Kristi Unzicker initially hesitated when her colleagues suggested building a crude oil terminal on a contaminated Texas lot described as a “Superfund site on steroids.”
But the Environmental Protection Agency now hopes more developers like Unzicker, manager of environmental compliance at energy infrastructure provider Genesis Energy LP, choose contaminated properties deemed ready for redevelopment. To that end, the agency is encouraging potentially responsible parties to integrate redevelopment opportunities into the remediation process for Superfund sites.
The top level focus from EPA Administrator Scott Pruitt, who has made cleaning up Superfund sites an agency priority, and new reassurances about liability risks are causing developers and buyers to take second looks at building on some of the most contaminated properties in the country.
Unzicker wasn’t comfortable building on the site, Tex-Tin Corp. in Texas City, Texas—home to a smelter, slag piles, and wastewater ponds filled with acidic water—until she saw an EPA document stating the site was ready for redevelopment.
The EPA is drafting stronger reassurance letters and reaching out to companies that deal in contaminated property purchases and environmental insurance, hoping to spur their interest in remediating and buying Superfund sites. The letters contain information about potential liabilities at a site so that the parties can make more informed decisions and provide clarity to lenders.
Right now, those letters don’t provide specific liability protections, Polly Jessen, a partner in the Denver office of Kaplan Kirsch Rockwell LLP, told Bloomberg Environment in an email.
“Many of the shortfalls are ones EPA is well aware of and has identified for improvement,” she said in an email.
New Demand for Superfund Sites
Companies that redevelop contaminated properties tell Bloomberg Environment the agency’s initiative could soon drive up demand for Superfund site redevelopment.
The agency’s “executive level focus” on streamlining the Superfund program and efforts to clarify liability issues are making sites more appealing, Mary Hashem, founder and principal of RE|Solutions LLC, told Bloomberg Environment.
Pruitt’s Superfund Redevelopment Focus List consists of 31 sites. Most are still on the National Priorities List. In some cases, the EPA has highlighted parts of those sites that are ready for development.
Potential buyers and developers have been frustrated by the slow pace of the EPA’s decisions and prolonged negotiations with companies that are potentially responsible for cleaning up the contamination. While Superfund sites take years—and sometimes decades—to clean up, real estate trends come and go.
“As a buyer coming in, you need to know what the remedy is going to be,” Hashem said.
Ready for Reuse
The Tex-Tin site Unzicker’s firm built on is “a Superfund site on steroids,” Bob Piniewski, senior project coordinator at Project Navigator, Ltd., said during a Feb. 27 Superfund redevelopment webinar hosted by the EPA. Piniewski’s company consults on and guides remediation projects, and Piniewski provided Unzicker’s team with institutional knowledge about the site.
The Tex-Tin site is still on the National Priorities List. A portion of it was remediated and ready for redevelopment by 2003, leading the EPA to issue one of its first “ready for reuse” determinations. The determination helps future owners decide what uses would be appropriate for the site, while retaining the protectiveness of the site remedy.
“I saw the ready for reuse determination, and that got me a little more comfortable,” Unzicker said during the webinar.
Texas City Terminal Railway Co. bought the site in 2010, and Genesis Energy redeveloped part of the site into a crude oil terminal in 2016.
Piniewski said the parties working on the site’s redevelopment were determined to keep the end use in mind.
“I think all parties would say it was really a good guiding principle for the entire redevelopment project,” Piniewski said during the webinar.
The EPA’s current focus on redevelopment started with Pruitt’s 2017 Superfund Task Force recommendations, which included ways to streamline the cleanup process for sites on the National Priorities List. Pruitt wants to get sites off the list and back into productive use faster than the agency has in the past.
“Everything that we’re seeing in the Superfund task force recommendations is designed to move cleanup forward, and ultimately, development has a role in that,” Randall Jostes, chief executive officer of Environmental Liability Transfer Inc., told Bloomberg Environment.
Environmental Liability Transfer helps companies get contaminated sites off their books by buying or acquiring the sites and cleaning them up to regulatory requirements.
About 95 percent of the company’s remediated sites are redeveloped for industrial use, Jostes said, while the remaining 5 percent are redeveloped for commercial and residential use.
“Not all Superfund sites are candidates to be developed, but many are, and they can be significant wins for the community, for the municipality in which they’re located, for the local government and the state government,” Jostes said.
Environmental Liability Transfer is working with the EPA’s headquarters and regional offices on 18 of the 31 sites Pruitt has targeted for redevelopment, Jostes said.
Sites on the list include the Metal Bank site in Philadelphia, Quendall Terminal in Renton, Wash., U.S. Smelter and Lead Refinery in East Chicago, Ind., and New Bedford Harbor in Massachusetts.
Hashem’s company is interested in buying a Superfund site in EPA Region 10, which covers the Pacific Northwest. The EPA’s “incredibly responsive” communications with her company are indicative of its focus on reusing contaminated properties, she said.
“They’re serious about this, and they have shown it,” she said.