Threading the BFPP Needle: You Can Succeed Where Others Have Failed Timothy A. Haley, Esq., Barnes and Thornburg (Moderator) William R. Weissman, Esq., Retired Partner, Venable LLP J. Michael Sowinski, J.D., Terradex

CERCLA’s Unintended Consequences Liability Fears Outweigh Redevelopment Potential Cleanup Liability Redevelopment

2002 CERCLA Brownfields Amendments added new defenses: - Bona Fide Prospective Purchaser (BFPP) - Contiguous Property Owner (CPO) - Innocent Landowner (ILO)* BFPP, CPO, ILO Environment vs. Redevelopment Cleanup Liability *The ILO defense was originally enacted in 1986, but was revised in CERCLA Brownfields Amendments

No “disposal” of hazardous substances after purchasing the property. Exercise appropriate care by taking reasonable steps to: –(a) stop any continuing release –(b) prevent any future threatened release; and –(c) prevent or limit any human, environmental, or natural resource exposure to any previously released hazardous substance. Comply with land use restrictions established or relied on in connection with the response action Do not impede the effectiveness or integrity of any institutional control. Release Management Institutional Controls Disposal There are also “other” continuing obligations. “Continuing Obligations”

No Disposal After Acquisition Compliance with LURs BFPP Defense Really? Ambiguities Leave Holes Open in the BFPP Defense

Legal Issues Aside, How Do I Know What To Do?

Your Ideas! Ideas! BFPP Defense Our Speakers Have Some Ideas

‘”is in compliance with any land use restrictions established or relied on in connection with the response action… ” LURs ICs “does not impede the effectiveness or integrity of any institutional control employed in connection with a response action. ” The LUR Issue

ICs Government Controls Proprietary Controls Info Devices Orders/ Agreements Binding on All Binding on Some Binding on None The Legally Binding Nature of ICs Varies By Category

Restrictions need to be complied with “ even if those restrictions have not been properly implemented through the use of an enforceable institutional control.” EPA Common Elements Guidance, p. 7. Non -IC Risk Assessments Remedy Design Documents Remedy Decision Documents Orders & Agreements A Fifth Category? – the Non IC

Narrow?Equal? Broad?or LURs are the Legally Enforceable Subset of ICs. They mean the same thing. LURs IC LURs LURs Need to be Complied With Even if Not Implemented by Enforceable ICs. LURs IC LURs – “Broad” or “Narrow”?

Broad Interpretation of LURs IC LURs CONS PROS -Quid pro quo -Prevents cleanup remedy from being thwarted by change of ownership -Lack of fair notice. -Supersedes state or common law property rules on the extent to which LURs bind future owners - Penalizes innocent property owner for implementation lapses by prior owners or regulatory authorities

LURs IC CONS PROS Narrow Interpretation of LURs - Retains states’ rules in defining when LURs run with the land. -Fairness to innocent property owners that conducted due diligence compliant with AAI rule. -Avoids hidden liability traps that innocent purchasers are unlikely to discover despite compliance with AAI rule. -If LUR does not run with the land, regulatory authorities may have to initiate administrative proceedings to apply LUR to new owner. -Courts often reject interpretation of “any” to the ultimate limits of linguistic possibilities – courts prefer interpretation based on context.

LURs are the Legally Enforceable Subset of ICs. LURs IC Narrow The Analysis Weighs in Favor of:

“any person who at the time of disposal … owned or operated any facility…” CERCLA 107(a)(2) (defining liable persons) BFPP if “[a]ll disposal of hazardous substances occurred before the person acquired the facility” Before After 2002 Cleanup Liability Redevelopment Cleanup Liability takes “reasonable steps” to manage releases. CERCLA 101(40)(A) (defining BFPP defense). The Disposal Issue

BFPP Redevelopment No Disposal And EPA’s Common Elements Guidance Doesn’t Address This. Liability Exposure for “Disposal” is Not in Balance with Redevelopment

Disposal Passive Migration Secondary Disposal (e.g., excavation and grading) Gradual Spreading Leaking Tank Pre-2002 Pre-2002 Disposal Cases Cast A Wide Net Initial Introduction

Post-2002 Brownfield Cases Accept and Rely on Pre-2002 Disposal Cases. Allowing sumps to remain and leach into soil constituted a “disposal.” Ashley II, 791 F. Supp. 2d 431, 499 (D.S.C. 2011). Post-2002 Removing concrete slab and exposing contaminants to rain constituted “disposal.” Saline River Props., 823 F. Supp. 2d 670, 683–84 (E.D. Mich. 2011). Redevelopment No Disposal Things are still out of balance.

Disposal leachingemitting “…discharge, deposit, dumping, leaking, placing…” Release disposing The Definition of “Release” Encompasses “Disposal”

107(a)(2). disposal 101(40)(a). disposal The same term used in different parts of a statute can be interpreted differently. Context counts. Envtl. Def. v. Duke Energy Corp., 549 U.S. 561, 576 (2007). CERCLA Context Counts!

There is A Better Way No Disposal Appropriate Care for Releases In post statutory context, “disposal” can be interpreted differently. Redevelopment Activities Done with “Appropriate Care” Should Not Constitute Disposal Post-2002 CDMG Realty paves the way.

Appropriate Care Due Care At least in the 4 th Cir. but their reasoning may have holes Developers Would At Least Have A Fighting Chance.

-More Examples of Appropriate Care/Due Care. -Alignment with Phase I “CREC” and redefined “HREC.” -Relation to “No Further Action” and Similar Agency Assurances ASTM CO Guide Undergoing Updates -Continuing Obligation Plans.

33 Va. Envtl. L.J. 257 Available at: or

Your Ideas! Moderated Discussion William R. Weissman, Esq. Retired Partner, Venable LLP J. Michael Sowinski Jr., J.D. Terradex, Inc. Timothy A. Haley, Esq. Barnes & Thornburg, LLP

Additional Slides

Example Scenarios

Due Care Guideposts - Timely and Meaningful Action (take some steps) This is doable. - Protect from exposures/don’t exacerbate. - Regulator notification/coopera tion Prevent Further Harm

Appropriate Care Decisions Robertshaw Ashley II Maryland Square No steps to protect contaminated soil from exposure/spread after demolishing building. Took steps to remove tanks. Failed to protect contaminated sumps from rain which exacerbated conditions (sumps noted as a REC). Did Not Prevent Further Harm