For many years CTI has stressed the tremendous importance of clients performing a Phase I Environmental Site Assessment (ESA) prior to the acquisition of a commercial or industrial facility. The obvious benefit is to discover whether a site may be contaminated by a release or threat of a release of hazardous substances. More importantly, yet frequently unknown to the prospective buyer, the Phase I, if conducted correctly, affords the buyer a shield from liability from being forced to clean up the acquired property under Federal Law, namely, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, also known as Superfund).

In other words, buying a facility without your own Phase I leaves you open to serious and expensive liability. The Federal EPA wields this power of lawsuit in the absence of a shield. Another shield can be created through taking a contaminated property through a Voluntary Action Plan (VAP) or “Brownfields” program which USEPA and many states offer and through which program the property owner gains a defense shield through a covenant document.

Ohio’s Governor DeWine recently joined other states when he incorporated the Federal CERCLA Bona Fide Prospective Purchaser (BFPP) shield into Ohio law by signing House Bill 168 on June 16, 2020, having an effective date of September 15, 2020. Ohio’s new statutory BFPP defense offers property purchasers another self-implementing defense which requires no governmental approval.  However, as under the CERCLA law, Ohio’s BFPP defense requires the acquirer of property to satisfy a number of factors, including the following:

  • Disposal of all hazardous substances at the facility must have occurred prior to the person’s acquisition;
  • The person has completed a valid Phase I ESA which meets USEPA’s All Appropriate Inquiry;
  • The person has exercised appropriated care in managing any hazardous substances at the facility, including reasonable steps to stop continuing releases and preventing future releases;
  • The person cooperates with those taking response actions at the site;
  • The person complies with applicable land-use restrictions and/or institutional controls;
  • The person is not affiliated with anyone potentially liable for the site’s contamination.

The Ohio BFPP does not offer blanket immunity from possible action brought by the Federal EPA; it only offers immunity in an action by the state where the person is deemed liable as an owner or operator of the site. USEPA typically maintains a similar authority in other environmental programs, but the original purpose of preparing a quality Phase I was to gain a shield against a CERCLA action as mentioned above.

Going forward, Ohio’s new BFPP defense should be viewed as a good option in avoiding the liability associated with purchasing a property with contamination. Ohio’s law can allow for a purchaser to avoid taking-on a VAP program cleanup, which requires Ohio EPA’s granting of liability protection. Rather, it offers the purchaser the advantage of a self-implementing shield which does not require Ohio’s affirmative approval.

Ohio’s law will encourage developers to remediate lightly contaminated sites, such as gas stations and dry cleaners…

It is expected that Ohio’s law will encourage developers to remediate lightly contaminated sites, such as gas stations and dry cleaners, while heavily contaminated industrial sites may likely still follow the VAP process.

Published by Stephen Kovatch

Senior Client ManagerĀ  Stephen J. Kovatch focuses on assisting clients in establishing corporate regulatory compliance programs in the areas of air, water, and waste management. Mr. Kovatch also provides direction to industrial facility owners who are active in the transaction of contaminated property by defining objectives, coordinating soil and water sampling protocols, risk assessment, and remedial / cleanup activities. He frequently represents clients in property sales negotiations and regulatory agency and insurance proceedings.

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