Appendix 5 Issuance of CERCLA Model Agreement and Order on Consent for Removal Action by a Bona Fide Prospective Purchaser

• Author: Allison Rumsey/Michael Daneker
• Pages: 239-270

Page 239

November 27, 2006

U.S. Environmental Protection AgencyU.S. Department of Justice

MEMORANDUM

SUBJECT:Issuance of CERCLA Model Agreement and Order on Consent for Removal

Action by a Bona Fide Prospective Purchaser

FROM:Susan E. Bromm, Director /s/

Office of Site Remediation Enforcement

U.S. Environmental Protection Agency

Bruce S. Gelber, Chief /s/

Environmental Enforcement Section

Environment and Natural Resources Division

U.S. Department of Justice

TO:Director, Office of Site Remediation and Restoration, Region I

Director, Emergency and Remedial Response Division, Region II

Director, Hazardous Site Cleanup Division, Region III

Director, Waste Management Division, Region IV

Directors, Superfund Division, Regions V, VI, VII and IX

Assistant Regional Administrator, Office of Ecosystems Protection and

Remediation, Region VIII

Director, Office of Environmental Cleanup, Region X

Director, Office of Environmental Stewardship, Region I

Director, Environmental Accountability Division, Region IV

Regional Counsel, Regions II, III, V, VI, VII, IX, and X

Assistant Regional Administrator, Office of Enforcement, Compliance, and

Environmental Justice, Region VIII

Deputy and Assistant Chiefs, Environmental Enforcement Section, U.S.

Department of Justice

Chief, Deputy Chief, and Assistant Chiefs, Environmental Defense Section,

U.S. Department of Justice

We are pleased to issue the CERCLA Model Agreement and Order on Consent for

Removal Action by a bona fide prospective purchaser (“BFPP”) (BFPP Removal Model

Agreement). This model is part of EPA’s continuing effort to promote land reuse and

revitalization by addressing potential liability concerns associated with acquiring contaminated

Page 240 Superfund Deskbook

properties. This model responds to requests from parties who enjoy liability protections

provided for bona fide prospective purchasers by Sections 101(40) and 107(r) of the

Comprehensive Environmental Response, Compensation, and Liability Act of 1980

(“CERCLA”), 42 U.S.C. § 9601, et seq. as amended by the Brownfields Amendments, who will

perform removal work at sites of federal interest that they own or intend to acquire, where EPA

may advise on the extent of cleanup required and oversee the work, and where the removal work

will exceed the “reasonable steps to prevent releases” obligation upon which their BFPP status

depends.

In May 2002, EPA issued a policy stating that, in most cases, the Brownfields

Amendments make agreements that provide a covenant not to sue (prospective purchaser

agreements or PPAs) from the federal government unnecessary. Bona Fide Prospective

Purchasers and the New Amendments to CERCLA, May 31, 2002 ( BFPP Policy). EPA

continues to believe that PPAs are no longer necessary in the vast majority of cases, because

BFPPs may now purchase property with knowledge of contamination and not acquire CERCLA

liability as long as they meet certain BFPP criteria. In the May 2002 BFPP Policy, the Agency

recognized that, in limited instances, the public interest would be served by entering into PPAs

or some other form of agreement with purchasers of contaminated property. One of the

instances identified in the BFPP Policy as justifying a federal covenant not to sue was where a

significant environmental benefit will be derived from the project in terms of cleanup. This

model is intended to serve as the vehicle for providing a federal covenant not to sue and

contribution protection for BFPPs who will perform removal work exceeding reasonable steps at

a site of federal interest. The model offers an “existing contamination” covenant like that

offered in the 1999 Model PPA, and includes appropriate provisions associated with the

performance of removal work. In addition, it provides a release and waiver of any windfall lien.

The model conforms to other recently issued models insofar as certain provisions have been

standardized from model to model. It is unique, however, in that the settling party already has

statutorily conferred liability protection as a BFPP.

The attached BFPP Removal Model Agreement is intended for removal sites where there

is a federal interest and the work required is complex or significant in extent. For this reason,

this Model includes provisions relating to, e.g., reimbursement of oversight costs, work takeover,

and financial responsibility, designed to ensure that the work is completed in a timely and proper

manner by the BFPP. Any determination to omit one or more of these provisions should be

based on consideration of specific factors, including the nature and extent of the work, the risks

presented by not including a specific provision in the agreement, the benefits of having the

removal performed by the BFPP, and the benefits to the BFPP of cleaning up the site with EPA’s

direct oversight and involvement, including, e.g., any enhancement to the value or marketability

of the site or property that would flow from a cleanup performed with EPA’s oversight and

involvement. Omissions from the model, other than designated optional provisions, should be

discussed with Headquarters and Department of Justice prior to that omission being offered or

agreed to.

Issuance of CERCLA Model Agreement Page 241

For federal interest sites where BFPPs wish to satisfy their reasonable steps requirements

but do not intend to undertake a removal action with EPA oversight, EPA may continue to

provide comfort/status letters suggesting site-specific reasonable steps where appropriate.

Interim Guidance Regarding Criteria Landowners Must Meet in Order to Qualify for Bona Fide

Prospective Purchaser, Contiguous Property Owner, or Innocent Landowner Limitations on

CERCLA Liability (“Common Elements”), March 6, 2003. As stated in the Common Elements

Guidance, such comfort/status letters are limited to sites with significant federal involvement

such that the Agency has sufficient information to form a basis for suggesting reasonable steps.

In implementing this new model for removal work by BFPPs, Regions are asked to

coordinate with EPA Headquarters and with the Department of Justice early in the process. Any

Region settling with a BFPP for removal work at a property owned by that BFPP will be

expected to consult with Headquarters on the settlement being proposed. In addition, any

Region significantly deviating from this model for settlement with a BFPP, other than using the

previously published Model for Waiver of the Windfall Lien, will be required to seek

Headquarters’ concurrence from the Director of Regional Support Dvision. The Department of

Justice must approve and sign each of these settlements.

Please address any questions on this model to Helen Keplinger of the Regional Support

Division at (202) 564-4221 or Tom Carroll of the Environmental Enforcement Section at (202)

514-4051. This model is available on EPA’s Web site at

http://www.epa.gov/compliance/resources/policies/cleanup/superfund/bfpp-ra-mem.pdf.

Attachments

cc: Earl Salo, Acting Associate General Counsel for Solid Waste and Emergency Response

Juliette McNeil, Director, Financial Management Division

Office of Regional Counsel Branch Chiefs, Regions I-X

CERCLA Settlement Lead Region Workgroup

David Lloyd, Director, Office of Brownfields Cleanup and Redevelopment