Redevelopment Rewind: A Look at the Current Status of Public and Private Brownfields Redevelopment

Environmental laws typically seek to ensure innocent parties do not bear the burden of contamination for cleanup of contaminated properties, and therefore first and foremost impose liability on the contaminating party. This usually means the owners and/or operators at the time of a release of contamination are primarily responsible for cleanup.² However, in an effort to avoid placing the burden of remediation on the public at large, these laws also usually extend cleanup liability to current owners. As a result, when the contaminating party is gone or recalcitrant, the current property owner can be left holding the bag. This possibility makes buying or investing in a Brownfield a risky proposition.

In an effort to minimize the risk of liability, the California State Legislature has repeatedly endeavored to incentivize Brownfields redevelopment. One notable example is the Polanco Redevelopment Act³ and its successor statute AB 440 (Gatto).⁴ At the federal level, Congress has taken an interest in the issue by adding and elaborating upon defenses to the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”),5 such as the innocent landowner and bona fide prospective purchaser defenses. However, recent CERCLA decisions suggest the protections afforded by these defenses are difficult to obtain.

This article provides an overview of the current status of redevelopment in California after the demise of the Polanco Act, and explores the remaining risks of engaging in Brownfields redevelopment in light of the current status of CERCLA’s defenses. We further explore some strategies regarding how to structure deals to provide a modicum of comfort to prospective Brownfields purchasers.

Download: Redevelopment Rewind: A Look at the Current Status of Public and Private Brownfields Redevelopment

1.  According to the California Department of Toxic Substances Control (“DTSC”), “Brownfields are properties that are contaminated, or thought to be contaminated, and are underutilized due to perceived remediation costs and liability concerns.” See DEPARTMENT OF TOXIC SUBSTANCES CONTROL, BROWNFIELDS, available at https:// www.dtsc.ca.gov/ SiteCleanup/ Brownfields/ (last visited Jan. 6, 2015).
2. See, e.g., CAL. HEALTH & SAFETY CODE § 25323.5 (defining a “responsible person” or “liable party” consistently with Section 107 of CERCLA, which considers responsible parties to be current owners/operators, owners/operators at the time of a release of hazardous substances, persons who arranged for the transportation of hazardous substances, or persons who accept hazardous substances for transport to disposal or treatment facilities [see 42 U.S.C. § 9607(a)(1)-(4)).); CAL. WATER CODE § 13304 (providing for cleanup liability to a person who has discharged or discharges waste into the waters of the state or who causes or permits waste to be discharged where it probably will be discharged to waters of the state); 42 U.S.C. § 9607(a)(2) (CERCLA liability may extend to any person who owned or operated a facility at the time of disposal of a hazardous substance).
3. CAL. HEALTH & SAFETY CODE §§ 34459, et seq.
4. Id. §§ 25403, et seq.