When Voluntary Cleanup Isn’t Voluntary

According to the U.S. Environmental Protection Agency (EPA), a “brownfield site” is a 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. After EPA established its Brownfields Program in the mid-1990s to promote the redevelopment of sites that were orphaned or abandoned due to actual or perceived environmental contamination, many states adopted voluntary cleanup programs (VCP) to oversee the assessment and remediation of brownfields and to encourage redevelopment of these sites by developers that had no involvement in the former site operations that may have resulted in contamination. A chief incentive for enrolling a site into a voluntary program is the issuance of a certificate of completion, something akin to a closure letter indicating no further action is required by the state, and something most lenders require before agreeing to loan money for redevelopment of contaminated sites.

Despite the innocuous sounding name, voluntary cleanup programs are not always voluntary. Not only do lenders often require developers to enter these programs (in many cases, the voluntary cleanup program is the only regulatory program whereby a state will issue a “sign-off” on a property), but once entered, many states impose requirements very similar to other typical enforcement programs. I often describe some state programs as “voluntary enforcement programs” whereby owners volunteer to be subject to regulatory enforcement. That doesn’t sound as friendly as a voluntary cleanup program, but it more closely represents the reality in some states.

Most VCPs require an upfront enrollment fee to cover the administrative costs associated with document review, risk evaluations, etc. Though these fees—which commonly range from $2,000 to $10,000—are not insignificant, they often pale in comparison to the site assessment costs required to fully characterize environmental conditions on a property and the potential risks to all future receptor populations. For example, site characterization activities at a typical strip shopping center that has had an onsite dry cleaner operating for a few decades can exceed $100,000 and can take up to 12 or more months depending on the extent of contamination. If that characterization work indicates that there are risks to future receptors (beware of vapor intrusion or if groundwater is used as a drinking water source), then remediation costs can greatly exceed the characterization costs and take years to implement.

Because owners and developers depend on lenders to finance their projects, and because lenders rely on “closure” letters from state agencies to offset their perceived risks, many developers become enslaved to the VCP process and spend much more time and money satisfying regulators than they expected. Understanding the state-specific VCP requirements before embarking on a brownfield redevelopment project is critical to accurately planning and budgeting the project, and an important part of that process is teaming with an environmental consultant with a proven track record of managing sites through the VCP process. With over 35 offices throughout the US and a resume of numerous active and closed VCP projects, Apex is ideally suited to help its clients successfully navigate the challenges of “voluntary” cleanups and risk-based closures.

Apex Associated Press (Apex AP) represents contributions from various authors within the Apex professional community.

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