Bush Signs Small Business Liability Relief, Brownfields Revitalization Act

President Bush amended Superfund Jan. 11 by signing the Small Business Liability Relief and Brownfields Revitalization Act.

The act represents a combination of a House bill intended to provide relief to certain small businesses and households from some of the perceived "draconian" consequences of aggressive enforcement of Superfund's liability provisions and a Senate bill focused on brownfield revitalization.

During the earlier years of Superfund implementation, both the government and private parties seeking to recover response costs focused on industrial waste streams and waste streams that became hazardous as a consequence of the enactment of the Resource Conservation and Recovery Act since hazardous substances were present in low concentrations in virtually all waste. As a consequence, municipal waste streams, waste streams from homes and small businesses were targeted as other responsible parties looked for ways to distribute the costs of remediating Superfund sites. Section 102 of the act addresses this consequence by enacting a de micromis exemption and a municipal solid waste exemption.

Under the de micromis exemption, a person arranging for disposal of a total of less than 110 gallons or 200 pounds of "material containing hazardous substances" is exempt from liability at National Priorities List sites provided that all or part of the disposal occurred before April 1, 2001. The act provides no relief at sites proposed for the NPL or for cost-recovery claims arising from removal actions or other NCP complaint activity at non-NPL sites.

The president may override the exemption if he determines that a particular waste contributed significantly to the costs of response or natural resource damage or that the party asserting the exemption failed to answer an information request or was convicted of criminal action in connection with the relevant waste stream.

Under the municipal solid waste exemption, an owner, operator or lessee of residential property, a business entity with less than 100 full-time employees for the three years preceding the date a claim is first asserted against that entity or a tax exempt business with less than 100 employees generating municipal solid waste are exempt from Superfund liability at NPL sites.

"Municipal solid waste" is defined as "waste material (i) generated by a household … and generated by a commercial, industrial or instructional entity, to the extent that the waste material (I) is essentially the same as waste normally generated by a household; (II) is collected and disposed of with other municipal solid waste as part of normal municipal solid waste collection services; and (III) contains a relative quantity of hazardous substances no greater than the relative quantity of hazardous substances contained in waste material generated by a typical single-family household". 42 USC §9607(p)(4)

Finally, the act codifies EPA's practice of reducing settlements in such circumstances. Settlements or judgments that preceded the date of the act are grandfathered.

The brownfields portion of the act originated in the Senate and authorizes, but does not appropriate, $200 million per year for EPA to provide grants for fiscal years 2002 through 2006 to eligible entities (i.e. governmental entities, Indian tribes or non-profit organizations) to "inventory, characterize, [and] assess" brownfield sites.

"Brownfield site" means "real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance…" 42 USC §9601(39(A). Eligible entities in turn may provide loans or grants to site owners, developers or other persons for remediation of brownfield sites. Up to $200,000 per site per year could be provided for sites that are not otherwise subject to a regulatory obligation for corrective action or remediation.

In addition to site-specific grants, the act authorizes community-wide grants not to exceed $1 million per eligible entity for community wide targeting of brownfields. Applications for grant money are to be submitted through EPA's 10 regional offices, which will rank applications according to a system to be established by the administrator.

Importantly, the act also includes "brownfield's liability clarification" for contiguous property owners and bona fide prospective purchasers. Section 221 of the act exempts from liability any person that owns contaminated real property contiguous to property on which a release or threatened release of hazardous substances actually occurred.

This exemption resolves the concerns about passive migration for any person who owns contaminated property and did not cause, contribute or consent to the release, is not affiliated with the person who is responsible for the release, conducts appropriate inquiry prior to acquisition, takes reasonable steps to prevent threatened future releases or exposure to the contamination and cooperates in the conduct of remedial activity. To qualify for this exemption, a person must establish by a preponderance of the evidence that the aforementioned conditions have been met.

The act also authorizes the administrator to issue an assurance that not enforcement action will be taken toward a person qualifying for this exemption and provide contribution protection from a cost-recovery action under Section 113(f).

The act also protects a person that acquires ownership of property after Jan. 11, 2002, who can establish by a preponderance of the evidence that (1) all disposal of hazardous substances at the property occurred before acquisition, (2) the person made all appropriate inquiries into the previous ownership and uses of the facility and (3) then exercises appropriate care to stop continuing releases and to prevent or limit exposure.

Eligibility for this exemption further requires cooperation with authorities conducting remediation and an absence of affiliation with any otherwise liable party. Even though a bona fide prospective purchaser may be exempt from liability, the government retains the right to attach a lien to the property equivalent to the difference between the fair market value of the property before response costs were incurred by EPA and the fair market value after remedial activity has been undertaken. Such a lien remains in existence until satisfied by a sale or EPA recovers its response costs from other parties.

The act also requires the administrator to promulgate, by January 2003, regulations establishing standards and practices to qualify for what has come to be known as the "innocent landowner defense." Prior to enactment of the "innocent landowner" regulations, the applicable standards for property purchased after May 31, 1997, are the procedures set forth by the American Society for Testing and Materials, including ASTM Standard E1527-97 entitled "Standard Practice for Environmental Site Assessment: Phase I Environmental Site Assessment Process."

Finally, the act authorizes, but does not appropriate, $50 million to be used by EPA for grants to states or Indian tribes with environmental response programs with provisions similar to those of the federal Superfund statute. Persons conducting remediation pursuant to an approved state or Indian program are immune from federal enforcement unless the administrator determines that the remedial activity is inadequate. Moreover, the act authorizes a state to request deferral of NPL listing for a site if, after proposal, adequate progress is being made to address remedial requirements at the site.

Published: March 19, 2002