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Building on a Brownfield Site?

Today, with the continuing concerns about urban sprawl and the desire for a greener environment, economic development of open space has become more challenging.  This has served to make “brownfield” sites potentially more attractive for development than in the past.  A brownfield is a property whose redevelopment or reuse may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant, and include everything from former gas stations to large industrial complexes. There are an estimated 450,000 brownfields in the United States. Historically, brownfield sites have raised concerns for buyers, sellers, lenders, and realtors, among others, and have often caused prospective purchasers and lenders to shy away.   But with the passage of brownfield legislation such as Pennsylvania’s Land Recycling and Environmental Remediation Standards Act, commonly referred to as Act 2, and Pennsylvania’s Economic Development Agency, Fiduciary and Lender Environmental Liability Protection Act, commonly referred to as Act 3, numerous sites in Pennsylvania, including several in the Lehigh Valley, have been remediated and put to productive reuse.  Act 2 provides flexibility regarding remediation, and upon completion and approval of the remediation, the Department of Environmental Protection issues a release of liability that stays with the land, regardless of future sales of the property.  Notably, cleaning up and reinvesting in brownfield properties has served to increase local tax bases; facilitate job growth; utilize existing infrastructure; take development pressures off of undeveloped, open land; and both improve and protect the environment.

With the passage of legislation, numerous measures can now be used to aid the redevelopment of brownfield sites and, in particular, to obtain a release of liability under Act 2.  These include the construction of caps or barriers over contaminated areas such as buildings, paving and landscaping, restrictive covenants that, for example, prohibit the construction of residential dwellings or the use of groundwater.  Further, for years, “buyer-seller agreements” among the DEP and buyers and sellers of property have been used.  These agreements serve to facilitate a purchase and sale of property before a release of liability is issued by the DEP, and outline the remaining actions to be taken to have the release issued after the closing.  As an additional tool, a buyer and seller may agree to escrow a portion of the purchase price to ensure funds are available for cleanup.

If you are interested in or involved with a brownfield site as a seller, prospective purchaser, lender, lessee, or realtor,  we at Norris Mclaughlin can provide the counsel necessary to achieve a successful project. To learn more about this post or any other environmental matter, please feel free to contact me at jlushis@norris-law.com