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Brownfields

Posted on: July 5th, 2022
by Scott Siegwald

Attributed with some hesitancy to F Scott Fitzgerald is the following,  “There were no second acts in American lives”   Let us see if this applies to contaminated properties.    Brownfields are properties for which the expansion, redevelopment, or reuse is complicated by the presence or potential presence of a contaminant. Left unchecked, brownfields are a blight.    Think of brownfields as a past tense activity.  Something was done by man to or on the property that created an environmental problem.  Government programs exist for which funding may be available for a  brownfield  property rehab.

Liability for brownfield sites is found in the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA).  Based on available “reported” data, South Dakota has 151 known and documented brownfields. The number is probably larger however as there are likely others undetected and unreported. To label a property a brownfield, an  environmental site assessment (ESA) must be completed.   Brownfield rehab may be done to government as well as private properties. For governments looking to evaluate a possible brownfield site, a targeted brownfield assessment (TBA) is an option. TBA services include site assessments, cleanup options and costs estimates, and community outreach.

 Brownfields are not  superfund sites.  Brownfields differ in that a brownfield is contamination ‘to a lesser degree.’  Superfund sites might be a candidate for big time cleanup.  Brownfields are smaller deals, smaller property sites,  with not so much money available, and with not as much public exposure of a property’s contamination. Your local church or school might be examples of brownfields.

While the cost for fixing brownfields can be high, the health and safety hazards of brownfields are real.   Brownfields may include physical health hazards, such as uncovered holes, unsafe structures, and sharp objects.  These properties also pose a risk to communities because of potential human exposure to hazardous chemicals.  A brownfield site whether reported or not usually lowers the value of the property itself and can lower values of nearby properties.

If a county or city wants to cleanup a brownfield to allow for its future use no easy solution exists. The EPA awards competitive grants to government entities and certain non-profit organizations for cleanup activities  but does not  come riding in on a white horse to completely fix the problem.   Government grants allocate funds mostly for assessing and classifying brownfields.   Private property owners do not have quite as many opportunities for financial support for remediation as do government or non-profit sites.  With all legal programs the devil is in the details;  brownfield development agreements between parties and the government are intricate contracts detailing the legal responsibilities of the parties.  An agreement will detail specific remediation steps concerning the contaminated property, describe the intended reuse of the property and disclose  and justify the reuse technology proving that the rehab will leave the property suitable for the future uses identified.

Development of brownfield sites requires serious investigative due diligence of the property and its history. Brownfield development when completed with proper due diligence, I call it rehab, can lead to successful reuse of the site.  

     As stated, the EPA provides some financial assistance to eligible applicants through competitive grant programs.  Additionally, funding support is provided under state and tribal programs through a separate mechanism.  Let us consider a non-industrial city for illustration purposes.  We will use Aberdeen as our example.   The EPA in 2020 gave the city of Aberdeen a Brownfields Assessment Grant.  Aberdeen’s foray into the world of brownfields provides a good sampling of the broad spectrum of the subject.  EPA grant funds were to be used by the city to inventory and prioritize sites as a part of its assessment. Grant funds were also to be used to develop six cleanup plans and conduct area-wide planning activities.  The Aberdeen  priority sites under the grant included:   the former Washington School Building (a building about as old as George Washington himself in which I was required to attend classes in high school.  I could have told the powers-that-be way back then all about the building’s issues), a petroleum release site, a former dry-cleaning site, the Northwestern Railroad site which was a creosote pit, and the former Shopko retail site.

Yes, there are Second Acts in America – at least for some contaminated properties.  One of my clients made a fairly good living cleaning up such properties. There ain’t no reason to be caught between the past and the present.  Make something of what you got now and go forward.

Brownfields: A Calculated Risk Missed by Tribes and South Dakota

Posted on: December 2nd, 2016
by David Ganje

The EPA defines a brownfield as “real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant.” The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) mandated that the purchasers of property are liable for any contamination on this property regardless of when they acquired a site. However, CERCLA also created a defense known as the “innocent landowner defense” that can only be used if “appropriate due diligence” was conducted prior to the acquisition of the property. Appropriate due diligence has been exercised if an environmental site assessment (ESA), a thorough investigation of a site’s current and previous owners, has been prepared.

ESA’s have an average cost of about $4,000 for a small business acquisition and can vary depending on variety of factors specific to the job. The typical businesses that leave behind brownfields include gas stations, dry cleaners, railroads, oil refineries, liquid / chemical storage facilities, and steel / heavy manufacturing plants. Typical hazardous materials they leave behind include hydrocarbons, solvents, pesticides, heavy metals such as lead, and asbestos.

What is so dangerous about leaving these brownfields alone? Many of these brownfields are abandoned commercial properties and tend to be an eyesore in the community. Not only can this lead to decreased property values in surrounding neighborhoods, but the property can also pose serious health risks for new tenants and their neighbors.

Once a brownfield has been identified, the EPA provides two options for cleanup, revolving loan fund grants and cleanup grants. The purpose of revolving loan fund grants is to enable states, political subdivisions, and Native American tribes to make low interest loans to carryout cleanup activities at brownfields properties. Cleanup grants provide funding for a grant recipient to carry out cleanup activities at brownfields sites.

Since the cost of cleanup is considerable, the grants may provide several hundred thousand dollars towards the cost of cleanup. This money comes with strings attached, of course. Among other things, the costs are shared with the property owner, by at least 20 percent, and the brownfield site must be cleaned up within a three-year period.

Entities eligible for the EPA’s brownfield grants and loans include state, local and tribal governments; general purpose units of local government, land clearance authorities or other quasi-governmental entities; regional council or redevelopment agencies; states or legislatures; or nonprofit organizations. If you are not an eligible entity, you may still be able to receive assistance through your state or city.

In South Dakota, the agency that provides statewide brownfield assistance is the Department of Environment & Natural Resources (DENR). DENR receives funding from the EPA for assessments and cleanup and have discretion in how to allocate those funds. For example, a national hotel chain looking to redevelop a brownfield site in South Dakota would not be eligible to apply for assistance through the EPA directly. However, the hotel chain could contact DENR for assistance and DENR could use their funds to perform an ESA or help with the cleanup.

In 2015, Sioux Falls received an assessment grant for $400,000 from the EPA. In addition to performing site assessments, they plan to use the money to update the city’s brownfields site inventory, prioritize sites, plan for cleanups at priority sites, and perform community outreach activities. They, like DENR, also have discretion in performing assessments and have made assessments available to entities who would not be eligible to apply for grants from the EPA.

With these options available to assist with brownfield redevelopment, why do so many brownfields remain untouched in South Dakota? In the last 5 years the EPA only awarded four grants in South Dakota. They gave an assessment grant to Sioux Falls and cleanup grants to Standing Rock Sioux Tribe, Cheyenne River Sioux Tribe, and Lower Brule Sioux Tribe. This suggests that other entities are not aware of the grants available to them, they are dissuaded from applying, or they do not have the structure to run a brownfields program.

Since South Dakota is not small Rhode Island, which is about the size of Brown County, businesses and other eligible entities find it is more economical to buy available land than it is to redevelop a brownfield site. This misses the mark. A brownfield site is many times in an attractive location. A brownfield site is often close to business activity and transportation or the prior owner would not have developed it.

Although the grants and other forms of assistance are “competitive,” grants are awarded based on guidelines. The deadlines for applying for assessment and cleanup grants from the EPA is December 20, 2016, so it’s not too late.

View the original article at FarmForum.net

Brownfield Due Diligence – Don’t Get Married, Get Engaged

Posted on: October 22nd, 2016
by David Ganje

Let’s not pretend.  We have messed up parts of mother earth.  Now let’s use the tools at hand to undo the mess and be good stewards again.  Brownfield recycling, that is the brownfields program is one means to that end. If you are looking to start a new redevelopment project don’t get married, get engaged. Do your due diligence and explore the possibilities from exposing a brownfield.

The EPA defines a brownfield as “real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant”. The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) mandated that the purchasers of property are liable for any contamination on this property regardless of when they acquired a site. However, CERCLA also created a defense known as the “innocent landowner defense” that can only be used if “appropriate due diligence” was conducted prior to the acquisition of the property. Appropriate due diligence has been exercised if an environmental site assessment (ESA), a thorough investigation of a sites current and previous owners, has been prepared.

ESA’s have an average cost of about $4,000 for a small business acquisition and can vary depending on variety of factors specific to the job. The typical businesses that leave behind brownfields include gas stations, dry cleaners, railroads, oil refineries, liquid / chemical storage facilities, and steel / heavy manufacturing plants. Typical hazardous materials they leave behind include hydrocarbons, solvents, pesticides, heavy metals such as lead, and asbestos. Much of the information about previous and past owners is public.

What is so dangerous about leaving these brownfields alone? Many of these brownfields are abandon commercial properties and tend to be an eyesore in the community. Not only can this lead to decreased property values in surrounding neighborhoods but the property can also pose serious health risks for new tenant and their neighbors. For example, the Love Canal disaster in Niagara Falls, in the late 70’s. Hooker Chemical Co. dumped over 20,000 tons of chemical waste in the unfinished and abandoned Love Canal. The canal was later paved over and sold to the city. The city then developed residential neighborhoods and schools on top of the contaminated land. About 25 years later, after an unusual amount of rain, a large amount water absorbed by the land upwelled the “entombed” chemical waste. Residents complained of chemical burns, organ failures, mental disabilities, and congenital birth defects. Eventually local families were relocated and the land was cleaned up. However, in recent years, residents on the rebuilt lands have complained of health issues similar to the ones originally reported 35 years earlier and have filed lawsuits against Hooker Chemical Co.’s parent company.

Once you suspect that the land you are planning to purchase could be a brownfield in need of cleanup what can you do? If you have not purchased the land yet you could include provisions in the purchase agreement that can indemnify you from liability for claims associated with existing contamination.

If you have done your due diligence and you know what you are getting into then you should already know that the Environmental Protection Agency (EPA) has set up the Brownfield Cleanup Program (BCP) “to encourage private-sector cleanups of brownfields and to promote their redevelopment as a means to revitalize economically blighted communities.” The BCP provides incentives through, grants, loans, training, and tax benefits to aid with the cleanup. Since the cost of cleanup is considerable the BCP may provide several hundred thousand dollars towards the cost of cleanup. This money comes with strings attached of course. Among other things, the costs are shared with the property owner, up to 20%, and the brownfield site must be cleaned up within a three-year period. In addition to tax incentives and financial assistance provided through the various governmental programs the land developer should be comforted by the fact that his contributions have also helped the environment. Furthermore, awards are given out by the NYC Brownfield Partnership providing public recognition for the most successful brownfield redevelopment projects.

Additionally, taking on a new brownfield project in NYC grants access to special municipal assistance programs through the NYC Office of Environmental Remediation (OER). The OER was established in 2009 to “design, build, and operate a set of world class municipal programs to advance cleanup and redevelopment of brownfield sites.” Since then they have developed over thirty new programs that take some of the most blighted properties in some of the most disadvantaged neighborhoods, cleans them up, makes them safer, and enables new development that brings new jobs and affordable housing.

The OER also distributes a variety of letters to aid sellers, lenders, and prospective buyers of brownfield properties. An “environmental review and assessment letter” is issued after the OER conducts an ESA on the property in question. It is used to provide assurances against liability. A “standstill letter” contains a preapproved remedy plan developed by a seller and the OER. The letter can be used to enroll the property in a brownfield cleanup program so that a prospective purchaser might receive financial assistance. This letter is intended to provide comfort to a prospective purchaser and its lender since the purchaser will be able to better estimate the cleanup costs.

If you have already started a construction on a new project and just learned of contamination, you may still be able to request a “look back letter” from the OER which would grant liability protection. Although a developer can gain liability protection after a project has started, they will not be eligible for brownfield funding incentives.

Many prime redevelopment sites are located on brownfields, don’t get married. Get engaged first and do your due diligence.

David Ganje practices law in the area of natural resources, environmental and commercial law.

Brownfields-An Unused Part of North Dakota’s Environmental Law

Posted on: April 19th, 2014
by David Ganje

 

BROWNFIELDS – AN UNUSED PART OF NORTH DAKOTA’S ENVIRONMENTAL LAW

 

Laws by their nature create tension between different economic interests in a democratic society.  When the free market system includes environmental laws which affect the market­ability and development of contaminated or polluted property, the system must also include a mechanism to protect the owner’s ability to sell and develop such property.  Man-made ‘controls’ created by man-made regulations need man-made protections to reduce the affect of these ‘controls’.  Environmental laws and regulations are no exception.  Contemporary environmental laws contain many restrictions on transfer of property, as well as hazardous spill reporting and cleanup requirements.  Such laws affect the marketability of property.  State and federal agencies in recent years have focused attention on the cleanup and redevelopment of contaminated property sites in North Dakota.  These sites are called brownfields.

Brownfields are properties the use, expansion or redevelopment of which is complicated by the presence or potential presence of a hazardous substance.  Environmental laws now include financial assistance for the cleanup of such properties.  Brownfield cleanup can address mine-scarred lands, sites contaminated by petroleum, chemicals or sites contaminated as a result of manufacturing.

Environmental issues in North Dakota are primarily the jurisdiction of the state’s Department of Health, Environmental Health Section (EHS).  The EHS has significant management authority over environmental matters in the state and has had cooperative agreements in place with the U.S. Environmental Protection Agency (EPA) under which the EHS is the principal state government agency dealing with environmental matters.

North Dakotans are fortunate in that the EHS is generally accessible and open in its regulatory and management style.  Such accessibility is not always the norm among environmental agencies across the country.  EHS has established policies that promote the development of environmentally affected properties. The brownfields program is application based.  Cities, counties or local government groups may apply for assistance under the program.

Many North Dakota municipalities and local governments are missing the boat.  Not all environmental regulations are bad.  One useful but underused environmental program in the state is North Dakota’s State Response Program (Brownfields Program).  This program is a source of funding for site assessments and, if necessary, cleaning up qualified brownfield sites throughout the state.  Access is available to qualified property owners (counties and municipalities), community development organizations, and nonprofits.  The expenses of approved site assessment and environmental testing can be cost free to the property owner; The North Dakota Brownfield Program manages and pays for these expenses.

One can be fairly certain that in North Dakota many cities and counties, in both rural and urban areas, have abandoned, underutilized, or potentially contaminated properties.

EPA data indicates that only three North Dakota municipalities and five tribal organizations have received Brownfield Grants since 1998.

The prevailing view is that many people think that brownfield sites are only associated with abandoned manufacturing sites that were so prevalent in the rust belt states located east of the Mississippi River.  Brownfield sites exist in very state and they include but are not limited to abandoned gas stations, dry cleaners, factories, warehouses, bus facilities, parking lots, aircraft hangars and heavy equipment repair and storage centers.

In years to come we will probably see an increase in North Dakota brownfield sites due to the development of oil and gas resources in the Bakken Formation.  The state’s Brownfield Program will enable qualified property owners to clean up Brownfield sites so they can be put to better economic use for the benefit of investors and residents of North Dakota.

The EPA reports that qualified applicants are eligible for up to $200,000 in cleanup grants per property and that 3 out of 4 applications received in 2013 were successful.  The cleanup grant recipients are required to provide a 20% share (e.g. $200,000 Grant has a $40,000 match).  The cost share does not have to be money; it could be in the form of a contribution of labor, material, or services from a non-federal source.  Hardship waivers can also be requested.

That environmental problems with properties should remain hidden based upon a public misunderstanding is the old way of doing business.  EHS and affected communities and counties should partner up and pursue this course of action.  It would be in the economic interest of the communities in which such properties are located and the state.