Dinsmore & Shohl LLP
Elizabeth T. Schindzielorz
May 31, 2018
It was this time last year that U.S. Environmental Protection Agency Administrator Scott Pruitt created a Superfund Task Force to “provide recommendations . . . on how the agency can restructure the cleanup process, realign incentives of all involved parties to promote expeditious remediation, reduce the burden on cooperating parties, incentivize parties to remediate sites, encourage private investment in cleanups and sites and promote the revitalization of properties across the country” under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601, et seq., also known as the “Superfund.” Approximately two months later, the Task Force produced a report with 42 recommendations which “can be initiated without legislative changes within the next year.” The recommendations are intended to advance five overarching goals: expediting cleanup and remediation, re-invigorating responsible party cleanup and reuse, encouraging private investment, promoting redevelopment and community revitalization, and engaging partners and stakeholders. The Task Force has published two quarterly reports since October 2017 to document its progress implementing these recommendations. This article highlights two of the most recent updates to the body of Superfund guidance pursuant to Task Force recommendations.
Use of Special Accounts
One recommendation concerns the utilization of “special accounts,” which are site-specific, interest-bearing subaccounts within the Hazardous Substance Superfund Trust Fund. These special accounts, totaling $3.3 billion, are funded through settlements with Potentially Responsible Parties (PRPs) and earn interest. Traditionally, these funds have been used as a financial incentive to encourage PRPs to settle. Recognizing the broader potential of this significant pot of money, the Task Force recommended that the Agency maximize its use of the accounts to facilitate site cleanup and/or redevelopment, including “[a]ggressively pursu[ing] additional opportunities to provide special account funds to Bona Fide Prospective Purchasers (BFPPs) that agree to perform cleanup work.”
Accordingly, on March 27, 2018, the EPA’s Special Accounts Senior Management Committee issued new “Guidance on Disbursement of Funds from EPA Special Accounts to Entities Performing CERCLA Response Actions,” superseding guidance from 1998, 2002, and 2012. Although the new guidance reiterates the traditional use of special accounts to incentivize settlements with PRPs, it also recognizes—for the first time—that BFPPs and “other similarly-situated parties (e.g., those who are subject to a statutory exemption or defense)” who undertake response actions at a Superfund site may be eligible to receive special accounts monies. Limitations set forth in the guidance include that BFPPS can only be reimbursed for “expenses related to the implementation of an EPA-selected response action,” as opposed to “[a]ncillary redevelopment costs at the site which are wholly unrelated to implementation of an EPA-selected response action.” .
Site-Specific Agreements with Third Parties
The Task Force also recommended that the Agency update its position on the use of site-specific agreements with third parties at NPL sites. In 2002, the Small Business Relief and Brownfield Revitalization Act, P.L. 107-118 (known as the “Brownfields Amendments”) was signed into law, codifying a liability exception for Bona Fide Prospective Purchasers. Guidance issued later that year set forth the Agency’s position that “in most cases, the Brownfields Amendments make PPAs from the Federal Government unnecessary.” However, subsequent guidance issued in 2006 acknowledged one circumstance that may justify a PPA is “where the removal work will exceed the ‘reasonable steps to prevent releases’ obligation upon which their BFPP status depends.”
Pursuant to this Task Force recommendation, on April 17, 2018, the EPA issued new guidance titled “Agreements with Third Parties to Support Cleanup and Reuse at Sites on the Superfund National Priorities List.” The guidance specifically “encourage[es] Regions to consider more frequent use of BFPP agreements and PPAs [Prospective Purchaser Agreements] at NPL sites, as appropriate,” and suggests that “Regions also may consider using other tools, including comfort/status letters, to address site-specific liability concerns of third parties interested in cleaning up and reusing contaminated property.” Additionally, the guidance notes that the Agency is reviewing the BFPP and PPA model agreement templates to determine whether there are provisions that should be revised.
It is clear that the regulatory landscape for cleaning up and repurposing contaminated property has shifted significantly in the past year, largely in favor of redevelopment. The Superfund Task Force recommendations have resulted in the issuance of new guidance reflective of the Agency’s current stance as discussed above. Further, CERCLA itself has recently been amended with the passage of the Brownfields Utilization, Investment, and Local Development Act of 2018. Those concerned with the redevelopment of contaminated property should monitor these changes closely as they continue to roll out and be implemented by the Agency.
This article is being provided for informational purposes only and not for the purposes of providing legal advice or creating an attorney-client relationship. You should contact an attorney to obtain advice with respect to any particular issue or problem you may have. In addition, the opinions expressed herein are the opinions of Ms. Schindzielorz and may not reflect the opinions of Synergy Environmental, Inc., Dinsmore & Shohl LLP or either of those firms’ clients.