Maryland Jumps on Brownfields Bandwagon

5 min

After unsuccessful efforts to reach a compromise between varying bills on the subject in 1996, the Maryland General Assembly at its current 1997 session quickly and unanimously passed emergency legislation, sponsored in part by Governor Glendening and the Maryland Department of the Environment, to institute two separate "brownfields" programs in Maryland. The State thus joins more than 30 of its sister states, which have previously adopted and are now implementing similar programs to clean up commercial and industrial sites that have been impaired through past on- and off-site activities. The major goal of brownfields programs is to encourage voluntary cleanup of these sites, which are usually located in urban areas, so that they can be reused for economically beneficial business activities, and so that new, expanding, or relocating businesses will choose to operate on the cleaned-up sites, rather than on previously undeveloped "greenfields" in suburban or rural areas.

The federal government, through a Clinton Administration Brownfields Program administered by EPA, is concurrently supporting state and local government brownfields programs by making monetary grants to pilot projects that exemplify how the public and private sectors can work in partnership to restore abandoned or underutilized sites to new uses, thus increasing property values, stimulating tax revenues, and revitalizing inner city neighborhoods. A mid-February EPA press release announced that 78 pilot project grants, totaling $13.2 million, had already been made, and that an additional 25 brownfields projects would be selected for EPA grants later in 1997.

The Maryland legislation establishes a "Voluntary Cleanup Program" within the Maryland Department of the Environment (MDE) and a complementary "Brownfields Revitalization Incentive Program" within the Department of Business and Economic Development (DBED). It also modifies the definitions of "responsible person" and "person responsible for the discharge" under the State's hazardous waste and oil pollution laws, by providing new exemptions, primarily for lenders.

The MDE Cleanup Program can be used for sites contaminated by hazardous materials, including sites on CERCLIS but not Superfund sites; however, it is not available for oil-contaminated sites, which are covered by a preexisting corrective action program. Sites subject to active enforcement by MDE and sites currently operating under RCRA permits are likewise ineligible for the Cleanup Program. A site is eligible for cleanup whether or not it is actually contaminated, as long as it is "perceived to be contaminated."

Site eligibility for the DBED financial incentives program is different. Incentives can be awarded to oil-contaminated sites that are subject to approved corrective action plans, as well as to sites participating in the MDE Cleanup Program. However, these incentives are available only for sites in local jurisdictions that opt to participate in the DBED program by granting local property tax relief. Incentives are not automatic, but are awarded on a competitive basis to sites that DBED decides are either substantially underutilized sites in densely populated urban centers or commercial/industrial sites posing a threat to public health or the environment.

Both programs also impose eligibility requirements on the people and companies who may participate. The legislation introduces the term "inculpable person," defined as one who has no prior or current ownership interest in an eligible site and has not caused or contributed to contamination at the site. To participate in the MDE Cleanup Program, a person must be an inculpable person or, if he or she is a "responsible person," must not have knowingly or willfully violated hazardous substance laws or regulations. On the other hand, the DBED incentives program, as it applies to hazardous-waste-contaminated sites, is open only to inculpable persons.

If an eligible person wants to participate in the MDE Cleanup Program with respect to an eligible site, that person pays an initial $6,000 fee and submits an application, which must include a report of known environmental conditions, a Phase I/Phase II site assessment, and a summary description of the proposed cleanup project (identifying the proposed use of the cleaned-up site, if appropriate, and the cleanup criteria to be met). If MDE approves the application, the participant then develops a detailed Response Action Plan and schedule, designed to meet the selected cleanup criteria.

The Response Action Plan, which must also be approved by MDE, is subject to a public participation process. When MDE approves the plan and issues a Response Action Plan Approval Letter, and after the participant posts security to assure performance, the participant's legal obligations with respect to site contamination become fixed, and the participant has the opportunity to carry out the plan free from the threat of enforcement. If he or she performs in accordance with the plan and meets the selected cleanup criteria, both to MDE's satisfaction, MDE issues a Certificate of Completion. This certificate generally precludes MDE from taking enforcement action against the participant and releases the participant from liability for remediating identified site contamination and from liability in contribution actions brought by responsible persons.

The legislation includes relatively complicated provisions permitting an applicant or participant to withdraw from the MDE Cleanup Program after stabilizing and securing the site, and allowing the State to reopen the status of a site under certain circumstances.

As to the DBED incentives program, those local jurisdictions choosing to participate must grant property tax credits to persons conducting eligible cleanup each year for 5 years. (For sites in designated enterprise zones, the credits may be granted for up to 10 years.)

The credits, which apply to both State and local property taxes, are calculated to forgive at least 50 % of the tax attributable to increases in assessed value due to a cleanup. Participating jurisdictions are required to contribute 30 % of the post-credit taxes they collect on these increases in assessed value to a Brownfields Revitalization Incentive Fund, which DBED will use to administer the incentives program and to make low-interest loans and grants for cleanup projects.

For a copy of the Maryland legislation or for more information on brownfields programs, call Judy Armold at (410) 244-7437 or Tony Carey at (410) 244-7620.