PROVISIONS AND HOW THEY CAN HELP YOU
By Bowen Ota
as defined by EPA, are abandoned, idled, or under-used industrial
and commercial facilities where expansion or redevelopment is complicated
by real or perceived environmental contamination. The EPA’s Brownfields
Initiative goal is to assist communities in revitalizing these properties,
(both environmentally and economically), mitigate potential health
risks, and restore economic vitality to areas where Brownfields
exist. While this Initiative assists communities it can also help
developers, as well as, owners and/or PRPs of these sites through
the use of Prospective Purchaser Agreements (PPAs).
on settlements with prospective purchases of contaminated property
(e.g., Brownfields) has been provided by EPA in its 1989 document
entitled "Guidance on Landowner Liability Under Section 107(a) of
CERCLA, De Minimis Settlements Under Section 122 (g)(i)(B) of CERCLA,
and Settlements with Prospective Purchasers of Contaminated Property"
("the 1989 guidance").
the recent May 1995 guidance by EPA restates much of the 1989 guidance,
but revises the original criteria used to determine whether a PPA
is appropriate. According to the revised guidance, the following
criteria should be met before an agreement is made between the Agency
and the prospective purchaser:
that EPA does not become unnecessarily involved in private real
estate transactions, therefore, an EPA action at the facility
must have been taken, is ongoing, or anticipated to be undertaken
by the Agency. Consideration should also be given to information
from CERCLIS, a state agency through submissions from the prospective
purchaser, such as results of an environmental audit or site assessment.
a more balanced evaluation of both direct and indirect benefits
to the government and public, rather than the previous guidance
where benefit was measured only in cost reimbursement or work
operation of the facility or new site development with due care
not to aggravate or contribute to the existing contamination or
interfere with EPA’s response action.
operation or new development of the property without posing health
risks to the community and those persons likely to be present
at the site.
that the prospective purchaser is financially viable.
revised criteria allows the Agency greater flexibility to consider
PPAs with Covenant Not To Sue and is extremely helpful to those
entities wishing to sell their contaminated land to a prospective
purchaser. Under this new guidance, the prospective purchaser would
be protected by the Covenant Not To Sue for liabilities related
to the existing contamination. This makes the property more viable
for the purchaser, and in turn, increases the value for the seller.
The funds generated from the sale of the land could then be used
to offset any remediation costs and the seller would be free of
long-term operation and maintenance costs.
there are aspects of the current Brownfields Initiative, which need
some refinement in order to be more attractive to both the buyer
and the seller. For example, according to the guidance, once the
seller sells the property to the prospective purchaser, the seller
relinquishes control of the property, yet retains all liability
associated with both past, present, and future issues related to
the contamination on site. Barriers of EPA’s present guidance that
may be discouraging the prospective purchaser include: EPA’s stringent
clean-up standards, financial return on investment, bureaucratic
delays in cleanup and redevelopment, and liability for third party
important points have been outlined to EPA by the Environmental
Financial Advisory board along with possible solutions to these
issues. At the present time, EPA has not decided whether to address
the issues or adopt the issues and possible remedies to the real
or perceived barriers of Brownfields redevelopment.
(and example PPA structure agreement) for entering into PPAs/Covenants
Not To Sue with prospective purchasers of contaminated property,
along with the barriers of Brownfields development, can be found
in the Environmental Links section (under
U.S. EPA Brownfields). Also of note is the upcoming Brownfields
‘98 Conference: The Basics and Beyond Showcasing Successful Partnerships
which will be taking place November 16-18, 1998 at the Los Angeles
is currently working with developers, law firms and financial institutions
on Brownfields development projects. Please contact C2REM
with any questions regarding the above issues or should you need
assistance with a specific Brownfields project.