Virginia’s Department of Environmental Quality (“VDEQ”) announced via its email newsletter that it will resume issuance of Bona Fide Prospective Purchase (“BFPP”) and other “Comfort Letters” beginning September 1, 2022. This resumes a popular program that offers welcomed legal clarity to businesses looking to purchase environmentally distressed properties.
As we reported on December 13, 2021, VDEQ suspended issuance of Comfort Letters due to the surge in demand for such letters in the face of significant staffing shortages. It appears VDEQ’s staffing levels have improved sufficiently that it feels able to renew processing Comfort Letter applications.
With this said, applicants should expect changes in how the program is administered and how their applications are reviewed. This is in part because the issuance of Comfort Letters remains a discretionary ‘courtesy’ program that draws on resources otherwise heavily committed to numerous other mandatory statutory programs.
The stringency of application reviews is also intended to address what had been a growing number of incomplete or poorly supported applications. It was no secret that many applications were submitted with little supporting data as to the scope of contamination on a property. Some applicants began to emphasize expediency over thoroughness with the intent of getting projects in the review queue, and with the hope of obtaining a Comfort Letter while avoiding more intensive and expensive site testing and characterization. The historically poor quality of some applications became a source of frustration not only for VDEQ, but for other applicants because of the delays associated with processing less thorough applications.
Such practices were also short-sighted. While VDEQ Comfort Letters provide some level of ‘comfort’ against the possibility of future state-required remediation, VDEQ Comfort Letters provide no protection against Federal liability, or against CERCLA cost-recovery/contribution claims by private parties. As such, poor environmental due diligence exposes a landowner to significant CERCLA liability regardless of any VDEQ Comfort Letter.
While the sufficiency of each application will depend on the nature of the site, applicants should expect VDEQ will require, at minimum, completed and current Phase I and II environmental site assessments (“ESAs”), with the latter including site testing to assess the extent and severity of any contamination. The findings of the ESAs will inform whether the applicant needs additional documentation, such as a site characterization report or perhaps a remedial action plan to address any ongoing releases from the property.
The resumption of this program is good news for those engaged in real estate transactions involving industrial and contaminated properties in Virginia. However, applicants should expect a stricter application review process. To this end, applicants are encouraged to consult with environmental counsel and appropriate technical consultants before initiating a Comfort Letter application.