New changes to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, AKA “Supoerfund”) are broadening the EPA’s national Brownfields Program.
The latest protections come under the Brownfields Utilization, Investment, and Local Development Act of 2018 (“BUILD Act”) signed into law in March 2018 as part of the bipartisan Consolidated Appropriations Act of 2018.
Embedded in the massive omnibus spending bill, the BUILD Act (an updated version of the Obama Administration’s TIGER Grants) revisions expand how exceptions to liability can be met, and the number of brownfield redevelopment sites can be increased.
First, the BUILD Act increases the funding limit for Brownfields remediation grants from $200,000.00 per site to $500,000.00 per site.
This is based on the anticipated level of contamination, size, or ownership of the sites. In unique circumstances, that amount can increase to $650,000.00 with approval by the Administrator of the EPA.
Municipalities often rely on Brownfields grants to assess and remediate problem sites in their jurisdiction to identify economic opportunities and attract developers. Increased funding coupled with a new ability to use grant funds to defray up to five percent of certain administrative costs will help reach more troubled properties.
Second, municipalities now can acquire blighted property for redevelopment without the specter of inheriting cleanup liability.
Under CERCLA, liability of the owner attaches when the property is transferred. Previously, CERCLA exempted a unit of State or local government from cleanup liability only if it acquired title involuntarily. The BUILD Act revises the definition of “owner or operator” to exempt governments from liability by removing the requirement that property ownership results from involuntary acquisition of title.
Now, ownership or control can occur through “seizure or otherwise in connection with law enforcement activity, or through bankruptcy, tax delinquency, abandonment, or other circumstances in which government acquires title.” Such expansion provides redevelopment certainty for governmental entities without the risk of an obligation for cleanup.
Third, tenants now have liability protection available directly.
Under CERCLA, tenancies and leases are a type of contractual relationship that can be excluded from the category of “affiliated with” a potentially responsible party that triggers liability. Prior to the BUILD Act, tenants had to rely on the landlord’s qualification as a bona fide prospective purchaser (“BFPP”) of the property the tenant occupies to avoid liability.
There are steps required under CERCLA to establish BFPP status, initiated by all appropriate inquiries into the previous ownership and uses of the property (i.e., conducting a Phase I Environmental Site Assessment), but often a landlord/owner would fail to satisfy later requirements, thus exposing tenants to joint and several liability.
The only protection available to tenants was for the EPA to exercise “enforcement discretion” for tenants that conducted their own “all appropriate inquiries” prior to lease commencement under agency guidance issued in 2012.
Photo courtesy of U.S. Environmental Protection Agency.