EPA Issues Revised Guidance on Applicability of BFPP Protection To Tenants

EPA issued revised guidance discussing the potential applicability of the CERCLA Bona Fide Prospective Purchaser (BFPP) liability protection to tenants who lease contaminated or formerly contaminated properties. Revised Enforcement Guidance Regarding The treatment of Tenants Under the CERCLA Bona Fide Prospective Purchaser Protection. The guidance supersedes EPA’s January 14,2009 guidance titled “Enforcement Discretion Guidance Regarding the Applicability of the Bona Fide Prospective Purchaser Definition in CERCLA § 101(40) to Tenants.

Under CERCLA, tenants of property owners who qualify for the BFPP will have derivative BFPP status. So long as the owner maintains compliance with the BFPP criteria, the tenant who has derived BFPP status does not have any independent duty to carry out any of the BFPP responsibilities (such as conducting AAI). However, if the owner loses its BFPP status either through its own action or inaction, the tenant could lose its derirvative BFPP status.

Because leasehold interests play an important role in facilitating the cleanup and reuse of contaminated properties, the guidance states that EPA may exercise its enforcement discretion to treat the tenant as a BFPP on a site-specific basis. The guidance applies to leases executed after January 11, 2002 where the tenant otherwise satisfies meet the other BFPP provisions.  Note that for derivative BFPP status, a tenant does not have to conduct  AAI since it would have been conducted by the owner. However, EPA suggested that a tenant may still wish to obtain information on the prior uses of the facility.

The revised guidance will extend to tenants of owners who are not BFPPs even where the tenant lacks sufficient indicia of ownership to be a CERCLA owner. EPA also clarified that a lease would not normally be considered a prohibited “affiliation” that precludes BFPP eligibility because a lease does not convey title to the property. However, EPA said intends to exercise its enforcement discretion on a site-specific basis by not treating the existence of a lease between the tenant and the owner as a prohibited affiliation. EPA  issued guidance in 2011  discussing the affiliation prohibition of the BFPP. See  “Enforcement Discretion Guidance Regarding the Affiliation Language of CERCLA\’s Bona Fide Prospective Purchaser and Contiguous Property Owner Liability Protections 

EPA did state that there might be limited instances where it would use a comfort/status letter or a prospective lessee agreement to address the concerns of tenants not covered by the guidance to further the public interest.

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