Brownfields Incentives in the Corn Belt: Comparing the Missouri and Illinois Statutes

Thomas P. Redick
Kathleen S. Northcutt

While Missouri and Illinois are well-known for comprising the heart of the “corn belt,” in between those fields of green these states are also home to thousands of “brownfields”– slightly contaminated properties that have fallen into less productive uses and need a shot in the arm to become part of a “redevelop ment” project. This article will profile the approaches taken by Missouri and Illinois – states divided by the Mississippi River that have taken different approaches to incentives to encouraging cities to redevelop brownfields.

Missouri Incentives for Brownfields Redevelopment

Through the leadership of certain far-sighted state officials, Missouri’s brownfields programs have carved out a fair and generous approach to rewarding redevelopment. Missouri’s brownfields programs are widely regarded as more generous than those across the river in Illinois, which have limits that are so low, many brownfields cleanups would only be partially compensated by the incentives.

The Missouri Brownfield Redevelopment Program is administered by the Department of Economic Development and the Department of Natural Resources (MDNR). See http://www.ded.state.mo.us/business/economic assistancecenter/summarysheets/taxcredits/redevelopment/brownfieldredev.shtml. Provisions relating to this program are found at 447.700 to 447.710 R.S.Mo. According to the MDNR, “The program’s purpose is to provide incentives for the redevelopment and revitalization of ‘environmentally challenged’ properties.” Financial incentives are available through the Missouri Department of Economic Development. The Voluntary Cleanup Program discussed below oversees all brownfields site cleanup whether funded by the state or federal government. See http://www.dnr.state.mo.us/alpd/hwp/hwpvcpbrownfields.htm.

Financial Incentives

Missouri’s brownfields programs take a three-pronged approach to a varied set of problems. First, Missouri has a generous brownfields redevelopment program that offers the prospect of paying for up to 100 percent of the cost of reasonable remediation measures. As an additional incentive, tax credits are provided for new job creation. This includes up to $400 per employee per year. 447.708.1
(2) R.S.Mo.

A second statutory mechanism exists outside the brownfields statute and can be adapted to brownfields. Missouri entices owners in particular “enterprise zones” to create businesses. R.S.Mo. 135.205. This program appeals to manufacturing and office-related developments, from simple warehouses to full scale “biotech wet labs.”

The third statute that can be included within the Missouri brownfields toolbox is the “Distressed Communities Tax Credit.” 135.110 R.S.Mo. This statute is designed to promote growth in certain less economically advantaged parts of Missouri.

Voluntary Cleanup Program

Missouri has established a Voluntary Cleanup Program (VCP) under which one may remediate a site under the supervision of the MDNR. The statutes regulating this program are located at 265.565 R.S.Mo. et seq. Any site contaminated with hazardous substances and/or waste qualifies (with the exception of sites constituting an imminent and substantial threat to public health or environment, sites being considered for NPL listing under CERCLA, sites warranting enforcement under RCRA or sites warranting enforcement under the Missouri Hazardous Waste Law). See http://www.stlrcga.org/environment/brownfields.html for more information. The VCP is designed to provide developers with flexibility in cleanup options and to encourage redevelopment. In exchange for entering into the program and paying administrative costs (typically ranging from $1,000 to $5,000 per site), a participant will receive a Notice of Completion, or a “no further action (NFA) letter.” This letter will indicate that no further remedial action is necessary.

Underground Storage Tank Fund

Missouri has a fund for the cleanup of underground storage tank sites. Information regarding the Petroleum Storage Tank Insurance Fund may be found at http://www.pstif.org/index.shtml. The fund will pay up to $1 million per incident minus a $10,000 deductible.

Risk-Based Cleanup Standards

Missouri has also adopted the concept of risk-based cleanup standards. Risk-based standards acknowledge that certain sites do not need to be as clean as others. Missouri uses risk-based standards set forth in its Cleanup Levels for Missouri (CALM) guidance. See http://www.dnr.state.mo.us/alpd/hwp/calm.htm.

Releases from Liability

As with many brownfields programs, a buyer in the redevelopment project expects to emerge from development with a clean regulatory bill and no future cleanup obligations from regulatory chain of command and policy decisions to ratchet down the standards for “how clean is clean.” Missouri’s Voluntary Cleanup Program will provide developers with a Certificate of Completion which will state that no further remediation at the site is necessary provided new contamination is not discovered. See http://www.dnr.state.mo.us/oac/pub2036.pdf.

Illinois Incentives for Brownfields Redevelopment

Illinois is proud of being one of the first states to launch a “voluntary cleanup program” for cleaning up non-priority, minimally threatening environmentally contaminated sites around the state. See, Illinois Environmental Protection Agency, Illinois Brownfields Cleanups: Quicker, Cheaper, Effective: Decision-makers’ input streamlines successful but cumbersome program. http://www.epa.state.il.us/environmental-progress/v22/n3/brownfields-cleanups.htmlAdditional information about new and amended state laws and regulations involving brownfields cleanups can be found on the Illinois Pollution Control Board’s Web site at www.ipcb.state.il.us and the Illinois EPA’s at http://www.epa.state.il.us/land/brownfields/index.html.

The Illinois EPA promotes brownfields redevelopment with a four-step approach.

Brownfields Redevelopment Grant Program (Assessment Only)

These incentives are available only to municipalities. The maximum award to cities participating in the program is $120,000. The program requires a 30 percent matching fund from the city, but this requirement could be met with in-kind services such as city staff participation at an agreed hourly rate. The grant funds must be used within three years of issuance. The statute will pay for environmental assessments and development of cleanup plans from this limited fund, but will not pay for actual remediation costs (see Brownfields Redevelopment Loans below). As with the federal brownfields laws (in contrast to the federal CERCLA statute, which contains a petroleum exclusion), the Illinois program includes funding for properties contaminated with petroleum.

Brownfields Redevelopment Loan Program (Remediation)

For actual remediation of the contamination found at the brownfield, Illinois offers a low-interest loan program. This is available for both the agencies (any unit of local government) and private parties interested in developing brownfields. The loan amounts offered can go up to $500,00 for any single loan application with a maximum of $1 million for each brownfields project. This money can be used for remediation, some limited investigation and demolition. The repayment time frame is 5 years, however, which is a tight time frame that some builders may balk at for a loan of this size. Costs of acquiring property and any costs incurred before the loan date are excluded from this program’s coverage.

Brownfields Cleanup Revolving Loan Fund

This low-interest loan program applies only to municipalities that have been given a demonstration “pilot” grant from the U.S. Environmental Protection Agency or have been targeted under the Illinois EPA “targeted brownfields site assessment” program. In contrast to the grant program above, this loan cannot be used for petroleum contamination. Moreover, borrowers are expected to conduct community-relationship-building activities.

UST Program

Like most states, Illinois also has a fund for removal and remediation of underground storage tanks (USTs) for up to $1 million in cleanup and assessment costs.

Flexible, Risk-based Cleanup Programs

Illinois EPA takes pride in its flexible, risk-based methodology for deciding “how clean is clean” at sites that may not need a full scale cleanup to “background” levels (i.e., pristine pre-industrial status in an industrial zone). The Illinois EPA takes into account site conditions and land use and can allow some contamination to remain in place if there is no health threat posed by it. This includes measures leaving waste in place if there are adequate institutional controls and well-engineered barriers to releases. This flexible approach gives more control to site owners and redevelopers in areas that are zoned industrial and will not be used for schools or hotels. The colorful name given to this program is “TACO” for “Tiered Approach to Corrective Action Objectives.”

Releases from Liability

Like Missouri’s brownfields program, the TACO system allows Illinois regulators to issue “No Further Remediation” letters to the buyers of brownfields properties who follow the guidelines. This letter may identify land use limitations to avoid future uses that are not consistent with the residual contamination that may be present. This release has to be filed by the recipient with the county recorder of deeds. Where an agreement with U.S. EPA is required, there are both the “Superfund Memorandum of Agreement” and the “RCRA Memorandum of Understanding” that merit review and consideration. In general, brownfields sites that complete cleanup qualify as sites that are of “no federal interest” for purposes of the federal Superfund and RCRA laws.

Conclusions

As these states in the Corn Belt remedy the legacy left by “Rust Belt” industries, the brownfields programs in each state will provide the grease that gets the rusty gears of redevelopment turning. Missouri and Illinois represent an experiment in federalism at its best, with policy experiments taking place on either side of the Mississippi River. Only time will tell which state provides the best brownfields toolkit for cleaning up properties under its jurisdiction.

Thomas P. Redick is a member of the litigation department of Gallop, Johnson & Neuman, L.C. in St. Louis and a vice-chair of the Section’s Committee on Toxic Tort and Environmental Litigation. For further information, contact Tom Redick at tpredick@gjn.com. Kathleen S. Northcutt is an associate in the government affairs department of Gallop, Johnson & Neuman, L.C. in St. Louis.