On January 6, 1998, Governor Christie Whitman signed into law New Jersey's Brownfield and Contaminated Site Remediation Act. The statute is an historic one, because it provides real incentives, both financial and legal, to the business community to clean up contaminated sites, to reuse them for purposes that will revitalize areas of the state, and to move away from developing virgin "greenfields" and leave them untouched. The question that now looms in the minds of environmental lawyers is whether this new legislation will increase the number of parties interested in redeveloping Brownfields in New Jersey, even with these incentives. The experience of our neighbor, Pennsylvania, should convince New Jersey investors that Brownfields redevelopment can be a good investment as well as a good deed.
In 1995, Pennsylvania passed its own package of bills, known as the Land Recycling Program. Under the leadership of Governor Tom Ridge, Pennsylvania has shown that cooperation between government and business can cause the remediation of contaminated property to occur faster than the traditional adversarial relationship ever could. Pennsylvania was the first state off the mark on this issue, and the success of the Land Recycling Program has caused awards to be heaped on it. The Ford Foundation announced that the Program had won its Innovations in Government Award. The American Legislative Exchange Council declared the program the national model for industrial site recycling, and the Council of State Governments awarded the program its 1997 Innovations Award. To date, after only two years, 264 sites have been added to the Land Recycling Program, representing contaminated property both in the
center of urban areas and in the more rural and undeveloped counties, and more than 100 of these sites have been remediated.
Without a doubt, Pennsylvania's success story would not have occurred without the whole-hearted endorsement of the Brownfields scheme by the employees of the Pennsylvania Department of Environmental Protection. While it took some of them a while to buy into the program (it's hard to move from the role of adversary into the role of colleague for some environmental professionals), their receptiveness to innovation and common sense helped implement the package of statutes that have made the Brownfields program work. Like the New Jersey law, the Pennsylvania Brownfields program recognizes a need for a "flexible" approach to cleanup, but having flexibility articulated in a statute is meaningless unless such flexibility is implemented.
Like the new New Jersey law, the Pennsylvania Brownfields program provides for outright grants and loans to qualified applicants to help pay for the remediations of contaminated sites. Like the New Jersey law, the Pennsylvania Brownfields program provides that once a remediation has been completed, the state will enter into a covenant not to sue the remediator for the area of the site--or the whole site, if applicable--that has been cleaned up. Like the New Jersey law, the Pennsylvania program provides that certain redevelopment remedies are presumptively approved, and may be undertaken by remediators without prior approval of the State's environmental agency. Both state programs provide special rules for contaminated sites in economic "opportunity" zones.
The combination of liability protection, flexible cleanup standards, and monetary incentives, whether offered as grants, loans or tax forgiveness, has made cleanups by developers a real possibility for the first time. In the past, entrepreneurs were too risk-averse -- and with good reason, given both the cleanup standards requiring a return to a pristine state and the potential liability attached to touching a contaminated site -- to believe redevelopment of old sites to be financially attractive. It is not surprising that Governor Whitman decided to sign New Jersey's Brownfields bill at the former ALCOA factory site in Edgewater. The site, an abandoned industrial property that has lain dormant for 20 years, is slated to be redeveloped as a 460-unit luxury apartment complex after demolition of the existing buildings. It is a symbol of a startling and exciting feature of the push to reuse old industrial sites, to snatch them from the abyss of pollution and disuse and to restore them to the highest and best use possible. It is also a symbol of at least one developer's belief that there is money to be made by redeveloping brownfields.
A Pennsylvania site similar to the ALCOA site is emblematic of the Commonwealth's efforts in the Brownfields arena. On January 15, 1998, Governor Ridge announced that Pennsylvania had awarded a grant of $1 million to spur a residential reuse of a PCB-contaminated site in the Borough of Downingtown, Pennsylvania, the so-called O'Brien Machinery site. The grant and the project show the lengths the Commonwealth has gone to in order to spur the business community's interest in land recycling. Using a unified community development approach, the Commonwealth launched in 1997 a "one-application" program by which municipalities and developers would fill out one application for both grants and loans to be awarded from a variety of funding sources -- in fact, whatever funds are available from any Commonwealth program. The Borough of Downingtown, an historic small town located in Chester County, near Philadelphia, and my client, a developer and investor named Gary Silversmith, applied for funds under this program to undertake a variety of activities at the site, from decontamination of a three-foot thick concrete slab to demolition of a contaminated and leaking warehouse covering 10 acres. The grant of $1 million emanates from the Industrial Sites Reuse Fund, administered by the Department of Environmental Protection, and the Communities of Opportunity fund, administered by the Department of Community and Economic Development. Matching funds are to be provided by the private sector, the County, and the Borough. The Environmental Protection Agency has agreed to the residential use of the site and is in the process of issuing, in conjunction with the Department of Justice, a prospective purchaser agreement for the site.
The project is a win-win-win for all concerned. Downingtown will be rid of an eyesore property that sat, perplexingly, in the middle of a well-maintained residential area of the Borough. The property, forecast after redevelopment to have townhouses and commercial mixed use, will provide ratables to the Borough and will revitalize Downingtown's downtown area. The developer will have the opportunity to make a successful project, doing good in addition to doing well. The state and federal governments, by providing seed money for the project, are spared the time, money and effort a completely government-financed cleanup would entail.
There is no doubt that New Jersey, like Pennsylvania, is seeking through its Brownfields initiative to encourage private voluntary cleanups and to lure businesses into New Jersey. In addition to the new bill and a series of statutes and regulations passed since 1994, the State of New Jersey is using its web site to provide a list of currently existing brownfields that are available for redevelopment. Pennsylvania has gone further, though; rather than wait for developers to browse its web site, Pennsylvania has actually advertised in Business Week the prime available brownfields sites that entrepreneurs ought to see as opportunities and as reasons to move their businesses to Pennsylvania.
Potential brownfields remediators find Pennsylvania sites appealing because the agency charged with cleanup oversight, the Department of Environmental Protection, has been charged by the governor and by Secretary of PADEP James Seif with cooperating with the regulated community. The new New Jersey statute is a model of clarity in its expressed commands to the New Jersey DEP that it, too, be flexible and cooperative both in its issuance of regulations under the statute and in its dealings with remediators. "In establishing criteria and minimum standards...the department shall strive to be result oriented, provide for flexibility, and to avoid duplicate or unnecessarily costly or time consuming conditions or standards." S.39, amending C. 58:10B-2 (24) a. Time will tell if the NJDEP's follow-through on projects can lure investors into the state to remediate brownfields.
The commonsense approach mandated by the New Jersey statute and its Pennsylvania counterpart is more a matter of attitude than a matter of legislation. Historically, the regulators have believed themselves duty-bound not only to be protective of the environment and public health, but also to be overprotective. In Pennsylvania, there was an expressed preference for a cleanup to take the site back to pristine levels. S. 39 commands the NJDEP not to be "overprotective," but one person's view of what is protective may not be another's. How the regulators interpret their own guidelines will determine whether the regulators will be cooperative with remediators and whether cleanups in New Jersey will be viewed as potential means of making profits by investors.
A brownfields site in Bucks County, Pennsylvania is a good example of the attitude change necessary to make a state attractive to brownfields entrepreneurs. In 1989, TCE was discovered in the groundwater beneath an old industrial site. Consistent with the attitudes then prevailing, the regulators required the owner of the site to install a pump-and-treat system, at the cost of close to a million dollars, to remove the TCE from the groundwater. In 1997, after pumping and treating for almost a decade, sampling results showed that the TCE levels had not changed significantly. The owner decided to approach the PADEP with a new plan, consistent with the land recycling program's flexible approach, to protect the surrounding residential development in a more cost-effective way: abandon the pump and treat system and instead install whole-house filtration systems in every home, to be maintained until the groundwater is clean. This so-called "engineering control," aimed at protecting human beings from coming into contact with the contaminant without attempting the impossible cleanup of the groundwater, met with the PADEP's approval, as long as the homeowners themselves approved the plan. Each and every homeowner signed a consent, agreeing to the cleanup. The remediator will receive an Act 2 land recycling release.
The New Jersey statute encourages the use of institutional and engineering controls such as the one I just described. It is a commonsense approach to an often intransigent environmental problem, cleaning up volatile organic compounds that have historically been present in groundwater. It could not have been undertaken without the imprimatur of the Land Recycling Program, or the whole-hearted endorsement of the PADEP representatives. The plan is more protective of human health than the ineffective pump and treat program that seemed the inevitable cleanup answer ten years ago.
If New Jersey regulators follow the Pennsylvania approach, New Jersey's many brownfields may soon be on the road to successful cleanup.