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Good Intentions: How EPA Laid New Legal Land Mines Beneath the Bona Fide Prospective Purchaser Defense

Good Intentions: How EPA Laid New Legal Land Mines Beneath the Bona Fide Prospective Purchaser Defense

Ryan Mitchell

            No other law has adversely affected the real estate market like the Conservation Environmental Recovery, Compensation, and Liability Act (CERCLA).[1] Upon Congress’s adoption of CERCLA in 1980, CERCLA liability tied up every contaminated parcel of land.[2] Estimates of the total cost of remediating every Brownfield reach $650 billion.[3] The overwhelming fear of CERCLA liability stifled the real estate market.[4] From rural communities to inner cities, CERCLA has financially frustrated the nation as a whole.[5]

            Until 2002, CERCLA did not provide an adequate remedy for its frustrating impacts on real estate.[6] While CERCLA’s liability scheme was expansive, CERCLA offered comparatively limited liability defenses.[7] The first two defenses rarely utilized: hazardous releases resulting from “an act of God” and “an act of war.”[8] The third defense is more practical: the third-party defense.[9] The defense is available to owners who took appropriate precautions to prevent disposal on their property, and that when a disposal did occur, the owner had no contractual relationship with the third party.[10] While the third-party defense is more practical, it is still extremely narrow (it basically applies to disposals caused by midnight dumpers).

            In 1986, Congress attempted to remedy the frustration by adopting the Innocent Landowner Defense.[11] However, the defense could not provide what the nation’s real estate market needed: a defense for people who had knowledge that a parcel was contaminated or potentially contaminated. In response, EPA resorted to Prospective Purchaser Agreements (PPA), which included covenants not to sue Brownfield owners.[12] However, PPAs were resource intensive and did not provide purchaser adequate security from liability.[13] As a result, Congress went back to the drawing board.

            In 2002, Congress passed the Brownfields Amendments to CERCLA with the goal of spurring redevelopment of contaminated and potentially contaminated land.[14] The Brownfield Amendment created two tools to achieve Congress’s redevelopment goals: a grant program to incentivize qualified brownfield remediation[15] and the Bona Fide Prospective Purchaser (BFPP) defense to CERCLA liability.[16] The BFPP defense protects owners and operators who knowingly purchase a Brownfield from CERCLA liability.[17] Yet, the BFPP defense has not produced the redevelopment results Congress intended.[18] This failure is due to BFPP’s several shortcomings, as precipitated by EPA’s Common Elements guidance.[19]

            This Note will provide a thorough investigation into and analysis of the Brownfields Amendment’s legislative history. The investigation will reveal that the EPA has not followed the intelligible principle provided by Congress. This Note will discuss how EPA’s interpretation of “appropriate care” in arbitrary and capricious. As a correspondingly issue, this note will discuss how EPA should revise the “Common Elements” guidance to achieve congress’s intended redevelopment goals. Specifically, this note will discuss the precarious interplay between the AAI and the Reasonable Steps, as stated in the “Common Elements” guidance. Part I of this note will discuss the relevant history leading up to the Brownfields Amendments. Part II will examine and analyze the Brownfields Amendment’s legislative history. Part II will examine whether EPA’s “Common Elements” guidance is arbitrary and capricious. Part IV will discuss how, even if the “Common Elements” guidance is not arbitrary and capricious, EPA should revise the “Common Elements” guidance to achieve congress’s intended redevelopment goals. This Part will propose changes to the “Common Elements” guidance.[20]

[1]Comprehensive Environmental Recovery, Compensation, and Liability Act (CERCLA) 42 U.S.C. §§9601–9675 (2012). Office of Pub. Affairs, U.S. EPA Region 5, Basic Brownfields Fact Sheet (1996) (estimating that there are 450,000 brownfields in the United States); United States Conference of Mayors, Recycling America’s Land: A National Report on Brownfields Redevelopment 6, 6 (2006) (highlighting that in a sample of 200 cities there are over 23,810 brownfields. 158 of these cities estimated that brownfields comprised of over 96,039 acres).

[2]See 42 U.S.C. §9601(9) (“The term ‘facility’ means (A) any building, structure, installation, equipment, pipe or pipeline (including any pipe into a sewer or publicly owned treatment works), well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock, or aircraft, or (B) any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located . . . .”).

[3]Todd S. Davis & Kevin D.. Margolis, Brownfields – A Comprehensive Guide to Redeveloping Contaminated Property 5 (1997).

[4]Nicholas J. Ortolano III, Note, Appropriate Care Under the Brownfield Amendments: A Better Standard After the Fourth Circuit’s Holding in PCS Nitrogen v. Ashley II, 5 Seattle J. Env’t  L. 25, 34 (2015).

[5]See Becky L. Jacobs, Basic Brownfields, 12 J. Nat. Resources & Envtl. L. 265, 266 (1997) (“Brownfields also impose unquantifiable financial costs on communities, states, and the nation.”).

[6]Peter Niemiec, The Brownfield Blues Recent Legislation Intended to Promote the Cleanup and Reuse of Brownfields May Actually Have the Opposite Effect, L.A. Law., Jan. 2003, at 32. (“[CERCLA’s] draconian liability scheme has brought much financial pain to those who have bought industrial and commercial properties either before CERCLA’s passage or, afterwards, without due consideration for the problems they were purchasing.”).

[7]See 42 U.S.C. §9607(b) (providing defenses for acts of god, acts of war, and acts by third parties).

[8]Id. (b)(1)–(2).

[9]Id. (b)(3).

[10]Id.

[11]Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613 (1986) (codified as amended in scattered sections of 42 U.S.C. §§ 9601-9628 (2000)).

[12]Cleanup Enforcement: Brownfields, EPA, http://www.epa.gov/compliance/cleanup/brownfields/index.html (last updated Apr. 8, 2003).

[13]Spencer M. Wiegard, Note, The Brownfields Act: Providing Relief for the Innocent or New Hurdles to Avoid CERCLA Liability, 28 William & Mary Envt. L. & Pol’y . Rev. 127, 160 (2003) (“Obtaining a PPA could be a difficult and timeconsuming process, extracting from the prospective landowner not only the costs of negotiation, but also the cost of providing adequate consideration in the form of other environmentally beneficial actions. If these costs and delays were born before a transaction took place, they could serve to discourage prospective purchasers.”) [hereinafter Wiegard, Providing Relief for the Innocent or New Hurdles].

[14]Id. at 128.

[15]Summary of the Small Business Liability Relief and Brownfields Revitalization Act, EPA, http://www.epa.gov/brownfields/html-doc/2869sun.htm (last updated July 7, 2003).

[16]Small Business Liability Relief and Brownfields Revitalization Act, Pub. L. No. 107-118, § 221, 115 Stat. at 2370.

[17]See 42 U.S.C. §9601(39).

[18]Timothy Harmon & Karen Williams, Brownfields Revitalization Act: Big Promises Not Delivered in New Brownfields Law, Environs (Summer 2002), http://www.lanepowell.com/pressroom/newsletters/detail.asp?xnltypeid= 12&nlid=318.

[19]U.S. Envtl. Prot. Agency, Memorandum, 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 (Mar. 6, 2003) [hereinafter U.S. Envtl. Prot. Agency, Common Elements], www2.epa.gov/sites/production/files/documents/common-elem-guide.pdf.

[20]Id.

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