Tenants Gain Improved Liability Protections Under CERCLA

New Superfund amendments make clear that a tenant at an industrial or manufacturing site can claim the bona fide prospective purchaser (BFPP) defense to liability and escape what would otherwise be strict, joint and several owner/operator liability when leasing a previously contaminated property. Tenants now can assert an actual BFPP defense if the tenant leases property after January 11, 2001, undertakes a pre-lease Phase I environmental assessment meeting All Appropriate Inquiry (AAI) standards, and complies with additional requirements of the BFPP defense moving forward.

The Consolidated Appropriations Act of 2018 includes a section known as the Brownfields Utilization, Investment, and Local Development Act of 2018 (BUILD) that amends the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA ), commonly referred to as Superfund. In the past, tenants benefited only from enforcement discretion exercised by EPA consistent with the 2012 Revised Enforcement Guidance Regarding the Treatment of Tenants Under the CERCLA Bona Fide Prospective Purchaser Provision. The new law provides an actual defense to possible liability asserted by EPA and third parties who may bring action against a tenant.

The Superfund amendment is great news for tenants and will promote increased reuse of brownfield properties and other industrial redevelopment. The change also means that tenants, like purchasers, need to be mindful of strict compliance with the AAI requirements for Phase I environmental site assessments as well as complying with other BFPP criteria in order to rely upon the liability protections.