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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.


Community Banks: Collaboration, not isolation, is the key to protecting/ enhancing the cannabis business you pioneered

As we prepare for the plenary session of the informal institutional cannabis lenders community announced in my previous article, I am pleased to advise that participants now include 5 of the best-known dedicated loan funds; a select group of commercial banks ranging in size from single state community banks to mid-size regionals making cannabis loans into the mid-8 figures; and, a syndicator of credit union cannabis loans.

Inflation Reduction Act: Healthcare Provisions

On August 16, 2022, President Joe Biden signed into law the Inflation Reduction Act (the “Act”), a landmark climate, healthcare, and tax bill. Though the Act’s climate provisions have received most of the media attention, the healthcare aspects of the Act present some of the most significant changes to the American healthcare system since the passage of the Affordable Care Act.

The Current State of Assignment of Benefits Litigation in Florida

On May 25, 2022, Florida lawmakers approved property insurance reforms that remove attorney’s fees, with respect to assignment of benefits (“AOB”) property insurance litigation. One-way attorney’s fees are a longstanding problem in Florida and the reforms come at a time when AOB litigation increasingly affects homeowners in a negative way.

Proposed Community Revitalization Grants for Ohio Projects

Jason A. Butterworth client alert ohio tax credits historic preservation tax credits community revitalization grants

Ohio Senate Bill 225 Paves the Way for Greater Investment in Opportunity Zones and Historic Districts

Ohio Senate Bill 225 is poised to make dramatic enhancements to certain tax credit programs in Ohio, specifically those surrounding investments in “Opportunity Funds” and historic buildings. Signed into law by Governor Mike DeWine in June 2022, the Bill is positive news for real estate developers working to revitalize Ohio communities with investment and rehabilitation projects.