Brownfield Liability

Federal Liability Protections for Private Developers

The Small Business Liability Relief and Revitalization Act (the Brownfields Amendments) clarifies CERCLA liability provisions for certain landowners and potential property owners. The Brownfields Amendments provide liability protections for certain property owners, if the property owners comply with specific provisions outlined in the statute, including conducting all appropriate inquiries into present and past uses of the property and the potential presence of environmental contamination on the property. The Brownfields Amendments amend Section 101(35)(B) of CERCLA and require EPA to promulgate regulations that establish federal standards and practices for conducting all appropriate inquiries.

The all appropriate inquiries standards and practices are relevant to:

• The innocent landowner defense to CERCLA liability (§101 (35));
• The contiguous property exemption to CERCLA liability (§107 (q));
• The bona fide prospective purchaser exemption to CERCLA liability (§107 (r)(1) and (§101 (40));
• The brownfields site characterization and assessment grant programs (§104 (k)(2)).

The All Appropriate Inquiry may provide the information necessary for an informed business decision. All Appropriate Inquiry is part of the process that an innocent landowner, contiguous landowner, or bona fide prospective purchaser must follow to secure an exemption or defense to Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), also known as “Superfund,” liability. All Appropriate Inquiries must be conducted or updated within one year prior to acquiring ownership of a property. Additional information and an explanation of the federal liability protections are found at https://www.epa.gov/brownfields/aai/index.htm.

State Liability Protections for Private Developers

It is important that a private developer initiate Diligent Inquiry prior to acquiring the property to begin the process to secure state liability protections. Once remediation activities are complete, the developer has a defense against third party damage claims, will not be considered a Responsible Party and a Covenant Not to Sue applies to the cleanup activities that are completed in accordance with state requirements. These protections are found at N.J.S.A. 58:10-23.11g(d)(4).

Federal Liability Protections for Governmental Entities

CERCLA also contains liability exemptions, affirmative defenses, and protections which may apply to a local government when it:

• Acquires contaminated property involuntarily by virtue if its function as a sovereign, CERCLA § 101(20)(D)
• Qualifies for a third party defense or innocent landowner liability protection, CERCLA §§ 107(b)(3), 101(35)(A)
• Qualifies as a bona fide prospective purchaser (BFPP) when it acquires the contaminated property, CERCLA §§ 101(40), 107(r)(1)
• Is conducting or has completed a cleanup of a contaminated property in compliance with a state cleanup program, CERCLA § 128(b).

More information on local and state CERCLA liability protections

State Liability Protections for Governmental Entities

A federal, state, county or municipal government entity can determine whether it is responsible for the contamination by reviewing the Spill Compensation and Control Act at N.J.S.A. 58:10-23.11g.d(4). The Spill Act exempts government entities from joint and several liability where the governmental entity involuntarily acquires title to a site by virtue of its function as sovereign, or where the governmental entity acquires the property by any means for the purpose of promoting the redevelopment of that property.

The government entity is not liable for any discharge that occurred prior to ownership of the site that the government entity acquired involuntarily, such as in cases of:

• bankruptcy
• tax delinquency
• abandonment
• escheat
• eminent domain
• condemnation

There is no liability protection to the government entity if it caused or contributed to the discharge of a hazardous substance, or if it acquired ownership of the property by condemnation or eminent domain and that property is being remediated in a timely manner by another party.

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