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Published online by Cambridge University Press: 16 December 2009
As Congress begins to entertain proposals to reauthorize the Environmental Protection Agency Brownfields Program, local governments will be paying particular attention to one issue: a proposed amendment to grant public agencies greater liability protection when they acquire contaminated property. Supporters contend that cities play a unique role in brownfield redevelopment—acquiring, cleaning up, and repositioning properties that are unlikely to attract private investment either because of depressed neighborhood conditions or because the properties are being held off the market by corporate mothballing practices. Current federal law offers minimal and confusing liability protection for these activities, and the result is that many cities pass over brownfield acquisitions for fear of engendering environmental liability. Those cities that proceed with brownfield acquisitions are rolling the dice in favor of community revitalization but also argue that federal law should be more protective. To rectify these issues, several states have adopted liability reforms that establish a more “causation based” liability scheme for local government acquisitions. A number of groups are advocating for similar reforms at the federal level. Acquisition of contaminated land by public entities is also often complicated by the complexities involved in eminent domain. First, if the acquiring agency lacks the authority to gain access to the site and cannot perform a site assessment prior to taking possession, fiscal concerns are heightened because cleanup costs will not be taken into account in determining fair market value. Secondly, the acquiring agency may not be allowed to deduct cleanup costs from fair market value, so the locality will, in effect, pay twice for cleanup costs. This article explores the statutory issues related to public agency acquisitions, focusing particularly on state reforms and exploring whether particular state liability reforms might serve as a model for a federal liability reform.
Environmental Practice 11:311–319 (2009)
1 Notably absent from this article is any discussion of incentives—note that other Northeast-Midwest Institute (NEMW) research has looked at the incentive side. See sources listed at the NEMW home page, http://www.nemw.org/index.php?option=com_content&view=article&id=94&Itemid=74.
2 CERCLA 107(b)(3), available at Cornell University Law School, US Code Collection, http://www.law.cornell.edu/uscode/html/uscode42/usc_sec_42_00009607----000-.html#b_3.
3 NALGEP, Superfund Liability: A Continuing Obstacle to Brownfields Development, 31 pp. (NALGEP, Washington, DC, 2006), available at http://www.resourcesaver.com/file/toolmanager/CustomO93C337F72956.pdf.
4 As one example of the difficulties associated with the BFPP requirements, the National Aquarium in Baltimore was initially rejected for a cleanup grant because the property owner was the City, which was on the Aquarium board, and this was interpreted as a violation of the No Affiliation requirement.
5 The NALGEP report cites the following case as one with the ruling that a judicial proceeding is required in order get involuntary acquisition protection: City of Toledo v. Beazer Materials & Servs., Inc., 923 F. Supp. 1013, 1020 (N.D. Ohio 1996).
6 Personal communications, Mort Ames, Chicago Law Department; and Julianne Kurdia, Cleveland Law Department.
7 Personal communication, Susan Hamilton, Louisville Metropolitan Economic Development Department.
8 Personal communication, Darsi Foss, Wisconsin Department of Natural Resources.
9 Personal communication, Brad Cunningham, City of Lexington Law Department
10 Personal communication, Darsi Foss, Wisconsin Department of Natural Resources
11 NJ PL 1997, chap. 278 (S39), p. 39.
12 The definition of “economic development agencies” includes local government.
13 At Pennsylvania Session Laws, Introduction to Pamphlet Laws. See http://www.palrb.us/pamphletlaws/19001999/1995/0/act/0003.pdf.
14 The inclusion of “common law equivalents” can be interpreted as providing liability protection against toxic tort. A more in-depth review of legislative history would be required to provide a definitive interpretation.
15 Maryland Code Ann., Environment. §7-201(X)(2)(vii) (1996).
16 Wis. Stat. Ch 292.11(9)(e).
17 Wis. Stat. 292.26 (see http://www.dnr.state.wi.us/org/aw/rr/lgu/liability.htm#lgu), and A.J. Harrington and D. Marchik, Environmental Liability Mitigation Strategies for Local Public Agencies, 26 pp. (Godfrey & Kahn, S.C., Milwaukee, WI, 2005), available athttp://www.glc.org/wiconference/PDF/mw_913100_1.pdf.
18 Email to Evans Paull from Darsi Foss, Chief, Brownfields and Outreach, Wisconsin Department of Natural Resources, Bureau for Remediation and Redevelopment.
19 As of this writing, 39 cities are signed onto a letter requesting congressional action on public agency liability.
20 House budget bill for 2005: HR 3058.
21 Minnesota redefined allowable use of eminent domain to include acquisition of “environmentally contaminated areas.” See S.F. No. 2750, 5th Engrossment—84th Legislative Session (2005–2006), posted on May 16, 2006, http://www.revisor.leg.state.mn.us/bin/bldbill.php?bill=S2750.5.html&session=ls84.
22 J. Fersco and J.J. Riley, Condemnation: The Impact of Environmental Contamination on Property Valuation, 6 pp. (Farer Fersko, Westfield, NJ, 2006), available at http://www.farerlaw.com/library/archive/lit-con_jf_jjr_ciecpv.pdf; and J.D. Brusslan, “Eminent Domain and Environmental Contamination,” Illinois Real Estate Journal, January 14, 2002, available at http://pages.ripco.net/~envnlaw/eminent.htm.
23 Northeast Connecticut Economic Alliance, Inc., v. ATC Partnership. See http://www.jud.state.ct.us/external/supapp/Cases/AROcr/256cr64.pdf.
24 Brusslan, “Eminent Domain.”
25 Camden Redevelopment Agency v. Barbara Aston Financing Corp., Docket No. CAM-L-1058-08, cited in P.E. Bross, “Contamination and Eminent Domain: Isn't This Blight?” Brownfields Renewal, June 2009, available at http://www.brownfieldrenewal.com/article-contamination_and_eminent_domain-784.html.
26 Housing Authority v. Sudham Investors; and Department of Transportation of the State of Illinois v. Parr. See M. Rikon, Valuing Contaminated Property (Goldstein, Goldstein, Rikon & Gottlieb, P.C., New York, 2008), available at http://www.ggrgpc.com/pubs/contaminated_property_97.html).
27 Finkelstein v. Department of Transportation, Florida, 1995. See http://www.brighammoore.com/samples/decisions/join_ventures_v_dot.pdf.
28 See OLR Amended Bill Analysis, http://www.cga.ct.gov/olr/ba2000/2000HB-05175-R010633-BA.htm.
29 Illinois sect. 735 ILCS 5/7-119.
30 “Wisconsin Constitution, Article I, Section 13: Just Compensation Clause,” Constitutional Highlights 5, no. 1 (2005), available at http://www.legis.state.wi.us/lrb/pubs/consthi/05consthiV1.htm.
31 J. L. Hernandez and C. Wade Griffith, A Practical Guide to Implementing the Polanco Act for Redevelopment Area Brownfields, 12 pp. (Beveridge and Diamond, Los Angeles, 2001), available at http://beveridge.gbclients.com/media/news/news.349.pdf.
32 Maryland Real Property article §12-111, available at http://michie.lexisnexis.com/maryland/lpext.dll?f=templates&fn=main-h.htm&cp.
33 Virginia law sect. 10.1-1236, Access to abandoned brownfield sites.
34 Bross, “Contamination and Eminent Domain.”