Many folks are trying to figure out just how changes in environmental regulations under the Trump Administration will impact the business community, commercial real estate financing and investment, and the environment itself.
It is undeniable that the Administration and the Environmental Protection Agency (EPA) have aggressively sought to eliminate many environmental regulations enacted during the Obama and Clinton years. The EPA has rolled back auto emissions standards, the “once-in, always-in” (OIAI) industrial pollutant standards, and the Clean Power Plan. President Trump has also announced the U.S. would withdraw from the international Paris Agreement on Climate Change.
In addition, the EPA is relaxing its enforcement of many regulations still on the books, reducing staff, and is reportedly filing fewer lawsuits against corporate polluters.
The long-term impacts of these policy changes on the climate and the environment are still unclear. However, under Trump, the U.S. Government has also made some positive moves to help support both environmental cleanup efforts and economic development, two worthy objectives that are not, despite the popular rhetoric, intractably at odds.
One example is Brownfields. Studies have shown that Brownfield cleanup projects return $18 for every $1 of taxpayer investment. The EPA has also reported that 7.3 jobs are created for every $100,000 in brownfield investment.
Toward this end, the bi-partisan Omnibus Bill passed by Congress and signed into law by President Trump on March 23, 2018 included the Brownfields Utilization, Investment, and Local Development (BUILD) Act of 2018, which increases federal funds available for Brownfields cleanup from $80 million to $200 million annually. It also gives priority to so-called “bluefield” sites, located on waterfronts or within floodplains, and “brightfield” clean energy projects. These new incentives should spur investment in these two important project categories, helping to combat the impacts of climate change on vulnerable properties located on waterfronts or prone to flooding, and accelerate the adoption of clean energy solutions.
In addition, Trump’s 2018 infrastructure proposal calls for up to $100 billion in additional funding to be allocated toward Brownfield and Superfund cleanup, plus another $10 billion from the government’s Rural Infrastructure Program.
The infrastructure proposal also expands the types of projects eligible for funding under the EPA’s Brownfields program to include Superfund sites and National Priorities List (NPL) sites, which were historically excluded by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The proposal also seeks to clarify and expand liability relief for property owners and lenders from CERCLA.
“The Trump administration’s body of brownfield work is impressive, if largely unnoticed,” says Dan French, CEO of Brownfield Listings, LLC, a national property marketplace and project workspace for real estate with reuse challenges. “Various brownfield reauthorization bills have been floating around Capitol Hill for half a decade or so. Rescuing a popular, bipartisan and high impact program from legislative stagnation and passing the BUILD Act this year is one of the administration’s cleanest wins, which will go a long way towards cleaning up contaminated properties through greater investment for years to come.”
The Administration is seeking to merge the missions of environmental remediation and economic development in other ways, as well. The Tax Cuts and Jobs Act of 2017 included a provision for establishing Opportunity Zones in low-income and depressed urban and rural communities. These Zones will provide tax incentives for investors to invest their dividend earnings into Opportunity Funds, which will help promote economic development in these depressed areas. The bipartisan public policy organization Economic Innovation Group (EIG) estimates the total unrealized capital gains held by households and corporations at $6 trillion, representing a huge potential market for investment in Opportunity Zones.
The net gain from all these changes at the federal level is complex, and only time will tell whether the overall impact will be net positive or negative for the business community, the country, and the planet. But it is worth exploring the many programs available today that are intended to both spur economic development and support our environment.