Waste Disposal - Brownfields

Many former industrial sites have become eyesores of urban scenery. These trash-strewn plots, concentrated mostly in the northeast and Midwest, are called brown-fields and, as of EPA estimates in early 2004, numbered more than 400,000 sites. The EPA defines brownfields as abandoned, idled, or underused industrial or commercial sites where expansion or redevelopment is complicated by real or perceived environmental contamination.

Many of the properties are polluted. They are shunned by developers, often stalling efforts to revive poor, inner-city neighborhoods. Until 1995, developers and buyers had avoided some 38,000 sites listed as possible targets under the Superfund Law, which says that anyone involved in the management of a property can be held liable for the entire cost of cleanup. Many of those sites had, in fact, been passed over by the EPA as not contaminated enough for Superfund action. Nonetheless, many of those properties were deemed untouchable by the real estate industry. A 1995 survey of the American Bankers Association showed that 83 percent of smaller banks had refused to make loans to projects because of concerns about environmental liability.

To help the reclamation effort, in 1995 the EPA removed 25,000 of the least-polluted sites from the list. The sites required some type of cleanup but would not be subjected to the tougher Superfund standards. In addition to restoring the environment, the purpose of reclamation programs is to encourage the reuse of abandoned sites, revitalize cities, create jobs, and generate municipal tax revenues. Redevelopment of polluted sites is becoming a thriving business. Experts estimate that about one-third of real estate sales involve sifting databases of environmental agencies for records of toxic spills before a real estate transaction can take place. Sensing a new business possibility, several insurance companies have created divisions offering policies that protect developers of polluted real estate against unforeseen cleanup costs or lawsuits.

In 1997 U.S. President Bill Clinton signed the Taxpayer Relief Acts (PL 105-34 and PL 105-32), both of which included new tax incentives to spur the cleanup and redevelopment of brownfields. The acts enable taxpayers to consider any qualified environmental remediation expenditure as tax deductions in the year paid rather than having to be capitalized over time.