Cercla Windfall Lien Case Study

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The CERCLA Windfall Lien: A Liability Trap for Unwary Purchasers of Contaminated Sites By Larry Schnapf The Small Business Liability Relief and Brownfields Revitalization Act of 2002 (the “2002 Brownfield Amendments”) added a Bona Fide Prospective Purchaser (“BFPP”) defense to the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) . The BFPP defense allows purchaser to knowingly take title to contaminated property provided they satisfy certain criteria but comes with an important hitch. Namely, EPA may perfect a “windfall lien” on property owned by a BFPP in certain circumstances to recover cleanup costs. This article will discuss the scope of this lien, the recent EPA guidance that discusses when the…show more content…
To successfully invoke this defense, the purchaser or occupier had to establish that it had no reason to know that the property was contaminated. Since the problem with brownfields is the existence or suspicion of contamination, the defense was largely unavailable to prospective developers or tenants of brownfield sites. To eliminate this obstacle to redevelopment of brownfields, the Brownfield Amendments created the BFPP defense for landowners or tenants who knowingly acquire or lease contaminated property after January 11, 2002. Only those parties that qualify for the BFPP defense are potentially subject to the windfall lien. To qualify for the BFPP, the owner or tenant must establish by a preponderance of the evidence that it has satisfied the following eight conditions: • All disposal of hazardous substances occurred before the purchaser acquired the facility. • The purchaser conducted an “appropriate inquiry” • The purchaser complied with all release reporting…show more content…
The lien applies to all of the property owned by the PRP and not just the portion of the site affected by the cleanup. However, the lien is subject to the rights of bona fide purchasers and previously perfected interests in the property so it does not act as a “superlien”. The lien becomes effective when EPA incurs response costs or notifies the property owner of its potential liability whichever is later, whichever date is later. Although the lien was enacted as part of the 1986 Superfund Amendments and Reauthorization Act (SARA) to CERCLA, it applies to costs incurred prior to the passage of SARA. The lien continues until the PRP resolves its liability or it becomes unenforceable though operation of the CERCLA statute of

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