Environment & Energy Report

Superfund Sites Just Got More Appealing for Developers (1)

April 6, 2018, 3:40 PMUpdated: April 6, 2018, 7:48 PM

Superfund sites may become more appealing to developers as a result of EPA’s latest effort to push the contaminated sites toward reuse.

The Environmental Protection Agency now may use chunks of its $3.3 billion in special accounts to persuade companies to buy and clean up Superfund sites. The change could push more Superfund sites toward redevelopment, since those purchasers’ efforts could also prepare sites for future uses, attorneys told Bloomberg Environment.

“If you’re a developer interested in one of these, you may be intrigued by the notion,” John Gullace, partner at Manko, Gold, Katcher & Fox LLP, told Bloomberg Environment. Gullace has represented companies involved with Superfund sites.

The EPA maintains special accounts for each site. Those accounts bear interest and accumulate funds from actions such as settlements with polluting companies. Special account funds have been used to pay for cleanup and to persuade companies that are potentially liable for pollution to clean up sites.

New agency guidance, signed March 27, expands the uses of those funds to persuade prospective site purchasers, who have not caused pollution at a site, to start cleaning it up.

Those monetary incentives could range from tens of thousands to millions of dollars, depending on the site, David Mears, professor and director of the Environmental and Natural Resources Law Clinic at Vermont Law School, told Bloomberg Environment.

Sites on EPA’s National Priorities List, also known as Superfund sites, are the most contaminated in the country. Sites on the list include the Gowanus Canal in New York, Portland Harbor in Oregon and Tar Creek in Oklahoma.

Special Accounts

There is about $3.3 billion in EPA’s Superfund site special accounts as of this week, about three times the amount Congress has appropriated to the Superfund program for fiscal year 2018.

About $1 billion of the money in Superfund special accounts is from a 2014 settlement with Tronox, Inc. to address more than 50 abandoned uranium mines on and near Navajo Nation land, according to the agency.

The agency prefers to use special account funding at sites where companies can be compelled to pay for cleanup. At abandoned sites or those where companies are unable to pay for cleanup, the EPA uses Congressionally-appropriated funds.

Regional EPA offices must consult with the remediation enforcement office at agency headquarters before regional offices may pay funds out of the special account.

The value of a redeveloped property often provides the financial incentive for a potential buyer to take on a contaminated site, Peter Hsiao, partner at Morrison Foerster in Los Angeles, told Bloomberg Environment. But in some cases, for example where sites are in depressed real estate markets, special account funds could expedite cleanup and productive reuse, he said.

“It will be interesting to see how EPA proposes to equitably distribute those funds and what strings it may attach to their use,” Hsiao said in an email. His practice includes Superfund law.

The updated guidance was one of more than three dozen recommendations the agency’s Superfund task force made last year. Attorneys told Bloomberg Environment the guidance is consistent with EPA Administrator Scott Pruitt’s effort to redevelop Superfund sites.

Elliott Gilberg, former director of EPA’s Superfund enforcement office, told Bloomberg Environment the guidance seems to be a “reasonable use” of special account funds.

(Updates with additional reaction)

To contact the reporter on this story: Sylvia Carignan in Washington at scarignan@bloombergenvironment.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bloombergenvironment.com

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