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It’s OK to be a brownfield – as long as it’s not too brown – Renewable Energy

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Tucked away in the recesses of the Cut Inflation Act is a provision that reminds everyone why they love Superfund so much. At first glance, it is simply an incentive for the development of renewable energies, which is added to the amount of the investment tax credit (ITC) or the production tax credit (CIP) to which certain renewable energy projects would otherwise be entitled, if they are located in an “energy community”. The adder for projects claiming ITC can increase the ITC credit rate by up to ten percentage points (for example, a project with a base credit rate of 30% is increased to 40%). The addition for projects claiming the PTC is an increase equal to 10% of the PTC otherwise available. The energy community definition has several parts, but the key for today is simply this – any property that meets the definition of a “contaminated site” under CERCLA is considered an energy community. The new amendment only applies to projects commissioned on or after January 1, 2023.

Renewable energy developers are now actively trying to determine if target projects meet the definition. This is where the fun begins. It turns out that the common-sense definition that most people think of when they think of brownfields is not the one that Congress had in mind when it defined the term under CERCLA. A brownfield site is indeed a property whose redevelopment is more difficult due to the presence of historical contamination –
but only if the contamination is relatively minor.

Here’s what renewable energy developers need to know to determine if their property is brownfield and therefore eligible for the IRA adder, or just contaminated property. The basic definition is reasonably clear:

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

However, there are several different exclusions that developers should be aware of. Exclusions are long and complicated, but can be easily classified into four categories. Facilities in either category are excluded from the definition of “brownfields”.

  • Facilities that are in fact federal superfund sites, including:
    • Sites on the national priority list (or proposed for inscription)

    • Sites on which a removal action takes place

    • Sites subject to 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 inconsistent drafting, it is unclear whether the exclusion applies to such orders or only to orders issued under certain other federal environmental laws, including the Conservation and resource recovery 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 while such an order remains in effect.

  • Facilities “for which a permit has been issued by the United States or an authorized state” under the RCRA, CWA, Toxic Substances Control Act, or Safe Drinking Water Act.

  • Facilities subject to RCRA corrective action or where there has been a release of PCBs subject to corrective action under TSCA.

There are nuances, but these are the basics. What is important to understand is that while developers should carefully analyze these exclusions to see if they qualify for the addition, there will still be a significant number of installations where the exclusions do not apply. and the addition will be available.

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The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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