GAO

United States General Accounting Office

Report to the Chairman, Committee on

Commerce, House of Representatives

December 2000 BROWNFIELDS

Information on the

Programs of EPA and

Selected States

GAO-01-52

Page 1 GAO-01-52 Brownfields

Contents

Letter 3

Appendixes Appendix I: EPA’s Brownfields Program 26

Appendix II: Massachusetts’ Brownfields Program 35

Appendix III: Michigan’s Brownfields Program 43

Appendix IV: New Jersey’s Brownfields Program 48

Appendix V: Pennsylvania’s Brownfields Program 54

Appendix VI: Wisconsin’s Brownfields Program 61

Appendix VII: Comments From the Environmental Protection Agency 68

Tables Table 1: EPA Brownfields Assistance Obligations, Fiscal Years

1995-2000 11

Table 2: Number and Amount of Grant and Loan Awards at

Selected States 12

Table 3: Data on Assessment-Related Program Performance in the

Brownfields Management System, as of March 31, 2000 15

Table 4: Data Reported by Brownfields Assessment Pilots on

Six Measures, as of June 2000 16

Table 5: EPA’ s Brownfields Financial Incentives and Federal

Tax Incentive 27

Table 6: Selected BMS Accomplishments as of March 31, 2000 31

Table 7: Eligibility Certification Requests, as of August 31, 2000 34

Table 8: Massachusetts’ Brownfields Financial Incentives 37

Table 9: Massachusetts’ Brownfields Financial Incentives Awards

and Requirements 38

Table 10: Massachusetts’ Brownfields Program Accomplishments,

Fiscal Year 2000 42

Table 11: Michigan’s Brownfields Financial Incentives 45

Table 12: Michigan’s Brownfields Financial Incentives Awards

and Requirements 46

Table 13: New Jersey’s Brownfields Financial Incentives 50

Table 14: New Jersey’s Brownfields Financial Incentives Awards

and Requirements 51

Table 15: Pennsylvania’s Brownfields Financial Incentives 56

Table 16: Pennsylvania’s Brownfields Financial Incentives Awards

and Requirements 57

Table 17: Wisconsin’s Brownfields Financial Incentives 63
Contents

Page 2 GAO-01-52 Brownfields

Table 18: Wisconsin’s Brownfields Financial Incentives Awards

and Requirements 64

Table 19: Brownfields Grant Program Accomplishments 67

Abbreviations

BCRLF Brownfields Cleanup Revolving Loan Fund

BMS Brownfields Management System

CERCLA Comprehensive Environmental Response, Compensation and

Liability Act of 1980

EPA Environmental Protection Agency

NPL National Priorities List
Page 3 GAO-01-52 Brownfields

United States General Accounting Office

Washington, D.C. 20548 Letr

December 15, 2000

The Honorable Thomas J. Bliley, Jr.

Chairman, Committee on Commerce

House of Representatives

Dear Mr. Chairman:

“Brownfields” are properties with real or perceived environmental

contamination that hampers redevelopment efforts and encourages

development in suburban “greenfields.” Brownfields are often abandoned,

urban industrial properties whose redevelopment for commercial or

residential uses could create jobs and increase tax bases in cities. In the

past decade, the Environmental Protection Agency (EPA) and some states

have established financial assistance programs, including grant and loan

programs, to encourage the assessment, cleanup, and redevelopment of

brownfields.

You asked us to provide information on (1) how the assistance1 provided

under EPA’s program to encourage the assessment and cleanup of

brownfields compares with the assistance provided by selected states with

respect to overall strategy, the forms of assistance, eligibility, and other

factors; (2) the amounts of assistance provided by EPA and these states;

and (3) the results reported by EPA and these states. To do this, we

selected five states that were identified by EPA and other knowledgeable

organizations as operating some of the largest or most innovative

brownfields programs in the nation: Massachusetts, Michigan, New Jersey,

Pennsylvania, and Wisconsin. We also contacted brownfields program

managers in five cities that, according to EPA records, had achieved large

numbers of cleanups, major redevelopment investments, or other results

from their EPA funding. In addition, you asked us to provide information on

other incentives, such as federal and state tax benefits for brownfields

cleanup and state cleanup and liability rules intended to facilitate

brownfields cleanups. We are providing information on these incentives in

appendixes I through VI.

1

Throughout this report, we refer to grants and cooperative agreements as assistance or

awards. Both provide organizations with funding to undertake certain activities. EPA uses

grants when it does not expect to be substantially involved in the activities and cooperative

agreements when it does expect to be involved.
Page 4 GAO-01-52 Brownfields

Results in Brief The EPA and state brownfields programs each provide financing (1) to

assess environmental contamination at brownfields properties and (2) if

necessary, to clean them up. However, the EPA and state programs differ in

certain significant respects. For example:

• Overall strategy. EPA’s assessment assistance, referred to as

assessment pilot project awards, can be used to support brownfields

assessment programs and to conduct site-specific assessments. For

instance, assessment awards may be used to pay the salaries of

municipal brownfields staff who work on assessment-related activities.

In contrast, the selected states generally provide assistance to assess

particular properties.

• Forms of assistance. EPA’s cleanup funds are available to the parties

cleaning up brownfields only as loans. In the states, most cleanup funds

have been provided as grants.

• Eligibility. EPA provides all of its assessment and cleanup assistance to

state, local or tribal governments, although these governments may lend

funds to private parties for cleanup. Most of the selected states provide

assistance directly to private parties and to local governments.

• Other aspects. EPA does not impose matching requirements on the

recipients of its assessment assistance; the selected states do for their

recipients. Because EPA administers brownfields assistance under the

law authorizing its program to clean up hazardous waste sites—

Superfund—recipients and borrowers in the brownfields cleanup loan

program must comply with certain Superfund program restrictions,

such as a prohibition on using funds to clean up sites contaminated

solely by petroleum products. State grants and loans are not subject to

such restrictions.

From fiscal years 1995 through 2000, EPA provided a total of $246.9 million

for brownfields assistance:

• $123.6 million in pilot project assessment and related assistance to help

identify, assess, characterize, and plan cleanup activities at

contaminated brownfields sites targeted for redevelopment.

• $64.8 million to capitalize revolving loan funds to assist government

agencies and private parties clean up brownfields properties.
Page 5 GAO-01-52 Brownfields

• $58.5 million for brownfields-related job training, the development of

state cleanup programs, and other purposes.

According to the most recent available data at the time of our review, the

five states combined had provided about $136 million for brownfields

assessments and cleanups to public and private entities. Of this total, about

$114 million was provided in grants and about $22 million in loans. The

states provided most of their grants to local governments.

Currently, the information EPA has collected on the results of its

brownfields program is limited for a variety of reasons:

• While EPA maintains a database to track measures of program activities

and outcomes reported by recipients of funds—such as the number of

properties with cleanups completed or with redevelopment underway—

the database is incomplete because most recipients have not reported

on many of the measures. EPA has not required recipients to report on a

specific set of program measures, partly out of concerns about imposing

a burden on recipients, but it has encouraged them to report. Also,

several years may elapse after an award before certain results, such as

the creation of jobs, are realized. EPA data provided to us in June 2000

show that 48 recipients of pilot project assessment awards (about 16

percent of the 306 awards made at that time) had reported using their

awards to help leverage cleanups at 130 properties, while 84 recipients

(27 percent) reported that their awards helped leverage nearly $2.2

billion for redevelopment.

• Prior to September 1999, EPA did not have nationwide guidance to help

ensure its results were consistently recorded. We found inaccuracies in

the results recorded in EPA’s database for three of the five cities we

contacted that had reported major results prior to September 1999.

• Brownfields program managers in these five cities generally believed

that their EPA assessment funds had been useful or essential to their

programs. However, measuring the results of brownfields assistance

programs more quantitatively is difficult because it cannot be known

with certainty whether cleanup and redevelopment might have occurred

without government assistance.

States’ information on the results of their brownfields programs was also

limited. Two of the five states do not track the economic benefits of their
Page 6 GAO-01-52 Brownfields

brownfields loan and grant programs, and the data collected by the other

three states represent forecasted, rather than actual, results.

We are making recommendations to EPA aimed at improving its

information on the results of its brownfields program.

EPA provided us with written comments on a draft of this report. EPA said

that the five states we selected did not represent state brownfields

programs nationwide, many of which have smaller brownfields programs.

EPA also said that it is striving to improve the accuracy of its results data

and has instituted quality controls over the data. EPA generally agreed with

the substance of the report’s recommendations.

Background The Comprehensive Environmental Response, Compensation and Liability

Act of 1980 (referred to as CERCLA or Superfund) authorizes the cleanup

of hazardous waste sites and, to fund these cleanups, holds the parties

responsible for the contamination liable for the cleanup costs. The act also

gives EPA enforcement authority. Many states have laws with similar

liability and enforcement provisions. In the 1990s, many of the states

amended their cleanup laws and rules to encourage parties to clean up sites

without direct enforcement action. They created “voluntary cleanup

programs” that made cleanup rules less stringent and increased liability

protection for the parties that cleaned up sites. According to officials in the

five states, some of the properties cleaned up under their state voluntary

cleanup programs are brownfields properties. Some states began to further

encourage the cleanup and redevelopment of brownfields though financial

assistance and tax incentives. (See app. I for information on federal

brownfields cleanup tax incentives, and apps. II through VI for information

on tax incentives in the five states.)

EPA also joined the effort to revitalize brownfields. It issued a “Brownfields

Action Agenda” in 1995 and began an initiative that now includes assistance

to states, local governments, and tribes to assess and clean up brownfields

sites, build voluntary cleanup programs, and carry out other brownfieldsrelated activities. In an effort to encourage the reuse of brownfields, EPA

also issued guidance explaining that it would not hold property owners

liable for cleanup under CERCLA in certain circumstances. (See app. I.)

EPA defines brownfields as “abandoned, idled or underused industrial and

commercial facilities where expansion or redevelopment is complicated by

real or perceived environmental contamination.”
Page 7 GAO-01-52 Brownfields

In addition to providing financial assistance through its brownfields

program, EPA helps support the assessment and cleanup of hazardous

waste sites through other programs whose primary purpose is not

brownfields redevelopment. Such sites, while not considered to be part of

the brownfields program, could meet EPA’s definition of brownfields. For

example, the Superfund program assesses sites being considered for

possible Superfund cleanup.

EPA and State

Brownfields Programs

Differ in Key Aspects

EPA and the states we selected provide various forms of financing and

other assistance to encourage brownfields redevelopment. EPA’s programs

are similar to those in the states in one major respect: They both provide

funds for assessing and cleaning up sites. However, the federal and state

efforts differ significantly in other respects. Some of the major differences

are discussed below.

Overall Strategies The assessment and cleanup assistance programs operated by EPA and the

selected states have different overall strategies. EPA’s brownfields program

focuses on funding assessments, building local capacity for planning and

conducting brownfields activities, and developing brownfield program

models in local governments that can be emulated by others. For example,

EPA assessment assistance to state, local, and tribal governments may be

used to pay staff salaries, revise regulations, and develop inventories of

brownfields sites. Also, EPA does not target particular properties for

cleanup assistance; rather, EPA provides money to capitalize state and

local government revolving loan funds. Loans are available to local

government agencies or private parties to clean up specific sites. In

contrast, the states generally focus both their assessment and cleanup

assistance on specific properties.

EPA also offers assistance to governmental entities and nonprofit

organizations for job training in hazardous waste cleanup and to the states

to develop their voluntary cleanup programs. The states generally do not

have similar programs.

Forms of Assistance EPA and the states differ in the forms of assistance provided. EPA provides

assistance to states, political subdivisions, or Indian tribes for assessments

and cleanups through the following programs:
Page 8 GAO-01-52 Brownfields

• Assessment Pilot Projects: EPA makes awards to pilot projects in

state, local, and tribal governments to identify and assess potential

contamination at brownfields and to plan cleanup if needed. Initial

awards can be up to $200,000 and may be followed with an another

$150,000 award. An additional $50,000 is available for applicants who

redevelop sites as greenspace, such as parks, playgrounds, or open

space.

• Showcase Communities and Finalists: EPA provides awards to

communities that serve as models for collaborative efforts to assess,

clean up, and reuse brownfields. Sixteen awards were made in fiscal

year 1998, and 12 more will be made in fiscal year 2001. In fiscal year

1998, EPA committed to provide up to $400,000 to each showcase

community, including up to $200,000 to pay for the temporary

assignment of a federal staff person to assist the program. In fiscal year

2000, EPA offered $100,000 in additional funding for the assignment of

federal staff. Showcase finalists are those communities that submitted

applications and were selected as finalists but not as showcase

communities. The 24 finalists in fiscal year 1998 received up to $200,000

each as either a supplement to an existing assessment pilot project or as

a new assessment pilot award.

• Cleanup Revolving Loan Fund: EPA awards up to $500,000 to state,

local, and tribal governments to help them create revolving loan funds

that provide low-interest loans to public and private entities for site

cleanup.

• Targeted Brownfields Assessments Awards: EPA hires, or provides

funds to states to hire, contractors to identify the extent of

contamination at properties, when this option is preferable to awarding

a pilot award. For example, a targeted assessment might be done at a

property in a small town that did not plan to develop a general

brownfields program. As of September 2000, EPA had funded 500

targeted assessments for about 470 properties.

In addition, EPA provides funds to the U.S. Army Corps of Engineers and

the Department of the Interior’s Bureau of Reclamation to provide

technical assistance for brownfields redevelopment projects.2 For a listing

of EPA’s brownfields assistance programs, see appendix I.

Each of the states we visited operates grant and/or loan programs to assist

brownfields assessments and cleanups. States vary in the number of these
Page 9 GAO-01-52 Brownfields

programs that they offer. Some of the states also address brownfields in

other ways. For example, Michigan is starting a major program in which it

will conduct brownfields cleanups; Massachusetts has created a special

insurance program; and Pennsylvania funds contractors to conduct site

assessments and prepare cleanup plans to facilitate the cleanup of

abandoned industrial sites in prime locations. Pennsylvania’s program is

similar in purpose to EPA’s targeted brownfields assessment program.

Finally, some of the states have established brownfields inventories to

assist in attracting developers. For a more detailed description of the five

states’ brownfields programs, see apps. II to VI.3

Eligibility In general, both EPA and the states limit eligibility for assistance to parties

that did not cause or contribute to the release of hazardous substances on

the property or that were not subject to cleanup enforcement action. For

example, Massachusetts officials stated that parties that caused or

contributed to a hazardous substance release are prohibited from receiving

state grant or loan assistance.

In other ways, EPA and the states’ programs differ in their eligibility

requirements. EPA makes assessment and cleanup awards only to

governmental units.4 In contrast, three states, Massachusetts, New Jersey,

and Pennsylvania, also lend private parties money for assessment and

cleanups; and two states, New Jersey and Wisconsin, make grants to

private parties for assessments or cleanups. Michigan was the only state

that limited both grant and loan assistance to public entities.

Some of the states have other eligibility requirements, such as geographic

location or economic potential. For example, Massachusetts limits grant

and loan assistance to projects located in state-designated economically

distressed areas. Funds awarded under Wisconsin’s sustainable urban

development zone program are reserved for five large communities in the

2

EPA also uses its brownfields funds for grants to nonprofit organizations for outreach,

technical assistance and research, and tribal support related to hazardous and solid waste

issues. Little of this money, according to EPA officials, is directly related to brownfields.

3

The state programs discussed in these appendixes are those aimed at the environmental

assessment and cleanup of brownfields. The appendixes do not include state assistance and

tax relief programs directed at economic revitalization that may encourage brownfields’

reuse but do not provide special assistance for assessment and cleanup.

4

As indicated above, recipients of cleanup funds may lend the funds to private parties.
Page 10 GAO-01-52 Brownfields

state. To obtain financial assistance, some of the states require the

applicant to demonstrate that the project will create jobs or contribute to

the economic well-being of the community. For example, Michigan requires

an applicant to demonstrate the project’s potential to create jobs and

regenerate economic activity. Likewise, Massachusetts requires project

applicants to generate jobs or contribute to the economic or physical

revitalization of the area where the project is located. EPA officials said

that EPA does not have geographic limits on the use of its assessment or

cleanup awards.

Other Aspects Other differences in EPA and the selected state brownfields programs

include the following:

• Matching requirements. EPA does not require recipients to provide

matching funds for assessment assistance. The states impose matching

requirements for assessment grants, with the size of the award or the

specific requirements of the program determining the amount of the

match.

• Special federal requirements. Because EPA administers brownfields

assistance under CERCLA, recipients must comply with certain

Superfund restrictions. These restrictions include prohibitions on the

use of funds at certain sites, such as those contaminated solely by

petroleum products. In addition, recipients of money from EPA-assisted

revolving loan funds are required to file certain documents, including a

community relations plan and a sampling and analysis plan. Officials in

the five states said they require recipients of state brownfields funds to

provide similar documents, but they believed their documents did not

have to be as detailed or extensive as EPA’s.

Amounts of Grants and

Loans Provided for

Assessments and

Cleanups

From fiscal year 1995 through fiscal year 2000, EPA awarded assistance for

brownfields-related purposes totaling $246.9 million. Of this amount, $155.6

million was accounted for by pilot project assessment awards, showcase

community and finalist awards, and cleanup revolving loan fund awards.

These are the forms of assistance most similar to the state assessment and

cleanup grant and loan programs. The five states combined have made

grants and loans for assessment and cleanup totaling about $135.9 million

over the lives of their programs.5
Page 11 GAO-01-52 Brownfields

Table 1 presents EPA’s obligations for brownfields assistance for fiscal

years 1995 through 2000.

Table 1: EPA Brownfields Assistance Obligations, Fiscal Years 1995-2000

a

Totals may not add due to rounding.

b

Includes the salary of federal staff assigned to communities and paid over a number of

years.

c

Because of unique circumstances, EPA regions have awarded additional resources to some

pilots.

d

Includes all amounts awarded before 1998. Annual amounts were not available for this

period.

Source: GAO’s analysis of EPA’s data.

5

The five states began these programs on various dates over the last several years. See apps.

II to VI for details.

Dollars in millions

Fiscal year

Initiative 1995 1996 1997 1998 1999 2000 Totala

Pilot Project

Assessment

$5.0 $7.9 $7.6 $22.2 $15.3 $20.8 $78.9

Showcase

Communitiesb

3.0 0.2 4.7 $7.9

Showcase Finalists 4.0 $4.0

Revolving Loan

Fund

9.1 30.9 24.9 $64.8

Targeted

Brownfields

Assessments

6.5d 11.9 6.1 8.3 $32.8

State Voluntary

Cleanup Program

11.5d 10.3 10.3 9.5 $41.6

Job Training 0.4 2.1 1.5 2.8 $6.9

U.S. Army Corps of

Engineers and

Bureau of

Reclamation

2.5 2.5 3.5 $8.4

Otherc 0.4 0.9 0.3 $1.6

Totala $5.0 $8.3 $35.1 $52.9 $66.8 $78.8 $246.9
Page 12 GAO-01-52 Brownfields

EPA’s cleanup revolving loan fund program, which began in 1997, has

awarded $64.8 million to recipients through fiscal year 2000. Recipients had

lent about $1 million for five cleanup projects though September 2000.

Table 2 shows, for each of the five states, the numbers and amounts of

grants and loans made for site assessment and cleanup. For each state, the

data are cumulative from the beginning of the program through the most

recent period for which the state provided data at the time of our review.6

Table 2: Number and Amount of Grant and Loan Awards at Selected States

a

Totals may not add due to rounding.

b

New Jersey has made 518 grants and 92 loans for a total of 610 grants and loans made. New

Jersey did not provide us with the individual number of assessment grants, assessment

loans, cleanup grants, and cleanup loans made.

c

Wisconsin does not provide loans for site assessments.

Source: GAO’s presentation of state data.

As the table shows, in total, two-thirds of the states’ money, about $91

million, was used for cleanups rather than assessments. Although

individual states differed with respect to whether they favored grants or

loans, most of their combined funding was provided as grants rather than

loans. Michigan distributed the largest amount of cleanup funds, all as

grants. Wisconsin and Pennsylvania also had substantial cleanup grant

6

Massachusetts data are as of March 2000, Pennsylvania as of June 2000, Wisconsin as of

January 2000, Michigan as of May 2000, and New Jersey as of January 2000.

Dollars in millions

Assessment

Grants

Assessment

Loans

Cleanup

Grants

Cleanup

Loans Totala

State grants and

loans No. Amount No. Amount No. Amount No. Amount No. Amount

Massachusetts 0 $0.0 5 $0.1 0 $0.0 3 $0.7 8 $0.9

Michigan 101 8.0 15 5.0 59 34.5 0 0.0 175 $47.5

New Jersey b 24.0 b 0.0 b 7.0 b 11.5 610b $42.5

Pennsylvania 120 7.7 5 0.3 60 17.1 5 3.5 190 $28.6

Wisconsin 0 0.0 c c 39 15.8 1 0.6 40 $16.4

Totala 221 $39.7 25 $5.4 158 $74.4 9 $16.3 1023 $135.9
Page 13 GAO-01-52 Brownfields

programs. New Jersey made most of its cleanup financing in the form of

loans. The Massachusetts program was recently established, and the state

had limited its assistance to loans rather than grants so as to preserve its

capital.

EPA and the States

Have Limited Data on

Results

Determining the results of EPA and state brownfields programs is difficult

because the data are limited. Most recipients of EPA’s brownfields pilot

assessment assistance have not reported on measures of program results,

such as sites cleaned up or redevelopment investments made.7 Reporting

has been incomplete because assistance agreements did not require full

reporting of results and because redevelopment may take several years or

more to be completed. We also found inaccuracies in the results data for

three of the five pilot assessment recipients that we reviewed. These pilot

recipients reported some of the largest accomplishments in the program.

Data on the results of the other EPA programs, such as the revolving loan

fund program, are also limited. Two of the five states did not track the

economic benefits of their loan and grant programs, and the data collected

by the other three represent forecasted rather than actual results.

Assessing the impact of brownfields programs is also difficult because

reported results may be due, at least in part, to factors other than

government assistance.

EPA’s Data Are Limited Information on brownfields program results is important for demonstrating

program effectiveness and accountability. According to EPA, performance

data are used to justify current activities, advocate future funding, and

report progress under the Government Performance and Results Act. This

act requires federal agencies to establish performance goals and measures

to help move them toward managing for results. Performance goals and

their associated measures are often expressed as end outcomes,

intermediate outcomes, or outputs. End outcomes are the results of

programs and activities compared with their intended purpose.

Intermediate outcomes show progress toward achieving the end outcomes.

7

As we reported in April 1999, other federal agencies also generally do not have the

comprehensive data necessary to determine the extent to which brownfields programs’

economic benefits will be achieved. See Environmental Protection: Agencies Have Made

Progress in Implementing the Federal Brownfield Partnership Initiative (GAO/RCED-99-86,

Apr. 9, 1999).
Page 14 GAO-01-52 Brownfields

Outputs are typically activities or products, such as the number of

regulations promulgated, and do not directly measure results.8

In part to compile information on the brownfields program’s performance,

EPA maintains a database—the Brownfields Management System—

containing information on program outputs, such as the number of awards

made, and outcomes,9 such as cleanups completed and redevelopment

dollars leveraged. (App. I contains information as of March 31, 2000, on

measures tracked by the system.) However, for a variety of reasons,

program results data are limited.

Assessment Results EPA’s data on the results of its assessment assistance are derived from

quarterly reports and other documents submitted by recipients; the data

are accumulated in the management system. Not all recipients have

reported on all data elements because they have not been required to and

because some results may not occur for some time after awards are made.

In addition, we noted some inaccuracies in data reported by three of the

five recipients we contacted.

Recipients reported that assessments had been completed at 1,939

properties10 associated with the pilot projects through March 31, 2000.

Table 3 shows the data reported for assessment awards through March 31,

2000.

8

We have issued several reports and testimonies discussing EPA’s lack of reliable data for

assessing the results of its environmental programs. For example, see Environmental

Information: EPA Is Taking Steps to Improve Information Management, but Challenges

Remain (GAO/RCED-99-261, Sept. 17, 1999); Managing for Results: EPA Faces Challenges in

Developing Results-Oriented Performance Goals and Measures (GAO/RCED-00-77, Apr. 28,

2000); and Environmental Information: EPA Needs Better Information to Manage Risks and

Measure Results (GAO-01-97T, Oct. 3, 2000).

9

In this report, we use the term “results” to signify intermediate and end outcomes.

10This number represents the total of 1,666 properties with brownfields assessments

completed with pilot funding, and 273 properties with brownfields assessments completed

with other funding. See table 3.
Page 15 GAO-01-52 Brownfields

Table 3: Data on Assessment-Related Program Performance in the Brownfields

Management System, as of March 31, 2000

Source: GAO’s analysis of EPA’s data.

EPA Does Not Have Results Data

From All Pilot Assessment

Recipients

At our request, EPA disaggregated its data on six measures of program

results by the pilot projects—cities, states, or tribes—that reported them.

The six measures are the number of (1) properties with cleanups

completed, (2) properties with redevelopment underway, (3) cleanup

dollars leveraged, (4) redevelopment and construction dollars leveraged,

(5) cleanup jobs leveraged, and (6) redevelopment and construction jobs

leveraged. As shown in table 4, 27 percent or less of the 306 pilots that had

received awards reported results on any one of these six measures through

June 2000.

Dollars in millions

Measure Total

Assessment demonstration pilots awarded 306

Properties with brownfields assessments

started with pilot funding

1,998

Properties with brownfields assessments

completed with pilot funding

1,666

Properties with brownfields assessments

completed with other funding

273

Properties assessed that do not require

cleanup activities

623

Properties with brownfields cleanup

activities started

236

Properties with brownfields cleanup

activities completed

127

Properties with redevelopment activities

underway

221

Cleanup dollars leveraged $147.6

Cleanup/construction jobs leveraged 1,541

Redevelopment/ construction dollars

leveraged

$2,189.4

Redevelopment jobs leveraged 5,104
Page 16 GAO-01-52 Brownfields

Table 4: Data Reported by Brownfields Assessment Pilots on Six Measures, as of

June 2000

Note: We received these data from EPA in June 2000. According to EPA, these data were the most

recent information reported by the grantees and entered into the database at that time.

Source: GAO’s analysis of EPA’s data.

The results reported by the pilot projects varied widely. For example, the

pilot projects reported that their awards had helped to leverage from as

little as $6,700 to as much as $650 million in redevelopment and

construction funding, and from as few as 1 to as many as 1,400 jobs. Five

pilot projects accounted for 75 percent of the redevelopment dollars

leveraged, and 26 projects accounted for 75 percent of the reported

cleanups. According to EPA officials, a larger portion of recipients, an

estimated 85 percent or more, have reported on the number of assessments

accomplished than on the program measures shown in table 4.

EPA requires pilot assessment recipients to report on how they spent

award funds and the work accomplished but does not require recipients

nationwide to report the results (intermediate and end outcomes) achieved

from their use of the awards. According to EPA officials, the Paperwork

Reduction Act and Office of Management and Budget rules on collecting

information from recipients limit the agency’s ability to require national,

uniform reporting of results. However, according to EPA officials, the

regional offices administering the assessment awards have encouraged

recipients to report their results. In September 1999, EPA defined a set of

accomplishment measures that regions could require of pilots in new or

amended agreements after September 30, 1999. However, headquarters’

officials in charge of the brownfields program do not track the extent to

which regions have incorporated these optional requirements and

Measure

Number of

pilots

reporting on

the measure

Percent of

306 pilots

reporting on the

measure

Properties with completed cleanups leveraged 48 16

Properties with redevelopment underway 64 21

Redevelopment/construction dollars leveraged 84 27

Cleanup dollars leveraged 76 25

Cleanup jobs leveraged 24 8

Redevelopment/ construction jobs leveraged 30 10
Page 17 GAO-01-52 Brownfields

therefore do not know the extent to which recipients will be expected to

report on such measures in the future.

Moreover, data on certain measures—for example, redevelopment dollars

invested or numbers of jobs created—may be available only from privatesector entities that may not wish to divulge the information. In addition,

reporting may be limited in the six categories because some results, such

as cleanups completed and investments in redevelopment, might not occur

for some years after an award is made, and thus it would not yet be

possible for the recipients to report such information. EPA made 121

awards in fiscal year 1997 or earlier; 71 percent of the pilots that reported

results in one or more of the six categories received awards in that period.

Pilot project recipients that received awards in later years may report

results as time goes on.

Some Reported Results Were

Inaccurate

To discuss reported results, we contacted five recipients, all city

governments, that reported large numbers of sites cleaned up,

redevelopments underway, and redevelopment/construction dollars and

jobs leveraged. These cities are Dallas, Texas; Houston, Texas; Emeryville,

California; Shreveport, Louisiana; and Baltimore, Maryland. According to

the EPA data provided to us in June 2000, these cities represented 36

percent of the reported properties with cleanups completed, 30 percent of

the number of properties with redevelopment underway, 80 percent of the

redevelopment and construction dollars leveraged, and 35 percent of the

jobs leveraged.

The managers of three of these cities’ brownfields programs said that some

of the results recorded in the Brownfields Management System were

inaccurate. In particular:

• In the case of Shreveport, the reported number of properties with

cleanups completed was overstated. This number of properties with

completed cleanups should have been reported as 2, not 22. According

to EPA, the city had been counting the cleanups performed on segments

of properties; however, under EPA’s current guidelines, pilots report the

number of properties with completed cleanups instead of segments of

properties. According to the information EPA provided to us in October

2000, Shreveport had continued to clean up properties, bringing its total

of properties with completed cleanups to seven at that time.

• In Baltimore, the amount of cleanup dollars leveraged, reported as $4

million, was incorrect. Of the $4 million, $3 million was leveraged from a
Page 18 GAO-01-52 Brownfields

fund that pays for cleanup and noncleanup actions on brownfields.

According to the city’s brownfields program manager, $2.4 million of the

fund had been expended mostly for noncleanup actions and was

incorrectly counted as dollars leveraged for cleanup actions. According

to EPA, the $2.4 million should have been counted as redevelopment or

construction dollars leveraged.

• In Houston, the number of redevelopment/construction dollars reported

as leveraged was inaccurate. According to EPA data, $175 million of the

city’s reported leveraged redevelopment/construction dollars was funds

received by the city from the Department of Housing and Urban

Development under the Department’s Section 108 loan guarantee

program. According to the city’s brownfields coordinator, the $175

million was not leveraged through the use of EPA brownfields funds.

EPA told us that the $175 million accomplishment was erroneous and

has been removed from the city’s total count of

redevelopment/construction dollars leveraged. According to the city’s

brownfields coordinator, the city has actually leveraged over $500

million, but this was not reflected in the EPA data we received in June

2000.

EPA’s 1999 guidance to pilot assessment recipients defines in some detail

the requirements for such measures as cleanups completed and dollars

leveraged. These guidelines may facilitate more consistent, accurate

reporting. EPA also operates a quality control process for its program

results data that EPA officials said involves reviews of the data by regional

and headquarters officials and discussions of any questionable items with

recipients. Also in 1999, EPA began to review the results data reported by

recipients in the past. According to EPA officials, most of the errors

detected in this review have been corrected and they are currently

attempting to resolve remaining issues.

Limited Reporting of Results for

Other Forms of Brownfields

Assistance

The Brownfields Management System also contains information on awards

to capitalize revolving loan funds, such as the numbers of sites with

cleanups started and with cleanups completed using loans from a revolving

fund. According to EPA data, recipients of revolving loan fund

capitalization awards had made three loans as of March 31, 2000, and these

loans contributed to the completion of the cleanup of one property.

Through September 30, 2000, recipients had made five loans of about $1

million in total, but results data through that date were not available.
Page 19 GAO-01-52 Brownfields

EPA officials believe that the program’s relatively recent start, a lack of

loan administration capability in the recipient governments, and

restrictions associated with the award money have impeded lending. For

example, according to EPA’s Director of the Office of Special Programs,

which oversees the brownfields program, the prohibition against using

revolving loan funds to clean up petroleum products is a significant barrier

to cleaning up brownfields because it prevents using the funds at sites

formerly occupied by gas stations. Such sites are often brownfields

properties. Officials in the states we visited believed that other Superfund

requirements, such as those related to community relations and

environmental sampling, were also limiting loans from the EPA-assisted

revolving loan funds. EPA has implemented a number of administrative

changes to make its cleanup assistance less restrictive, such as highlighting

areas of flexibility within the program, issuing guidance, and providing

training. EPA is also supporting proposed legislation that would provide

greater flexibility in using award funds. In fiscal year 2001, EPA will begin

making awards to states from its Leaking Underground Storage Tank Trust

Fund to assist in cleaning up gasoline-contaminated brownfields.

The management system also contains information on the Job Training and

Development Demonstration Pilot awards. Measures reported for these

awards include the number of participants completing training or obtaining

employment. For example, the report for the job training awards shows the

number of participants obtaining employment—378 through March 31,

2000. (See app. I.)

Linkages Between Program and

Results Are Difficult to Establish

Brownfields program managers in the five cities we contacted generally

believed that the EPA funds were useful or even essential to their

programs. Four said that their cities would not have had brownfields

programs without EPA funds. However, tying the cleanup or

redevelopment of a particular property, or other result, to an award can be

difficult.

According to EPA guidance, results are leveraged if there is a “link or

nexus” to the efforts of an EPA-pilot funded activity or the EPA-pilot

funded activity is a “catalyst” for the results. However, it cannot be known

with certainty whether private money or other federal money might have

been invested, at some time, in a given property without EPA’s help. It is

especially difficult to link EPA’s assessment awards to the redevelopment

of specific properties because these awards can be spent for assessmentrelated purposes, such as preparing inventories of brownfields properties

or facilitating community involvement, rather than for assessing the
Page 20 GAO-01-52 Brownfields

particular property whose cleanup and redevelopment are counted as

program results. In addition, results such as cleanup or redevelopment may

occur because of funding provided jointly by EPA and other sources. EPA’s

Brownfields Management System collects data, for example, on the

number of “partnerships” formed with other government and

nongovernment entities and on the amounts of funding leveraged through

such entities.

State Data Are Also Limited Three of the five states we contacted—Wisconsin, Massachusetts, and

Michigan—attempt to measure the impact of their brownfields financial

assistance programs on jobs or other economic benefits. Wisconsin reports

the accomplishments of its brownfields grant program in terms of potential

jobs created, potential increase in taxable property values, and potential

acres returned to productive use. Massachusetts reports potential private

investment and potential jobs created as a result of its brownfields

redevelopment fund assistance and its insurance subsidy program.

Michigan reports the amount of estimated private investment and

estimated jobs created at sites where state funds were used to assess and

clean up brownfields. (See apps. II, III, and VI.) However, the source of the

estimates for each state is information submitted by assistance applicants.

In contrast, according to EPA officials, results from the agency’s pilot

assessment awards are recorded in its database only if they have been

achieved or recipients have demonstrated that there has been a

redevelopment commitment, such as a contract. State attempts to track

program accomplishments are limited, as are EPA’s, by an inability to know

with certainty whether the government’s assistance was essential to

achieving a cleanup, redevelopment, or other result.

Conclusions EPA has taken steps to obtain information on the results of its brownfields

program, but the data available thus far are limited. In prior reports, we

have pointed out that EPA has long used activity, or output measures, such

as awards made, to manage its programs, and has found it challenging to

develop more results-oriented performance measures. Spurred by the

requirements of the Government Performance and Results Act of 1993,

EPA has made some progress in recent years in measuring the outcomes of

its programs, although—as we recently reported11—relatively few of its

performance measures are end outcomes. EPA is now attempting to track

certain outcomes of its brownfields program in terms of jobs created and

redevelopment investments. This effort is worthwhile and could produce

data useful for managing the program and assessing its results. However,
Page 21 GAO-01-52 Brownfields

most recipients have not reported on these program measures, and small

proportions of those that have account for most of the program’s reported

results in these areas. Also, we found inaccuracies in the data for recipients

that accounted for some large reported results—data that were reported

before EPA’s existing reporting guidelines were developed. Accurate data

on the results achieved by recipients are useful for evaluating the success

of the program overall and the effectiveness of individual recipients’

programs. Comparative information about the recipients would be useful

for identifying best practices among their programs and for making

decisions about further funding. EPA instituted new quality control

procedures in 1999 and began a review of previously reported data and is in

the process of resolving remaining data issues.

EPA officials acknowledge the need for accurate data on the results of the

brownfields program. Recently, EPA authorized its regions to require new

fund recipients to report their results and developed definitions of

performance measures, which may improve both the quantity and quality

of data reported. However, brownfield program managers at EPA will need

to follow through on regional efforts to improve recipients’ results

reporting. At present, the extent to which all regions are incorporating

reporting requirements in recipient agreements is unknown. We recognize

that EPA faces a challenge in balancing the need for data with the need to

avoid placing overly burdensome reporting requirements on recipients.

However, the importance of information for evaluating the success of the

program justifies greater efforts by EPA to obtain more complete data on

the results recipients achieve.

Recommendations for

Executive Action

In order to produce better information on the impact of the brownfields

assistance program, we recommend that the Administrator, EPA,

• continue to review data reported by recipients before EPA’s new

guidelines for results were put in place and make any corrections

needed to ensure that the data are consistent with the current

guidelines; and

• monitor the extent to which EPA regions succeed in improving

recipients’ reporting of data on key results measures and, if warranted,

11Environmental Information: EPA Needs Better Information to Manage Risks and Measure

Results (GAO-01-97T, Oct. 3, 2000).
Page 22 GAO-01-52 Brownfields

consider additional action to encourage reporting, such as making it

clear to recipients that follow-on awards depend on reported results.

Agency Comments We provided a draft copy of this report to EPA for its review and comment.

In written comments, EPA said it had a number of concerns about our

review’s methodology and findings. EPA’s principal concerns and our

responses are summarized below. The full text of EPA comments and our

detailed response are presented in appendix VII.

EPA said national conclusions could not be drawn on the basis of the five

states we selected, which have more established brownfields programs

than many other states. As our report indicates, we selected states that

operate some of the largest or most innovative brownfields programs in the

nation. Our intent was to compare the practices of EPA’s program with

these state programs, and our report draws no national conclusions on the

basis of our review of the five state programs. EPA also said that our review

of the program results reported for five assessment recipients was too

small and too unrepresentative to justify our characterization of the quality

of the program’s results data as “uncertain.” Based on further information

provided by EPA officials about their efforts to correct errors in program

results data, we have removed this characterization from the report.

However, we believe our findings indicate that EPA should continue its

effort to improve its data because (1) we found inaccuracies in three of the

five pilots we examined, (2) these pilots represented a significant portion

of the results reported for the program, and (3) most of the program’s

results were reported before EPA established national definitions for

program measures. EPA said that it did not disagree with the substance of

our recommendations but had some concerns with their wording. We

discussed these concerns with EPA officials and made changes where

appropriate.

Scope and

Methodology

We performed our work at EPA headquarters in Washington, D.C. and in

five states. To develop information on EPA’s brownfields program,

including the financial assistance provided and EPA’s cleanup and

enforcement policies relevant to brownfields, we contacted officials in

EPA’s Office of Special Projects Staff within the Office of Solid Waste and

Emergency Response. We obtained and reviewed various program and

funding documents. To obtain information on the program’s reported

results, we discussed reporting policies with staff from the Office of
Page 23 GAO-01-52 Brownfields

Special Projects and reviewed reporting instructions on the

accomplishments. We also asked EPA to prepare a report from its

Brownfields Management System showing which of the recipients had

reported results in certain categories: properties with completed cleanups,

jobs leveraged, dollars leveraged, and properties with redevelopment

underway. We examined the recipients’ reports to EPA, which were the

source of these data, and contacted some of the recipients by telephone to

discuss their use of the EPA award and its contributions to the reported

results.

We selected five state brownfields programs to compare with the EPA

program in terms of financial assistance provided and results reported. We

selected states that were known to have large active brownfields programs

or that offered unique forms of assistance and that offered grants and loans

for site assessments and cleanup. We identified these states through

consultation with EPA and professional organizations, such as the U.S.

Conference of Mayors and the National Governors Association. For each of

the states we selected—Massachusetts, Michigan, New Jersey,

Pennsylvania, and Wisconsin—we contacted officials in the state

departments of environmental protection and commerce to discuss the

states’ brownfields programs and activities. Details on the state programs

are contained in appendixes to this report. The material in these

appendixes is based on discussions with state officials and the documents

they provided. In addition, we provided officials in each state with a draft

version of the report sections describing that state’s programs; the officials

provided technical clarifications, which we incorporated where

appropriate.

We did not independently verify the data provided by EPA and the states.

We performed our work from March through November 2000 in accordance

with generally accepted government auditing standards.

As arranged with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days after the

date of this letter. At that time, we will send copies of this report to the

Honorable Bob Smith, Chairman, and the Honorable Max Baucus, Ranking

Minority Member, Senate Committee on Environment and Public Works;

the Honorable John D. Dingell, Ranking Minority Member, House

Committee on Commerce; and the Honorable Carol M. Browner,
Page 24 GAO-01-52 Brownfields

Administrator, EPA. We will also make copies available to others upon

request.

If you or your staff have any questions about this report, please contact me

at (202) 512-3841. Key contributors to this report were Jim Donaghy,

Stephen Jones, and Les Mahagan.

Sincerely yours,

David G. Wood

Director, Natural Resources

and Environment
Page 25 GAO-01-52 Brownfields
Page 26 GAO-01-52 Brownfields

Appendix I

EPA’s Brownfields Program ApApenednxidexiIs

Program Authority and

Structure

The Environmental Protection Agency (EPA) established its Brownfields

Economic Redevelopment Program administratively under the aegis of the

Superfund program in 1993 to help communities restore less seriously

contaminated sites that have the potential for economic development. EPA

administers its brownfields program under the Comprehensive

Environmental Response, Compensation and Liability Act (CERCLA).

Fiscal year 1997 was the first year the brownfields program became a

separate budgetary line item.

According to EPA, the brownfields program helps states, localities, and

other agents of economic redevelopment revitalize brownfield properties

both environmentally and economically, mitigate potential health risks, and

restore economic vitality to surrounding areas. Through brownfield

agreements, EPA awards funds to eligible states, political subdivisions, or

Native American tribes. Assistance is provided for site assessment, site

cleanup, job training, community outreach, and for other purposes.

EPA has also developed guidance to provide some assurance that, under

specified circumstances, prospective purchasers, lenders, and property

owners do not need to be concerned with Superfund liability. This

guidance states that EPA will use its enforcement discretion not to pursue

certain parties associated with a site. EPA expects that these statements

about its position will alleviate concerns parties may have in becoming

involved in the cleanup and redevelopment of previously used properties.

The Outreach/Special Projects Staff within EPA’s Office of Solid Waste and

Emergency Response is responsible for managing the brownfields

program. Award oversight is done by designated staff within EPA’s 10

regional offices.

The federal government also provides a tax benefit to encourage

brownfields cleanup and redevelopment. Under federal law, certain

environmental cleanup costs at targeted sites may be fully deducted from

federal income taxes by eligible taxpayers in the year in which they are

paid or incurred. The tax incentive is applicable to properties that meet

specified land use, geographic, and contamination conditions.

Major Program

Elements

The major elements of EPA’s brownfields financial assistance are presented

below.
Appendix I

EPA’s Brownfields Program

Page 27 GAO-01-52 Brownfields

Table 5 describes, for each applicable element of the program, the number

of awards made, the amount of obligations incurred by fiscal year, and the

purpose of the program element.

Table 5: EPA’ s Brownfields Financial Incentives and Federal Tax Incentive

Dollars in millions

Initiative

Total number

of awards

fiscal years

1995-2000

Total amount

of obligations

fiscal years

1995-2000 Purpose

Assessment Pilot

Projects

362 $ 78.9 • Through cooperative agreements, EPA provides funding to state, local,

and tribal governments. Each pilot, as the recipients are called, can be

funded for up to $200,000 over 2 years. In fiscal year 2000, an additional

$50,000 could be awarded to an applicant to assess the contamination

at sites that will be used for green space. Starting in fiscal year 2000,

previous recipients could receive a supplemental award of $150,000.

• Funds must be used to identify, assess, characterize, and plan

responses or plan cleanup activities at contaminated sites targeted for

redevelopment or can be used for a broad range of support activities.

• Funds may only be used at sites where there has been or may be a

release of a CERCLA hazardous substance or of a pollutant or

contaminant that may present an imminent and substantial danger to the

public health or welfare.

• Funds may be used for public/community involvement activities to

explain site selection, assessment, characterization, or cleanup planning

activities at a site or set of sites.

• No recipient match is required.
Appendix I

EPA’s Brownfields Program

Page 28 GAO-01-52 Brownfields

Cleanup Revolving

Loan Fund

105 $ 64.8 • EPA provides funds to state, local, and tribal governments to create

revolving loan funds to provide public and private entities with lowinterest loans to facilitate the cleanup and redevelopment of brownfields.

Each pilot may be funded at up to $500,000.

• Eligible applicants are states; political subdivisions (including, cities,

towns, and counties); and Native American tribes that were awarded

Assessment Pilot assistance and political subdivisions that received

Targeted Brownfields Assessment funds.

• Εligible properties are brownfields sites where there has been or may be

release of a hazardous substance or of a pollutant or contaminant that

may present an imminent and substantial danger to the public health or

welfare.

• Any entity, public or private, may borrow from a loan fund. Funds may be

loaned to an owner/operator of the site only if the owner/operator is not

liable for cleanup under CERCLA or EPA could use its enforcement

discretion not to pursue the party in question under CERCLA, as

described by EPA guidance.

• Brownfield Cleanup Revolving Loan Fund (BCRLF) cleanups must meet

the regulatory requirements identified for non-time-critical removal

actions for which a planning period of at least 6 months exists.a

• BCRLF pilot funds may not be used to clean up products that are part of

the building structure and result in exposure within residential buildings

or business or community structures, for example, interior lead-based

paint contamination or asbestos, which results in indoor exposure.

• BCRLF pilot funds may not be used to clean up petroleum products,

unless they are believed to be commingled with a hazardous substance,

pollutant, or contaminant.

• No recipient match is required.

State Voluntary

Cleanup Programs

$ 41.6 • EPA provides funds to state and tribal governments to enhance and

develop voluntary cleanup programs that frequently address brownfields.

States and tribes use the funds to

• complete regulations for voluntary cleanup programs,

• purchase equipment to support program administration,

• pay the salaries of agency staff to develop program procedures,

• build their own capacity to oversee cleanups, and

• promote greater community involvement.

(Continued From Previous Page)

Dollars in millions

Initiative

Total number

of awards

fiscal years

1995-2000

Total amount

of obligations

fiscal years

1995-2000 Purpose
Appendix I

EPA’s Brownfields Program

Page 29 GAO-01-52 Brownfields

Targeted

Brownfields

Assessments

500 $ 32.8 • EPA uses these funds to enter into agreements whereby states can hire

contractors to identify the extent of contamination at brownfields,

especially those that have not received funding under EPA’s Assessment

Demonstration Pilots program. EPA may also hire the contractors itself.

• Funds can only be used at sites that are, or are suspected to be,

contaminated with hazardous substances.

• Funds are subject to CERCLA requirements.

• Funds are generally not available for assessments at sites where the

owner is responsible for the contamination on the site unless there is a

clear means of recouping EPA expenditures.

• Funds may not be used to conduct cleanup or building demolition

activities.

Job Training 37 $ 6.9 • EPA makes awards to colleges, universities, nonprofit training centers,

community job training organizations, and governmental units. Each job

training pilot can be funded up to $200,000 over 2 years.

• Funds may be used (1) to train residents in communities affected by

brownfields in the procedures for handling and removing hazardous

substances and (2) for outreach to improve participation in training.

• Recipients must be located within or near one of the brownfields

assessment pilot communities.

• Proposed training programs must establish procedures to ensure that

participants are recruited from the neighborhoods where the brownfields

sites are located and graduates are employed in cleaning up hazardous

waste facilities.

• Funds should, whenever possible, be used to ensure that those training

participants include, but are not limited to, the unemployed; those in

welfare-to-work programs and environmental justice communities, and

those who are members of other disadvantaged populations.

Showcase

Communities

16 $ 7.9 • EPA provides funds to showcase communities that represent national

models for collaborative efforts to assess, clean up, and reuse

brownfields. The funds can be used for the same activities that are

allowed under EPA’s assessment pilot projects initiative.

• EPA announced additional showcase communities in October 2000.

Showcase Finalists 24 $ 4.0 • Of 40 showcase finalists, only 16 were chosen in fiscal year 1998 as

showcase communities. The remaining 24 finalists also received

financial support from EPA, but in smaller amounts than the showcase

communities.

U.S. Army Corp of

Engineers and

Bureau of

Reclamation

$ 8.4 • EPA funds the U.S. Army Corps of Engineers and the Department of the

Interior’s Bureau of Reclamation to provide technical assistance in

connection with brownfields redevelopment projects.

Other $ 1.6 • Because of unique circumstances in certain pilots, EPA regions have

awarded additional resources to some pilots. For example, at the

closeout of one pilot, another pilot was awarded the remaining funds to

allow it to continue brownfields efforts that benefit both communities.

(Continued From Previous Page)

Dollars in millions

Initiative

Total number

of awards

fiscal years

1995-2000

Total amount

of obligations

fiscal years

1995-2000 Purpose
Appendix I

EPA’s Brownfields Program

Page 30 GAO-01-52 Brownfields

a

The Superfund program has two basic types of cleanups: (1) remedial cleanups, which are

generally long-term cleanup actions at sites on the National Priorities List (NPL), EPA’s list

of the nation’s worst hazardous waste sites, and (2) removal cleanups, which generally

mitigate more immediate threats at both NPL and non-NPL sites. EPA’s removal cleanups

include (1) emergency removals for threats requiring immediate action, (2) time-critical

removals for threats requiring action within 6 months, and (3) non-time-critical removals for

threats where action can be delayed for at least 6 months in order to adequately plan for

cleanups.

b

EPA also uses brownfields funds for awards to nonprofit organizations for outreach,

technical assistance and research and tribal support related to hazardous and solid waste

issues. Little of this money, according to EPA officials, is directly related to brownfields.

Source: GAO’s analysis of EPA’s information.

Accomplishments

Resulting From

Brownfields Program

EPA tracks its accomplishments through its Brownfields Management

System (BMS). BMS contains information on the Brownfields Assessment

Demonstration Pilots, Brownfields Showcase Communities, Brownfields

Cleanup Revolving Loan Fund pilots, and Brownfields Job Training and

Development Demonstration pilots. Data in BMS is taken from

applications, quarterly reports submitted by recipients, and other

documented sources. According to EPA, the data collected serve as

performance indicators and allow EPA to justify current activities,

advocate future funding, demonstrate vital success stories, and allow a

large number of communities to benefit from successful brownfields

innovations.

Total $246.9b

Brownfields Tax

Incentive

• The Brownfields Tax Incentive allows taxpayers to deduct from their

income eligible cleanup expenses in targeted areas. Such expenses

might otherwise have to be capitalized and depreciated over a period of

years. This incentive was created by the Taxpayer Relief Act of 1997.

• The taxpayer must hold the property for business or income generation.

• A state agency must certify that the property for which a deduction is

being claimed is located in certain low-income or industrial areas or in a

jurisdiction that received an assessment pilot award prior to February

1997.

• Incentives are only available at sites where there has been a release or

threat of a release of a hazardous substance.

• All eligible expenses must be incurred after August 5, 1997 and before

January 1, 2002.

(Continued From Previous Page)

Dollars in millions

Initiative

Total number

of awards

fiscal years

1995-2000

Total amount

of obligations

fiscal years

1995-2000 Purpose
Appendix I

EPA’s Brownfields Program

Page 31 GAO-01-52 Brownfields

Table 6 shows selected accomplishments reported by BMS for the program

through March 31, 2000, the latest information available at the time of our

review.

Table 6: Selected BMS Accomplishments as of March 31, 2000

Dollars in millions

Accomplishment

Total through

March 2000

Assessment demonstration pilots and showcase communities

Demonstration pilots awarded 306

Properties with assessments started or completed

Properties with assessments started with pilot funding 1,998

Properties with assessments completed with pilot funding 1,666

Properties with brownfields assessments completed with other

funding

273

Properties assessed that do not require cleanup activities 623

Properties with cleanup activities started or completed

Properties with brownfields cleanup activities started 236

Properties with brownfields cleanup activities completed 127

Properties with redevelopment activities underway 221

Cleanup and redevelopment jobs and dollars leveraged

Cleanup/construction jobs leveraged 1,541

Cleanup dollars leveraged $ 147.6

Redevelopment jobs leveraged 5,104

Redevelopment/construction dollars leveraged $ 2,189.4

Job training and development demonstration pilots

Training and development demonstration pilots

Pilots announced 21

Pilots awarded 21

Participants in job training and development demonstration pilots

Entered in training 725

Completing training 529

Obtaining employment 378

Cleanup revolving loan fund

Pilots awarded 68

Number of loans

Applications received 5
Appendix I

EPA’s Brownfields Program

Page 32 GAO-01-52 Brownfields

Source: GAO’s analysis of EPA’s data.

EPA Efforts to Address

Liability and Cleanup

Issues

The potential for being held liable under CERCLA for the contamination on

brownfield properties is a significant barrier to redevelopment, according

to lenders; property purchasers, such as developers; and property owners.

Most brownfields are not likely to be added to the list of potential NPL sites

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 even at non-NPL sites. As a result, lenders and

developers may avoid investing in potentially contaminated properties, and

current owners may avoid selling them. Some of the actions EPA has taken

to lower the barriers to brownfield redevelopment include the following

guidance:

• A general policy statement on the liability of owners of uncontaminated

property containing groundwater that has been contaminated by a

neighboring property. This policy statement provides assurance that

EPA does not anticipate suing the property owner for groundwater

contamination if the owner did not cause or contribute to the

contamination.

• Guidance that expands the circumstances under which EPA will enter

into agreements with prospective purchasers of brownfields. The

guidance states the conditions under which EPA will not sue

prospective purchasers for contamination that existed before the

purchase.

• A policy explaining when lenders and municipalities that are involved

with brownfields are exempt from CERCLA.

• Soil screening guidance to help decision makers quickly determine

which portions of a site require further study and which pose little risk

to human health and therefore may be ready for development without

extensive cleanup.

• A rule that limits the regulatory obligations of financial institutions and

others who hold security interests in property on which petroleum

underground storage tanks are located.

Loans made 3

Amount of funds loaned $0.5

(Continued From Previous Page)

Dollars in millions

Accomplishment

Total through

March 2000
Appendix I

EPA’s Brownfields Program

Page 33 GAO-01-52 Brownfields

In addition, EPA removed about 30,000 sites from its list of potential

Superfund sites. By reducing the possibility of Superfund liability for

purchasers of these properties and others, EPA may encourage the

properties’ redevelopment.

Federal Tax Incentive Under the Taxpayer Relief Act, environmental cleanup costs for properties

in targeted areas are fully deductible in the year in which they are incurred,

rather than having to be capitalized. To take advantage of the deduction,

taxpayers must get an eligibility certification from the state environmental

agency prior to filing their tax returns.

To qualify for the federal tax deduction, the taxpayer must meet the

following criteria:

• The property must be "held by the taxpayer," i.e., owned by the taxpayer.

Some types of long-term lease arrangements may qualify.

• The taxpayer must hold the property for business or income generation

purposes. This may include trade or business property, investment

property, or property held for inventory, but it does not include personal

use property.

• There must have been a release, or threat of a release, of a hazardous

substance on the property.

• The eligible property must be located in an area that falls into at least

one of the following four categories:

• A census tract with a poverty rate of 20 percent or more;

• A census tract with a population of less than 2,000 people that has

more than 75 percent of the tract zoned for commercial or industrial

use and that is located next to another census tract with a poverty

rate of 20 percent or more;

• A federally designated Empowerment Zone or Enterprise

Community; or

• An EPA brownfields pilot site designated prior to February 1997.

According to officials in the Department of the Treasury, the Department

does not regularly track how often this deduction has been used or the

dollar amount of the deductions claimed. However, we asked officials in

the states we visited how many eligibility certifications had been requested

by taxpayers. Table 7 shows the total number of requests for these states

as of August 31, 2000.
Appendix I

EPA’s Brownfields Program

Page 34 GAO-01-52 Brownfields

Table 7: Eligibility Certification Requests, as of August 31, 2000

Source: GAO’s analysis of EPA’s information.

State Number of requests

Massachusetts 3

Michigan 3

New Jersey 3

Pennsylvania 6

Wisconsin 8

Total 23
Page 35 GAO-01-52 Brownfields

Appendix II

Massachusetts’ Brownfields Program ApendxiI

Program Authority and

Structure

Massachusetts’ brownfields program, enacted in 1998, provides various

forms of financial assistance to encourage the cleanup and redevelopment

of brownfield properties. The legislation created a Brownfields

Redevelopment Fund to make grants and loans to public and private

entities to clean up and redevelop brownfield properties in economically

distressed areas and authorized state subsidies to purchase insurance to

protect parties that conduct or finance brownfields cleanups. The state

also gives state income tax credits for brownfields cleanup expenses and

authorizes local real estate tax abatements for brownfields developers.

These benefits are available at any site subject to the state superfund law.

While there is no statutory definition, program documents defined

brownfields as properties that are contaminated with oil or hazardous

materials and have been used for commercial or industrial activities.

Legislation in 1992 and 1998 amended the state’s cleanup and liability rules

to encourage the cleanup and redevelopment of contaminated properties.

The law authorized licensed site professionals to oversee cleanups and

provided flexible, risk-based cleanup standards. The statutory changes also

provided greater liability protection for parties that cleanup brownfields

and exemptions for certain parties, such as lenders, who finance site

cleanups.

Responsibility for the state’s brownfields program is distributed among the

following state offices and agencies and a private corporation:

• The Governor’s Office for Brownfields Revitalization markets the

benefits of the state’s brownfields program and provides technical

assistance by helping brownfields developers locate financing and sites.

• The Massachusetts Development Finance Agency, referred to as

MassDevelopment, approves specific projects to receive grants or loans

from the Brownfields Redevelopment Fund.

• The Department of Environmental Protection, through its Bureau of

Waste Site Cleanup, is responsible for all hazardous waste site cleanup

programs and regulations as well as for developing cleanup standards.

Most cleanups, including those done at brownfields, are overseen by

licensed site professionals and are subject to audit by the Department.

• The Office of the Attorney General has authority to enter into

individually tailored brownfields covenants, known as not-to-sue

agreements, to provide liability relief to current or prospective property

owners.
Appendix II

Massachusetts’ Brownfields Program

Page 36 GAO-01-52 Brownfields

• The Massachusetts Business Development Corporation, a private sector

company that provides private financing and financial services, is

responsible for all aspects of the state’s environmental insurance

program.

Major Program

Elements

The major components of the state’s brownfields program, including

financial and non-financial incentives are described below.

Financial Incentives Grants and loans are available from the Brownfields Redevelopment Fund

for public and private entities to conduct site assessments and cleanups in

state-designated economically distressed areas. MassDevelopment is

responsible for establishing the terms and conditions for receiving and

using grants and loans. Because the fund has been given a one-time state

appropriation, MassDevelopment, in order to preserve the fund principal,

has awarded only loans thus far.

To further encourage brownfield site cleanup and redevelopment, the state

provides tax incentives both at the state and local level. The state allows

private entities a credit against their state income taxes for 25 or 50 percent

of cleanup costs, depending on the thoroughness of the cleanup. The state

has also given municipalities the authority to negotiate with developers to

reduce or eliminate delinquent real estate taxes on brownfields properties

in exchange for cleaning up and redeveloping them.

The state encouraged brownfields cleanup and redevelopment further by

negotiating an environmental insurance policy with an insurance company

that is available to developers, including potentially responsible parties,

and lenders at reasonable premiums. In addition, the state will pay 50

percent of the insurance premiums. This incentive is available to any party

in the state that undertakes a cleanup or lends funds for the cleanup of a

contaminated site.

Table 8 describes the state’s brownfields financial assistance programs, the

amount of authorized funding, the source of program funds, and the

purpose of the program.
Appendix II

Massachusetts’ Brownfields Program

Page 37 GAO-01-52 Brownfields

Table 8: Massachusetts’ Brownfields Financial Incentives

Source: GAO’s analysis of Massachusetts’ information.

Table 9 presents available data on each financial assistance program, such

as the number and amount of grants and loans awarded, and describes

recipient eligibility and other requirements for the programs.

Program

Amount of funding

authorized Source of funding Program purpose

Brownfields

Redevelopment Fund

$ 30,000,000 One-time state

appropriation in fiscal

year 1999

Authorized to provide low-interest and no-interest loans and

grants to public and private entities for site assessment and

cleanup.

Brownfields

RedevelopmentAccess

to Capital

$ 15,000,000 One-time state

appropriation in fiscal

year 1999

Provides environmental insurance for parties that are involved

in cleanup and redevelopment to cover cleanup cost overruns

and for the lenders of cleanup and construction loans to cover

loss owing to a default. The state will pay 50 percent of the

insurance premium.

State Tax Credit 25 percent or 50

percent of eligible

cleanup costs

Reduction in state

income tax

Provides credit to private entities that clean up and redevelop

contaminated sites in economically distressed areas.

Municipal Tax

Abatement

Reduction in property

tax

Enables municipalities to negotiate reductions in outstanding

tax obligations at contaminated sites in exchange for a

commitment from a new party to clean up and redevelop the

sites and return them to the community’s tax rolls.
Appendix II

Massachusetts’ Brownfields Program

Page 38 GAO-01-52 Brownfields

Table 9: Massachusetts’ Brownfields Financial Incentives Awards and Requirements

Program

Cumulative

number of

awards

Cumulative award

amounts Selected program requirements

Brownfields Redevelopment Fund

Assessment grants

Assessment loans

Cleanup Grants

Cleanup Loans

0

5

0

3

$148,168

$ 732,300

Common requirements for site assessment and cleanup

funding:

• Project proponents must not have caused or contributed to

the releases or have owned or operated the sites when the

releases occurred.

• Projects must generate jobs or contribute to the economic or

physical revitalization of the area.

• Projects must result in a significant level of community

benefit.

• Brownfields redevelopment funding must be necessary to

make the proposed reuse feasible.

• Projects must be located in an economically distressed area.

• Projects must not be eligible for funding under the state

program that provides funds to cleanup petroleum spills.

Special requirements for site assessment and cleanup funding:

• The maximum amount for site assessments is $50,000.

• The maximum amount for site cleanups is $500,000.

• 30 percent of funds is earmarked for grants and loans for site

assessments.

• For grants, 20 percent match by the recipient is required.

• For loans, some match by the recipient is required and is

determined by the specific project. The match may be

waived.
Appendix II

Massachusetts’ Brownfields Program

Page 39 GAO-01-52 Brownfields

Brownfields Redevelopment Access to Capital

Brownfields Insurance

Premiums

25 policies Value of insurance

coverage:

$142.5 million

Value of premium:

$ 1.0 million

State share of

premium:

$ 0.3 million

Developer share of

premium:

$ 0.7 million

Environmental insurance for parties conducting cleanups and

redevelopment covers:

• Any party performing a site cleanup.

• Cleanup costs that exceed the planned costs for an approved

cleanup plan. The standard deductible is 15 percent of

cleanup costs but is negotiable.

• Cleanup costs for unknown pollution conditions discovered

during cleanup within the property boundaries.

• Coverage for cleanup costs, property damage, and personal

injury resulting from preexisting, unknown conditions beyond

the insured’s property boundaries; a deductible applies.

• Business interruption because of pollution discovered outside

the planned cleanup area; a deductible applies.

• Legal defense for claims arising from pollution conditions

outside of planned cleanup area.

• Maximum five-year term, but is negotiable.

Secured creditor coverage provides:

• Protection for lenders against loss on cleanup loans and

contemporaneous related construction loans. This coverage

protects the lender from default on project loans arising from

unanticipated environmental costs in the unlikely event that

the environmental insurance coverage is insufficient.

State Tax Credit

Tax Credits Not available at

the time of our

visit

Not available at the

time of our visit

• Project proponents, or other persons, must not have caused

or contributed to the releases or have owned or operated the

sites when the releases occurred.

• Projects must be located in an economically distressed area.

• Properties must be owned or leased for business purposes.

• A 25- or 50-percent tax credit is available for project cleanup

costs depending on whether the use of the property is

restricted after cleanup.

• Tax credit is available for cleanup costs incurred between

August 1, 1998 and January 1, 2005.

• Cleanup must begin on or before August 5, 2001.

• Tax credit may be taken upon completion of cleanup

conducted in accordance with applicable laws.

• Cleanup costs must be equal to or exceed 15 percent of the

preremediation assessed value.

• Tax credit may be carried forward for 5 years.

(Continued From Previous Page)

Program

Cumulative

number of

awards

Cumulative award

amounts Selected program requirements
Appendix II

Massachusetts’ Brownfields Program

Page 40 GAO-01-52 Brownfields

Source: GAO’s analysis of Massachusetts’ information.

Nonfinancial Incentives The state offers three major nonfinancial incentives to parties performing

site assessments and cleanups: flexible, risk-based cleanup standards,

greater liability protection, and reduced state oversight.

The state’s current cleanup rules, adopted in 1993, establish flexible, riskbased cleanup standards that permit parties performing the cleanups to

more accurately determine the costs of the cleanups in advance and may

make cleanups less costly. For example, the regulations establish

numerical standards for deciding “how clean is clean enough” for 107 of the

most common contaminants in soil and groundwater. The changes also

provide the ability for parties to factor in site-specific information to

modify the numerical standards when appropriate.

In addition to revised cleanup standards, the state provides statutory

liability protection to parties that did not cause or contribute to the

contamination at a site, or that were not the owners of or operators at the

site at the time of the release, but who clean up the site. Upon achieving a

permanent cleanup or a remedy operation status, the parties are protected

from state claims for cleanup costs and natural resource damages and from

third-party claims for cleanup costs and property damage. The liability

protection is transferable to subsequent property owners that meet the

same eligibility requirements noted above. In addition, the amended rules

clarified liability protection for lenders whose loans are secured by

brownfields. These revisions encourage cleanups by providing a more

certain exemption from liability, resulting in more opportunities for parties

to obtain financing from institutions that were once reluctant to provide

loans for brownfield projects because of the threat of potential liability.

Municipal Tax Abatements

Municipal taxes abated Not available at

the time of our

visit

Not available at the

time of our visit

• Eligible entities are municipalities and private purchasers that

did not cause or contribute to the release and did not own or

operate the site when the release occurred.

• Property must be zoned for commercial or industrial use.

• Agreement must specify details such as the amount of

outstanding tax obligation, payment term, interest rate, and

any other contractual obligations.

(Continued From Previous Page)

Program

Cumulative

number of

awards

Cumulative award

amounts Selected program requirements
Appendix II

Massachusetts’ Brownfields Program

Page 41 GAO-01-52 Brownfields

The Attorney General has authority to enter into individually tailored

brownfields covenants, referred to as not-to-sue agreements. These

agreements provide liability protection from suits brought by the

Commonwealth as well as contribution protection from third-party claims

under state law and common law property damage claims. Brownfields

covenants offer additional liability protection beyond that offered by the

statute itself, including increased flexibility, and broader eligibility and

liability relief. For example, agreements can provide liability limits prior to

completing the cleanup, as compared with the liability relief available

directly under the statute, which comes at the end of the cleanup process.

Moreover, parties that actually caused the contamination are eligible for

the brownfields covenant program even though they are generally not

eligible for relief offered by the statute.

One of the key features in the 1993 changes was the reduction in direct

state oversight of site assessments and cleanups. The state relies on statelicensed site professionals, experts in assessment and cleanup, to oversee

the assessments and cleanups of most sites. According to the state, using a

licensed site professional allows the assessment and cleanup to proceed at

most sites without the delay sometimes resulting from the need to obtain

state approvals before initiating the work. The state audits 20 percent of

the sites where licensed site professionals oversee the cleanup and directly

oversees the worst sites. Massachusetts is one of a small number of states

that rely upon these licensed environmental professionals to oversee waste

site cleanups.

Accomplishments of

State Program

MassDevelopment, in its 2000 annual report to the state legislature,

reported on the number of potential jobs and the potential private

investment that may result from loans made from the Brownfields

Redevelopment Fund. The Massachusetts Business Development

Corporation, a private company that administers the insurance program,

also reported to us information on the number of potential jobs and the

potential private investment that may result from participation in the state’s

environmental insurance program. The information being reported comes

from applications for assistance.
Appendix II

Massachusetts’ Brownfields Program

Page 42 GAO-01-52 Brownfields

Table 10: Massachusetts’ Brownfields Program Accomplishments, Fiscal Year 2000

Source: GAO’s analysis of Massachusetts’ information.

Dollars in millions

Accomplishments Number or amount

Brownfields Redevelopment Fund:

Potential private investment $ 74.0

Potential jobs created 325

Insurance Program:

Potential jobs created 2,000

Potential private investment $ 50
Page 43 GAO-01-52 Brownfields

Appendix III

Michigan’s Brownfields Program ApendxiI

Program Authority and

Structure

In the early 1990s, Michigan began to offer grants and loans to

municipalities to assess and clean up brownfields. In 1995, as an incentive

to brownfields redevelopment, Michigan amended its laws to offer

nonfinancial incentives to cleanup and redevelopment through the use of

state-established cleanup standards and relief from liability from past

contamination on a site. In 1999, the state supplemented these earlier

programs with the Clean Michigan Initiative program to fund state-run

cleanups of brownfields with the potential for redevelopment. This

program was just getting started at the time of our review. The Department

of Environmental Quality oversees the operation of the state’s brownfields

programs, including grant and loan assistance.

Michigan has also authorized local tax incentives for brownfields cleanup.

Municipal and other local government organizations can form agencies that

can pay for cleanup costs incurred at a site by capturing local tax funds

generated by newly redeveloped properties.

Major Program

Elements

The major elements of the state’s brownfields program: financial

incentives, liability relief, and cleanup standards are discussed below.

Financial Incentives The state conducts cleanups of brownfields and offers grants and loans to

municipalities to assess and remediate brownfields. Through the Clean

Michigan Initiative, a state bond issue in 1999, the state obtained $235

million to fund state cleanup of contaminated publicly owned sites with the

potential to be redeveloped. Under the program, the state selects sites that

have been nominated by municipalities, and it cleans up the sites. As of July

2000, the state had selected sites for cleanup under the program, but no site

cleanups had yet been completed. Also, through the state bond issue, the

state obtained $20 million to provide brownfields redevelopment grants to

municipalities to assess and clean up brownfields.

According to state officials, the Clean Michigan Initiative and Brownfields

Redevelopment Fund program replace earlier state programs for

assessment and cleanup that may run out of funding in the near future. For

example, since 1994, the state has provided over $7 million in grants to

municipalities through its Site Assessment Program. The state originally

appropriated $10 million for the program. The state legislature does not

plan to provide additional funding to the program once the funding runs
Appendix III

Michigan’s Brownfields Program

Page 44 GAO-01-52 Brownfields

out. Since 1997, the state has offered loans to municipalities under the

Revitalization Loan Program to fund site assessments as well as removal

actions needed for site assessment and demolition.

Under the Site Reclamation Program, the state has provided grants to

municipalities to conduct cleanups at the site of a new development. The

state has provided $32 million of the $35 million that was originally

appropriated for the program. The state legislature does not plan to provide

additional funding to the program once the funding runs out.

The state offers tax incentives to conduct assessments and cleanups at

brownfields through the Brownfield Redevelopment Authorities. The

authorities are municipalities that have the ability to capture the revenue

generated by new taxes created by redeveloped properties. The authorities

can use the tax revenues to reimburse the cleanup costs on the

redeveloped property. After the expenses are paid, the authorities can

continue to capture taxes for 5 years and use these funds for remediation

costs at other sites.

Table 11 describes the state’s brownfields financial assistance programs,

the amount of authorized funding, the source of program funds, and the

purpose of the program.
Appendix III

Michigan’s Brownfields Program

Page 45 GAO-01-52 Brownfields

Table 11: Michigan’s Brownfields Financial Incentives

Source: GAO’s analysis of Michigan’s information.

Table 12 presents available data on the number and amount of grants and

loans awarded for each financial assistance program and describes

recipient eligibility and other program requirements.

Dollars in millions

Program

Amount of

funding

authorized Source of funding Program purpose

Site Assessment

Program

$10 1988 state bond

issue

Grants to municipalities for assessments

Brownfields

Redevelopment

Loans

$5 State appropriation Loans to municipalities for site assessments and demolition and removal

actions needed for site assessment and demolition

Site Reclamation

Grants

$35 1988 state bond

issue

Grants to municipalities to conduct cleanups

Clean Michigan

Initiative (CMI)

Brownfields

Redevelopment

Grants

$20 1999 state bond

Issue

Grants to municipalities to conduct assessments or cleanup. This program

replaces the Site Reclamation Program. According to state officials, once

funding for the Site Reclamation program runs out, the state legislature will

not provide additional funding.

CMI $ 235.0 1999 state bond

issue

State selects sites with redevelopment potential that are nominated by

municipalities, and state conducts cleanup.

Brownfields

Redevelopment

Authorities

Capture of property

taxes

These authorities are municipal entities that reimburse cleanup costs by

capturing tax revenues from newly redeveloped properties and can capture

taxes for up to 5 years after reimbursement for cleanup expenses at other

properties.
Appendix III

Michigan’s Brownfields Program

Page 46 GAO-01-52 Brownfields

Table 12: Michigan’s Brownfields Financial Incentives Awards and Requirements

Source: GAO’s analysis of Michigan’s information.

Dollars in millions

Program

Cumulative

number of

awards

Cumulative

award

amounts Selected program requirements

Site Assessment Program

Assessment grants 101 $ 8 • Maximum grant of $1 million per project.

• In applying for funds, municipality must demonstrate a potential for

economic development on property.

Revitalization Loan Program

Assessment loans 15 $ 5 • Loans must be repaid in 15 years at an interest rate of 2.5 percent.

• No payment has to be made on the loan for the first 5 years of the

repayment term.

• Loans may be issued to a Brownfield Redevelopment Authority and

repaid with tax increment financing.

Site Reclamation Program

Cleanup grants 57 $33 • Maximum grant of $1 million per project and maximum of 1 grant per

community per fiscal year.

• According to Michigan program policy, at a minimum, private

investment must be twice the amount of the grant or loan the person

receives.

• Funded projects must also create jobs and/or increase property

value.

• Funded projects must show economic development, such as having

an operational building on the property within 2 years of completing

activities using grant funds or the state can ask for repayment of

some or all of grant.

Brownfields Redevelopment Grants

Cleanup grants 2 $ 1.5 • Maximum grant of $1 million per project and maximum of 1 grant per

community per fiscal year.

• According to Michigan program policy, at a minimum, the private

investment must be twice the amount of the grant offered to the

community.

• Funded projects must also create jobs, and/or increase property

value.

• Funded projects must show economic development, such as having

an operational building on the property within 2 years of completing

activities using grant funds or the state can ask for the repayment of

some or all of the grant.

Clean Michigan Initiative Bond Fund

State-funded cleanups 85 $34.4 Eligible sites must have potential to be redeveloped and must be

publicly owned. Eighty-five brownfield properties were approved for

funding through 9/30/99. According to state officials, cleanup

contractors were being selected for these cleanups during the summer

of 2000.
Appendix III

Michigan’s Brownfields Program

Page 47 GAO-01-52 Brownfields

Nonfinancial Incentives According to Michigan officials, state cleanup standards and state laws that

provide relief from liability of past contamination at a site encourage the

assessment and cleanup of brownfields.

The state cleanup standards dictate the amount of contaminant that has to

be removed from the site for it to be considered safe for humans and the

environment under state law. According to state officials, these standards

provide certainty in estimating cleanup costs and reduce the cost of sitespecific environmental studies. The state has defined generic and limited

cleanup standards that are based on the end use of the property and its

current zoning.

Under state liability rules, purchasers of property who are not responsible

for causing contamination are not held liable for cleaning up past

contamination of the site if they conduct a baseline environmental

assessment of the property. This assessment, provides the basis for

identifying any new contaminant release for which the new owner or user

would be responsible. In addition, new users of a property must ensure that

“due care” is taken in the use of the property. Due care requires that

existing releases are not exacerbated and that the users of the property and

third parties are not exposed above the applicable standard. According to

state officials, prior to the passage of state liability amendments, the fact

that persons who did not cause the contamination on a site could be held

liable for past contamination was the major impediment to encouraging

people to clean up and redevelop brownfields.

Accomplishments of

State Program

Michigan tracks the estimated private investment and estimated jobs

created at sites where state funds were used to assess and clean up

brownfields. As of May 2000, Michigan estimated that the properties at

which its grant and loan programs were used produced $1.3 billion in

private investment and 6,436 jobs. The state obtains these estimates of

private investment and jobs created from the recipients of the funds at the

time they apply for the state funding. The state requires recipients of state

funds to report every 6 months for 2 years after the completion of state

funded work on the status of development—including the amount of

private investment and jobs created—at the sites where the funds were

used. According to state officials, many recipients are not reporting these

data to the state.
Page 48 GAO-01-52 Brownfields

Appendix IV

New Jersey’s Brownfields Program ApendxiIV

Program Authority and

Structure

Since 1994, New Jersey has provided grants and loans to municipalities and

private citizens for assessing and cleaning up hazardous waste sites,

including brownfields, through its Hazardous Discharge Site Remediation

Fund. In addition, the state offers tax incentives for brownfields

redevelopment. The state defines brownfields as “any former or current

commercial or industrial site that is currently vacant or underutilized and

on which there has been, or there is suspected to have been, a discharge of

contamination.”

As a further incentive for brownfields redevelopment, in 1998, the state

legislature passed a law that provides certain liability protection from past

contamination for persons who are not in any way responsible for causing

the contamination at a site that clean up contaminated properties,

including brownfields. According to state officials, using state-developed

cleanup standards, entities can easily determine the approximate cleanup

costs at a site and use of the state technical requirements for cleanups offer

predictability in the cleanup process by providing a definite endpoint to

many cleanups. This may encourage entities to become more involved in

cleanups.

The New Jersey Department of Environmental Protection and the New

Jersey Economic Development Authority jointly administer the state grants

and loans for assessment and remediation. According to state

environmental officials, the state environmental department performs a

technical review of applications for funding to make sure that the applicant

is eligible and that cleanup plans are appropriate. The state economic

development authority performs a financial review of the application.

Major Program

Elements

The major elements of the state’s brownfields program: financial

incentives, cleanup standards, and liability relief are discussed below.

Financial Incentives New Jersey provides grants to municipalities to conduct assessments of

brownfields. To qualify for assistance, the municipalities must have a

development or redevelopment plan for the site or be able to demonstrate a

realistic opportunity for redeveloping the site.

The state offers both municipalities and private parties funding to conduct

cleanups. Municipalities can receive loans to conduct a cleanup if they
Appendix IV

New Jersey’s Brownfields Program

Page 49 GAO-01-52 Brownfields

used an assessment grant. Also, municipalities are eligible for loans to

clean up sites that present an imminent threat to public health or the

environment. Municipalities can receive up to $2 million per year in

financial assistance from the state for assessing and cleaning up

brownfields.

Private parties are eligible for grants and loans to conduct cleanups. They

can receive grants to conduct cleanups if they use innovative technology;

acquired the site before December 31, 1983, and it had existing

contamination that they did not cause; or if they do cleanups that do not

require engineering controls—physical barriers, such as soil caps—to

prevent exposure to contaminants.

New Jersey provides cleanup loans to private parties in specific situations.

First, parties conducting cleanups in qualifying New Jersey municipalities,

as defined by state law, are eligible for loans. Second, private parties and

municipalities are eligible for loans to clean up sites that contain an

imminent threat to health or environment. Third, private parties are eligible

for loans if they conduct voluntary remediation that is not required by the

state or a court. Fourth, private parties that conduct cleanups required by

the state as a condition of closure, transfer, or termination of operations

can receive loans to pay for the cleanup costs.

Under the Brownfields Reimbursement Fund program and Environmental

Opportunity Zone program, New Jersey offers tax incentives to parties that

clean up contaminated sites. Under the Brownfields Reimbursement Fund

program, a party that conducts a cleanup can enter into an agreement with

the state to receive up to 75 percent of the cost of the cleanup from state

property tax revenues from the site that has been cleaned up. To be eligible

for the program, the site must be an integral part of a local redevelopment

strategy. Under the Environmental Opportunity Zone program,

municipalities can offer abatements of local property taxes for up to 15

years to parties that clean up sites. Environmental Opportunity Zones are

created by municipal ordinance.

Table 13 describes the state’s brownfields financial assistance programs,

the amount of authorized funding, the source of program funds, and the

purpose of the program.
Appendix IV

New Jersey’s Brownfields Program

Page 50 GAO-01-52 Brownfields

Table 13: New Jersey’s Brownfields Financial Incentives

Source: GAO’s analysis of New Jersey’s information.

Table 14 presents available data on each financial assistance program, such

as the number and amount of grants and loans awarded, and describes

recipient eligibility and other program requirements.

Program

Amount of

funding

authorized

Source of

funding Program purpose

Hazardous

Discharge Site

Remediation Fund

$75,000,000 State

appropriations

and bond fund

State offers 10 categories of grants and loans to municipalities and private

persons to conduct assessments and cleanups of contaminated sites. Each

year the state allocates a percentage of the fund to each of the categories

as follows:

• Grants for assessments and loans for remediation to municipalities (10

percent)

• Loans to private parties to conduct cleanups in qualifying municipalities

selected by the state (15 percent)

• Loans to private parties or municipalities to remediate imminent

environmental threats (15 percent)

• Loans to private parties to conduct voluntary remediations that have not

been required by the state or a court (10 percent)

• Loans to private persons for state-required remediation as a condition of

the closure, termination of operations, or transfer of the property (15

percent)

• Grants to innocent private parties for up to 50 percent of remediation

costs, maximum $1 million per grant (15 percent )

• Loans to private parties for cleanup in a New Jersey Environmental

Opportunity Zone (5 percent)

• Grants to private parties of up to 25 percent of project costs for cleanup

using innovative technology, maximum $100,000 (5 percent)

• Grants to private parties up to 25 percent of project cost for cleanups

without engineering controls, maximum $100,000 (5 percent)

• Reserve fund category—money in this fund can be allocated to the other

nine funds if needed (5 percent)

Brownfields

Reimbursement

Fund

Taxes generated

from the property

cleaned up

The site must be an integral part of a local redevelopment strategy.

Environmental

Opportunity Zone

Abatement of

property taxes

Municipalities can offer tax abatements of local property taxes for up to 15

years to parties that clean up sites.
Appendix IV

New Jersey’s Brownfields Program

Page 51 GAO-01-52 Brownfields

Table 14: New Jersey’s Brownfields Financial Incentives Awards and Requirements

Dollars in millions

Hazardous

Discharge Site

Remediation

Fund

Cumulative

number of awards

Cumulative

award amounts Selected program requirements

Assessment

grants

a $24.0

• For municipalities to be eligible, they must create a development plan or

be able to demonstrate a realistic opportunity for redeveloping the site.

• Municipalities are not required to provide matching funds.

Cleanup grants a $7.0 • Private parties are eligible for grants to conduct cleanups if they use

innovative technology, are innocent partiesb

, or conduct cleanups that

do not use engineering controls—physical barriers such as a soil cap to

prevent exposure to contamination.

• For innovative technology cleanups, a person must provide matching

funds equal to 25 percent of the amount provided by the state and have

net worth less than $2 million. The grants are up to 25 percent of

remediation costs and cannot exceed $100,000.

• To receive innocent party grants, a person must own the property and

have acquired the property before December 31, 1983, and must not

have used or discharged the hazardous substance on the site. New

Jersey provides grants to innocent parties of up to 50 percent of a site’s

remediation cost and up to $1 million.

• To receive grants for cleanups that do not require engineering controls,

a party must provide matching funds equal to 25 percent of the grant

provided by the state and the party must have less than $2 million in

net worth. The grants are up to 25 percent of costs of a cleanup and

cannot exceed $100,000.

Cleanup loans a $11.5 Private parties are eligible for cleanup loans if they

• conduct cleanups in qualifying New Jersey municipalities as defined by

the state;

• conduct voluntary remediation of sites that are not required by the state

or a court;

• clean up sites that contain an imminent threat to public health or the

environment; or

• conduct a cleanup required by the state as a condition of closure,

transfer, or termination of operations of a facility.

Municipalities are eligible for cleanup loans if they received an

assessment grant or clean up sites that contain an imminent threat to

public health or the environment. Municipalities are eligible for up to $2

million per year in grants to assess sites or loans to remediate

properties.

• The state requires loans be paid back within 10 years and charges an

interest rate that is 2 percent below the federal discount rate, with a

minimum of 3 percent charged.
Appendix IV

New Jersey’s Brownfields Program

Page 52 GAO-01-52 Brownfields

a

New Jersey has made 518 grants and 92 loans for a total of 610 grants and loans made. New

Jersey did not provide us with the individual number of assessment grants, assessment

loans, cleanup grants, and cleanup loans made.

b

The state defines innocent parties as persons who acquire a site where there has been a

discharge of a hazardous substance that was not used by the new property owners.

Source: GAO’s analysis of New Jersey’s information.

Nonfinancial Incentives According to state officials and documents, three nonfinancial incentives

to cleaning up and redeveloping contaminated sites, including brownfields,

are state cleanup standards guidance, the state voluntary cleanup program,

and state laws that provide purchasers who conduct cleanups relief from

liability for past contamination not caused by the purchaser. According to

state officials in the Department of Environmental Protection, using the

state’s cleanup standards guidance, a party can easily determine the

cleanup costs at a site, which may encourage developers to become

involved in cleanups. Furthermore, according to state officials, the new

standards guidance offers a sense of finality and predictability in that there

is an endpoint to the cleanup of a site and to the state’s involvement at the

site. The standards guidance does not require a site-specific study to be

used at the site. In addition, the cleanup remedy is based on the planned

end use of the site.

According to the state, its voluntary cleanup program encourages cleanups

of contaminated properties, including brownfields. Under the Voluntary

Cleanup program, private parties and municipalities clean up contaminated

sites under state oversight. Under the program, parties enter into voluntary

agreements with the state to establish the scope and schedule of cleanup

activities. The agreements may encourage cleanups because they are not

state enforcement documents and, thus, do not contain penalties, which,

according to state documents, may have prevented cleanups from

occurring in the past.

Other incentives to encourage cleanup and attract private investment in

brownfields are state laws that provide purchasers who conduct cleanups

with relief from liability. Under a 1998 state law, purchasers who did not

cause the past contamination on the site can clean it up and will not be

required by the state to conduct additional cleanup work in the future on

previously undiscovered contamination.
Appendix IV

New Jersey’s Brownfields Program

Page 53 GAO-01-52 Brownfields

Accomplishments of

State Program

New Jersey tracks the accomplishments of its brownfields incentives by

tracking the amount of funds it gives to municipalities and private parties

each year and the program’s success stories. In the annual report for the

Hazardous Discharge Site Remediation Fund and in other documents, the

state publishes examples of sites that have been cleaned up or assessed

using state funds. According to state officials, the state does not currently

track the amount of private investment or jobs created at brownfields

where state funds were used for assessment or cleanup.
Page 54 GAO-01-52 Brownfields

Appendix V

Pennsylvania’s Brownfields Program ApendxiV

Program Authority and

Structure

Pennsylvania provides financial assistance in various forms to stimulate

the cleanup and redevelopment of brownfield properties. It makes grants

and loans to municipal and other developers for property assessments and

cleanups and publishes an inventory of brownfields properties to assist in

marketing the properties. Grants and loans for assessing and cleaning up

brownfields were authorized by the state in 1995. While the state has not

defined brownfields in its statutes or regulations, according to a

Pennsylvania official, it targets its brownfields assistance to the same types

of sites as EPA’s brownfields program.

In 1995, the Pennsylvania legislature also amended the state’s cleanup

requirements to authorize more flexible cleanup standards and to provide

greater protection from further liability for parties that cleaned up

contaminated properties. These changes applied to all contaminated sites

cleaned up under state law, not just brownfields. The flexible cleanup

standards and liability relief are intended to encourage cleanups by

reducing costs and providing certainty in the cleanup process.

The Department of Community and Economic Development is responsible

for administering grants and loans for site assessments and cleanups,

developing regulations to administer these incentives, and determining

which sites will be funded. The Bureau of Land Recycling and Waste

Management, within the Department of Environmental Protection, is

responsible for the state’s hazardous waste site cleanup programs,

including establishing cleanup standards and overseeing site assessments

and cleanups performed at brownfields and other properties by private

parties. The state does not accept any funding from EPA for its brownfields

program.

Major Program

Elements

The major elements of the state’s brownfields program, financial

incentives, flexible cleanup requirements, and liability relief for certain

parties, are discussed below.

Financial Incentives Grants and loans are available from the Industrial Sites Cleanup Fund for

government and private entities to conduct environmental assessments and

cleanups. Grants are also available from the Industrial Sites Environmental

Assessment Fund for government entities and nonprofit economic

development agencies to conduct environmental assessments located in

targeted areas. The two funds are administered through the Industrial Sites
Appendix V

Pennsylvania’s Brownfields Program

Page 55 GAO-01-52 Brownfields

Reuse Program. Money for the assessment and cleanup funds comes out of

the Hazardous Cleanup Fund, the state’s main cleanup fund, which receives

the proceeds from waste disposal fees. The Department of Environmental

Protection, through the Key Sites Initiative, uses state-funded contractors

to conduct environmental assessments on publicly owned sites that are

contaminated, or suspected to be contaminated, and have a high potential

for redevelopment.

The state recently revised its Industrial Sites Reuse Program to allow the

Department of Economic and Community Development to make

performance-based loans for the cleanup of nonhazardous waste or debris

at brownfield sites. A performance-based loan may be forgiven to the

extent that agreed-upon performance measures are met by the loan

recipient. Performance measures are based on the magnitude and

timeliness of the cleanup, resulting economic benefit of the cleanup to the

state, and method used to dispose of the waste or debris.

In an effort to market brownfield properties for redevelopment, the

Department of Environmental Protection established the Brownfields

Inventory Grant Program. Municipalities and economic development

agencies receive a $1,000 grant payment from the state for each

brownfields property they list on the Pennsylvania Brownfields Directory.

The Directory, which is available on the Internet, will provide an estimate

of the number of brownfield sites in the state and increase the opportunity

for sites to be assessed, cleaned up, and redeveloped.

Table 15 describes the state’s brownfields financial assistance programs,

the amount of authorized funding, the source of program funds, and the

purpose of the program.
Appendix V

Pennsylvania’s Brownfields Program

Page 56 GAO-01-52 Brownfields

Table 15: Pennsylvania’s Brownfields Financial Incentives

Source: GAO’s analysis of Pennsylvania’s information.

Table 16 presents available data on each financial assistance program, such

as the number and amount of grants and loans, and describes recipient

eligibility and other requirements for the program.

Dollars in millions

Program

Amount of

funding

authorized Source of funding Program purpose

Industrial Sites

Environmental

Assessment Fund

$ 2 Transfer of funds

from the

Hazardous Sites

Cleanup Fund

• Grants are provided to public entities for site assessments of

properties located in designated communities as well as targeted

areas.

Key Sites Initiative No limit Hazardous Sites

Cleanup Fund

• State-funded contractors conduct site assessments and prepare

cleanup plans to encourage and facilitate the voluntary cleanup

and reuse of abandoned industrial sites in prime locations.

• No maximum authorization has been established for the program.

Industrial Sites

Cleanup Fund

$ 39 Transfer of funds

from the

Hazardous Sites

Cleanup Fund

• Grants and low-interest loans are provided to public and private

entities for site assessments and cleanup.

• State statute requires that 20 percent of the yearly amount

appropriated be used for grants and the remaining 80 percent for

loans.

Brownfields Inventory

Grants

$ 2 Transfer of funds

from the

Hazardous Sites

Cleanup Fund

• Grants are available to municipalities and economic development

agencies to inventory brownfield properties in their areas.
Appendix V

Pennsylvania’s Brownfields Program

Page 57 GAO-01-52 Brownfields

Table 16: Pennsylvania’s Brownfields Financial Incentives Awards and Requirements

Program

Cumulative

number of

awards

Cumulative award

amounts Selected program requirements

Industrial Sites Reuse Program

Assessment grants

Assessment loans

Cleanup grants

Cleanup loans

120

5

60

5

$ 7,664,661

$ 278,062

$ 17,144,408

$ 3,529,792

Grant and loan conditions:

• Grant and loan applicants must not have caused or contributed to the

contamination at a site.

• The maximum grant or loan amount for assessments may not exceed

75 percent of the assessment cost, or $200,000, in a single fiscal

year, whichever is less.

• The maximum grant or loan amount for remediation may not exceed

75 percent of the remediation cost, or $1,000,000 in a single fiscal

year, whichever is less.

• A 25-percent match is required.

Special grant conditions:

• Grants for site assessments are available to municipalities, counties,

municipal authorities, redevelopment authorities, and economic

development agencies for projects located in targeted communities

as designated by the Department of Community and Economic

Development.

• Grants for site remediation are available to municipalities, counties,

municipal authorities, redevelopment authorities, and economic

development agencies for projects that they own and provided they

oversee the cleanups.

Special loan conditions:

• Loans are available to all eligible applicants, government and private

sector.

• Loan interest rate is 2 percent.

• The maximum loan term for site assessments is 5 years.

• The maximum loan term for site remediation depends on the loan

awarded but may not exceed 15 years.

• All loans must be sufficiently secured with business or personal

guarantees, real estate mortgage, letters of credit, or other forms of

collateral.

• As of June 2000, the program had pending 31 loan requests for

$20.4 million and 64 grant requests for $4.3 million, for a total of

$24.7 million.

Key Sites Initiative

Site Assessments 9 sites $ 3 million expended State assistance is available to municipalities and redevelopment

authorities that own contaminated properties but lack the funding or

the expertise to implement site assessment and planning.
Appendix V

Pennsylvania’s Brownfields Program

Page 58 GAO-01-52 Brownfields

Source: GAO’s analysis of Pennsylvania’s information.

Nonfinancial Incentives The two primary nonfinancial incentives that the state provides to parties

that clean up and redevelop brownfields are (1) flexible and more clearly

defined cleanup requirements and (2) liability relief. The state’s current

cleanup rules and liability standards were adopted in 1995, in an effort to

encourage more cleanups of hazardous waste sites by private parties and to

get the sites back into productive use.

Prior cleanup policies required that contaminated sites be restored to

“pristine” conditions—a standard so rigorous that compliance was

prohibitively expensive and virtually unattainable, according to

Pennsylvania program information. According to the state, these policies

were impractical and contributed to the abandonment of thousands of

industrial sites throughout Pennsylvania. According to state officials,

cleanups under the Pennsylvania’s new cleanup standards may be less

costly than if performed under EPA’s Superfund program.

For example, state laws and regulations establish statewide cleanup

standards that prescribe the maximum concentrations of contaminants by

environmental media, such as soil and water. These standards may be used

at most sites instead of cleanup levels determined by site-specific studies.

The standards permit the party performing the cleanup to more accurately

determine cleanup costs in advance and to do less site-specific study. The

standards have proven popular with parties performing cleanups and have

been used at 75 percent of sites in recent years, according to Pennsylvania

program reports.

In addition, special cleanup provisions are available for parties developing

properties formerly used for industrial activities where there is no

Brownfields Inventory Grants

Grants 40

approved

applicants

$ 51,000 • Grants are for local governments and economic development

agencies to inventory the brownfield properties in their areas.

• Grant recipients may receive up to $1,000 for each brownfield site

listed in the state’s brownfields directory.

• Each grant is limited to $50,000 per year.

• Applicant must submit a claim for reimbursement of expenses

incurred in inventorying the sites.

(Continued From Previous Page)

Program

Cumulative

number of

awards

Cumulative award

amounts Selected program requirements
Appendix V

Pennsylvania’s Brownfields Program

Page 59 GAO-01-52 Brownfields

responsible party to pay for cleanup or the property is located within a

state-designated area. A baseline remedial investigation of the property

must be done by the developer and documented in a report. The developer

is only responsible for remediating immediate, direct, or imminent threats

to the public health or the environment that would prevent the property

from being used. The developer is not responsible for any other

contamination identified in the report.

Pennsylvania also changed its liability rules. Prior laws held current

owners responsible for cleanup, even though the contamination on their

properties may have been caused by previous owners. This unlimited

liability often made it preferable to abandon a site rather than to restore it,

according to the state. The revised liability rules encourage cleanups by

providing a more certain end to liability after cleanup by limiting future

liability when cleanup standards are achieved and by expanding the

opportunities for parties to obtain financing from institutions that were

once reluctant to provide financing for brownfields because of the threat of

potential liability.

According to the revised Pennsylvania liability rules, any party that

demonstrates compliance with the state’s cleanup standards is to be

relieved of further liability for the site cleanup and is not to be subject to

citizen suits or actions to force a contribution to cleanup costs. The liability

relief attaches to the property and continues with the property through

future property transfers. This protection applies to

• the current or future owner or any other party who participated in the

remediation of the site,

• a party that develops or otherwise occupies the site,

• a successor or assignee of any party to whom liability protection

applies, and

• a public utility to the extent that it performs activities on the identified

site.

The scope of liability relief has certain limitations. Liability relief received

from the state does not affect the responsible parties’ liability under

CERCLA. Contaminants not identified prior to and during the cleanup

action that are later identified are not covered by the liability relief. Nor is

there any release of liability for contamination caused by a party after

cleanup.
Appendix V

Pennsylvania’s Brownfields Program

Page 60 GAO-01-52 Brownfields

The revised Pennsylvania rules expands liability relief for certain parties,

such as lenders and economic development agencies that hold an interest

in properties, unless they directly cause an immediate release or directly

exacerbate a release of contaminants.

Accomplishments of

State Program

Neither the Department of Environmental Protection nor the Department

of Community and Economic Development formally tracks

accomplishments that arise from the state’s program of brownfields

financial assistance. At the time of our review, the Department of

Community and Economic Development was developing a database that

will track the activities and accomplishments resulting from its financial

assistance at properties.
Page 61 GAO-01-52 Brownfields

Appendix VI

Wisconsin’s Brownfields Program ApendxiVI

Program Authority and

Structure

Wisconsin’s brownfields initiative comprises a number of programs that

provide financial assistance and technical assistance to parties cleaning up

and redeveloping brownfield properties. These programs provide funding

to public and private parties for site assessments and cleanups, and tax

relief for parties that cleanup and redevelop brownfield properties. The

state has also enacted legislation to bring finality to liability after cleanup.

A state statute defines brownfields as abandoned, idle, or underused

industrial or commercial facilities or sites, the expansion or redevelopment

of which is adversely affected by actual or perceived environmental

contamination, a definition very similar to EPA’s. Wisconsin officials

estimate that 10,000 brownfield sites exist throughout the state.

The state’s brownfields initiative is administered by three state agencies:

the Department of Commerce, the Department of Natural Resources, and

the Department of Revenue.

The Department of Commerce, Division of Community Development, is

responsible for the following programs.

• The Wisconsin Brownfields Grant Program, the most mature of the

state’s financial assistance programs, provides grants to local

development agencies, municipalities, and private parties for cleanup

and redevelopment.

• The Wisconsin Community Development Zone Program assists those

seeking to start or expand a business in, or relocate a business to,

designated areas in Wisconsin. The program offers a tax credit against

income taxes of 50 percent of all eligible cleanup costs.

• The Wisconsin Enterprise Development Zone Program also encourages

businesses to locate their projects in areas designated as high economic

distress areas. The enterprise development zones are smaller than the

community development zones and comprise only a single business. The

program offers a tax credit against state income taxes of 50 percent of

all eligible cleanup costs.

• The Department of Commerce is preparing a listing of brownfield

properties in a state-developed inventory to assist in marketing these

properties.

The Department of Natural Resources’ Bureau for Remediation and

Redevelopment has full responsibility for the following initiatives:
Appendix VI

Wisconsin’s Brownfields Program

Page 62 GAO-01-52 Brownfields

• The Site Assessment Grant for Local Governments is a new program

that provides funding to local government units to make preliminary

assessments at brownfields sites.

• The Land Recycling Loan Program is also a new program that provides

loans to local governments to investigate and remediate municipalowned contaminated properties, including landfills. The funding for this

program is provided by a set-aside of $20 million from the state’s clean

water revolving fund1 to assist the municipalities.

• The Sustainable Urban Development Zone Program is a pilot program

that provides grants to five Wisconsin communities to promote the

cleanup and redevelopment of certain brownfields in their communities.

The Department of Revenue is responsible for administering the

Environmental Remediation Tax Incremental Financing Program. This

program allows political subdivisions to pay for site investigations and

cleanups from the increased property taxes generated by redeveloped

properties. In addition, Wisconsin counties and the city of Milwaukee have

authority from the state legislature to cancel all or part of delinquent

property taxes and the associated interest and penalties on contaminated

properties in exchange for getting the properties cleaned up and

redeveloped.

Major Program

Elements

The major elements of the state’s brownfields program including various

forms of financial assistance, state-developed inventories of brownfield

sites, and expanded liability protection, are discussed below.

Financial Incentives Table 17 describes the state’s brownfields financial assistance programs,

the amount of authorized funding, the source of program funds, and the

purpose of the program.

1 States establish state clean water revolving funds through capitalization grants provided by

EPA and a state match. Loans are made from the funds to address wastewater treatment and

water quality issues.
Appendix VI

Wisconsin’s Brownfields Program

Page 63 GAO-01-52 Brownfields

Table 17: Wisconsin’s Brownfields Financial Incentives

Source: GAO’s analysis of state information.

Table 18 presents available data on each financial assistance program, such

as the number and amount of grants and loans, and describes recipient

eligibility and other requirements for the program.

Program

Amount of

funding

authorized

Source of

funding Program purpose

Site Assessment

Grants for Local

Governments

$ 1.45 million One-time state

appropriation

New program that began in the summer of 2000. Funds are available to

local government units to assess contaminated brownfield properties.

Brownfields Grant

Program

$ 22.2 million Biennial state

appropriation

Funds are available to public and private parties to clean up brownfields

projects that promote economic development.

Land Recycling

Loan Program

$ 20.0 million Clean water

revolving loan fund

Low-interest loans are available for investigating and remediating

municipal-owned contaminated properties, including landfills.

Sustainable Urban

Development Zone

Program

$ 2.38 million State appropriation New pilot program that provides grants to five Wisconsin communities

to create a comprehensive set of financial incentives to promote the

cleanup and redevelopment of certain brownfield areas in a community.

Cancellation of

Delinquent Taxes

Reduction in

property tax

Wisconsin counties and the city of Milwaukee can cancel all or part of

delinquent property taxes, interest, and penalties on a contaminated

property in exchange for cleanup and redevelopment. Of the 10,000

estimated brownfields in the state, 1,500 are believed to be tax

delinquents.

Environmental

Remediation Tax

Incremental

Financing

No limit on the

amount of eligible

costs

Reduction in

property tax

Governmental entities, such as counties, cities, villages, and towns, can

recover their cleanup costs on properties they transfer to other parties

through the increased property taxes produced by subsequent

redevelopment.

Community

Development Zone

Program

$ 38.16 million in

tax benefits

available

Reduction in state

income tax

An environmental remediation tax credit is available to parties

expanding or starting businesses in, or relocating current businesses

to, 1 of 20 community development zones.

Enterprise

Development Zone

Program

Maximum of $3

million per each of

the 79 designated

zones

Reduction in state

income tax

A tax credit is available for environmental remediation to parties that

start or expand businesses in distressed areas. A zone is “site-specific”

and applies to only one business.
Appendix VI

Wisconsin’s Brownfields Program

Page 64 GAO-01-52 Brownfields

Table 18: Wisconsin’s Brownfields Financial Incentives Awards and Requirements

Dollars in millions

Program

Cumulative number

of awards

Cumulative

award amounts Selected program requirements

Site Assessment Grants for Local Governments

Grants Not available at the time of

our visit

Not available at

the time of our visit

• Eligibility is limited to local governments that did

not cause the contamination at the site.

• Applicant may be awarded up to 15 percent of the

funds available in each fiscal year.

• The party causing the contamination must be

unknown, unable to be located, or unable to pay

for the cleanup.

• Local governments are reimbursed for 80 percent

of the assessment costs.

• The state has received 85 applications requesting

$1.8 million. Only $1 million is available.

Brownfields Grant Program

Grants 39 $ 15.8 • Eligible parties are local development authorities,

municipalities, and private parties.

• Grants are awarded competitively and can be

used for environmental remediation and

redevelopment.

• Matching requirements increase from 20 to 50

percent as the size of the grant increases.

• Program has received 106 requests totaling $51.5

million during the first three rounds of competition.

Of the 106 requests, only 39 grants, totaling $15.8

million, were awarded.
Appendix VI

Wisconsin’s Brownfields Program

Page 65 GAO-01-52 Brownfields

Land Recycling Loan Program

Loans 1 $ 0.6 • Eligible entities are local governments, including

community development and housing authorities,

that own the property and, except for landfills, did

not cause the contamination.

• Funds are loaned at no interest to pay for site

assessments and remediation.

• The maximum loan term is 20 years.

• An applicant can receive no more than 25 percent

of the $20 million program funds authorized. Only

40 percent of the loans in each fiscal year can be

used for landfills.

• Awards are based on a project’s ability to reduce

environmental pollution, threats to human health,

and for non-landfill projects, the extent to which

the project will prevent the development of

undeveloped land.

• Funds are to be used for projects that remedy

contamination that affects or threatens to affect

groundwater or surface waters.

• No recipient match is required.

• Preliminary applications received exceeded the

$20 million set aside for this program. State

officials anticipate that not all applicants who

submitted a preliminary application will submit a

full application.

Sustainable Urban Development Zone Program

Grants 3 communities Not available at

the time of our visit

• Program eligibility is limited to the following

communities: Milwaukee, Green Bay, Oshkosh, La

Crosse, and Beloit.

• Fund provides grants to assess, investigate, and

clean up brownfield properties.

• No recipient match is required.

• To date, three communities have contracts with the

state and have started their projects. The state is

negotiating contracts with the remaining two

communities. Each community gets a share of the

$2.38 million.

(Continued From Previous Page)

Dollars in millions

Program

Cumulative number

of awards

Cumulative

award amounts Selected program requirements
Appendix VI

Wisconsin’s Brownfields Program

Page 66 GAO-01-52 Brownfields

Source: GAO’s analysis of Wisconsin’s information.

Cancellation of Delinquent Taxes

Property Tax Abatements 5 sites Not available • Eligible parties are property owners or potential

owners.

• Authorized bodies may forgive a portion or all of

the delinquent property taxes.

Environmental Remediation

Tax Incremental Financing

Tax Credit 3 communities are

considering this program

Not applicable • Counties, cities, villages, and towns can establish

environmental remediation tax increment districts

on one or more contiguous properties they own

and clean up to recover property assessment and

cleanup costs. A district is created once the

property is sold to a private party.

• Eligible project costs include environmental

investigation and remediation costs, as well as

other costs.

• There are no limitations on the amount of costs

eligible for financing.

• The maximum life of the tax increment financing is

16 years or when all eligible costs have been paid,

whichever occurs first.

Community Development Zone Program

Property Tax Credit Not available at the time of

our visit

Not available at

the time of our visit

• Eligible parties are individuals and businesses

who locate their new or expanded business

projects within one of 20 development zones.

• The credit is 50 percent of all eligible remediation

costs. Credits for remediation plus nonremediation

credits provided to business cannot exceed $38

million for all zones.

Enterprise Development Zone Program

Property Tax Credit Not available Not available • Eligible parties are individuals and businesses

who locate or expand their businesses in an

economically distressed area.

• The Department of Commerce can designate up

to 79 zones, 10 of which must be for

environmental remediation and can vary the zone

benefits to encourage projects in areas of high

distress.

• Zones can exist for up to 7 years.

• The credit is 50 percent of all remediation costs.

Credits for remediation plus nonremediation

credits provided to businesses that locate in a

designated area cannot exceed $3.0 million for

each zone.

(Continued From Previous Page)

Dollars in millions

Program

Cumulative number

of awards

Cumulative

award amounts Selected program requirements
Appendix VI

Wisconsin’s Brownfields Program

Page 67 GAO-01-52 Brownfields

Nonfinancial Incentives In addition to financial incentives, Wisconsin provides nonfinancial

incentives to further encourage the cleanup and redevelopment of

brownfield properties: an inventory system that links properties with

potential developers and expanded liability protection.

The Department of Commerce is developing a Web-based system, the

Brownfields Location Information System, to list brownfield sites in order

to promote their potential reuse by allowing users to locate properties that

meet their specific redevelopment criteria. Any party owning a brownfield

site in the state can complete and submit a form to the Department to have

the property listed.

The state has created a number of specific liability protections to facilitate

brownfields redevelopment. For example, Wisconsin law exempts lenders,

owners of properties contaminated by off-site sources, and local

governments from cleanup liability in certain circumstances. Parties that

conduct cleanups of contaminated properties are also given protection

from further liability, such as for contamination unknown at the time of

cleanup.

Accomplishments of

State Program

At the time of our visit, the Department of Commerce had only provided

accomplishments for the Brownfields Grant Program. Table 19 shows the

accomplishments reported under this program as of January 2000. The

source of the accomplishments is grant applications.

Table 19: Brownfields Grant Program Accomplishments

Source: GAO’s analysis of Wisconsin’s information.

Accomplishments Number or amount

Potential jobs created 3,364

Potential increase in taxable property values $227 million

Potential acres returned to productive use 507
Page 68 GAO-01-52 Brownfields

Appendix VII

Comments From the Environmental

Protection Agency ApendxiVI

Note: GAO's

comments

supplementing those

in the report text

appear at the end of

this appendix.
Appendix VII

Comments From the Environmental

Protection Agency

Page 69 GAO-01-52 Brownfields

See comment 1.

See comment 2.

See comment 3.

Now on p. 6.

See comment 4.
Appendix VII

Comments From the Environmental

Protection Agency

Page 70 GAO-01-52 Brownfields

Now on p. 17.

See comment 5.

Now on p. 17.

See comment 6.

Now on p. 6.

See comment 7.

Now on p. 16.
Appendix VII

Comments From the Environmental

Protection Agency

Page 71 GAO-01-52 Brownfields

See comment 8.

Now on p. 7.
Appendix VII

Comments From the Environmental

Protection Agency

Page 72 GAO-01-52 Brownfields

See comment 9.

Now on pp. 11 and 12.

See comment 10.

See comment 11.
Appendix VII

Comments From the Environmental

Protection Agency

Page 73 GAO-01-52 Brownfields
Appendix VII

Comments From the Environmental

Protection Agency

Page 74 GAO-01-52 Brownfields

The following are GAO's comments on the Environmental Protection

Agency's letter dated November 22, 2000.

GAO's Comments 1. We believe that our methodology is appropriate for the findings

presented in our report. Our report presents data on the awards made

by EPA and states for assessments. It does not compare the number of

assessments done by EPA or the states or compare the cost of

assessments. We agree with EPA that it is not accurate to draw national

conclusions on the basis of our review of five states, and we note that

the report does not reach any such conclusions. We also agree with

EPA that the five states we reviewed are not necessarily representative

of other state programs, and, as we indicated at the beginning of our

report, the states we selected were identified by EPA and other

knowledgeable organizations as operating some of the largest or most

innovative brownfields programs in the nation.

2. Our report briefly discusses state superfund and voluntary cleanup

programs in the background section to provide some historical context

for the state brownfields programs. It also presents information on the

cleanup and liability standards adopted by the states for their voluntary

cleanup programs because these standards govern the cleanup of sites

that receive state brownfields financial assistance and because they are

regarded by the states as incentives for brownfields cleanups. However,

our comparison of funding provided by EPA and the states and our

discussion of state accomplishments use data only from the states'

brownfields programs. Our report does not discuss the need for a

national program because this issue is not related to the objectives of

our review.

3. Our report discusses the data EPA and the states have obtained on

program results and the systems that EPA and the states have

established to measure results, and concludes that data on both EPA

and state programs are limited. We do not criticize EPA for attempting

to collect program results data and, in fact, recommend that they

increase efforts to get it.

4. We added more information to our report on EPA's efforts to assure

data quality and to indicate that it is making a special review of the

accuracy of previously reported data. EPA provided data to us from its

Brownfields Management System in June 2000 showing that Shreveport

had completed cleanups at 22 properties. EPA did not disclose to us in
Appendix VII

Comments From the Environmental

Protection Agency

Page 75 GAO-01-52 Brownfields

June that the number of properties with completed cleanups was

overstated for Shreveport nor had it revised its brownfields database.

In September 2000, we contacted the Shreveport brownfields

coordinator, who informed us of the overstatement. In October 2000,

when we questioned EPA about the discrepancy, EPA told us for the

first time that it had discovered the error in April 2000.

5. Our selection of the five assessment pilots was not intended to be a

representative, random sample of pilots. Instead, we chose pilots to

whom EPA had attributed some of the largest accomplishments in the

program. This selection allowed us to review a substantial percentage

of the program's reported results in a short period of time. For

example, according to data EPA provided to us in June 2000, the pilots

we selected represented 36 percent of the properties with cleanups

completed, 30 percent of the properties with redevelopment underway,

80 percent of the redevelopment/construction dollars leveraged, and 35

percent of the jobs leveraged. We found substantial overstatement of

cleanups completed in Shreveport and of redevelopment/construction

dollars leveraged in Houston. We also found a misclassification of

results in the data for Baltimore. Also, as we noted in our report, prior

to September 1999, EPA did not have nationwide guidance that would

help to ensure the consistent reporting of results. Based on further

information provided by EPA officials about their efforts to correct

errors in program results data, we have deleted from our final report a

characterization of EPA’s data as uncertain. EPA officials told us that

they are reviewing data reported in the past by pilots and are in the

process of resolving issues about the accuracy of the data.

6. Our report does indicate that one reason for the limited data EPA has

on program results is that some of these results can take some time to

occur. For example, we noted that several years may elapse after an

award before certain results, such as the creation of jobs, are realized.

In addition, our report notes that the reporting of results may be limited

because some results, such as cleanup and redevelopment, might not

occur for some years after an assessment award is made. The report

also cites one of our past reviews showing that most federal agencies

generally do not have the comprehensive data necessary to determine

the extent to which brownfields programs' economic benefits will be

achieved. EPA also said that we had not faulted the states for not

collecting information on program results. Our report indicates that

only three of the five states we selected were reporting data on the

results of their brownfields loan and grant programs and that state data
Appendix VII

Comments From the Environmental

Protection Agency

Page 76 GAO-01-52 Brownfields

on program results are limited. EPA said that its efforts to collect data

on the results of its brownfields program should be recognized. We

have revised our conclusions to recognize the efforts that EPA has

made.

7. Our report defines “results” as intermediate or end outcomes, such as

cleanups completed or redevelopment activity begun. EPA said that it

has required recipients to submit quarterly reports on activities

delineated in the scope of work for their awards. For example, EPA

officials said that recipients have been required to report on how they

spent their awards. However, EPA does not have a national requirement

that recipients report program results as we have defined them in this

report. In September 1999, EPA defined a set of accomplishment

measures that regions could require of pilots in new or amended

agreements after September 30, 1999. EPA also said that it disagreed

with statements made in our report implying that EPA does not have a

functioning performance measurement system in place and the tone

that implies some “fault” on the part of the agency for pioneering

efforts to collect information. The report does not imply that EPA does

not have a functioning performance measuring system in place. It

indicates that the data collected so far by the system for certain key

parameters are limited. In addition, we disagree that the tone of our

report faults EPA for attempting to collect data. In fact, we recommend

further efforts at data collection.

8. We have revised our description of EPA's brownfields initiative in light

of EPA's comment.

9. The data in our report cannot be used to compute costs per assessment

because the report shows only the number of assessment grants and

loans made by states not the number of assessments performed. State

grants and loans may have been used for more than one assessment.

10. We do not regard our comparison of EPA and state brownfields

programs as pitting the programs against each other.

11. As an agency of the U.S. Congress, GAO does not generally make

recommendations to state governments. We discussed the

recommendations with EPA officials and made changes where

appropriate to address their concerns.

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