Governor Signs Significant Environmental Legislation: Jennifer Hernandez Reviews Impacts Of Approved Bills

Jennifer, let's begin by having you update our readers on the just completed legislative session and the environmental bills you were following. What bills of significance made it to the Governor's desk?

On the brownfields front, three bills have made it out of the Legislature this year: The first makes some desperately needed reforms to a loan program for brownfield projects; The second authorizes the Governor and CalEPA to explore creating a subsidized environmental insurance program; And the third takes aim at some key policy items that have been frustrating brownfield cleanup and reuse projects in California.

Let's focus on that last one first. SB 32, requires the State to establish cleanup standards. Relate for our readers how those standards would translate for a real estate project.

One of the biggest questions with brownfield projects is "How clean is clean?" And while 42 states have already adopted cleanup standards for brownfield sites, California has not. Because of that, local governmental agencies have been forced to devise elaborate regulatory and technical negotiation processes to establish how clean a site must be.

SB 32 begins to settle that question in California by requiring the California EPA to establish a statewide screening standard for soil cleanup levels on brownfield projects. The bill asks that CalEPA review the standards devised by the San Francisco Regional Quality Control Board for the 9-County San Francisco Bay Area region and extrapolate a set of statewide levels. Setting clear standards is an incredibly important step towards effectively mitigating brownfield sites. Once you know how clean you need to make a site, you can more accurately predict how much it will cost to clean it up. And if you know how much it's going to cost, you know whether it is cost effective to buy, clean and reuse.

Additionally, while it's always been possible to negotiate liability on a site-specific basis, but between lawyers, technical consultants and agency oversight costs, the cost of obtaining liability protection for local governments and others trying to cleanup and redevelop brownfield sites could easily surpass $50,000-$100,000 to negotiate a site-specific immunity deal. This bill expands the kind of immunity offered to redevelopment projects by California's Polanco Act to all brownfield sites that are cleaned up pursuant to the SB 32 local government coordination process and makes that immunity available as a matter of right on these brownfield projects. Motivated communities that use the SB 32 process can get assured access, at no additional costs, to this immunity protection.

Jennifer, maybe one way for our readers to understand what the tradeoffs are and how to evaluate the importance of this bill is for you to give us a sense of who opposes it. What are their reasons for opposition? And how were those arguments overcome?

Many environmental advocacy groups have long advocated the removal of all residual levels of contaminants, no matter how benign. That stance raises real questions, particularly when we have background levels of some chemicals present naturally. If your view is that nothing can be left in place and everything must be pristine, as a practical matter, that means you dig up a lot of dirt and put it in somebody else's backyard.

On the other side of the spectrum, some industry groups have advocated that virtually all or most of the contamination in place should remain and that they should only be required to cap the site with asphalt. They were not looking to make the cleanup process easier, they merely wanted to avoid requiring landowners from stepping up to the plate and doing the cleanup.

Those two sides of the spectrum have effectively neutralized each other and prevented political progress on this issue in California for more than a decade.

Those arguments were overcome through a strong coalition of community-based affordable housing advocates, park advocates, minority groups, health groups and school advocates that came together and said that the current and historic status quo of no action was no longer acceptable. It was that coalition that forced the two sides to accept the notion of cleanup standards based on protecting human health, safety and the environment.

Let's focus on the other pieces of legislation you mentioned in our opening question. Give us your assessment of the loan program.

After being far behind most of the rest of the country, California last year got on board with the notion that certain brownfield reuse projects are simply not financially feasible if purely based on a private market model. Because of that, both the Treasurer's Office and Cal EPA ended up crafting legislation last year that allows them to start funneling loans to do assessment and environmental remediation work at these locations.

The Treasurer's Office is pursuing a very strategic partnership approach, whereby they partner and allocate matching grants to local governments which stimulate otherwise unfeasible brownfield reuse projects.

In contrast, the original CalEPA program was something of a fiasco. Their program initially excluded all properties with existing mortgages from being able to qualify for loans, effectively making sure that only the wealthiest corporations and owners would qualify. Some of the more egregious problems with that loan program have now been corrected. And the new program will likely be more robust. But, the failure of the original program was a huge embarrassment to the administration.

And the bill encouraging environmental insurance, what about that one?

The bill basically subsidizes environmental insurance. It's still quite unclear how much of a need there is for this subsidy, but that piece of legislation has been a CalEPA priority for quite some time. There is a fair amount of skepticism in the market that subsidized environmental insurance will make much of a difference. But we're open to letting them try.

Let's use the framework and issues we've discussed apply it to Belmont. In an interview last month with LAUSD Director of Environmental Health and Safety, Angelo Bellomo, he made no mention of environmental standards, but rather spoke of the current state environmental review period as the main challenge to a project. In your view, would having state standards make review of school sites easier?

Tremendously easier. Having standards would make the review process for school sites much easier in the sense that everyone would be focused on the same outcome. School districts could decide whether or not a site was clean. If it did not meet State standards, they could examine how much it would cost to achieve those cleanup levels.

The agency review process would no longer take a year or two to complete risk assessment and site-specific cleanliness studies. And it would be hugely beneficial for urban school districts like LAUSD that are going to need to formally reuse previously developed sites if they hope to build the schools they need.

Again in that interview with Mr. Bellomo, he said re: Belmont, "We've got reports that the site can be mitigated and we've also received information that it cannot. But none of these reports have put that information into the type of dollars and cents format necessary to finally answer whether it is feasible for the district to move forward." Give us your reaction to that analysis and again how it plays into the reform efforts you've been working on with the Legislature.

The whole issue of whether you want to get to a bottom line and how much it's going to cost to make a site clean comes down to how the project is managed. If Angelo has got a lot of data going in one direction or another, the next step is to have someone prepare a report that simply puts that data in the context of how much it's going to cost to clean it up.

Given the controversy at Belmont, the idea that there are differing experts is not surprising. But it's Angelo's job to sort through those expert opinions and get to the bottom line. And that has to start with how clean is clean.

There have been a series of significant crises that have challenged the State this year. Will these new foci of security and energy distract us from the environmental agenda that you've been working on for the last couple of years?

It's a very strange time for the environmental community. On the one-hand, brownfields revitalization is no longer a niche issue. We now have community-based groups in both the public and non-profit sector that have coalesced around the idea of rebuilding and rehabilitating our existing built environment. Because of that we have an enormous chance to delve further into environmental issues.

However, because of the energy problems, the events of Sept. 11 and the resulting projected federal and State budget challenges for next year, public spending priorities for environmental issues are at risk now. And if the environmental programs we've talked about are some of the measures that wind up being cut this year, it would be an devastating outcome for the environmental community. These are solutions to problems that have plagued the State for a long time, I hope that despite the current economic tightening, they will still be considered cost-effective.

We are also encouraged by the fact that the Governor signed SB 32 and directed that adequate funds be spent to assure that the clean-up standards be established. Since the rest of SB 32 is effectively self-funded, through required reimbursement of state environmental agency oversight costs, we're very hopeful that SB 32 will be fully implemented as enacted.

Of course, brownfields redevelopment remains completely linked to the health of the real estate market. While it's unfortunate that California's tardy adoption of brownfield legislation missed the most recent real estate market cycle, we hope that ongoing redevelopment efforts-especially funded programs aimed at affordable housing, schools and parks-will still benefit from these brownfield policy reforms.