Contaminated Property Shelved - Transactional Relief from the new CERCLA Amendments
By Martin K. Banks
12/1/2002

For real estate developers and property owners, the recent CERCLA amendments enacted as the Small Business Liability Relief and Brownfields Revitalization Act (SABRA) may turn out to be one of the most important legislative developments in the last twenty years, especially for properties with associated environmental issues. The purpose of SABRA is to provide certain relief from liability under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). This relief is aimed at promoting the cleanup and reuse of brownfields sites, properties where the expansion, redevelopment, or reuse of which may be complicated by the presence of hazardous substances.

A. Bona Fide Prospective Purchasers - A purchaser of environmentally contaminated property, and meeting the following conditions, may invoke the bona fide prospective purchaser defense to CERCLA liability: (1) all disposal at the site occurs prior to acquisition; (2) for commercial property, the person makes all commercially appropriate inquiries in accordance with the revised due diligence standards; (3) provides all legally required notices regarding the discovery of the hazardous substances; (4) exercises appropriate care by taking reasonable steps to stop any continuing or future releases; (5) provides full cooperation to persons conducting response actions; (6) complies with any existing or clean-up derived institutional controls on the use of the land; (7) complies with requests for information from the EPA; and (8) is not a potentially responsible party.

B. Innocent Landowner Defense - Under CERCLA, a purchaser of property could invoke the innocent land owner defense to CERCLA liability by showing that the contamination took place before his purchase. Under SABRA, this defense is preserved but the purchaser must also (1) give full cooperation to the person doing the cleanup; (2) comply with all land use restrictions; (3) not impede the effectiveness of institutional controls; and (4) take reasonable steps to stop any continuing release.

C. Contiguous Property Owners - Under CERCLA, a contiguous property owner whose land has been contaminated by adjacent contaminated lands (generally by groundwater migration) is generally liable for the contamination on his property. Under SABRA, however, there is a new defense for such a contiguous property owner if the following conditions are met: (1) did not contribute to the release; (2) is not affiliated with the person who is liable for the release; (3) takes reasonable steps to stop any continuing or future releases; (4) provides full cooperation and access to response action providers; (5) does not impede any ongoing response action; (6) complies with requests for information; (6) provides all required notices of release; and (7) did not know about the release in the contiguous property at the time of purchase.

In summary, SABRA provides significant relief to owners of contaminated property and introduces an element of relief and reason into an environmental remediation scheme that historically imposed overly burdensome and unpredictable requirements to real property owners. For further information contact: Marty Banks at the law firm of Stoel Rives. He is the Chairman of the Environmental Committee of the Utah Manufacturers Association. (801) 578-6975; email: mkbanks@stoel.com