EPA and Massachusetts: Setting Incentives for Brownfield Cleanup and Redevelopment

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Brownfields, as defined by the United States Environmental Protection Agency (the "EPA"), are abandoned, idled, or under-used industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination. In Massachusetts, the phenomenon of brownfields can be explained by the reaction of owners and operators of contaminated property to potentially unlimited liability. Under General Laws Chapter 21E in Massachusetts, also known as the "Massachusetts Superfund Law", past and present owners and operators of contaminated property are potentially liable for all clean-up costs, regardless of fault. As a result, owners and operators may choose to abandon their contaminated property rather than risk either financial demise under the Massachusetts Superfund Law or indemnify potential buyers for liability. Similarly, developers and potential buyers have avoided acquiring these contaminated sites due to the uncertain costs of cleaning up and the potential liability.

There is hope for the redevelopment of brownfields, however. At the federal level, the EPA has taken action to facilitate the cleanup and redevelopment of brownfields by third parties. Through its Brownfields Economic Redevelopment Initiative, the EPA's stated mission is to empower states, communities and other stakeholders in economic development to work together in a timely manner to prevent, assess, safely clean up, and sustainably reuse brownfields. Regarding liability and cleanup issues, the EPA is working with states and municipalities to develop and issue guidances that will clarify the liability of prospective purchasers, lenders, property owners, and others regarding their association with and activities at a contaminated site.

The EPA's Brownfields Initiative strategies include, among other items, funding pilot programs and other research efforts. For example, the EPA Brownfields Cleanup Revolving Loan Fund Demonstration Pilot Program is designed to enable eligible states, cities, towns, counties, U.S. Territories, and Tribes "to capitalize revolving loan funds that will be used to safely cleanup brownfields so as to facilitate their sustainable reuse." To accomplish this objective, the EPA provides financial assistance to eligible entities to establish their own loan funds, which funds will be used to make loans for authorized purposes, such as cleaning up brownfields.

As part of the EPA's mission, EPA-New England initiated a regional program called the "Brownfields Targeted Site Assessment Program" aimed at assisting municipalities in redeveloping contaminated sites. Through this program, EPA-New England offers federal contractor support for site assessments to eligible public or non-profit entities who currently have redevelopment plans for a brownfield. The Brownfields Targeted Site Assessment Program seeks to minimize the uncertainties surrounding the actual or perceived contamination associated with a site. A Brownfields Targeted Site Assessment, which would be conducted by environmental consultants currently under contract with the EPA, may include a screening assessment, a full site assessment (including sampling activities to identify contaminants) and the establishment of cleanup options and cost estimates.

In addition to programs developed by the EPA, states such as Massachusetts are establishing their own incentives to encourage parties to clean up and redevelop contaminated sites. On August 5, 1998, Governor Celluci signed into law the "Brownfields Act", more formally known as "An Act Relative to Environmental Cleanup and Promoting the Redevelopment of Contaminated Property." The Brownfields Act encourages redevelopment of contaminated sites within the Commonwealth by providing liability relief. In part, the Brownfields Act ends liability for "innocent" owners and operators once they meet the cleanup standards of the Department of Environmental Protection ("DEP"). The Brownfields Act defines an "eligible person" to be an owner or operator who did not own or operate the site at the time of the release of contaminant and who did not cause or contribute to the contamination at the site. If the eligible person achieves permanent cleanup of the site, or meets other requirements, the Brownfields Act protects the eligible person from certain liability. In particular, the eligible person is protected from claims from the Commonwealth of Massachusetts for response action costs and natural resource damages. Further, an eligible person granted liability exemption is protected from claims by third parties for contribution, response action costs and property damage under the Superfund Law and property damage under common law.

The Brownfields Act not only encourages redevelopment of brownfields by limiting liability but by creating financial incentives as well. The Brownfields Act created the Brownfields Redevelopment Fund (the "BRF") which was accompanied by a $30 million appropriation. Among its financial incentives, the BRF provides up to $50,000.00 toward site assessments and $500,000.00 toward cleanup costs for sites located in "Economically Distressed Areas." Eligibility for grants under the BRF is limited to municipalities, redevelopment authorities and agencies, economic development and industrial corporations, community development corporations and economic development authorities. Grants require twenty percent matching funds from the applicant.

Another noteworthy aspect of the Brownfields Act is its establishment of a safe-harbor from lawsuits by the Attorney General. Under this "Brownfields Covenant Not to Sue" program, the party who redevelops the brownfield may be granted liability relief from the Commonwealth and third parties for claims under the Superfund Law and property damage under common law. In order to qualify for this protection, the planned redevelopment of the site must contribute to the economic or physical revitalization of the surrounding community.

Thus, through the use of programs established both at the federal and state levels, current and prospective owners and operators of contaminated sites are provided with the incentives to revitalize and redevelop brownfields. This redevelopment should benefit both the property owner and the affected community.