Brownfield Redevelopment
Stakeholders Report That EPA's Program Helps to Redevelop Sites, but Additional Measures Could Complement Agency Efforts Gao ID: GAO-05-94 December 2, 2004Brownfields are properties whose use may be hindered by the threat of contamination. Cleaning up and redeveloping these properties can protect human health and the environment and provide economic benefits. Under the Brownfields Act, the Environmental Protection Agency (EPA) provides grants to state and local governments and others for site assessments, job training, revolving loans, and cleanups and to assist state efforts. GAO was asked to (1) obtain stakeholders' views on EPA's contribution to brownfield cleanup and redevelopment, (2) determine the extent to which EPA measures program accomplishments, and (3) obtain views on options to improve or complement EPA's program. Stakeholders GAO surveyed included grant recipients, state program officials, interest groups, and others.
Stakeholders said that EPA's Brownfields Program supports the initial stages of site redevelopment by funding activities that other lenders often do not, such as identifying contamination and cleaning up sites. While important, the impact of EPA's funding is difficult to isolate because it is often combined with funds from other sources. For example, representatives of a company that combined an EPA loan with city, state, and other federal agency funds to redevelop a brownfield site near Seattle, Washington, said that EPA's loan, while small, provided critical up-front funds for cleanup. Furthermore, while an unknown number of projects rely solely on private and other federal agencies' funding, EPA funds often go to sites with more complex cleanups, less desirable locations, or liability issues. In addition, officials in 10 states reported that EPA's assistance has been crucial to establishing and expanding the scope of their voluntary cleanup programs. EPA's current performance measures do not measure major components of the Brownfields Program, such as progress toward cleaning and redeveloping sites or assisting state programs. Furthermore, EPA has not yet developed measures to assess the extent to which the Brownfields Program achieves key outcomes, such as reducing environmental risks. Similarly, EPA's Inspector General found that the brownfields performance measures do not demonstrate the program's contribution to reducing or controlling health and environmental risks. Acknowledging its measures' limitations, in fiscal year 2004, EPA began collecting additional data--such as the number of acres ready to be reused--about properties under the program and is developing performance measures for state voluntary cleanup programs. Stakeholders identified three options for improving or complementing EPA's Brownfields Program. First, they suggested eliminating the provision in the Brownfields Act that, in effect, disqualifies from grant eligibility those landowners who purchased a brownfield site before January 2002. Second, they suggested changes to the stringent technical and administrative requirements that they believe have discouraged the use of revolving loan funds. While EPA officials maintained that the act eased administrative burdens, stakeholders believed that technical requirements continue to impede lending. Stakeholders also suggested that EPA give priority to applicants with proven administrative expertise or to coalitions that can consolidate administrative functions. Third, stakeholders believed that a federal tax credit for developers' remediation costs could attract developers to brownfield sites on a broader national basis. Although EPA and other organizations were also generally supportive of a tax credit, we did not analyze the costs and benefits of such a tax credit or any other potential incentives.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-05-94, Brownfield Redevelopment: Stakeholders Report That EPA's Program Helps to Redevelop Sites, but Additional Measures Could Complement Agency Efforts
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Report to Congressional Requesters:
December 2004:
BROWNFIELD REDEVELOPMENT:
Stakeholders Report That EPA's Program Helps to Redevelop Sites, but
Additional Measures Could Complement Agency Efforts:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-94]:
GAO Highlights:
Highlights of GAO-05-94, a report to congressional requesters
Why GAO Did This Study:
Brownfields are properties whose use may be hindered by the threat of
contamination. Cleaning up and redeveloping these properties can
protect human health and the environment and provide economic benefits.
Under the Brownfields Act, the Environmental Protection Agency (EPA)
provides grants to state and local governments and others for site
assessments, job training, revolving loans, and cleanups and to assist
state efforts. GAO was asked to (1) obtain stakeholders‘ views on EPA‘s
contribution to brownfield cleanup and redevelopment, (2) determine the
extent to which EPA measures program accomplishments, and (3) obtain
views on options to improve or complement EPA‘s program. Stakeholders
GAO surveyed included grant recipients, state program officials,
interest groups, and others.
What GAO Found:
Stakeholders said that EPA‘s Brownfields Program supports the initial
stages of site redevelopment by funding activities that other lenders
often do not, such as identifying contamination and cleaning up sites.
While important, the impact of EPA‘s funding is difficult to isolate
because it is often combined with funds from other sources. For
example, representatives of a company that combined an EPA loan with
city, state, and other federal agency funds to redevelop a brownfield
site near Seattle, Washington, said that EPA's loan, while small,
provided critical up-front funds for cleanup. Furthermore, while an
unknown number of projects rely solely on private and other federal
agencies‘ funding, EPA funds often go to sites with more complex
cleanups, less desirable locations, or liability issues. In addition,
officials in 10 states reported that EPA‘s assistance has been crucial
to establishing and expanding the scope of their voluntary cleanup
programs.
EPA‘s current performance measures do not measure major components of
the Brownfields Program, such as progress toward cleaning and
redeveloping sites or assisting state programs. Furthermore, EPA has
not yet developed measures to assess the extent to which the
Brownfields Program achieves key outcomes, such as reducing
environmental risks. Similarly, EPA‘s Inspector General found that the
brownfields performance measures do not demonstrate the program‘s
contribution to reducing or controlling health and environmental risks.
Acknowledging its measures‘ limitations, in fiscal year 2004, EPA began
collecting additional data”such as the number of acres ready to be
reused”about properties under the program and is developing performance
measures for state voluntary cleanup programs.
Stakeholders identified three options for improving or complementing
EPA‘s Brownfields Program. First, they suggested eliminating the
provision in the Brownfields Act that, in effect, disqualifies from
grant eligibility those landowners who purchased a brownfield site
before January 2002. Second, they suggested changes to the stringent
technical and administrative requirements that they believe have
discouraged the use of revolving loan funds. While EPA officials
maintained that the act eased administrative burdens, stakeholders
believed that technical requirements continue to impede lending.
Stakeholders also suggested that EPA give priority to applicants with
proven administrative expertise or to coalitions that can consolidate
administrative functions. Third, stakeholders believed that a federal
tax credit for developers‘ remediation costs could attract developers
to brownfield sites on a broader national basis. Although EPA and other
organizations were also generally supportive of a tax credit, we did
not analyze the costs and benefits of such a tax credit or any other
potential incentives.
What GAO Recommends:
GAO recommends that EPA develop additional measures of the Brownfields
Program‘s achievements. It also recommends that EPA consider
stakeholder suggestions for improving and complementing the agency‘s
brownfield efforts as it weighs potential changes to the program. GAO
provided EPA with a draft of this report for its review and comment.
EPA agreed with the report‘s findings and recommendations and provided
technical comments we addressed in the report where appropriate.
www.gao.gov/cgi-bin/getrpt?GAO-05-94.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact John B. Stephenson at
(202) 512-3841 or stephensonj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Stakeholders Reported That EPA's Program Enables Brownfield
Redevelopment That Might Not Otherwise Occur:
EPA's Current Performance Measures Are Not Sufficient to Enable
Effective Program Oversight and Decision Making:
Stakeholders Identified Changes That Could Enhance Existing Federal
Brownfield Redevelopment Efforts:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Summary Information on Other Federal Agencies' Activities
and Funding in Support of Brownfield Redevelopment:
Appendix III: Comments from the Environmental Protection Agency:
Appendix IV: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Tables:
Table 1: Number and Amount of Brownfield Grants Awarded:
Table 2: Stakeholders Contacted to Obtain Views on the Contribution of
EPA's Program and Options for Improving or Complementing the Program:
Table 3: Nine Federal Agencies' Activities and Funding in Support of
Brownfield Redevelopment, Fiscal Years 2001 Through 2003:
Figure:
Figure 1: Funding for Brownfield-Related Activities Reported by 5
Federal Agencies:
Abbreviations:
CERCLA: Comprehensive Environmental Response, Compensation, and
Liability Act:
EPA: Environmental Protection Agency:
GPRA: Government Performance and Results Act of 1993:
IPA: Intergovernmental Personnel Act:
NCP: National Contingency Plan:
OMB: Office of Management and Budget:
Letter December 2, 2004:
The Honorable Tom Davis:
Chairman, Committee on Government Reform:
House of Representatives:
The Honorable Michael R. Turner:
House of Representatives:
An estimated 450,000 to 1 million brownfields--sites whose
redevelopment or reuse may be complicated by the presence or potential
presence of hazardous substances--sit abandoned or underused across the
country. Brownfields can include industrial properties, former gas
stations, warehouses, and residential buildings. These sites have
remained largely undeveloped for several reasons, including uncertainty
about the presence of contamination, limited cleanup resources, and
fear by the sites' owners--or prospective purchasers--that they might
be held liable for cleaning them up. Cleaning up and redeveloping these
properties can improve and protect human health and the environment;
increase local tax bases; and slow the development of undeveloped, open
land. Although a number of federal agencies provide funding and
technical assistance to aid in restoring brownfields, the Environmental
Protection Agency (EPA) has the lead federal role in encouraging and
facilitating the cleanup and redevelopment of these sites. In addition,
state and local governments, commercial lending and real estate
development corporations, and other entities provide funding for
brownfield redevelopment--both with and without EPA's participation.
While the availability of funding from these other sources depends on
the particular circumstances of individual brownfield sites, many sites
have been and are being redeveloped primarily through state, local, and
commercial efforts with no assistance from EPA.
To address the numerous brownfield properties across the country, in
1995, EPA began its Brownfields Initiative under the Superfund Program,
established by the Comprehensive Environmental Response, Compensation,
and Liability Act (CERCLA), to clean up contaminated sites. In January
2002, the Congress passed the Small Business Liability Relief and
Brownfields Revitalization Act (Brownfields Act)(Pub. L. No. 107-118),
formally establishing a separate Brownfields Program within EPA. The
act authorizes $250 million in grant funds annually for fiscal years
2002 through 2006. Of this amount, $200 million is authorized to fund
EPA grants for site assessments, job training, revolving loans, and
newly created cleanup grants in support of brownfield revitalization
efforts.[Footnote 1] Under the act, state and local governments and
quasi-governmental entities can apply for site assessment and cleanup
grants of up to $200,000 and revolving loan fund grants of up to $1
million.[Footnote 2] Between fiscal years 1995 and 2004, EPA awarded
over 1,200 brownfield grants totaling about $400 million. In addition,
of the $250 million annual authorization, the act authorizes $50
million in grants to assist states and tribes in developing and
enhancing their environmental response--or voluntary cleanup--programs
to address contaminated sites. Since fiscal year 2003, EPA has awarded
about $100 million in assistance to states and tribes.
To hold federal agencies systematically accountable for achieving
results from their programs, such as EPA's Brownfields Program, the
Congress passed the Government Performance and Results Act (GPRA) of
1993. The act requires EPA and other federal agencies to develop
strategic plans covering at least 5 years and submit them to the
Congress and the Office of Management and Budget. GPRA also requires
agencies to set annual performance goals related to the goals and
objectives in the strategic plan and to prepare annual reports
comparing actual performance with annual goals. An agency's performance
measures should, among other things, demonstrate results and provide
useful information to track how programs and activities contribute to
achieving its goals and mission. The objectives of EPA's Brownfields
Program, as set out in the agency's strategic plan for fiscal years
2003 through 2008, are to assess, clean up, and redevelop properties;
leverage job creation; and leverage cleanup and redevelopment funding
from other sources.
In this context, we (1) obtained the views of stakeholders--including
EPA grant recipients, state and local government officials, real estate
developers, and interest groups, among others--on the extent to which
EPA's program has contributed to the cleanup and redevelopment of
brownfields; (2) determined whether the measures EPA uses to gauge the
performance of its brownfield activities provide sufficient information
to identify program accomplishments; and (3) obtained these
stakeholders' views on potential options for improving or complementing
EPA's Brownfields Program. Additionally, you asked us to identify other
federal agencies that support brownfield cleanup and redevelopment and
describe their activities and funding levels.[Footnote 3] We provide
this information in appendix II.
In conducting our work, we met with the Director of EPA's Office of
Brownfields Cleanup and Redevelopment and other officials within that
and other EPA headquarters offices. In addition, we visited eight
entities that received site assessment, revolving loan, or job training
grants located in four states--Colorado, Florida, Minnesota, and
Washington State--to discuss their brownfield redevelopment
activities, their views on EPA's contribution, and potential options to
improve federal brownfields efforts. We selected a nonprobability
sample of eight grant recipients by identifying one recipient of a
grant with high activity (as determined by the number of sites
assessed, the number of loans made, and loan size) and one with low
activity in each state. On the basis of these paired criteria and an
effort to select sites from a geographically diverse range of states,
we chose four recipients of site assessment grants and four recipients
of revolving loan grants--two of which also received job training
grants. Additionally, we obtained the views of other local brownfield
stakeholders who were identified by these grant recipients, such as
real estate developers, property owners, attorneys, nonprofit
organizations, and other state and local government officials involved
in brownfield activities. We also identified and obtained the views of
several industry groups and associations representing state and local
governments with brownfield expertise. Although we did not identify a
sample of EPA brownfield grant recipients that would allow us to
generalize our findings to the total population of EPA brownfield grant
recipients, our selection of recipients with high-and low-grant
activity, in conjunction with the large, diverse groups we contacted,
enabled us to obtain a wide range of views on EPA's program and
brownfield issues. Furthermore, we obtained information about
brownfield efforts from nine federal agencies identified by EPA as
active in the Federal Brownfields Partnership. We also reviewed data
from EPA's brownfields database and found them to be sufficiently
reliable for use in this report. Appendix I provides additional details
on our objectives, scope, and methodology. We conducted our review
between October 2003 and November 2004 in accordance with generally
accepted government auditing standards.
Results in Brief:
Stakeholders reported that EPA's Brownfields Program provides an
important contribution to site cleanup and redevelopment efforts by
funding activities that might not otherwise occur. EPA grants typically
support the initial stages of brownfield redevelopment and are
important in that they fund activities and address sites--such as those
with more complex cleanup requirements, less desirable locations, or
liability or ownership issues--that private lenders and other
government programs often do not, according to stakeholders. EPA's site
assessment grants provide recipients with seed money for identifying
contamination and estimating cleanup costs, while the agency's
revolving loan fund grants provide funding for cleanup activities.
However, EPA is often one of several funding sources for brownfield
cleanup and redevelopment. All of the grant recipients we interviewed
used EPA grants in conjunction with funding from state, local, and/or
other federal sources to address brownfield sites. For example, a
Seattle, Washington, company combined an EPA revolving loan with city,
state, and Department of Housing and Urban Development funds to begin
redeveloping a brownfield site into a housing and retail business
property. Representatives of the company told us that EPA's revolving
loan provided critical up-front funds for the cleanup during the first
phase of the project. While EPA's program makes an important
contribution to some individual brownfield redevelopment projects, an
unknown number of other projects that are funded solely by other public
and private sources without any EPA assistance have been completed and
are under way. In addition, officials in all 10 of the states we
contacted reported that EPA assistance has been crucial to establishing
and expanding the scope of their voluntary cleanup programs.[Footnote
4] These officials said that without EPA's grants, their voluntary
cleanup programs would not have had the resources to undertake
activities such as compiling state inventories of brownfield sites,
performing limited brownfield site assessments, and developing needed
guidance and information for program participants.
The performance measures EPA has used to date have provided information
on accomplishments in some but not all key areas of the Brownfields
Program, thereby limiting the agency's--and the Congress'--ability to
determine the extent to which the program is achieving its goals.
First, EPA's current brownfield performance measures do not fully
address the program's central objectives. While EPA has reported to the
Congress on the cumulative sites assessed, jobs generated, and cleanup
and redevelopment funds leveraged by the program, the agency has not
begun reporting data on grant recipients' activities to clean up and
redevelop properties, which is one of its primary stated objectives.
Second, EPA does not collect or report data on the assistance it
provides to state voluntary cleanup programs. Although this is not one
of the program's strategic objectives, these activities are a
significant part of EPA's brownfield efforts, accounting for about one-
third of the total program funds in each of fiscal years 2003 and 2004.
Third, although EPA's overall mission is to protect human health and
the environment, the agency has not yet developed measures to determine
the extent to which the Brownfields Program helps reduce environmental
risks. Acknowledging these limitations, in fiscal year 2004, EPA began
collecting additional information--such as the number of acres ready to
be reused--which agency officials believe will allow them to develop
additional measures to gauge the program's achievements. Similarly, EPA
is developing performance measures for voluntary cleanup programs, but
the agency has not yet proposed that it include such measures in its
performance reports. We are recommending that EPA continue its efforts
to develop additional measures to gauge program achievements--
especially those addressing the program's environmental and state
voluntary cleanup aspects--and incorporate them into annual performance
measures that are reported to the Congress.
Stakeholders identified three potential options for improving or
complementing EPA's Brownfields Program. First, they suggested
eliminating the provision in the Brownfields Act that, in effect, makes
landowners who purchased a brownfield site prior to January 2002
ineligible for EPA grant funding. While the Consolidated Appropriations
Act for Fiscal Year 2004 temporarily suspended the eligibility date for
that fiscal year, stakeholders asserted that the clause continues to
discourage brownfield redevelopment by limiting program eligibility.
Second, stakeholders suggested changes to address the underutilization
of revolving loan funds. As of November 2004, grant recipients had
loaned out less than $29 million (about 17 percent) of the $168 million
in revolving loan fund grants awarded by EPA. According to
stakeholders, the stringent technical and administrative requirements
to establish a revolving loan fund have discouraged grant recipients
from using the funds. While EPA officials maintain that provisions in
the Brownfields Act eased administrative requirements, stakeholders
believed that technical requirements continue to be the primary
impediment to making loans. Additionally, stakeholder comments
indicated that EPA could achieve greater results by giving priority to
applicants with proven administrative expertise or to coalitions of
agencies that could consolidate administrative functions and thereby
produce economies of scale. Third, stakeholders believed that a federal
tax credit, which would allow developers to offset a portion of their
federal income tax with their remediation expenditures, could
complement EPA's program by attracting developers to brownfield sites
on a broader national basis. While EPA and other organizations with
brownfield expertise were also generally supportive of a federal
brownfield tax credit, we did not analyze the costs and benefits of
such a tax credit or any other potential incentives. We are
recommending that the Administrator of EPA consider stakeholder
suggestions for improving and complementing the agency's brownfield
efforts as EPA weighs potential changes to the program.
Background:
EPA's initial efforts to address brownfield properties began in 1995
with the Brownfields Initiative under CERCLA, which was enacted in 1980
in the wake of discoveries of abandoned hazardous waste sites around
the country. CERCLA authorizes EPA to compel parties responsible for
the contamination to clean up hazardous waste sites; allows EPA to pay
for the cleanups, then seek reimbursement from the responsible parties;
and established a trust fund to help EPA pay for cleanups and related
program activities. Under CERCLA, past and present owners and operators
of hazardous waste sites, as well as generators and transporters of the
hazardous substances, can all be held liable for cleanup costs. CERCLA
establishes a defense to liability for innocent landowners--that is,
owners who obtain property without knowing it was contaminated despite
conducting "all appropriate inquiries" regarding the present and past
uses of the property and the potential presence of on-site
contamination.
Under its Brownfields Initiative, EPA awarded several types of grants
in support of brownfield redevelopment, as follows:
* site assessment grants, which provide funding to inventory,
characterize, assess, and conduct planning and community involvement
related to brownfield sites;
* revolving loan fund grants, which provide funding for recipients to
make no-or low-interest loans for brownfield cleanup;
* job training grants, which provide funding for environmental training
for residents of brownfield communities;
* showcase grants, which provided targeted technical and financial
assistance from EPA and other federal agencies to support brownfield
activities in select communities demonstrating innovative and
successful approaches to addressing brownfields;
* greenspace grants specifically for brownfield projects that result in
parks or other greenspace development; and:
* Intergovernmental Personnel Act funds to site assessment grant
recipients, which provide for employee exchanges between a federal
agency and a state or local government entity to share environmental
expertise with those entities.[Footnote 5]
EPA's Brownfields Program:
On January 11, 2002, the Congress amended CERCLA by passing the Small
Business Liability Relief and Brownfields Revitalization Act
(Brownfields Act) (Pub. L. No. 107-118). The act defined brownfields as
real property, the expansion, redevelopment, or reuse of which may be
complicated by the presence or potential presence of a hazardous
substance, pollutant, or contaminant. Furthermore, the act established
the Brownfields Program and amended the criteria for establishing the
innocent landowner defense. It also limits liability for two types of
parties: (1) contiguous property owners--persons who own property that
may be contaminated by a release of hazardous substances from a
neighboring property--and (2) bona fide prospective purchasers--
persons who purchased the property after the act's passage on January
11, 2002; did not contaminate the property; and exercised appropriate
care with respect to any hazardous waste found on the property. Both
types of parties must demonstrate that they conducted:
all appropriate inquiries into the site's previous ownership and
use.[Footnote 6] Under the act, any landowner who acquired a
potentially contaminated property before January 11, 2002, is not
eligible for the bona fide prospective purchaser exemption and
accordingly may not be eligible for brownfield grants.
In addition to clarifying CERCLA liability, the act also made several
changes to EPA's brownfield grants, including:
* authorizing EPA to continue awarding site assessment, revolving loan
fund, and job training grants, and authorizing new cleanup grants up to
$200,000 to be used directly for brownfield remediation;
* allowing recipients of revolving loan fund grants, in accordance with
certain statutory restrictions, to use a portion of these funds for
subgrants for cleanup activities that, unlike loans, do not have to be
repaid;[Footnote 7]
* requiring recipients of revolving loan fund grants and cleanup grants
to provide a 20 percent cost share, unless EPA determines that the cost
share requirement would place an undue hardship on the recipient;
* allowing recipients of revolving loan fund grants that were awarded
before January 11, 2002, to transition to the new requirements set out
in the act;
* prohibiting the use of grant or revolving loan funds for
administrative costs;
* requiring that 25 percent of grant funds be used for site assessment
and cleanup activities on sites contaminated with petroleum or a
petroleum product; and:
* generally prohibiting EPA from taking federal enforcement action
under sections 106 and 107 of CERCLA at "eligible response sites" that
are enrolled in a state program that meets certain criteria.
Brownfield grants are currently awarded competitively by regional
panels that evaluate grant proposals against threshold criteria, such
as applicant eligibility on a pass/fail basis, and a national panel
that scores and ranks proposals on criteria such as the proposals'
budgets, the planned method for selecting sites that will receive grant
funds, and the communities' need for brownfield assistance.
EPA Funding of Brownfield Grants:
Since EPA began the Brownfields Initiative in 1995, the agency has
awarded over 1,200 brownfield grants totaling about $400 million. Table
1 shows the number of grants and the amount (in nominal dollars)
awarded for each grant type between fiscal years 1995 and 2002 (when
the Brownfields Act was passed) and during fiscal years 2003 and 2004.
Table 1: Number and Amount of Brownfield Grants Awarded:
Dollars in millions;
Grant type: Site assessment;
Fiscal years 1995[A] through 2002: Number of grants: 437
Fiscal years 1995[A] through 2002: Amount: $103.1;
Fiscal year 2003: Number of grants: 117
Fiscal year 2003: Amount: $30.7
Fiscal year 2004[B]: Number of grants: 155
Fiscal year 2004[B]: Amount: $37.6.
Grant type: Revolving loan fund;
Fiscal years 1995[A] through 2002: Number of grants: 143;
Fiscal years 1995[A] through 2002: Amount: $117.0;
Fiscal year 2003: Number of grants: 28;
Fiscal year 2003: Amount: $30.4;
Fiscal year 2004[B]: Number of grants: 18;
Fiscal year 2004[B]: Amount: $20.9.
Grant type: Cleanup;
Fiscal years 1995[A] through 2002: Number of grants: N/A;
Fiscal years 1995[A] through 2002: Amount: N/A;
Fiscal year 2003: Number of grants: 66;
Fiscal year 2003: Amount: $11.4;
Fiscal year 2004[B]: Number of grants: 92;
Fiscal year 2004[B]: Amount: $16.9.
Grant type: Job training;
Fiscal years 1995[A] through 2002: Number of grants: 57;
Fiscal years 1995[A] through 2002: Amount: $12.1;
Fiscal year 2003: Number of grants: 10;
Fiscal year 2003: Amount: $2;
Fiscal year 2004[B]: Number of grants: 16;
Fiscal year 2004[B]: Amount: $2.5.
Grant type: Other[C];
Fiscal years 1995[A] through 2002: Number of grants: 97;
Fiscal years 1995[A] through 2002: Amount: $14.4;
Fiscal year 2003: Number of grants: N/A;
Fiscal year 2003: Amount: N/A;
Fiscal year 2004[B]: Number of grants: N/A;
Fiscal year 2004[B]: Amount: N/A.
Grant type: Total;
Fiscal years 1995[A] through 2002: Number of grants: 734;
Fiscal years 1995[A] through 2002: Amount: $246.6;
Fiscal year 2003: Number of grants: 221;
Fiscal year 2003: Amount: $74.5;
Fiscal year 2004[B]: Number of grants: 281;
Fiscal year 2004[B]: Amount: $77.9.
Source: GAO analysis of EPA data.
[A] EPA awarded one site assessment grant in 1993 and two site
assessment grants in 1994 as pilot tests for its Brownfields
Initiative.
[B] Fiscal year 2004 numbers and amounts are for grants announced, not
awarded. A small number of these grants may have been awarded after the
end of fiscal year 2004, according to EPA officials.
[C] This category includes showcase grants, greenspace grants, and
Intergovernmental Personnel Act funds awarded prior to the Brownfields
Act.
[End of table]
State Voluntary Cleanup Programs:
Many states have passed their own hazardous waste cleanup laws, many of
which have liability and enforcement provisions similar to CERCLA's
provisions. Concerns about liability under both federal and state laws
have hindered cleanups at brownfields and other contaminated sites. To
alleviate this problem, in the late 1980s, some states began to
establish voluntary cleanup programs that allow private parties to
identify and clean up sites, use less extensive administrative
procedures, and obtain some relief from future state liability for past
contamination.[Footnote 8] All 50 states now have voluntary cleanup
programs, although these programs vary considerably in scope and
breadth. Programs generally provide participants with protection from
future state liability for cleanup costs. In addition, EPA has signed
Voluntary Cleanup Program Memorandums of Agreement with 22 states.
These memorandums clarify roles and responsibilities and encourage the
cleanup of contaminated properties. Generally, they provide a statement
that EPA does not plan or anticipate taking federal enforcement action
at those sites going through a state voluntary cleanup program, with
some caveats. Additionally, the Brownfields Act further encourages the
use of state voluntary cleanup programs by generally prohibiting EPA
from taking federal enforcement action under sections 106 and 107 of
CERCLA at "eligible response sites" that are enrolled in a state
program that meets certain criteria.
The 2002 Brownfields Act authorizes grant funds for state and tribal
voluntary cleanup programs. The act authorizes EPA to provide $50
million for each of fiscal years 2002 through 2006, to state or tribal
programs that include, or are taking reasonable steps to include,
elements such as an inventory of brownfield sites, mechanisms for
approval of cleanup plans and verification that cleanup actions were
completed, and oversight and enforcement authorities adequate to ensure
that cleanups protect human health and the environment. EPA's guidance
to states and tribes seeking voluntary cleanup program grants specifies
that, among other things, funds may be used to:
* develop legislation, regulations, procedures, or guidance that would
establish or enhance the program;
* finance a revolving loan fund for brownfield cleanups;
* purchase environmental insurance or develop an insurance mechanism to
provide financing for cleanup actions under the program;
* establish and maintain the required public records; and:
* conduct limited site-specific activities, such as assessment or
cleanup.
In 2003, EPA distributed almost $50 million among the 50 states, 30
tribes, the District of Columbia, and the Virgin Islands to develop or
enhance their programs' infrastructure and capabilities. The Congress
appropriated $50 million in funding for state and tribal voluntary
cleanup program grants for fiscal year 2004.
The Government Performance and Results Act of 1993:
In 1993, the Congress passed GPRA, requiring all federal agencies to
(1) develop and submit strategic plans covering at least 5 years to the
Congress and the Office of Management and Budget (OMB), (2) set annual
performance goals related to the goals and objectives in the strategic
plan, and (3) annually compare actual program results with established
performance goals and report this information to the Congress. Under
the act, agencies are to establish in their strategic plans general
outcome-related goals and objectives for their major functions and
operations. Performance measures are the yardsticks used to assess an
agency's success in meeting its performance goals. EPA's broad mission
is to protect the nation's health and environment, and the agency's
fiscal year 2003-2008 Strategic Plan places the Brownfields Program
under its goal of protecting, sustaining, or restoring the health of
communities and ecosystems. EPA's Strategic Plan identifies three
performance measures for the program: the number of properties
assessed, the number of jobs generated, and the cleanup and
redevelopment funding leveraged.
Stakeholders Reported That EPA's Program Enables Brownfield
Redevelopment That Might Not Otherwise Occur:
Stakeholders told us that EPA's Brownfields Program provides an
important contribution to cleaning up and redeveloping properties by
funding activities--such as site assessments and remediation
activities--that private lenders and other government programs often do
not. EPA grant funds are often applied to brownfields that are less
likely to be redeveloped without EPA funding because of the sites' more
complex cleanup requirements, less desirable locations, or liability or
ownership issues. However, because EPA is often one of several sources
of funding for the range of activities at a brownfield site, its impact
on the final redevelopment of a property is difficult to isolate.
Furthermore, officials in all 10 of the states we contacted reported
that EPA assistance has been crucial to establishing and expanding the
scope of their voluntary cleanup programs.
Stakeholders Acknowledged That EPA's Contribution Is Significant:
EPA's Brownfields Program contributes significantly to grant
recipients' redevelopment efforts, with site assessment grants
providing seed money for identifying contamination and estimating
cleanup costs and revolving loan fund grants supporting cleanup
activities. By funding site assessments and cleanups, EPA provides a
resource for activities that private lenders and other government
programs often do not cover, according to stakeholders.[Footnote 9] In
this regard, officials of the Washington Department of Community,
Trade, and Economic Development--which is currently administering two
EPA brownfield revolving loan fund grants totaling $5.9 million for a
coalition of state and local agencies--told us that the banking
industry generally is reluctant to lend money for brownfield projects
because of the high risks involved. Consequently, EPA is an important,
and sometimes the only, funding source for the critical assessment and
cleanup activities in the initial stages of redevelopment. For example,
a representative of a nonprofit company redeveloping a brownfield site
in Seattle, Washington, told us that the $440,000 revolving loan they
received from the Washington Department of Community, Trade, and
Economic Development, while relatively small compared with the overall
project costs of about $24 million, provided critical funds for the
cleanup during the first phase of the project. Similarly, a real estate
developer revitalizing a brownfield site in Lakewood, Colorado, stated
that although the Colorado Department of Public Health and
Environment's $1.9 million revolving loan accounted for a small portion
of the project's estimated $750 million cost, these funds were
significant. The developer explained that the loan, which the state
made with EPA revolving loan fund dollars, covered about one-half of
the project's cleanup costs, helped the project advance in a timely
manner, and provided financial reassurance to the project's other
lenders that the cleanup would be properly performed.
Stakeholders also told us that EPA's grant funds are important to
brownfield redevelopment because they are often applied to sites with
(1) more complex cleanup requirements, (2) less desirable locations, or
(3) liability or ownership issues that make them less likely to be
redeveloped by private or other governmental investors alone. A senior
planner with Palm Beach County, Florida, explained that some brownfield
sites in prime locations are more likely to be redeveloped without
EPA's assistance because of the potential positive financial return on
investments in such properties. Brownfield sites in less desirable
locations, however, need financial assistance for the site assessment
and cleanup to make the project work, as do heavily contaminated areas
located in prime locations. Similarly, officials with the Colorado
Brownfields Foundation explained that some brownfield sites require
additional financial aid because of their contamination, location, and
other factors, and that EPA's assessment and cleanup funds are
important for their redevelopment. Furthermore, an official with King
County, Washington, who managed the two EPA site assessment grants that
the county and the city of Seattle received, informed us that the
county would not have assessed the 50 brownfield sites that it did
without EPA's assistance because these sites involved complex
environmental and funding issues.
Grant Recipients Combined Funds from Many Sources to Clean Up and
Redevelop Brownfields:
Although grant recipients and other stakeholders believed EPA's
contribution is important, the agency is often only one of several
sources funding activities at the site. All of the grant recipients we
interviewed used EPA's grants in conjunction with funding from state,
local, and other federal sources. For example, the Seattle development
company we contacted combined an EPA brownfield revolving loan with
city, state, and Department of Housing and Urban Development funds to
begin redeveloping a brownfield site into a housing and retail business
property. Additionally, the Colorado real estate developer with whom we
spoke combined an EPA brownfield revolving loan; a substantial company
equity investment; and several commercial loans, bonds, and other
financing to fund a mixed-use project that will include retail shops
and housing units.
Although EPA's program makes an important contribution to some
individual brownfield redevelopment projects, an unknown number of
other projects have been completed and are under way that are funded
solely by other public and private sources without any EPA assistance.
An official with the Northeast-Midwest Institute--a nonprofit,
nonpartisan research organization for the Northeast and Midwest states
that has been very active on brownfield issues--emphasized that, while
EPA and other federal programs provide key support for brownfield
redevelopment, the number of brownfield sites far exceeds the number of
sites that could be addressed by available federal resources.
Furthermore, an official with the Center for Public Environmental
Oversight--an organization that promotes and facilitates public
participation in the oversight of environmental activities such as
brownfields--echoed this view and said that, given the limited
availability of funding from all levels of government, the vast
majority of sites that are redeveloped do not receive any government
assistance. Similarly, in its September 2003 report on the Brownfields
Program, EPA stated that there remain hundreds of thousands of
brownfield sites across the country that could be put to better use,
but even with the additional assistance available under the Brownfields
Act, the sheer enormity of the problem far outstrips all available
federal resources.
States Reported That EPA Assistance Is Crucial to Establishing and
Expanding Their Voluntary Cleanup Programs:
Under the Brownfields Act, states and tribes may use EPA's voluntary
cleanup program grant funds to, among other things, establish or
enhance their programs, purchase insurance for financing state response
actions, or finance a revolving loan fund for brownfield cleanup.
Officials with the voluntary cleanup programs in the 10 states we
contacted reported that EPA's funding has been crucial to establishing
and expanding the scope of their programs. Program officials from 4 of
the 10 states--Kentucky, Virginia, West Virginia, and Wyoming--reported
that EPA's funds keep their voluntary cleanup programs operating and
that, without this assistance, their programs would not exist. For
example, Virginia officials said that their program relies solely on
EPA funding and struggles to maintain, rather than enhance, their
current program performance. Similarly, the Wyoming official said that
the state used EPA's funds to help develop their program, including
providing contractor support for developing the program's guidance, and
to pay employees' salaries. This official said that the state plans to
use some of EPA's funds to study various types of incentives the
program could offer to encourage participants to redevelop brownfields,
such as providing environmental insurance.
The state officials with whom we spoke, for the most part, believed
that the activities they fund with EPA's grants are beneficial and
contribute to the effectiveness of their programs. State officials from
Colorado and Minnesota commented favorably on the flexibility that the
activities provide their state programs. Alaska officials said that
EPA's funding for their program, which has only been in existence a
short time, is very important for its development and growth. Both the
Minnesota and Alaska officials commented on the benefits of using EPA
funds to conduct site-specific assessments, and the Alaska
representative further said that these assessments helped to redevelop
foreclosed brownfield sites faster.
Officials from all 10 states said that their programs would not be able
to accomplish a number of key activities without EPA's assistance, such
as compiling state inventories of brownfield sites, performing limited
brownfield site assessments, and developing needed guidance and
information for program participants. For example, state officials
overseeing Alabama's program said that EPA's funding allowed the
department to hire additional staff, provide training, and develop an
inventory and public record of brownfield sites. These officials told
us that, although Alabama has been able to pay the program's
administrative costs with user fees that are collected from
participants, the revenue from these fees would not have been
sufficient to allow them to expand the program and hire needed
additional staff. Colorado program officials also noted that, without
EPA's funding, the state's program would not be operating at its
current service level and would not have undertaken activities such as
performing brownfield site assessments or preparing cleanup guidance to
deal with the state's growing problem of contamination from illegal
methamphetamine drug laboratories.
EPA's Current Performance Measures Are Not Sufficient to Enable
Effective Program Oversight and Decision Making:
The performance measures EPA has used to date have not provided
information on key outcomes and objectives of the Brownfields Program,
thereby limiting the agency's ability to demonstrate the extent to
which the program is achieving its goals. While EPA is beginning to
collect data that may help it to better assess the program's
achievements, its current brownfield performance measures do not fully
address the program's central objectives, including its activities to
clean up and redevelop properties, one of its primary stated
objectives. Furthermore, EPA does not currently collect or report data
on the assistance it provides to state voluntary cleanup programs.
Finally, although EPA's overall mission is to protect human health and
the environment, the agency has not yet developed measures to determine
the extent to which the Brownfields Program helps reduce environmental
risks. Acknowledging the limitations of its measures, in fiscal year
2004, EPA began collecting additional information that they believe
will allow them to develop appropriate measures to gauge the
achievements of the program, and the agency is also taking steps to
develop performance measures for state voluntary cleanup programs.
EPA's Current Brownfield Performance Measures Reflect Some but Not All
of the Program's Major Activities:
The current performance measures that EPA reports to the Congress
regarding its brownfield activities do not fully address the program's
central objectives, thereby limiting both the agency's and the
Congress' ability to determine the extent to which the program is
achieving its goals. EPA collects data on its brownfield activities in
a number of areas. Some of these data are intended solely for the
agency's internal use, and others are intended for reporting to the
Congress on the program's performance under its GPRA requirements. The
performance measure information that EPA provides to the Congress
through the agency's 5-year strategic plan and annual plans is
important in that it informs decision making and oversight of the
program. EPA's fiscal year 2003-2008 Strategic Plan states that the
specific objectives and targets for the Brownfields Program for this
period are to (1) assess, clean up, and redevelop 9,200 properties; (2)
leverage $10.2 billion in cleanup and redevelopment funding; and (3)
leverage 33,700 jobs. In its fiscal year 2003 annual report, EPA
reported to the Congress on the cumulative (1) sites assessed, (2) jobs
generated, and (3) cleanup and redevelopment funds leveraged. However,
EPA did not report the number of properties cleaned up or redeveloped
under the program. Although EPA's fiscal year 2004 annual plan
includes--in addition to the measures in the 2003 plan--the number of
properties cleaned up and the number of acres available for reuse as
measures it plans to report to the Congress, the agency did not include
targeted goals for these measures. According to agency officials, these
goals were not included because the agency is still in the process of
collecting the data it needs to set meaningful goals for these
measures.
EPA's current performance measures also do not provide information on
the impact of EPA's funding to state voluntary cleanup programs. While
supporting state and tribal voluntary cleanup efforts is not one of the
Brownfields Program's stated strategic objectives, these activities are
a significant part of EPA's brownfield activities. EPA's funding to
establish or enhance voluntary cleanup programs--authorized at $50
million per year by the Brownfields Act--comprised about one-third of
the agency's total Brownfields Program funds in each of fiscal years
2003 and 2004. However, EPA does not currently collect data on the
results from this funding.
Furthermore, while EPA's objective to assess, clean up, and redevelop
properties addresses the environmental impact of the program, its
current measures do not allow the agency to determine the extent to
which the program helps reduce environmental risks, a key agency
outcome goal. In July 2003, an EPA consultant suggested that, in its
brownfield grants and loan agreements, EPA should require recipients to
report on environmental indicators as a condition of receiving funding.
In addition, the EPA Inspector General found that while the Brownfields
Program's current performance measures may provide important, desired,
and relevant information on the economic outputs and activities
associated with brownfield expenditures, the measures do not provide
information on how risks to human health and the environment will be
reduced or controlled through brownfield investments. In 2002, the
Inspector General suggested that EPA could use measures, such as acres
of brownfields assessed and cleaned up or the population protected by
brownfield cleanup actions, to more fully capture the program's
environmental impact. In June 2004, the Inspector General reiterated
this point, noting the lack of program performance measures that
indicate how risks to human health and the environment will be reduced
or controlled through brownfield assistance.[Footnote 10] Furthermore,
on the basis of our recent work in evaluating EPA's grant management
process, we testified in July 2004 that EPA is not consistently
ensuring that its grants--such as those awarded under the Brownfields
Program--are clearly linked to environmental results.[Footnote 11]
EPA Is Taking Steps to Obtain and Report Additional Information That
May Better Measure Brownfields Program Accomplishments:
Recognizing the limitations of its current performance measures and
supporting data, EPA has taken a number of steps to collect additional
information on the results of its brownfield activities that should
enhance its ability to develop more meaningful measures of the
Brownfields Program's accomplishments. First, in August 2002, EPA
initiated an internal work group to develop a data collection
instrument for the site assessment, cleanup, and revolving loan fund
grants. This work group developed a property profile form to collect
information from each grant recipient beginning in fiscal year 2004.
This form will provide EPA with more detailed information on such
factors as common contaminants and property size, among other things.
Officials in EPA's Office of Brownfields Cleanup and Redevelopment told
us that these data will allow the agency to better measure the direct
economic and environmental impact of EPA's activities on a property-
specific basis. These officials anticipate that these data will provide
a better measurement of program results, and they plan to conduct
further evaluations after a full year of data collection to determine
whether and how to use the data to form environmental indicators.
In addition, EPA has efforts under way that may assist the agency in
developing performance measures to gauge the impact of funding for
voluntary cleanup programs. In 2004, to develop such measures, EPA
formed a work group of state and tribal officials that analyzed methods
that states currently use to measure their programs. Also in 2004, the
Association of State and Territorial Solid Waste Management Officials
reported that while states continue to use counts of completed
activities--such as the number of cleanups completed--as the primary
measure for evaluating their programs, some states use other
quantifiable indicators--such as the number of acres available for
reuse and the anticipated land reuse--to assess their programs'
broader, more global impacts.[Footnote 12] EPA officials told us that
the work group is now building on these efforts by developing
performance measures for EPA's assistance to voluntary cleanup programs
that could be implemented by the end of fiscal year 2005. However,
states may view any reporting requirements that EPA imposes on them as
burdensome. An EPA consultant reported in July 2003 that efforts to
integrate states' data into EPA's brownfield data system would likely
require a high level of state resources because many states have
established their own systems.
A recent OMB review has also prompted EPA to take steps to develop
measures that provide a more comprehensive picture of the program's
impact. In February 2004, OMB completed an EPA Program Assessment and
Rating Tool review--a systematic method of assessing the performance of
program activities, focusing on these activities' contribution to an
agency's achievements of its strategic and program performance
goals.[Footnote 13] According to the Director of EPA's Office of
Brownfields Cleanup and Redevelopment, the office recently developed,
and OMB approved, a performance indicator that will be used in future
OMB reviews of the Brownfields Program. The indicator will show "EPA
investments per acre reused and compared to leveraged investments for
redevelopment per acre of property." This measure will provide
information on changes that occurred at a given brownfield property
after it received EPA brownfield assistance and will enable OMB to
compare the efficiency of the Brownfields Program with other federal
programs. This measure could also be incorporated into the Brownfields
Program's strategic plan and annual performance report to provide the
Congress with more meaningful information about the program.[Footnote
14]
Finally, EPA's fiscal year 2005 annual performance plan included
additional information, which the agency will report to the Congress,
that more closely links the program to the goals of its strategic plan.
The plan added a new measure that tracks the number of cleanup grants
awarded and added a targeted goal--60 properties--for the "properties
cleaned up" measure that was included in the previous annual plan
without such a goal. This latter measure, which records the number of
previously contaminated properties that have been cleaned up and made
available for reuse, potentially addresses the program's environmental
impact. Incorporating this measure and goal as well as efforts to
collect additional information are steps forward in measuring the
agency's progress in achieving the program's goals and objectives.
While EPA has initiated efforts to obtain additional data on the
accomplishments of the Brownfields Program, further action is needed to
ensure that the Congress has sufficient information to make informed
decisions and conduct appropriate oversight regarding all aspects of
the program, including the agency's efforts to assist state and tribal
voluntary cleanup programs and the program's impacts on environmental
risks. Therefore, EPA must ensure that its data collection efforts
address the program's central activities and that, once collected, it
uses these data to inform the Congress about program results.
Stakeholders Identified Changes That Could Enhance Existing Federal
Brownfield Redevelopment Efforts:
The grant recipients, developers, expert groups, and other stakeholders
we contacted suggested three options for improving or complementing
EPA's Brownfields Program. First, stakeholders suggested eliminating a
restriction in the Brownfields Act that, in effect, disqualifies from
grant eligibility those landowners who purchased a brownfield site
before January 2002. Second, they suggested that EPA make changes to
the stringent technical and administrative requirements that they
believe continue to discourage the use of revolving loan funds, despite
changes in the act, and give priority to applicants with proven
administrative expertise. Third, stakeholders supported allowing a
federal tax credit for developers' remediation costs. While EPA and
other organizations varied in their support of these changes, we did
not analyze the costs or benefits of any of these options.
Stakeholders Believed That Revising a Restrictive Provision of the
Brownfields Act Could Expand the Number of Eligible Grant Applicants:
Some stakeholders told us that revising a restrictive provision of the
Brownfields Act could expand the number of applicants eligible for
brownfield grants.[Footnote 15] The act effectively limits grant
eligibility to parties who purchased their property after January 11,
2002.[Footnote 16] These stakeholders believed that EPA's Brownfields
Program could have a broader impact if those who purchased property
prior to January 11, 2002, were also eligible to receive brownfield
grants. Representatives of three of the organizations with brownfield
expertise mentioned that many local governments that were actively
addressing brownfields by acquiring these sites before the law was
enacted have been penalized by the eligibility date. For example, the
Director of EPA's Office of Brownfields Cleanup and Redevelopment noted
that a local government in Rhode Island purchased a brownfield site on
December 27, 2001, and followed the appropriate steps to demonstrate
that it is not potentially responsible for contamination. However, this
local government is not eligible to apply for EPA brownfield grant
assistance because the site was purchased before the law was enacted.
In addition, a coalition of groups with brownfield expertise, as well
as EPA brownfield officials, reported that EPA rejected a number of
brownfield grant applications in fiscal year 2003, and other
applications were never submitted, largely because of the eligibility
date.
The Consolidated Appropriations Act for Fiscal Year 2004 temporarily
suspended the eligibility date for that fiscal year, prompting EPA to
reopen the grant application period for 1 month in February 2004 to
provide previously excluded applicants with an opportunity to submit
proposals. However, all of the stakeholders we spoke with who raised
this issue believed that the eligibility date will impact the program's
support of brownfield redevelopment by limiting program eligibility
until it is permanently revised. Groups such as the U.S. Conference of
Mayors, an organization that represents mayors in strengthening
federal-city relationships, and the National Association of Local
Government Environmental Professionals, a national association
representing local government professionals with various environmental
responsibilities, have suggested limiting the eligibility date
provision to those landowners who caused or contributed to the
contamination. Such a limitation would enable nonpolluting prospective
purchasers that acquired brownfields before January 2002 to qualify for
EPA's brownfield funding. The Director of EPA's Office of Brownfields
Cleanup and Redevelopment supports removing the eligibility date from
the prospective purchaser requirements to make landowners purchasing
property before January 11, 2002, eligible for grant funds. This
official noted that the act's other requirements for obtaining
prospective purchaser liability protection are sufficient without
specifying the date of acquisition.
Stakeholders Believed Pooling Grant Funds Could Aid Recipients That May
Lack Administrative Expertise and Produce Economies of Scale:
Almost one-half of the stakeholders with whom we spoke, such as grant
recipients, state or local government officials, and real estate
developers, suggested changes to address the underutilization of
revolving loan fund grants. As of November 1, 2004, recipients of
revolving loan fund grants had loaned about $28.6 million (about 17
percent) of the $168 million in such grants that EPA had awarded up to
that date. EPA data show that, of the 154 active grants, 47 grant
recipients had made 67 loans for brownfield projects and the remaining
grant recipients had made no loans.[Footnote 17] Reacting to this
situation, EPA began rescinding revolving loan fund grants from
communities that had not used them and "deobligated" about $12 million
in revolving loan funds, thereby making them available to make other
grants. Thirty grants have been or will be deobligated by the end of
calendar year 2004, and 44 additional grants have been or will be
reissued under the new requirements in the act by this date.
The Congress has also expressed concern about the underutilization of
EPA's revolving loan fund grants. In the Senate Report accompanying
EPA's fiscal year 2004 appropriations bill, the Committee on
Appropriations expressed disappointment in the revolving loan component
of EPA's Brownfields Program, noting that only a small percentage of
grant recipients had made loans, and that these loans had resulted in
the completion of only a small number of brownfield site cleanups over
the life of the program.[Footnote 18] EPA officials told us that the
Brownfields Act's provision allowing a portion of revolving loan fund
grants to be awarded to brownfield projects in subgrants that do not
have to be repaid will make these grants more attractive to applicants
and bring renewed interest in the loans.[Footnote 19] EPA officials
also maintained that the act eased the administrative burden on grant
recipients by removing full CERCLA National Contingency Plan
requirements. EPA, however, retains certain requirements in order to
ensure that environmental cleanups protect public health and the
environment.[Footnote 20]
According to five revolving loan fund grant recipients and a number of
developers, however, other technical and administrative requirements
not directly addressed by the Brownfields Act have also discouraged
grant recipients from using the funds. Managing a revolving loan fund
requires the government or nonprofit entity receiving the grant to
perform many of the functions of a commercial lending institution,
including establishing interest rates, repayment terms, and collateral
requirements; processing and approving loans; and collecting loan
payments. Revolving loan fund grant recipients with whom we spoke
reported that this process requires significant staff time and
expertise. While some stakeholders acknowledged that other factors,
such as the availability of low-interest private loans and marketing of
the loan fund by grant recipients, play a role in the number of loans
made, seven of the grant recipients and groups with whom we met told us
that having expertise was key to making loans and that grant recipients
with financial expertise or experience administering other revolving
loan funds were better equipped to successfully operate a brownfields
loan fund as well.
Comments from eight stakeholder groups indicate that, to address this
impediment, EPA could achieve greater results through its brownfield
revolving loans by giving priority to applicants with proven expertise
or to coalitions of agencies that can consolidate administrative
functions and thereby produce economies of scale. Four revolving loan
fund grant recipients and two groups with brownfield expertise reported
that grant recipients with in-house technical expertise, such as
economic development or regional planning agencies, were more likely to
have financial expertise or experience administering other revolving
loan funds and were therefore better positioned to set up a fund. Grant
recipients that partnered with other state or local agencies to obtain
technical expertise also were successful in this regard. Two revolving
loan fund grant recipients also reported that grant recipients who
hired contractors to manage the administrative aspects of the revolving
loan fund have been successful at establishing a fund framework and
were better positioned to make loans. For example, the Department of
Environmental Services in Hennepin County, Minnesota, contracted with a
nonprofit organization that specializes in servicing loans to manage
its fund. Hennepin County has made four loans totaling over $1.7
million to local brownfield projects.
Three revolving loan fund grant recipients also said that coalitions
that consolidate administrative functions and pool revolving loan fund
grants were able to take advantage of economies of scale by making more
loans once they had made the up-front administrative investment to
establish the fund. Nine grant recipients and other stakeholders told
us that EPA's grants were not large enough to justify the time and
effort required to establish a fund because it is frequently depleted
after one or two loans are made. The 65 loans made to date range from
$50,000 to $1.95 million, with an average loan amount of about
$420,000. The act limits revolving loan fund grants to $1 million, and
many grants have been funded at less than this amount. However, EPA
grant guidelines allow coalitions of eligible entities to apply
together to receive funds of up to $1 million each. For example, five
entities could apply jointly and each receive up to $1 million, for a
total of up to $5 million for the coalition. By pooling revolving loan
funds among six entities, as of September 2004, the Washington
Department of Community, Trade, and Economic Development was
administering two revolving loan fund grants of $2.3 million and $3.6
million, respectively. The department has loaned $440,000 for a project
converting a former landfill and dumping ground into an affordable
housing development for senior citizens in an economically distressed
area of Seattle.
The revolving loan fund grant applicants' ability to manage a fund is 1
of 10 ranking criteria EPA evaluates in selecting grant
proposals.[Footnote 21] EPA's fiscal year 2005 grant proposal
guidelines direct applicants to describe previous experiences in
managing federal funds and to provide a plan for managing the loan fund
in accordance with prudent lending practices. Applicants' ability to
manage the grant is allocated a maximum of 10 points out of a possible
120 points for all ranking criteria. While EPA's draft guidance to
regional offices outlines elements of prudent lending practices that
should be addressed in grant recipients' work plans, it does not
require grant recipients to discuss their expertise or resources to
establish or implement these lending practices. We did not evaluate
EPA's grant selection or award process.
Stakeholders Supported a Federal Tax Credit to Encourage Brownfield
Redevelopment:
All of the stakeholders we spoke with about tax credits believed that a
federal brownfield tax credit, which would allow developers to offset a
portion of their federal income tax with remediation expenditures,
could complement EPA's Brownfields Program by attracting developers to
brownfield sites on a broader national basis. These stakeholders stated
that a federal tax credit would help to enhance the federal, state, and
local brownfield redevelopment efforts currently under way. One
stakeholder noted that while brownfield redevelopment is still a small
and specialized real estate market, a federal tax credit could attract
new developers and investors to these projects. A local government
official told us that a federal tax credit would be beneficial in that
it would provide an incentive that real estate developers could access
directly--unlike many incentives available exclusively to government
entities--and that the private sector would easily understand. At least
10 developers and 5 state or local government officials also said that
other similar federal tax credits, such as the federal low-income
housing and historic rehabilitation credits, have proven effective in
stimulating redevelopment.[Footnote 22] The U.S. Conference of Mayors
and other organizations with brownfield expertise told us that a
federal tax credit has tremendous potential to foster new brownfield
redevelopment. Furthermore, a brownfield redeveloper in Minnesota
suggested that a federal tax credit would be most effective if the
credit were directed to brownfield projects with more complex
contamination, liability, or cleanup issues that would be less likely
to be redeveloped without federal aid. Nevertheless, while stating that
a credit could be beneficial, three stakeholders voiced concern about a
tax credit's impact on federal revenue. EPA's Brownfields Program
Director was also generally supportive of a federal brownfield tax
credit, noting that a tax credit could be an incentive to new
brownfield redevelopment. However, this official emphasized that a tax
credit is separate from EPA's Brownfields Program and would not fall
under EPA's jurisdiction. We did not analyze the costs and benefits of
such a tax credit or any other potential incentives.
Conclusions:
EPA's Brownfields Program has supported efforts to identify, assess,
and clean up contamination on brownfield properties in communities
across the country. While this support is small relative to the number
of brownfields and the investment often required to fully clean up
contamination and redevelop properties, EPA's program has, in
particular, helped communities address less desirable sites that might
not be developed if left to the private real estate market. Although
EPA's contribution to brownfield revitalization is generally
acknowledged, the agency has not fully measured or reported to the
Congress on the extent of this contribution--information that is needed
to improve congressional decision making and oversight of the program.
While EPA has reported on some achievements of the program, further
action is needed to ensure that the Congress has sufficient information
on the results of the program to monitor and oversee all aspects of the
program, including efforts to assist state and tribal voluntary cleanup
programs, and on the program's impacts on environmental risks. EPA has
initiated efforts to obtain additional data, but the agency must ensure
that these efforts address the program's central activities and that,
once collected, it uses these data to inform the Congress of program
results.
While stakeholders we contacted praised EPA's program, they identified
a number of limitations that, if addressed, could improve the program.
First, many stakeholders stated that the Brownfields Act imposes
certain limitations on the program by restricting the number of
potential recipients who qualify for EPA brownfield grants. While
changing the provision of the act that prevents pre-January 2002
purchasers of brownfield properties from qualifying for EPA grant funds
would expand the number of eligible applicants, a careful review of the
implications of such a change would be warranted as part of any
consideration of legislative amendments. Second, stakeholders
identified the underutilization of the revolving loan fund component of
the program as a concern that despite changes brought about by the
Brownfields Act, continues to restrict access to these funds. Some of
these barriers may be addressed by directing revolving loan funds to
government and nonprofit entities that have demonstrated the ability to
manage and administer a fund. Similarly, pooling these funds so that
recipients can make more cleanup loans may make better use of this
resource by leveraging the up-front administrative investment required
to set up a fund.
Recommendations for Executive Action:
To enhance federal efforts to clean up and redevelop brownfield
properties, EPA should consider stakeholder suggestions for improving
and complementing the agency's activities as it weighs potential
changes to the program. Specifically, we recommend that the
Administrator of EPA take the following four actions:
* continue the agency's efforts to develop additional measures to gauge
the achievements of the Brownfields Program, especially those
addressing the program's environmental and state voluntary cleanup
aspects, and to incorporate this information into annual performance
measures that are reported to the Congress;
* weigh the merits of revising the Brownfields Act to eliminate the
provision that prevents pre-January 2002 purchasers of brownfield
properties from qualifying for EPA grant funds, and, if the agency
determines that such a change would benefit the Brownfields Program
without any significant detrimental effects, develop a legislative
proposal to amend the act to incorporate this revision;
* closely monitor the brownfield revolving loan fund grants to
determine why they have been underutilized and what, if any, changes
are needed to facilitate or encourage grant recipients' use of these
funds; and:
* determine the advantages and disadvantages of giving priority to
coalitions or other entities with proven revolving loan fund
administrative expertise when awarding grants and, if found to be
beneficial, adopt this as a key criterion for selecting grant
recipients.
Agency Comments and Our Evaluation:
We provided EPA with a draft of this report for its review and comment.
EPA agreed with the findings and recommendations in the report and
provided information on the agency's plans and activities to address
them. With regard to our recommendation that EPA continue its efforts
to develop additional measures to gauge the achievements of the
Brownfields Program, EPA stated that the agency will continue to
collect and evaluate environmental data received from brownfield grant
recipients in developing an environmental measure. EPA further said
that it continues to work closely with the states through a work group
to develop measures for the state response programs and hopes to
develop baseline information over the next several years to better
enable them to establish stronger environmental indicators. In
addition, regarding our recommendation that EPA weigh the merits of
revising the Brownfields Act to eliminate the provision that prevents
pre-January 2002 purchasers of brownfield properties from qualifying
for EPA grant funds, EPA agreed that the agency should weigh the
potential benefits to the Brownfields Program and any potential
detrimental effects in considering whether to develop a legislative
proposal to amend the act. It also acknowledged that the Congress has
provided, and EPA has supported, expanded eligibility for pre-January
2002 purchasers of brownfield properties as part of the annual
appropriations process. With regard to our recommendation to closely
monitor the brownfield revolving loan fund grants to determine why they
have been underutilized and what, if any, changes are needed to
facilitate or encourage grant recipients' use of these funds, EPA
stated that it will continue to monitor these grants. Finally,
regarding our recommendation that EPA determine the advantages and
disadvantages of giving priority to coalitions or other entities with
proven revolving loan fund administrative expertise when awarding
grants, and, if found to be beneficial, adopt this as a key criterion
for selecting grant recipients, EPA stated that the agency has (1)
adjusted the ranking criteria for revolving loan fund grant recipients,
giving more weight to ranking factors that demonstrate an applicant's
ability to manage a revolving loan fund and make loans, and (2) has
strengthened its evaluation of recipients' proposed business plans. If
coalitions have a strong business plan, according to EPA, they are
likely to rank more highly on this criterion. Furthermore, according to
EPA, the agency also has changed the application evaluation process to
require EPA regions to provide an advisory ranking score on "the
ability to manage grants" criterion, to include the applicant's past
performance, if any, as an indicator of potential future success. In
addition, EPA said that it may award supplementary funds to successful
grant recipients that have already made loans, thus providing
additional incentives to grant recipients with demonstrated
performance. EPA's successful completion of these ongoing and planned
activities would effectively address the concerns we raised in this
report. EPA also provided a number of technical comments, which we have
incorporated into the report where appropriate. The full text of EPA's
comments is included in appendix III.
As agreed with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies to interested
congressional committees, the EPA Administrator, and various other
federal departments and agencies. We will also make copies available to
others upon request. In addition, the report will be available at no
charge on GAO's Web site at [Hyperlink, http://www.gao.gov]. If you
have any questions about this report, please contact me at (202)
512-3841. Key contributors to this report are listed in appendix IV.
Signed by:
John B. Stephenson:
Director, Natural Resources and Environment:
[End of section]
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
The objectives of this review were to (1) obtain stakeholders' views on
the extent to which the Environmental Protection Agency's (EPA)
Brownfields Program has contributed to the cleanup and redevelopment of
brownfields, (2) determine whether the measures EPA uses to gauge the
performance of its brownfield activities provide sufficient information
to identify program accomplishments, and (3) obtain stakeholders' views
on potential options for improving or complementing EPA's program.
Additionally, we identified other federal agencies that support
brownfield cleanup and redevelopment and described their activities and
funding levels.
To obtain stakeholders' views on EPA's contribution to the cleanup and
redevelopment of brownfields and potential options for improving or
complementing EPA's Brownfields Program, we met with the Director of
EPA's Office of Brownfields Cleanup and Redevelopment and other
officials within that and other EPA headquarters offices and with EPA
Region VI officials in Dallas, Texas. In addition, we visited eight
entities that received site assessment, revolving loan, or job training
grants located in four states--Colorado, Florida, Minnesota, and
Washington State--to discuss their brownfield redevelopment
activities, their views on EPA's contribution, and potential options to
improve federal brownfield efforts. We selected a nonprobability sample
of eight grant recipients by identifying one recipient of a grant with
high activity (as determined by the number of sites assessed, the
number of loans made, and loan size) and one with low activity in each
state. On the basis of these paired criteria and an effort to select
sites from a geographically diverse range of states, we chose four
recipients of site assessment grants and four recipients of revolving
loan grants--two of which also received job training grants. We also
reviewed documents related to these recipients' grants and visited
brownfield redevelopment sites.
In addition, we obtained the views of other local brownfield
stakeholders who were identified by these grant recipients, such as
real estate developers, property owners, attorneys, nonprofit
organizations, and officials from other state and local government
agencies (some of which have received EPA brownfield grants), involved
in brownfield activities. We also identified and obtained the views of
several industry groups and associations representing state and local
governments with brownfield expertise. We also spoke with state
environmental officials about their voluntary cleanup programs in the
four states we visited and an additional six randomly selected states:
Alabama, Alaska, Kentucky, Virginia, West Virginia, and Wyoming.
In an effort to obtain consistent information from the nonprobability
sample of grant recipients, local brownfield stakeholders, industry
groups and associations, and state environmental officials we
contacted, we followed a standard set of questions for each of the
groups. Some groups did not respond to every question because they were
not as knowledgeable about some aspects of EPA's Brownfields Program or
some of the brownfield issues we inquired about, while others offered
more than one response. We did not determine the extent to which
stakeholders agreed or disagreed with any particular response offered
by other stakeholders. While we did not identify a sample of EPA
brownfield grant recipients that would allow us to generalize our
findings to the total population of grant recipients, the selection of
recipients with high-and low-grant activity, in conjunction with the
large, diverse groups we contacted, enabled us to obtain a wide range
of views on EPA's program and brownfield issues.
The stakeholders we contacted are included in table 2.
Table 2: Stakeholders Contacted to Obtain Views on the Contribution of
EPA's Program and Options for Improving or Complementing the Program:
Stakeholder category: Nonprobability sample of EPA's brownfields grant
recipients;
Stakeholder contacted: Colorado Department of Public Health and
Environment;
Westminster, CO;
Hillsborough County, FL;
South Florida Regional Planning Council;
Hennepin County, MN;
Virginia, MN;
Seattle/King County, WA;
State of Washington Department of Community, Trade, and Economic
Development.
Stakeholder category: Private and nonprofit real estate development
entities;
Stakeholder contacted: Developer, Denver, CO;
Developer, Hollywood, FL;
Developer representative, Miami, FL;
Developer, Tampa FL;
Developer group interview, Tampa, FL (eight participants);
Housing Trust Group of Florida;
Developer, Minneapolis, MN;
Developer, Minneapolis, MN;
Developer group interview, Tacoma, WA (four participants);
SouthEast Effective Development, WA.
Stakeholder category: State voluntary cleanup programs;
Stakeholder contacted: Alabama;
Alaska;
Colorado;
Florida;
Kentucky;
Minnesota;
Virginia;
Washington;
West Virginia;
Wyoming.
Stakeholder category: Other state/local governments/agencies;
Stakeholder contacted: City of Englewood, CO;
Colorado Housing and Finance Authority;
Florida Department of Environmental Protection, Southeast District,
West Palm Beach, FL;
Palm Beach County, FL;
Minnesota Department of Employment and Economic Development;
St. Paul Port Authority, MN;
City of Seattle, WA;
City of Tacoma, WA.
Stakeholder category: Other organizations and individuals;
Stakeholder contacted: Association of State and Territorial Solid Waste
Management Officials;
Center for Public Environmental Oversight;
Colorado Brownfields Foundation;
Environmental Coalition of South Seattle;
Independent researcher, Pittsburg, PA;
International City/County Management Association;
Minnesota Environmental Initiative and Twin Cities Metropolitan
Council;
National Association of Local Government Environmental Professionals;
National Brownfield Association;
Northeast-Midwest Institute;
U.S. Conference of Mayors.
Source: GAO.
[End of table]
To determine whether the measures EPA uses to gauge the performance of
its brownfield activities provide sufficient information to identify
program accomplishments, we contacted the Director of EPA's Office of
Brownfields Cleanup and Redevelopment and other officials within that
and other EPA headquarters offices, including the Office of Planning,
Analysis, and Accountability and the Office of Solid Waste and
Emergency Response. We reviewed EPA's fiscal years 2003 to 2008
Strategic Plan, as well as the agency's fiscal years 2003, 2004, and
2005 annual performance reports. Additionally, we reviewed EPA
Inspector General reports related to the Brownfields Program, as well
as the Office of Management and Budget's February 2004 Program
Assessment and Rating Tool review of the program.
To identify federal agencies, other than EPA, that support brownfield
cleanup and redevelopment and describe their activities and funding
levels, we (1) reviewed the November 2002 and September 2004
Brownfields Federal Partnership Action Agendas, (2) interviewed
officials in the Office of Brownfields Cleanup and Redevelopment, and
(3) collected and analyzed funding information from 9 federal agencies
that participate in the partnership and that EPA identified as the
agencies providing or likely to provide the largest amount of funding
to brownfield-related activities. These agencies included the
Departments of Energy, Housing and Urban Development, Justice, and
Transportation; the National Institute of Environmental Health Sciences
within the Department of Health and Human Services; the Department of
Commerce's Economic Development and National Oceanic and Atmospheric
Administrations; the General Services Administration; and the Army
Corps of Engineers. We asked these agencies to describe their
brownfield-related activities and provide information on their
historical funding for these activities. Of the 9 federal agencies, 3
did not provide financial information. Two of these 3 agencies--the
Departments of Justice and Transportation--reported that, although they
support brownfield redevelopment, they could not provide information on
the amount of funding provided to brownfield-related activities because
the information is not tracked separately and cannot be easily
identified. While the General Services Administration works with state
and local planners and others to effectively match underutilized
federal property holdings with local revitalization objectives, the
agency reported that it did not provide financial support to
brownfields.
We also reviewed data from EPA's brownfield database and found them to
be sufficiently reliable for use in this report. In particular, we
interviewed agency officials on data collection and reporting
protocols, reviewed user manuals for the database, conducted basic
electronic checks of the data, and corroborated limited entries in the
database with information obtained from grant recipients during site
visits.
We conducted our review between October 2003 and November 2004 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Summary Information on Other Federal Agencies' Activities
and Funding in Support of Brownfield Redevelopment:
Although EPA has the lead federal role in brownfield redevelopment, a
number of other federal agencies also have programs that either
directly address brownfield issues or provide funds and services that
could be used to support brownfield redevelopment efforts. In May 1997,
the Clinton Administration announced the Brownfields National
Partnership Action Agenda, a 2-year initiative to bring federal, state,
and local agencies together to clean up and redevelop brownfields.
Under this initiative, more than 20 federal agencies were to better
coordinate their brownfield resources and activities--specifically
carrying out more than 100 action items involving brownfields that
would result in specific economic outcomes: that is, additional private
investment in brownfields, new jobs, and the protection of thousands of
acres of greenspace. In 2002, 23 agencies renewed their commitment to
coordinating brownfield efforts with an updated Brownfields Federal
Partnership Action Agenda--outlining commitments, new initiatives,
events, and activities that each agency would undertake to help
communities address brownfields and associated problems. Through the
Action Agenda, federal agencies jointly committed to actions such as
making funding and technical assistance to brownfield communities a
budget priority, changing agency policies to facilitate brownfield
redevelopment, and sharing program information by linking their Web
sites. Most of these agencies do not have separate programs
specifically dedicated to brownfield redevelopment, but they provide
some form of assistance for brownfield properties as part of a broader
program.
Of the 23 federal agencies--other than EPA--that participate in the
Brownfields Partnership, 9 have been particularly active in supporting
brownfield-related activities, according to an EPA official. These
agencies include, the Departments of Energy, Housing and Urban
Development, Justice, and Transportation; the National Institute of
Environmental Health Sciences within the Department of Health and Human
Services; the Department of Commerce's Economic Development and
National Oceanic and Atmospheric Administrations; the General Services
Administration; and the Army Corps of Engineers within the Department
of Defense. Most of these agencies do not have separate programs
specifically dedicated to brownfield redevelopment, but they provide
some form of assistance that benefited brownfield properties as part of
a broader program. Of the 9 agencies, 5 reported about $260 million in
funds obligated to brownfields from fiscal years 2001 through 2003.
[Footnote 23] The Department of Housing and Urban Development and the
Economic Development Administration within the Department of Commerce
were responsible for almost all of the funding provided during this
period--about $250 million or 96 percent of the total funds obligated--
with each agency contributing about $125 million. The Department of
Energy, the Department of Health and Human Services, and the National
Oceanic and Atmospheric Administration provided the remaining support
of about $10 million (see fig. 1).
Figure 1: Funding for Brownfield-Related Activities Reported by 5
Federal Agencies:
[See PDF for image]
[End of figure]
Table 3 includes a summary of these 9 agency's brownfield-related
activities and funding for fiscal years 2001 through 2003.
Table 3: Nine Federal Agencies' Activities and Funding in Support of
Brownfield Redevelopment, Fiscal Years 2001 Through 2003:
Agency: Army Corps of Engineers;
Brownfield-related support activities/funding[A]:
Activities: In addition to providing engineering support to the
military, the Army Corps of Engineers provides engineering services
such as planning, design, and construction management on a reimbursable
basis to non-Department of Defense federal agencies. For example, the
Corps may provide engineering services related to remediation of
hazardous waste sites, environmental restoration, and infrastructure
renewal in support of the brownfield activities of non- Department of
Defense federal agencies. Although the Corps can provide reimbursable
support to state, local, and tribal governments for brownfield-related
activities, among other things, this support is limited to only those
engineering services for which the Corps is uniquely equipped. Given
current budget constraints and the backlog of Corps Civil Work
projects, only occasionally are there new opportunities to coordinate
the Corps' projects with community brownfield projects.
Funding:
Fiscal years 2001 through 2003 - the Corps carried out about $1.8
million in brownfield-related activities for various federal agencies
on a reimbursable basis.
Agency: Department of Commerce - Economic Development Administration;
Brownfield-related support activities/funding[A]:
Activities:
The mission of the Commerce Department's Economic Development
Administration (EDA) is to lead the federal economic agenda by
promoting innovation and competitiveness. EDA investments, including
those in support of brownfield redevelopment, are intended to create
wealth and minimize poverty by promoting a business environment that is
favorable for attracting private capital investment and creating higher
skill, higher wage jobs. EDA provides grants to state and local
governments, educational institutions, nonprofit organizations, and
others for brownfield-related activities primarily under two programs:
The Public Works and Economic Development Facilities Program provides
grants to help construct or rehabilitate essential public
infrastructure and develop facilities needed to generate higher skill,
higher wage jobs and attract private investment. For example, the
program provides grants for investments in industrial and business
parks, port facilities, and rail sidings, as well as for redevelopment
of brownfields.
The Economic Adjustment Program provides grants to assist state and
local entities to design and implement strategies to adjust or bring
about change to their economies. Funded activities may include the
creation of business development and financing programs, such as
revolving loan funds and market or industry research and analysis.
Funding (in millions, by fiscal year):
2001: $53.3;
2002: $42.5;
2003: $29.1;
Total: $124.9.
Agency: Department of Commerce - National Oceanic and Atmospheric
Administration;
Brownfield-related support activities/funding[A]:
Activities:
The National Oceanic and Atmospheric Administration (NOAA) assists in
conserving and managing the nation's coastal and marine resources.
NOAA's brownfield-related activities focus on the redevelopment of
coastal brownfield properties and the protection and restoration of
coastal resources. These activities are primarily carried out by NOAA's
Office of Response and Restoration and Office of Ocean and Coastal
Resource Management. NOAA is leading a "Portfields" project to help
coastal communities address contamination, restoration, and economic
redevelopment issues related to port development, dredging, and
"brownfields" redevelopment. The agency provides technical assistance,
training, and support to states and communities to strengthen local and
regional capabilities to restore or redevelop contaminated sites. It
also provides funding to coastal states for brownfield redevelopment as
part of waterfront revitalization efforts.
Funding (by fiscal year): [B];
2001: $460,000;
2002: $510,000;
2003: $660,000;
Total -$1.6 million.
Agency: Department of Energy;
Brownfield-related support activities/funding[A]:
Activities: The Department of Energy supports brownfield-related
activities by providing technical assistance relating to energy use and
environmental remediation, sharing lessons learned about cleanup and
long-term stewardship efforts, and funding- related research and
development.
Funding (by fiscal year): [C];
2001: $130,000;
2002: $[D];
2003: $50,000;
Total: $180,000.
Agency: Department of Health and Human Services - National Institute of
Environmental Health Sciences;
Brownfield-related support activities/funding[A]:
Activities: The National Institute of Environmental Health Sciences'
Brownfields Minority Worker Training Program awards cooperative
agreements to nonprofit organizations that provide health and safety
training to minority residents in brownfield communities. The program
tests strategies to educate new workers in life skills training,
mentoring, remedial science and math, and specific health and safety
training that will help them enter careers in the construction and
environmental remediation and technology workforce. For example,
participants receive training in the handling and removal of hazardous
substances. EPA provides the needed funding.
Funding (in millions, by fiscal year):
2001: $3.0;
2002: $3.0;
2003: $2.2;
Total: $8.2.
Agency: Department of Housing and Urban Development;
Brownfield-related support activities/funding[A]:
Activities:
The Department of Housing and Urban Development (HUD) provides grant
funds and economic development loan guarantees to communities to
redevelop brownfields, primarily through three programs: the Community
Development Block Grant (CDBG) Program, the Section 108 Loan Guarantee
Program, and the Brownfields Economic Development Initiative (BEDI).
HUD encourages brownfield economic development projects that propose
the redevelopment of a brownfield site through new investments by
identified private sector parties and that will directly result in new
business or job creation, increases in the local tax base, or other
near-term measurable economic benefits.
* CDBG program funds are provided directly to larger communities and,
indirectly through state programs, to smaller communities. The funds
are distributed on the basis of formulas that combine several measures
of community needs, such as population, extent of poverty, or age of
the housing stock. To be eligible for funding, all activities or
projects must meet at least one of the program's designated national
objectives: benefit low-and moderate-income persons, prevent or
eliminate slums or blight, or address particularly urgent community
development needs caused by conditions that pose a serious and
immediate threat to the community's health or welfare. Funding can be
used for a wide range of activities directed toward neighborhood
revitalization, economic development, and improved community facilities
and services. For example, activities approved for CDBG funds include
acquiring real property; clearing, demolishing, and rehabilitating
residential and nonresidential structures; and providing public
facilities and improvements such as water and sewer facilities;
* HUD's Section 108 Loan Guarantee Program helps provide communities
with a source of financing for economic development, housing
rehabilitation, public facilities, and large- scale physical
development projects. Eligibility requirements for authorized
activities are the same as those of the CDBG Program. Under the Section
108 Program, HUD guarantees notes or other obligations issued by the
borrower or its public agency designee. Borrowers are required to
pledge current and future CDBG funds as security for the loan and also
to secure the loan with other collateral;
* BEDI emphasizes the redevelopment of brownfield properties by
providing competitive grants for local governments for economic
development projects involving contaminated or potentially contaminated
land or buildings. The grants are designed to enhance the security of
loans guaranteed under the Section 108 Program, and all BEDI grants
must be used in conjunction with a new Section 108-guaranteed loan
commitment.
Additionally, HUD manages other economic development, housing, and
technical assistance programs to assist communities with brownfield
revitalization, including the Renewal Community/Empowerment Zone/
Enterprise Community Initiative, the Rural Housing and Economic
Development Program, the Home Investment Partnership Program, and the
department's University and College programs.
Funding (in millions, by fiscal year): [E];
2001: $36.1;
2002: $43.1;
2003: $46.3;
Total: $125.5.
Agency: Department of Justice;
Brownfield-related support activities/funding[A]:
Activities: The Department of Justice supports brownfield-related
activities through its Weed and Seed Program. This program uses a
multidisciplinary approach to combating violent crime, drug use, and
gang activity in high-crime neighborhoods. The goal of the program is
to "weed out" violence and drug activity and "seed" the sites with a
wide range of crime and drug prevention programs, human service
resources, and neighborhood restoration activities to prevent crime
from reoccurring. Up to $50,000 is available for each brownfield-
related restoration activity--such as the cleanup of methamphetamine
labs--at weed and seed sites.
Funding:
The Department of Justice reported that the agency could not provide
data on the amount of funding provided to brownfield-related
activities. Because these activities are a component of broader agency
programs, funding for these activities is not tracked separately and
cannot be easily identified, according to the agency.
Agency: Department of Transportation;
Brownfield-related support activities/funding[A]:
Activities:
The Department of Transportation's goals include, among others,
providing policy leadership and financial assistance to improve
transportation and foster economic growth while ensuring safety and
security and protecting the environment. Although the department does
not have a brownfields program, it encourages the transportation
community to consider community brownfield redevelopment in
transportation planning. Almost all of the department's funds for
highways and most transit funds are distributed on a formula basis to
state and local transportation agencies, which set priorities for
highway and transit projects through state and regional transportation
planning processes.
Funding:
The Department of Transportation reported that the agency could not
provide data on the amount of funding provided to brownfield- related
activities. Because these activities are a component of broader agency
programs, funding for these activities is not tracked separately and
cannot be easily identified, according to the department.
Agency: General Services Administration;
Brownfield-related support activities/funding[A]:
Activities:
The General Services Administration (GSA) partners with communities to
ensure that underutilized federal properties are included in urban
redevelopment. Through its Brownfields Redevelopment Initiative, GSA
identifies underutilized federal properties with varying degrees of
contamination and helps put them back into productive use. GSA works
with state and local planners, economic development officials, and
community groups to include underutilized federal property holdings in
local revitalizations objectives. Through an exchange of information,
communities become aware of the location of federal holdings within
their localities and have a better understanding of the process
involved in acquiring underutilized federal property. In turn, GSA,
guided by local objectives, is able to focus and prioritize the
disposal of underutilized federal property.
Funding:
GSA reported that, while it works with state and local planners and
others to integrate underutilized federal property into local
revitalization objectives, it does not provide financial support to
brownfield redevelopment efforts.
Source: GAO analysis of information from individual agencies.
[A] Unless otherwise noted, funding information relates to amounts
obligated.
[B] Includes staff support for Portfields Initiative.
[C] Expended amounts.
[D] Agency did not report funding for fiscal year 2002.
[E] Includes total amounts obligated for BEDI grants and total amounts
expended for CDBG for asbestos removal, cleanup of contaminated sites,
and lead-based paint and lead hazard test and abatement. Totals do not
include $225.7 million in loan guarantees for BEDI projects and $1.6
billion CDBG funds for activities that may have been--but were not
necessarily--conducted at brownfield sites, including property
acquisition, clearance and demolition, and rehabilitation;
infrastructure development; construction of parking facilities and
flood and drainage facilities; and water/sewer and street improvements.
[End of table]
[End of section]
Appendix III: Comments from the Environmental Protection Agency:
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY:
WASHINGTON, D.C. 20460:
OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE:
November 9, 2004:
Mr. John Stephenson, Director:
Natural Resources and Environment:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Stephenson:
EPA appreciates the opportunity to provide comments on the draft GAO
Report, "Stakeholders Report that EPA's Program Helps to Redevelop
Sites, But Additional Measures Could Complement Agency Efforts" (GAO-
05-94). EPA is in overall agreement with the findings, conclusions, and
recommendations of your report. The following responses to the report's
four Recommendations for Executive Action elaborate on EPA's activities
and possible future activities to address your recommendations.
1) GAO Recommendation: Continue the agency's efforts to develop
additional measures to gauge the achievements of the Brownfields
Program, especially ones addressing the programs' environmental and
state voluntary cleanup aspects, and to incorporate this information
into annual performance measures that are reported to the Congress.
EPA Response: EPA will continue to collect and evaluate environmental
data received from brownfields grantees in developing environmental
measures. EPA continues to work closely with the states as co-
regulators through a workgroup with them to develop measures for the
state response programs. EPA hopes to develop baseline information from
the information collected from property and grant profiles over the
next several years to better enable the Agency to establish stronger
environmental indicators.
2) GAO Recommendation: Weigh the merits of revising the Brownfields Act
to eliminate the provision that prevents pre-January 2002 purchasers of
brownfields properties from qualifying for EPA grant funds and, if the
agency determines that such a change would benefit the brownfields
program without any significant detrimental effects, develop a
legislative proposal to amend the act to incorporate this revision.
EPA Response: Congress has provided, and EPA has supported in the
President's FY05 Budget Request, expanded eligibility for pre-January
2002 purchasers of brownfields properties, as part of the annual
appropriations process. EPA agrees we should weigh the potential
benefits to the Brownfields program and any potential detrimental
effects in considering whether to develop a legislative proposal to
amend the act to eliminate the pre-January 2002 purchaser provision.
3) GAO Recommendation: Closely monitor the brownfields revolving loan
fund grants to determine why they have been underutilized and what, if
any, changes are needed to facilitate or encourage grant recipients'
use of these funds.
EPA Response: EPA continues to monitor the brownfields revolving loan
fund (RLF) grants. In recent years EPA has awarded fewer RLF grants,
selecting only the strongest RLF applicants, as recommended by GAO in
previous studies. EPA has adjusted the ranking criteria for RLF
grantees, giving more weight to ranking factors which demonstrate an
applicant's ability to manage an RLF. EPA officials provided a report
to Congress in September 2004 with updated RLF information, including
the fact that 30 RLF grants have been deobligated or will be by the end
of calendar year 2004, and 44 RLF grants have transitioned to the new
grants program under the Brownfields Act (SBLBRA) or plan to be by the
end of calendar year 2004.
4) GAO Recommendation: Determine the advantages and disadvantages of
giving priority to coalitions or other entities with proven revolving
loan fund administrative expertise when awarding grants, and if found
to be beneficial, adopt this as a key criterion for selecting grant
recipients.
EPA Response: EPA has adjusted the ranking criteria for RLF grantees,
giving more weight to ranking factors which demonstrate an applicant's
ability to manage an RLF and make loans, and strengthened evaluation of
proposed business plans. If coalitions have a strong business plan,
they are likely to rank more highly on this criterion. We also have
changed the application evaluation process in FY 2005 to require the
home region to provide an advisory ranking score on "the ability to
manage grants" criterion. We hope this will inform the national panel
as to the Region's evaluation of the applicant's past performance, if
any, as an indicator of potential future success. In addition, EPA may
award supplementary funds to successful RLF grantees who have already
made loans, thus providing additional incentives to RLF grant
recipients with demonstrated performance.
In addition to the responses to the report's recommendations provided
above, EPA has provided, under separate correspondence, specific
technical comments and suggestions on the report to ensure accuracy of
data. Please contact Linda Garczynski, Director of the Office of
Brownfields Cleanup and Redevelopment on 202-566-2731 should you have
questions or concerns about EPA's response or technical comments and
suggestions.
Sincerely yours,
Signed by:
Thomas P. Dunne:
Acting Assistant Administrator:
[End of section]
Appendix IV: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
John B. Stephenson (202) 512-3841;
Thomas Melito (202) 512-9601;
Vincent P. Price (202) 512-6529:
Staff Acknowledgments:
In addition to the individuals named above, Teresa Dee, Kirk Menard,
Joanna Owusu, and Cristina Ramirez made key contributions to this
report. Important contributions were also made by William Bates, Mark
Braza, Elizabeth Curda, John Delicath, Richard Johnson, and Judy
Pagano.
(360407):
FOOTNOTES
[1] EPA's site assessment grants provide funding for a grant recipient
to inventory, characterize, assess, and conduct planning and community
involvement related to brownfield sites. EPA also awards brownfield job
training grants to provide environmental training for residents of
brownfield communities. EPA's revolving loan fund grants provide
funding for recipients to make no-or low-interest loans or subgrants
for brownfield cleanup. EPA also awards cleanup grants that provide
direct funding for a recipient to address contamination at brownfield
sites.
[2] Nonprofit organizations are also eligible to apply for cleanup
grants and revolving loan fund subgrants to clean up sites that the
nonprofit owns.
[3] For purposes of this report, we refer to the various federal
departments, agencies, commissions, and other entities that undertake
brownfield-related activities as "agencies."
[4] The 10 states we contacted included Alabama, Alaska, Colorado,
Florida, Kentucky, Minnesota, Virginia, Washington, West Virginia, and
Wyoming.
[5] The Intergovernmental Personnel Act (IPA) provides for the
temporary assignment of personnel between the federal government and
state and local governments, institutions of higher education, and
other organizations. EPA's IPA program objectives include increasing
the nation's environmental expertise, acquiring hard-to-find
expertise, and providing a training ground for both EPA and nonfederal
employees to gain experience at another level of government.
[6] In August 2004, EPA proposed a rule that would establish specific
requirements and standards for conducting all appropriate inquiries
into the previous ownership, uses, and environmental conditions of a
property for the purposes of qualifying for CERCLA liability
protection.
[7] EPA guidance limits the portion of funds that can be used as
subgrants to 40 percent of the original grant amount.
[8] Indian tribes also established programs to oversee assessment and
cleanup activities.
[9] These stakeholders included a nonprobability sample of eight EPA
brownfield grant recipients, as well as (1) real estate developers,
property owners, attorneys, and nonprofit organizations that the grant
recipients identified and (2) several industry groups and associations
representing state and local governments with brownfield expertise that
we identified. Some stakeholders did not offer a response to our open-
ended questions on various issues, while others offered more than one
response. We did not determine the extent to which stakeholders agreed
or disagreed with any particular response offered by other
stakeholders.
[10] EPA, Office of Inspector General, Observations on EPA's Plans for
Implementing Brownfields Performance Measures, 2002-M-00016
(Washington, D.C.: May 24, 2002) and Substantial Progress Made, But
Further Actions Needed in Implementing Brownfields Program, 2004-P-00-
20 (Washington, D.C.: June 21, 2004).
[11] GAO, Grants Management: EPA Continues to Have Problems Linking
Grants to Environmental Results, GAO-04-983T (Washington, D.C.: July
20, 2004).
[12] Association of State and Territorial Solid Waste Management
Officials, State Response Programs: Measuring Success (Spring 2004).
[13] OMB developed a Program Assessment and Rating Program for federal
agencies in 2002 to improve program performance and better link
performance to budget decisions.
[14] OMB also directed EPA to modify its currently reported measures to
provide more accurate information about the program's impact. EPA
agreed to qualify two of its performance measures--jobs generated and
cleanup and development funds leveraged--by indicating that the EPA
investment "enabled" the outcome. OMB believed that this addition (1)
recognized that other entities were involved in the creation of jobs
and the leveraging of funds on brownfield projects and (2) impacted
these measures.
[15] These stakeholders included representatives of eight land
developers and other private companies and four organizations with
brownfield expertise.
[16] The act states that responsible parties are not eligible for
brownfield grants. The current owner of a contaminated property is
generally considered to be a responsible party. However, persons who
purchased property after January 11, 2002, may be considered bona fide
prospective purchasers, who are not generally responsible parties.
[17] According to EPA officials, an additional 10 revolving fund loans
may be signed before December 2004.
[18] EPA officials stated that informally collected information
collected as of November 1, 2004, suggests that cleanups have been
completed at 37 brownfield sites, are ongoing at 19 others, and 3 more
are about to get under way. They explained that since EPA brownfield
funds generally represent only a portion of ongoing cleanup activities,
recipients may delay reporting progress until such time as all site
cleanup activities are completed.
[19] EPA guidance allows up to 40 percent of revolving loan fund grant
dollars to be distributed as subgrants to provide direct assistance for
brownfield cleanups.
[20] Prior to 2002, EPA-funded brownfield cleanups were subject to the
National Contingency Plan (NCP)--CERCLA regulations that provide EPA's
blueprint of how to respond to hazardous substance releases. Applicable
NCP requirements included conducting an environmental engineering
evaluation and cost analysis, developing an environmental sampling and
analysis plan that must be reviewed and approved by EPA, publishing a
public notice of the proposed cleanup activity and providing a public
comment period, and preparing a formal community relations plan. Under
the 2002 Brownfields Act, an NCP provision applies to EPA-funded
brownfield cleanup only if EPA determines that the provision is
relevant and appropriate to the Brownfields Program. While EPA regions
will determine the terms and conditions applicable to each grant, EPA
expects that grant recipients will receive increased flexibility as a
result of the new provision.
[21] In addition to management capabilities, EPA evaluates (1) the
grant proposal budget; (2) the community's need for brownfield
redevelopment; (3) the process that the grant recipient will use to
select brownfield projects for loans or subgrants; (4) the target
market (types of borrowers or subgrant recipients) and a business plan
addressing the loan structure and factors that will be considered in
awarding subgrants; (5) the sustainable reuse of brownfield projects
receiving loans or subgrants; (6) the extent to which the revolving
loan fund grant would facilitate the creation or preservation of a
park, greenway, undeveloped property, recreational property, or other
public use development; (7) community involvement activities; (8) the
reduction of threats to human health and the environment; and (9) the
leveraging of additional resources from the applicant and all other
federal, state, nonprofit, or private funding resources. According to
EPA officials, the grant proposal budget, target market and business
plan, and the leveraging additional resources criterion also provide an
assessment of applicants' ability to manage the grant.
[22] The federal low-income housing tax credit provides an owner of
newly constructed or renovated rental housing who sets aside a
specified percentage of units for low-income persons for a minimum of
15 years with a tax credit over a 10-year period. The federal historic
rehabilitation tax credit provides the owner of a certified historic
structure with a tax credit equal to 20 percent of the amount of
qualified rehabilitation expenditures.
[23] Of the 9 federal agencies, 3 did not provide financial
information. Two of these 3 agencies--the Departments of Justice and
Transportation--reported that, although they support brownfield
redevelopment, they could not provide information on the amount of
funding provided to brownfield-related activities because the
information is not tracked separately and cannot be easily identified.
While the General Services Administration works with state and local
planners and others to effectively match underutilized federal property
holdings with local revitalization objectives, the agency reported that
it did not provide financial support to brownfields.
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