New Ohio Law Establishes “Bona Fide Prospective Purchaser” Defense to Aid in Brownfield Redevelopment 

Environmental Law
July 6, 2020
 

Governor DeWine signed into law H.B. 168, which closes the gap between federal and state liability protection for purchasers of brownfield sites throughout the state of Ohio. This new law, effective September 14, 2020, adopted the federal definitions of "facility" and “bona fide prospective purchaser” (from 42 U.S.C. 9601(40)) and now provides immunity in all civil actions to brownfield purchasers who can demonstrate certain factors regarding the purchase. The protections extended by H.B. 168 should increase investment and encourage brownfield redevelopment as the gap between state and federal law was eliminated 

Immunity at the federal level has existed for quite some time for bona fide prospective purchasers (BFPPs) under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Essentially, a BFPP is a person who acquires ownership of a facility and can demonstrate that all disposal of hazardous substances related to the site occurred before the acquisition and “all appropriate inquiries” have been made into the previous owners and uses of the facility. Now this immunity extends to protect BFPPs from liability to the state of Ohio for its performance of investigative and remedial activities to address the release or threatened release of hazardous substances from the facility. Federal immunity continues to have broader protections in that it extends to all such federal responses costs, whether the party incurring the costs and bringing suit is the government or a private party, while H.B. 168 provides an affirmative defense only to costs sought by the state.  

Prior to the enactment of this legislation, brownfield redevelopers in Ohio typically proceeded through the Ohio Voluntary Action Program (VAP) in order to obtain a “covenant not to sue” (CNS). If the cleanup of the property met certain Ohio EPA requirements, the Ohio EPA director ("Director") could issue a CNS to protect the property owner or operator from future costs associated with further cleanup and investigations. CNSs, however, were subject to being automatically voided by prior law when the use or control requirements for the property were violated. Now, in addition to providing the explicit BFPP affirmative defense in the law, the VAP regulations have been revised to allow the Director the discretion whether to issue an order to void a CNS for violations instead of it occurring automatically by operation of law.  

If a property owner is sued by the state of Ohio for response costs associated with investigating or remediating hazardous substances from a facility, the owner can now assert an affirmative defense under R.C. 3746.122(B) to avoid liability for those costs for releases and contamination on the subject property prior to ownership. The statute requires that the owner demonstrate his status as a BFPP (meeting the criteria in the adopted federal definition), while also demonstrating that the state’s civil action rests upon his status as an owner or operator of the facility and that he has not impeded any part of the state’s remediation or restoration.  

If prospective purchasers of brownfields continue their due diligence in conducting environmental assessments under the “all appropriate inquires” standard, they can now proceed with assurance that should a future suit be brought by the state to recover additional costs related to these sites, no liability should be incurred once the affirmative defense is raised. 


For additional information on this topic, please contact your regular Calfee attorney or one of the attorneys listed below.

 
 
 
 
 
 
 

For more updates and alerts, visit the News section of Calfee.com.