The U.S. Environmental Protection Agency recently issued new guidance that will help tenants leasing contaminated property to minimize their risk of environmental liability under the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as CERCLA. Although guidance documents do not create binding law, the EPA’s new “Revised Enforcement Guidance Regarding the Treatment of Tenants Under the CERCLA Bona Fide Prospective Purchaser Provision,” issued on December 5, 2012, should provide additional comfort to conscientious tenants. The guidance outlines how the EPA will choose to exercise, or rather not to exercise, its enforcement discretion to hold tenants liable as “owners” or “operators” of contaminated facilities under §107(a) of CERCLA. This guidance clarifies when and how tenants leasing contaminated property can avail themselves of the bona fide prospective purchaser or BFPP defense, and creates renewed opportunities for redevelopment and reuse of brownfield properties that otherwise may present too significant a risk for prospective tenants.

CERCLA imposes strict liability on owners and operators of contaminated property for all costs associated with releases or threatened releases of a hazardous substance. However, in the 2002 Small Business Liability Relief and Brownfields Revitalization Act amendments to CERCLA, Congress created the BFPP exception to CERCLA liability as a means of encouraging redevelopment and beneficial reuse of contaminated properties. Creation of the BFPP exception allowed purchasers for the first time to knowingly acquire contaminated property without simultaneously buying themselves the property’s associated CERCLA liability.

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