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Liability Protection Proposed by EPA Would Encourage Brownfield Development

A proposed regulation by the U.S. Environmental Protection Agency (EPA) to encourage the redevelopment of the nation’s more than 750,000 brownfields would spell out how builders, developers and others can obtain federal liability protections for cleaning up hazardous contamination that was caused by previous owners of the property.

“Liability is a major challenge for builders and developers who want to redevelop brownfield sites — abandoned property or older structures usually located in cities and inner suburbs that can be contaminated by PCBs, petroleum and other hazardous materials,” said NAHB President Bobby Rayburn. “Builders want to help these blighted areas become economically viable again, but they need the fair protections from liability that are offered in this newly proposed rule.”

The EPA’s proposed rule would implement a key provision of the 2002 Small Business Liability Relief and Brownfields Revitalization Act outlining the steps needed to be named a bona fide prospective purchaser.

Under this provision, before assuming ownership of property, builders and developers would need to have a qualified professional conduct a thorough investigation of the site — a process referred to as an “All Appropriate Inquiry” — and document its potential for being contaminated. Bona fide purchasers then would qualify for federal liability protection against lawsuits filed by the federal government or third parties, as long as they took appropriate care of the property.

The EPA last year invited NAHB to participate in a negotiated rulemaking panel to develop this proposed rule, along with 24 other organizations, including the Real Estate Roundtable, American Society of Civil Engineers, Environmental Defense, Environmental Bankers Association and U.S. Conference of Mayors.

“This was an open and collaborative effort among competing groups in the debate over brownfields redevelopment,” said Martin Mitchell, 2003 chair of the NAHB Environmental Issues Committee (a link for NAHB members only) and a home builder from Rockville, MD, who represented the association on the panel. “In the end, we came together to support a proposed rule that will benefit the residents living near these sites, their communities and the environment.”

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