New EPA Enforcement Guidance on CERCLA Liability of Tenants

January 2013Articles In the Zone

In December, the Environmental Protection Agency (EPA) released a revised guidance on how it intends to exercise enforcement discretion for tenants who lease contaminated property. Under the Superfund law, CERCLA, there is a defense to liability if an owner is a “bona fide prospective purchaser” (BFPP) of contaminated property. The new guidance clarifies EPA’s position regarding tenants who were not covered by previous EPA guidance.

Tenants are technically not BFPPs as they do not purchase property. The new guidance clarifies EPA’s position that these tenants can also obtain liability protection in certain situations. Also, EPA may assist in land development by providing “comfort letters” to tenants of properties that have been contaminated by stating its intent not to pursue them for cleanup claims.

Under the CERCLA statute, a tenant may “derive” BFPP status if the owner already has satisfied the BFPP requirements. Their tenants are protected from liability provided they did not dispose of hazardous substances at issue on the property and that they did not impede the performance of any restoration or response to contamination. If the tenant otherwise satisfies the general requirements that a BFPP owner, EPA would not exercise its enforcement discretion against the tenant.

If, on the other hand, the owner is not a BFPP, under the new guidance a tenant who has executed its lease after January 11, 2002 can obtain its own BFPP status, provided that they comply with EPA guidance as if they were an owner. If that tenant has not polluted the property and has not impeded a response, it can be a BFPP even if the owner is not.

In limited instances, EPA will provide a “comfort letter’ to a prospective tenant, if EPA decides it is “appropriate” in order to “further the public interest.” Any prospective long term tenant of a property that may be contaminated should consult with counsel to see if it can obtain a “comfort letter.” We have found that attorneys with EPA experience can assist in obtaining these letters from EPA.