EPA Issues Guidance On New CERCLA Landowner Defenses

Similar documents
Environmental due diligence has been an integral

CERCLA Amendments Will Impact How Due Diligence is Conducted. By Larry Schnapf

CERCLA AMENDMENT CREATES NEW EXEMPTIONS AND DEFENSES

A. Threshold Criteria

BROWNFIELDS Connecticut All Grantee Meeting July Getting the most out of All Appropriate Inquiries (AAI)

Renewable Energy Development on Contaminated Properties. Liability Concerns

Broker. Environmental Concerns Affecting Real Estate Transactions. Chapter 17. Copyright Gold Coast Schools 1

Minnesota Pollution Control Agency Voluntary Investigation and Cleanup

Speaker 10: Matthew Joy of Jorden Bischoff & Hiser PLC Page 1 TWO RECENT DEVELOPMENTS POTENTIALLY AFFECTING REAL ESTATE TRANSACTIONS

Technical Information Paper No

Tools for Managing Potential Liabilities Associated with Contaminated Port Land. David Ashton Assistant General Counsel Port of Portland 02/13/07

A Primer on Environmental Due Diligence and Remedial Programs that Can Save a Real Estate Transaction

This edition of Environment and the Appraiser

In previous editions of Environment and the

FACT SHEET Brownfields Cleanup Program (BCP) KEY DEFINITIONS (see also ECL )

EPA s All Appropriate Inquiry Rule: When is Enough, Enough?

New Environmental Diligence Standards for All Appropriate Inquiries (AAI)

Change is in the air with regard. feature

Highlights of USEPA All Appropriate Inquiries (AAI) Final Rule and Revised ASTM Phase I Environmental Site Assessment

Preparing for Negotiations: The Environmental Lawyer s Checklist In Oil and Gas Transactions

Sustainable development for the future of Arkansas

Phase I Environmental Site Assessment Standard Practice Update. West Virginia Brownfields Conference September 2013

ASTM Phase I Changes and AAI Webinar

Managing Environmental Risks

Flawed Phase 1 CREC Definition Poses Challenges to Property Owners and Lenders

ALI-ABA Course of Study Environmental Law

New Phase I Requirements for Real Estate Transactions: Implications of the New All Appropriate Inquiries Rule

Due Diligence & Environmental Compliance Issues for Tribal Energy Projects: Hazardous Waste

Chapter XII BROWNFIELDS & BUSINESS TRANSACTIONS. A. Business Transactions

VOLUNTARY CLEAN UP PROGRAMS IN GEORGIA

ENVIRONMENTAL DUE DILIGENCE

Environmental Legal Issues and Due Diligence When Cities Acquire Real Property

Hazardous Materials in Project Development Additional Guidance

Voluntary standard; accepted by USEPA to comply with AAI rule. 2. Regulatory/Developmental History

Mitigating Risk Through Environmental Due Diligence in California Real Estate Deals

The University of Texas System Systemwide Policy. Policy: UTS Title. Environmental Review for Acquisition of Real Property. 2.

Due Care Obligations

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY WASHINGTON, D.C SEP 2J Attorney-Client Privilege I For Internal Use Only

How To Use Institutional Controls for Contaminated Sites

Credit Risk. 72 March 2013 The RMA Journal Copyright 2013 by RMA

Environmental. Due Diligence 9 Steps Companies Should Take to Effectively Manage. Environmental. Risks in Commercial Real Estate Deals

DTSC BROWNFIELDS Services

ADMINISTRATIVE GUIDANCE

Different Levels of Environmental Site Assessment and the Benefits to M&A Due Diligence

Environmental Due Diligence in the Wake of the EPA s New All Appropriate Inquiry Rule

Condemnation Summit XIX

The Bona Fide Prospective Purchaser Defense and the use of Comfort Letters

ENVIRONMENTAL DUE DILIGENCE AND DEFECT PROCEDURE

Three decades after the passage of the Comprehensive

CERCLA Bona Fide Prospective Purchaser

Chapter 16 EXTREME MAKEOVERS: RISK-REDUCTION STRATEGIES FOR REDEVELOPING MINE-SCARRED AND OTHER INDUSTRIAL LANDS

Oregon, Brownfields, and the Land Bank and Tax Abatement Authorities. How Does It All Work And Why Cities and Counties Should Be Interested

BROWNFIELD CLEANUP PROGRAM (BCP) APPLICATION FORM

Department of Legislative Services

NDEQ Brownfields Overview. Charlene R. Sundermann Nebraska Department of Environmental Quality Voluntary Cleanup Program and Brownfield Coordinator

Due Diligence April 10, 2018

Phase 1 Legal Lessons

ATTACHMENT 4 CERCLA NOTICE, COVENANT, AND ACCESS PROVISIONS AND OTHER DEED PROVISIONS

IV.D.3. Location Swan Cleaners is located in the City of Mansfield, County of Richland, State of Ohio

DUE DILIGENCE. Presented at. Lydia Work, Senior Chemist Licensed Remediation Specialist Triad Engineering, Inc.

MINNESOTA POLLUTION CONTROL AGENCY SITE REMEDIATION SECTION

METRO BROKERS Checklist for Commercial Real Estate Professionals

Environmental Due Diligence

ACT 381 WORK PLAN INSTRUCTIONS July 2018 TO CONDUCT ELIGIBLE DEQ ENVIRONMENTAL AND/OR MSF NON-ENVIRONMENTAL ACTIVITIES

How the CERCLA Notification Requirements Facilitate the Creation of Brownfields and What EPA Can Do to Address this Problem

Ohio EPA Guidance - VAP Environmental Covenants May 2005 Updated February 2012

By Peter Niemiec. Blues. The Brownfield

The Challenge of Brownfield Redevelopment: Addressing Contamination and Perception

Phase I ESAs and the USEPA's All Appropriate Inquiry Final Rule

TACKLING ENVIRONMENTAL ISSUES IN NORTH CAROLINA. Presented by The Cambridge Institute

MA Brownfields Program: A Fresh Look. MassDEP Presentation Western LSP Association Meeting Springfield, MA September 13, 2018

East Central Brownfields CoaliƟon Request for Services

ASTM E : Applying the New Phase I Site Assessment Standard

Section 16. Virtual Office Website (VOW) Rules

Assessment. Guidance CLEANUP. Liability Release. Petroleum Brownfields Eligibility Letter Remediation Oversight. Project Endorsement

An Overview of Institutional Controls

IOWA SOLID WASTE PROGRAM ENVIRONMENTAL COVENANT

Phase I Environmental Site Assessments for Corridors

TRUTH IN LENDING ACT - APPRAISER INDEPENDENCE REQUIREMENTS (TILA-AIR)

Brownfield Action: Questions about Brownfields

Form SF298 Citation Data

SUBJECT: The Appraisal of Real Property That May Be Impacted by Environmental Contamination

How Many Brownfields Does California Have? by Corynn Brodsky. Where are all the brownfields? This question is posed frequently by environmental

Gaps and Challenges That Led to Groundbreaking Liability Reform in 2011

DRAFT PROPERTY TRANSFER OR CLOSURE STATUTES

Environmental Management Chapter

New Jersey Department of Environmental Protection. Biennial Certification Monitoring Report for a Ground Water Classification Exception Area (CEA)

STATE OF NEW JERSEY NEW JERSEY LAW REVISION COMMISSION. Final Report. Relating to. Uniform Environmental Covenants Act. July 2009

USEPA Brownfield Assessment Grant Application for Financial Assistance

Municipality of Anchorage PURCHASE AND SALE AGREEMENT FOR HLB Parcel C in Chugiak, Alaska

Environmental Due Diligence and Risk Allocation

July 1, 2017 HAZARDOUS SITE INVENTORY Environmental Protection Division Georgia Department of Natural Resources

Municipality of Anchorage PURCHASE AND SALE AGREEMENT FOR LOT 17, NEVILLA PARK SUBDIVISION

Ohio EPA Guidance - VAP Environmental Covenants Updated July 2015

Anthony Banfield, FRICS Banfield Real Estate Solutions Ltd

New Developments in Brownfield Redevelopment Navigating Recent Challenges in the Remediation of Contaminated Sites

TITLE 20 MISCELLANEOUS CHAPTER 1 FAIR HOUSING REGULATIONS

PHASE I ENVIRONMENTAL ENGINEERING PHASE I REPORT 3264 PREPARED FOR: Mark Hopkins. Liberty Real Estate, LLC. 741 North State Road.

The Tenant Who Leaves Trash Behind

I. Background. This Memorandum of Understanding (MOU) is entered into between HUD and EPA, referred to collectively as the "parties" to this MOU.

Transcription:

EPA Issues Guidance On New CERCLA Landowner Defenses Last December, Congress amended the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund) to modify the innocent landowner defense and to add liability exemptions for bona fide prospective purchasers (BFPPs) and owners of property onto which contamination migrated from a contiguous contaminated property. See, Superfund Amendments Encourage Brownfield Development, 13 Michigan Environmental Compliance Update (May 2002). The purpose was to encourage developers and lenders to redevelop contaminated properties. Unfortunately, these amendments did not clearly define what a landowner must do to qualify for the exemptions. In response to requests by many developers, the United States Environmental Protection Agency (EPA) recently issued a guidance stating how EPA intends to interpret and apply these new provisions. 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 ( Common Elements ) (March 6, 2003) (the Guidance). Although the Guidance is not binding, it may help landowners decide how far they should go in monitoring or possibly remediating contamination, and may help developers decide whether or not to proceed with a potential project. A. Threshold Criteria To qualify for any of the three landowner defenses, a person must satisfy two threshold criteria. First, the landowner must have made all appropriate inquiry into the previous ownership and uses of the property before acquiring it. For property purchased on or after May 31, 1997, this requirement can be satisfied by performing a Phase I Environmental Site Assessment as described in ASTM Standard E1527-97. Early this year, EPA promulgated, and

then withdrew, a rule allowing the use of ASTM Standard E1527-2000 as an alternative. EPA is now establishing an advisory committee to develop a new rule to define all appropriate inquiry. Second, to qualify for the BFPP or contiguous property owner defense, the owner must not be affiliated with anyone who is potentially liable for response costs at the property by a direct or indirect familial relationship or any contractual, corporate and financial relationship other than a contract for sale of goods or services. The affiliation test for the innocent landowner defense is defined separately. The Guidance does little to clarify the affiliation test for any of the defenses. The Guidance does not state whether EPA will limit familial relationships to a person s immediate family, or whether it will include cousins or in-laws. Nor does it explain what kinds of contract, corporate, or financial relationships EPA will consider sufficient to render a landowner affiliated with a liable party. The Guidance simply states that EPA intends to be guided by Congress intent of preventing transactions structured to avoid liability. B. Continuing Obligations to Protect Environment 1. Land Use Restrictions and Institutional Controls To qualify for any of the three landowner defenses, an owner must, among other things: (1) comply with any land use restrictions (LURs) relied on in connection with a response action, and (2) not impede the effectiveness of any institutional control (IC) employed in connection with a response action. The Guidance takes the position that an owner must comply not only with LURs and ICs that were in effect when he or she acquired the property, but must also comply with any that are imposed thereafter. In some cases, requiring non-liable landowners to comply with LURs or ICs that they did not anticipate may seriously reduce the value of their

properties, and may make developers unwilling to acquire properties for which a final cleanup plan has not been selected. The Guidance says that landowners must comply with all LURs that were relied on when EPA or the state selected a response action, even if the restriction was not implemented through an enforceable IC. To determine what LURs were relied on, the Guidance says that a landowner may need to consult: the EPA or state risk assessment, remedy decision document, and remedy design document; a permit, order and consent decree; statutes; and other documents developed in conjunction with a response action. This list demonstrates that it may be difficult for an owner to determine what LURs, if any, EPA or a state relied on for a response action, and with what restrictions the landowner must comply. If an owner fails to comply, the Guidance states that he or she will forfeit the liability protection, and that EPA may either order the landowner to remedy the violation or may sue to recover EPA s costs of remedying the violation. An owner may also forfeit this liability protection if the owner impedes the effectiveness of an IC. According to the Guidance, that may occur if an owner removes a notice of an IC from the public land records, fails to notify a new purchaser of the IC, applies for a zoning change or variance that conflicts with the IC, or refuses to record a notice in the land records that was required by EPA or a state. The Guidance recognizes that if environmental conditions at the property change, an owner may seek changes in LURs or ICs with the approval of EPA or the state environmental agency. 2. Reasonable Steps To Investigate Or Remediate Contamination To qualify for any of the three landowner defenses, an owner must: (1) stop any continuing releases; (2) prevent any threatened future releases; and (3) prevent or limit exposure

of humans and the environment to releases of hazardous substances. According to the Guidance, these requirements are consonant with traditional common law principles and the existing CERCLA due care requirement. This suggests that EPA will consider both common law cases and CERCLA due care cases in evaluating what a non-liable owner must do to qualify for one of the three landowner defenses. The Guidance states that as a general matter the response obligations of a non-liable owner will be less than the obligations of a liable party. However, it also states that the obligations of a non-liable owner would be akin to the obligations of a liable party in some unusual circumstances, including when: (1) the only uncompleted response action is compliance with ICs or environmental monitoring; (2) the response action will primarily benefit the landowner; or (3) the owner is the only person in a position to prevent an immediate hazard. The Guidance also notes that the obligation of a BFPP to take reasonable steps may be broader than the obligations of an innocent landowner or a contiguous landowner, because a BFPP will usually know about the contamination before deciding to buy the property. The Guidance states that EPA will consider a BFPP s knowledge of contamination and his opportunity to plan for it before buying the property, as factors in deciding what reasonable steps the BFPP must take to investigate and possibly remediate contamination. The Guidance states that EPA will consider CERCLA cases that discuss what steps innocent landowners must take to satisfy their due care obligations under the innocent landowner defense as a reference point in evaluating what a landowner must do to satisfy the reasonable steps requirements under any of the three landowner defense. An attachment to the Guidance lists the following as potential reasonable steps that a non-liable landowner may be required to take to avoid becoming a liable party: (1) notify EPA

or the state if hazardous substances are discovered; (2) restrict access to the site; (3) segregate and overpack leaking drums; (4) repair breaches in a containment system or a landfill cap; (5) maintain containment systems in working order; and (6) investigate the extent of contamination. However, reasonable steps generally do not include full scale remediation of groundwater contamination. The Guidance does not discuss what a landowner may have to do to satisfy his obligations under environmental statutes other than CERCLA. Such statutes may impose obligations that are more extensive than those required to maintain eligibility for the three landowner defenses under CERCLA. Christopher J. Dunsky DET_B\382855.1