Fact Sheet: Brownfields and Prospective Purchaser Agreements

Revised: January 1997

Contact: For additional information regarding Brownfields and prospective purchaser agreements, please contact the SWRCB Staff Counsel at their website at http://www.swrcb.ca.gov/plnspols/index.html.

Summary

Many communities have abandoned or underutilized properties that are contaminated or polluted or thought to have contamination or pollution, which have not been redeveloped due to concerns about the perceived cost of remediation and liability. These properties are commonly known as "Brownfields." When industrial and commercial facilities are built on "Greenfields" (land with no previous commercial or industrial use), roads, sewers, schools, residences and other infrastructure must be developed, and new units of government created to levy the taxes to pay for them.   Redundant infrastructure not only wastes scarce tax dollars, it adds to the burden on the environment.

The State Water Resources Control Board (SWRCB) has developed a Guidance document to address some of the major Brownfields issues and remove or lessen the liability that prospective purchasers face. This document discusses the major issues and outlines eligibility criteria. The process has been streamlined to reduce negotiation and Regional Water Quality Control Board (RWQCB) review time, lower transaction costs, ensure statewide consistency, and promote compliance with current settlement practices and procedures. The Guidance is intended to provide consistency and coordination with the Prospective Purchaser Policy developed by the Department of Toxic Substances Control (DTSC).

The SWRCB acknowledges that a Prospective Purchaser Agreement (PPA) with a prospective purchaser of contaminated or polluted property, given appropriate safeguards, may result in an environmental benefit through a commitment to perform approved investigative and cleanup activities. Additionally, PPAs can benefit the community, or the state as a whole, by encouraging the reuse of properties where the perceived liability may pose a barrier. A critical factor for determining eligibility for a PPA is that the prospective purchaser must establish the project benefits to the public in terms of job creation, an increased tax base, and/or opportunities for disadvantaged groups.

All the following criteria will be considered before the RWQCB contemplates entering into a PPA. These criteria are intended to reflect the SWRCB's commitment to removing the barriers to proposed redevelopment of property imposed by potential liability, while ensuring the protection of public health and the environment.

The site falls under the jurisdiction of one of the RWQCBs because of a pollutant release, and the RWQCB is the lead agency.

The prospective purchaser is willing to enter into an agreement with the RWQCB. The agreement provides that: (a) the prospective purchaser is willing to pay RWQCB oversite costs, and (b) the proposed cleanup activity will completely clean up the site or will make significant progress toward a complete remedy.

Unauthorized disposal of pollutants or contaminants is not currently occurring at the site.

The prospective purchaser is not a responsible party or affiliate of a responsible party with respect to the release(s) existing at the time the PPA is executed.

A complete site assessment or equivalent has been performed and provided to the RWQCB identifying the waste, pollutant, or contaminant releases at the site.

The waste, pollutant, or contaminant release site is not the subject of an enforcement action or agreement with another agency with jurisdiction to address the remediation at the site unless that agency transfers oversight to the RWQCB.

A substantial benefit will be received by the public as a result of the PPA, which would not otherwise be available (e.g., potential environmental benefits, significant progress towards site remediation, value to the community in terms of additional jobs, an increased tax base or opportunities for disadvantaged groups).

The continued operation at the site or new site development, with the exercise of due care, will not exacerbate or contribute to the existing pollution or interfere with the investigation of the extent, source and nature of the substance release(s), and/or the implementation of remedial or removal actions.

The effect of continued operation or new development on the site will not result in health risks to those persons likely to be present at the site.

The prospective purchaser is financially viable and willing to provide instruments of financial assurance. Financial assurance is needed to ensure that: (a) the prospective purchaser has sufficient funds to complete the agreed upon investigation and remedial action; (b) any existing site condition is not exacerbated due to lack of action; and (c) the RWQCB is reimbursed for its oversight.

The prospective purchaser is a "bona fide prospective purchaser" (i.e., a person or entity that is purchasing all or part interest in real property, but is not affiliated with any person potentially liable for response actions at a site). The bona fide prospective purchaser must provide evidence of these conditions to the RWQCB.

The RWQCB only has authority to negotiate a PPA on behalf of itself and no other state agency. The DTSC has recently issued a policy on PPAs, which is included as an appendix to the SWRCB Guidance.