EPA Tailoring Superfund Agreements for Concerned Companies

By Sylvia Carignan

Third parties that want to take on Superfund site projects can expect more personalized attention and customized agreements from the EPA, as the agency moves to redevelop contaminated properties.

The Environmental Protection Agency is targeting companies’ contamination liability concerns at the site level, pushing more tailored, site-specific agreements in addition to using agency-wide guidance, Cyndy Mackey, director of the agency’s Office of Site Remediation Enforcement, told Bloomberg Environment May 3.

Those changes are enticing more private investors to step in, clean up, and redevelop the country’s most contaminated sites, the agency said.

Renewed Interest

Those third parties are often environmental remediation companies and redevelopers that are willing to take on cleanup risks. The site-specific agreements address their concerns regarding their responsibilities at contaminated sites and the potential for future liabilities.

“We have seen an uptick in interest with those agreements,” Mackey said.

Previously, third parties interested in Superfund sites had to rely on statutory protections to determine whether they are liable for contamination. The site-specific approach, which comes from the agency’s Superfund task force, helps manage third parties’ cleanup expectations and liability concerns, she said.

EPA Administrator Scott Pruitt’s task force specifically focuses on making changes to the Superfund program that don’t require legislation. In more than 40 recommendations, the task force details administrative ways the agency can ensure accountability, accelerate cleanup, and prepare sites for reuse.

Superfund sites are the most contaminated in the country, and include the Gowanus Canal in New York, Portland Harbor in Oregon, and Tar Creek in Oklahoma. Properties with the EPA’s Superfund designation are eligible to receive federal funds for cleanup, though the agency aims to compel companies responsible for the sites, or third parties, to pay the cleanup bills.

From HQ to Regions

The two types of site-specific agreements that the EPA seeks to promote are bona fide prospective purchaser agreements and prospective purchaser agreements. The EPA’s headquarters office is encouraging regional offices to use them more frequently. Both require the approval of the Department of Justice.

The bona fide prospective purchaser provision in the 2002 brownfields act protects landowners from liability for cleanup costs. The agreement is valid only if they meet certain conditions. These include reviewing records and inspecting the site for the presence or possibility of contamination, demonstrating that the purchaser is not affiliated with any liable party, complying with land use restrictions, and cooperating with information requests.

Prospective purchaser agreements center on the EPA’s promise not to sue a party that could buy contaminated property. Certain conditions also must be met for these agreements.

The agency also is reviewing the content of those agreements to determine whether their templates should be revised, the EPA noted in guidance signed April 17.

Third-Party Liability

But third parties looking to take on contaminated sites may have another reason to hesitate, after an April 27 ruling from the U.S. Court of Appeals for the Ninth Circuit.

In California Department of Toxic Substances Control v. Westside Delivery, the court ruled that a third party, Westside Delivery, was liable for the costs of cleanup the state performed at Westside’s contaminated property in Los Angeles.

Westside acquired the property in a tax sale and didn’t interact directly with the original owner, the Davis Chemical Co., which recycled spent solvents at the site. A 1992 EPA assessment of the site found significant spillage, according to court documents.

The defendant argued that it was protected from liability under Superfund law, but the court disagreed.

“This decision reinforces the golden rule of acquiring industrial property—look before you leap,” Peter Hsiao, partner at Morrison Foerster LLP in Los Angeles, told Bloomberg Environment in an email. Hsiao’s practice includes Superfund litigation and other types of environmental law.

On the other hand, the case may not affect many third parties that are interested in buying contaminated sites, Bart Seitz, partner at Baker Botts LLP in Washington, told Bloomberg Environment.

“On the narrow facts of this case, I don’t think it’s that common,” he said. Seitz represents companies involved in Superfund litigation.

The EPA is reviewing the court’s decision and will determine whether any changes need to be made to site-specific agreements or guidance, Mackey said.

To contact the reporter on this story: Sylvia Carignan in Washington at scarignan@bloombergenvironment.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bloombergenvironment.com

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