Brownfields at 20: a critical reevaluation.

• Author: Eisen, Joel B.

1. INTRODUCTION

   The revitalization of brownfields, (1) once a theory, is now an industry. This industry, however, is not yet mature. It has been only twenty years since Congress attempted to give prospective purchasers of real estate a defense to liability under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), (2) and a little more than a decade since the majority of states began to embrace voluntary cleanup programs for abandoned or under-used sites. (3) The ink is barely dry on the 2002 CERCLA amendment that promises to reduce the risk of federal liability for brownfields developers. (4)

   Even in these relatively early days, brownfields remediation and reuse is almost universally viewed as a done deal--a major environmental success story. (5) Many point to state cleanup programs that have processed thousands of sites successfully, and there are numerous high-profile stories of successful conversions of neglected sites to profitable reuse. (6) Still, relatively little empirical work has been done to assess whether state and federal brownfields policies have been an unqualified success. (7) Getting a handle on their value requires, among other things, accounting for the wide variety in state program features, the numbers of cases handled, and the types and numbers of results. It also requires looking longitudinally at a statistically significant sample of sites to see whether environmental problems develop or persist after a period of years.

   The optimism about brownfields policies has considerable staying power, in part because it rests on a foundation of specific expectations about brownfields, their cleanup and reuse, and assumptions about the typical site and typical developer. These expectations relate to "the nature of brownfield properties; the expectations and behavior of public and private parties involved in the development, environmental, and financial risks; the importance of subsidies; and the investment climate of host communities." (8) In this Article, I term this foundation the "brownfields story," and suggest that it is time for a more detailed analysis of this story after a decade of experience with brownfields remediation and reuse, and, as a consequence, a re-examination of whether brownfields programs meet their original goals, and whether those goals were the right ones.

   Those involved in brownfields remediation pin many hopes on the process. They seek to discover and rehabilitate neglected sites, reverse the decay of urban cores, and, in some cases, link with smart growth strategies by slowing the march of development to suburban and exurban America. The parcel-by-parcel approach to brownfields remediation and reuse, however, cannot possibly guarantee all that. There are thousands of brownfields sites and each has a different experience. (9) As a leading study pointed out, "[e]ach brownfield redevelopment decision can trigger a variety of concerns related to the long-term vision of a community, threats to public health and nature, economic livelihoods, social equity, and public participation." (10) The paradox of brownfields programs is that they may have considerable legitimacy when one looks at the successful remediation and reuse of individual parcels, but as a whole, the policies may or may not be contributing measurably to the long-term health of communities throughout the nation.

   It is time to decide how nascent state programs could best promote a comprehensive approach to urban redevelopment. This in turn requires us to decide whether the assumptions about brownfields programs' success are substantiated in practice. I am not at all suggesting that brownfields revitalization needs to end, yet, as I argue in this Article, the brownfields story is partly incorrect. Consider this recent summary: "Many of the premises [of brownfields policies] may have a factual base, while others may be rooted in unsubstantiated assertions of mixed quality or outright misunderstandings." (11) As a result of this partial breakdown of the story, it is time for a reorientation of brownfields law and policy that moves it toward a development-centered approach to brownfields, not one that caters specifically to developers.

   In this Article, I will look at brownfields policies in one state, New Jersey, and suggest how to make the approach of brownfields revitalization more development-centered and less developer-centered. New Jersey's program is worth examining for a number of reasons. First, it has processed a large number of sites. There are an estimated 10,000 brownfields sites in the state (though not all have commercial potential), (12) and a number of developers proceeded successfully to cleanups using the state Memorandum of Agreement ("MOA"). (13) In the state's Voluntary Cleanup Program ("VCP"), (14) a party who wants to remediate a site enters into an MOA with the state's environmental agency, the Department of Environmental Protection ("NJDEP" or "DEP"). The MOA, as is typical for similar programs in other states, establishes the scope of assessment and remediation activities, including anything from preliminary assessment at the site to remedial actions and reuse of the site. New Jersey's program is a typical one that allows all sites (not just those designated as brownfields) to enter into the VCP, but also has elements tailored specifically to brownfields, including a statewide task force (15) and an "Office of Brownfield Reuse." (16) There are some analyses (17) and some limited empirical evidence (18) about the program, as it was one of the earliest brownfields programs and has been in place for over a decade. New Jersey is also attempting to use second-generation approaches (19) to improve the relationship of brownfields cleanups and urban redevelopment, most notably the Brownfields Development Area ("BDA"). (20) In short, the brownfields program is maturing and growing, and well worth the analytical look.

   Following a basic description of the New Jersey program, I will discuss two specific developments, the BDA initiative and the recent "Grace Period Rule," that changed some aspects of the program. My aim is more modest than a full-scale re-evaluation of all brownfields programs (or indeed of the New Jersey program in its totality); instead I look at the experience within one program to assess whether there is movement toward the development-centered approach. I find that some developments in New Jersey are positive, notably the BDA's approach to addressing multiple brownfield sites concurrently in the same location. On the other hand, the Grace Period Rule introduces the prospect for additional delay in cleanups that is unwarranted given the current program structure.

2. DRAWBACKS OF THE BROWNFIELDS STORY

   The prevailing brownfields story has been repeated so often that it is essentially unchallenged. The story looks something like this: a developer, perhaps a hospital or university that has no prior experience with the environmental enforcement scheme, decides to look at a piece of abandoned or underused urban property, typically located in a declining Rust Belt city. While the abandoned property was most likely a site with a history of industrial uses (although, with its former owner out of the picture, it may be hard to tell), its primary attribute is that no one has touched it for the last decade or more. The site's advantages are clear: it is large enough for development and located near railroads and other forms of transportation; (21) it is also within striking distance of a large population that can provide jobs and shopping opportunities for the new shopping center or hospital or (to be trendy) biotechnology research park. Ultimately, the abandoned site that had been previously used for manufacturing will become an apartment complex or a ballpark, and yield a bushel of economic benefits to the municipality.

   The prospective developer, inexperienced with environmental enforcement, does not know where to start. It is afraid to contact the state environmental protection department because it fears the unknown. As much literature has explained, the developer may face potential liability as an owner or operator under CERCLA (or one of its state counterparts) as a result of taking ownership, or even by undertaking to clean up and reuse the property. (22)

   In most cases, the story assumes that residual contamination is not all that serious--otherwise the site would have presumably attracted attention from state regulators who force site cleanups in state CERCLA-like programs. (23) So, the future of the developer when it tackles an urban brownfields site is hardly a complete imponderable. The site might be more difficult to develop than its greenfield counterpart (24) and presents the potential of environmental risk. The developer faces two possible outcomes, with one far more likely than the other. In the first scenario, the developer steps in with the aid of incentives that tip the scale in favor of taking on risk. It finds that the site is not all that contaminated and cleanup is therefore neither costly or difficult. It cleans up the site, utters the proverbial sigh of relief, gets a state's signoff through some form of liability release, and moves on to build a Wal-Mart or ballpark. In the second (less likely) scenario, the site is tossed back into the enforcement hopper because a serious environmental problem is discovered.

   It is the uncertainty about whether a given site is a scenario one site or a scenario two site that hampers remediation and reuse. (25) The developer prepared a business case for its project which showed that if the environmental cost (a number plugged into the ubiquitous spreadsheet) becomes anything more than a de minimis amount--half a million dollars, a million, or even more--it will sink the profit of the development. Therefore, the developer, fearing the unknown, flees to the suburban greenfield location where...