It’s Good to Be a Brownfield Site — As Long As It’s Not Too Brown

Tucked away in the recesses of the Inflation Reduction Act is a provision that reminds everyone why they love Superfund so much.  On its face, it’s simply an incentive for renewable energy development, giving an adder to the amount of the investment tax credit (ITC) or production tax credit (PTC) to which certain renewable energy projects would otherwise be entitled, if they are located in an “energy community”.  The adder for projects claiming the ITC can increase the ITC credit rate by as much as ten percentage points (e.g., a project with a base credit rate of 30% is increased to 40%).  The adder for projects claiming the PTC is an increase equal to 10% of the PTCs otherwise available.  The definition of energy community has multiple parts, but the key for today is simply this – any property meeting the definition of a “brownfield site” under CERCLA is considered an energy community.  The new adder only applies to projects placed in service on or after January 1, 2023.

Renewable energy developers are now busily trying to figure out whether target projects meet the definition.  Here’s where the fun starts.  It turns out that the common sense definition most people think of when they think about brownfield sites is not what Congress had in mind when it defined the term under CERCLA.  A brownfield site is indeed a property where redevelopment is more difficult because of the presence of historic contamination – but only if the contamination is relatively minor.

Here’s what renewable energy developers need to know to determine whether their property is a brownfield site and thus eligible for the IRA adder, or whether it’s just a piece of contaminated property.  The basic definition is reasonably clear:

The term “brownfield site” means real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant.

However, there are several different exclusions about which developers need to be aware.  The exclusions are lengthy and complicated, but can be conveniently placed into four categories.  Facilities in any of the categories are excluded from the definition of “brownfield site”.

  • Facilities that are actually federal superfund sites, including:
    • Sites on the National Priorities List (or proposed for listing)
    • Sites at which a removal action is occurring
    • Sites that are the subject of a court order, consent decree, or administrative order under CERCLA
  • Facilities that are otherwise subject to court orders, consent decrees, or administrative orders. (Maintaining CERCLA’s reputation for incoherent drafting, it is not clear whether the exclusion applies to any such orders or only orders issued pursuant to certain other federal environmental statutes, including the Resource Conservation and Recovery Act and the Clean Water Act.)  Fortunately, the language is written in the present tense, so at least it is clear that this exclusion only applies where such an order remains in effect.
  • Facilities “to which a permit has been issued by the United States or an authorized State” under RCRA, the CWA, the Toxic Substances Control Act, or the Safe Drinking Water Act.
  • Facilities subject to RCRA corrective action or at which there has been a PCB release subject to remediation under TSCA.

There are nuances, but these are the basics.  What’s important to understand is that, while developers need to carefully parse through these exclusions to see if they are entitled to the adder, there will remain a significant number of facilities where the exclusions are not applicable and the adder will be available.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.