David J. Freeman & Gregory R. Belcamino
Partner and Chair
Environmental Department
Battle Fowler LLP

---

David J. Freeman is a partner and chair of the Environmental Department at Battle Fowler LLP, a 125-lawyer firm based in New York City. He is Co-chair of the ISO 14000 U.S. Technical Advisory Group's Ad Hoc Legal Issue Forum and serves as counsel to the Business Coalition for Sustainable Cities. Gregory Belcamino is an associate at Battle Fowler LLP.

This paper was originally published by Corporate Environmental Strategy (Copyright PRI Publishing 1996).

Two seemingly disparate initiatives have come to the forefront of environmental activity over the past several years. One is "brownfields revitalization"–attempts by the federal and state governments to facilitate the reuse of abandoned or unproductive urban industrial and commercial sites. Another is ISO 14000, a series of environmental management systems standards that have been under development by a group of international experts.

While superficially unconnected, these two initiatives have similar conceptual underpinnings. More importantly, they can complement each other in major ways. This paper explores both of these powerful new trends and the possible synergies between them.

Brownfields Redevelopment

"Brownfields" are those former industrial sites that, either because of actual or perceived contamination, lie idle or underutilized because of fear of hazardous waste liability attached to their ownership or operation.

The benefits of brownfields redevelopment programs are many. They revitalize the abandoned or underutilized cores of American cities. They put jobs close to population centers, alleviate urban unemployment, and increase tax bases. They avoid the costs to society of bringing industrial infrastructure to the suburbs where many industries have been relocating. They require less reliance on private automobiles and reduce the social costs associated with them. And finally, they help ensure that greenfields – those pristine rural sites where industry has sought to escape the spectre of hazardous substances liability will remain uncontaminated.

Because of these perceived benefits, over twenty states now have adopted policies or enacted legislation to encourage redevelopment of brownfields, and a number of other states are considering such action.

Following the lead of the states, the US EPA in the last two years has put into effect its own Brownfields Redevelopment Initiative, which involves the issuance of new and revised policy and guidance documents and funding for fifty grants to municipalities. Nevertheless, the number of sites affected by EPA's actions is limited to those where the agency has defined a "federal interest." The vast majority of brownfields sites will be redeveloped under state programs. The state programs, which are typically offered on a fee-for-service basis, provide incentives to owners and redevelopers of property who were not responsible for existing environmental conditions to undertake voluntary cleanups. Most brownfields programs allow for cleanup standards that are risk-based and predicated on projected future land use of the affected sites. Thus, a redeveloper of an industrial facility will not be required to clean up to residential standards. Similarly, cleanup standards will be adjusted when there are no pathways of contamination to potential receptors such as drinking water wells or persons who come into contact with contaminated media, or when such pathways can be eliminated by institutional controls such as fencing or deed restrictions.

The "environmentally acceptable endpoint" for redevelopment or reuse of a brownfields site may be reached by a combination of cleanup, land use restrictions and institutional controls. The primary incentive for brownfields redevelopment offered to varying degrees by the different states–is some kind of assurance that the state will not take future enforcement action with respect to known contamination remaining at the site. Such assurances may take the form of a state environmental agency pronouncement that it has reviewed the documentation of the site cleanup, inspected the site and requires no further action at this time. Some states offer a higher level assurance: a letter stating that the new owner will not be "associated" with the levels of known contaminants remaining at the site – if the seller or redeveloper is willing to conduct the cleanup under direct state supervision. A number of states have statutory authority to offer, as a maximum assurance, a covenant not to sue under state Superfund laws.

The state and the brownfields redeveloper are not the only parties affected by state brownfields programs. Most of the programs also encourage, to some degree, public participation in setting cleanup standards and strategies for brownfields sites as a way of overcoming resistance from neighboring communities who might otherwise object to the brownfields process as being insufficiently protective of health and the environment. Some state programs also include explicit lender liability provisions aimed at overcoming the reluctance of lending institutions to provide financing for redevelopment of contaminated collateral.

Yet, in many instances, owners and potential users of such sites still hesitate to put the sites back into productive use. Developers, lenders, government agencies and the public are concerned not only about the potential liabilities created by past operations at brownfields, but also about the potential for new uses to create new contamination or to exacerbate existing environmental conditions. Compliance with existing laws, such as the federal Resource Conservation and Recovery Act ("RCRA") and its state hazardous waste law analogues, does not provide complete assurances that undesirable consequences, from the viewpoint of either the past or present owner or operator of the site or the public, will not result from redevelopment of a brownfields site. At a recent conference on brownfields held in Washington, D.C., an executive of a major U.S. chemical manufacturer offered a view of brownfields redevelopment from the perspective of a potential "deep-pockets" defendant. His company has made a conscious decision not to sell or use certain problem sites where there are substantial potential liabilities associated with either existing or perceived contamination. The company fears that even when such sites are cleaned up to standards appropriate for reuse as industrial facilities, it cannot control the activities of future operators whose actions or whose mere presence may revive dormant liability exposures. Such sites ultimately will be donated to municipalities for "use" as open space, or, in the worst cases, boarded up.

A basic failure of brownfields redevelopment efforts is that in focusing on the return to productive use, they address only the liabilities that arise out of past activities. Current programs envision a process that culminates at the moment the property is returned to productive use, or when the state provides its imprimatur and provides assurances of non-liability for past contamination. There is no explicit provision in such programs for addressing liabilities and disincentives to brownfields reuse that arise out of activities after cleanup is completed and the state has given its assurances. This shortcoming can be readily addressed. States (or the EPA, where there is a federal interest reflected by inclusion of the site in the Comprehensive Environmental Response, Compensation and Liability Information System ["CERCLIS"] database) could require that the new operator of a rehabilitated brownfields site establish a formal environmental management system for its operations. Doing so would be a condition to relief from liability for past contamination. An effective environmental management system for the new facility would give a greater level of comfort to past owners and to lenders. And it would provide both a reassurance and a benefit to the surrounding community – in return for accepting a somewhat less stringent standard of cleanup than might otherwise be required, they would be assured that the new operations would achieve a level of environmental performance that would go beyond "mere compliance" with minimum statutory requirements.

ISO 14000

Enter ISO 14000. At the very moment that brownfields redevelopment is capturing the interest of many legislators, regulators, and the general public, there is a parallel trend that is attracting significant attention of businesses worldwide: the institution of environmental management systems. The concept is deceptively simple. Rather than continually responding in an ad hoc way to the maze of overlapping and conflicting state, federal and international regulations, a company would systematize its approach and create internal mechanisms to achieve environmental excellence. It would establish an environmental policy; set goals (including, at a minimum, compliance with all applicable laws and regulations) for the company to achieve; develop mechanisms to meet those goals; conduct periodic audits to see that those goals are being met; and create a system to address any shortcomings identified by the audit process. There are many potential benefits to such a program. For companies, it can be an effective management tool, allowing management to "get a handle" on how the company is managing its environmental exposures. Properly implemented, it is also a way to enlist middle management and even line operators in compliance efforts. Many companies have also found that, in looking analytically at their procedures, they have identified inefficiencies – in raw materials usage, in process operations, in waste disposal – that can be remedied at a savings of millions of dollars. Along with current cost savings, there is a significant reduction in the companies' long-term environmental liabilities from improper disposal of materials, worker exposure to toxic substances, and risk of catastrophic accidents. There are benefits to government regulators as well. In an era of decreasing confidence in government and decreasing agency budgets, shifting some of the burden of assuring environmental compliance from government hands and letting the private sector play a role (with appropriate checks and balances to make sure that the system is not abused) makes a great deal of sense. In fact, EPA and state governments are already busy designing pilot programs that will relax certain rules for companies having effective environmental management systems in place.

There are many such systems that have been proposed or are on the drawing boards. But there is one that stands out as having a broader base of support and more international credibility: the ISO 14000 series of environmental management standards. This set of standards is being written by experts from over 60 countries who have been meeting for the past three years under the auspices of the International Organization of Standardization, headquartered in Geneva. The first set of standards is expected to be finally approved in mid to late 1996. There are a number of standards that are being developed contemporaneously by different ISO Subcommittees. First is ISO 14001, the basic standard which sets up the parameters for managing one's overall environmental responsibilities. Among the key requirements of ISO 14001 are the establishment of an environmental policy; a determination of the environmental impacts of the organization's activities; the establishment of environmental goals; the creation of a training program; the appropriate assignment of responsibility for implementing the system; periodic audits to determine the effectiveness of the system; a report to management; and a commitment to follow up on the results of the audit and to continually improve the system.

A company with a properly functioning system can be "certified" as being in compliance to ISO 14001, either by a self-certification process or by an accredited third-party certifier.

There are also other important (but subsidiary) standards being developed. These standards are subsidiary in the sense that they are only "guidelines." They are being prepared in an attempt to assist companies in understanding and implementing ISO 14001 but are not mandatory, in that deviation from them will not cause a company to fail certification. Among these standards are those governing the conduct of environmental audits and certification of auditors (ISO 14010, 14011 and 14012); those governing environmental claims and labeling (ISO 14020-4024); those governing criteria for measuring environmental performance (ISO 14031); and those addressing the still-nascent discipline of life cycle analysis (ISO 14040-14043).

These standards are all at different stages of development. The most advanced (for example, ISO 14010, 14011 and 14012 on environmental audits and auditors) are likely to be promulgated contemporaneously with ISO 14001. Work on others (for example, the life cycle analysis standard) are not anticipated to be completed for several years. In short, the ISO 14000 series of standards represents a very ambitious attempt to define what is necessary for internalizing environmental compliance from a company management standpoint, and for doing it in a way that can be applied across the board. One of the principal advantages, from a brownfields standpoint, is that ISO standards can apply to all sorts of industries with equal validity–heavy manufacturing, light manufacturing, service industries, even real estate development. Naturally, a environmental management system for a steel mill will be much more detailed, and have much different parameters, than an EMS for a wholesale distributor or a shopping center. The ISO standards are written so that those difference can be accommodated; any certification provided will, by definition, be appropriate to the industry that is being certified. Given the diversity of types of brownfields development projects, this universality is critical to making ISO 14000 certifications an element in brownfields programs. Properly administered, a brownfields redevelopment program with an ISO 14000 component would fulfill many objectives. It would prevent redeveloped sites from becoming eyesores or environmental hazards through current or future mismanagement.

It would reassure current owners, developers, lenders and investors that the liability protection they have received will not be compromised by operations of the new enterprises. It would offer brownfields entrepreneurs a way to achieve environmental compliance without government micromanagement. And it would convince government regulators and a potentially skeptical public that the tradeoff of a lesser level of current cleanup for a potentially greater level of environmental conscientiousness in future site operations is worthwhile.

Conclusion

Brownfields redevelopment programs share important goals with ISO 14000. Both address the issue of inefficiencies in resource use by attempting to lift the heavy hand of government from industry and to achieve environmental goals by alternative strategies. Both try to enlist and capitalize on the innovation and resources of the private sector. And both integrate their environmental goals with other important societal objectives. In the case of brownfields, these other goals include revitalization of our cities, increased urban job opportunities, and returning to more rational land use patterns.

In the case of ISO 14000, other goals include avoiding the proliferation of different national and international standards; achievement of cost savings from efficient use of resources; and integrating environmental compliance into overall management planning.

These two streams can, with proper implementation, combine to form an irresistible current. The integration of ISO 14000 management systems with brownfields redevelopment can help assuage the nagging doubts of regulators and the public that brownfields owners and redevelopers are getting a sweetheart deal that will have long-term negative impacts on the local environment. Meanwhile, the ISO standards can benefit in the long term by being tested – and having to be adapted to the wide spectrum of businesses and organizations that are expected to participate in brownfields projects. The ISO standards will also benefit by the "jumpstart" in public awareness that will come from their being a formal part of brownfields programs. It remains to be seen whether these synergies will be achieved. But the potential is clearly there, for those farsighted and creative enough to explore the possibilities.

Sustainable Cities White Papers Index
<< Back  Next >>