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EPA Issues Expanded CERCLA Liability Exclusion Guidance for Tenants

01.28.2013

By Andy Bowman, Attorney, Bingham Greenebaum Doll LLP

On December 5, 2012, EPA issued a revised guidance document that significantly expands the circumstances where EPA will exercise its enforcement discretion on a site-specific basis and treat a tenant as a Bona Fide Prospective Purchaser (BFPP) for purposes of the liability exclusion under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA, also known as Superfund).  In the new guidance, a tenant of an owner who is not itself a BFPP may be treated as a BFPP for purposes of CERCLA liability regardless of whether the tenant has sufficient indicia of ownership to be an owner.

Without liability protection both the owner and operator of property contaminated by hazardous substances are potentially responsible under CERCLA for removal or remedial costs incurred by the federal government.  The Brownfield Amendments of 2002 amended CERCLA to provide an important liability exclusion for a bona fide prospective purchaser (BFPP) of contaminated property.  In general terms a BFPP is a person or tenant of a person that demonstrates:

  • The property was acquired after January 22, 2002;
  • The person has not impeded a response action or natural resources restoration;
  • All disposal of hazardous substances at the facility occurred prior to acquisition;
  • All appropriate inquiry (AAI) into previous ownership and uses of the facility was performed;
  • All required notices provided;
  • Reasonable response steps taken with respect to the hazardous substances releases;
  • Cooperation, assistance and access provided;
  • Compliance with land use restrictions and institutional controls;
  • Compliance with information requests and subpoenas; and
  • The person is not a potentially responsible party for response costs or affiliated with such a person.

Since 2002, there has been much uncertainty whether a tenant could qualify for the BFPP liability exclusion.  In 2009, the Environmental Protection Agency (EPA) issued guidance that partially addressed some of the many questions facing tenants.  In the 2009 Guidance, EPA acknowledged that a tenant of an owner who has BFPP status may qualify for derivative BFPP status.  However, the only other situation where EPA would exercise enforcement discretion was in cases where a tenant had sufficient indicia of ownership to be an owner for purposes of the BFPP liability exclusion.  The 2009 Guidance did not address what constitutes “sufficient indicia of ownership” other than citing a 2000 court decision in Commander Oil v. Barlo Equipment Corporation, 215 F.3d 321 (2d Cir. 2000), recognizing some tenants may have requisite indicia of ownership to be de facto owners of the contaminated property.

The guidance document is available at: http://www.epa.gov/enforcement/cleanup/documents/policies/superfund/tenants-bfpp-2012.pdf.

To view a complete PDF of the November/December 2012 issue of the Environmental Letter, click HERE.

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