From the August 2002 issue of Entrepreneur

It's not often a new law is cheered by so many parties normally in conflict. But the Small Business Liability Relief and Brownfields Revitalization Act, signed into law in January, is something small-business groups, environmentalists, developers and advocates for the inner city can all agree on. Focusing on commercial and industrial land contaminated by toxins, the new law overhauls some troubling aspects of CERCLA (The Comprehensive Environmental Response, Compensation and Liability Act), the 1980 law that created the Superfund.

Under CERCLA, the EPA identifies sites, cleans them up, and seeks reimbursement from those responsible for the mess. The problem is old commercial and industrial sites may have changed hands many times, and the EPA was allowed to exact the entire cost of cleanup from any of the parties involved: whoever created the problem, the property owner at the time of contamination, the lender who financed the purchase of the property, or, easiest to find, the current owner, who may have had nothing to do with it. Then the parties fight it out in the courts. The nightmare of lawsuits and counter-lawsuits typically drags on for years.

That's why so many cities are blighted with a ring of abandoned industrial sites-some 600,000 nationwide. It's been less risky to build on a cornfield than to redevelop a brownfield that may immerse the company in litigation.

New Hope

So what's in the new law? Title I, Small Business Liability Protection, protects business owners whose everyday waste ends up at a Superfund site. Suppose your shop generates small quantities of ordinary waste, and the firm that hauls it away takes it to a landfill on the National Priorities List for cleanup. Title I presumes you would be exempt from litigation unless there's strong evidence the waste contributed significantly to the problem.

Title II, Brownfields Revitalization and Environmental Restoration, allows new purchasers of brownfields to avoid federal liability if they follow state voluntary cleanup rules when they're decontaminating the property. State standards are typically less rigorous and more flexible than the federal standards, notes David B. Hird, a lawyer with Weil, Gotshall & Manger in Washington, DC, who drafted parts of the law on behalf of the Real Estate Roundtable. Even if the EPA decides to clean up the site further, the developers and new owners are off the hook.

The brownfields law also protects owners of contiguous properties that may have been cross-contaminated, and provides $200 million in federal funds for states to develop or expand reclamation programs.

"What I think will happen is that people will be more willing to buy these properties," Hird says. "It means more land will be back in public use." And that's good for everyone.


Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.