UNITED STATES ENVIRONMENTAL PROTECTION AGENCY · PDF file The bona fide prospective purchaser...

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Transcript of UNITED STATES ENVIRONMENTAL PROTECTION AGENCY · PDF file The bona fide prospective purchaser...

  • MEMORANDUM

    UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

    WASHINGTON, D.C. 20460

    JUL 2 9 2019 ASSISTANT ADMINISTRATOR FOR ENFORCEMENT AND

    COMPLIANCE ASSURANCE

    SUBJECT: Enforcement Discretion Guidance Regarding Statutory Criteria for Those Who May Qualify as CERCLA Bona Fide Prospective Purchasers, Contiguous Property Owners, or

    FROM:

    Innocent Landowners ("Common Elements"~

    Susan Parker Bodin~ ~a,J..,- • TO: Regional Counsels

    Superfund National Program Managers

    I. Introduction

    The U.S. Environmental Protection Agency recognizes that environmental cleanup can help promote reuse or redevelopment of contaminated, potentially contaminated, and formerly contaminated properties ( collectively referred herein as " impacted properties") and thereby revitalize communities that may have been adversely affected by the presence of these impacted properties. The EPA also understands that parties interested in acquiring an impacted property for reuse and redevelopment, as well as parties that currently own an impacted property or land contiguous to an impacted property, may be concerned about the potential liabilities stemming from the presence of contamination to which they have not contributed.

    Congress also understood these concerns, and in an effort to address them enacted the Small Business Liability Relief and Brownfields Revitalization Act ("Brownfields Amendments"), Pub. L. No. 107-118, in January 2002, which amended the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, also known as Superfund) 1 to provide important liability limitations for landowners that qualify as: ( 1) bona fide prospective purchasers (BFPPs ), (2) contiguous property owners (CPOs), or(3) innocent landowners (ILOs) (hereinafter, "landowner liability protections" or •fandowner provisions"). Congress intended these provisions to be self- implementing, enabling private parties to save time and costs, in part, by reducing EPA involvement in most private party transactions. Despite the self-implementing nature of the qualified landowner liability protections, however, the EPA has continued to receive requests for more clarity on the specific statutory criteria for BFPPs, CPOs, and ILOs.

    • 1 42 U.S.C. §§ 960 I, et seq.

    Internet Address (URL) • http://www.epa.gov Recycled/Recyclable • Printed with Vegetable Oil Based Inks on 100% Postconsumer, Process Chlorine Free Recycled Paper

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    To achieve and maintain these statutory landowner liability protections, a landowner must meet certain threshold criteria and satisfy certain continuing obligations.2 Many of the conditions are the same or similar under the three landowner provisions (“common elements”). This memorandum is intended to provide EPA personnel with general guidance on the common elements of the landowner liability protections to assist them in exercising their enforcement discretion, which at the same time may provide general information to landowners, developers, lenders, investors, or other third-party stakeholders who may wish to become involved with impacted properties. Specifically, this memorandum first discusses the threshold criteria of:

    • Performing “all appropriate inquiries” into the previous ownership and uses of property before acquisition; and

    • Demonstrating no “affiliation” with a liable party (for BFPPs and CPOs).3 The memorandum then discusses the common continuing obligations:4

    • Demonstrating that no disposal of hazardous substances occurred at the facility after acquisition by the landowner (for BFPPs and ILOs);

    • Complying with land use restrictions and not impeding the effectiveness or integrity of institutional controls (ICs);

    • Taking “reasonable steps” with respect to hazardous substance releases affecting a landowner's property;

    • Providing cooperation, assistance, and access to persons authorized to conduct response actions or natural resource restoration;

    • Complying with information requests and administrative subpoenas (for BFPPs and CPOs); and

    • Providing legally required notices (for BFPPs and CPOs). A chart summarizing the common elements and other statutory criteria applicable to BFPPs, CPOs, and ILOs is attached to this memorandum (Attachment A). Also attached is a “Reasonable Steps Categories and Examples” document (Attachment B), which identifies acts and omissions that courts have found to be indicative of “due care” or the lack thereof in evaluating the ILO affirmative defense. The attachment further includes limited discussion on “reasonable steps” identified by courts in evaluating BFPP status. Attachment B also lists some site-specific examples of reasonable steps from previously-issued EPA comfort/status letters.5 This guidance supersedes the EPA’s 2003 interim guidance titled Interim Guidance Regarding Criteria Landowners Must Meet in Order to Qualify for Bona Fide Prospective Purchaser, Contiguous Property Owner, or Innocent Landowner Limitations on CERCLA Liability (“2003 Interim Common Elements

    2 See CERCLA §§ 101(40)(B)(i)-(viii) and 107(r) for BFPPs, 107(q)(1)(A) for CPOs, and 101(35)(A)-(B) and 107(b)(3) for ILOs. 3 While some common elements are only applicable to two of the three landowner liability protections (as indicated), there may be related obligations for the third category of landowner. See each of the common element’s sections and Attachment A for a fuller explanation. 4 Certain obligations specific to the individual landowner liability protections are not listed here. Please see the statute and Attachment A for further information. 5 Attachment C (“Sample Federal Superfund Interest Reasonable Steps Letter”) to the 2003 Interim Common Elements Guidance has been removed, as sample “reasonable steps” language is now included in the Model Federal Superfund Interest Comfort/Status Letter (see Section III.B.3.c., below).

    https://cfpub.epa.gov/compliance/models/ https://cfpub.epa.gov/compliance/models/ https://cfpub.epa.gov/compliance/models/ https://cfpub.epa.gov/compliance/models/

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    Guidance”). The 2003 Interim Common Elements Guidance noted that revisions to the document may be made as the “EPA gains more experience implementing the Brownfields Amendments.”6 Since the release of the 2003 Interim Common Elements Guidance, the EPA has gained experience through regular discussions with brownfields stakeholders, a more thorough analysis of relevant and emerging case law, continuous site-specific work on landowner liability issues, and development and issuance of related guidance documents. This memorandum discusses the exercise of the EPA’s enforcement discretion. The guidance does not address obligations and liability landowners may have under state statutory or common law, state or other federal agency claims under CERCLA, or private party claims under CERCLA, against landowners.7 II. Background The bona fide prospective purchaser provision, CERCLA § 107(r), protects a party from Superfund owner/operator liability if the party acquires property after January 11, 2002 (the date of enactment of the Brownfields Amendments), and meets each of the criteria in CERCLA §§ 101(40) and 107(r), many of which are discussed in this memorandum.8 BFPPs may purchase property with knowledge of contamination after performing all appropriate inquiries, and still qualify for the landowner liability protection, provided they meet the other statutory criteria, including not impeding the performance of a response action or natural resource restoration.9 BFPPs that continue to meet the criteria in CERCLA §§ 101(40) and 107(r) are not liable as owners/operators for CERCLA response costs, but the property they acquire may be subject to a windfall lien where the EPA’s response action has increased the fair market value of the property. The United States, after spending taxpayer money for cleanup at a property, may have a windfall lien on the property for the lesser of the unrecovered response costs or the increase in fair market value at the property attributable to the Superfund cleanup.10 The contiguous property owner provision, CERCLA § 107(q), excludes from the definition of “owner or operator” a person who owns property that is “contiguous,” or otherwise similarly situated, to a facility that is the only source of contamination found on the person’s property.11 The CPO provision “protects parties that are essentially victims of pollution incidents caused by their neighbor’s actions.”12 To qualify 6 2003 Interim Common Elements Guidance at 2. 7 See infra, Section V. 8 The Brownfields Utilization, Investment, and Local Development (BUILD) Act of 2018 amended CERCLA § 101(40) to allow parties with leasehold interests to qualify for the BFPP liability protection in certain circumstances, provided that the leasehold interest is not designed to avoid CERCLA liability and the leasehold was acquired after January 11, 2002. See Pub. L. No. 115-141 (2018); CERCLA § 101(40)(A)(ii). 9 CERCLA § 107(r)(1). 10 The windfall lien provision is found in CERCLA § 107(r). The EPA anticipates that there may be situations where a site has a windfall lien and a BFPP wants to satisfy any existing or potential windfall lien before or close to the time of acquisition. The EPA and the Department of Justice (DOJ) jointly issued the Interim Enforcement Discretion Policy Concerning “Windfall Liens” Under Section 107(r) of CERCLA (July 16, 2003), whi