Common Elements and Other Landowner Liability Guidance
In 2019, the EPA issued revised guidance addressing the criteria and obligations landowners must meet to obtain liability protection from the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, commonly referred to as Superfund). The 2019 guidance titled "Enforcement Discretion Guidance Regarding Statutory Criteria for Those Who May Qualify as CERCLA Bona Fide Prospective Purchasers, Contiguous Property Owners, or Innocent Landowners (“Common Elements”)" describes the overlapping threshold criteria and ongoing obligations that all three landowner types (BFPP, CPO, ILO) must meet and thus the shorthand name for the guidance. The Agency issued the revised "Common Elements" guidance based on regular discussions with brownfields stakeholders, development of related EPA guidance documents, a thorough analysis of relevant and emerging case law, and continuous site-specific work on landowner liability issues.
|Common Elements and other Requirements||Bona Fide Prospective Purchaser
Can acquire with knowledge of contamination
|Contiguous Property Owner
Cannot acquire with knowledge of contamination
|Innocent Landowner - Section 101(35)(A)(i)
Can acquire with knowledge of contamination
|Perform All Appropriate Inquiries||✔ § 101(40)(B)(iii)||✔ § 107(q)(1)(A)(viii)||✔ § 101(35)(A)(i), (B)(i)|
|"No affiliation" demonstration||✔ § 101(40)(B)(viii)||✔ § 107(q)(1)(A)(ii)||See Footnote 1|
|Acquisition after January 11, 2002||✔ § 101(40)(A)(i)(I)|
|No disposal after acquisition||✔ § 101(40)(B)(i)||✔ § 101(35)(A)|
|Compliance with land use restrictions and not impeding institutional controls||✔ § 101(40)(B)(vi)||✔ § 107(q)(1)(A)(v)||✔ § 101(35)(A)|
|Taking "reasonable steps" to manage releases||✔ Exercise appropriate care 101(40)(B)(iv)||✔ § 107(q)(1)(A)(iii)||✔ § 101(35)(B)(i)(II)|
|Providing full cooperation/assistance/access||✔ § 101(40)(B)(v)||✔ § 107(q)(1)(A)(iv)||✔ § 101(35)(A)|
|Compliance with information requests and administrative subpoenas||✔ § 101(40)(B)(vii)||✔ § 107(q)(1)(A)(vi)||See Footnote 2|
|Providing legally required notices||✔ § 101(40)(B)(iii)||✔ § 107(q)(1)(A)(vii)||See Footnote 3|
|No impeding performance of response action or natural resource restoration||✔ § 107(r)(1)|
|Did not cause/contribute to contamination||✔ § 107(q)(1)(A)(i)|
|Third Party Defense requirements (due care and precautions)||✔ § 107(b)(3)|
To qualify as a bona fide prospective purchaser, contiguous property owner, or innocent landowner, a person must perform “all appropriate inquiry” before acquiring the property. Bona fide prospective purchasers and contiguous property owners must, in addition, demonstrate that they are not potentially liable or “affiliated” with any other person that is potentially liable for response costs as the property.
All Appropriate Inquiries
One of the important statutory criteria BFPPs, CPOs and ILOs must meet is to perform "all appropriate inquiries" prior to purchasing property. Performing all appropriate inquiries (AAI) is the process of evaluating a property’s environmental conditions and assessing potential liability for any contamination.
In 2005 EPA published in the Federal Register a final rule on standards and practices for all appropriate inquiries (PDF) (11/1/2005) (44 pp, 342 K). The 2005 Final Rule was updated on December 30, 2013 to reference the latest version (2013) of the American Society for Testing and Materials (ASTM) International’s voluntary standard for conducting a Phase I environmental site assessment (ASTM E1527-13) (78 Fed. Reg. 79,319 (PDF)) (6 pp, 235 K, About PDF).
Additional updates to the 2005 Final Rule were published in the October 6, 2014 Federal Register (PDF) (7 pp, 314 K) (79 Fed. Reg. 60087) which terminates recognition of the 2005 ASTM International industry standard (E1527-05) as a method to meet AAI requirements. The Final Rule was also amended on September 15, 2017 to recognize another industry standard practice (ASTM E2247-16) as compliant with the requirements of the Final Rule. Parties performing AAI should refer to the 2013 ASTM International industry standard (E1527-13) or the EPA’s AAI rule, 40 C.F.R. § 312 (1996) to satisfy the requirement for AAI.
More information on AAI is available on EPA’s All Appropriate Inquiries website
To meet the statutory criteria of the BFPP and CPO liability protections, a party must not be potentially liable or affiliated with any other person who is potentially liable for response costs. For the innocent landowner defense, the act or omission that caused the release or threat of release of hazardous substances and the resulting damages must have been caused by a third party with whom the purchaser does not have an employment, agency, or contractual relationship. Affiliations include:
- Direct or indirect familial relationships.
- Contractual, corporate, or financial relationships. For BFPPs, there is an exception for contractual, corporate or financial relationships that are created by the instruments by which title is conveyed or financed, or by a contract for the sale of goods or services.
- The result of a business reorganization.
In 2011, the EPA issued Enforcement Discretion Guidance Regarding the Affiliation Language of CERCLA’s Bona Fide Prospective and Contiguous Property Owner Liability Protections on how it intends to apply the affiliation language in the BFPP and CPO liability protections to individual property owners. This memorandum is meant to aid EPA regional attorneys in evaluating whether specific circumstances run afoul of the “no affiliation” clauses in CERCLA. To that end, the memorandum is divided into two sections: the first addresses general guidance regarding the statutory language, while the second addresses the three situations in which the EPA will exercise its enforcement discretion for non-site related relationships, post-acquisition relationships, and tenants. The guidance uses questions and answers and more specific examples to explain the statutory language and the EPA’s intention for the use of enforcement discretion.
The Common Elements guidance discusses the common ongoing obligations a landowner must meet in order to achieve and maintain each type of landowner liability protection. These obligations are:
- Demonstrating that no disposal of hazardous substances occurred at the facility after acquisition by the landowner;
- Complying with land use restrictions and not impeding the effectiveness or integrity of institutional controls;
- Taking “reasonable steps to prevent releases” with respect to hazardous substances affecting a landowner’s property;
- Providing full cooperation, assistance, and access to persons who are authorized to conduct response actions or natural resources restoration;
- Complying with information requests and administrative subpoenas; and
- Providing legally required notices.
Congress intended that landowners who see to establish and maintain the BFPP, CPO, and ILO liability protections act responsibly concerning hazardous substances that are present on their property. Thus, as a condition of qualifying for these protections, the statute requires these owners to take "reasonable steps" with respect to hazardous substance releases by doing all of the following:
- Stop continuing releases;
- Prevent threatened future releases; and
- Prevent or limit human, environmental, or natural resource exposure to earlier released hazardous substance releases.
Although the “reasonable steps” legal standard is generally the same for the three landowner provisions, the obligations may differ to some extent because of other differences among the three statutory provisions. For example, as noted earlier, one of the threshold criteria is that a person claiming the status of a BFPP, CPO, or ILO must have “carried out all appropriate inquiries” into the previous ownership and uses of the property. However, whereas a CPO or ILO cannot know, or have reason to know, that contamination exists on the property, a BFPP may purchase property with knowledge of the contamination and still be eligible for the liability protection. Thus, only the prospective BFPP could purchase a contaminated property that is, for example, on CERCLA’s National Priorities List or is undergoing active cleanup under an EPA or State cleanup program, and still maintain the liability protection.
The EPA may, in its discretion and based upon a variety of factors, including site complexity, issue comfort/status letters to inform interested parties of site-specific information known to the EPA about reuse of impacted properties. These letters may suggest property-specific reasonable steps that EPA staff believe a party should take at the property with respect to contamination to help ensure protectiveness of human health and the environment and to achieve or maintain a landowner liability protection.
For more information on the “reasonable steps” requirement or other obligations for BFPPs, CPOs, and ILOs, please see the Common Elements Guidance.
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