Authored by: Marianne Horinko, President, The Horinko Group
Marianne Horinko, THG President and Chair of the National Brownfields Association’s Advocacy Committee, kicks-off the 2013 Profile Leadership Series with a look ahead at the hottest issues Brownfield activists intend to tackle.
The crystallizing economic recovery coupled with a host of legal and social policy issues have created a hotbed of environmental questions and Brownfields redevelopment in 2013.
Bona Fide Prospective Purchaser Rules
Purchasers and developers of Brownfields property are anxiously awaiting the U.S. Court of Appeals for the Fourth Circuit’s decision in the Superfund case, Ashley II of Charleston, LLC v. PCS Nitrogen, Inc., No. 11-1662(L). The two key questions in this matter concern whether the property purchaser should have done or known more about the pre-existing contamination on the property at issue and also whether the purchaser had a prohibited relationship with the seller as evidenced by an agreement concerning cost recovery by the parties as well as efforts to prevent EPA from taking a cost recovery action at the property. The appeals court’s decision with respect to the first question will greatly affect the degree of care that purchasers exercise with respect to contamination they find as part of their due diligence. The court’s resolution of the second issue will be trickier should they choose to take it on. The presence of an indemnification agreement between the purchaser and seller may become one of the deciding factors. The extent to which any transaction appears to be conducted at arm’s-length distance will be guided by the court’s resolution, even if only in dicta, as the first question may ultimately be the dispositive one.
Licensed Site Professionals
Often the state legislatures are paragons of innovation, and Brownfields law is no exception. In recent sessions, a number of states have enacted laws authorizing the appointment of licensed site professionals or essentially certified auditors to augment the role of state or federal officials in determining whether cleanups are properly conducted. Massachusetts, Connecticut, and New Jersey are the leadership states in piloting this proposal. So far, the results are garnering mixed reviews. The additional capabilities in the field can enlarge and speed the process of finalizing a clean up. The licensed site professionals can on occasion be even more conservative than state employees given that their professional certifications are on the line.
State Liability Transfer Programs
Another state technique is the use of unusual liability transfer programs to speed closure of a site cleanup. In particular, the State of Wisconsin, often a leader in Brownfields innovation, has in recent years created a program that encourages property owners to obtain a state certification showing that a cleanup has been completed in accordance with the specific land-use. Subsequent purchasers are then liable for any change of land-use at the property and for ensuring that their stewardship of the property maintains the integrity of the previous owners cleanup.
Federal Tax Extender Legislation
In 2012, the federal provision allowing property developers to deduct the cost of any environmental cleanup for property they acquire under federal taxes expired . While data on the use of this tax provision are spotty, the City of New York alone reports hundreds of thousands of dollars in savings for Brownfields developers. There appears to be a consensus among federal legislative professionals that this popular tax extender will be revised in 2013. However, given the larger negotiations over the fiscal cliff and federal sequestration, the outcome of this provision remains unclear.
Brownfields Waterfront Legislation
In the waning days of the previous congressional session, Senator Kirsten Gillibrand (D-NY) introduced legislation that would provide incentives both financial and policy for the redevelopment of waterfront property . This legislation has important ramifications for Brownfields located in the fragile ecosystems and urban areas along the East Coast, Gulf, and Pacific Northwest. Subject to the outcome of the federal budget deliberations, this specific bill is likely to garner significant political support.
Green or Sustainable Remediation
The movement towards green or sustainable remediation has gained significant international momentum. Property owners and developers are finding that the principles of greener cleanups, layered atop existing legal requirements in their specific jurisdiction, can help engage communities and also create drivers for more acceptable, efficient, and low impact redevelopment. Grassroots efforts to share best practices and promote widely-accepted standards hold considerable promise, a hallmark of the Brownfields movement.
These issues are just a bellwether of the actions to come in 2013. As the economy and real estate market continue to improve, it is safe to project that Brownfields developments will continue to blossom and grow internationally for the coming year.
Marianne L. Horinko is President of The Horinko Group and serves as Chair of the National Brownfields Association’s Advocacy Committee.
1. 26 U.S.C. §198
2. S. 3549 (112th)