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EPA Issues New Guidance to Assist Tenants in Avoiding Cleanup Liability at Contaminated Sites

In an effort to encourage brownfield site redevelopment and renewable energy development on contaminated sites, on December 5, 2012, EPA issued a guidance document designed to clarify the scope of enforcement discretion the agency will provide to tenants who undertake steps to avoid liability under CERCLA’s Bona Fide Prospective Purchaser (“BFPP”) provisions. In conjunction with the guidance memorandum, EPA also issued three new model comfort/status letters for lessees involved in renewable energy development on contaminated property.

Under CERCLA section 107(a), 42 U.S.C. section 9607(a), current and past owners and operators of properties where there has been a release or threatened release of a hazardous substance may be potentially liable for response costs and natural resource damages incurred in cleaning up the property. Despite the Supreme Court’s opinion in U.S. v. Bestfoods, 54 U.S. 51 (1998), that “an operator must manage, direct, or conduct operations specifically related to pollution, that is, operations having to do with leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations[,]” the mere specter of CERCLA liability has, at times, prevented commercial and industrial tenants from entering into lease transactions due to risks and challenges associated with CERCLA’s liability scheme.

With this in mind, in 2002 Congress added the BFPP provision in sections 107(r) and 101(40)(A-H) allowing prospective property owners and tenants to avoid CERCLA liability when acquiring or leasing contaminated property after January 11, 2002, if the party satisfies particular circumstances.

EPA’s new BFPP tenant guidance sets forth the contours for which the agency will provide enforcement discretion directed in favor of tenants who undertake the steps established in the statute and guidance. Particularly noteworthy is EPA’s discussion of how a tenant can acquire BFPP status even if the owner is not a BFPP. Time will tell whether the new guidance substantially clarifies this, at times, murky area of CERCLA exposure and liability.

Although not all businesses and not all sites are target candidates for taking advantage of EPA’s new BFPP guidance, as EPA will continue to view each situation on a case-by-case basis, EPA’s newly issued position reaffirms that with proper planning and foresight, and utilizing resources that understand the process and are solutions-oriented, commercial and industrial tenants, property owners, developers and the like, can take advantage of various protections under CERCLA that would otherwise be too challenging for developing and building on contaminated sites.