Final 2012 CERCLA Update

Two recent developments will likely change the face of CERCLA liability as the year draws to a close. First, the EPA issued its new bona fide prospective purchaser (“BFPP”) guidance for tenants on December 5, 2012. The BFPP definition in CERCLA § 101(40) applies to a “person (or a tenant of a person).” The EPA has historically acknowledged that a tenant may derive BFPP status from an owner who satisfies the BFPP criteria. Therefore, the tenant remains a BFPP and is protected by section 107(r) from CERCLA liability as long as the owner maintains its BFPP status and as long as several other criteria are met:

(1) all disposal of hazardous substances at the facility occurred prior to acquisition, as provided by section 101(40)(A); and
(2) the tenant does not impede the performance of a response action or natural resource restoration, as provided by CERCLA § 107(r)(1).

The problem arises when the owner fails to maintain compliance with those criteria. If the
owner loses its BFPP status, whether by its own action or inaction or that of the tenant, then the EPA views the CERCLA’s provisions to provide that the tenant would no longer be a tenant with derivative BFPP status.

The new guidance tries to clear up this problem by allowing the tenant to take its own measures to meet the BFPP status requirements independent of the landlord’s effort (or lack of effort).

The second development is that the Fourth Circuit heard oral arguments in Ashley II of Charleston LLC v. PCS Nitrogen Incorporated, 11-1662 on December 5, 2012. This will be an important case as the district court ruled that the developer had failed to meet the BFPP criteria and was liable for a portion of the cleanup costs.

About James Pray

Attorney with BrownWinick Law Firm in Des Moines, Iowa.
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