Prospective Purchaser Agreements

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Legal Issues
What is a PPA?
PPAs and EPA's Mandate
Guidance
Related Links
Alternatives to PPA

A Quick View of the Legal Issues

Both federal and state environmental laws may impose liability for cleanup of hazardous substances on an owner of contaminated property. Under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), 42 United States Code Section 9601 and following, commonly known as Superfund, the owner of contaminated property may be liable for cleaning up the contamination or reimbursing the United States for its costs incurred in a cleanup. Liability may be imposed under the Superfund law regardless of fault.

What is a Prospective Purchaser Agreement (PPA)?

A Prospective Purchaser Agreement, more commonly known as a PPA, is a tool used by EPA that encourages the redevelopment of contaminated property that remains underutilized due to potential liability issues. A PPA is a contract between EPA, the Department of Justice and the prospective purchaser of a Superfund Property that allows the prospective purchaser to acquire the property, after meeting certain conditions, without incurring federal/Superfund liability. Superfund, and other environmental laws, have played a critical role in protecting human health and the environment. However, the liability scheme of these laws can create barriers that impede desired redevelopment. PPAs work to remove this uncertainty and have become powerful tools in promoting the redevelopment of blighted areas.

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How do PPAs Further EPA's Mandate of Protecting the Environment?

By removing the liability impediments to purchasing Superfund property, PPAs encourage industry to remain centralized and reutilize commercial property, thereby preserving green space. Without PPAs, commercial interests are more likely to locate new facilities to properties that are free from liability problems. A 1999 EPA survey indicated that 90% of respondent developers would not have purchased a Superfund site without a PPA. Therefore, PPAs enable industry to recycle industrial property and protect the environment. In addition, the monies that EPA receives from each PPA is dedicated to the cleanup of the contaminated property.

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