The Brownfields Program Authorization: Cleanup of Contaminated Sites
CRS Report for Congress
The Brownfields Program Authorization:
Cleanup of Contaminated Sites
Updated January 27, 2002
Analyst in Environmental Policy
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress
The Brownfields Program Authorization:
Cleanup of Contaminated Sites
The Environmental Protection Agency (EPA) defines brownfields as abandoned,
idled, or under-used industrial and commercial facilities where expansion or
redevelopment is complicated by real or perceived environmental contamination. The
brownfields program was established administratively by EPA under the aegis of the
Superfund program; without explicit authority for it in the law, it has been financed
by the Superfund appropriation. The program provides financial and technical
assistance to help communities restore less seriously contaminated sites that have the
potential for economic development. A combination of potential environmental,
economic and social benefits gives this program broad support among governments,
environmentalists, developers, and communities.
The program began in 1993 and has grown to include 398 brownfields
assessment grants (most for $200,000 over 2 years); 151 grants of up to $350,000 (up
to $1 million beginning in FY2001) to establish revolving loan funds to help finance
the actual cleanups; 47 job training grants; and 28 Brownfields Showcase
Communities where technical and financial assistance from 20 participating federal
agencies is being coordinated with state, local and non-governmental efforts.
EPA also addressed some liability and cleanup issues affecting brownfields by
changing its hazardous waste site tracking system, and issuing guidance clarifying the
situations where it will not bring enforcement actions against brownfield property
FY1997 was the first year brownfields became a separate budgetary line item,
at $37.7 million. For FY2000 the appropriation was $91.7 million, in FY2001 the
appropriation was $91.6 million, and in FY2002 it is $97.7 million
The 106th Congress extended the brownfields cleanup tax incentive to December
31, 2003, and expanded it to make all brownfields certified by a state environmental
agency eligible for the tax break. The provision allows the costs of redeveloping
brownfields to be deducted in the current year rather than being capitalized over a
period of years. The administration favors making the provision permanent.
Congress passed H.R. 2869 on December 20, 2001, and the President signed it
on January 11 (P.L. 107-118). The act provides statutory authority to the
brownfields program, authorizes funding at $250 million per year, and protects certain
property owners from Superfund liability. Ten other bills have also been introduced.
This report provides background on the issue (including state voluntary cleanup
programs), surveys the Environmental Protection Agency’s current program, and
reviews congressional action, including a description of the new law. The report will
be updated as events dictate. For additional information on legislative activity, see
CRS Issue Brief IB10078, Superfund and Brownfields in the 107th Congress.
Background .................................................... 1
Voluntary Cleanups vs. Brownfields..........................3
EPA’s Brownfields Program: Grant-Award Activities................4
Brownfield Assessment Pilot Projects.........................4
Targeted Brownfield Assessments...........................4
Brownfield Cleanup Revolving Loan Fund (BCRLF) grants........5
Job Training Grants......................................5
State voluntary cleanup program grants.......................6
Interagency Efforts and the HUD Program.........................6
Non-grant Activities: Clarification of Liability and Cleanup Issues, and
Outreach .............................................. 7
CERCLIS: Listing of Sites.................................7
Liability ............................................... 7
Outreach .............................................. 8
Appropriations .............................................. 8
Legislation ................................................ 10
Brownfields Tax Incentive................................10
Action in the 107th Congress...............................11
Outlook .................................................. 14
List of Figures
Figure 1. Brownfields Funding: FY1993 to FY2002 Request..............9
List of Tables
Table 1. Brownfield Bills in the 107th Congress........................15
The Brownfields Program Authorization:
Cleanup of Contaminated Sites
The brownfields program to assist in cleaning up less seriously contaminated
sites has been popular since its inception in 1993, and has been funded by Congress
at about $91 million for the past 4 years. On January 11, 2002, the President signed
H.R. 2869 (P.L. 107-118), an Act which provides the statutory authority the program
currently lacks, limits Superfund liability for certain parties, and limits the
Environmental Protection Agency’s (EPA) authority to intervene at sites cleaned up
under state jurisdiction. (A separate title of the Act protects small businesses from
Superfund liability if they were responsible for only small amounts of contamination
at a site.) This report provides background on the brownfields issue (including state
voluntary cleanup programs), surveys EPA’s current program, and reviews
congressional action, including a description of the enacted law: the Brownfields1
Revitalization and Environmental Restoration Act of 2001.
The Brownfields Economic Redevelopment Initiative is an effort begun in 1993
by the EPA to address sites that may be contaminated by hazardous substances,2 but
do not pose a serious enough public health or environmental risk to qualify for3
cleanup under the Superfund program. The purpose of the program is to provide
seed money for activities prior to cleanup, but not to fund the actual cleanup (or
“remedial action,” as it is called in the Superfund program). The Environmental
Protection Agency (EPA) defines brownfields as abandoned, idled, or under-used
industrial and commercial facilities where expansion or redevelopment is complicated
by real or perceived environmental contamination.4 They range in size from a corner
gas station to abandoned factories and mill sites. Estimates of the number of sites
1The name of the enacted law is the “Small Business Liability Relief and Brownfields
Revitalization Act.” Title I (originally H.R. 1831) is named the “Small Business Liability
Protection Act.” Title II (originally S. 350) is named the “Brownfields Revitalization and
Environmental Restoration Act of 2001.”
2The degree of contamination ranges from nonexistent to very contaminated but not serious
enough to warrant listing on Superfund’s National Priorities List.
3The Superfund program was created by the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA, P.L. 96-510).
4See EPA’s brownfields home page for additional information, available at:
range from 500,000 to a million;5 they are often in economically distressed areas.
Brownfield sites face a paradox: they are generally not eligible for remediation
funding under the Superfund program because they pose a low public health risk
while, at the same time, developers may avoid them because of cleanup costs,
potential future liability, or related reasons, thereby stalling economic development.
The brownfields program is not specifically mentioned in the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA, or the
Superfund law) – it was created administratively by EPA. Congress has recognized
it through a separate line item appropriation since FY1997, and there is a desire
among many members to formally establish the brownfields program by law and
provide it with legislative guidance and structure. Brownfield issues have been the
subject of several hearings, and have been discussed in Superfund and appropriations
hearings.6 In the 106th Congress approximately 32 bills with significant brownfields
provisions were introduced, some of them with broad bipartisan cosponsorship. In
2001, the Senate passed S. 350 (S.Rept. 107-2), which would provide the statutory
authority for the program, $250 million per year for various brownfield initiatives, and
relief from Superfund liability for some property owners, among other things.
Support for the brownfields program as it has been operating comes from a wide
array of states and localities, environmental groups, business associations, developers,
and community activists. Proponents argue that the program has the potential to
leverage federal, state, local and private funds to improve the environment by
addressing low-level, low-risk contamination that otherwise might not be remediated.
Once the environmental problems are remedied, the economic potential of (previous)
brownfield sites can be realized, they argue. This might include a wide range of
economic uses, possibly creating jobs, recreational opportunities, and local tax
revenues. From this, there may be positive social benefits for communities negatively
affected by environmental contamination and economic decline.
5 “Remarks by the President in Signing of H.R. 2869, the Small Business Liability Relief and
Brownfields Revitalization Act,” found at the White House web site:
6Hearing testimony in the 107th Congress is available at the following committee Web sites:
for the Senate Environment and Public Works Committee hearing on February 27, 2001:
for the House Energy and Commerce Committee hearing on March 7, 2001:
for the Transportation and Infrastructure Committee hearing on March 15, 2001:
For published hearings in past Congresses, see, for example: U.S. Senate. Committee on
Environment and Public Works, Subcommittee on Superfund, Waste Control, and Risk
Assessment. Brownfield Revitalization and Environmental Restoration Act, S. 2700.thnd
Hearing, 106 Cong., 2 sess. June 29, 2000; and U.S. House. Committee on
Transportation and Infrastructure, Subcommittee on Water Resources and Environment.
Brownfields Redevelopment and Superfund Reform Legislation. May 12, 1999.
There are, of course, a variety of federal programs that target urban renewal,7
and the brownfields program is designed to supplement, not duplicate them. The
program itself, as it presently exists, does not aim to perform the cleanups. It
generally provides grants which are to serve as catalysts to bring together other
resources in the communities to provide the environmental cleanup component of
redevelopment efforts. Overall, the brownfields program is intended to fill a
previously unmet need and to offer hope for a cleaner environment, new jobs, a
stronger tax base, and economic recovery.
Voluntary Cleanups vs. Brownfields. One way states are dealing with
contaminated sites is through voluntary cleanup programs, which had been adopted
by 44 states as of the end of 1997. These programs encourage the owners or
developers to work cooperatively with the state outside of the state’s enforcement-
driven cleanup program, thereby avoiding some of the costs and delays associated
with that approach. Cleanup standards are usually identical to those the states enforce
at other hazardous waste sites, according to the Environmental Law Institute (ELI).8
Most states provide incentives for participating in the program – most commonly
some form of liability release. Other incentives include a streamlined process,
financial or tax incentives, and technical assistance. States created voluntary cleanup
programs in the absence of federal legislation or standards, and these programs vary
States define brownfield sites in different ways, but they usually echo EPA’s
definition, encompassing “urban industrial or commercial facilities that are abandoned
or underutilized due, in part, to environmental contamination or fear of
contamination.”9 ELI noted that a few states have different standards or cleanup
approaches for brownfields than they do for voluntary cleanup sites. For brownfield
sites, Florida provides for site-specific cleanup levels based on risk, allowing
institutional or engineering controls instead of the state-wide remediation levels
otherwise required. North Carolina allows for alternative cleanup strategies focusing
on removal of exposure pathways at certain brownfield sites. And Mississippi did not
set specific standards – the statute requires that risk assessment be used.10 The
difference between brownfields and voluntary programs in the states is often a matter
of semantics. The Environmental Law Institute distinguished them thus:
Typically, ... voluntary programs do not focus on redevelopment nor do they
target urban sites specifically. Rather voluntary programs are more often aimed
at getting simple, less contaminated sites cleaned up regardless of whether they are
reused. Brownfield programs, on the other hand, are more likely to focus on
7 For more information see CRS Report 96-503 GOV, Community Development Block
Grants: An Overview. 11 p.
8Environmental Law Institute, An Analysis of State Superfund Programs: 50-State Study,
9 Environmental Law Institute, p. 43.
10 Environmental Law Institute, p. 46.
redevelopment and be part of a broader State strategy or set of social policies11
aimed at improving distressed urban areas.
Prior to enactment of P.L. 107-118, the legal underpinnings of the brownfields
program were somewhat nebulous, since the program is not mentioned in CERCLA.
The authorized uses of Superfund monies are specified in section 111, and cleanup of
brownfield sites is not among them. Nevertheless, Congress appeared to tacitly
approve the program by providing it a line item in the FY1997 and subsequent
EPA’s Brownfields Program: Grant-Award Activities
EPA has redefined and expanded the brownfields program several times. The
number of grants to assess brownfields (which EPA calls assessment pilot project
awards) has been increased from the original 50 announced in 1995 to nearly 400;
brownfields cleanup revolving loan fund grants and job training grants have been
initiated; and the Brownfields Showcase Communities have been inaugurated. EPA
has also used “targeted brownfield assessments” to hire contractors to conduct
assessments, and beginning in FY2000 has provided supplemental awards, and awards
for greenspace enhancement.
In addition to these grant programs, EPA has taken several steps to relieve
uncertainty over cleanup liability. It has changed the way it keeps track of potentially
contaminated sites, and has issued guidances to clarify the situations where it will use
its enforcement discretion and not bring legal action to force cleanups, such as against
prospective purchasers of brownfields. Several of EPA’s actions relate to property
transfer, as the sale of real estate is frequently a central element to redevelopment.
Brownfield Assessment Pilot Projects. EPA provides funding for
brownfields through cooperative agreements with state, local and tribal governments,
as well as with multi-jurisdictional authorities such as regional planning commissions
and economic development agencies. The awards are for up to $200,000 over 2 years
to be used to bring together governmental entities, community groups, investors,
lenders, developers, and other affected parties to address site assessment and cleanup
The agency awards grants for the brownfields assessment pilots on a competitive
basis. In selecting projects, EPA focuses on firm redevelopment plans, as well as a
commitment from the public and private parties to both cleanup and redevelopment
after the brownfields assessment is completed. From FY1995 (October 1994)
through April 2001, $78.9 million was awarded to 398 grantees.
Targeted Brownfield Assessments. The Targeted Brownfields
Assessment program is managed by each of EPA’s 10 regional offices. The selection
criteria include a strong development potential, a clear municipal-community vision
of and support for the property’s future use, and a crucial need for the assessment for
the project to move forward. The funds are used to hire contractors to identify the
11 Environmental Law Institute, p. 44.
extent of contamination at a site when this appears preferable to making an
assessment pilot award. Targeted assessments might be used in the case of a small
town that does not intend to establish a brownfields program, for example, but does
have a site that is ripe for renewal. Through FY2000, EPA has awarded $32.8 million
to fund 500 targeted assessments.
Supplemental Awards. Beginning in FY2000 previous recipients of funding
for brownfield assessments can receive a supplemental award of $150,000 for
continuation and expansion of their efforts. These, too, are awarded on a competitive
basis, as are the greenspace awards.
Greenspace Awards. An additional $50,000 may be awarded to an applicant
to assess the contamination of a brownfield site that is or will be used for
“greenspace” purposes. Greenspace purposes may include, but are not limited to,
parks, playgrounds, trails, gardens, habitat restoration, open space, and/or greenspace
preservation. The $50,000 is available in addition to a brownfield assessment award
($250,000 total), or in addition to a supplemental award ($200,000 total).
Brownfield Cleanup Revolving Loan Fund (BCRLF) grants.
Communities, as well as state and tribal governments, that have received brownfield
assessment (or targeted assessment) grants are subsequently eligible for grants for
Brownfields Cleanup Revolving Loan Fund pilot projects (BCRLF). The grants, for
up to $500,000, are to enable the recipient to make low interest loans to public or
private entities to facilitate the cleanup and redevelopment of brownfields. Originally
limited to $350,000, BCRLF awards can now be made for up to $1 million over 5
years. Loans may be made to the owner or operator of a facility only if he or she is
not liable for the cleanup under CERCLA. It is intended that upon repayment, the
loans will replenish the fund to be loaned again for other sites. Some facilities are not
eligible for loans: sites on or proposed for the National Priorities List,12 sites requiring
a Superfund removal action within 6 months, and sites where a federal or state
enforcement action is planned or underway (including sites that are the subject of a
unilateral administrative order, a court order, an administrative order on consent, or
a judicial consent decree). Through April 2001, 151 BCRLF grants have been made,
totaling $64.8 million.
Job Training Grants. To assure that residents of brownfields communities
benefit from the industrial and commercial activities associated with site cleanup, job
training grants of up to $200,000 over 2 years may be awarded to colleges,
universities, non-profit training centers, and community job training programs as well
as to governmental entities. Their purpose is to train residents of the brownfields
communities in handling and removing hazardous materials. The grant recipient must
establish procedures to recruit participants from the neighborhoods and to employ
them in cleaning up hazardous waste facilities. To the extent possible the trainees are
12The National Priorities List itemizes the most seriously contaminated sites in the U.S. being
cleaned up through the Superfund program. For more information, see CRS Issue Briefth
Environmental Laws: Summaries of Statutes Administered by the Environmental Protection
Agency, p. 67-77.
to include the unemployed, those in welfare-to-work programs, and members of
disadvantaged groups. Through December 2000, EPA made 46 awards totaling $8.7
State voluntary cleanup program grants. EPA also provides funds to
state and tribal governments to enhance and develop voluntary cleanup programs.
Uses of the funds include writing regulations for voluntary cleanup programs,
purchasing equipment, paying the salaries of agency staff to develop program
procedures, building their own capacity to oversee cleanups, and promoting greater
community involvement. EPA has awarded $41.6 million in this category to the states
Interagency Efforts and the HUD Program
In July 1996 EPA created a federal Interagency Working Group on Brownfields
to share knowledge on economic redevelopment and environmental principles, and
to coordinate agency efforts and resources. The most visible outgrowth of their
efforts is the Showcase Communities, described below, as is the program of the
Department of Housing and Urban Development. More than 20 federal agencies
continue to participate, and links to Web sites describing their activities can be found
at EPA’s “Brownfields Partnerships and Outreach” site:
Showcase Communities. The Showcase Communities project is an effort
to develop a comprehensive, coordinated federal approach to dealing with brownfields
in local communities. Sixteen Showcase Communities were designated in 1998, and
another 12 were named in October 2000. These 28 communities of different types
(such as urban, rural, coastal) were selected to serve as national models and
demonstrate how collaborative support from a variety of federal agencies could be
applied successfully to redevelop their brownfields properties. GAO reported that the
10 federal agencies they reviewed had improved their coordination of brownfield
activities both within their own agency and between agencies. The showcase
communities also acknowledged improvement: “They are now better aware of the
federal resources available ... to support brownfield redevelopment and how to access
them and are getting more technical and financial help from agencies.... [A] major
reason for this success is that EPA loaned a staff person to each city under the13
Intergovernmental Personnel Act, for 2 years.” According to GAO, four
professional associations involved with brownfield issues agreed with this14
13U.S. GAO. Environmental Protection: Agencies Have Made Progress in Implementing
the Federal Brownfield Partnership Initiative. April 1999. 20 p. (GAO/RCED-99-86)
Hereinafter cited as GAO 1999 report. p. 9-12.
14The professional associations are the Association of State and Territorial Solid Waste
Management Officials, the National Association of Counties, the National Association of
Local Government Environmental Professionals, and the U.S. Conference of Mayors. GAO
HUD program. In addition to EPA’s program, the Department of Housing and
Urban Development (HUD) has its Brownfields Economic Development Initiative
(BEDI). BEDI provides start-up funds to attract private financing for brownfield
cleanup and redevelopment. The program works through and in conjunction with the
Community Development Block Grants and the Section 108 Loan Guarantee
programs. BEDI provides funds and loan guarantees to clean up and redevelop
brownfields.15 Congress appropriated $25 million for BEDI for FY2002.
Non-grant Activities: Clarification of Liability and Cleanup
Issues, and Outreach
EPA has also made an effort to address liability and cleanup issues that lenders,
developers, and property owners see as barriers to brownfields development.
CERCLIS: Listing of Sites. In a key move in 1995, EPA revamped the
Comprehensive Environmental Response, Compensation, and Liability Information
System (CERCLIS), the Superfund program’s database of sites suspected of being
contaminated by hazardous substances. As required by law, the worst of the
CERCLIS sites (which numbered about 38,000 at the time) are placed on the National
Priorities List (NPL) to be cleaned up under the Superfund program. However, no
procedures existed to remove less seriously contaminated facilities — many of them
brownfields — from the registry, and the stigma of being associated with the
Superfund program reputedly often prevented sale or development of CERCLIS-
listed properties, even if they had never been contaminated in the first place. Since
then more than 32,000 CERCLIS sites have been archived. Procedures are now in
place to remove from CERCLIS those sites where no further response action is
Liability. EPA issued guidances that addressed the liability status of
prospective purchasers of contaminated property, and of property owners with
groundwater contamination that originated on neighboring property. The current
Senate vehicle, S. 350, would put these protections against liability into law, and16
would also clarify CERCLA’s innocent landowner defense. Other guidances
addressed the transfer of federally owned property, aspects of the underground
storage tank cleanup program, soil testing, and the RCRA corrective action
program.17 In addition, EPA and the Department of Justice clarified enforcement
policy regarding lenders and governmental entities that acquire contaminated property
involuntarily. (The 104th Congress enacted the Asset Conservation, Lender Liability,18
and Deposit Insurance Protection Act in December 1996 which essentially
incorporated the policy into law.)
15Applications and other information are available at the BEDI website:
16For a detailed discussion of these issues, see CRS report RS20869, The Liability
Exemptions in the Senate Brownfields Bill (S. 350). Mar. 30, 2001. 6 p.
17This program of the Resource Conservation and Recovery Act (RCRA) exists to clean up
currently operating hazardous waste treatment, storage, and disposal facilities.
18Public Law 104-208, Omnibus Consolidated Appropriations Act, 1997, §2504.
Outreach. EPA is also working to improve communication with minority
communities, and to increase their involvement early and meaningfully in the
brownfields effort. The Agency’s National Environmental Justice Advisory Council
(NEJAC) held a series of public hearings in five cities, and released a report
containing a number of recommendations to incorporate the communities’ own
visions of the future and to identify ways to create healthy and sustainable
communities.19 A June 1999 report found that “the quality and scope of community
involvement ... minimizes the likelihood that ... complaints [of discrimination under
Title VI of the Civil Rights Act] would be raised at brownfield sites and hinder
redevelopment of these areas.”20
The popularity of the brownfields program led Congress to approve its rapid
expansion from $8 million in FY1996 to $87.4 million 2 years later. It also prompted
a number of legislative proposals to provide the program with legislative authority and
direction, and to give it funding outside the Superfund framework.
To date, all funding for brownfields has come from Superfund appropriations.
For the first years of the program, FY1993 - FY1996, EPA funded brownfield
activities without a line item but from money appropriated for the Superfund program.
(See Figure 1.) In FY1997, proposing major expansion of the program, the agency
requested and received $37.7 million in a line item, specifically for brownfields. That
amount was 2.6% of the Superfund appropriation for that year. In addition to
continuing the grants for site assessment and other pre-remedial activities, EPA used
FY1997 appropriations to support revolving loan funds (RLFs) to help finance actual
cleanups. Through these RLFs EPA funded 24 $350,000 grants to communities.
The FY1998 appropriation (P.L. 105-65) increased EPA’s brownfields program
by $50 million, to $87.4 million (5.8% of the Superfund appropriation). It also
provided $25 million for HUD’s Brownfield Economic Development Initiative
(BEDI), the amount requested by the Administration. However, questioning EPA’s
authority to use Superfund monies for revolving loan funds (RLF) “to clean up sites
19National Environmental Justice Advisory Council. Environmental Justice, Urban
Revitalization, and Brownfields: The Search for Authentic Signs of Hope. November 1996.
20U.S. EPA. OSWER. Brownfields Title VI Case Studies: Summary Report. June 1999.
p. 23. (EPA 500-R-99-003). Available at:
See also: [http://es.epa.gov/oeca/main/ej/nejac/index.html]
Figure 1. Brownfields
Funding: FY1993 to FY2002
Millions of Dollars
87.4 91.3 91.7 91.6100
0.2 0.7 2
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Source: EPA, Office of Solid Waste and Emergency Response
which are neither emergency in nature nor eligible for NPL listing,”21 the conference
committee denied the request unless RLFs were specifically authorized in subsequent
For FY1999 Congress approved the $91 million requested by the Administration
for the brownfields program, which included funds to capitalize RLFs in 100
communities. HUD’s request to double its brownfields funding to $50 million was
rejected; it remained at $25 million. For FY2000 Congress appropriated $91.7
million, for FY2001, $91.6 million, and for FY2002 $97.7 million, matching EPA’s
request in all 3 years. HUD’s appropriation has remained steady at $25 million.
On January 11, 2002, the day the Brownfields Revitalization and Environmental
Restoration Act of 2001 was signed, EPA announced it would seek $200 million for
FY2003, and the administration would ask for $25 million for HUD’s brownfields
21H.Rept. 105-297, Conference report to accompany H.R. 2158. p. 121.
Brownfields Tax Incentive. A tax incentive allowing the costs ofth
redeveloping brownfields to be deducted in the current year was enacted in the 105
Congress as part of the Taxpayer Relief Act of 1997 (P.L. 105-34). Initially good for
3 years, until December 31, 2000, the tax break was extended to the end of 2003 by
the 106th Congress, and expanded to include all brownfields certified by the
appropriate state agency. The administration has announced that it will seek to make
the provision permanent, as part of its FY2003 budget request.
Tax Incentive BackgroundThe 1997 act limitedeligibility for the tax break to the
A 1994 ruling by the Internal Revenue76 brownfield pilots announcedprior to February 1, 1997, areas
Service, Revenue Ruling 94-38, held that thewith a poverty rate of 20% or
costs of cleaning up contaminated land andmore, adjacent industrial or
groundwater are currently deductible, but onlycommercial areas, and
for the person who contaminated the land.Empowerment Zones and
Also, the cleanup would have to be doneEnterprise Communities
without any anticipation of putting the land to(EZ/ECs). The Tax Extenders
a new use. Further, any monitoring equipmentAct of 1999 (P.L. 106-170)
with a useful life beyond the year it wasadded a year to the life of the
acquired would have to be capitalized. On theincentive to December 31, 2000,
other hand, a person who acquired previouslyand the Consolidated
contaminated land, such as a brownfield site,Appropriations Act, 2001 (P.L.
would have to capitalize his cleanup costs,106-554) extended the
spreading them out over a number of years.brownfields tax incentive for an
Cleanup costs are a major barrier toadditional 2 years, to December
redevelopment, and the IRS ruling made a31, 2003. The latter act also
challenging situation even more difficult forbroadened eligibility for the tax
developers. The Taxpayer Relief Act thus hadbreak to include any site
the effect of overturning the ruling and allowingcontaining a hazardous
developers who had not caused thesubstance that is certified by the
contamination to deduct cleanup costs in theappropriate state environmental
current year, rather than to have to capitalizeagency; Superfund sites are
Congress enacted this incentive to resolve an issue that arose from the tax
treatment of costs of cleaning up contaminated land. In general, costs incurred for
new buildings or for permanent improvements to increase the value of a property must
be capitalized (that is, the cost must be deducted over a period of years). Some
expenses, such as repairs, are currently deductible (that is, deductible in the year in
which the cost is incurred — this is also called expensing). It is a considerable
financial advantage to be able to fully deduct a cost in one year rather than many.
However, the benefit of the brownfields tax incentive is reduced to a certain
degree over time by what is called in tax terminology the “recapture” provision.
Recapture mandates that the gain realized from the value of the property when it is
later sold be taxed as ordinary income (rather than at the generally lower capital gains
rate) to the extent of the expensing allowance previously claimed. In effect, the tax
incentive helps to encourage development of brownfield sites by postponing a certain
amount of the developer’s tax liability in the early days of a project when the
developer is spending money to clean up the property. When the developed property
is later sold, the deferred tax “comes due” by reason of the recapture provision. As
a stimulus to development, the overall value of the brownfields tax break is dependent
on a number of factors, including the total cost of the project, the cost of cleanup,
how long the developer intends to hold the property before selling it, and the
developer’s individual tax situation.
Action in the 107th Congress.22 Eleven brownfields bills have been
introduced in the 107th Congress, and one of them, S. 350 (subsequently H.R. 2869)
was enacted as P.L. 107-118. See Table 1 on page 15 for a summary of their major
S. 350. Senator Lincoln Chafee, then chairman of the Superfund, Waste
Control, and Risk Assessment Subcommittee of the Committee on Environment and
Public Works introduced S. 350 on February 15, 2001. The full committee reported
it on March 12 (S.Rept. 107-2) with the understanding that negotiations on the “state
finality” question would continue. Hearing witnesses have testified over several
Congresses that a barrier to cleanup and development at many brownfield sites is the
concern that even though a site might meet state cleanup standards and be released
from liability under state law (thereby achieving “finality”), the U.S. Environmental
Protection Agency could still intervene (or “overfile”) and require a second cleanup
to meet more stringent federal requirements.
S. 350 has such finality language, but it also contains exceptions that are meant
to provide an “environmental safety net,” allowing EPA to step in if a threat to public
health or the environment is not being met by a state. Some Senators felt that these
exceptions to the finality language in the bill were too broad, and that the state should23
have an opportunity to act before EPA initiates an enforcement action. The post-
markup negotiations led to a managers’ amendment satisfying their objections which
was adopted in the Senate debate on April 25, 2001.
As passed by the Senate, Title I of S. 350 directs EPA to establish: (1) a
program to provide grants to characterize, assess, and conduct planning at brownfield
sites, and to perform targeted site assessments; and (2) a program to provide grants
to capitalize revolving loan funds, or to be used directly to remediate one or more
sites. Characterization grants are limited to $200,000, which EPA may increase to
$350,000 based on the anticipated level of contamination, the size, or the status of
ownership of the site. The remediation grants may be awarded on a community-wide
or site-by-site basis, and are limited to $1 million. The bill authorizes $200 million for
each of 5 years for these programs, and dedicates $50 million per year (or 25% of the
amount appropriated if less than $200 million) for the assessment and cleanup of
relatively low-risk sites contaminated with petroleum or petroleum products.
22Also see Issue Brief IB10078, Superfund and Brownfields in the 107th Congress, for regular
updates on legislative activity.
23“Minority Views of Senator Voinovich,” p. 23, and “Minority Views of Senators Inhofe,
Crapo, and Bond,” p. 31-32, in S.Rept. 107-2.
The bill’s Title II provides protection from Superfund liability for owners of land
contaminated by a source on contiguous property, and for prospective purchasers of
property that is known to be contaminated. These provisions essentially codify24
existing EPA policy. In addition, the bill clarifies the Superfund law’s “innocent
landowner” defense. CERCLA provides a defense against liability for a person who
unknowingly purchased contaminated land, provided the person made “all appropriate
inquiry” prior to the transaction. The bill spells out what comprises all appropriate25
inquiry for the purchaser to qualify as an innocent landowner under the law. These
provisions would apply to all contaminated sites, not just brownfields.
Title III of S. 350 authorizes $50 million per year for 5 years to assist states in
establishing or enhancing their voluntary cleanup programs. States may also use these
grants to capitalize a revolving loan fund, or to develop a risk sharing-pool, an
indemnity pool, or insurance mechanism to provide financing for response actions.
Title III also addresses the finality issue, forbidding enforcement by the federal
government at sites being cleaned up under a state program, except where: (1) the
state requests assistance; (2) the contamination has or will migrate across state lines,
or onto federally owned or controlled property; (3) EPA determines, after taking into
account the response actions already taken, that a release or threatened release may
present an imminent and substantial endangerment to public health or welfare, or the
environment; or (4) EPA, after consultation with the state, determines that
information not known by the state has been discovered that requires further
remediation to protect public health or welfare, or the environment. The federal
enforcement ban is contingent on the state maintaining a public record of sites where
response action is completed, and sites that are scheduled to be cleaned up in the
The Environment and Public Works Committee noted in the bill report that, “The
committee expects this [Title I] money to be funded through general revenues and to
be in addition to appropriate Superfund funding.”26 Until now brownfields funding
has been part of the Superfund appropriation, at least half of which has come from the
Superfund trust fund. The report did not comment on the source of funds for the
state voluntary cleanup programs in Title III.
H.R. 2869. After the Senate unanimously passed S. 350 on April 25,2001, the
House unanimously passed H.R. 1831 on May 22. That bill dealt with the Superfund
liability of small businesses and other small contributors of hazardous wastes at sites
on the National Priorities List. On September 10 Energy and Commerce Committee
Chairman Paul Gillmor and Ranking Member Frank Pallone merged the two bills and
introduced the result as H.R. 2869.
24Policy Towards Owners of Residential Property at Superfund Sites, OSWER Dir. No.
9834.6 (July 3, 1991), and Final Policy Toward Owners of Property Containing
Contaminated Aquifers, 60 Fed. Reg. 34790 (1995).
25For more information, see CRS Report RS20869, The Liability Exemptions in the Senate
Brownfields Bill (S. 350).
26Brownfields Revitalization and Environmental Restoration Act of 2001. Report to
accompany S. 350 (S.Rept. 107-2). p. 5, 9.
There were two substantive issues that held up passage. The first was the “state
finality” question, that is, the circumstances under which EPA should be allowed to
intervene at a site that has been or is being cleaned up under a state program. This
was the same issue that had proved a problem in the Senate. House Energy and
Commerce Committee Chairman Billy Tauzin said he wanted a bill with stronger
language than S. 350 to bolster state authority.27 The second issue was whether the
Davis-Bacon Act, which requires that workers be paid prevailing union wages in the
area, would apply at brownfield cleanups. Davis-Bacon has been applicable at
brownfield sites all along because the brownfield grants were made under CERCLA
authority, and CERCLA requires it in Section 104(g). House Speaker Dennis Hastert
reportedly used his influence in both cases to persuade reluctant members to go28
forward, and ultimately pass H.R. 2869.
Other Bills. Ten other bills have been introduced in the 107th Congress and
two of them, S. 23 and H.R. 324, would provide statutory authority for the
brownfields program. S. 23 (introduced by Senator Specter) is an urban economic
development bill, one title of which would approve EPA’s existing program. H.R.
reported in the 106 Congress (H.R. 1300). They both address the state finality issue,
and H.R. 324 also contains the liability relief provisions.
Another set of bills would promote brownfield programs in other agencies.
Representative Quinn’s H.R. 2064 would give specific statutory authority to three
agencies, enabling them to provide direct federal funding, loans and loan guarantees
for brownfields within the context of their agency missions and existing programs. The
three are the Department of Housing and Urban Development (HUD), the Small
Business Administration, and the Economic Development Administration (EDA).
Senator Levin’s S. 1078 and Representative Gary Miller’s H.R. 2941 address HUD’s
brownfields program, and Levin’s S. 1079 provides authority to EDA, with S. 1079
employing the same language as H.R. 2064's EDA provisions.
These same three bills, along with S. 350, would expand the list of sites eligible
to receive brownfield grants. They would include former illegal drug labs, petroleum-
contaminated sites, and mine-scarred lands within the definition of a brownfield site,
making them eligible for federal assistance. For a petroleum-contaminated site to be
eligible, it would have to be of relatively low risk, as compared to other petroleum-only
sites in the state; have no viable responsible party; be assessed, investigated, or cleaned
up by a person that is not potentially liable; and not be subject to a cleanup order under
the leaking Underground Storage Tank program. The drug labs and mine-scarred
lands have no other qualifying requirements.
The Quinn bill and three others would address the expensing of cleanup costs (see
pages 10-11 above). The bills are Senator Torricelli’s S. 1082, Representative
Weller’s H.R. 2264, and Representative Coyne’s H.R. 1439. All four bills would make
27“House to Differ with Senate on Brownfields,” Congressional Green Sheets Weekly
Bulletin,” April 30, 2001. p. 11.
28 Rebecca Adams. “Brownfields Redevelopment Measure Clears,” Congressional Quarterly
Weekly, December 22, 2001, p. 3091.
the tax break permanent (it is due to expire at the end of 2003), a position the
administration is backing. S. 1082 and H.R. 2264 would also eliminate the “recapture”
provision, and would include additional substances in the definition of hazardous
substances that may be cleaned up and be eligible for the tax break: asbestos, oil,
pesticides, radon, and lead-based paint. And H.R. 2064 would make the expensing
provision available to those who lease sites for more than 30 years.
H.R. 2064 would add four new tax breaks to stimulate brownfields
redevelopment. The first is a 50% tax credit for cleanup costs incurred at a brownfield
site. The credit is limited to $50,000 per site, and must be taken over 5 years. A
taxpayer would have the option of using this credit or the expensing provision, but
could not take advantage of both.
Secondly, H.R. 2064 authorizes the establishment of “Brownfield IRAs.” The site
owner could put up to $1 million per year free from federal taxation into a special
savings account (the IRA) for future use in brownfield assessment and cleanup. The
money would have to be used within 10 years. The third tax incentive in the bill is
aimed at banks and other lenders to encourage them to make loans for brownfield
redevelopment. Interest earned on brownfield loans would be exempt from federal
taxation, up to $100,000 per year. The fourth tax break would provide a 20% tax
credit for the costs of research and development of environmental remediation
Representative Andrews’s H.R. 3170 would provide a limited tax credit for
qualified brownfields cleanup bonds issued by state or local governments.
As noted previously, the administration has backed the idea of making the
brownfields tax incentive permanent, and will include it in the budget request. With
no vocal opponents, prospects for passage appear good.
Table 1. Brownfields Bills in the 107th Congress
Program or Activity
S. 23 (Specter) S. 350 (Chafee) S. 1078 (Levin) S. 1079 (Levin) S. 1082 (Torricelli)H.R. 324 (Boehlert)H.R. 1439 (Coyne) H.R. 2064 (Quinn) H.R. 2264 (Weller) H.R. 3170 (Andrews)
H.R. 2941 (Gary Miller)
Brownfields Characterization GrantsXXX
Brownfields Cleanup Grants and/orXXX
Revolving Loan Fund Grants
Establish or Expand State VoluntaryXX
No Federal Enforcement at StateX1XX
Cleanup Sites, with Exceptions
Include Illegal Drug Labs, PetroleumXXXX
Sites, and Mine-Scarred Land
Brownfield Programs in:
Dept. of Housing and Urban Dev.XXX
Economic Development Adm.XX
Small Business AdministrationX
Liability Relief for:
Contiguous Property OwnersXX
Defer NPL Listing at State’s RequestX
Expensing of Cleanup Costs:
Make It PermanentXXXX
Eliminate the “Recapture” Provision2XX
Make Additional Substances EligibleXX
Make 30-Year Leases EligibleX
50% Tax Credit Taken Over 5 YearsX
No Tax on Interest from Brownfield X
Tax Credit: for Cleanup R & DX
for State and Local Gov. Cleanup BondsX
Notes: 1 S. 23 provides no exceptions to the ban on federal enforcement.
2 The substances are asbestos, oil, pesticides, radon, and lead-based paint