'Brownfields' are in need of cleanup Pollution becomes hurdle to property development

REAL ESTATE MAILBAG

February 18, 1996|By MICHAEL GISRIEL

Dear Mr. Gisriel:Dear Mr. Gisriel:

What are "brownfields?" What is the source and extent of the problem? Do "brownfields" exist in Maryland and what proposals are there to solve the problem?

Robert Hagen

Baltimore

Dear Mr. Hagen:Dear Mr. Hagen:

"Brownfields" describe unused or abandoned urban properties that are either polluted or perceived to be polluted as a result of past commercial or industrial use and are not attractive to the real estate market.

What causes a piece of property to sit idle while others attract much coveted commercial or industrial uses? Fear of legal liability for pollution is only one of many causes but nevertheless one that can be addressed.

The keys to removing environmental barriers are to provide as much "certainty" about the site to a prospective developer as possible, to re-examine laws and regulations and their practical application, to streamline the process by which environmental contamination is addressed and to provide incentives for redeveloping brownfield properties.

Many experts believe that state and federal laws governing toxic waste disposal and cleanup have had the unintended consequence of making it more difficult to reuse old industrial land than it is to develop pristine land. The reasons:

* The liability scheme makes even innocent purchasers, sellers, and lending institutions responsible for cleanup costs. Maryland lacks any organized way for businesses to receive a clear liability sign-off.

* Cleanup standards are often unclear and may require cleanup beyond what might be appropriate for the planned use.

* Maryland lacks any offsetting financial incentives to counter the disadvantages of redeveloping brownfields.

Part of the inventory of contaminated sites is known, i.e. those sites that are on the state's list of hazardous-waste sites. There are about 450 sites on this list, with the largest number being in lTC Baltimore, Prince George's County, Baltimore County, Cecil County and Anne Arundel County.

About 30 states have adopted reform measures, usually called "Voluntary Cleanup Programs," to make it easier to clean up and reuse contaminated properties. About 20 states have legislated programs.

There are two legislative proposals pending in Annapolis to deal with the brownfields problem, HB 5 and SB 205.

HB 5 is broadly inclusive regarding eligible sites while the Senate bill, SB 205, is quite restrictive, eliminating sites that are either occupied or subject to enforcement action by the Maryland Department of the Environment.

Regarding eligible parties -- the House bill, again, is broadly inclusive; the Senate bill eliminates all "Responsible Parties," which would mean, for example, that any current owner of contaminated land would not be eligible for the program, even if that owner did not cause the contamination.

Regarding lender liability -- the House bill corrects the law in order to encourage lenders to participate in brownfields redevelopment. The proposal removes lending institutions from cleanup liability in instances where the bank may be managing a cleanup as part of a foreclosure.

Regarding "Timing" and "Form of Assurance" letters from the environmental agency -- the House bill, recognizing the obstacles to obtaining private financing, authorizes MDE to issue various assurance or approval letters in advance of the completion of the cleanup (for example, a technical approval of a cleanup response plan). The House bill also authorizes MDE to issue a "No Action Letter," which gives a clean bill of health to a site where no cleanup is required.

Both bills are consistent with the "polluter pays" doctrine. MDE's ability to enforce and seek cost recovery from polluters remains unchanged. While the House bill includes a potential liability release for responsible parties (RP's), the RP must complete a cleanup according to an MDE-approved plan before the release can be obtained. Should contamination be found after the release is granted, the release would be "reopened" and the responsible party would be liable.

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