When President Donald J. Trump reluctantly signed the bipartisan Consolidated Appropriations Act on March 23, 2018, he also enacted the Brownfields Utilization, Investment, and Local Development (“BUILD”) Act of 2018, which was part of the omnibus spending bill.
The BUILD Act does not significantly overhaul the old Brownfields program, rather it “builds” on it by:
- Significantly increasing the program’s funding and ability to participate in the Brownfields programs;
- Incentivizes the redevelopment of contaminated properties adjacent to water or those which will promote renewable energy; and
- Expands the exceptions from liability under CERCLA.
Increases to the Program’s Funding and Eligibility for Participation in the Programs
The BUILD Act provides significant changes to the funding of the Brownfields programs.
- The yearly funding appropriated to the program was more than doubled, increasing from $80 million to $200 million each fiscal year through 2023.
- It provides an additional $50 million per year for state response programs.
- The cap on the amount of grants which can be awarded per site was increased, raising the limit from $200,000 to $500,000 (with a possible waiver to reach $650,000).
- The ban on the use of Brownfields funds for administrative costs was removed, and now, up to 5% of the grant loan may be used for this purpose.
- A $1.7 million per year Small Community Technical Assistance Grant program was created, which provides up to $20,000 to “assist small communities, Indian tribes, rural areas, or disadvantaged areas in carrying out” the redevelopment of brownfield sites.
Additionally, more types of sites are now eligible for funding, including petroleum-contaminated sites for which there is no potentially responsible party identified and properties which were acquired prior to Jan. 11, 2002, so long as the eligible entity has not caused or contributed to a release or threatened release of a hazardous substance at the property.
The BUILD Act also expands the eligibility of nonprofit organizations to apply for Brownfields grants. Now, eligible 501(c)(3)’s and “Qualified Community Development Entities” are able to receive grants under the Brownfields program.
Renewable Energy and Bluefields Development are Incentivized
One of the more significant changes the BUILD Act makes is adding certain incentives for clean energy developments and the revitalization of waterfront sites (also referred to as “Bluefields”). Applications for Brownfields grants are ranked based on the extent to which they meet certain criteria. Under the BUILD Act, “[t]he extent to which a grant would address a site adjacent to a body of water or a federally designated flood plain” or the extent to which a grant would facilitate the generation of “renewable electricity from wind, solar, or geothermal energy” or any other “energy efficiency improvement project at a brownfield site, including a project for a combined heat and power system or a district energy system” will now be ranked higher than other properties which do not involve waterfront sites or renewable energy.
Expansions and Clarity Provided to Certain Exceptions from Liability under CERCLA
The BUILD Act also clarifies the rights and responsibilities of a tenant claiming the Bona Fide Prospective Purchaser (“BFPP”) Defense from CERCLA liability. This exception for tenants codifies what has long been the general understanding for how a tenant should demonstrate it meets the qualifications of a BFPP based on EPA guidance. Now, it is clear that a tenant can demonstrate that it qualifies as a BFPP by either: 1) qualifying as a BFPP itself by performing its own appropriate investigation and taking certain measures in addressing any hazardous substance found at the site; or 2) by showing the landlord is a BFPP. Further, the BUILD Act adds tenancies and leases to the types of contractual relationships that are excluded from being considered “affiliated with” a potentially liable party.
Finally, the prior exception for State and local governments from current owner liability for involuntarily acquiring sites (but not contaminating the site themselves) has been expanded, providing additional redevelopment certainty for the governmental entities. The definition of “owner or operator” under CERCLA was amended to also exclude ownership or control by a unit of state or local government “through seizure or otherwise in connection with law enforcement activity,” in addition to the exclusions already provided for, including ownership through “bankruptcy, tax delinquency, abandonment, or other circumstances in which the government acquires title by virtue of its function as a sovereign.’’ (emphasis added). The BUILD ACT also removes the requirement that the governmental entity acquire the property involuntarily.
The full text of the BUILD Act can be found here (beginning on Page 1768)