CERCLA Bona Fide Prospective Purchaser Defense: Securing and Maintaining Liability Protection

Description

The BFPP defense was introduced to encourage the redevelopment of contaminated properties by limiting purchaser liability under specific conditions. Before asserting a BFPP defense, purchasers must understand the strict requirements as well as all of the potential pitfalls. The Fourth Circuit's ruling in PCS Nitrogen v. Ashley II (2013) limited the availability of the BFPP defense and underscored the need for purchasers to tread carefully because they must successfully prove the required elements by a preponderance of the evidence in addition to fulfilling other statutory prerequisites.

The Ashley II decision and others on the BFPP defense have made real estate transactions involving BFPPs more complicated. These decisions put counsel on the alert that the courts and other potentially responsible parties will carefully scrutinize a BFPP defense. Additionally, the BFPP defense hinges on meeting "all appropriate inquiries" (AAI) standards established by the EPA. Conducting AAI requires the prospective purchaser to make certain disclosures in connection with the preparation of a Phase I Environmental Site Assessment (ESA). The standard for Phase I ESAs was updated in 2023.

Counsel to parties involved in CERCLA litigation should proceed with caution to avoid potential severe pitfalls when seeking to qualify for the BFPP defense.

Listen as our authoritative panel of environmental law attorneys examines recent court decisions, analyzes the implications of and lessons from those decisions, and outlines how to approach asserting or confronting challenges to a BFPP defense. The panel will also discuss the potential impact of the new Trump administration on the BFPP defense and offer best practices for the redevelopment of contaminated sites in light of current case law and guidance.