EPA’s New Liability Shield Intended to Spur Brownfields Redevelopment

November 10, 2005

A new “brownfields” rule from the U.S. Environmental Protection Agency will encourage redevelopment of old, abandoned industrial facilities, according to the National Association of Home Builders.

The final rule, promulgated Nov. 2, will provide liability protection for those who seek to rehabilitate and redevelop brownfields. The rule also establishes a new method for conducting traditional “due diligence” in all real estate transactions.

The EPA’s “all appropriate inquiry” rule spells out the requirements to ensure that a property purchaser cannot be sued for environmental contamination that took place on a property prior to the purchaser’s ownership. As such, it will instill crucial legal certainty in transactions involving both tainted and untainted properties, accprdin to the home builders.

“Federal brownfields law says that those who purchase previously tainted properties can be protected from federal liability if they perform a property investigation called ‘all appropriate inquiry’ before taking title to the property, but until now, it was unclear what such an investigation entailed or who was qualified to undertake it,” explained NAHB member Marty Mitchell, a land developer with Mitchell & Best Homebuilders based in Rockville, Md. “The new rule clearly explains these requirements so everyone can understand and comply with them.”

The new EPA rule seeks to encourage the cleanup and redevelopment of approximately 500,000 abandoned, idled, or under-used industrial sites where redevelopment is complicated by real or perceived environmental contamination. Brownfields redevelopment can be an important part of efforts to revitalize blighted areas near old, unused industrial facilities. Many brownfields sites are located in urban areas or inner suburbs close to residential neighborhoods, employment opportunities and retail centers.

A number of cities, including Pittsburgh, Baltimore and Minneapolis, have made brownfields redevelopment a centerpiece of neighborhood revitalization efforts.

“This will serve as a catalyst for private sector investment in brownfields cleanup,” said Mitchell, who served on the EPA advisory panel that developed the new rule to provide reasonable clarity and assurance for redevelopers. “It sends a strong signal to builders, developers, lenders and others that the government wants to make rehabilitation of these old industrial sites feasible.”

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