On July 29, 2019, as part of a Superfund Task Force effort, US EPA updated its “common elements” memo with more guidance on steps landowners and tenants must follow in order to secure CERCLA cleanup exemptions. The guidance only provides information to EPA enforcers in the exercise of their enforcement discretion and encourages reuse and redevelopment of brownfields. In other words, though it is a noble memo, courts (unless persuaded by EPA’s views) or potentially responsible or liable parties may disagree with EPA in any litigation. 

There are three exempt categories: Innocent Landowners (ILOs) who acquire apparently “clean” sites, Contiguous Property Owners (CPOs) whose land is contaminated from off site, and Bona Fide Prospective Purchasers (BFPPs), who acquire “dirty” sites. They all must perform “all appropriate inquiry” before acquisition. BFPPs and CPOs must demonstrate no “affiliation” with a liable party and that no “disposal” of hazardous substances occurred after their acquisition. All owners must comply with “institutional controls,” take “reasonable steps” for any releases, and provide “cooperation, assistance and access” to authorized agency personnel. BFPPs and CPOs must also comply with administrative subpoenas and information requests and provide legally required notices to agencies. See EPA chart attached.

“All appropriate inquiries” specifically includes Phase I environmental site assessments under ASTM E1527-3. This assessment involves qualified consultants’ inspection, interviews, records review, and findings on contamination.

EPA does not take a broad view of the “no affiliation” language, which could include all familial or corporation relationships. It therefore generally excludes from affiliation other business contracts with a responsible party, relationships after sale, contractual or financial relationships at the time property is transferred, and relationships between landlord and tenant. EPA references its earlier September 11, 2011, enforcement discretion guidance memo on affiliation with more examples, such as on successor companies, reorganizations, municipalities, contracts for goods or services, etc.

“Disposal” is not limited to initial placement of hazardous substances but can include subsequent dispersal of contaminants during site development. However, EPA favors not treating all secondary disposal as disqualifying someone from exempt status. This would protect secondary disposal during management of a release if performed in a reasonable manner.

“Land use restrictions,” of course, should be strictly complied with, including zoning, groundwater use, covenants, and conservation easements. Reasonably ascertainable recorded property records must be reviewed by the purchaser’s attorneys and consultants.

Integrity of institutional controls cannot be impeded; these include ordinances, covenants, orders, permits, deed notices, consent decrees, agency letters, and certificates.

Monitoring of implementation and maintenance to satisfy land use restrictions and institutional controls must be done at sufficient frequencies and includes providing cooperation and assistance to agencies.

“Reasonable steps” to maintain exempt status include stopping continuing releases, preventing threatened future releases, and preventing or limiting exposure. A landowner cannot ignore potential dangers associated with hazardous substances on its property. Taking too much time to initiate reasonable steps (like waiting a year to react after first discovery of a release or threatened release), or doing nothing, can result in the loss of exempt status. Comfort/status letters allow EPA to give guidance to a landowner on reasonable future steps. This is rather open-ended guidance.

Legally required notices include release reporting under federal, state, or local laws.

Though general, the EPA guidance will assist landowners in pursuit of their brownfield dreams. However, the guidance does not grant guarantees. The 2018 Build Act requires owners and tenants to meet their CERCLA exemptions by a preponderance of the evidence only, which appears to relax somewhat their burden of proof in lieu of strict compliance.