In general, CERCLA imposes joint, strict and several liability on the owners and operators of contaminated lands for removal and remediation costs. However, CERCLA also provides protection from such liability for any potentially responsible party who qualifies as a BFPP.3 CERCLA indicates that lessees can derive BFPP protection from owners/lessors who also satisfy the BFPP criteria, but the statute does not address whether a lessee can maintain its BFPP status independent of the owner/lessor's status. In this guidance, the EPA exercises its enforcement discretion to address that issue.
First, the guidance explains that EPA will continue to treat a lessee that has derivative BFPP status through the owner as a BFPP even after the owner no longer qualifies as a BFPP through no fault of the lessee, as long as the lessee continues to comply with applicable BFPP criteria.4
Specifically, a lessee can maintain its BFPP status as long as each of the following is the case:
all disposal of hazardous substances at the facility occurred prior to execution of the lease
the tenant provides all legally required notices
the tenant takes reasonable steps with respect to hazardous substance releases
the tenant provides cooperation, assistance and access
the tenant complies with land use restrictions and does not impede the integrity or effectiveness of institutional controls
the tenant complies with information requests and administrative subpoenas
the tenant is not potentially liable for response costs at the facility or "affiliated" with any such person (other than through the lease with the owner)
the tenant does not impede any response action or natural resource restoration
Notably, lessees need not have conducted all appropriate inquiries into the previous ownership and uses of the property, since EPA generally does not expect lessees to have conducted such inquiries in these circumstances.5
Second, the guidance states that a lessee can still qualify for the protection, even if the lessor/owner never constituted a BFPP, as long as the lessee complies withall of the BFPP criteria, including the requirement to conduct all appropriate inquiries.6 As a result, a prospective lessee should determine whether the owner/lessor qualifies as a BFPP. If the owner/lessor does not, then the lessee should take care to conduct all appropriate inquiries prior to executing the lease.
Third, the guidance clarifies two potential barriers to BFPP protection for lessees, regardless of the lessor/owner's status. First, the guidance explains that the leasehold relationship between the lessee and the owner does not constitute a prohibited affiliation between the parties.7 In general, a BFPP may not be "affiliated" with any party that is potentially liable. However, CERCLA provides an exception to these criteria where the affiliation "is created by instruments by which title to the facility is conveyed or financed or by a contract for the sale of goods or services." Although a lease does not constitute a conveyance of title or the sale of goods or services, this guidance extends this exception to lessees.
The guidance also indicates that the EPA will treat qualifying lessees as BFPPs as long as the lease agreement was executed after January 11, 2002.8 Under CERCLA, a party qualifies for BFPP status only if it "acquire[d] ownership" to the property after January 11, 2002. However, a lessee may not know when the owner/lessor purchased the property, which may have occurred long before the lessee ever gained access to the property. By clarifying that it will treat lessees as BFPPs based on the date on which the lease agreement was executed, not the date on which the owner/lessor acquired title to the property, EPA resolves that uncertainty and extends the BFPP protection to parties who have leased property since January 11, 2002 from owners/lessors that acquired the property prior to that date.
Because EPA issued this guidance as an exercise of its enforcement discretion, it has expressly reserved the right to withdraw these extensions of the BFPP protection, particularly in instances where the lessee is potentially liable for reasons other than its status as a lessee, or when the owner is not in compliance with state or federal regulatory requirements or an administrative or judicial cleanup order relating to the property.9
Finally, because the BFPP protection is self-implementing, the guidance indicates that EPA generally does not intend to issue site-specific determinations of a given party's BFPP status. However, EPA may do so in limited circumstances "where it is appropriate to address the concerns of tenants not covered by this guidance in order to further the public interest."10
Further, EPA may issue site-specific comfort letters to provide lessees with information that it has about the given property in order to help lessees make informed decisions for future development. To facilitate that effort, EPA has issued three model letters that regional offices can utilize in providing such information to tenants.11 Appealing to its original motivation for this guidance, EPA has prepared these model letters to apply specifically for lessees interested in developing renewable energy projects. However, in light of the expanded scope of the revised guidance, these letters could potentially be tailored to apply more broadly to tenants operating in other industries.
1See Memorandum from Cynthia Giles, Office of Enforcement and Compliance Assistance, U.S. Environmental Protection Agency to Regional Administrators, "Revised Enforcement Guidance Regarding the Treatment of Tenants Under the CERCLA Bona Fide Prospective Purchaser Provision" (Dec. 5, 2012) (BFPP Guidance for Lessees), available at http://www.epa.gov/enforcement/cleanup/documents/policies/superfund/tenants-bfpp-2012-mem.pdf.
2 Additional information about this Initiative is available at http://www.epa.gov/oswercpa/.
3 See 42 U.S.C. §9607(r). The criteria to qualify as a BFPP are provided in §9601(40)(A)-(H).
4 See EPA, BFPP Guidance for Lessees, at 3.
5 See id. at 3.
6 See id. at 4.
7 See id.
8 See id. at 4-5.
9 See id. at 5.
11 The three letters are titled "Model No Previous Federal Interest Comfort/Status Letter," "Model Federal Superfund Interest and No Current Federal Superfund Interest Comfort/Status Letter," and "Model State Action Comfort/Status Letter." All three letters are available at http://www.epa.gov/enforcement/cleanup/documents/policies/superfund/tenants-bfpp-2012-mem.pdf.