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Round 2-4e: Removing Liability Barriers


Reform Description
For this reform, EPA identified options to encourage the cleanup and redevelopment of contaminated properties, giving prospective purchasers, lenders, and property owners more assurances that acquisition of such property will not also mean acquisition of liability. Two of the most effective tools have been development of prospective purchaser agreements (PPAs) and issuance of comfort letters (see Glossary).

In May 1995, EPA revised its prospective purchaser agreement guidance (see "Guidance on Agreements with Prospective Purchasers of Contaminated Property" in Documents section) to allow the Agency greater flexibility in entering into agreements with prospective purchasers. These agreements provide a promise by the United States not to sue the prospective purchaser for contamination existing at the time of purchase, and provide contribution protection.

The revised guidance expands the universe of eligible sites, allowing the use of such agreements when the agreement results in a substantial indirect benefit to the community in terms of cleanup, creation of jobs, and redevelopment of blighted property. In addition, a model PPA was included in the guidance to help streamline the process.

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Reform Status
check mark Implementation of this reform is complete.

EPA plans to compile the lessons learned through surveys on prospective purchaser agreements into a summary report for distribution in FY 2000.

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Results
  • Referred over 110 prospective purchaser agreements (PPAs) to DOJ as of September 1999. Through the close of FY01, EPA has signed more than 170 PPAs.

  • Issued Expediting Requests for Prospective Purchaser Agreements in October 1999.

  • Issued four guidance documents providing assurance to prospective purchasers, lenders, and property owners on CERCLA liability.

  • Issued "Handbook of Tools for Managing Federal Superfund Liability Risks at Brownfields and Other Sites" in November 1998.

  • Issued approximately 300 comfort letters through the end of 1998.

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Success Stories
San Fernando Valley Sites, Glendale, CA

Dreamworks, the film studio founded by Steven Spielberg, showed interest in buying a large parcel of land on which to build sound stages. However, the land included a portion of the San Fernando Valley sites that was subject to EPA cleanup activities. EPA's comfort letter was able to address Dreamworks' concern about potential Superfund liability. [FY98 Success]

Industri-Plex Site, Woburn, MA

To advance the redevelopment proposals at the Industri-Plex site in Woburn, MA, EPA entered into three PPAs. The PPAs enabled the public/private partnership to begin developing the area into a Regional Transportation Center with over 200,000 square feet of retail space, and potentially over 750,000 square feet of hotel and office space.

Environmental and economic benefits include:

  • Creation of an open land and wetlands preserve;

  • Reduced exposure to contaminants by enhanced remedy protectiveness;

  • Improved traffic and safety conditions through alleviation of congestion at a major highway interchange; and

  • An average of 700 short-term jobs with an estimated total annual income of $23.6 million.

In addition, a property owner adjacent to the Industri-Plex Superfund Site was receiving offers of less than half his asking price for his property due to potential ground water contamination. After EPA issued a comfort letter to the property owner, he received the amount he was asking. [FY98 Success]

General Gas Mantle Site, Gloucester City, NJ

At the General Gas Mantle site, a purchaser plans to rehabilitate an abandoned 1.7 acre property which was previously contaminated with radioactive substances from gas mantle manufacture. The purchase is partially financed by the Federally-funded Cooperative Business Assistance Corporation. The purchaser is planning to expand its business and provide jobs in a depressed area. [FY97 Success]

Middlefield-Ellis-Whisman Site, Palo Alto, CA

A commercial development of high-tech research and office facilities in a campus-like setting is planned for this currently vacant site. The prospective purchaser will pay $200,000 to EPA, enabling the Agency to continue sampling at a nearby monitoring well for an additional two years. [FY97 Success]

MRM Industries Site, Sikeston, MO

The purchaser (North Ridge Homes, a manufacturer of prefabricated homes) agreed to reimburse EPA $20,000 for costs incurred in a removal action at the MRM Industries site. Sikeston, a city of 5,000 people, is very supportive of the agreement because of the 125 new jobs that the project will bring to the community. [FY97 Success]

Prier Brass Site, Kansas City, MO

At the Prier Brass site, the purchaser (CST Limited Liability Partnership) will provide deed restrictions on the property to maintain a protective cover, maintain the foundation of a building on site so as to not disturb the lead-contaminated material beneath it, pay EPA $50,000, and provide operation and maintenance activities. The company will use the property to house the headquarters of their demolition and construction business, a use which local authorities believe will help maintain property values in an area that is prone to attract salvage yards and unauthorized industrial dumping. [FY97 Success]

San Gabriel Valley Site, Baldwin Park, CA

Monsanto plans to purchase assets of a contact lens manufacturing company which has been a source of the contaminated ground water plume. The purchaser will continue operations, and pay $150,000 to fund response for a portion of the San Gabriel Valley site. [FY97 Success]

Vineland Chemical Site, Vineland, NJ

EPA will receive $10,000 from the purchaser, as well as $309,912 of the purchase price of the property from the Vineland Chemical site owners pursuant to a consent decree. The purchaser, City of Vineland, represents that it has received two Federal redevelopment grants to assist it in redeveloping the property as an industrial park, creating jobs in an economically depressed area. [FY97 Success]

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Documents
For more on these and related documents, see OSWER's Brownfields-related Law and Regulations page.

Title: Memorandum: Support of Regional Efforts to Negotiate Prospective Purchaser Agreements (PPAs) at Superfund Sites and Clarification of PPA Guidance
Date: January 10, 2001
Synopsis: This memorandum is part of a continuing EPA Region, Office of Site Remediation Enforcement, and U.S. Department of Justice effort to support and build upon EPA's success in cleaning up and resolving liability at Superfund sites so that they will be available for productive reuse.

Title: Expediting Requests for Prospective Purchaser Agreements
Date: October 1999
Synopsis: This document provides PPA requestors with a standard acknowledgement letter and information checklist to help standardize the process and allow for a quicker review of requests.

Title: Fact Sheet: The Effect Of Superfund On Involuntary Acquisitions Of Contaminated Property By Government Entities
Date: December 1995
Synopsis: This fact sheet summarizes EPA's policy on Superfund enforcement against government entities that involuntarily acquire contaminated property. The document also describes types of government actions that EPA believes qualify for either a liability exemption or a defense to Superfund liability.

Title: Fact Sheet: Effect Of Superfund On Lenders That Hold Security Interests In Contaminated Property
Date: August 20, 1996
Synopsis: This fact sheet summarizes CERCLA's security interest exemption and the Policy on CERCLA Enforcement Against Lenders and Government Entities that Acquire Property Involuntarily. The sheet also answers common questions about the effect of CERCLA on lenders.

Title: Fact Sheet: Liability and Other Guidance
Date: April 1997
Document #: EPA 500-F-97-104
Synopsis: This sheet summarizes EPA's efforts to alleviate any concerns parties may have in becoming involved in the cleanup and redevelopment of previously used properties.

Download in PDF format (2 pages, 11KB)

Title: Fact Sheet: Policy on the Issuance of Comfort/Status Letters
Date: November 12, 1996
Synopsis: This document summarizes and explains the four sample comfort/status letters included in the EPA Policy.

Title: Fact Sheet: Policy Toward Owners of Property Containing Contaminated Aquifers
Date: November 1995
Synopsis: This fact sheet summarizes EPA's "Policy Toward Owners of Property Containing Contaminated Aquifers." The sheet is based on EPA's interpretation of both CERCLA and existing EPA guidance.

Title: Guidance on Agreements with Prospective Purchasers of Contaminated Property
Date: May 24, 1995
Document #: 60 FR 34792
Synopsis: The new guidance supersedes the 1989 guidance and allows the Agency greater flexibility in entering into agreements which provide a promise by EPA not to sue the prospective purchaser of property for contamination existing at the time of purchase. A model prospective purchaser agreement is attached to this document.

Title: Guidance: Model Comfort Letter Clarifying NPL Listing, Uncontaminated Parcel Identifications, and CERCLA Liability Involving Transfers of Federally Owned Property
Date: January 1996
Synopsis: EPA issued this model comfort letter clarifying common myths about NPL listing and CERCLA liability, and highlighting certain provisions concerning the transfer of Federally owned properties.

Title: Handbook of Tools for Managing Federal Superfund Liability Risks at Brownfields and Other Sites
Date: November 1998
Document #: EPA 330-B-98-001
Synopsis: This handbook identifies, describes, and differentiates between the various tools available to address concerns regarding potential Superfund liability associated with brownfield properties. It is designed for parties interested in purchasing, developing, leasing, or cleaning up brownfield properties, and will specify the situations at which the different tools are applicable and appropriate.

Title: Memorandum: Model Comfort Letter Clarifying NPL Listing, Uncontaminated Parcel Identifications, and CERCLA Liability Involving Transfers of Federally Owned Property
Date: August 1995
Synopsis: EPA issued this model comfort letter clarifying common myths about NPL listing and CERCLA liability, and highlighting certain provisions concerning the transfer of Federally owned properties.

Title: Memorandum: Policy on the Issuance of Comfort/Status Letters
Date: November 8, 1996
Synopsis: This memorandum introduces and transmits the Office of Enforcement and Compliance Assurance's Policy on the Issuance of Comfort/Status Letters.

Title: Municipal Immunity from CERCLA Liability for Property Acquired through Involuntary State Action
Date: October 20, 1995
Synopsis: This memorandum provides a legal opinion from the Office of General Counsel regarding the liability of municipalities for property acquired through tax delinquency foreclosure, demolition lien foreclosure, escheat, abandonment, condemnation, or eminent domain.

Title: Policy on CERCLA Enforcement Against Lenders and Government Entities that Acquire Property Involuntarily
Date: December 11, 1995
Document #: 60 FR 63517
Synopsis: The policy states EPA and DOJ's intentions to apply as guidance the provisions of the invalidated rule on Lender Liability under CERCLA. The policy instructs the user to use the rule and its preamble as guidance in determining when EPA should exercise its enforcement discretion and not take an enforcement action under CERCLA against a lender or a government entity.

Title: Policy on the Issuance of Comfort/Status Letters
Date: November 8, 1996
Synopsis: This document contains four sample comfort/status letters and a general policy regarding their use for parties interested in brownfield cleanup and reuse. The letters address the most common inquiries received by EPA regarding brownfield properties.

Title: Policy Toward Owners of Property Containing Contaminated Aquifers
Date: May 24, 1995
Document #: NTIS PB96-109145, 60 FR 34790
Synopsis: This policy documents the Agency's position of removing the threat of enforcement action against parties who have hazardous substances located on their property solely as the result of subsurface migration in an aquifer from a source outside the property. The document specifies the conditions of this policy and notes that EPA may draw from de minimis policy to protect landowners from contribution suits.

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