Background, Research Questions, and Analytical Approach
Do Variable Cleanup Standards Lower Cleanup Costs and Thus Result in
Result in Greater Cleanup Activity?
State Voluntary Cleanup Program (VCP) databases provide data on expected or actual cleanup costs, but the actual cost is less significant than its proportion relative to the total project cost, a metric often undisclosed to public agencies The study focused solely on projects within the VCP, limiting insights into potential cost reductions or increased cleanup efforts, as it lacked data on projects outside the VCP Additionally, evaluating the cost impact on cleanup activities is complicated by factors influencing the long-term property value and transaction costs associated with the public processes of the VCP.
The use of a variable cleanup standard can lead to contamination that diminishes the lease or resale value of redeveloped properties, meaning that while initial costs may be lower, this may be counterbalanced by a reduced future resale value.
The direct engineering costs associated with mitigation often overlook the expenses related to increased public participation in the approval of partial cleanups Consequently, employing "risk-based corrective action" (RBCA) standards that necessitate public involvement may lead to additional costs or merely shift one type of transaction cost for another.
Case studies were used to augment the standardized data sets to address the question about improvement in project rates of return.
Do Institutional Controls, Combined With Such Variable Standards,
Institutional controls impose restrictions on how a property can be used, typically manifested as a deed notice, deed restriction, easement, or other registered limitations that are more enduring than zoning classifications These controls can lead to similar data challenges as those encountered when assessing the impact of reduced project costs In certain cases, property values may remain unaffected despite these constraints.
State initiatives aimed at promoting the redevelopment of brownfields often face challenges related to land use restrictions, which can affect property values For instance, limitations on residential development near active industrial zones may not significantly impact property values due to the negative influence of surrounding industrial activities Conversely, in areas where residential use is restricted but economically viable alternatives are lacking, such limitations can lead to a decrease in property values.
The comparability of institutional controls across states presents a significant challenge, as each state may employ distinct tools The three primary forms of institutional controls impose varying use constraints and provide different levels of certainty.
Deed Notices are essential for documenting incomplete mitigation in property deeds However, there may be minimal legal requirements for these notices to be included in future deeds after the property title is transferred, which can lead to the warning being omitted over time.
Deed Restrictions can impose specific land uses on a site, potentially overriding local zoning laws, depending on the level of mitigation required However, their enforceability in legal disputes regarding future land uses remains uncertain In situations where a land use aligns with a local comprehensive plan but contradicts state restrictions, the hierarchy of authority between the two is ambiguous.
Environmental easements integrated into property deeds are gaining legal recognition due to recent court rulings regarding easement status Nevertheless, the application of these environmental constraints to an entire property, rather than just a portion, remains a legal ambiguity Currently, few states have adopted this restriction tool in their legislation.
Determining the impact of institutional controls is challenging due to the brief duration these restrictions have been in place As property values are likely to fluctuate over time, the current data from the limited study period does not provide sufficient insight into this issue.
What is the Relative Importance of Regulatory Reforms and Financial
Incentives in Stimulating Economic Development of Brownfields Properties, and Which Specific Mix of Those Interventions Appear to be Most Effective?
The question of projects that bypassed the VCP oversight process remains statistically unresolvable, as redevelopment may have occurred without state protection or projects may have been abandoned due to environmental concerns, resulting in a lack of records for comparison Additionally, much of the economic development funding in states is not specifically linked to brownfields, complicating the assessment of the impact of general development incentives versus targeted funds or regulatory relief Although it is theoretically possible to analyze the extent to which VCP projects utilized state economic incentives with adequate data, the limited resources and few projects that have undergone VCPs hindered this study Furthermore, determining the complete scope of financial assistance is challenging, as general economic development subsidies are often not recorded as incentives for brownfield cleanup and reuse.
How Does the Impact of These Programs Vary With the Size or Type of
Addressing the challenge of cross-state comparisons is complicated by the lack of consistent data, as site size is typically measured either by area or cleanup costs, but rarely by both These metrics fail to accurately represent the true scale of redevelopment efforts Additionally, total redevelopment costs and mitigation expenses as a percentage of overall costs are seldom reported Intended future land uses are documented in states with varying "clean-to-use" mitigation standards, yet changes in these intended uses due to public notice processes or market shifts often go unrecognized.
Assessment of State Initiatives to Promote Redevelopment of Brownfields 15
The Three States and Their Brownfield Programs
Massachusetts
The Massachusetts Waste Site Cleanup Program (VCP) provides liability relief for developers of industrial and commercial properties This is achieved through "Covenant Not to Sue" agreements, which safeguard developers who secure state certification confirming that a site is either clean or compliant with state mitigation standards.
The Massachusetts Voluntary Cleanup Program (VCP) allows developers to voluntarily participate, except for those identified as “potentially responsible parties” (PRPs) If the state finds contamination, developers are required to join the program Notably, there are no public notice requirements, and the state has a thirty-day period to respond to applications; if no response is given, the application is automatically approved.
1 Under CERCLA legislation, a “Potentially Responsible Party” (PRP) is defined as any party that has used or owned an environmentally contaminated site.
Flexible cleanup standards are established according to the intended land use, the permanence of the site, and the depth of contamination Although some state financial assistance is available for site assessment and remediation, it is significantly limited Throughout 1997, state support for site assessments remained relatively low, never surpassing specific thresholds.
In fiscal years 1996 and 1997, assistance for environmental risk reduction was limited to $1 million, but it surged to $2.2 million annually in subsequent years The primary focus during this period was on minimizing human exposure to environmental hazards rather than directly promoting economic redevelopment of brownfields Consequently, while the program has indeed encouraged brownfield redevelopment, this outcome is primarily a secondary benefit of its environmental risk reduction initiatives.
Massachusetts employs a combination of engineering and institutional controls in its mitigation strategies Since a regulatory change in 1993, institutional controls known as Activity and Use Limitations (AULs) have been implemented These measures involve Licensed Site Practitioners, who are private companies responsible for overseeing compliance and ensuring safety.
In Massachusetts, contracts for the design and implementation of site mitigations include the responsibility of monitoring Activity and Use Limitations (AULs) A 1998 state study indicates an increasing dependence on AULs, yet it points out significant administrative challenges faced by Licensed Site Professionals (LSPs) in their implementation The study concludes that the legal complexities involved in AULs suggest that LSPs who prepare them without proper legal assistance may be operating beyond their expertise.
Massachusetts categorizes mitigation outcomes based on their permanence and the necessity for ongoing site monitoring, utilizing three main classes of Response Action Outcomes (RAOs) Approximately 89% of these outcomes are classified as Class "A" RAOs, indicating permanent remediation solutions that are not anticipated to require further action Class "B" outcomes, making up nearly 10%, involve sites with previous contamination that meet the "No Significant Risk" standard Only 1.6% of outcomes fall under Class "C," representing temporary remediation solutions, such as ongoing water treatment or monitoring, where the state assesses that existing contamination poses no significant risk for several years Regulatory action may be reinstated for a cleaned site only if there is a breach of the monitoring requirements for engineering controls set by the state.
Michigan
In recent years, Michigan has launched several innovative programs aimed at revitalizing brownfields, accompanied by a significant increase in funding Established in 1995 through the Michigan Environmental Response Act (MERA), Michigan's Voluntary Cleanup Program (VCP) includes both the Site Reclamation Fund and the Site Assessment Fund, enhancing efforts to address environmental challenges and promote sustainable redevelopment.
As in Massachusetts, liability relief is offered to developers under a Covenant Not to Sue In contrast to Massachusetts, Michigan offers third party liability relief to lenders and
The reliance on Licensed Site Professionals (LSPs) for designing and implementing assessment and mitigation measures has significantly influenced the data availability for this study In Massachusetts, LSPs are not mandated to gather information on institutional controls or the timing of non-covenant projects, nor are they required to track developers' involvement in economic development or subsidy programs However, the absence of this data is of little concern, as very few projects received brownfields-specific assistance during the study period.
The Michigan Voluntary Cleanup Program (VCP) promotes the redevelopment of brownfields by offering flexible cleanup standards tailored to the intended land use, ensuring cost-effectiveness in remediation efforts This initiative allows participation from private industrial sites and those contaminated by public sector activities, while also implementing institutional and engineering controls to safeguard new owners and the environment.
Participation is mandatory for private sector entities or sites that are listed as state priorities, when past contamination is discovered.
Public notice is mandatory for projects that receive state funding or utilize engineering controls The state has a sixty-day period to respond to developers' requests for program entry, with automatic approval granted if no response is given However, if public hearings are necessary, this timeframe may be extended Additionally, the state reserves the right to revisit regulatory actions on a site if new undiscovered conditions arise or if engineering controls prove ineffective.
Michigan offers various funding opportunities for brownfields developers, with a 1998 study by the Consumers Renaissance Development Corporation revealing that $35.6 million was allocated to sites since the enactment of MERA This funding has leveraged nearly $460 million in private investment and contributed to the creation of 5,342 new jobs In the first year of the program, 425 Baseline Environmental Assessments were filed, significantly surpassing the total number of brownfields redeveloped under other state programs in the previous four years Additionally, the 1998 "Clean Michigan Initiative" authorized a $675 million bond issue for seven programs, with approximately half of the funds earmarked for brownfield redevelopment, while the remainder is also accessible for this purpose.
Michigan offers significant incentives for brownfield redevelopment through its eleven tax-free Renaissance Zones, where many brownfield sites are situated These Zones provide valuable tax benefits that encourage the revitalization of these underutilized properties.
Michigan's strong commitment to brownfield redevelopment is demonstrated through the establishment of specialized Brownfield Redevelopment Authorities and their integration with broader economic development initiatives This has resulted in a wealth of data on subsidies, with 75 cases analyzed, offering more comprehensive insights into environmental responses and economic incentives compared to Massachusetts and Pennsylvania The extensive data available may enable future investigations into the potential oversubsidization of brownfield redevelopment projects.
Pennsylvania
The Pennsylvania Land Recycling Program (VCP), established in 1995, provides developers with flexible cleanup standards and liability relief through written compliance certifications This relief extends to both Potentially Responsible Parties (PRPs) and property owners While the funding for brownfields redevelopment under the VCP is less than that of Massachusetts, it remains significant, with $2 million allocated annually for site assessments and additional funds designated for site mitigation.
Pennsylvania's Voluntary Cleanup Program (VCP) offers four distinct cleanup standards: background, statewide health, site-specific, and special industrial The "background" standard is the highest level of remediation required when mitigation activities are necessary without the VCP Currently, the "statewide health standard" is the most commonly used remediation level, applied in 70 percent of projects, as recent regulatory revisions have broadened the scope for site redevelopment under this standard.
The use of site-specific and special industrial standards necessitates increased state involvement in mitigation design, often requiring significant engineering or institutional controls In Pennsylvania, the Voluntary Cleanup Program (VCP) mandates deed notices, and engineering controls may be applied in certain situations The state reserves the right to reopen regulatory actions for specific brownfield projects if adverse conditions arise post-redevelopment, with public disclosure of cleanup plans being a requirement Many developers opt for higher standards to avoid delays, modifications, and increased costs associated with public hearings Additionally, appraisers indicate that institutional and engineering controls can diminish property values, contributing to a trend away from standards that impose such limitations Notably, nearly 80 percent of Land Recycling Program (LRP) projects have adopted either background or statewide health standards, despite the availability of lower standards in designated industrial areas.
All property types can participate in the VCP, and the state is required to respond to developer requests for program entry within sixty days If public hearings are necessary, this response period extends to ninety days Approval for participation will occur by default if the state does not respond within these timeframes.
Assessment of State Initiatives to Promote Redevelopment of Brownfields 19
Table 2.1 Characteristics of the Voluntary Cleanup Programs of the Study States
VCP Feature Massachusetts Michigan Pennsylvania
Industrial and Commercial uses; but PRPs are not eligible
Industrial sites and ones with public sector polluters
Any uses, PRPs explicitly eligible to cleanup after themselves Degree of “Voluntarism” Report, action is involuntary if contamination is found to exist
Involuntary for private owners; publicly listed priority sites
Voluntary No requirement for disclosure of assessment results. Assessment Support Very limited Multiple funding sources Annual $2 million allotment
Mitigation Support Rarely available to private parties Extensive loans, grants $15 million total funding (1995) Public Liability Relief Covenant not to sue Covenant not to sue Certification in letter form
Expressly excluded For lenders and innocent new owners; not PRPs
Expressly provided; available to all, including PRPs
Land use, permanence of solution, and depth of the pollutants
Land use, cost-effectiveness; use limits for engineering controls
4 standards; lower 2 respond to land use, allow engr controls
Regulators/Approvers State-certified private professionals
Agency personnel - adversarial Agency personnel - cooperative
Time limits for public hearings can extend to 60 days, or even 90 days if a public review is involved Buyer-seller agreements are not a formal program element, but title transfers must include necessary disclosures This is a common reason why sites participate in the Voluntary Cleanup Program (VCP) Engineering controls are implemented based on intended use, and no public hearings are required for this process.
For intended use; req’d hearings
For intended use; req’d disclosure
Institutional Controls Available; used sparingly Detailed activity, use limits based on remaining pollutants
Deed notices list contam left, for two less stringent standards Public Notice
None specified Any project with state funding or using engineering controls
Public notice required for the two lower cleanup standards
Reopener Clauses Only if “standard of care” in effect at time of VCP was violated
For undiscovered conditions or if engineering controls fail
6 conditions, all involving ex-post changes, permit reopeners
Findings from State Practices
Spatial Emphasis and Redevelopment Focus
State programs exhibit varying degrees of spatial emphasis, particularly in the context of urban economic redevelopment The Massachusetts Waste Site Cleanup program lacks the geographic focus seen in Michigan and Pennsylvania Before 1998, the Massachusetts Voluntary Cleanup Program prioritized environmental cleanup over economic development, neglecting the need to attract private investment Although 52 cases with location data were identified in priority redevelopment areas, only 14 percent focused on revitalizing central city sites The state's emphasis on its nineteenth-century mill towns indicates that its redevelopment efforts may be more applicable to non-metropolitan regions.
The Michigan Environmental Response Act, enacted in 1995, along with its financial incentives introduced in 1996, primarily targeted urban areas, with nearly 60 percent of the projects analyzed located in these regions Conversely, fewer than 10 percent of the sites studied were situated in the state's most critical locations.
State initiatives aimed at promoting the redevelopment of brownfields, particularly in designated "Renaissance Zones," have provided significant financial subsidies for reclamation projects However, the effectiveness of these initiatives in achieving successful redevelopment remains to be assessed.
Pennsylvania's 1995 Land Recycling Program monitors projects by region rather than municipality, obscuring its urban focus Historically, major industrial facilities have often been located outside urban centers, with many of Pittsburgh's extensive steel mills situated upriver from the city Consequently, the spatial distribution of these projects across the state aligns with historical population concentrations.
Types of Contamination Most Frequently Addressed
Reclaiming previously utilized sites requires waste removal, the demolition or repair of old structures, and investment in enhanced infrastructure and facilities, both on-site and off-site However, the national policy emphasis on "brownfields" often exaggerates the importance of environmental issues compared to other development challenges Additionally, the federal Superfund provisions of CERCLA limit the understanding of what qualifies as an environmental problem, narrowing the focus on broader development concerns.
Data from three states indicates that the national, CERCLA-driven approach has somewhat skewed the understanding of environmental challenges in redevelopment Although state definitions of contaminants differ, petroleum products prominently feature in the findings, as highlighted in Table 3.1 Despite significant variation among Voluntary Cleanup Programs (VCPs), likely influenced by differing data recording and contaminant standards, petroleum is present in nearly one out of every six projects completed under these programs.
Types of Contamination Remediated in VCP Projects
None (MI) or Missing (PA)
(1) Solvents may or may not be petroleum-based.
(2) See “Cleanup Standards” below: many of the sites classified as having a contaminant were found to have too little of the substance(s) to warrant any cleanup effort under the
(3) Weighted by number of projects in each state VCP.
Some sites entering Voluntary Cleanup Programs (VCPs) show low contamination levels that do not require special remediation efforts, as indicated by data labeled “None or Missing.” This suggests that sites with minimal pollution may be more likely to participate in VCPs to access subsidies or obtain state certification, rather than due to significant environmental concerns Consequently, the actual percentage of less contaminated sites in these programs may be underestimated This data implies that the economic revitalization of brownfields may be hindered by factors beyond environmental conditions, with VCP incentives potentially addressing non-environmental issues that discourage investment.
Reliance on Different Cleanup Standards
State Voluntary Cleanup Programs (VCPs) offer site cleanup standards that allow for greater flexibility compared to the stringent requirements of federal Superfund law Each state can tailor its approach to protect human health and local ecosystems by implementing engineering and institutional controls that mitigate exposure to contaminants This section explores the flexible features of various state programs and how these options are applied to projects with diverse land use objectives.
State Voluntary Cleanup Programs (VCPs) typically mandate that remediation efforts align with standards based on future intended land uses Consequently, the costs and efforts involved in addressing specific pollution issues can differ significantly depending on the planned use of the site post-cleanup The accompanying tables outline the cleanup standards achieved and correlate them with the anticipated new land uses.
Massachusetts tracks Response Action Outcomes (RAOs) for sites that meet specific cleanup standards Type "A" RAOs indicate permanent cleanups to various background standards, while Type "B" RAOs denote situations where no action is required due to "no significant risk" under certain conditions Type "C" RAOs represent temporary or incomplete mitigations, including ongoing water monitoring or groundwater filtration efforts Within Types A and B, there are distinctions regarding the extent of cleanup, reliance on institutional controls (activity and use limitations, or AULs), and acceptance of contamination located 15 feet or deeper, which may not be economically or technically feasible to address AUL cleanups are documented separately from Type A and Type B cases in Table 3.2.
Table 3.2 Massachusetts Cleanup Standard in Relation to Intended Use
The project counts presented here are lower than those in the complete state samples, as they necessitate having file data on both the standards employed and the planned future land uses on-site.
Assessment of State Initiatives to Promote Redevelopment of Brownfields
Ten cases listed in this report were classified as Type C due to the absence of specified remediation actions, indicating they are incomplete Although this classification may not fully reflect the rigor of the actual standards applied, we have chosen to include them here, recognizing state approval rather than categorizing them as missing cases.
In Michigan, the classification of cleaned sites is limited to industrial, commercial, or residential use, without specifying what constitutes a "clean" site According to Table 3.3, more than one-third of the sites assessed were either cleaned for residential use or deemed not needing cleanup This even distribution may indicate that the standards applied are influenced more by market demand for specific land uses rather than by the degree of past contamination Additionally, there is no indication that projects aimed at industrial or commercial use were developed to evade stricter residential cleanup standards, suggesting that mitigation requirements are not the primary barriers to site reclamation and reuse within the Voluntary Cleanup Program (VCP).
Intended Use Standard Employed in Cleanups on Michigan Project Sites
Pennsylvania relies on three, state-tailored classes of standards in addition to the
CERCLA-based “clean to background” approach – state wide health, site specific use and
The use of "special industrial areas" is governed by state-wide health standards, which dictate permissible exposure levels to various pollutants; however, these standards cannot be applied to toxins not on the state list Proposed remediation strategies may involve engineering and institutional controls, but they require public disclosure and allow for local government oversight State annual reports on the Voluntary Cleanup Program (VCP) indicate that approximately 80 percent of projects meet background or statewide health standards, thus circumventing public scrutiny This trend implies that many developers view the costs of oversight as higher than those of achieving stricter cleanup standards that would prevent public involvement.
The utilization of cleanup options in Pennsylvania reveals significant insights regarding intended site uses, as shown in Table 3.4 Notably, the "special industrial area" standard is not limited to industrial applications, with 35% of projects under this standard planned for commercial use Additionally, 12 projects, representing 16% of those listed, achieved cleanup to background levels without any intention for residential development, indicating that this standard is relatively cost-effective The preference for the state-wide health standard highlights its appeal to developers, as it imposes no institutional controls or local oversight However, the actual reliance on this standard may be underestimated, primarily due to the absence of comprehensive standards for common toxins established by the state environmental agency since the introduction of the Voluntary Cleanup Program (VCP) in 1995.
2 Pennsylvania Department of Environmental Protection 1996, 1997, 1998 Pennsylvania’s
Land Recycling Program Annual Report Harrisburg, PA: Authors.
Assessment of State Initiatives to Promote Redevelopment of Brownfields
Pennsylvania Cleanup Standards Employed for Different Intended Land Uses
Pennsylvania categorizes various levels of mixed uses, arranged in a general order from least to most intensive use, without conflating them with the most stringent cleanup requirements.
The state-wide health standard establishes varying levels of allowable residual contamination for different uses, with residential applications subject to stricter regulations This distinction, while significant, is not explicitly reflected in the accompanying table.
The site-specific standard is based on negotiated agreements tailored to each location rather than formulaic methods This means that utilizing this standard does not indicate a less rigorous exposure requirement compared to state-wide health measures for similar land uses Additionally, it allows for potential public oversight and participation in the negotiation process.
Adaptive Reuses: Types of Land Use Conversions
Conventional wisdom suggests that heavily contaminated sites have limited redevelopment options; however, findings from the Massachusetts, Michigan, and Pennsylvania Voluntary Cleanup Programs (VCPs) challenge this notion Evidence indicates that many sites have successfully transitioned from intensive industrial uses to commercial or warehouse purposes, with notable instances of even heavy industrial areas being repurposed for residential use While Massachusetts shows minimal new housing development on older sites in its VCP, both Michigan and Pennsylvania demonstrate significant residential infill development, including projects on previously industrial lands.
The three states collected data in such different ways that direct combinations of their data are impossible, but we can examine each in turn.
Table 3.5 illustrates the Massachusetts conversion pattern It is noteworthy that the three sites converted to the least intensive use, “residential/public” were all originally industrial
No absolute barrier to such conversions appears to exist.
Table 3.5 Massachusetts Intended Use Change from Past Use
Scrapyards, Lumber, Auto, Transit, Army, Vacant
Michigan's land use changes reveal a notable trend, particularly in the conversion of industrial sites to residential use, which accounted for 16.7% of known cases Out of 72 instances where both prior and intended uses were identified, 12 involved this transformation, highlighting its feasibility under existing policies While conversions to commercial use were more prevalent, with 28 cases, and there were 16 cleanups for new industrial purposes, the residential shift demonstrates potential for diverse land use Additionally, despite incomplete financial support data, there is no indication that significant reductions in land use intensity relied on unusually high state subsidies.
Pennsylvania did not record prior use in its electronic data files and cannot be directly compared to Massachusetts and Michigan The records that were available there show that only
Out of 73 cases with identified end uses, only 4.1 percent were converted to pure residential use, while 46.6 percent were transformed into mixed residential-commercial spaces This indicates that over half of the redevelopments included some form of residential use Additionally, the Pennsylvania VCP data revealed just one instance of conversion to pure commercial use, highlighting that large industrial sites near urban centers are often repurposed into townhouse or garden apartment complexes accompanied by shopping centers This trend emphasizes the significance of market dynamics and site characteristics in determining the reuse of previously contaminated properties once long-term liability issues are addressed.
Assessment of State Initiatives to Promote Redevelopment of Brownfields
Utilization of Engineering and Institutional Controls
State Voluntary Cleanup Programs (VCPs) differ significantly in their acceptance of engineering controls aimed at reducing exposure to contaminants While all programs permit a minimal increase in cancer risk, they require measures such as fencing off contaminated hotspots and capping pollutants with impermeable barriers to mitigate these risks However, relying on exposure limits instead of complete pollution removal introduces additional challenges, including the need for ongoing environmental monitoring, the potential for reopening previously approved cleanups if engineering protections fail, and the obligation to inform future property owners about contamination issues.
Institutional constraints are formal mechanisms that limit future land uses based on the level of contamination allowed to remain on a site While not all engineered controls require institutional controls, in some cases, simply establishing use limits can facilitate the redevelopment of a site without the need for active removal or mitigation of contaminants.
In Massachusetts, the reliance on engineering controls, specifically Activity and Use Limitations (AULs), has led to a lower Risk Assessment Outcome (RAO) ranking However, state legislation has not formally recognized the limitations on contaminant pathways and human exposure, resulting in minimal documentation of these controls in the state database Records were primarily available when controls were removed or modified, categorized as incomplete or temporary mitigations (type “C”) AULs were likely present in 59 out of 77 cases studied that required active remediation, yet only 20 of the approved RAOs included an AUL, with 11 also utilizing institutional controls The presence of use limits in the state’s Voluntary Cleanup Program (VCP) redevelopment projects is limited, appearing in at most one in four projects, while formal institutional controls were recorded in only 13 percent of the projects.
Michigan data reveals that engineered barriers were implemented in 15 out of 60 cases where acceptable exposure levels were recorded Additionally, the data indicates that in every instance where these barriers were utilized, deed restrictions on future land use were also applied However, there appears to be no formal mandate linking the use of engineered barriers to the enforcement of deed restrictions.
In Pennsylvania, 37.1 percent of the 116 examined projects, equivalent to 43 cases, utilized institutional controls to manage human health and environmental risks This percentage matches the number of projects employing site-specific or special industrial cleanup standards, highlighting a deliberate connection While engineering controls cannot be used to restore a site to background levels or meet statewide health standards, they are allowed in projects that follow state-approved site-specific standards or special industrial area standards, provided they include a deed notice The use of engineering and institutional controls under the Land Recycling Program (LRP) is legally linked to non-standardized cleanup criteria and requires local public review before state approval.
Environmental Concerns and Project Timing
The adage "time is money" likely originated from developers, as evidenced by the three state Voluntary Cleanup Programs (VCPs) analyzed These programs, along with many others designed to facilitate redevelopment, enforce strict time limits on the state's review process for cleanup proposals and reports detailing completed mitigation activities.
In Massachusetts, the state maintains the authority to audit cleanups managed by Licensed Site Practitioners (LSPs) but does not engage in the remediation planning process This privatized system allows developers facing tight deadlines to pay LSPs for expedited services, including mitigation planning and oversight, to facilitate quicker state certification.
The system facilitates price-based rationing to enhance the efficiency of mitigation planning and implementation The state Department of Environmental Protection has minimized significant delays in reviewing LSP recommendations for RAOs, with nearly 20 percent of projects completing the process in under two weeks and over 70 percent within a month Regulatory delays do not seem to pose a major issue in the state; however, the overall time required for cleanup can extend over many years, although the data does not clarify the level of activity in pursuing these cleanups.
The Michigan program tracks application and approval dates, marking the beginning and end of a multifaceted process largely influenced by the developer While project approval is necessary for securing site assessment and cleanup funding, it differs from the approval of a cleanup plan, which must be fully executed before the state recognizes the site as remediated and issues a Covenant Not to Sue The duration of this entire process can range from under a month to over 18 months, indicating that some applications are submitted early in the project decision-making phase, while others are filed post-completion, once engineering confirms satisfactory site conditions This suggests a dichotomy where early applications may seek state funding and subsidies, whereas later submissions indicate a project pursued with minimal state involvement, yet still aiming for liability relief under the Michigan Voluntary Cleanup Program (VCP).
In Pennsylvania, state law mandates that the Department of Environmental Protection (DEP) must review the Final Remedial Report (FRR) within sixty days for cleanups to background or state health standards, and within ninety days for site-specific and industrial standards involving engineering and institutional controls If a Final Remedial Action (FRA) is not submitted within these timeframes, the FRR is automatically deemed approved This regulation has led to increased staffing in relevant DEP bureaus, although its significance may not directly impact site owners or developers While measuring the importance of these review deadlines is challenging, the concern over timeliness has provided a valuable dataset to analyze internal project process stages, a unique opportunity not available in states like Massachusetts or Michigan.
Assessment of State Initiatives to Promote Redevelopment of Brownfields
The LRP process begins with filing a Notice of Intent to Remediate/Remediation Plan (NIRRP), which can be negotiated with the state before preparing a Final Remediation Report (FRR) for approval This consultative approach aims to minimize uncertainty for developers and their financiers early on However, data indicates that many projects filed their NIRRP and FRR simultaneously, with nearly half having less than a month between submissions This short timeframe raises questions about the negotiation process, suggesting that many cleanups are either straightforward, inexpensive, or that informal discussions occur prior to formal submissions The notion that cleanups are inexpensive is less convincing compared to the idea that they are straightforward.
Hiring staff or contracting for mitigation efforts without an approved cleanup plan poses an unusually high risk for developers in a regulated industry, making such behavior implausible Additionally, reports from DEP personnel indicate that many cases are entering the LRP process primarily to obtain state certification and establish formal liability divisions between sellers and buyers, despite the on-site contamination being minimal This underscores the value of certification and state involvement, even in cases of low-level pollution.
In Pennsylvania, over 65 percent of projects entering the Land Recycling Program (LRP) involved straightforward cleanups, with plans typically negotiated in under two months These sites, classified as brownfields, required Department of Environmental Protection (DEP) approvals due to environmental impairments However, the process of obtaining cleanup plan approvals appears to be efficient, demonstrating a relatively low time investment for addressing environmental concerns.
In Pennsylvania, an analysis of 85 cleanup project approvals reveals that 82.4% (70 projects) were approved in under 60 days, including 23 projects with a 90-day deadline However, 10.6% (9 projects) did not meet their respective timeframes, particularly during the early months of the new program when implementation challenges were common Notably, delays often stem from developers seeking positive approvals rather than default ones from the Department of Environmental Protection (DEP), highlighting the importance of thorough approvals in mitigating potential third-party litigation risks.
Pennsylvania protections in state law for approved cleanup projects.
3.7 The Extent and Types of State Financial Assistance Provided for
During the analysis period, Massachusetts lacked substantial support for contaminated site remediation, and there was no available tracking data for state funding related to redevelopment Consequently, this discussion will center on the efforts in Michigan and Pennsylvania.
Pennsylvania and Michigan lack comprehensive data regarding economic development agency support for projects affected by environmental factors, making the reported findings merely indicative as they are based on limited project samples from the VCPs with available funding data A key inquiry concerning funding is how environmental factors translate into actual dollar costs for these projects.
In Michigan, analysis of sixteen project files revealed that cleanup costs constituted between 1.7 percent and 30.0 percent of total project expenses for 15 cases, with seven projects reporting mitigation expenses of 5 percent or less Notably, the sixteenth case exhibited a striking 95.4 percent ratio, indicating it was primarily aimed at site cleanup for sale, likely reflecting the initiatives of a local brownfields redevelopment agency.
The recorded range of cleanup costs for redevelopment projects may overestimate their significance in relation to total costs, as non-property expenses, such as investments in new equipment, are likely excluded Consequently, the actual costs of initiating new activities on brownfield sites are probably higher than those reflected in the database These additional expenses also apply to launching businesses on greenfield sites By incorporating these costs, the proportion of site preparation expenses attributed to contamination issues diminishes, indicating that the reported significance of cleanup costs in state development agency data may be overstated.
In Michigan, state support for site improvements includes grants and loans for assessments and mitigations, but excludes off-site infrastructure investments Projects located in Renaissance Zones can benefit from a 10 percent tax credit on on-site investments, which can be carried forward for up to ten years if not fully utilized However, only 7 out of the studied projects were situated in these zones, suggesting that these areas may face significant locational disadvantages that deter investors, despite the availability of tax incentives.
The total state subsidy for urban infill sites was determined by combining declared grants and loans from state sources with an additional 10 percent of private investment reported for projects in these areas Data allowed for the calculation of the ratio of state support to estimated cleanup costs for 26 projects.
Seven projects received subsidies totaling less than 50 percent of cleanup costs;
Nine projects obtained state support for between 50 and 100 percent of cleanup costs;
Six projects had their cleanup costs completely covered by state support; and
Four received more funds than needed for mitigation, and thus used state funds for other costs
Assessment of State Initiatives to Promote Redevelopment of Brownfields
Direct state assistance thus does offset many of the financial disadvantages of brownfield projects.
Significant Factors Shaping VCP Utilization and Project Outcomes
The analysis has explored the characteristics of Voluntary Cleanup Programs (VCPs) and their application by redevelopers It also highlights the significance of various program components and pollution conditions in influencing project outcomes, with findings derived from exploratory regressions of VCP projects across different states included in this study.
1 Reliance on cleanup standard flexibility in all three states appears to have been largely determined by the complexity of the on-site pollution, especially when it may have penetrated the groundwater and threatened off-site migration.
2 The intended land use or extent of use conversion was similarly influenced by prior contamination, but as expected, such use change is constrained by institutional controls on new land uses and by zoning limits Michigan data on project site acreage shows a strong positive influence of size on conversion to residential uses, indicating perhaps that engineering controls and other use constraints can be used to deal with contamination on a portion of a large site, while the remainder can be converted to environmentally sensitive new uses
The findings highlight that brownfield projects are approached similarly to other economic redevelopment initiatives, where environmental considerations are factored into decision-making based on the potential financial implications of addressing them.
The exceptionally rich 75-case sample in the Michigan database provides some indication of project impacts on neighborhoods and community development goals under the state VCP:
An average of about 59 jobs per project were created according to data on 39 projects, for a total of 2,285 new jobs.
Assessment of State Initiatives to Promote Redevelopment of Brownfields
Eleven projects successfully retained 1,077 existing jobs, with nearly all of them also reporting new job creation This aligns with the understanding that redevelopment is often motivated by business needs for additional space to facilitate growth.
A total of 867 new market rate housing units have been introduced across eleven projects, averaging nearly 80 units per project Notably, three of these projects also included subsidized housing This increase in market rate units indicates that the stigma associated with past contamination on brownfields may not deter buyers from purchasing homes in these areas, effectively addressing local housing demand.
The findings from the limited data sample suggest that the economic impact of brownfield developments is likely underestimated However, these results do not compare the job or housing creation potential of brownfield sites against greenfield developments.
VCP Impacts on Exceptional Project Costs
A preliminary review of twelve states revealed a lack of comprehensive data regarding the effects of Voluntary Cleanup Programs (VCP) or grant initiatives on the unique costs tied to the redevelopment of contaminated sites This project gathered detailed project narratives from three study states, providing evidence of VCP impacts on critical risk factors and highlighting the program elements that investors deemed most financially advantageous.
Table 3.6 outlines two types of exceptional project costs, highlighting that VCP programs significantly lower expected transaction costs related to investment decisions and project planning The findings indicate that these programs not only reduce actual costs but also alter perceptions of high costs By diminishing cost expectations, VCP programs may enhance developer interest in investment projects, potentially leading to increased investments, regardless of whether actual cost reductions occur.
Panel 2 considers the special elements of brownfield regeneration projects that could undermine returns on investment after completion of redevelopment efforts By and large, the VCPs appear to significantly reduce future uncertainty for innocent new buyers, thus making the projects more attractive Stigma does not appear as a significant factor, perhaps because of the
State certifications of mitigation adequacy provide a crucial "blessing" for projects, while land use constraints from institutional controls do not significantly hinder expected revenues from Voluntary Cleanup Programs (VCPs) Over time, these restrictions have become more widely accepted, indicating a shift in perception as they have become more commonplace.
The findings of this study suggest that the effects attributed to Voluntary Cleanup Programs (VCPs) may stem not from their specific features, but rather from a broader shift in perceptions regarding urban brownfield redevelopment and heightened demand for infill projects Factors such as national economic conditions in the late 1990s and demographic changes, including empty nesters seeking quality urban housing, could be driving these demands instead of direct public policy impacts If any new demands are indeed linked to policy changes, it may be due to the symbolic significance of VCP passage, which could foster a climate conducive to regeneration Although the individual elements of VCPs may not distinctly influence redevelopment investments, the overall environment they create could be pivotal in encouraging new infill investments, even if the exact impact of state VCP promulgations remains inconclusive.
Assessment of State Initiatives to Promote Redevelopment of Brownfields
Table 3.6 VCP Impacts on the Exceptional Project Costs Potentially Associated with Brownfield Redevelopments
Types of Costs State Program Impacts on Costs
Transaction Costs Massachusetts Michigan Pennsylvania
Environmental assessment fees Limited state funding; but not a priority; limited money
Project delays due to lack of knowledge of existing environmental site conditions
No impact No impact No impact
Increased loan underwriting costs Liability “comfort letters” to lenders
Liability “comfort letters” to lenders
Liability “comfort letters” to lenders
Allowances for unpredictable clean-up costs Clear cleanup standards, formal use limits
Clear cleanup standards for intended uses
Legal expenses associated with liability risk and changing regulatory requirements
Institutionalization of the WCSP has reduced these costs over time
Institutionalization of the MERA has reduced these costs over time
Major buyer cost savings with cut-off liability for prior contamination
Uncertainty over the actual costs of site mitigation before redevelopment Perceived uncertainty reduced by being in the state’s WCSP
Participation in MERA reduces fear of uncertain costs and regulations
Public notice/hearings for 2 cleanup standards limit uncertainty reductions
Property stigmatization State brownfield listing may raise desirability of sites for redevelopment
Redev Agencies promote brownfields; state lists of brownfields — no stigma
Accelerated LRP activity suggests stigma is fading with models of successes
Post-cleanup monitoring Remains risk for RAO-C temporary remediations CNTS does not protect; innocent owners protected Clearly not an obligation of buyers after mitigation
Use restrictions 8 percent of projects use
25 percent of MERA projects use Instit Controls Instit Controlled Cleanups down to 20 percent under LRP
Changing mitigation standards for mitigation as rules change over time Use of LSPs means the discretion is private, not public - more acceptable
Land-use based criteria now getting less stringent, but that could reverse
Statewide standards had to be developed when LRP was launched; now stable Risk of reopening of regulatory actions Reopeners only if audits of
LSP decisions show problems exist
CNTS is perceived as protecting against this risk; belief is probably false
Such reopeners are part of LRP; lawyers say risk is lower with LRP in place
Risk that regulatory actions may affect lenders' lien positions
Use of LSPs makes state less visibly threatening
Legally possible; unlikely given state commitments
Perceived risk is reduced, not actual prospect
Conclusion: Implications for Policy
Findings on the Research Questions
Although this study could not conclusively answer the research questions, its findings—despite the limitations in addressing certain nuances—offer valuable insights for future policy development Each research question is systematically examined, leading to a synthesis of policy guidance.
Variable cleanup standards appear to lower cleanup costs and encourage increased cleanup activity, as evidenced by over 80 percent of projects in Pennsylvania and Massachusetts utilizing less stringent standards than the previous "background" criterion In Michigan, while cleanups to background were not distinctly recorded, data indicates that only slightly over 10 percent of VCP projects achieved the residential standard without engineering controls Overall, the fact that more than 85 percent of projects across these three states were mitigated to levels other than "background" or "residential" suggests that developers perceived the new cleanup options as cost-effective.
Redevelopment projects are driven by the necessity to meet cost criteria, and any measures that reduce expenses are likely to stimulate increased activity While it remains uncertain if VCPs were the most efficient way to lower developers' costs, they undeniably played a significant role in achieving this goal.
Institutional controls, along with varying standards, play a significant role in development outcomes Analysis of state Voluntary Cleanup Program (VCP) projects reveals that 45% of Pennsylvania projects, 32% in Michigan, and 18% in Massachusetts employed institutional controls when not cleaned to background levels This discrepancy can largely be attributed to differing public notice requirements across state programs Pennsylvania mandates public notices for all projects under site-specific or industrial area standards, whereas Michigan, despite not having a public notice requirement, frequently utilizes them due to its reliance on local Brownfield Redevelopment Authorities as project sponsors.
The high utilization of institutional controls in the three states indicates that concerns over reduced property values due to restrictions on alternative uses are minimal Implementing these controls may enhance redevelopment efforts by minimizing uncertainty for future users regarding site history, facilitating access to essential maintenance information for engineering controls, decreasing the risk of accidental exposures, and preventing future issues that could tarnish the reputation of all previously contaminated sites.
Assessment of State Initiatives to Promote Redevelopment of Brownfields
Regulatory reforms and financial incentives play crucial roles in stimulating the economic development of brownfield properties, though the lack of robust data on financial support limits definitive conclusions Evidence suggests that regulatory reforms, particularly through Voluntary Cleanup Programs (VCP), have effectively reduced costs and stimulated redevelopment Additionally, VCP provisions that provide certainty to developers enhance investors' risk tolerance for projects on previously used sites Developers and local agencies have indicated that without state VCP programs, liability relief, or state-approved cleanups, many projects would not have proceeded While financial support is acknowledged as beneficial, it is often the state intervention that is seen as the primary motivator for initiating redevelopment projects.
Financial incentives are not always necessary for the redevelopment of contaminated sites, as potential investors recognize the real economic value of regulatory benefits provided by Voluntary Cleanup Programs (VCPs) While adding subsidies to these regulatory relief measures may lead to over-subsidization, this inefficiency could hinder neighborhood regeneration by diverting limited economic development funds away from other properties in need of capital for redevelopment In economically depressed areas struggling to attract new investment, however, subsidies may be essential to address non-environmental barriers to redeveloping sites affected by previous contamination.
The impact of redevelopment programs varies significantly based on the size and type of the proposed project In Michigan, size data is available for a limited number of redevelopment efforts, highlighting the importance of these factors in assessing program effectiveness.
In Pennsylvania, evidence suggests that larger redevelopment sites benefit significantly from regulatory relief, facilitating their transformation The impact of project type on redevelopment is more complex, as it encompasses both the pre-remediation state and the intended future use Generally, non-residential projects across the three states reap greater advantages from flexible cleanup standards compared to residential projects, allowing for more adaptability Additionally, findings indicate that sites with heavier historical contamination derive greater value from variable cleanup standards as cost containment strategies, while institutional controls play a crucial role in minimizing future liability for residual contaminants Consequently, the primary benefit often manifests as reduced mitigation requirements when repurposing an industrial site for another industrial use.
Remaining Unresolved Policy Issues
This study encounters several challenges that could compromise the reliability of future analyses, particularly in relation to regulatory changes and evolving policy environments.
The evolving state brownfield redevelopment policies significantly influence this project Initial reconnaissance across twelve states revealed that national sources often provide outdated and inaccurate descriptions of state programs The slow development of state data systems and the rapid pace of policy changes hinder the ability to gather a consistent sample of projects operating under the same regulatory framework.
The ongoing changes in regulations create challenges for analyzing current policies and developing recommendations for improvement, impacting the evaluation of brownfield redevelopment programs This rapid evolution complicates the ability to foster constructive innovation due to insufficient data on historical experiences Consequently, three significant obstacles arise when attempting to establish new programs based on previous insights.
1 Obtaining a sample of projects passing through a state program while it remains unchanged is difficult if not impossible Projects may be initiated under one regulatory regime, but completed under a different one
2 Some redevelopment efforts may be accelerated or slowed in anticipation of expected changes in the relevant regulatory requirements Thus, the exhibited investment behaviors may not really be responses to the programs in place when projects are initiated.
3 Given the rapid evolution of approaches, it is likely that, by the time data are collected, they relate to the effects of a policy that is no longer in effect As a result, it becomes difficult to design transitions from policies currently in effect, on which no data are available, to new approaches the research shows would be most valuable
Public policy, particularly regarding state Voluntary Cleanup Programs (VCPs) and brownfield initiatives, is influenced by a rapidly evolving context that mirrors changes in the real estate market The shifts in policy are primarily aimed at adapting to these dynamic market conditions, which may be the main drivers behind the rising rates of brownfield redevelopment, rather than the state interventions themselves.
Over the past two decades, following the Love Canal incident and the subsequent Fleet Factors case that raised alarm within the banking sector regarding liability risks, concerns surrounding brownfield projects have diminished As a result, these projects are now more feasible to implement, irrespective of state Voluntary Cleanup Programs (VCPs).
New federal legislation can alter the importance of particular state programs The
In 1996, the introduction of lender and innocent new purchaser relief from CERCLA liability diminished the effectiveness of similar protections provided by state Voluntary Cleanup Programs (VCPs) Additionally, federal tax relief for mitigation costs associated with brownfields reduces developers' net expenses, consequently decreasing the perceived value of the cleanup standard flexibility available through state VCPs.
Assessment of State Initiatives to Promote Redevelopment of Brownfields
The rapid growth of the environmental insurance industry has significantly increased certainty for large projects involving cleanups exceeding $250,000 Since late 1997 and into 1998, these projects have increasingly opted for private insurance over state Voluntary Cleanup Programs (VCPs) This shift suggests that private market solutions may diminish the perceived value of state assurances, such as "No Further Action" letters and "Covenants Not to Sue," for large insurable projects.
The transfer of environmental policy-making authority to state and local governments has likely increased the acceptance of non-federal assurances among developers and financiers They may view state-issued Covenants Not to Sue and No Further Action letters as sufficient safeguards against further mitigation requirements, despite the potential for federal environmental enforcement actions.
The redevelopment of brownfields is increasingly influenced by changing factors, including regulatory relief and heightened market demand for infill sites, which highlight the economic potential of urban areas As the landscape evolves, capturing its complexities requires more than a single perspective or momentary observation.
1 Yount, Kristen R., and Peter B Meyer 1999 Environmental Insurance Products Available for
Brownfield Redevelopment, 1999 Washington, DC: US Environmental Protection Agency.
Appendix A: Glossary of Key VCP Features
Buyer-seller agreements are crucial for successful brownfield projects, as they require both parties to be willing participants The state can enhance reclamation and reuse efforts by formalizing agreements that outline the distribution of liability for previous contamination between the buyer and seller This allocation of responsibility is essential due to flexible cleanup standards that allow for the retention of certain on-site contaminants within the reuse framework.
The degree of voluntarism in state programs, known as Voluntary Cleanup Programs (VCPs), varies significantly In states where all site assessment findings must be reported, listings in VCP files are often mandatory However, in cases where disclosure is not required, certain contaminated sites may be excluded from the real estate market, avoiding state oversight and remaining polluted.
Eligibility Some states limit the protection under their VCPs to “innocent parties,” excluding any people or organizations that might be “Potentially Responsible Parties” (PRPs) Under
CERCLA, any party that has used or owned a site is a PRP Another limitation may be placed on intended uses, sometimes excluding residential uses from VCP flexibility.
Enforcement deferral Once a proposal to remediate is filed for a property, VCPs generally suspend any enforcement actions except those generated by a clear and present danger that needs to be removed
Engineering controls are essential for minimizing exposure to contaminants at sites with flexible cleanup standards, a practice commonly seen in Voluntary Cleanup Programs (VCPs) The formal registration of these controls with state agencies, along with the procedures for their oversight and maintenance, can differ significantly across various jurisdictions.