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Protections Under Federal and Ohio Law for Bona Fide Prospective Purchasers of Contaminated Property

Client Alert

Most industrial/commercial property developers are generally aware of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), often also referred to as “Superfund”. CERCLA, a United States federal law administered by the U.S. Environmental Protection Agency, was created, in part, because the U.S. Environmental Protection Agency recognized that environmental cleanup could help promote reuse or redevelopment of contaminated, potentially contaminated, and formerly contaminated properties, helping revitalize communities that may have been adversely affected by the presence of the contaminated properties. Commercial property developers should be aware that CERCLA provides for some important liability limitations for landowners that own contaminated property impacted by materials hazardous to the environment. It can also assist with landowners concerned about the potential liabilities stemming from the presence of contamination to which they have not contributed. In particular, CERCLA provides important liability limitations for landowners that qualify as (1) bona fide prospective purchasers (BFPPS), (2) contiguous property owners, or (3) innocent landowners. 

A relatively new Ohio law works in tandem with CERCLA to make purchasing contaminated properties in Ohio a bit less risky for the BFPPs. By way of a quick recap of CERCLA before discussing Ohio law, the 2002 amendments to CERCLA created landowner liability protections, including protection for BFPPs as mentioned above. The BFPP provision protects a party from Superfund owner/operator liability for a party that acquired property after January 11, 2002 by way of providing for available affirmative defenses to liability for said developers involved in certain remedial activities. These protections are immensely important as CERCLA imposes strict, joint, and several liabilities on property owners/operators for releases of hazardous substances into the environment, meaning that remediation costs can be overwhelming for parties that did not necessarily cause the contamination. BFPPs are able to purchase property with knowledge of contamination so long as the BFPP meets certain statutory criteria. The statutory criteria include conducting all appropriate inquiries into the previous ownership and uses of the property, disposal of hazardous substances at the property that occurred prior to the acquisition, providing all of the legally required notices regarding any releases, cooperating with those conducting response actions at the property, complying with any institutional land use or engineering controls, and taking the appropriate steps and care with regard to any hazardous substances at the property. 

The new Ohio law that went into effect on September 15, 2020 through the enactment of House Bill 168 has been codified in Ohio Revised Code 3746.122.  It is a new BFPP defense from liability that in large part mirrors the defense under CERCLA. It is available as a defense for any BFPP where the acquiring landowner qualifies under the same BFPP factors referenced above with a couple additional qualifications – the cause of action against the person must be due to the person’s status as an owner or operator of the facility, and the person must not impede the state’s actions in responding to a release or threatened release of hazardous substances. The main advantage of Ohio’s law is that prior to the Ohio law went into effect, there was not a similar defense to state-level liability for BFPPs. This often left BFPPs dealing with state-level liability with no choice other than to work through the Ohio Voluntary Action Program in order to obtain a Covenant Not to Sue from the State of Ohio, requiring a certified professional to issue a no Further Action Letter and for Ohio to issue a Covenant Not to Sue based on the No Further Action Letter.  This was frequently a very expensive and time-consuming process that was often avoided. The new Ohio law, however, requires no affirmative government approval to take effect. 

Ohio’s law pertaining to BFPP defense does differ, however, from CERCLA as it does not provide blanket immunity from liability in any action brought by the federal government or a private citizen. Instead, Ohio’s law only provides immunity in an action brought by the state to recover investigative or remedial costs, where the basis for liability is the person’s status as an owner or operator. This is obviously a narrower scope than CERCLA. Nonetheless, it is surely a welcome law for any individual or entity that has purchased commercial property in Ohio that may contain hazardous material. 

For additional questions, please contact Litigation Attorney Jack Hinneberg at jwhinneberg@bmdllc.com.


Valley National Bank/Trulieve Loan: A Big Step Out of the Shadows

In a late December press release, Trulieve announced that it had secured a $71.5 million commercial bank loan. In addition to the amount of the loan, which may be the largest commercial bank loan to date to a cannabis company, the release prominently identified Valley Bank and featured both a quote from Valley’s Senior Vice President, John Myers, and a description of the Bank’s service platform and commitment to the cannabis industry.

The End of Non-Competes? The Impact It Will Have on the Healthcare Industry

On January 5, 2023, the Federal Trade Commission (“FTC”) announced a proposed rule that, if enacted, will ban employers from entering into non-compete clauses with workers (the “Rule”), and the Rule would void existing non-compete agreements. In their Notice, the FTC stated that if the Rule were to go into effect, they estimate the overall earnings of employees in the United States could increase by $250 billion to $296 billion per year. The Rule would also require employers to rescind non-competes that they had already entered into with their workers. For purposes of the Rule, the FTC has defined “worker” to also include any employees, interns, volunteers, and contractors.”

2022 Healthcare Recap and 2023 Healthcare Check-Up

As the country begins to return to a new “normal” following the COVID-19 pandemic, there are many healthcare rules changing on both the federal and state levels as a result. Thus, it is important for healthcare providers and their employers to be aware of these changing rules, and any implications they may have on their practice. Look back on healthcare in 2022 and find a checklist for 2023.

Direct Support Professional Retention Payments

On December 15, the Ohio Senate and House passed House Bill 45, which authorizes the Department of Developmental Disabilities (DODD), in conjunction with the county boards of developmental disabilities, to launch their initiative to issue retention payments to Direct Support Professionals (DSPs). These retention payments will be distributed quarterly to participating home and community-based waiver providers to address the workforce crisis in the direct provider sector. Governor DeWine needs to sign the Bill to begin the payments, but he is expected to do so by the end of 2022.

Real Estate Investors Position for 2023 Opportunities

Real estate investors weathered another year in a post-pandemic world, with the year closing with yet another interest rate increase coupled with both uncertainty and heightened interest carrying into 2023. Just last Wednesday, the Federal Reserve raised its benchmark interest rate 0.50 percentage points, shifting the target range to 4.25% to 4.50%. The new level is the highest the fed funds rate has been since December 2007 and marks the seventh rate hike this year. So what does this mean to investors, brokers, lenders, and others in the real estate world? Read a few perspectives below from stakeholders familiar with our BMD clients and the markets in which they do business.