Environmental Law Matters

As part of an evolving effort to encourage the redevelopment of brownfield properties, the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA" or "Superfund") was amended in 2002 to provide a defense against liability for existing property contamination for a class of purchasers who were not otherwise responsible for the condition. This is specifically referred to as the Bona Fide Prospective Purchasers ("BFPP") defense. It can be asserted to avoid liability under Superfund if a party can demonstrate its compliance with applicable requirements specified in the Act as augmented by regulations adopted by EPA. Essentially, these require that a party exercise sufficient precaution by way of inquiry and investigation about a prospective property purchase (know as the All Appropriate Inquiry process) and comply with other applicable provisions. Generally, these involve providing all required notices; the exercise of care to prevent making the contaminated condition worse; cooperation with remediation efforts; and, compliance with any land use restrictions applicable to the property. These rules were clearly applicable to purchasers of contaminated property, but they left open the status of tenants who leased property from purchasers who complied with BFPP rules. Earlier guidance adopted by EPA made clear that a tenant of a land owner who is a qualified BFPP would also benefit from the protection. The various options, including original guidance about tenants is found here on EPA's website here. On December 5, 2012, EPA issued additional guidance titled "Revised Enforcement Guidance Regarding The Treatment Of Tenants Under the CERCLA Bona Fide Prospective Purchaser Provision." This new guidance expands the prior guidance by making clear that even if a property owner does not qualify for the BFPP defense, its tenant may nonetheless qualify if the tenant independently meets the requirements for BFPP or "innocent" status. The guidance, found here, also indicates that EPA will issue letters in the appropriate circumstances clarifying a tenant's potential liability with respect to a particular parcel or transaction. Samples of the letters are also included in the link.