Volume 18, No.4, Winter 2000

War Against the States

The United States’ inner cities are home to hundreds of thousands of old, abandoned industrial sites. Such eyesores-railroad yards, outmoded factories, and junk yards-have always dotted the urban landscape. In the past, however, new owners gradually took them over as market conditions changed, restoring them for new uses or tearing them down to build something else. That market-led process, although never perfect, has been completely distorted by federal intervention, first through the federal law known as Superfund and now through federal red tape that is tying the hands of city and state governments.

In 1980, alarmed by the possibility that contaminated waste sites around the country were "ticking time bombs," Congress passed a law known as CERCLA1 or Superfund. This law expanded liability for such sites. Even new purchasers could be held responsible for contamination that they had not caused. It also led to tough, costly standards for cleaning up these places-such as the requirement that soil be clean enough for children to eat daily, even if children are never going to be near the place.

The new rules hampered the normal market transfer of such sites, which became known as "brownfields" (in contrast to "greenfields," sites that have never been used industrially before). Cities and states found themselves saddled with thousands of industrial locations that needed to be restored to productive use, but with major restraints on what companies (such as potential buyers) were willing to do. Estimates of the total number of brownfield sites range from 450,000 to 600,000 (Upton 1999; Resources for the Future 1999). These numbers are in addition to the supposedly more seriously contaminated sites that the federal government selected for the National Priorities List.

The good news is that state and local governments have cleaned up over 40,000 of these sites (Environmental Law Institute 1998, 61), returning them to productive use. The bad news is that the Environmental Protection Agency is making the job tremendously difficult.

The states’ success is due in large part to innovative measures. All but four states currently have a "voluntary" brownfield-cleanup program. That is, property owners who want to clean up can negotiate with the state and obtain financial incentives such as grants, loans, and tax benefits. Many states have set reasonable cleanup standards, so that soil that children will never live on does not have to be clean enough to eat.

Almost all states passed laws to protect innocent parties from unfair liability. State lawmakers were well aware that potential owners and developers would not even consider redeveloping a site unless they were free from the threat of litigation for contamination of sites they had no prior involvement with.

Yet the EPA remains the enemy of these efforts. To begin with, the states’ liability statutes carry little weight in federal law. Brownfields are still regulated by CERCLA and, therefore, can be subject to the same federal liability laws that govern Superfund sites.

Furthermore, the EPA’s much-touted programs to "fix" the problem are mired in red tape and accomplish little. In 1997, the EPA set up the Brownfields Cleanup Revolving Loan Fund. The purpose is to provide grants to selected cities, or pilots, to help them set up revolving loan funds for financing cleanups and redevelopment efforts.

The program has grown from $8.7 million in fiscal 1997 to $30 million in fiscal 1999, in inflation-adjusted dollars (GAO 1998, 5; Upton 1999). Of the 142 pilot cities that received federal grants for the program, only four have actually been able to issue loans for cleanup projects. And only one of these four pilots has completed cleanup of the site (Fields 2000).

An official with the Boston Redevelopment Authority testified to Congress that the brownfields program "simply has shown to be more trouble than it is worth." After participating, Thomas Ahern concluded that he should have borrowed the necessary funds through the private sector and paid a higher interest rate to avoid the EPA’s cumbersome demands: "My [federal government] rate may be lower, but a $25,000 loan amortized over five years, is it really worth the lower rate when I have to hire three new attorneys just to ensure I am satisfying the regulations?" (Ahern 1999).

Ongoing government audits, reports, and congressional hearings have confirmed the problem of red tape. In 1998, the EPA’s own Inspector General audited the programs and concluded, "While the enthusiasm for EPA’s brownfields initiative was readily apparent, the impact was less evident," and the program was actually having "little impact on actual redevelopment" (EPA 1998, 9).

At one pilot project site reviewed in the report, city officials estimated that it would take 50 years to clean up and redevelop the site. The reason was federal requirements, including rules for community involvement and detailed land use plans that divert funds and delay cleanup (EPA 1998).

Investigators found that the cost of meeting these requirements consumed the bulk of funding that was supposed to go toward actual cleanup preparation. For example, out of $1 million authorized to assess the degree of contamination at five pilot sites, only $65,000-6.5 percent-was actually spent on assessing the sites. The rest was spent on community involvement and inventory list requirements. The audit’s findings were consistent with testimony presented last fall by city and state officials before the House Subcommittee on Oversight and Investigations hearings.

What is to be done? First, the federal government should de-link brownfield cleanup activities from the failed CERCLA requirements. General Accounting Office reports have identified CERCLA as "one of the major disincentives to redeveloping brownfields," (GAO 1996, 1) and stated that the federal law "make[s] brownfields difficult to redevelop�?" (GAO 1997, 2). Yet the Clinton administration has opposed every past legislative effort to change CERCLA liability requirements.

Once brownfields are removed from CERCLA liability, the EPA should get out of the brownfields business altogether. In the words of the National Environmental Policy Institute (1999, 47), "the principal assistance that the federal government might provide at a state-led cleanup is no action at all. In fact, the greatest need at these sites is some type of assurance that the federal government will not secondguess state and local cleanup decisions."

1. The full name is the Comprehensive Environmental Response, Compensation, and Liability Act of 1980.

Ahern, Thomas. 1999. Prepared Statement of Mr. Thomas Ahern, Senior Project Manager for Brownfields and Industrial Development, Boston Redevelopment Authority. Congressional Oversight Hearing, Subcommittee on Oversight and Investigations, November 4.
Environmental Law Institute, 1998. An Analysis of State Superfund Programs: 50 State Study, 1998 Update. Washington, DC.
EPA. 1998. Report of Audit: Brownfields: Potential for Urban Revitalization. E1SHF8-11-0005-8100091. Washington, DC: EPA, Office of Inspector General, March 27.
—. 1999. Brownfields Economic Redevelopment Initiative. Quick Reference Fact Sheet, 500- F-99-303, December.
Fields, Timothy. 2000. Prepared Testimony of Timothy Fields, Jr., Assistant Administrator Office of Solid Waste and Emergency Response, EPA. Congressional Hearing of Senate Committee on Environment and Public Works, Subcommittee on Superfund, Waste Control, and Risk Assessment, June 29.
General Accounting Office (GAO). 1996. Superfund: Barriers to Brownfield Redevelopment. GAO/ RCED-96-125, June.
—. 1997. Superfund: Proposals to Remove Barriers to Brownfield Redevelopment. GAO/RCED-97- 87, March.
—. 1998. Superfund: EPA’s Use of Funds for Brownfield Revitalization. GAO/RCED-98-97, March.
—. 2000. Superfund: Extent to Which Most Reforms Have Improved the Program Is Unknown. GAO/RCED-00-118, May.
National Environmental Policy Institute. 1999. Rolling Stewardship: Beyond Institutional Controls. Washington, DC, December.
Resources for the Future. 1999. Brownfield Pilots. Library: Project Summary. Available: http://www. rff.org/proj_summaries/99files/hersh_ Brownfield_Pilots.htm. Cited: 12 April 2000.
Upton, Fred. 1999. Prepared Statement of Congressman Fred Upton, Congressional Oversight Hearing, Subcommittee on Oversight & Investigations, November 4.

Dana Joel Gattuso is an adjunct scholar with the Competitive Enterprise Institute. This article is based on her report "Revitalizing Urban America: Cleaning Up the Brownfields" (July 2000), available from CEI and at www.cei.org.

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