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EPA task force seeks to encourage and promote brownfield redevelopment

In May, the Environmental Protection Agency set up a task force to review the Superfund program and make recommendations to speed up the process of cleaning up and remediating contaminated sites, reducing the financial burden on parties involved in the cleanup process, encourage private investment, promote community redevelopment and revitalization, and build and strengthen partnerships.

The Superfund task force published its recommendations on July 25. They include a number of measures consistent with the stated objectives, many of which apply only to EPA or parties that are actively engaged in the process of remediating contaminated sites.

An important set of recommendations apply to investors and developers, however, and can create substantial business opportunities.

“Superfund” is a bit of a misnomer. There isn’t really a “fund” that is used by the government to clean up groundwater contamination. It’s actually the Comprehensive Environmental Response, Compensation and Liability Act, better known in the industry as CERCLA. He created the framework for cleaning up hazardous waste sites. It imposes responsibility on the parties that caused the contamination in the first place and casts a very wide net.

The problem is that sometimes the person or company causing the problem is no longer around to pay for the cleanup. CERCLA imposes liability on owners of contaminated property, even if they did not cause the contamination. This means investors and lenders have been reluctant to buy contaminated properties due to the potential risk that they could be required to pay for costly cleanups.

States and federal government have set up brownfield programs to encourage investment and development in contaminated sites and to allay some fears of being forced to pay substantial clean-up costs. But these programs have not been very well funded over the years, and investors remain cautious about continued purchases through the program.

During and after the 2008 financial crisis, commercial real estate investors had little reason to continue investing in brownfields, given the availability of other less risky alternatives.

However, with the boom in commercial real estate in recent years, interest in development opportunities for properties with contamination issues has increased, despite the potential risks. Now the EPA is seriously considering ways to encourage these investments.

The agency is looking at ways to encourage private investment by exploring Environmental Liability Transfer (ELT) approaches and other risk management tools during cleanups by conducting stakeholder outreach activities that include professionals industry to discuss their products and the industry climate, parties that have used an ELT or other risk management tools; contractors who have successfully participated in ELTs, and States to discuss their experiences with ELTs.

The task force also recommends creating a national task force to identify creative uses of insurance, annuities, indemnification and other tools for third parties interested in buying or selling cleanup risk. . It also encourages the use, where appropriate, of comfort/status letters or settlement tools to provide certainty to encourage or reassure parties considering using an ELT or other tools.

To address buyer risk concernsthe task force wants the EPA to identify opportunities and update the model good faith purchaser labor agreement to incentivize installation.

Expect EPA to conduct outreach with third-party investors who may provide private financing or otherwise be involved in transactions involving contaminated or previously contaminated property to identify specific liability issues. acting as a barrier to investment or other opportunities in such transactions. This would involve lenders determining standard language to include in prospective buyer contracts to facilitate financing.

The task force also seeks to identify investment opportunities and public-private partnership structures for successful arrangements that would benefit local communities as a whole. Among the recommendations in the report are a series of actions designed to help municipalities and local governments have tools to promote the development of sites that would otherwise sit idle (and off the tax rolls). Local governments should make every effort to participate in these types of outreach programs to promote property reuse.

Of course, this all sounds good in a workgroup report. The proof will be in the implementation. But it’s clear that the opportunity is there for companies and communities to knock on the EPA’s door and demand a review of projects that might have been previously unthinkable. Looks like someone might be listening.

Robert R. Lucic is chairman of the litigation department at the Manchester-based law firm Sheehan Phinney.