United States General Accounting Office

GAO Testimony

Before the Subcommittee on Superfund, Waste Control,

and Risk Assessment, Committee on Environment and

Public Works, U.S. Senate

For Release

on Delivery

Expected at

9:30 a.m. EST

Tuesday

March 4, 1997

SUPERFUND

Proposals to Remove

Barriers to Brownfield

Redevelopment

Statement by Peter F. Guerrero, Director

Environmental Protection Issues,

Resources, Community, and Economic

Development Division

GAO/T-RCED-97-87

Mr. Chairman and Members of the Committee:

I am pleased to be here today to discuss the Committee’s efforts to

support the cleanup and redevelopment of hazardous waste properties

across the country. Over the past several decades, manufacturing has been

declining in many of the nation’s cities. When businesses closed, they

often left abandoned and idled properties, commonly known as

“brownfields.” These properties are sometimes contaminated with

chemical wastes from manufacturing processes. Partly to avoid the costs

of assessing and cleaning up these properties according to federal and

state environmental laws, some new businesses have chosen to locate in

uncontaminated areas outside cities known as “greenfields.” These

decisions have led to the loss of tax revenue and employment in central

city neighborhoods.

The Congress has been interested in finding ways to help localities clean

up and redevelop brownfields. This Committee asked us to provide it with

information on the (1) legal barriers that the Comprehensive

Environmental Response, Compensation and Liability Act, commonly

known as Superfund, presents for redeveloping brownfields and (2) types

of federal financial support that states and localities would like to help

them address such properties. This testimony summarizes the major

findings from our June 1996 report on brownfield redevelopment and

information from an ongoing review for this Committee of states’

voluntary cleanup programs.1

 These programs substitute incentives for

enforcement actions to encourage, rather than compel, private parties to

clean up contaminated properties. States are beginning to use these

programs to address brownfields because they are faster and less costly

than enforcement programs. This testimony also comments on how

liability and funding provisions in two legislative proposals pending before

this Committee respond to the legal barriers and funding needs we

identified in our work.2

In summary, we found the following:

1

Superfund: Barriers to Brownfield Redevelopment (GAO/RCED-96-125, June 17, 1996).

2

S. 8, the Superfund Cleanup Acceleration Act of 1997, includes provisions that would (1) limit

Superfund liability for prospective purchasers; (2) clarify the circumstances under which landowners

who did not contribute contamination at a site (innocent landowners) may avoid liability; (3) limit

liability for property owners whose property is contiguous to a contaminated site; and (4) limit liability

at any site subject to a state cleanup plan. S. 18, the Brownfield Remediation and Environmental

Cleanup Act, also includes provisions that would limit liability for prospective purchasers and would

clarify liability for innocent landowners. Both bills would establish grant programs and provide

assistance for brownfield redevelopment.

Page 1 GAO/T-RCED-97-87
• Superfund’s liability provisions make brownfields difficult to redevelop, in

part because owners are unwilling to identify contaminated properties and

prospective developers and property purchasers are reluctant to invest in

a redevelopment project that could leave them liable for cleanup costs.

While brownfields are usually not contaminated seriously enough to be

listed as Superfund sites, these parties still fear that they may be sued

under Superfund and state laws for cleanup costs if they become involved

with a contaminated property. In addition, most of the voluntary cleanup

program managers in the 15 states we surveyed judged that volunteers’

concerns about being held liable for a property under federal Superfund

law, once a cleanup is complete, discouraged some of them from initiating

a cleanup. Both bills include provisions that would help to address these

concerns, including provisions to limit liability for some prospective

purchasers.

• To help promote the redevelopment of brownfields, states and localities

would like federal financial support to cover some of the costs of

assessing these properties for contamination, cleaning them up, and

developing their voluntary cleanup programs. Over the past few years, the

Environmental Protection Agency (EPA) and the Congress have provided

some funds which states and localities have used for activities such as

developing an inventory of brownfield properties. Funding provisions in

the bills would continue and expand this support and respond to the

states’ and localities’ needs. For example, Senate bills S. 8 and S. 18 would

authorize EPA to provide grants to support the characterization and

assessment of brownfields. We determined that the amounts of the grants

proposed in the bills for these activities would be sufficient to cover the

costs for most brownfield properties. Additional provisions in the bills for

grants to fund some cleanup costs and provisions in S. 8 to fund the

development of state voluntary cleanup programs should also promote

brownfield cleanup and redevelopment.

Background Under Superfund, EPA can compel the parties responsible for hazardous

waste contamination to clean up a contaminated property, or pay for its

cleanup, in order to protect public health and the environment. Also, any

party that contributed to the contamination, even if this action was legal at

the time, may be liable and may be held responsible for the entire cost of

the cleanup. The federal government targets its enforcement and cleanup

resources to properties on the National Priorities List (NPL), a list of highly

contaminated sites. However, parties may be subject to Superfund’s

liability and enforcement provisions even if a property is not on the NPL.

Most states have adopted similar liability laws and enforcement programs.

Page 2 GAO/T-RCED-97-87
States find that these stringent liability provisions have provided leverage

to convince responsible parties to clean up the more highly contaminated

sites in the states’ inventories. As we reported last year in a separate study

of the potential cleanup workload in eight states, the program managers in

these states pointed out that the threat of having a site placed on the NPL

and identified as one of the most contaminated sites in the country created

a major incentive for responsible parties to clean up their sites.3

Brownfields, however, are typically urban properties that are less

contaminated than NPL sites. EPA defines brownfields as abandoned or

underused facilities, usually in industrial or commercial areas, where

redevelopment is hampered by real or perceived environmental

contamination. While we identified no official nationwide count of

brownfields, the states estimated in a study conducted for EPA that they

may have about 85,000 potentially contaminated properties, including

brownfields, that need investigation and may need cleanup.4

 The federal

Superfund program and similar programs in the states do not have the

capacity to address these properties. These programs have limited

resources, which EPA and the states target to small numbers of highly

contaminated properties. As a result, states and localities are looking for

alternative ways to address brownfields, including voluntary programs.

Superfund’s Liability

Provisions Raise a Legal

Barrier to Redeveloping

Brownfields

Most brownfields are not likely to be added to the NPL because they are not

severely contaminated. However, investors are still wary of the cleanup

liability provisions of both federal and state legislation because these can

apply to all sites, including brownfields. As a result, developers who

purchase properties may become liable for any contamination later found

there. Former property owners may also be liable for cleanup costs if the

contamination occurred while they owned the properties. Thus, even the

suspicion of current or prior contamination may make developers hesitant

to purchase brownfield properties and owners reluctant to place their

properties on the real estate market.

The voluntary program managers in the 15 states we surveyed also

identified Superfund liability as a barrier to attracting volunteers to

accomplish cleanups, including those at brownfields. All but one of these

managers reported that their programs were addressing brownfields so

that they could be returned to productive use through redevelopment and

3

Impact on States of Capping Superfund Sites (GAO/RCED-96-106R, March 18, 1996).

4

An Analysis of State Superfund Programs, Environmental Law Institute under contract with EPA

(1996).

Page 3 GAO/T-RCED-97-87
expansion. Twelve of the managers reported that the limits on state

liability that their voluntary programs provide are a good incentive to

attract volunteers. However, state officials judged that some potential

volunteers would still find Superfund liability a deterrent to participation.

Moreover, managers cited limiting federal liability as one of the more

important ways the federal government could assist voluntary cleanups.

The Congress has considered actions to help address some of these issues.

For example, because lenders had feared being named as responsible

parties if they foreclosed on contaminated properties, the Congress passed

legislation limiting lenders’ liability at such sites.5

 S. 8 and S. 18 also

include various provisions to help address Superfund liability issues at

brownfields, including limiting the liability of prospective purchasers of

these properties and clarifying circumstances under which current

landowners would not be liable for past contamination.

Federal Funding Can Help

Support Brownfield

Redevelopment

During our reviews of brownfields and voluntary programs, we found that

states and localities would like federal funding support to help them

characterize, assess, and clean up brownfields, and establish and support

voluntary programs. Most of the states in our ongoing review of voluntary

programs—even those states that levied fees on volunteers that were high

enough to cover their program costs—identified federal funding as a key

way for the Congress to promote their programs. Some states said they

would use the funds to help municipalities cover the costs of assessing

properties where no parties had been identified as responsible for the

contamination or where the cleanup costs would otherwise be too high to

attract voluntary cleanups. One state sought to use the support to establish

a revolving loan fund to support brownfield cleanups, similar to provisions

in both the bills. Others said they would use the funds to, for example,

publicize the programs or develop information systems to better manage

and evaluate the programs.

To date, both federal agencies and the Congress have provided some funds

in support of brownfield cleanups and voluntary programs, and the

pending two bills would continue and expand on this support. In 1995, EPA

issued a “brownfields action agenda” which, among other things, currently

provides grants of up to $200,000 each to 76 state and local governments to

fund a wide variety of brownfield demonstration projects. These include

developing inventories of brownfields and establishing policies to govern

5

The Asset Conservation, Lender Liability, and Deposit Insurance Protection Act of 1996, contained in

the Omnibus Consolidated Appropriations Act, 1997 (P.L. 104-208).

Page 4 GAO/T-RCED-97-87
brownfield redevelopment. The Department of Housing and Urban

Development has also provided funding to communities to redevelop

brownfields once they have been cleaned up. The Congress, in the House

Conference report accompanying EPA’s fiscal year 1997 appropriations act,

indicated that more than $36.7 million of the current Superfund

appropriation would go to support EPA’s brownfield activities and

voluntary programs.

The two pending bills would provide substantial amounts of additional

funding that states and localities could directly use to characterize, assess

and clean up sites. Specifically, the bills give EPA the authority to provide

Superfund grants of up to $200,000 per property, to characterize and

assess brownfields.6

 Before these properties can be redeveloped, an

assessment must be performed to determine the nature and extent of the

contamination present. Because the assessment requires research into a

property’s history and a technical analysis of its conditions, a substantial

expenditure may be involved. For some brownfields, this expenditure may

be significant enough to discourage developers. We estimated that for

most brownfields, assessment costs could average $60,000 to $85,000 and

for some properties with groundwater contamination could exceed

$200,000. Therefore, the grant provisions in the bills to help fund property

characterization and assessment should be sufficient for most

brownfields.

In addition to these assessment funds, both bills would give EPA the

authority to issue Superfund grants to pay for actual cleanup actions at

brownfields. S. 8 would also provide funds to assist states in establishing

and administering voluntary cleanup programs. Although we asked the

states for information on their costs to clean up brownfield properties and

to operate their voluntary programs, most states did not yet systematically

collect such data. Therefore, we cannot offer a perspective on the

sufficiency of the grants proposed for brownfield cleanup actions or state

voluntary programs.

Mr. Chairman, this concludes my prepared remarks. At this point, I would

be glad to respond to any questions you may have.

(160385)

6

The grants would be provided out of the Superfund trust fund which has been primarily financed from

taxes on crude oil and certain chemicals.

Page 5 GAO/T-RCED-97-87
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