Submitted by: Jane C. Luxton and Amanda L. Tharpe
In March 2018, President Trump signed the Consolidated Appropriations Act of 2018 into law. Included in this massive spending bill was legislation that had been pending in the last several sessions of Congress to reauthorize EPA’s Brownfields program through 2023. This legislation increased funding and made programmatic changes that will allow for more efficient and expanded redevelopment of contaminated properties for productive reuse. The new law creates opportunities, but also challenges. General contractors should take steps to understand the nuances of the new provisions and what they mean for involvement in future brownfield redevelopment.
A brownfield is a property that cannot be redeveloped due to the presence of hazardous substances, pollutants, or contaminants. As a result, these contaminated properties often sit idle and provide no economic or tax benefit to the communities in which they are located. It is estimated that there are more than 450,000 brownfields properties throughout the United States.
EPA’s Brownfields Program provides grants for the cleanup and redevelopment of these contaminated sites. According to EPA, this successful program leverages $16.99 for every EPA investment dollar and has leveraged more than 138,000 American jobs. The program has been underfunded for years, however, and redevelopment has further been held back by uncertainties relating to legal liability for contaminated properties.
After several attempts over the last several sessions of Congress, the Brownfields Utilization, Investment and Local Development (“BUILD”) Act was signed into law this year. The Act reauthorizes EPA’s Brownfields Program at $200 million per year through fiscal year 2023. It increases cleanup grant funding to $500,000 per site, or up to $650,000 with a waiver, expands grant eligibility to non-profit entities, creates a grant program for training, technical assistance, and research for small communities and rural areas, and allows entities to use up to 5% of a grant for administrative costs.
The BUILD Act also makes several important reforms to property ownership and liability that provide increased protections and greater certainty for landowners seeking to clean up and redevelop contaminated sites. The definition of “bona fide prospective purchaser” was expanded to include individuals having tenancy or leasehold interests in the facility. In addition, governmental entities that take control of a contaminated site no longer have to do so under “involuntary” circumstances, and grant eligibility has been extended to publicly owned sites acquired prior to January 11, 2002, so long as the entity is not responsible for original or additional contamination.
At the same time, two aspects of the BUILD Act may pose challenges to private developers seeking to redevelop brownfields. The 2018 BUILD Act expands liability protection to parties such as nonprofits and state and local governments under certain circumstances. However, these liability protections do not extend to general contractors who redevelop the property on a contractual basis and possess no ownership interest. As a result, general contractors should take steps to minimize or limit any potential liability that may result from their involvement in redeveloping a brownfield site. By the same token, the new law does not resolve issues that have embroiled private landowners in litigation over the years with regard to the showing necessary to qualify as bona fide prospective purchasers or innocent landowners to ensure liability protection.
Further, the BUILD Act gives scoring preferences to waterfront – or “bluefield” – projects as well as renewable energy or energy efficiency projects. These projects will receive additional points in the grant application scoring process. Although the BUILD Act provides substantially increased funding for brownfield grants, landlocked projects and projects that do not include clean energy could be disadvantaged, given the new weighting factors.
The BUILD Act takes a significant step forward in expanding brownfield redevelopment opportunities and providing certainty for entities seeking to redevelop these properties and put them back into productive use in their communities. Additional funding and expanded opportunities will undoubtedly create increased competition for brownfields grants. Parties engaged in brownfield redevelopment should educate themselves about the details of changes to the existing brownfields program and be prepared to take advantage of increased opportunities that result from this new law.