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Brownfield
Practical Law Glossary Item 8-500-3363 (Approx. 3 pages)
Glossary
Brownfield
As used in project financing, an existing and operational project being modified to comply with technological, market, legal, or regulatory developments or expanded to increase capacity or production.
Financing a brownfield project presents different issues from greenfield projects, including how to:
- Isolate the revenues generated from the expanded or modified project so they are available to service the new debt and not any existing debt.
- Manage the security interests so the new lenders are adequately secured and by different assets and rights than the existing lenders.
- Ensure the new lenders have no responsibility for pre-existing liabilities and old lenders have no liability for future liabilities attributable to the expanded or modified project.
- Manage the rights of the old lenders and the new lenders who may have different and competing interests.
In the context of real estate and environmental law, abandoned or underused real property for which redevelopment, reuse, or expansion is complicated by the presence or potential presence of environmental contamination. Federal, state, and local governments and agencies (including under the Environmental Protection Agency's Brownfields and Land Revitalization Program) provide incentives for brownfield cleanup and redevelopment.
For more information on project finance transactions, see Practice Note, Project Finance: Overview and Project Finance Checklist.
For an overview of environmental law in the US, see Practice Note, Environmental Law: Overview. For additional guidance on brownfields, see Practice Note, Underground Storage Tanks: Environmental Regulation, Remediation, and Liability Issues: USTs and Brownfield Redevelopment.