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Buying a brownfield? U.S. District Court ruling provides rare insight on the risks of relying upon the Bona Fide Prospective Purchaser defense to CERCLA Liability

A recent decision by the U.S. District Court for the District of South Carolina provided a rare glimpse into the potential pitfalls of maintaining eligibility for the Bona Fide Prospective Purchaser (BFPP) defense to liability under Section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act. When buying contaminated land, purchasers must be aware that their attention to maintaining BFPP status extends far beyond merely performing a Phase I Environmental Site Assessment. Purchasers of contaminated property must also pay close attention to their contractual relationship with the seller as well as continuing obligations regarding the management of any hazardous substances remaining at the property.

In Ashley II of Charleston, LLC v. PCS Nitrogen, Inc. et al., the U.S. District Court  held that a property owner failed to satisfy the elements of the BFPP defense and was allocated liability for a portion of cleanup costs due to the owner’s (1) affiliation with past owners and operators of the subject property through the inclusion of a release and indemnification in the purchase agreement; (2) failure to exercise ongoing reasonable care related to hazardous substances at the subject property by delaying action on the substances for a period of just over one year, and (3) failure to prevent disposal of hazardous substances at the subject property after acquisition. Read more about this case and what it may mean for purchasers relying on the BFPP defense in my recent article.

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