Environmental Update

The Consolidated Appropriations Act of 2018, which President Trump signed on March 23, 2018, includes 2,300 pages of appropriations and priorities for the operation of the federal government over the next fiscal year. It also includes the Brownfields Utilization, Investment, and Local Development (BUILD) Act of 2018. The BUILD Act provides additional protections, resources and incentives to both public and private brownfield redevelopments and encourages the development of renewable energy and energy-efficiency projects on brownfield sites, amending several provisions of the Comprehensive Environmental Response, Compensation & Liability Act, 42 U.S.C. §§ 9601 et seq. (CERCLA or Superfund).

From the outset, CERCLA was designed to require “potentially responsible parties” (PRPs) to pay the costs associated with investigating and cleaning up contaminated properties. Under CERCLA’s liability provisions, the current owner and operator is always considered a PRP, even if the contamination occurred prior to that party’s acquisition of the property. [42 U.S.C. § 9607(a)(1)].

The Small Business Liability Relief Act and Brownfields Revitalization Act amendments to CERCLA in 2002 attempted to soften CERCLA’s liability scheme to an extent and encouraged the redevelopment of contaminated properties (i.e., brownfields). Among other additions, the 2002 amendments added liability protections for innocent purchasers, contiguous property owners and bona fide prospective purchasers who might otherwise face liability under CERCLA. To qualify for these landowner liability protections, an entity must satisfy the “All Appropriate Inquiry” standard and other criteria. See “Interim Guidance Regarding Criteria Landowners Must Meet in Order to Qualify for Bona Fide Prospective Purchaser, Contiguous Property Owner, or Innocent Landowner Limitations on CERCLA Liability (“Common Elements”)”, March 6 2003.

Significant provisions of the BUILD Act

Section 5 of the BUILD Act extends the definition of a bona fide prospective purchaser to include lessees of property who enter a lease after January 1, 2002, (effective date of the 2002 act) and who meet the other criteria for the bona fide prospective purchaser defense. The innocent purchaser defense in the 2002 amendments excluded state and local governments acquiring properties involuntarily from liability. Section 2 of the BUILD Act clarifies that states and local governments that acquire properties through seizure or other law enforcement activities are also excluded from CERCLA’s definition of owner and operator.

Section 6 of the BUILD Act expands the types of entities that are potential recipients of brownfield revitalization funding to include nonprofit and community development entities. In addition, certain public entities may receive brownfield grants and use brownfield grants and loans to characterize and remediate properties acquired before the 2002 amendments, even if the public entity does not qualify as a bona fide prospective purchaser. Section 6 also increased the size of remediation grants from $200,000 to $500,000 and may go as high as $650,000.

Section 9 of the BUILD Act establishes a program for multipurpose brownfield grants of up to $1 million for an eligible entity to inventory, characterize, assess, plan or remediate one or more brownfield sites within a designated area. With some limitations, entities are now allowed to pay administrative costs with grant or loan funds under Section 10 of the BUILD Act.

Section 11 of the BUILD Act adds several new criteria to be considered in evaluating grant applications. For example, the criteria now include whether the site is adjacent to a body of water or within a federally designated flood plain and whether the brownfield redevelopment would generate renewable electricity from wind, solar or geothermal energy or would improve energy efficiency (including a project for a combined heat and power system or a district energy system). Finally, Section 11 authorizes brownfield funding of up to $200,000,000 per year for fiscal years 2019 through 2023.

BUILD Act may boost redevelopment

The BUILD Act provides additional needed relief as well as new incentives to entities interested in the redevelopment of affected properties. When coupled with state voluntary cleanup and brownfield projects, the BUILD Act should encourage additional efforts to return impacted properties back to productive use. The challenge is to ensure that an entity understands how to retain its status as an innocent or bona fide prospective purchaser and how to access the resources currently available to assist in the redevelopment of impacted properties.