First Federal Court Interpretation of "affiliation" Under Cercla's Bfpp Defense
| Jurisdiction | United States,Federal |
| Citation | Vol. 40 No. 5 Pg. 59 |
| Pages | 59 |
| Publication year | 2011 |
2011, May, Pg. 59. First Federal Court Interpretation of "Affiliation" Under CERCLA's BFPP Defense
May 2011
Vol. 40, No. 5 [Page59]
Natural Resource and Environmental Law articles are sponsoredby the CBA Environmental Law, Water Law, and Natural Resources and Energy Law Sections. The Sections publish articles of interest on local and international topics.
Coordinating Editors
Melanie Granberg (Environmental), Denver, Gablehouse Calkins and Granberg, LLC-(303) 572-0050, mgranberg@gcgllc.com; Kevin Kinnear (Water), Boulder, Porzak Browning and Bushong LLP-(303) 443-6800, kkinnear@pbblaw.com; Joel Benson (Natural Resources and Energy), Denver, Davis Graham and Stubbs LLP-(303) 892-7470, joel.benson@dgslaw.com
About the Authors
Polly B. Jessen is a partner with Kaplan Kirsch and Rockwell LLP, Denver-pjessen@kaplankirsch.com. Ian K. London is a law clerk with Kaplan Kirsch and Rockwell LLP, Denver, and a 2011 JD candidate, University of Denver Sturm College of Law.
In Ashley II, a federal court has interpreted for the first time the meaning of "affiliation" under CERCLA's BFPP defense. This decision suggests that some of the standard risk management tools available in the contaminated property transaction may be construed to reveal an affiliation between a purchaser and a seller of real property, which defeats the BFPP defense and underscores the importance of encouraging purchasers of contaminated property to secure additional environmental liability protections.
Environmental counsel routinely advise clients that acquire contaminated or potentially contaminated property about the bona fide prospective purchaser (BFPP) defense to liability under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA).(fn1) Although the U.S. Environmental Protection Agency (EPA) has issued guidance regarding the requirements for invoking this defense, to date there has been little case law on point. In an October 2010 decision, the U.S. District Court for the District of South Carolina handed down one of the first cases examining the requirements of the BFPP defense, Ashley II of Charleston, L.L.C. v. PCS Nitrogen, Inc.(fn2)
Ashley II is the first case to explicitly address the "no affiliation" element of the BFPP defense. Ashley II suggests that some of the standard risk management tools available in the contaminated property transaction-purchaser indemnities and close coordination of a purchaser with the EPA or other authorities with enforcement authority over a site-may be construed to reveal an affiliation between a purchaser and seller of real property that defeats the purchaser's BFPP defense. This article discusses the Ashley opinion, as well as other relevant law.
Background Law: CERCLA, Brownfields Act, and BFPP
Under CERCLA § 107, a purchaser of contaminated real estate becomes jointly and severally liable for environmental response costs(fn3) merelyby acquiring ownership of a site where there has been a release or threatened release of hazardous substances.(fn4) The 2002 Brownfields Amendments to CERCLA introduced new defenses to liability for purchasers, which were intended to facilitate the redevelopment of these contaminated or "brownfields" properties. Among these defenses is the BFPP defense.(fn5)
Owners or tenants of owners of contaminated property can invoke the BFPP defense if the owner acquires a property after January 11, 2002, and meets all of the following statutory criteria:
1) the release occurred before acquisition;
2) the owner made "all appropriate inquiries" into the previous ownership of the facility;
3) the owner provided all legally required notices;
4) the owner exercised all appropriate care with respect to the release;
5) the owner cooperated with the authorities;
6) the owner complied with all institutional controls;
7) the owner complied with all requests and subpoenas; and
8) the owner is neither potentially liable nor...
To continue reading
Request your trial