Bona Fide Prospective Purchasers
The bona fide prospective purchaser (BFPP) provision in the 2002 amendments to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, commonly referred to as Superfund) dramatically changed the Superfund liability landscape for landowners, as a party can now achieve and maintain status as a BFPP, so long as that party meets specific statutory criteria.
Persons may now acquire property knowing, or having reason to know, of contamination on the property if they:
- acquire property after January 11, 2002,
- do not impede the performance of a response action or natural resource restoration,
- and meet the threshold criteria and ongoing obligations outlined in the statute and described below and in the supporting guidance.
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Threshold Criteria and Continuing Obligations
To qualify as a BFPP under CERCLA a landowner must meet certain threshold criteria that include the performance of “all appropriate inquiries” (AAI) before acquiring the property. In addition, a person wishing to assert BFPP status must meet continuing obligations which include exercising appropriate care with respect to hazardous substances found at the property by taking “reasonable steps” to stop any continuing release and to prevent any threatened future release.
For information on the BFPP criteria and obligations, visit the Common Elements and other Landowner Liability Guidance webpage.
The United States may pursue a "windfall lien" on a BFPP’s property where an EPA funded cleanup action increased the fair market value of the property. The amount of a windfall lien shall be the lesser of the unrecovered cleanup costs or the increase in fair market value at the property attributable to the Superfund cleanup. The Agency's EPA’s "Interim Enforcement Discretion Policy Concerning ‘Windfall Liens’ Under Section 107(r) of CERCLA" (7/16/2003) identifies the factors that may lead the United States to assert a windfall lien on a BFPP’s property. The policy also provides examples of situations where the EPA will generally not pursue a windfall lien and describes the EPA and DOJ’s approach to settling windfall liens. Finally, the policy provides a sample “comfort/status letter” that explains to the recipient whether the EPA believes there is a possible windfall lien applicable to the property, and a model settlement document, which the EPA may use to settle any applicable windfall lien provision in exchange for monetary or other adequate consideration. More information on windfall liens is available from the liens category in the Superfund enforcement policy and guidance database.
Tenants as BFPPs
Leasehold interests play an important role in facilitating the cleanup and reuse of contaminated properties. In 2018, Congress passed the Brownfields Utilization, Investment, and Local Development Act (“BUILD Act”), which included revisions to CERCLA's definition of a BFPP to address lessee concerns about potential liability with the reuse of contaminated property. The BFPP definition in section 101(40) of CERCLA, as amended, now includes a person who acquires a leasehold interest in a property and meets certain criteria.
The revised definition in CERCLA § 101(40)(A)(ii) creates three conditions under which a lessee may meet the definition of a BFPP:
- The property owner is a BFPP; or
- The property owner lost its BFPP status through no fault of the lessee and the lessee meets the criteria in section 101(40) (except for the requirement for conducting “all appropriate inquiries”); or
- The lessee independently meets the BFPP criteria in section 101(40).
The BUILD Act’s revised BFPP definition expands the liability protection to lessees involved in the reuse of contaminated properties. Since this revised definition is consistent with guidance EPA issued in 2012 (“Revised Enforcement Guidance Regarding the Treatment of Tenants Under the CERCLA Bona Fide Prospective Purchaser Provision”), EPA no longer relies on this guidance document.
The Agency issued a model RE-Powering America’s Land Initiative comfort/status letter for a property that involves EPA or another federal agency. Additional enforcement guidance and tools to address the liability concerns of those interested in the cleanup and reuse of contaminated property are available from the Agency’s Tools to Address Liability Concerns to Support Cleanup and Reuse web page.
Other Superfund landowner liability protection information is available on the following webpages:
- Contiguous Property Owners
- Third Party Defenses/Innocent Landowners
- Residential Property Owners and Lenders
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