Articles
|
Publications
Dealing With Dirty Dirt: The District of Columbia Voluntary Cleanup Program*
By James B. Witkin
*This article originally appeared in the January 2004 edition of
the Washington Lawyer.
The District of Columbia recently inaugurated its Voluntary Cleanup Program, a new city program aimed at encouraging the development of environmentally impacted properties, colloquially known as “brownfields.1 Following the lead of other states, including Maryland and Virginia, the District passed a law in 2001 focusing on abandoned or underutilized properties that are, or are perceived to be, contaminated. The new law has the potential to assist developers, community groups, and other parties with interests in properties that in the past may have been viewed as too environmentally risky to develop.
Although the District does not have the industrial history of cities like Chicago or Baltimore, and is generally free of major sites with serious pollution, there are many local properties with some contamination. The development of the new Washington Convention Center was impacted by the presence of contamination. In the Spring Valley neighborhood the federal government has been conducting a cleanup of soil impacted with arsenic and other substances related to chemical weapons developed during World War I. Also, as building in the historic central business district of Washington has reached a saturation point, developers have expanded into areas that historically included light industrial uses, such as the NoMa (north of Massachusetts Avenue) neighborhood and the area around Union Station.
Some prominent sites with environmental concerns have been developed. In 2001 U.S. Environmental Protection Agency (EPA) Administrator Christine Todd Whitman appeared with Mayor Anthony Williams to announce plans to clean up the Brentwood Road site, a former auto impoundment lot owned by the District. The site is now a major retail center. The owners of other sites have, more quietly, worked with District officials to determine if their impacted properties could be developed.
Background on Brownfields
The Voluntary Cleanup Program is administered by the D.C. Environmental Health Administration (EHA) under a statute enacted in 2001, the Brownfield Revitalization Amendment Act of 2000.2 Although there are various definitions of brownfield, the EPA web site defines it as “real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant.”
The development of brownfields is hampered by numerous factors, including fear of legal liability for environmental contamination, the costs of environmental cleanup, and the difficulty of obtaining financing for contaminated properties. Uncertainty as to potential liability is perhaps the greatest obstacle. Under certain federal and state environmental laws, the purchaser of an environmentally impacted property can be held liable for the costs of cleaning up the contamination, even though the purchaser did not contribute to the contamination. Similarly, lenders fear being held liable for cleanup costs in cases where they might have to foreclose on an impacted property. The federal government and numerous states have enacted brownfield laws designed specifically to overcome these barriers to redevelopment. Also known as voluntary cleanup programs, or VCPs, they are intended to promote economic development and environmental cleanup, with the goal of creating new jobs and expanding the tax base. Because many brownfields are located in urban areas, the programs also support “smart growth,” by encouraging the recycling of sites with existing infrastructure and discouraging development in outlying areas, minimizing urban sprawl.
Under these programs, private parties that voluntarily agree to clean up a contaminated site are offered liability protection in the form of a letter or certification indicating that no further action is required at the site, and that the state will not bring an enforcement action against the property owner for the known contamination. In addition, the state may work cooperatively with the property owner to determine the extent of contamination. Some states offer financial incentives in the form of grants, loans, and tax breaks for participants.
Locally, Maryland’s and Virginia’s VCPs have been in existence for a number of years. Applications for more than 175 properties have been submitted to Maryland’s program. Virginia’s Voluntary Remediation Program also has garnered considerable interest. A visible success story from the Maryland program is the former American Can Company property in Baltimore, an industrial property that was cleaned up and converted to a vibrant mixed-use retail and entertainment center.
D.C. Voluntary Cleanup Program
The law establishing the District’s VCP, codified at D.C. Code §§ 8-631.01 to -638.01, sets forth goals such as creating incentives for cleanup and redevelopment of contaminated property, developing effective and consistent cleanup standards and processes, and promoting economic development by encouraging the reuse of contaminated properties. The District will soon enact regulations under the VCP law.
The program allows for applications from both innocent purchasers and parties that are responsible for contamination at the site, and sets the stage for property-specific cleanup standards that will permit flexible approaches to individual sites. Upon successful completion of the cleanup, the Environmental Health Administration provides the applicant with a certificate of completion releasing the party from any liability related to the site. The VCP law also authorizes the mayor to create financial incentives in the form of tax relief, grants, and loans.
Eligibility
An eligible property is any brownfield or contaminated property that is not on the EPA’s list of national priority sites under the federal Superfund program and is not subject to a current cleanup action by the EPA or the District of Columbia.3 Thus, properties that already are the subject of federal or state cleanup orders are ineligible.
The VCP distinguishes between two types of participants in the program: responsible and nonresponsible persons. A responsible person generally is one who owns or owned a contaminated property or who caused or contributed to the contamination.4 A nonresponsible person is a party with no prior or current ownership interest in an eligible property at the time of submitting the VCP application, or such party’s successor.5 If the District approves an applicant’s status as nonresponsible, that status continues upon the acquisition of the property.
Whereas the responsible party is strictly liable for the contamination at the property, a nonresponsible person is not.6 Thus, although both responsible and nonresponsible parties may participate in the program, a nonresponsible party can (with certain exceptions) withdraw at any time without risking liability. A responsible party, however, will remain liable for contamination at the property.
Application Process
To start the VCP process, the prospective applicant must submit an application for the District to determine whether the applicant is a responsible or a nonresponsible person and whether the property is eligible for the program. The application form requires information on the historical uses of the property, a list of current and prior owners, and a description of the proposed development. The applicant must provide an environmental assessment of the property and a descriptive summary of the proposed cleanup action plan.
The District requires a $10,000 application fee in order to participate in the program. Unfortunately, this relatively high fee may discourage community-based groups, nonprofits, and developers of smaller projects with tight budgets from participating. In addition to paying the application fee, prior to commencing any cleanup action on the property the applicant must post a performance bond in an amount sufficient to stabilize the property if the cleanup plan is not completed.7 Once a VCP application has been submitted, the Environmental Health Administration has 90 business days to approve or deny the application.8
After the application is approved, the participant submits a corrective action plan (CAP) to EHA. The CAP details the applicant’s proposal to clean up the site (or explains why remediation is not required). Again, EHA has 90 business days to approve or disapprove the CAP and to consider any public comments on the CAP. EHA may initially reject a CAP submitted by an applicant, giving the applicant 30 days within which to submit a revised plan that responds to the rejection letter. At that point, EHA has another 30 days to review and approve the resubmitted CAP.9
The District has developed its own standards and guidelines for performance of Phase I and Phase II environmental assessments. In addition, the District has developed protocols for the development of CAPs.
Public Participation
The applicant must take certain steps to ensure that members of the public are notified of the VCP project. Section 8-636.01 of the D.C. Code requires that notice of the application and/or CAP be published in the District of Columbia Register and mailed to the applicable Advisory Neighborhood Commission. The District cannot finally approve the application, cleanup, or completion until after a 30-day public comment period.
In addition, the Environmental Health Administration may require an applicant to take extra steps to publicize the project, including mailing notices to neighboring property owners and residents, posting a sign on the property, and publishing a copy of the notice in a newspaper. EHA may also require an applicant to develop a broader “public involvement plan” to better ensure that concerned members of the public have adequate notice of the activities to be performed on the property.10
How Clean Is Clean?
Perhaps the most important question for any participant in a brownfields program is, how clean is clean? How clean does the property have to be before the regulatory authorities certify that no further remediation is required? Typically, state brownfields programs do not require that contamination be cleaned up to a nondetectible level; rather the required degree of cleanliness is based on the regulators’ estimate of the risks posed by particular substances.
To date, the District of Columbia has not established cleanup performance standards for the VCP. However, VCP law provides interim standards that the District will use in evaluating CAPs until the final standards are promulgated.11 The District published a notice of proposed rulemaking in the District of Columbia Register on October 17, 2003, that would establish generic soil cleanup levels for residential and commercial-institutional uses, and that would also establish criteria and standards for developing site-specific cleanup levels.
The Environmental Health Administration may rely on institutional controls in determining whether the cleanup standards proposed in any CAP are appropriate. Institutional controls are restrictions on the use of the property, such as deed restrictions that prevent the property from being used for residential purposes or prohibit the use of groundwater from under the property. The types of institutional control documents referenced in the statute include the following: (1) a notice of residual risk describing residual hazardous substances and their location on the property; (2) residual risk restrictions that apply to the use of the property; (3) hazardous substance easements that grant EHA access to the property to monitor levels of hazardous substances; and (4) orders that run with the land if no other instrument specifically authorized in the VCP law is adequate to implement the objectives of the law.12
The use of institutional controls (or engineering controls, such as an impervious surface on the property that prevents contamination under the property from escaping into the environment) gives both EHA and the participant flexibility in determining the level of cleanup necessary for a particular property. For example, an applicant may propose to remove less of the contamination at a site, but agree to use a vapor barrier to reduce the risk of inhalation of substances present in the subsurface. Or an applicant may be willing to place a deed restriction on the property that would allow only commercial or industrial uses. Approval of these measures would require performance of a site-specific risk assessment.
Any cleanup approved by EHA must be performed within the time periods specified in the CAP.13 If the participant fails to meet the schedule for implementation and completion of the cleanup plan, EHA may either extend the date or withdraw approval of the plan.14 An applicant may also voluntarily withdraw from the program upon notice to EHA, provided the applicant stabilizes the property to EHA’s satisfaction to ensure the protection of the public health and environment.15
In case of an applicant’s failure to perform the cleanup pursuant to the time frame outlined in the CAP, the participant must keep in place the security bond to ensure that funds are available to support any necessary site stabilization. Participants who are nonresponsible parties will not be required to perform any additional remediation upon withdrawal from the VCP, but they may be responsible if they exacerbated the existing environmental problems. If the party that fails to withdraw, or that fails to perform, is a responsible party, EHA “may take any applicable enforcement actions authorized” pursuant to the act.16
Certificate of Completion
The payoff of completing the VCP is the issuance of the certificate of completion by the Environmental Health Administration. Once the cleanup has been accomplished, the participant must file a completion report that includes sampling results, descriptions of the actions taken to reach the cleanup standards, and a description of the intended future use of the property, including any applicable engineering or institutional controls.17 EHA has 30 days to review this report.
The VCP law spells out the terms and contents of the certificate. In particular, it will state that the requirements of the cleanup plan have been implemented, the applicable cleanup standards have been met, and the participant has demonstrated that implementation of the cleanup plan has achieved the cleanup standards addressed in the cleanup plan.18 Most important to the participant, the certificate will also state that the participant is “released from further liability under this [act] and any other District regulation, for the cleanup of the eligible property and for any contamination identified in the environmental assessment of the property, and that the participant shall not be subject to a contribution action instituted by a responsible person.19 This should provide comfort to the property owner with respect to its liability for past environmental contamination at the property.
The certificate will also indicate whether long-term monitoring or maintenance is required. In some cases, although the cleanup may be finished, ongoing monitoring of groundwater or air may be required. This is something for VCP applicants to consider, as the day-to-day operation of a property may not be compatible with setting up monitoring stations, which can be unwieldy and costly.
In addition, the certificate lists the permissible uses of the property. As noted above, the use of institutional controls may allow a participant to clean up to more moderate standards where the participant is willing to restrict the intended use of the property. However, some lenders look unfavorably on use restrictions, since they prefer to have the unfettered use of properties (subject only to zoning and other similar restrictions) in the case of foreclosure. VCP participants may need to compare the costs involved in cleaning up to meet residential standards to the costs of a less thorough cleanup that would restrict the potential uses of the property. It is important to note that a future user of the property may be permitted to modify the use restrictions by performing additional remediation at a later date. If institutional controls are utilized, the certificate must be recorded with the Recorder of Deeds within 30 business days, or the certificate will be void. Finally, the certificate is transferable, allowing subsequent owners, and foreclosing lenders, to obtain the benefits of the VCP.
As is the case in most other jurisdictions, the certificate has numerous carve-outs that preserve EHA’s rights to bring enforcement actions against the VCP property owner under certain circumstances. For example, EHA may act to abate an imminent or substantial endangerment to the public health or the environment. Also, EHA retains authority to take action for exacerbation of existing contamination or for previously undiscovered contamination. Finally, EHA may take action to enforce compliance with the terms of the certificate, such as the institutional controls and the monitoring requirements.
Financial Incentives
Aside from the liability releases of the VCP that should stimulate redevelopment of impacted properties, it is the financial incentives that often make such projects attractive. Some states offer economic incentives such as loans, grants, and property tax credits to parties that clean up brownfield properties. The District’s VCP law authorizes the mayor to establish certain cleanup incentives, such as real property and personal property tax reductions, as well as a contaminated property cleanup fund to provide grants and loans. So far no regulations have been promulgated for these portions of the law.
Currently, the District of Columbia has a Brownfields Cleanup Revolving Loan Fund grant from the Environmental Protection Agency to facilitate the cleanup of contaminated sites. The brownfields program provides no-cost environmental site assessments of such areas throughout the District to help communities, prospective developers, and financial institutions better determine cleanup costs. Additionally, the program provides job training in hazardous materials handling to District residents.
Notes
|
