GT Alert

New Streamlined Process Another Incentive for State Voluntary Cleanups

October 2005

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State legislators and lobbyists across the country will likely be keeping a close eye on new guidelines developed by state and federal environmental regulators in Pennsylvania to streamline the process for meeting cleanup requirements for polluted former industrial sites. The new streamlined process implemented by the Pennsylvania Department of Environmental Protection (DEP) will allow developers to simultaneously satisfy their obligations under Pennsylvania’s Land Recycling Program — the Land Recycling and Environmental Remediation Standards Act (Act 2), 35 P.S. §§ 6026.101-6026.908 — and three key federal laws: the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. §§ 6901-6987; the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or superfund), 42 U.S.C. §§ 9601-9675; and the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601-2629. The success or failure of these guidelines will likely determine whether there will be a push in other states to follow Pennsylvania’s lead.

State Voluntary Cleanup Programs

State voluntary cleanup programs represent one of the few “everybody wins” solutions in environmental law. For many years, contamination at abandoned, idled or underused industrial and commercial facilities hampered redevelopment of these sites, as developers were reluctant to acquire them and lenders were loath to provide funding for them out of a concern that they would be held liable for cleanup costs under superfund and its state law analogs. Consequently, many of these facilities remained dormant, resulting in a loss of jobs and tax revenue for local communities.

To address these concerns and to encourage redevelopment of these sites, many states created voluntary cleanup programs (VCP), which provided incentives for brownfields redevelopment. The last formal survey on the subject indicated that forty-four states now have VCPs. These programs facilitate development and allow companies to improve their financial condition by removing unproductive properties and liabilities from their balance sheets.

While the types of sites and kinds of entities that may be eligible for these programs vary from state to state, many of the incentives provided by these programs overlap. The most common types of incentives, along with representative states incorporating such incentives into their programs, include:

• Releases from Liability: limitation on the potential liability of prospective purchasers and developers by allowing them to enter into agreements with state environmental authorities to perform a cleanup in exchange for a covenant not to sue from the state (often transferable to the lenders and successors of the purchasers and developers) (AR, CA, CT, FL, ID, IL, IN, LA, ME, MA, MI, MN, MO, NH, NJ, NY, OH, OK, OR, PA, RI, SC, TX, UT, VT, WA, WI)

• Contribution Protection: contribution protection to prospective purchasers and developers for response costs associated with pre-existing contamination at the site (sometimes extends to toxic tort and property damage liability as well) (DE, IL, MD, MO, NY, PA, RI)

• Risk-Based Cleanup Standards: more appropriate cleanup standards using risk-based cleanup standards, whereby prospective purchasers and developers can design a remediation that will be based on the risk posed by the site after taking into account the proposed use of the property, rather than generic cleanup standards (AL, AZ, CO, CT, FL, ID, IL, IN, MD, MN, MT, NJ, OH, OK, PA, RI, UT, VT, WI)

• Financial Assistance: grant or loan programs that may be used to defray the costs of site investigation and remediation, or tax incentives such as tax abatements (AR, CT, DE, FL, ID, IL, IN, MD, MA, MI, MN, MO, NJ, NY, OH, OK, OR, PA, TX, WA, WV)

• Streamlined Cleanup Procedures: streamlined cleanup procedures and expedited agency reviews (AZ, CA, MA, MT, NH, PA, WA)

Pennsylvania’s New Streamlined Process

Issued in September 2005, Pennsylvania’s new VCP guidelines for meeting cleanup requirements builds upon and expands the last of the above-listed incentives: streamlining cleanup procedures.

In April 2004, DEP and the United States Environmental Protection Agency (EPA) signed a historic Memorandum of Agreement (MOA), called Pennsylvania’s One Cleanup Program, which made it possible for developers to work toward meeting both state and federal cleanup standards at the same time. The MOA can be found at http://www.dep.state.pa.us/dep/deputate/airwaste/wm/landrecy/facts/EPAMOA.htm.

Previously, developers had to exert extra time and effort to comply with separate requirements under the Act 2 portion of the state’s Land Recycling Program and federal EPA standards. Now, most sites that enter the One Cleanup Program only need to fulfill the state’s Act 2 requirements to meet their federal obligations, speeding up final cleanup approval and hastening redevelopment.

The new VCP guidelines were adopted to implement the MOA. Key features include: a lead project manager to serve as a single point of contact for the client, simplification of process steps on most projects, and much faster approvals. Notably, the process sets forth three possible paths under which a project may proceed. The paths call for varying degrees of EPA oversight and concurrence, depending on MOA criteria and the level of contamination at the site. An abbreviated process flowchart follows:

A more detailed flowchart and description of the new process can be found here.

The success of the new VCP guidelines will depend on a number of factors, not the least of which are: cooperation among the developers, EPA, and DEP, and fair and consistent application of the process by the agencies. So far, 11 sites around the state are being remediated under the MOA. The streamlined process undoubtedly evolved from agency experience working on these sites. Only time will tell whether cleanup requirements for future sites will be able to fit the mold derived from this previous work. In the meantime, 49 states will be waiting, and watching.

This Alert was written by Brian G. Glass and Stephen C. Jones in the Philadelphia office. Please contact Mr. Glass or Mr. Jones at 215.988.7800 or your Greenberg Traurig liaison if you have any questions regarding the subject matter of this Alert.

© 2005 Greenberg Traurig

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