In Ohio, the primary brownfield cleanup program is known as the Voluntary Action Program (VAP).  Volunteers can cleanup their site to commercial/industrial or residential standards.  Upon completing the cleanup the volunteer can receive a legal release from the State of Ohio (called a "Covenant-Not-to-Sue" or CNS).

The CNS under the VAP does not include a release of liability from U.S. EPA.  In order to attempt to provide an option for volunteers who desired some protection from U.S. EPA enforcement, Ohio created the VAP Memorandum of Agreement (MOA) track.

I have had a few clients in the last couple months ask about the differences between the "Classic VAP" and the VAP MOA.  The main reason they ask is because they are interested in the heightened liability protection that is available under the VAP MOA process.  However, is the extra cost and longer time frames worth it?

"Classic" VAP

Under "Classic" VAP, the volunteer hires an environmental consultant who is recognized by Ohio EPA as a "certified professional" ("CP") under the VAP.  The CP performs the investigatory and cleanup work at the site to VAP regulatory standards.  Once the cleanup is complete, the CP prepares a "No Further Action Letter" (NFA) certifying that the property meets VAP standards.  

The volunteer then decides if they want the CP to submit the NFA to Ohio EPA for review.  If the NFA is submitted to Ohio EPA and the Agency concurs the property meets VAP regulatory standards, then the Agency issues a "Covenant Not to Sue" (CNS).  This is a formal legal release of liability from Ohio EPA.

As outlined above, the VAP process is a private cleanup.  There is no public involvement and no records are public until they are submitted to Ohio EPA for review.  

VAP MOA Track

MOA means Memorandum of Agreement.  The agreement is between U.S. EPA and Ohio EPA. (A copy is available here)  Under the agreement if a volunteer agrees to follow additional steps than necessary under the Classic VAP, it can receive "comfort" from the U.S. EPA that it won’t pursue additional cleanup.  Those steps include:

  1. Notice of entry into the VAP MOA program;
  2. Publish notice in the local newspaper that the volunteer has entered the program;
  3. Create a document depository in the local library available to the public;
  4. Volunteer must publish the proposed work plan and allow for public comments (30 day comment period);
  5. Host a public meeting to discuss the work plan;
  6. All documents associated with the VAP cleanup must be placed into the library (includes the Phase I, Phase II, Risk Assessment Report, Remediation Work Plan, and the NFA letter); and
  7. Public can request additional public hearing during the cleanup process.

If a volunteer meets the various requirements outlined above, then U.S. EPA provides the following "comfort"

For sites or facilities that have completed the voluntary action in compliance with the MOA Track procedures…U.S. EPA Region 5 does not plan or anticipate taking action under CERCLA or RCRA while the facility remains in compliance with the MOA Track VAP requirements, except as provided in Section IV.B below.

The highlighted language makes clear that completion of the VAP MOA does not provide the volunteer a legal release from U.S. EPA.  Rather, the volunteer gets the assurance that EPA "does not plan or anticipate taking action."  Nothing prohibits such action.

In fact, the highlighted language at the end of the paragraph provides several instances when EPA can take action, including:

  • Newly discovered information after the CNS is issued indicates additional cleanup is needed;
  • Failure to comply with applicable VAP cleanup plans and Ohio EPA fails to take action to correct the situation;
  • The site presents an imminent and substantial endangerment to public health or welfare or the environment; and
  • Ohio EPA requests EPA help because the volunteer isn’t make sufficient progress to complete the VAP MOA track

How Many Sites Have Gone Through the Classic VAP versus VAP MOA?

Currently, according to Ohio EPA tracking, 556 sites have submitted an NFA for review.  Not all of those sites have received a CNS.  29 NFAs were withdrawn before receiving a CNS.  

Only a total of 59 sites are identified as having entered the VAP MOA process.  Of those 59 sites, 22 sites actually submitted an NFA thus completing the VAP MOA process.  (Link to Ohio EPA list of VAP MOA sites)

What these numbers tell you is that very few volunteers have decided to spend the extra time and money to complete the VAP MOA process.  Some who even started, later left the MOA process.

Biggest Issue is Time

The biggest issue for many volunteers contemplating the VAP MOA process is the extra time involved.  Each plan is available for public comment.  A public hearing is required as well.  The extra time to complete the added upfront Ohio EPA review and public involvement can add many months on to a project. 

A review of the MOA track list shows that most projects took more than one year to complete once they formally entered the program.  Some took five or six years to complete.  It is unlikely Ohio EPA would allow a project to sit in process that long any more, but the track record clearly demonstrates the added steps will add significant time to the cleanup.

Risk Tolerance

As with many things environmental, whether to go Classic VAP or VAP MOA Track really depends upon your client’s risk tolerance.  For some clients, the added comfort from U.S. EPA (even though its not a legal release) is enough.

[Photo courtesy Engineering at Cambridge]

Prior to 2008 it seemed every company was talking about sustainability.  It was unprecedented the number of corporations that were putting out sustainability reports or hiring senior executives responsible for corporate "green" strategy.  That changed with the financial crisis.

In a few short months the "green" movement was replaced with concerns about jobs and saving the financial system.  This is is a quote from a blog post I did back in 2008 shortly after President Obama was elected to his first term.

Remember a few months back when oil peaked around $140 a barrel. Of course you do…But do you also remember the momentum behind the green movement due to the reality of limited resources and escalating energy prices. Everything looked possible- a shift to renewable energy, energy conversation, higher gas mileage vehicles, and climate change legislation.

Now, only a few months later and oil is around $60-70 a barrel (I just filled up my gas tank for $1.90 per gallon) We saw an economic meltdown the likes that has not been seen since the Great Depression.

While the economy floundered, so did the green movement.  Environmental issues were an after thought in the two presidential elections.  President Obama slowed down his aggressive push toward climate change regulations.  

Now it appears the economy is on firm enough footing that the sustainability movement is getting back its mojo.   For example, take the recent New York Times Article discussing First Energy’s agreement with activist shareholders that want lower carbon emissions from the utility.

As part of an agreement reached with shareholders, First Energy agreed to study and report on what it could do to help meet President Obama’s goal of reducing carbon emissions by 80 percent by 2050.  

The Times notes that the agreement "comes as investors are increasingly pressuring corporations into action on climate change."  In the 2013 proxy season, "shareholder submissions grew more than 6 percent compared with the year before, with environmental and social proposals representing the largest category, at just under 40 percent."

As of today, the price of oil crossed back over the $100 per barrel threshold. As the economy improves commodity prices will again rise.  Higher prices for raw materials and energy pushes companies to think more aggressively about conserving resources.

As we head into 2014, my bet is you will start hearing that "sustainability" buzz word more and more.  

The Obama Administrative continues to be heavily criticized by industry for its aggressive development of greenhouse gas regulations.  In contrast to the dizzying pace of new greenhouse gas regulations stands finalization of a new ozone standard…something the President promised to do after being elected to his first term. 

Under the Clean Air Act, EPA is required to review the ozone standard every five years. In 2008, the Bush Administration set the new ozone limit at 75 parts per billion (ppb). That was tighter than the existing regulations, but considerably weaker than the 60 to 70 ppb recommended by the Clean Air Science Advisory Committee (CASAC- a science advisory panel which advises EPA in settings National Ambient Air Quality Standards).

Litigation ensued over the Bush standard. However, a cease fire was called when the Obama Administration took office and called the 75 ppb indefensible. The EPA promised to revisit the standard and set it somewhere between the 60 to 70 ppb recommended by CASAC.

After two prior deadlines passed without a new standard, the Administration identified August of 2012 as the final date.  That date came and the Administration again said they would delay final standards until 2013.  Yet nothing happened last year.  Now, it appears the Administration may be making progress toward finalizing the standard.

On February 3rd, EPA release two reports-  its draft risk and exposure assessment and the Second External Review Policy Assessment for the New Ozone Standard.  Both of these reports confirm what was known five years ago-  the recommendation is to lower the standard to somewhere between 60 to 70 ppb.  

Clearly the Administration still has cold feet about finalizing a revised standard.  In fact, we have now gone more than five years since a review of the old standard.  

This is all good news to State’s like Ohio with a heavy manufacturing base, larger populations and fossil fuel reliant power base.  As discussed in my last post on this topic, the longer the delay the more time existing federal regulations have to take effect to reduce ozone precursors.  In reality, the States have very little ability to significantly reduce ozone pollution through state specific regulation.

The lengthy delay may mean that ozone levels will be reduced down to where a 70 ppb standard would be realistically attainable, something that seemed impossible even five years ago. 

 In a very significant case, the Chief Administrative Law Judge (ALJ) for U.S. EPA imposed a $2.5 million dollar penalty against a manufacturer, Elementis Chromium, Inc. ("Elementis") for failing to submit a health study to EPA pursuant to the requirements of TSCA.  The EPA imposed the large penalty despite the fact,

  • Many of the findings in the study were disclosed to EPA through other studies; and
  • The violation occurred more than five years ago- past the applicable statute of limitations period

Background

Elementis was part of a business coalition who undertook an epidemiological study of chromium-based products.  The study was performed, in part, as an attempt to potentially provide support for modification of the permissible exposure limit (PEL) for hexavalent chromium adopted by OSHA. 

The study was completed in 2002.  Elementis didn’t provide the study to U.S. EPA until six years later, in 2008, in response to a subpoena.  

EPA filed a complaint against Elementis for failing to disclose the study in accordance with the requirement set forth in TSCA Section 8(e) which provides:

Any person who manufacturers, processes, or distributes in commerce a chemical substance or mixture and who obtains information which reasonably support the conclusion that such substance or mixture presents a substantial risk of injury to health or the environment shall immediately inform the Administrator of such information unless such person has actual knowledge that the Administrator has been adequately informed of such information.

Elementis argued the EPA was "adequately informed" regarding the impacts of chromium and the study did not need to be disclosed as a result.  Also, the company asserted the failure to disclose occurred more than five years ago, past the applicable statute of limitation period. 

Statute of Limitations

EPA admitted that the five-year statute of limitations is generally applicable to administrative penalty actions brought under TSCA.  However, the EPA’s ALJ ruled that violations of TSCA Section 8(e) are continuing in nature.  Therefore, so long as the company failed to disclose, the statute of limitations did not begin to run.

New Information

The company also argued there was no violation of Section 8(e) because EPA was previously aware of the general conclusions of the study.  The ALJ rejected the Company’s argument and ruled it was required to disclose the report because there were significant distinctions between the study at issue and previous studies.  

The ninety page decision includes a highly detailed analysis of the ALJ determination the study had distinguishing characteristics which triggered the mandatory duty to disclose under TSCA. Many of the differences noted by the ALJ were with regard to the test methodologies employed, not necessarily health impacts.  

The opinion highlights the risks involved in the TSCA duty to disclose under 8(e).  The company incurred a substantial penalty despite:

  • Information and conclusions in the study had similarities to prior studies of chromium-based products;
  • The violation, failure to disclose, occurred more than five years ago which was past the normal statute of limitations period.

It is worth noting that the ALJ felt the Company’s failure to report, was so egregious in this instance, that it increased the penalty by 10%.  The ALJ felt the Company made critical comments in regulatory proceedings regarding data gaps involving chromium health impacts while being aware of the study, which it helped complete, and did not disclose to regulators.

 

On January 7th, Scott Nally resigned as Director of Ohio EPA after a three year stint.  Local media coverage of his resignations raised questions regarding the abrupt and surprise announcement.  Speculation included the fact that it was tied to the Nally’s firing of long-time Division of Surface Water Chief George Elmaraghy earlier this year.  This from the Columbus Dispatch:

“We can’t understand what Director Nally did or didn’t do in complete lock step with this administration. Maybe he is voluntarily pursuing other interests, but it’s suspicious he didn’t personally make the announcement.”

Kasich spokesman Rob Nichols said Nally’s resignation was not connected to the resignation last year of George Elmaraghy, who was chief of the EPA division that oversees the state’s efforts to protect streams, lakes and wetlands from pollution. Elmaraghy said he was asked to step down by Nally and Kasich because of clashes with the coal industry about water-pollution permits.

With Director Nally’s resignation, Craig Butler, who had served in Governor Kasich’s office, was named as interim Director.  With the Governor’s election this November, it it unlikely a replacement will be named until after the election.  This means Mr. Butler will more than likely serve as Director until after the election.

Butler brings a wealth of experience to the position.  He served as an industrial liaison in the Director’s Office of Ohio EPA under Governor’s Voinovich and Taft.  He also served as District Chief of Central District Office and Southeast District Office.  More recently, he served in Governor Kasich’s Office as the Executive Assistant to various agencies, including Ohio EPA.

His background and experience will be a major asset to him as he serves as Director.  He has seen the practical implications of EPA regulations on businesses, dealt with local issues as a District Chief as well as the political side to the Agency (Both in the Director’s Office and Governor’s Office).  

 

On December 30th, the  Federal Environmental Protection Agency (EPA) finally took action trying to address the confusion it caused when it previously issued a final rule recognizing both ASTM 1527-05 and 1527-13 as appropriate standards for conducting Phase I assessment.  A proper Phase I assessment is a requirement  for establishing the Bona Fide Purchaser Defense under CERCLA.  (See prior post).  

On the second to last day of the year, EPA published a final rule in the Federal Register (78 FR 79319) recognizing the new ASTM E1527-13 phase I standard practice as an approved method for complying with the All Appropriate Inquires (AAI) rule.  EPA also provided new language in the preamble as well as a separate guidance document addressing comments EPA received.

Background on Prior EPA Actions

On August 15, 2013, EPA issued a direct final rule which recognized both E1527-05 and E1527-13 as appropriate standards for conducting environmental due diligence in accordance with the AAI. EPA received negative comments regarding its decision to continue to recognize both standards. Many felt it caused unnecessary confusion.  In response to comments, on October 29, 2013, EPA withdrew the final rule.  

As a result of EPA’s action, there was a two month period where the most up-to-date standard, E1527-13, was not recognized by EPA as satisfying AAI.  This caused some attorneys and buyer/sellers of real estate  to request consultants to meet both standards.

With the December 30th action, EPA officially recognizes E1527-13 and also indicates it will soon issue a proposed rule removing AAI’s reference to E1527-05.  

Vapor Intrusion Remains the Big Issue

 The biggest differences between E1527-13 and E1527-05 include:

  • Revised definitions of RECs, HRECs CRECs
  • Greater emphasis on reviews of regulatory files
  • Vapor intrusion

(See prior post discussing differences in greater detail)

It is the last bullet point that has caused the greatest confusion and controversy.  Some provided comments to EPA expressing their view that under the prior E1527-05 standard consultants did not have to evaluate vapor intrusion.   Those commentators view E1527-13 as establishing that requirement for the first time.

However, EPA makes clear in the preamble to the December 30th action that the language in E1527-13 pertaining to vapor intrusion is only an enhancement of the requirements under the old standard.  EPA specifically states that E1527-05 "already calls for identification of potential vapor releases or vapor migration."

EPA comments create issues for environmental consultants who did not include evaluation of vapor intrusion as part of Phase I assessments under E1527-05.  Failure to do so could be grounds to assert the consultant committed malpractice.  

In situations where no such evaluation was performed under an old Phase I, and the building later proved to have vapor intrusion issues, consultants face heightened liability exposure.

EPA action should provide greater clarity to the due diligence community.  

 

 

 

Over the weekend, there was a good blog post on Schnapf LLC Blog discussing which Phase I standard lawyers and consultants should use for at least the rest of 2013.  Due to an unanticipated reversal by U.S. EPA, there is a gap right now between the current ASTM standard and EPA’s recognized standard for Phase I’s for compliance with the "All Appropriate Inquiries" Standard (AAI).

On November 6th, ASTM officially recognized E1527-13 as the new standard for conducting Phase I environmental assessments.  As a practical matter, this means ASTM E1527-13 represents current best practice in the industry.  

However, as discussed in a prior post, U.S. EPA reversed course and withdrew a direct final rule that would have recognized both E1527-13 and E1527-05 as meeting AAI.  As a result, the only standard EPA currently recognizes as satisfying AAI is E1527-05.

The post discussed the quandary caused by the current gap between sanctioned standard and the most up-to-date standard: 

So what is a consultant to do for transactions requiring a phase 1 prior to EPA formally recognizing E1527-13? On the one hand, by publishing E1527-13, ASTM is essentially saying that the new version now represents good commercial practice. Thus, a consultant failing to use the most current version of E1527 could expose a consultant to professional negligence claim if, for example, the consultants fails to identify a REC because it did not do a file review or fails to evaluate the soil gas pathway. This would seem to tip the decision towards using E1527-13.

However, E1527-13 is not yet recognized as an acceptable method of satisfying AAI. Thus, if the purpose of the phase 1 is to comply with AAI, a consultant stating that its phase 1 complies with AAI could be subject to breach of contract or claims of misrepresentation since only E1527-05 is currently recognized in the AAI rule.

The biggest differences between the two standards is the more defined requirements pertaining to file reviews and analysis of the vapor intrusion pathway.  It is pretty clear the E1527-13 requires additional work.  Arguably, a Phase I that meets E1527-13 should also be consistent with E1527-05.

For an attorney, you will want the consultant preparing the Phase I report to state it meets the current EPA recognized standard- E1527-05.  Without such a reference it is possible your client hasn’t satisfied AAI.  

A consultant will want to comply with the standard recognized in the industry as the best practice- E1527-13. Otherwise, one may argue the consultant isn’t utilizing current best practice.

It may be best to discuss the issue with your consultant and see if they are comfortable stating in the report that the Phase I meets both standards.  That may be the best alternative until EPA officially sanctions E1527-13. 

 

On October 22nd, Kristi Tanner, a managing director of JobsOhio presented regarding Ohio’s new brownfield redevelopment incentive program which will replace Clean Ohio.  Many in the brownfield redevelopment community have been anxiously awaiting the roll-out of the new program.

According to Ms. Tanner, JobsOhio will start discussing potential projects now, but awards under the new program are not likely to be made until March 2014.  

Under the new program, the amount of funding available will be comparable to the Clean Ohio- approximately $43 million annually.  However, the State is making a major shift away from a grant based program under Clean Ohio to a low interest loan program through JobsOhio.

Review of Ohio’s Prior Brownfield Incentive Program- Clean Ohio

Since 2002, Clean Ohio provided over $400 million in grants for brownfield redevelopment projects.  The Clean Ohio Revitalization Fund (CORF) was Ohio’s centerpiece brownfield funding program with some of the largest incentives available Under Clean Ohio the basic program consisted of the following:

Clean Ohio
Revitalization Fund Assistance Fund
Competitive Pool- awards 1 or 2 times per year Non-Competitive Selection Process
Complete Application- Phase I, Phase II and Proposed Remedy Only available in eligible areas
Up to $300k for Phase II Assessments Up to $300k for Phase II Assessments
Up to $3 million in grants for cleanup  Up to $750k for Cleanup
Eligible costs = demolition, purchase, infrastructure and cleanup costs Eligible costs = demolition, purchase, infrastrucutre and cleanup costs 
Required to complete VAP Required to complete the VAP

Many liked the openness the CORF selection process which used a competitive pool where all projects were pitted against one another for funding.  Award were made either once or twice per year.  

Projects were selected was through the Clean Ohio Council with heavy involvement from the local communities.  One major drawback of the program was that an applicant could spend approximately $30,000 just to develop the application (assuming a Phase I and Phase II was already complete) with no guarantee of being funded.

Still, as one of the best brownfield incentive programs in the country, CORF/COAF allowed many projects to move forward that may not have occurred otherwise.  As discussed in a Dispatch Article, Clean Ohio provided funding for over 70 projects in just Northeast and Central Ohio alone. 

JobsOhio Revitalization Program

Under the new JobsOhio program, the State will be making major changes to the structure and process for selection.  Here are the basic elements of the the new program:

Incentives Available

  • Up to $200k for Phase II Assessments-  JobsOhio had commented that it felt $300k for Phase II’s under CORF/COAF was excessive.  However, in order to qualify for the cleanup grant or loan, the developer is required to meet the applicable standards established by Ohio EPA’s Voluntary Action Program (VAP).  Therefore, a Phase II must generate sufficient data to be deemed VAP compliant.  With reduced funding, some projects may not be able to satisfy Ohio EPA’s rigorous Phase II VAP standards.
  • Up to $500k for Asbestos & Lead Paint-  This is a new component of the Ohio brownfield program which appears to target existing structures that may be idle due to asbestos and/or lead paint issues.  Under the proposal, the funds can be used for asbestos abatement, demolition, site preparation and disposal of universal waste.
  • $5 million cleanup loan with possibility of $1 million cleanup grant-  As the biggest change with the new program, JobsOhio has shifted from a grant cleanup funded model to a loan model.  Developers and companies looking to expand may have an opportunity to secure a $1 million cleanup grant if need is demonstrated and the grant is coupled with a loan.  Details on the requirements for securing a $1 million dollar cleanup grant were not provided.

 Selection Process

  • Open funding versus competitive pool-  JobsOhio has done away with the competitive pool process utilized by CORF.  Under the old process all grant applications were scored and the top projects were funded.  The positive aspect of this process was its transparency. The negative was that an applicant could spend a significant amount of money ($30k just for the application) without knowing whether they would receive an award.  The new process will be more flexible and less costly than Clean Ohio.  Projects can receive awards throughout the year and will not compete with one another.  Also, JobsOhio will likely notify an applicant it will receive an award before it has to put together the more detailed aspects of the application. 
  • Criteria for selection–  The JobsOhio selection process will utilize three basic criteria
    • Jobs– Retained or created with priority for projects with higher-than-average wage rate (generally must retain or create 20 jobs)
    • Investment- private versus public, capital investment in addition to site prep and priority will be given to JobsOhio targeted industry project
    • Certainty of completion-  must have an end user committed to the project, have redevelopment plans and sufficient funding to complete the project.

Conclusion

More details should be forthcoming regarding the program this fall.  However, JobsOhio has made clear that they will discuss prospective projects now.  However, awards will likely not be made until March 2014.  

The most likely users of the program will be commercial/industrial clients looking to expand onto brownfield properties.  With $200,000 available in grants for Phase II assessments and the possibility of $1 million in grant cleanup funds, the program offers very strong incentives. 

Due to the focus on job creation, cities looking to cleanup properties in hopes of attracting future development will have to look elsewhere for incentives.  Also, residential development projects will find it harder to compete without a jobs component.  

While there are good aspects of the new program, its overall success will depend upon whether loans will will be sufficient to attract redevelopment of contaminated properties.  

As discussed in a prior post, U.S. EPA had issued a direct final rule approving the use of the new ASTM Standard E 1527-13 "Standard Practice for Environmental Site Assessments:  Phase I Environmental Site Assessment Process."  The final rule was set to take effect on November 13, 2013.

If the rule had gone into effect, it would have allowed use of either ASTM Standard E 1527-13 or the old ASTM Standard E 1527-05 to comply with due diligence requirements associated with the "All Appropriate Inquiries Rule," (AAI), a necessary step to establishing certain affirmative defenses to CERCLA liability.  However, just prior to the September 16, 2013 comment deadline, adverse comments were filed by some influential practitioners.  

Concerns were expressed with regard to the practical effect of EPA’s proposal to allow either ASTM standard to be followed.  E 1527-13  is believed to be more costly than the old standard because it enhances the requirement for environmental professionals to perform agency file reviews as part of the Phase I process.  It also contains more definitive language requiring evaluation of potential vapor intrusion migration pathways. In addition, each ASTM standard uses different definitions. Adverse comments expressed concern that the use of the different definitions will lead to confusion or inconsistent practices in the due diligence community by allowing two different standards to satisfy AAI.

It is still unclear what U.S. EPA will do in response.   The Agency issued a proposed rule at the same time as the final rule.  The proposed rule contains the same option to utilize either ASTM standard.  It is possible EPA could sunset E1527-05 when it finalizes the proposed rule.  Or it could address the adverse comments in the final preamble to the rule.

Right now there is no clear direction from U.S. EPA with regards to this critical aspect of due diligence. 

UPDATE:  On October 29th, U.S. EPA did officially withdraw the direct final rule.  Currently, E1527-05 remains the only officially sanctioned guidance to meet the "All Appropriate Inquiry Rule."

This past spring, the Kasich Administration put another $15 million in grant funding into the Clean Ohio program. (See prior post).  While a public announcement has yet to be made regarding grant awards for the remaining $15 million, it is my understanding that the money is allocated. Announcements may be made next week at the Ohio Economic Development Association 2013 Summit.

After this last $15 million has been spent, what is the future in Ohio for brownfield grant funding?  The Administration has discussed a possible rollout of a new program by year’s end.  On multiple occasions, the Kasich Administration has indicated the new JobsOhio brownfield grant program will closely approximate the size of the old Clean Ohio program- roughly $43 million annually.

The changes made to the Clean Ohio program this past spring provide some indication of what a new program could look like.  

  • Streamlined application process where selection decisions are made before investing significant money in preparing detailed applications;
  • Selection criteria that will emphasis end use, job growth, job retention and enhanced tax revenue post development;
  • More involvement of local economic development organizations in the selection process; and
  • Continued use of Ohio EPA’s Voluntary Action Program as the benchmark for determining whether a property has been adequately cleaned up

With the incredible success of the Clean Ohio program there is a lot to emulate when JobsOhio launches its new program.

The uncertain rollout date for the new program has hindered getting new brownfield projects in the que.  Projects can take months before all the pieces (end use, infrastructure, financing, incentives, etc.) can be fit together.  Hopefully, an announcement can be made before the end of the year so we don’t lose any more momentum in this critically important area of economic development.

In the meantime are there other brownfield incentives available? 

Yes.  Many of the major and medium sized metropolitan areas have their own brownfield redevelopment programs.  They don’t provide the same level of grant funding, but they can be attractive.  

Both the City of Cleveland and Cuyahoga County maintain their own brownfield incentive programs. They are similar in their approach.  Here are the key aspects of the Cuyahoga County Commercial Property Reutilization Program:

  • Phase I Funding: Up to $6,500
  • Phase II Funding: Up to $35,000

 

Cleanup Loans

  • Up to $1 million- 4% over 10 years
  • 40% forgiveness
    • 15% for VAP NFA
    • 15% job creation (1% per job over $44k per year)
    • 10% for use of vendors in the County
  • Wider eligibility for types of clean up costs covered by the program (i.e. BUSTR, RCRA, etc.)
     

Brownfield Redevelopment Tax Incentives

Ohio also has on it books tax incentives for brownfield redevelopment.  The automatic abatement described below has been widely used, but is tricky to navigate.  There was considerable debate following a determination that the automatic tax incentive didn’t cover new buildings.  

Automatic Abatement (R.C. 5709.87)

  • 10 year Ohio Property Tax Abatement for Brownfield redevelopment
  • Abatement is on the increase in value of land and buildings post clean up
  • Abatement does not include new structures or fixtures after clean up (Caution: process for fixing abatement is complicated)

A more broad based tax incentive is available that does allow coverage for new structures as well as machinery.  However, do to the fact these incentives must be negotiated with local officials, the local tax abatement has not been utilized frequently.

Local Tax Abatement (R.C. 5709.88)

  • Tax abatement for real or tangible property(machinery and equipment)
  • Up to 100% abatement for increase in value in land or buildings(including new structures)