Under CERCLA, the Environmental Protection Agency (EPA) can compel the parties responsible for hazardous waste contamination to pay to clean up sites. The cleanup costs can be considerable. EPA estimates that the average cost to clean up a site on the National Priorities List (NPL), its list of highly contaminated sites, is $26 million. Although most brownfields are not highly contaminated, cities, lenders, and developers cite the possibility that the liability provisions in CERCLA could be applied to these properties as a major barrier to redeveloping them. Under CERCLA, the responsible parties are strictly liable for cleanup costs—they can be compelled to perform cleanups—and can be subject to “joint and several” liability. Under strict liability, a responsible party is liable regardless of whether the party is at fault. Under joint and several liability, each party can be held responsible for the entire cost of the cleanup. Most states have similar liability laws and develop their own lists of the sites needing cleaning up. EPA defines brownfields as “abandoned, idled or underused industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination.” When industries choose to avoid such potential problems by locating on uncontaminated sites rather than on brownfields, they may seek suburban “greenfields.” Although these sites may require building additional infrastructure, such as access roads and sewer systems, that brownfield sites would not, the developers may still view greenfields as more cost-effective than the sites requiring a cleanup. When the developers choose greenfields over brownfields, city residents lose employment opportunities, city governments lose tax revenue, and the new development contributes to urban sprawl. Several legislative proposals that would address brownfield issues, including S. 1285, have been introduced. Also, the President recently proposed tax incentives for those who voluntarily clean up brownfield properties. Besides these proposals, other executive agencies have provided funds for brownfield redevelopment. EPA issued a “brownfields action agenda” in 1995, which, among other things, provides 50 grants to local governments to fund a wide variety of 2-year demonstration projects that address brownfield problems. It has also removed nearly 28,000 sites from its list of potential NPL sites, thereby potentially stimulating redevelopment at these sites by reducing the possibility of Superfund liability. Additionally, EPA clarified its enforcement policies toward lenders, property purchasers, and certain property owners to alleviate their concerns and facilitate their involvement in the cleanup and redevelopment of brownfields. The abandoned or idled industrial sites that could be classified as brownfields probably number in the tens of thousands, totaling hundreds of thousands of acres, but no official nationwide count exists. Some of the research and advocacy organizations involved in urban issues have developed estimates, and municipalities have also estimated the potential number of brownfield sites, or acreage, within their borders. However, any estimate of the number of brownfields is likely to be imprecise because the cities and others measuring the number of brownfields often use different techniques and definitions. The researchers at the Urban Land Institute estimated that about 150,000 acres of abandoned or underused industrial land exist in major U.S. cities.This estimate excludes some commercial properties that could also be classified as brownfields; those excluded are sites with underground storage tanks, such as former gas stations, or dry cleaners. Therefore, this estimate represents the lower end of the range of estimates. While the federal government and the states have not identified and listed brownfield properties, several local governments that received grants under EPA’s brownfields pilot program have also developed estimates of brownfield acreage within their borders. (See table 1). In addition, the U.S. Conference of Mayors, an organization for local government issues, recently surveyed its member cities about the amount of brownfield acreage in their cities. (See app. I for a summary of the survey results for cities with populations over 100,000.) As with the cities participating in EPA’s brownfields program, these estimates varied considerably, from a low of 39 acres in Houston (the estimate was limited to a 20-square-mile area of the city targeted for redevelopment) to a high of 14,000 acres in Cleveland, depending, in part, on how the cities defined and counted their brownfields. The researchers and the cities have used different techniques and definitions in measuring the number of brownfields. For example, the Urban Land Institute’s estimate used a relatively narrow definition of a brownfield site because it focused primarily on the industrial corridors in larger cities. The number of brownfield acres could actually be greater than that estimate if it were based on the broader definitions that some local governments used in preparing their own estimates. Table 2 outlines the ways in which brownfield definitions vary. The potential of 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, these investors still are 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. To lower the barriers to brownfield redevelopment, S. 1285 would limit the liability of lenders and such property purchasers as developers under certain conditions and also would provide assistance for the state programs that encourage the voluntary cleanup of hazardous waste sites. However, these initiatives will not remove all barriers to brownfield redevelopment, such as the initial cleanup costs or high urban property taxes, that may still make them unattractive to business in comparison with suburban greenfields. The liability for the costly cleanup of environmental contamination is a barrier to brownfield redevelopment because it discourages lenders, developers, and property owners from participating in these projects. Under CERCLA, the owners of property containing hazardous substances are among those who can be held liable for the cleanup costs incurred by EPA, the states, and other responsible parties, regardless of whether the property is currently listed on the NPL. The lenders who hold a security interest in contaminated property may be considered property owners under CERCLA if they participate in the management of the property. The developers who purchase property may also become liable for any contamination later found at the site. Former property owners may also be liable for the cleanup costs if the contamination occurred during their ownership of the property. Thus, even the suspicion of current or prior contamination may make lenders less willing to provide funds, developers less willing to purchase property, and owners less willing to place their property on the real estate market. The Congress and EPA have already taken some steps to limit lenders’ liability. Under CERCLA, a party (such as a bank) that holds the evidence of ownership (such as a mortgage) in the property to protect its interest, and does not participate in the management of the property, is not considered a property owner. However, the statute does not define what actions constitute “participation in the management of the contaminated property,” and the courts have given varying meaning to this phrase. As a result, many lenders are reluctant to finance the purchase of property they suspect is contaminated, or to foreclose on such property in order to avoid the potential liability for cleanup. In an attempt to clarify these matters, EPA issued a rule in 1992 that outlined the actions a lender could take without becoming subject to liability. However, in 1994 a federal appeals court held that EPA was not authorized to issue the rule. After the rule was invalidated, EPA and the Department of Justice issued a policy stating that they intend to apply the provisions of the rule when deciding whether to take enforcement action against lenders. However, the lenders can still be sued by third parties seeking contributions for the cost of the cleanup. The Senate bill proposes two actions specifically designed to lower CERCLA’s liability barriers to redeveloping brownfields. First, the bill would define in detail the circumstances under which a lender who holds a security interest could act to protect that interest without becoming liable for cleanup costs. It also places a cap on the total amount that lenders would have to pay in the event they are liable. Second, the bill would limit the liability of certain purchasers of property, such as developers, if they assess a site for contamination before buying it and find none. Because the Senate bill does not exempt property owners from liability, these owners may continue to avoid selling contaminated properties because they fear drawing attention to the contamination and thus incurring cleanup costs. However, the bill authorizes funds from the Superfund trust fund to be used to help the states develop their voluntary cleanup programs. These programs often provide liability relief from the states’ hazardous waste laws to developers or property owners that volunteer to clean up contaminated sites. Resolving CERCLA’s liability concerns may not address all of the barriers to redeveloping brownfields. According to representatives of several large banks, the contamination at brownfields still generally makes them risky investments. Because of the potential contamination, developers have difficulty in predicting what the cost to clean up a site will be and when it will be ready for redevelopment; as a consequence, a return on the investment is uncertain in comparison with the potential return on a project on a greenfield site. Lenders, developers, and property owners could also be liable under other federal laws, such as the Resource Conservation and Recovery Act, or the states’ hazardous waste laws, potentially increasing costs and slowing down the project. Also, it may still be difficult for some of these urban industrial sites to compete with greenfields even if they are not contaminated.