US BUILD Act Clarifies Tenant Standing For Bona Fide Prospective Purchaser Protections From Contaminated Property Liability

When President Trump signed the omnibus spending bill on March 23, 2018, he also enacted the Brownfields Utilization, Investment, and Local Development Act of 2018 (BUILD Act) (not to be confused with the Better Utilization of Investments Leading to Development Act of 2018—yet another BUILD Act of 2018). Among the several provisions within the BUILD Act were some changes to how exceptions to CERCLA liability may be met, including clarification on how tenants may establish the Bona Fide Prospective Purchaser (BFPP) liability protection.

As Section 107(a) of CERCLA establishes liability for current or past owners and operators, lessees of contaminated property are also at risk of being pulled into CERCLA's grasp as either an owner (such as where the lessee participates in the disposal of hazardous wastes) or operator (where the lessee has authority to control operations or decisions involving the disposal of hazardous substances). Given the potential for joint and several strict liability under CERCLA, tenants have been concerned with the application of the BFPP protections as the distinction between the landlord's and tenant's rights and obligations have been less than clear.

Section 101(40) of CERCLA provides that a BFPP is "a person (or a tenant of a person) that acquires ownership of a facility after [January 11, 2002]" and that establishes:

All disposal of hazardous substances at the facility occurred prior to acquisition; the person made all appropriate inquiry (AAI) into the previous ownership and uses of the facility (e.g. obtained a valid Phase I report); the person provides legally required notices with respect to the discovery or release of any hazardous substances; the person exercises appropriate care with respect to hazardous substances at the property (including taking reasonable steps to stop continuing releases and prevent future releases, and prevent exposures); the person provides full cooperation, assistance, and access to persons performing response actions; the person is in compliance with land use restrictions and institutional controls; the person complies with information requests and administrative subpoenas; and the person is not potentially liable or "affiliated" with any...