BFPPs. Cleaning Up Their Own Property. William Keener Assistant Regional Counsel Office of Regional Counsel U.S. EPA Region 9

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1 BFPPs Cleaning Up Their Own Property William Keener Assistant Regional Counsel Office of Regional Counsel U.S. EPA Region 9 keener.bill@epa.gov (415)

2 Bona Fide Prospective Purchasers Developers approaching EPA Want to alter EPA remedy: move monitoring wells interrupt scheduled work Need to achieve cleanup faster: willing to invest significant $$ with EPA oversight requesting final EPA approval

3 Pre-Brownfields Amendments For buyers acquiring contaminated property Prospective Purchaser Agreements EPA model PPA document Covenant Not to Sue provided for Existing Contamination Authority: CERCLA, and the inherent authority of the Attorney General

4 Bona Fide Prospective Purchasers CERCLA 101(40) Acquire ownership after Jan 11, 2002 Not a PRP or affiliated with the PRP Disposal occurred before purchase Provide all legally required notices In compliance with land use restrictions/ institutional controls

5 Bona Fide Prospective Purchasers Threshold Criterion: All Appropriate Inquiries (and have knowledge of contamination) Continuing Obligation: Appropriate Care (with respect to contamination by taking reasonable steps)

6 All Appropriate Inquiries Rule AAI Rule now issued Assessment (Phase I) required Sampling (Phase II) not required

7 Appropriate Care Take Reasonable Steps: Stop any continuing release Prevent any threatened future release Prevent or limit any human, environmental or natural resource exposure EPA Common Elements Guidance 2003 steps are less than those required of PRPs

8 Bona Fide Prospective Purchasers BFPPs not liable parties BFPP Guidance issued 2002 In most cases, PPAs unnecessary, except Windfall lien settlements, or Substantial public benefits, or Threat of litigation

9 Windfall Liens CERCLA 107(r) BFPPs subject to Windfall Lien For unrecovered response costs Amount = increase in FMV attributable to EPA cleanup at time of sale or disposition Authorizes EPA settlements of lien

10 Windfall Liens EPA Guidance issued 2003, including model settlement document Windfall Lien resolution settlements are now being negotiated Provides a release, no covenant Liens are being filed, but sparingly

11 Bona Fide Prospective Purchasers Uncharted Waters: BFPPs Who Want to Do Work What document? What authority? removal remedial consent decree?

12 BFPPs Doing Work Region 9: Ti-Tech Removal Site UAO issued to PRP-owner PRP-owner not financially viable BFPP sought to acquire site By letter, Region 9 informed BFPP that completing work required by UAO would satisfy reasonable steps Cleanup conducted successfully by BFPP

13 BFPPs Doing Work Region 4: Moss Soap Removal Site EPA spends $500,000 on removal action 600+ hazwaste containers remained BFPP agrees to complete cleanup in consideration for windfall lien release Windfall Lien Resolution no covenant, but BFPP receives EPA approval of work Authority: CERCLA 107(r)

14 BFPPs Doing Work Region 3: North Penn Area 2 NPL Site Removal of lead in soils BFPP to submit and implement removal workplan, w/weekly progress reports No EPA oversight costs to be paid Release of liens, no covenant AOC: Administrative Order by Consent Authority: CERCLA 106(a), 107, 122(a)

15 BFPPs Doing Work Region 6: MDI NPL Site [deal not final] Acquired through bankruptcy auction BFPP to complete ROD remedial action Pay EPA s oversight costs Stipulated Penalties for noncompliance Dispute resolution procedures CERCLA Covenant Not to Sue provided for Existing Contamination AOC: Agreed Order on Consent Authority: CERCLA 106(a), 122(a) & (h)

16 BFPPs Doing Work EPA HQ/Regional Workgroup established to study this issue Model document to be developed Desire to treat new owners consistently Site specific factors will remain crucial

17 Bona Fide Prospective Purchasers Other Related Issues: Tenants of PRPs are not BFPPs Are ground lessees (w/ 99 year lease) equivalent to BFPPs who acquire ownership? Region 9 currently negotiating a PLA (Prospective Lessee Agreement) with major tenant on Superfund site

18 BRAC Privatization Non-NPL Federal Facilities Closing Military Base NPL Sites FFAs: EPA/DOD joint remedy selection Pre-ROD privatization Post-ROD privatization EPA may consider AOC-type agreement with BFPP developer Region 9: Ft. Ord DOJ says no CD because developer cannot be sued as non-liable party

19 RCRA Facilities CERCLA Amendments don t affect RCRA No BFPP status for new facility owners RCRA PPAs possible (6 in nation) Region 9 is currently negotiating with a private developer who will do significant work as consideration for the covenant Covenant will be both RCRA/CERCLA

20 Good Samaritans Non-liable parties doing cleanup work No BFPP status for a third party neither buying nor leasing the property EPA s Good Samaritan Initiative for abandoned mine runoff Region 8: Trout Unlimited AOC or CERCLA 107(d) letter?

21 Supreme Court Decision: Aviall Cooper Industries v. Aviall Services December 13, 2004 Affects Contribution Suits when one party sues a PRP to financially contribute to the cleanup Held: Private parties who have not settled under CERCLA 106 or 107 may not obtain contribution under CERCLA 113 (f)(1)

22 Supreme Court Decision: Aviall EPA issued revised settlement language for model administrative consent orders on August 5, 2005 US DOJ BFPPs, as non-liable parties, can seek contribution under CERCLA 107

23 EPA Liability Guidances BFPPs May 31, 2002 De Micromis Waste Nov 6, 2002 Common Elements March 6, 2003 Windfall Liens July 16, 2003 CPOs January 14, 2004 AAI Rule Nov 2005

24 For the Latest Information EPA Brownfields Homepage