Millions in Brownfields Funds Unused, Inspector General Says

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By Sylvia Carignan

Confusion, inconsistency and a lack of direction from the EPA kept investors away from about $11 million in potential brownfields cleanup funding, according to the agency’s inspector general.

Millions in brownfields grants sit unused in city, county and state accounts, the Environmental Protection Agency’s Office of the Inspector General reported Aug. 23, meaning millions less for borrowers to invest in site cleanup and land reuse.

“These funds are not being placed into active use as frequently and as fully as they could be and they should be,” Michael Goldstein, managing shareholder of the Goldstein Environmental Law Firm, told Bloomberg BNA.

Outstanding Needs

In general, he said, the federal government doesn’t provide enough funding to remediate brownfields.

“It’s modest compared to the need that’s out there,” he said.

In Florida’s Miami-Dade County, Goldstein said, several brownfields projects are ready for remediation but don’t have enough funding to address contaminated groundwater, which can be costly, depending on the methods employed such as pumping systems that remove and then treat the water.

“Those sites require multi-million dollar expenditures to develop an off-site conveyance system,” he said, but additional investment from the federal government would further remediation goals.

The EPA Brownfields Program provides grants and technical assistance to communities and states to assess, clean up, and reuse properties that are contaminated by hazardous substances. The agency resolved to reduce the amount of time brownfields funding goes unused by setting deadlines, according to the report. The EPA anticipates having those new deadlines ready by the end of March.

Rep. Elizabeth Esty (D-Conn.), who recently introduced a bill that would reauthorize funding for the brownfields program ( H.R. 1758), is still reviewing the report, according to her spokeswoman.

Loaning Potential

The inspector general specifically analyzed the use of the EPA Brownfields Program’s Revolving Loan Fund grants, which allows grant recipients—often local and state governments—to loan out money to clean up brownfield sites. Once the loans are paid back to the grant recipient, the funding goes to other borrowers.

But state and city governments are leaving those federal funds unused because they can’t find the right brownfields site for the funding, the market isn’t right for redevelopment, or those government agencies already had other brownfields efforts in progress, the inspector general found.

Larry Schnapf of Schnapf LLC, an environmental law firm, said he has had “mixed success” using revolving loan fund money for affordable housing projects.

Besides having to work with EPA to change eligibility criteria for the loans, “the application process is tedious and generally not responsive to needs of development projects,” he told Bloomberg BNA.

“If we want to truly create a loan incentive, then we need to make that loan program as efficient and as easy to use as possible,” Goldstein said.

In addition, EPA regional staff’s varying interpretations of loan terminology, a lack of annual reports from grant recipients, and inconsistent information caused confusion for those who would have administered grants.

Using Federal Funding?

The inspector general found that for half of the revolving loan fund agreements it reviewed, grant recipients did not re-loan funding or spend program income.

Those recipients were:

  •  Philadelphia
  •  Clearwater, Fla.
  •  Sioux City, Iowa
  •  Bridgeport, Conn.
  •  Cuyahoga County, Ohio
  •  Ohio Department of Development
  •  Colorado Department of Public Health and Environment
  •  Michigan Department of Environmental Quality
  •  Nevada Department of Conservation and Natural Resources
  •  New Mexico Environment Department
Some recipients lost out on thousands in additional funds because they did not deposit their grant money in an account where it could collect interest, the report said, but the EPA fails to require that. The inspector general also found incomplete financial records and potential misuse of funds.

The Office of the Inspector General issued more than 20 recommended improvements for regional administrators and the Office of Land and Emergency Management. The EPA has pledged to complete those changes by the end of fiscal year 2018.

To contact the reporter on this story: Sylvia Carignan in Washington at scarignan@bna.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bna.com

For More Information

The report from EPA's Office of Inspector General is available at http://src.bna.com/rUD.

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