforcement sites, according to the

Environmental Law Institute (ELI).7 Most states provide incentives for participating

in the program, most commonly some form of liability release. Other incentives

include a streamlined process, financial or tax incentives, and technical assistance.

States created voluntary cleanup programs in the absence of federal legislation or

standards, and these programs vary considerably.

See CRS Issue Brief IB10011, Superfund Reauthorization Issues in the 106th Congress,

updated regularly.

For more information on urban development, see CRS ReportRS20381, Empowerment

zone/enterprise communities program: information on Round II & III. , by Bruce Mulock.

Updated October 5, 2000, 6 p.

An Analysis of State Superfund Programs: 50-State Study, 1998 Update. Washington,

1998. p. 40.

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States define brownfield sites in different ways, but they usually echo EPA’s

definition, encompassing “urban industrial or commercial facilities that are abandoned

or underutilized due, in part, to environmental contamination or fear of

contamination.”8 ELI noted that a few states have different standards or cleanup

approaches for brownfields and voluntary cleanup sites. Florida provides for sitespecific cleanup levels based on risk, allowing institutional or engineering controls

instead of the state-wide remediation levels otherwise required. North Carolina

allows for alternative cleanup strategies focusing on removal of exposure pathways

at certain brownfield sites. And Mississippi’s standards were not set, but the statute

requires that risk assessment be used.9 The difference in brownfields and voluntary

programs in the states is often a matter of semantics. The Environmental Law

Institute distinguished them thus:

Typically, ... voluntary programs do not focus on redevelopment nor do they

target urban sites specifically. Rather voluntary programs are more often aimed

at getting simple, less contaminated sites cleaned up regardless of whether they are

reused. Brownfield programs, on the other hand, are more likely to focus on

redevelopment and be part of a broader State strategy or set of social policies

aimed at improving distressed urban areas.10

Why Brownfields Is an Issue

EPA’s brownfields program has become a legislative issue for several reasons.

First, EPA initiated the program administratively, using Superfund monies; this has

raised the question of its legal authority as well as whether the funds have been

expended in accordance with Superfund statutory criteria. Second, the program has

proved generally popular and has expanded substantially; with the increasing financial

commitment, questions have arisen about the effectiveness of the program and

whether the assumptions underlying the use of the funds have proved valid. These

two issues — legal authority, and program assumptions and effectiveness — have led

to congressional interest in statutorily authorizing the program and articulating its

authorities more clearly — and this comes at the same time other proposals for

amending Superfund are being made. Brownfields legislation has become intertwined

with Superfund proposals, and whether the two should be separated or not is a third

issue. Twelve of the 28 brownfields bills that the 106th Congress considered,

including the two that were reported, would have provided the statutory authority.

The two were Superfund reauthorization bills: H.R. 1300 was reported by the House

Transportation and Infrastructure Committee on September 30, 1999 (H.Rept. 106353, Part I), and H.R. 2580 was ordered reported by the House Commerce

Committee on October 13, 1999 (H.Rept. 106-775, part I).

Environmental Law Institute, p. 43.

Environmental Law Institute, p. 46.

Environmental Law Institute, p. 44.

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Unclear Legal Authority

The Superfund program was created to address major threats to public health

and the environment, and the authorized uses of Fund monies are specified in

CERCLA Section 111. EPA administratively created the brownfields program under

Superfund authority and financed it from its Superfund appropriation. Beginning in

1993 and for the first 4 years of the program, EPA drew on Superfund monies for the

program without explicit statutory authority. However, beginning in FY1997,

appropriations legislation included funding for brownfields activities. As the amount

of funding rose and the nature of expenditures went beyond cleanup, some in

Congress questioned EPA’s authority for carrying out the program. This issue was

specifically raised by House Appropriations Subcommittee Chairman Jerry Lewis at

a hearing on EPA’s FY1998 appropriations.11 In response, EPA Administrator Carol

Browner relied on opinions from the agency’s General Counsel which said the

brownfields pilots were legally acceptable under CERCLA section 104 if limited to

pre-cleanup activities. Some of the other activities could be funded under the broad

research authority of section 311(c).12 EPA’s Inspector General (IG) also considered

this question of legislative authority and reviewed the General Counsel’s legal

opinions, but did not comment further.13 The lead IG investigator observed that

Congress had appropriated funds for the brownfields program, 14 implying that the

appropriations represented tacit congressional acceptance of EPA’s position.

Despite the questions about the program’s statutory basis, congressional

appropriators have acceded to the popularity of the program and have continued to

recognize it with funding from Superfund. (The funding history and congressional

specifications are discussed below.)

Expansion of the Program

In keeping with Administrator Browner’s reference to it as “a work in progress,”

the program has been redefined and expanded several times — the number of

brownfields assessment pilots has been increased from the original 50 to more than

300, brownfields cleanup revolving loan fund grants and job training grants have been

initiated, and the Brownfields National Partnership has been announced.

The Brownfields Action Agenda. In January 1995, Browner announced the

Brownfields Action Agenda outlining EPA’s activities and future plans to help states

U.S. Congress. House. Committee on Appropriations. Departments of Veterans

Affairs and Housing and Urban Development, and Independent Agencies Appropriations

for 1998, Part 7: Environmental Protection Agency. Hearings, 105th Cong., 1st Sess. 1997,

p. 414.

The General Counsel’s memoranda may be found at ibid., p. 416-425.

U.S. EPA. Office of the Inspector General. Superfund — Brownfields: Potential for

Urban Revitalization. March 27, 1998. 31 p. (Audit Report No. E1SHF8-11-00058100091) p. 4.

Telephone conversation with Judy Vanderhoef, Office of the Inspector General, May 7,

1998.

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and communities. The agenda grouped the activities into four broad and overlapping

categories: the brownfields pilots, clarification of liability and cleanup issues,

partnerships and outreach, and job development and training.

Pilots. The centerpiece of the Action Agenda is the Brownfields Pilot Projects

which provide grants of up to $200,000 over 2 years for site assessments and other

pre-remedial activities. Browner said EPA would fund 50 of these. The first grant

was made to Cleveland, Ohio, in November 1993 “to determine the best way to

develop a national model for revitalizing these areas across the country,”15 and two

more pilots were awarded in 1994. Through FY2000 EPA made 363 brownfield

assessment pilot project grants of up to $200,000 over 2 years, for a total of more

than $57 million. In FY 2001 the agency expects to award 35 new assessment pilots,

and an additional $50,000 may be awarded for sites used for greenspace purposes.

EPA also expects to provide supplemental assistance of up to $150,000 to previously

awarded pilots to continue and expand their efforts.16

Clarification of Liability and Cleanup Issues. The second element of the

Action Agenda is intended to relieve uncertainty over cleanup liability. Several of

EPA’s actions relate to property transfer, as the sale of real estate is frequently a

central element to redevelopment.

In a key move, Administrator Browner announced that 25,000 sites would be

removed from the Comprehensive Environmental Response, Compensation, and

Liability Information System (CERCLIS), the Superfund program’s database of sites

suspected of being contaminated by hazardous substances. As required by law, the

worst of the CERCLIS sites (which numbered about 38,000 at the time) are placed

on the National Priorities List (NPL) to be cleaned up under the Superfund program.

However, no procedures existed to remove less seriously contaminated facilities —

many of them brownfields — from the registry, and the stigma of being associated

with the Superfund program reputedly often prevented sale or development of

CERCLIS-listed properties, even if they had never been contaminated in the first

place. Since Browner’s announcement more than 32,000 CERCLIS sites have been

archived. Procedures are now in place to remove from CERCLIS those sites where

no further response action is planned.

EPA also issued guidances which addressed the liability status of prospective

purchasers of contaminated property, and of property owners with groundwater

contamination that originated on neighboring property. Other guidances addressed

the transfer of federally owned property, aspects of the underground storage tank

cleanup program, soil testing, and the RCRA corrective action program. 17 In

addition, EPA and the Department of Justice clarified enforcement policy regarding

The Clinton Administration’s Brownfields Redevelopment Initiative, EPA press

release, June 13, 1996.

Further information is available from EPA at:

[http://www.epa.gov/swerosps/bf/pilot.htm]

This program of the Resource Conservation and Recovery Act (RCRA) exists to clean up

currently operating hazardous waste treatment, storage, and disposal facilities.

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lenders and governmental entities that acquire contaminated property involuntarily.

(The 104th Congress enacted the Asset Conservation, Lender Liability, and Deposit

Insurance Protection Act18 in December 1996 which essentially incorporated the

policy into law.)

Partnerships and Outreach. In addition to state, city, and community

representatives, EPA has developed cooperative relationships with other federal

agencies. Ultimately, in July 1996 EPA created the Interagency Working Group on

Brownfields, with staff from more than 20 federal agencies, and the Interagency

Steering Committee to share knowledge on economic redevelopment and

environmental principles, and to develop a comprehensive, coordinated federal

approach to local communities. These coordinating efforts subsequently led to the

Brownfields National Partnership, and the Showcase Communities, discussed below.

EPA is also working to improve communication with minority communities, and

to increase their involvement early and meaningfully in the brownfields effort. The

Agency’s National Environmental Justice Advisory Council (NEJAC) held a series of

public hearings in five cities, and released a report containing a number of

recommendations to incorporate the communities’ own visions of the future and to

identify ways to create healthy and sustainable communities.19 A June 1999 report

found that “the quality and scope of community involvement conducted by the Pilots,

as well as the fact that brownfields are not usually redeveloped into heavy industrial

or other uses which would raise [concerns of discrimination under] Title VI [of the

Civil Rights Act] ..., minimizes the likelihood that Title VI complaints would be raised

at brownfield sites and hinder redevelopment of these areas.”20

Jobs and Training. Starting in FY1998, EPA created job training and

development activities associated with brownfields grant recipients through 47 grants

to community colleges, universities, cities, and non-profit organizations. The 2-year

grants, at up to $200,000 each, are intended to assure that residents of brownfields

communities are trained for jobs that will allow them to benefit from the industrial and

commercial activities associated with site cleanup. Ten more job training pilots are

planned for FY2001.

The Brownfields National Partnership. On May 13, 1997, Vice President

Gore announced an expansion of the program, termed the “Brownfields National

Partnership,” which involved a commitment of about $300 million from “more than

15 federal agencies.”21 According to EPA, it was “expected to leverage from $5

Public Law 104-208, Omnibus Consolidated Appropriations Act, 1997, §2504.

National Environmental Justice Advisory Council. Environmental Justice, Urban

Revitalization, and Brownfields: The Search for Authentic Signs of Hope. November 1996.

U.S. EPA. OSWER. Brownfields Title VI Case Studies: Summary Report. June

1999. p. 23. (EPA 500-R-99-003). Available at:

[http://www.epa.gov/swerosps/ej/pdf/Report.pdf]. See also:

[http://es.epa.gov/oeca/main/ej/nejac/index.html]

See: U.S. EPA. OSWER. Brownfields National Partnership. Available at:

(continued...)

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billion to $28 billion in private investment, support up to 196,000 jobs, and protect

up to 34,000 acres of ‘greenfield’ areas outside of cities”22 by encouraging

development in brownfield areas instead of locating in rural or previously

undeveloped areas. The National Partnership also included the Brownfields

Showcase Communities.

Table Table 1. A Comparison of Agencies’ PlannedInvestment in the Partnership

Agenda, and Obligations and Loan Guarantees for Brownfields During Fiscal Years

1997 and 1998 23

Planned Brownfield

Assistance as Stated in the

Partnership Agenda

($ millions)

EPA

$125

Obligations and Loan

Guarantees Agencies

Made for Brownfields

($ millions)

$128

Dept. Of Housing and Urban

Development

$155

$26 a

Economic Development

Administration

$17

$114

Other Federal Agencies b

$304

$272

$165

$141

$469

$413

Federal Agency

Subtotal

HUD’s loan guarantees

Total

The primary reason for the difference between the planned and actual financial assistance for HUD is that about $100

million of the planned assistance for brownfield-related activities was from HUD’s Community Development Block

Grant program. Under this program, communities have wide discretion in how they use their funds and while the

agency does track communities’ use of funds, it does not track whether funds were specifically spent on brownfields.

Therefore, HUD could not report an amount of obligations made for brownfields under its block grant program.

The other federal agencies are the Departments of Energy, Health and Human Services, and Transportation, the

National Oceanic and Atmospheric Administration (Department of Commerce), and the General Services

Administration.

Under HUD’s Section 108 loan guarantee program, the agency may guarantee loans to local governments to conduct

large-scale economic revitalization projects. Local governments must pledge Community Development Block Grants

funds that they have received as partial security for financing these projects.

GAO’s sources: Documentation supporting the Partnership Agenda and agencies’ brownfield managers.

(...continued)

[http://www.epa.gov/swerosps/bf/html-doc/97aabref.htm]

U.S. EPA. Office of Outreach and Special Programs. Brownfields National Partnership

Action Agenda. May 1997. 3 p. (pub. no. EPA 500-F-97-090)

GAO 1999 report. p. 5.

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The General Accounting Office (GAO) reported on the status of the Partnership

in an April 1999 report.24 It stated that the agencies came close to their goals,

obligating $272 million of the planned $304 million (89%), and guaranteeing $141

million of loans compared to the planned $165 million (85%). (See Table 1.) GAO

said the apparent $129 million shortfall in the Department of Housing and Urban

Development’s (HUD) obligations was due to HUD’s inability to discern whether

Community Development Block Grants were spent on brownfields or on other

authorized activities. (See table footnote a.)

The agencies were not able to measure economic outcomes of their brownfield

programs, GAO said. The benefits of new jobs, more private investment, and

protected greenfields “were estimates of potential long-term benefits, generated from

economic models, that might result from the federal support for redeveloping

brownfields. They were not goals that the agencies could measure and achieve within

the 2-year period of the Partnership initiative.”25

The Brownfields Showcase Communities. One element of the Brownfields

National Partnership is the Showcase Communities program, under which 28 different

types of communities (such as urban, rural, coastal) have been selected to demonstrate

how federal support could be applied successfully to redevelop their brownfields

properties. GAO reported that the 10 federal agencies they reviewed had improved

their coordination of brownfield activities both within their own agency and between

agencies. The showcase communities also acknowledged improvement: “They are

now better aware of the federal resources available ... to support brownfield

redevelopment and how to access them and are getting more technical and financial

help from agencies.... [A] major reason for this success is that EPA loaned a staff

person to each city under the Intergovernmental Personnel Act, for 2 years.”26 Four

professional associations involved with brownfield issues agreed with this

assessment.27

Effectiveness

This expansion of the program into new activities brought to the fore the

question of whether the funds for it were being expended in accord with the statutory

criteria in Superfund.

U.S. GAO. Environmental Protection: Agencies Have Made Progress in

Implementing the Federal Brownfield Partnership Initiative. April 1999. 20 p.

(GAO/RCED-99-86) Hereinafter cited as GAO 1999 report.

GAO 1999 report. p. 13.

GAO 1999 report, p. 9-12.

The professional associations are the Association of State and Territorial Solid Waste

Management Officials, the National Association of Counties, the National Association of

Local Government Environmental Professionals, and the U.S. Conference of Mayors. GAO

1999 report, p. 11.

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GAO reported in April 1998 on EPA’s use of its appropriations in FY1997 and

FY1998.28 The majority of the funds went to state, local, and tribal governments for

assessing brownfields, for seed money to establish revolving loan funds, and for

supporting state voluntary cleanup programs. The audits showed that, overall, the

three recipients “were spending the funds in accordance with OMB’s guidance”29 on

the Superfund law.

Both the GAO report and an EPA Inspector General report found instances of

a lack of focus and misdirected efforts. GAO determined that $3.7 million (38.5%)

of the total $9.6 million awarded in the outreach and job training categories was for

brownfield-specific activities. And the Inspector General reported that —

While the enthusiasm for EPA’s Brownfields Initiative was readily apparent in all

of the cities we visited, the impact of EPA’s grant funds on redevelopment was less

evident. Of the $1 million awarded for the five site assessment pilot projects we

visited, less than $150,000 was spent on actual site assessments. If we exclude

from this figure the funds used on sites not meeting the definition of a Brownfield,

only $65,000 has been spent on actual site assessments.30

From the perspective of the beneficiaries of the brownfields program, however,

the broader use of the funds beyond site assessment is appropriate. A U.S.

Conference of Mayors (USCM) survey of their membership in April 1999 indicates

a strong perception of need. Of USCM’s 1,050 member cities, 223 responded.

Among their findings were the following:31

! 180 cities estimated they had 19,236 brownfield sites.

! 176 cities estimated that brownfields occupied 178,376 acres of land.

! 113 respondent cities (51%) have populations less than 100,000; they

accounted for 2,890 brownfield sites totaling over 89,020 acres.

Regarding potential benefits of brownfield redevelopment, the survey reported

that:

! Of those cities estimating potential additional tax revenues, the “conservative

estimate” totaled $955 million annually for the 153 cities responding, while the

“optimistic estimate” totaled nearly $2.7 billion annually for the 155 cities

responding.

! 168 cities estimated that more than 675,000 jobs could be created if their

brownfields were redeveloped.

U.S. GAO. Superfund: EPA’s Use of Funds for Brownfield Revitalization. March

1998. 28 p. (GAO/RCED-98-87) Hereinafter cited as GAO 1998 report.

GAO 1998 report. p. 1.

Inspector General’s report. p. 9.

U.S. Conference of Mayors. Recycling America’s Land: A National Report on

Brownfields Redevelopment, Volume II. April 1999. 76 p. Not all respondents answered all

questions. An additional 28 cities responded to the questionnaire, but indicated that,

according to their definition, they had no brownfields. p. 9-11.

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These statements speak to the perceived size of the problem and the potential

benefits of redevelopment in the sample cities. The survey also asked the mayors

about impediments to development, and the responses were consistent with earlier

reports. The three most frequently cited impediments to redevelopment were:

! a lack of cleanup funds (204 cities, or 91% of 223 respondents),

! liability issues (175 cities, 78%), and

! the need for environmental assessments (139 cities, 62%).

However, a joint HUD/EPA study32 raised some questions about whether the

program was meeting those needs and being effective. The study challenged some of

the original assumptions of the program, suggesting that part of the effort might be

misdirected. In particular, it suggested that the prospect for redevelopment was

probably more affected by the underlying economics of any proposed development

of a brownfield site than by the liability risk arising from the possible contamination.

Overall, the study indicated that a brownfield site has to be ripe for development

from an economic perspective before improvements to its environmental situation will

make a difference. (This is not in conflict with the Mayors’ report; 76% said they

would need additional subsidies or resources, such as infrastructure upgrades and

demolition of obsolete buildings, in order to attract private investment.) Many of the

HUD/EPA study’s findings had to do with state efforts, but there were implications

for the federal program. 33

! If a state employs land-use-based cleanup standards and institutional controls

(which can bring faster, cheaper redevelopment) the federal government must

ensure protection of health and the environment.

! Inasmuch as economic development agencies are generally developers’ point

of entry to the environmental arena, training is needed for the agencies’ staffs

on environmental standards, remediation technologies, and liability issues,

particularly in rural and smaller urban areas.

! Similar technical education for lenders, especially smaller lenders and those in

areas with little past history in redevelopment, holds promise of increased

credit availability.

These two studies highlight different perspectives on the importance of liability

in constraining brownfields development. Writings about brownfields often assume

that the threat of triggering Superfund liability has a chilling effect on redevelopment.

In the U.S. Conference of Mayors study 78% of the respondent cities cited liability

issues as an impediment. But the HUD study concluded that “liability concerns were

never the sole ‘critical’ environmental obstacle to redevelopment” (critical being

defined as a make-or-break factor). Actual cleanup costs (including assessment,

remediation, and legal expenses) relative to the total project costs “dominates all other

The Urban Institute, Northeast-Midwest Institute, University of Louisville, and University

of Kentucky. The Effects of Environmental Hazards and Regulation on Urban

Redevelopment. (Jointly sponsored by U.S. Dept. of Housing and Urban Development, and

EPA) Washington, February 1998. 86 p. Hereinafter cited as HUD/EPA study.

HUD/EPA study. p. vii-xi.

CRS-11

factors as an investment deterrent,” the report said.34 Possible future liability due to

previously unknown contamination, possible litigation, and other uncertain events

never constituted the sole significant environmental obstacle affecting site

redevelopment.

In any event, the importance of the liability threat has most often commanded

attention. For example, in Superfund: Barriers to Brownfields Redevelopment (June

1996),35 GAO concluded that CERCLA’s liability provisions are a serious obstacle

to development that discouraged lenders, developers, and property owners from

participating in renewal projects. Both federal and state cleanup liability laws can

apply at any site, not just those on Superfund’s National Priorities List. GAO noted

that there are other barriers to development, however, such as the actual cleanup

costs and high urban property taxes. And in March 1997 the agency said that most

of the state voluntary cleanup program managers in the 15 states it surveyed judged

that fear of federal Superfund liability discouraged some people from initiating a

cleanup.36

One’s view of the importance of the liability constraint on brownfields

development has consequences for how one would support efforts to achieve

development. To the extent liability is a key constraint, attention to reducing liability

is important. It is being addressed both through EPA guidances in the Brownfields

Action Agenda, as discussed previously, and by funding risk characterization and

remediation. On the other hand, to the extent that liability is a subordinate issue

compared to the basic community economic situation, attention and funding might

more appropriately focus on such activities as research, partnerships and outreach,

and job development and training, along with site assessment. Thus the elements of

the program necessary for effectiveness depend on an accurate understanding of the

true impediments to development of brownfields.

Impact of Voluntary Cleanup and Brownfield Programs in the States.

Another perspective is offered by the third survey of the 50 states conducted by the

Northeast-Midwest Institute in 2000. It revealed that there is increasing activity, with

new state programs being put in place and others being modified to accommodate

their particular situation and needs. The information in Table 2 on page 12, which

does not distinguish between brownfield and voluntary cleanup accomplishments, was

compiled from the Institute’s state-by-state listings. One should be aware that

significant differences exist among the states’ programs, and that eligibility

requirements for participation in voluntary programs vary. The authors also note that,

“Most states have yet to gather hard economic information on their programs. Many

programs are still too new to gain a handle on impacts; other states have not yet been

able to find the resources to collect any data beyond the number of sites in their

programs.”37

HUD/EPA study. p. 44-46.

GAO/RCED-96-125. June 17, 1996. 15 p.

U.S. GAO. Superfund: Proposals to Remove Barriers to Brownfields Redevelopment

(Testimony). March 4, 1997. 5 p. (GAO/T-RCED-97-87)

Charles Bartsch and Bridget Dorfman. Brownfields “State of the States – 2000”

(continued...)

CRS-12

Accordingly, the “economic impact” figures in Table 2 should be regarded as

minimum numbers that provide a glimpse of the order of magnitude of the states’

accomplishments. Thirty states are not currently tracking economic impacts, and

another three have no brownfields or voluntary cleanup program in place (North

Dakota, South Dakota, and Wyoming).

(...continued)

Report: What’s Happened in the 50 States This Year? Washington, Northeast-Midwest

Institute, October 2000. p. iii.

CRS-13

Table Table 2. Brownfield and Voluntary Cleanup Program Benefits

Cleanup Activity

Quantity

No. of States Reporting

Sites entering the

brownfield program

13,187

42 (All except IA, MA, NV, NC,

Sites completing the

program

5,212

Acreage of affected sites

ND, SD, WV, WY)

35 (All except DE, GA, ID, IA, LA,

MA, MI, MN, NV, NC, ND, SD, VT,

WV, WY)

7,227 acres

8 (AR, CA, CO ID, MD, OH, RI,

SC)

Economic Impact

Jobs created

91,600

17 (CA, CO, CT, DE, FL, HI, KY,

LA, MI, MN, MO, NH, OH, PA, RI,

TX, WI)

Housing units developed

9,441

6 (CA, CO, DE, MI, OH, TX)

Tax revenues added

$482 million

3 (CA, ME, RI)

Tax base increased

$582 million

4 (CT, MN, TX, WI)

Businesses created and

retained

Amount of private

investment

242

11 (CO, DE, FL, HI, KY, LA, MD,

OH, NH, RI, WI)

$2,095.2 million

5 (DE, FL, MI, MN, NH)

How Congress is Responding

With the brownfields program’s administrative origin and its subsequent

expansion, it has increasingly attracted Congress’ attention. This has been manifest

both in oversight of the funds by the appropriations committees and in proposals for

specifying elements of the program through amendments to CERCLA. 38 The

committee report accompanying EPA’s FY1999 appropriation directed the agency

to examine long-term funding options for brownfields, indicating a recognition of its

popularity and the likelihood of its continuation, but also questioning the use of

Superfund moneys to finance brownfield activities.

Appropriations

For the first years of the program, FY1993 - FY1996, EPA funded it from

money appropriated for the Superfund program. (See Figure 1.) In FY1997,

proposing major expansion of the program, the agency requested and received $37.7

For ongoing legislative activity, see CRS Issue Brief IB10011, Superfund

Reauthorization Issues in the 106th Congress, updated regularly.

CRS-14

Figure 1. Brownfields Funding: FY1993 to FY2000

Millions of Dollars

100

87.4

91.7

91.3

37.7

8.2

0.2

0.7

1993

1994

1995

1996

1997

1998

1999

2000

Fiscal years

Source: EPA, Office of Solid Waste and Emergency Response

million specifically for brownfields. That amount was 2.6% of the Superfund

appropriation, from which all the funds for the brownfields program have come. In

addition to continuing the grants for site assessment and other pre-remedial activities,

EPA used FY1997 appropriations to support revolving loan funds (RLFs) to help

finance actual cleanups. Through these RLFs EPA funded 24 $350,000 grants to

communities.

The FY1998 appropriation (P.L. 105-65) increased EPA’s brownfields program

by $50 million, to $87.4 million39 (5.8% of the Superfund appropriation). It also

provided $25 million for HUD’s Brownfield Economic Development Initiative

(BEDI), the amount requested by the Administration. However, questioning EPA’s

authority to use Superfund monies for revolving loan funds (RLF) “to clean up sites

which are neither emergency in nature nor eligible for NPL listing,”40 the conference

committee denied the request unless RLFs were specifically authorized in subsequent

legislation.

For FY1999 Congress approved the $91 million requested by the Administration

for the brownfields program, which included funds to capitalize RLFs in 100

communities. HUD’s request to double its brownfields funding to $50 million was

rejected; it remained at $25 million. For FY2000 Congress appropriated the full

$91.7 million EPA requested.

This appropriated amount differs from the amount in Table 1, which shows

obligations.

H.Rept. 105-297, Conference report to accompany H.R. 2158. p. 121.

CRS-15

Legislation

Brownfields Tax Incentive. A tax incentive allowing the costs of redeveloping

brownfields to be deducted in the current year was enacted in the 105th Congress as

part of the Taxpayer Relief Act of 1997.41 Good for 3 years, until December 31,

2000, in the 106th Congress, the tax break was extended to the end of 2003 and

expanded to include all brownfields certified by the appropriate state agency.

The 1997 act limited eligibility for the tax break to the 76 brownfields pilots

announced prior to February 1, 1997, areas with a poverty rate of 20% or more,

adjacent industrial or commercial areas, and Empowerment Zones and Enterprise

Communities (EZ/ECs). The Tax Extenders Act of 199942 added a year to the life of

the incentive to December 31, 2000, and the Consolidated Appropriations Act, 200143

extended the brownfields tax incentive for an additional 2 years, to December 31,

2003, and broadened eligibility for the tax break to include any site containing a

hazardous substance that is certified by the appropriate state environmental agency;

Superfund sites are excluded.

This provision resolved an issue that arose from the tax treatment of costs of

cleaning up contaminated land. In general, costs incurred for new buildings or for

permanent improvements to increase the value of a property must be capitalized (that

is, the cost must be deducted over a period of years). Some expenses, such as repairs,

are currently deductible (that is, deductible in the year in which the cost is incurred

— this is also called expensing). It is a considerable financial advantage to be able

to fully deduct an expense in one year rather than many.

The issue arose as a result of a 1994 ruling by the Internal Revenue Service,

holding that the costs of cleaning up contaminated land and groundwater are currently

deductible, but only for the person who contaminated the land.44 Also, the cleanup

would have to be done without any anticipation of putting the land to a new use.

Further, any monitoring equipment with a useful life beyond the year it was acquired

would have to be capitalized. On the other hand, a person who acquired previously

contaminated land, such as a brownfield site, would have to capitalize his cleanup

costs, spreading them out over a number of years. Cleanup costs are a major barrier

to redevelopment, and the IRS ruling made a challenging situation even more difficult

for developers. The Taxpayer Relief Act thus had the effect of overturning the ruling

and allowing developers who had not caused the contamination to deduct cleanup

costs in the current year, rather than to have to capitalize them.

106th Congress Legislative Proposals. In the 106th Congress 27 brownfields

bills, including six broader Superfund reauthorization bills, were introduced. The bills

largely reflected the general approach that EPA has adopted, and differed primarily

in what additional features they included, such as liability protection and tax

P.L. 105-34, H.R. 2014/S. 949, H.Rept. 105-220.

P.L. 106-170, H.R. 1180, H.Rept. 106-478.

P.L. 106-554, H.R. 4577, H.Rept. 106-1033.

Revenue Ruling 94-38.

CRS-16

incentives. They fell into three groups. Twelve of the bills (including all the

reauthorization measures) would have given statutory authority to the brownfields

program, and most of these also would have provided some degree of relief from

Superfund liability. Nine did not address the issue of establishing the program, but

would have provided different combinations of liability protection and/or tax

incentives.

The other six bills would have made funds available for brownfields in agencies

other than EPA . H.R. 1776 (a bill to expand home ownership in the U.S.) would

have provide statutory authority for the HUD brownfields program, authorizing the

use of Community Development Block Grants for “environmental cleanup and

economic development related to brownfields;” it passed the House but wen no

further. S. 1408 would have made funds available for brownfields under a program

in the Small Business Administration, and S. 1573 would have provided funding via

a proposed Environmental Stewardship Fund that would have used receipts from

Outer Continental Shelf revenues. Three bills would have authorized the U.S. Army

Corps of Engineers to undertake brownfield cleanups. One of the Superfund

reauthorization bills in the first group, H.R. 2956 , also would have provided funds

to the HUD brownfields program.

The lists of sponsors and co-sponsors show bipartisan support, and the testimony

at hearings has been generally favorable, at least with regard to the program and its

objectives. The provisions of the bills of the 106th Congress are summarized in Table

3, and the features of the bills authorizing characterization grants and revolving loan

fund grants are presented in Table 4.

Two of the Superfund reauthorization bills were reported — H.R. 1300 from the

Transportation and Infrastructure Committee, and H.R. 2580 from the Commerce

Committee. At the request of Speaker Dennis Hastert the two committees tried to

merge the bills in time to bring a Superfund reauthorization bill to the floor before the

first session adjourned, but reportedly encountered difficulties in discussions with the

Ways and Means Committee over reauthorizing the Superfund taxes. There was no

further action. Both bills would have essentially codified the existing brownfield

program, authorized RLFs, and addressed liability issues. H.R. 1300 also would have

provided assistance for state voluntary cleanup. (Further discussion of the bills can

be found in CRS Issue Brief IB10011, Superfund Reauthorization Issues in the 106th

Congress.)

CRS-17

H.R. 2956 (Pallone) *

Establish/Expand/Certify State Voluntary Cleanups

No Federal Liability if Released from State Liability

Liability Relief for Contiguous Property

Liability Relief for Prospective Purchasers

Liability Relief for Innocent Landowners

Tax-exempt Bonds; Tax Credit for Bonds

Tax Credit Taken Over 5 Years

Brownfields “IRA”

Workforce Training Program

Extend/Expand Current Year Tax Deduction of Cleanup

Costs

H.R. 3579 (Andrews)

H.R. 2580 (Greenwood) *

H.R. 2574 (J. Maloney)

H.R. 1756 (Franks)

H.R. 2264 (N. Johnson)

H.R. 1750 (Towns)

H.R. 1630 (Coyne)

H.R. 1300 (Boehlert) *

H.R. 1537 (Quinn)

S. 2700 (L. Chafee)

H.R. 1391 (Regula)

S. 2590 (Voinovich)

S. 2436 (Abarham)

S. 2334 (L.Chafee)

S. 1537 (J. Chafee) *

S. 1792 (Roth)

S. 1105 (Baucus) *

Brownfields Cleanup Revolving Loan Fund Grants

S. 1090 (J. Chafee) *

Brownfields Characterization Grants

S.23 (Specter)

Program or Activity

S. 20 (Lautenberg)

Table Table 3. Brownfields Bills in the 106th Congress

Notes: * These six bills would reauthorize the Superfund program.

Grants are for cleanup, not for establishing a revolving loan fund.

Or no federal enforcement action allowed.

With exceptions.

Also, liability relief for lenders, developers, and local governments.

Bills making funds available for brownfields in agencies other than EPA: H.R. 2956 (Department of Housing and Urban Development); S. 1408 (Small Business Administration);

S. 1573 (Interagency Environmental Stewardship Fund); S. 2335, S. 2437, and H.R. 4411 (U.S. Army). In addition, H.R. 1776 and S. 2590 provide statutory authority for the HUD

brownfields program.

CRS-18

Table Table 4. Bills with Characterization Grants and Revolving Loan Fund Grants

$200,000

Characterization Grants

Annual

Are States

Authorization

Eligible

($ million)

Recipients?

Revolving Loan Fund Grants

Bill

(Sponsor)

Number of Years

Authorized

S. 20

(Lautenberg)

$35

Yes

$50

$500,000

State & Local

Governments

S. 23

(Specter)

$50-$55-$60 a

Yes

$50-$55-$60 a

$200,000 b

State & Local

Governments

S. 1090

(J. Chafee)

$100 for both programs

Yes

$100 for both programs

$350,000 b EPA

may waive limit

State & Local

Governments

S. 1105

(Baucus)

$35

Yes

$60

$500,000 c

State & Local

Governments

State & Local

Governments

State & Local

Governments

Program

Authorization

($ million)

Maximum Grant

S. 1537

(J. Chafee)

$100 for both programs

Yes

$100 for both programs

$350,000 b EPA

may increase to

$600,000

S. 2590

(Voinovich)

not stated

amount of grants and

authorization not stated

Yes

not stated

$350,000 b

S. 2700

(L. Chafee)

$150 for both programs

Yes (grants may be

up to $350,000)

$150 for both programs

$1,000,000

“such sums as may be

necessary”

Yes

“such sums as may be

necessary”

$1,000,000

$35

Yes (grants are for

$500,000)

$65

$1,000,000

$15

Yes

$30

$500,000

H.R. 2580

(Greenwood)

“such sums as may be

necessary”

Yes

“such sums as may be

necessary”

$1,000,000

H.R. 2956

(Pallone)

$40

$80

$500,000 EPA

may waive limit

H.R. 1300

(Boehlert)

H.R. 1750

(Towns)

H.R. 1756

(Franks)

Notes:

S. 23's authorization increases each year; the amount shown is for both programs.

The grants are for cleanup, not for revolving loan funds.

Also provides for $200,000 cleanup grants to local applicants.

States may receive grants to facilitate the transfer of funds to local governments that do not have the capabilities to manage grants.

Eligible Recipients

State & Local

Governments

State & Local

Governments

Local Governments

State & Local

Governments

State & Local

Governments, Site

Owners or Developers

Local Governments d

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.