After fire destroyed the buildings housing the Sarah-Lil used-machinery dealership in the early 1990s, it seemed the plot might never be redeveloped. The Dearborn, Mich. site was an eyesore and, worse yet, contaminated with PCBs, lead, and assorted carcinogens from industrial tenants as far back as the 1920s.
The challenge of bringing "brownfield" sites like the Sarah-Lil plot back to life are daunting. Often, the polluter is out of business or cannot pay for a cleanup. And developers are leery of acquiring such sites because state governments, as well as the Environmental Protection Agency, can hold new owners responsible for cleaning up existing pollution. In older cities, where these sites are most common, the dead spaces are conspicuous symbols of lost jobs and shrinking tax revenues.
But the challenges are far from impossible. Today, the old Sarah-Lil site is home to a gleaming, 140,000-square-foot service center for flat-rolled steel, owned by Kenwal Steel Corp., a Dearborn company that employs 130 people. This thriving operation is the fruit of a Michigan-born approach to cleanup that brings together private investors with state and federal environmental authorities.
Indeed, Michigan's brownfield remediation efforts have proved so successful that they are now the standard for dozens of other states. And the model may soon go national. A bill sponsored by Senator Robert C. Smith (R-N.H.) passed the Senate 99-0 on Apr. 26, with support from the EPA and the White House. The House will begin work on its own bill in May, and lawmakers hope for a final vote later this year. "It produces revenue, it puts people to work," says Smith. "It's a win, win, win."
Michigan offers plenty of encouraging examples. All told, 2,944 brownfield projects have been launched under the state's seminal 1995 redevelopment law. Key to its success is a "polluter pays" provision that exempts new property owners from cleaning up contamination they didn't cause. Now, if the original polluter is bankrupt or can't be identified, the state kicks in some assessment and cleanup funding. The state also worked out a deal with the EPA so that the agency would match Michigan's polluter-pays terms and forgive new buyers from federal liability for existing pollution. And since 1995, the EPA has worked out similar deals with dozens of other states.
FLEXIBLE. The results? A polluted steel-manufacturing site in Buffalo, N.Y., is now home to a hydroponic tomato greenhouse. A 100,000-square-foot retail project has sprouted on a slag heap in Pittsburgh, and a former Bridgeport (Conn.) valve factory has been transformed into a ballpark and recreational facility. Such examples are common, according to a recent, independent study conducted by the nonpartisan Council for Urban Economic Development of 107 brownfield sites being developed under similar guidelines. The study found that, for every $1 of federal funding poured into these projects, $2.48 in private funding has followed, says Linda Garczynski, director of outreach and special projects at the EPA. And, the EPA estimates, some 11,000 new jobs have resulted from these redevelopment projects.
Here's how it worked at the Sarah-Lil site. Because it was difficult to determine who caused the original pollution and the most recent owner had no money for cleanup, state and federal programs kicked in $803,000 to identify contamination, remove leaking underground storage tanks, and clean up lead-contaminated soil. That cleared the way for more than $20 million in investment from Kenwal.
COMPROMISE. The key to Michigan's success with this program, as Kenwal found, is its flexible approach to cleanup. The state sets environmental criteria based on expected safe-exposure levels. So a site for an old folks' home is restored to near perfection, while a steel mill plot can remain a little dirtier. The state monitors the cleanup process, and the EPA checks in, too. At Sarah-Lil, the state allowed PCB-tainted cement to be capped with new layers of concrete and also sealed PCB-contaminated pits. To protect future generations, the property deed alerts owners of the covered PCBs and limits future uses.
The Smith legislation has the support of many green-friendly Senators, as well as the backing of environmental groups. Nevertheless, there has been some public dissent over the precedent that it sets. "The standard in most states is to clean up hot spots," says Ed Hopkins, director of the Sierra Club's Environmental Quality Program. "But they aren't cleaning these up--they're covering them up." And despite Michigan's efforts to limit the terms of reuse, Hopkins is concerned that enforcement may wane over generations. More broadly, he argues that after struggling for years to wrest control from the states, the EPA cedes too much power to the states under this new arrangement.
Michigan's brownfield program is clearly a compromise. But most people are willing to accept that: The public wants clean development, but not at any cost. The alternative to redevelopment, says Russ Harding, director of Michigan's Environmental Quality Dept. and one of the architects of the state's groundbreaking 1995 statute, is a dead patchwork of sites that no one will buy. Like Michigan, most states would prefer to replace these polluted zones with new industry on old land that's been made clean enough.
By Jeff Green in Detroit, with Lorraine Woellert in Washington, D.C.
Get BusinessWeek directly on your desktop with our RSS feeds.
Add BusinessWeek news to your Web site with our headline feed.
Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video.
To subscribe online to BusinessWeek magazine, please click here.
Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
Printer-Friendly Version
