Trump Infrastructure Plan Pitches Big Changes to Brownfield and Superfund Laws, Financing to Congress
President Trump's infrastructure plan proposes major changes to brownfield & Superfund laws, Clean Water Act, Clean Air Act and other laws to streamline permitting, expand financing and create new programs. Some of which might have a chance.
Last month the Trump Administration unveiled its infrastructure proposal along with its federal government budget for FY 2019. Like EPA’s agency-specific budget, released at the same time, the White House’s infrastructure plan paid significant attention to water infrastructure development as well as Superfund reform. And while a heavy news cycle seemed to immediately swamp that Monday release, killing another would-be “infrastructure week,” there was a lot of serious substance to digest in the administration’s thinking—some of which may prove sticky enough to survive beyond the fate of the four corners of this specific infrastructure proposal.
In general, President Trump’s infrastructure plan called for much smaller federal investment in our built-environment. The proposed $200 billion federal investment is intended to function almost like seed funding that will, in turn, leverage additional state, local and private sources to complete the funding requirements necessary to get infrastructure built. This follows in the footsteps of plans discussed for much of the last year, which were ongoing even as infrastructure took a backseat to healthcare and tax battles, and eventually floated as trial balloons via “leaks” previously covered by BL. By catalyzing more local funding, the Administration aims to reduce federal expenditures while still creating a total $1.5 trillion of infrastructure investment over the next decade.
Funding disappoints, but there's a lot of policy beef here.
It’s the most significant infrastructure proposal since December 2015 when Congress managed to produce a $300+ billion package to fund America’s bridges, roads, and rail lines through 2020 in a five-year infrastructure bill that was the longest reauthorization term of any federal transportation bill approved in over a decade. The year-end deal between the Obama administration and Republicans in Congress came together around the time of a large and memorable omnibus bill and it was transportation legislation that ended a frustrating era of stopgap bills and half-measures that left the Highway Trust Fund practically broke.
President Trump’s new infrastructure proposals represent a more radical departure from the past. They push for sweeping changes to America’s infrastructure regime, both in the way projects are financed and how the relevant laws work.
Presuming the plan was to unleash the $1.5 trillion the plan’s model predicts, it still falls far short of the $4.5 trillion experts estimate the U.S. needs to invest in order to fill its infrastructure gap—and further still from the $7 trillion the President cited in a tweet about U.S. investment in the Middle East published the day his infrastructure plan was released.
But size isn’t what stands out most in President Trump’s infrastructure proposals. It's the substance.
Whereas the size of the overall funding may have disappointed, one of the bigger calls for change in President Trump’s financial ideas would see states and localities foot bigger portions of the bill. “It's all about how do we get people to compete around in projects that they truly care about,” the senior administration official told Politico. "And how do we know they truly care about them? Well, because they've got a lot of skin in the game on the project."
The administration says it would be up to local communities to decide how to best raise money to fund for their projects, with sources that could include property taxes, sales taxes or user fees—although revenue sources figure heavily in how new projects will be viewed, weighted and scored. The administration offered rare praise for California by citing Los Angeles’ Measure M Initiative, which raised local sales taxes to fund transit investment.
The second biggest aim in the Trump administration’s infrastructure proposal is to try to speed up federal permitting processes. Faster permitting, the White House and experts agree, is a relatively low-cost way to get more infrastructure built. The current median length of time to complete an environmental impact study is 3½ years, according to 2016 data from the Department of Transportation. That represents a decline by nearly half since 2011, reported CNBC, when the Obama administration put reforms into place to speed up the notoriously slow U.S. infrastructure pace.
Election promises take shape in printed policy.
As a candidate, the real estate mogul made infrastructure a centerpiece of his campaign. The story of then citizen Trump stepping in to finish a skating rink in New York became a refrain, oft repeated. On election night, in the early morning hours, President-elect Trump said: “We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We're going to rebuild our infrastructure...and we will put millions of our people to work as we rebuild it.” As President, the Builder-in-Chief has continuously focused on streamlining the permitting process, starting early on with a press event at Trump Tower where he unrolled a long length of paper diagraming the Byzantine flowchart required by the many federal agencies involved in the approval process.
"We can't give you money, and you're going to take 15 years to get a permit," Trump said in the presser surrounded by state governors and government officials unveiling the plan. The goal, the President said, is to have one lead federal agency respond to each project, with 21 months for environmental review et al. before a final decision would be taken. The relevant states would thereafter have 3 months to formally respond.
Under the President’s “One Agency, One Permit” concept, the lead federal agency would be responsible for issuing a single record of decision for a major project within two years. Duplicative environmental reviews and processes would be eliminated in favor of more cooperation and earlier engagement by all relevant agencies in order to achieve positive environmental outcomes, regulatory certainty, and public transparency. Among the changes called for to implement these reforms require:
Amending Clean Air Act section 309 to eliminate the requirement for EPA to review and publicly comment on other agencies’ Environmental Impact Statements.
Amending Clean Water Act section 401 to establish an administrative appeal process to resolve disputes involving a state’s determination that a project would lead to a violation of its water quality standards.
Amending Clean Water Act section 404(c) to eliminate EPA’s ability to veto an Army Corps section 404 permit for infrastructure projects in order to implement the one federal permit decision.
Amending the Clean Water Act to clarify the Army Corps’ authority to construe the jurisdictional term “navigable waters” under section 404.
Amending the Clean Air Act to clarify that conformity requirements apply only to the most recent National Ambient Air Quality Standard for the same pollutant.
EPA Administrator Scott Pruitt participated in the White House Infrastructure Initiative Roundtable alongside President Trump, other members of the Cabinet and state and local officials from around the country. “President Trump’s infrastructure plan will revitalize our nation’s once-great infrastructure and create a safer and stronger America,” he said. “Infrastructure includes more than roads and bridges; we will also rebuild our nation’s crumbling water infrastructure and clean up contaminated land, both of which are critical to environmental protection and economic growth in our communities. Through regulatory reforms and targeted investments, EPA will play a leading role in this effort.”
Too big an engine in too small an agency?
Critics worry about the stress this will put on professionals in agencies across federal and state government. A surge of speedy review and approvals, the argument goes, would require a commensurate surge in human resources.
There is $100 billion included for an "Incentives Program" to be allocated to USDOT, Army Corps & EPA. Of this amount, EPA estimated it will receive about $20 billion for grant programs to support drinking water, wastewater and stormwater facilities and for brownfields and Superfund cleanup and land revitalization. But, unfortunately, the administration seems to go the other way by proposing steep cuts to government departments tasked with infrastructure. In the recently released 2019 fiscal year budget, the administration proposed cutting the budget for the Army Corps of Engineers, for example, by 20%.
Politic critics argued President Trump’s plan does not guarantee anywhere near enough federal financial support for long-deferred repairs and necessary next generation infrastructure projects. Democrats have already proposed their own $1 trillion federal infrastructure investment plan.
But the Trump administration’s infrastructure blueprint does target some pain points of high need. The proposal calls for $50 billion targeted for development in rural communities, too many of which are being left behind during this economic expansion. It also calls for apprenticeship and workforce training, another area of extremely high need in the beginning labor shortage. Looking toward the needs of the next century, President Trump’s infrastructure proposal also calls for an unspecified number of transformative, “next-century-type” keystone projects to be funded with $20 billion.
Water infrastructure funding mechanism flows to other programs
Importantly, it also opens funding up to address “more than traditional infrastructure” including brownfield and Superfund sites by name. Continuing with a recent trend to lean more and more heavily on the relatively new Water Infrastructure Finance and Innovation Act (WIFIA) program, essentially a low cost financing tool financing billions in new projects, the proposal would open a huge source of financing for use in the redevelopment of contaminated land by "broadening eligibility under [WIFIA] to include remediation of water quality contamination by non-liable parties at Brownfield and Superfund sites" (and certain Army Corps flood projects).
Aiming again at a key financing limitation holding back the brownfield space, financing, President Trump’s infrastructure plan would also add cleanup costs to the list of exempt facilities eligible to be financed with tax-exempt bonds, such as Private Activity Bonds (PABs), which were saved year after last minute rallying from the development finance community spared PABs from elimination as voted through in the House.
The redevelopment space is always starved for capital, so additional funding will help improve the health and function of this notoriously stunted market. Additional public capital is particularly helpful because it provides financing possibilities for public and private sector dealmakers to consider how they might assemble capital stacks for projects they might otherwise be unable to finance.
The administration's recipe here seems inspired by the brownfield program, long lauded as one of government's best, most efficient programs. Not only does the EPA brownfield program bust properties out of land use limbo and back onto tax roles, but it leverages an average of nearly $18 for every $1 invested through the program. That's quite a large return. And it’s one reason why these new proposals might receive bipartisan support, because the public sector role is so clear, the need so clearly defined, the returns so outsized and the recipe for success so tested.
But as vital and catalytic as it’s been—and as many communities these proven EPA programs have repaired and revitalized—federal funding for brownfield and Superfund redevelopment is really just a drop is the bucket. There are individual residential homes and commercial buildings that cost more than than Uncle Sam spends on brownfields across the country.
So, the scale of the funding just doesn’t match the need. Or the opportunity. But billions of dollars of additional WIFIA funding would provide massive oxygen that would encourage the healthier growth of the redevelopment sub-space—making underutilized real estate available for use at a time of land constraints in many growing markets.
Big legal changes for land cleanup
The proposal would also make massive changes to land use and cleanup law, perhaps the biggest proposed changes to this area of the law since the brownfield carve-out (Small Business Liability Relief and Brownfields Revitalization Act) amended the Superfund law (CERCLA). The infrastructure plan calls for a “new Brownfields grant program targeted to Superfund sites,” envisioning a kind of parallel program that could be equally as constructive for market activity as its highly successful and wildly popular EPA Brownfields Program. It also includes a Revolving Loan Fund & Brownfield-style grants for NPL sites. And there is additional Superfund flexibility envisioned, whereby areas not related to a Superfund response action could be returned to productive use, which would help communities and developers chip away at larger Superfund sites and accelerate the redevelopment of acres on the edges or in otherwise reusable portions of the site.
The administration's proposal would also grant the EPA greater power. The agency would enjoy greater flexibility by receiving additional statutory authority to grant legal immunity to parties in suits proceeding under CERCLA, which would clarify provisions identified by the Superfund Task Force working as barriers to private investment in cleanup projects were Congress to agree and amend these proposals into law.
A boon for local proaction: expanding of liability relief to municipalities acquiring contaminated land.
Last, and perhaps the opposite of the least of the brownfield ideas buried in the Trump administration’s infrastructure proposal, is a provision detailing “liability relief States and Municipalities Acquiring Contaminated Property through Actions as Sovereign Governments.” It represents an epochal shift with evolutionary implications for local government. Extending liability relief would clear the way for cities to take action and acquire properties without fear of taking on environmental liability more commonly encountered redeveloping legacy sites, which is holding many cities back. To date, only the big, bold or brilliant cities are able to play the brownfield game at scale.
It could unleash a wave of local redevelopment action on legacy sites like we haven't seen in a generation. Perhaps ever.
And the administration is not alone in backing wider use of brownfield liability protections. Recent overwhelming bipartisan votes to reauthorize and modernize federal brownfield policy also allowed for greater liability protections, known as bona fide purchaser protections. Liability protections for redevelopment, it seems, is another place where broad policy consensus has emerged even in these bitterly partisan times.
The legislation Congress is working on to extend liability relief even goes a bit farther. H.R. 3017 would expand EPA brownfield program eligibility to §501(c)(3) nonprofits & §45D(c)(1) community development entities. This would undoubtedly open up a whole new world of possibilities for proactive land banks and community development corporations. Proactive cities could get more aggressive acquiring and pre-developing underutilized real estate in ways they’ve been reluctant to so far because they rightly didn’t want to get stuck with the bill for land they didn’t spoil.
The White House’s infrastructure proposals are only worth the paper they are written on without Congress. Many observers declared this infrastructure proposal, the administration’s FY 2019 budget and EPA budget all dead on arrival. And while Congress will certainly hack away at any grand policy document like this infrastructure plan, perhaps radical departures from the status quo such as this even more so, but we may soon find a surprising amount of bipartisan support for much of the meat within these proposals, especially the WIFIA, brownfield and Superfund elements.
Much of this has been discussed among hard core redevelopment wonks for many years and lay idle on their professional wishlists. The work of the Superfund Task Force seems to have helped spark real momentum towards updating these well-intentioned, high-impact and easily upgradeable programs. It's possible the work the administration has done to reinvigorate the land remediation/reuse and water infrastructure functions of government, which have received vastly more attention than any time in recent memory, has fanned a spark that will last for quite some time.
Our built and natural environments, not to mention our health, wealth and safety, will be better for it.
While there are numerous references to "brownfield" and "Superfund" in the proposed infrastructure plan, the dedicated land use provisions are provided below.
... the following is taken from Trump administration's infrastructure proposal released Monday, February 12, 2018, pages 312-33:
IV. LAND REVITALIZATION (BROWNFIELD/SUPERFUND REFORM)
The below provisions would expand funding eligibility for revitalization projects and establish tools to manage and address legal and financial risks. These provisions would incentivize the development and dissemination of strong infrastructure risk mitigation and asset management standards to accelerate the desired transformational shifts for the public good—increases in revenue generation, risk allocation to the parties best equipped to mitigate concerns, and greater attention to maintenance and innovative design.
A. Create a Superfund Revolving Loan Fund and Grant Program and Authorize National Priorities List Sites to be Eligible for Brownfield Grants
—Currently, the Brownfield program has a revolving loan/grant fund, but under CERCLA Sections 101(39)(B) and 101(41)(C), Superfund sites are not eligible for the program. National Priorities List (NPL) sites currently are not eligible for Brownfield grants.
—Therefore, low interest loan funds are not available to clean up Superfund sites and because NPL sites cannot access Brownfield grants, they cannot fund any development unrelated to the response action.
—Amending the Small Business Liability Relief and Brownfields Revitalization Act to include a Superfund revolving fund would facilitate new investment into Superfund cleanup and reuse and would provide non-liable third parties a low interest source of funds to perform removals, remedial design, remedial action and long-term stewardship. Amending the law (CERCLA Section 101(40)) to allow NPL sites or portions thereof to be eligible for Brownfield grants at EPA’s discretion would make funds available to eligible entities to conduct assessments, complete cleanups, and implement remedy enhancements to accommodate development and perform long-term stewardship. This proposal would include areas of the NPL site that are not related to the response action; areas that can be parceled out from the NPL response action; areas where the NPL response action is complete but the site has not been delisted yet; or areas where the NPL response action is complete but the facility is still subject to orders or consent decrees under CERCLA. This would be a new Brownfields grant program targeted to Superfund sites.
B. Provide Liability Relief for States and Municipalities Acquiring Contaminated Property through Actions as Sovereign Governments
—Currently, State and local governments may be exempt from CERCLA liability as an “owner or operator” if they acquire ownership or control of contaminated property involuntarily through bankruptcy, tax delinquency, abandonment, or other circumstances under which the State or local government involuntarily acquires title by virtue of its function as a sovereign government.
—However, confusion exists regarding the meaning of “a unit of State or local government,” “involuntary acquisition,” and “acquires title by virtue of its function as sovereign,” which inhibits State and local governments from becoming full partners in the cleanup and reuse of Superfund sites.
—Clarifying and expanding the current liability exemption (CERCLA Section 101(20)(D)) to afford State and local governments an exemption from liability for all property acquisitions undertaken by virtue of their sovereign function would encourage these entities to become full partners in the cleanup and reuse of Superfund sites. Additionally, these changes would allow more State and local governments to be eligible for grants and to acquire property without fear of liability. Such relief from liability would be conditioned upon State and local governments not contributing to the contamination and meeting the obligations imposed on Bona Fide Prospective Purchasers (BFPPs) in Section 101(40)(C)-(G), including exercising appropriate care with respect to releases of hazardous substances at the facility.
C. Provide EPA Express Settlement Authority to Enter into Administrative Agreements
—Currently, CERCLA does not provide express authority for EPA to enter into certain administrative settlement agreements to clean up and reuse sites. EPA does not have express authority to settle with BFPPs or other third parties who may be subject to a statutory defense or exemption or to settle administratively with a potentially responsible party who is willing to perform remedial action. CERCLA (Section 122(a)) provides the President with authority to enter into an agreement with any person to perform a response action when the President determines the action will be done properly. CERCLA further requires that when EPA enters into a settlement for a remedial action with a potentially responsible party, the settlement must be approved by the Attorney General and entered into the United States District Court as a consent decree.
—CERCLA limitations hinder the cleanup and reuse of Superfund sites and contribute to delays in cleanups due to negotiations.
—Amending the law to provide EPA with express settlement authority to enter into administrative agreements with BFPPs and other statutorily protected parties and to enter into administrative agreements with any party to perform remedial action in appropriate circumstances (e.g., partial, early remedial action) would promote and expedite the cleanup and reuse of Superfund sites.
D. Integrate Cleanup, Infrastructure and Long-term Stewardship Needs by Creating Flexibility in Funding and Execution Requirements
—CERCLA and appropriations laws restrict EPA’s ability to creatively integrate cleanup, rebuilding infrastructure, and long-term stewardship. Additionally, EPA is subject to a number of restrictions on its ability incorporate infrastructure needs into cleanup design and implementation, particularly with respect to coordinating funding of such activities.
—These restrictions prevent EPA from incorporating infrastructure needs into cleanup design and implementation.
—Removing these restrictions for infrastructure projects that could easily be integrated with the cleanup work and funded by a third party, would enable EPA to better incorporate infrastructure needs (e.g., pipelines, power lines) into cleanup design and implementation and would promote site reuse.
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