While remaining a hot topic throughout the 1990s, environmental statutes, regulations and awareness are no longer new ideas. The federal government's Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") is sufficiently mature as to be under constant criticism and subject to heated reauthorization debates in the United States Congress (See also "Recent Proposals In Superfund Reform Legislation," page X). Further, 1996 marks the 20th anniversary of New Jersey's Spill Compensation and Control Act, legislation which pioneered the idea of creating government programs and making available government funds to facilitate the cleanup of environmentally contaminated sites. The maturation process has lead to the establishment of cleanup programs by many states, as well as the federal government, while also encouraging ideas that facilitate economic growth and create opportunities for engineers, contractors and other technical and environmental specialists.

While not only refining the administration of existing programs, many states continue to expend time, resources and money in developing new programs to cope with the multitude of issues which arise when the government attempts to remediate contaminated lands. One such focus is the area of "brownfields." Brownfields, and other voluntary cleanup programs, constitute the most widespread development in the past several years, with no fewer than 30 states having adopted some form of voluntary cleanup program. In October 1996, the Environmental Protection Agency announced it would provide over $2 million to fund 16 new brownfield redevelopment pilot projects in 12 states. Moreover, approximately 15 states currently have in effect formalized programs addressing brownfields, and eight additional states are in the process of enacting some form of formal brownfield program.

Common Characteristics Of Brownfields

While somewhat difficult to define, the basic concept of "brownfields" tends to encompass common characteristics like the following:

• Former industrial/manufacturing site;
• Currently abandoned, inactive or otherwise under-utilized;
• Urban setting;
• Environmental contamination, either real or perceived; and
• Contamination as the result of prior use.

Given "brownfields'" broad definition, one should not be surprised to learn that brownfields are found in a variety of sizes, with varying levels of contamination. It is estimated that anywhere from 50,000 to 500,000 or more sites can be classified as a brownfield. While many such sites contain high levels of various contaminants, many others involve only limited levels of contamination, or simply suffer from the perception of contamination and the resultant stigma brought by environmental concerns.

Additionally, brownfields can be found at different stages of remediation:

Wholly unaddressed — no activity past or planned;
Imminent or planned remediation;
Partial remediation; or
Wholly remediated.

The Cleanup Challenge

Each stage of remediation, or lack thereof, presents unique challenges and opportunities to engineers, contractors and other environmental specialists. For example, a key issue may be the availability of indemnification or limitation of liability for a cleanup contractor incorporated in its contract or imposed by applicable statutory provisions. In addition to legal issues, challenges and opportunities are also inherent in the extent and type of contamination present on site and the remediation efforts required to clean up the site. For example, technical issues may exist concerning the level to which the contaminants must be removed and whether the technology exists to efficiently and economically obtain such levels.

The successful cleanup of a brownfield can only be accomplished if knowledgeable parties are available and willing to undertake the cleanup challenge presented. Not surprisingly, the remediation and redevelopment of a brownfield is often a priority among city, state and federal officials. Accordingly, many "road blocks" to the successful cleanup have been removed by legislative initiative.

Brownfield Programs

The Environmental Protection Agency initiated a brownfields program in the winter of 1995-1996. Moreover, Congress attempted to use the reauthorization of the Superfund Program throughout the course of 1996 as a vehicle for facilitating the development of the brownfields initiative via the implementation of favorable legislation. While this issue remains somewhat unresolved pending Congress' continuing efforts to obtain CERCLA's reauthorization, it appears clear that Congress will continue to view the redevelopment of brownfields in a most favorable light.

However, as was the case 20 years ago, it appears that the federal government is once again taking its cue from the State of New Jersey. New Jersey recognized that many developers, engineers, contractors and financiers were leery of exposing themselves to the uncertainties inherent in a contaminated site. In 1983, New Jersey passed the Environmental Cleanup Responsibility Act ("ECRA") prohibiting the owner of an industrial facility from selling, transferring, closing or abandoning its facility without first obtaining an environmental audit. In 1993, the New Jersey legislature amended ECRA by passing the Industrial Sites Recovery Act. This Act allows cleanup efforts to be deferred provided the new owner continues to use the site in the same capacity.

Other states have facilitated brownfields redevelopment by encouraging landowners, developers, and others to voluntarily clean up sites. In 1992, Minnesota adopted a program which releases voluntary parties from liability through the issuance of "No Action Letters" and "Certificates of Completion." A No Action Letter is issued when the state determines that the contamination is not significant and that no cleanup is required, or in the alternative, when the state approves a cleanup plan and no further cleanup is necessary. A Certificate of Completion is issued when an agency-approved cleanup is completed, with same releasing from liability all parties that were not responsible for the contamination, including landowners, developers and contractors. The release is intended to be unconditional, even if further contamination is discovered or it is subsequently determined that the cleanup was insufficient.

Only six additional states have followed Minnesota's program of releasing voluntarily compliant parties from liability. Among the alternative avenues available to states to encourage voluntary cleanups are accelerated agency review of cleanup plans, low interest loans and other tax incentives, and land use based cleanup standards. Land use based cleanup standards are consistent with the maturation process of the entire environmental industry, since these are intended to recognize that certain industries do not require a pristine or "Greenfield" site.

The Role Of Insurance

Insurance plays a significant role in eliminating or reducing the uncertainty that exists for all parties involved in a brownfield site, thus further facilitating cleanup activities. Insurance is vital to municipalities, city governments, owners, developers, contractors, engineers and other environmental specialists, since insurance can protect these entities from the risks inherent to the remediation process. Often, environmental insurance providers offer flexible and responsive insurance products in order to facilitate the initiation and eventual completion of a brownfield project.

For example, the following risks can be addressed by way of insurance:

• The discovery of additional contamination during redevelopment or the aggravation of existing contamination by a consultant or a contractor;
• The discovery of residual contamination due to improper or inadequate cleanup efforts;
• The discovery of previously unknown, on-site contamination, or the discovery of contamination on adjacent properties;
• The initiation of third-party bodily injury and/or property claims;
• The spread of existing contamination during remediation; and
• The control of cleanup costs.

Third-Party Claims Administration

In addition to the availability of insurance products tailored to address the foregoing issues, liabilities and risks can be minimized through the use of a third-party environmental claim administrator. Such administrators can be retained to manage a specific project or to serve as a general consultant. For example, an environmental claims administrator may be retained to review the qualifications of outside consultants and contractors, to audit project costs and to negotiate contract prices.

With the likely existence of more than 500,000 brownfield sites throughout the United States, the opportunities available to prospective developers of brownfield sites, as well as environmental specialists, contractors and engineers are significant. The current trends clearly point in the direction of increased brownfields redevelopment. However, in order to take advantage of such opportunities, these entities must be familiar with not only the brownfield itself, but with applicable laws and available resources. Moreover, by staying abreast of this ever evolving field, one can turn the brownfields' challenge into the brownfields' opportunity.