Environmental Alert: Ohio Adopts CERCLA Bona Fide Prospective Purchaser Defense to Aide in Brownfield Development

On September 14, 2020, Ohio joined the list of states that have adopted the federal “bona fide prospective purchaser” (BFPP) affirmative defense to liability, closing the gap that formerly existed between state and federal liability protections for purchasers of property in Ohio.

Most commercial and industrial property purchasers and developers are already familiar with the BFPP defense under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), as it allows parties to acquire contaminated property with knowledge of the condition, provided the acquiring party performs “all appropriate inquiries” (AAI) and complies with certain conditions. When the required criteria are satisfied to establish BFPP status, this immunity defense will extend to protect the BFPP from liability not only under CERLCA, but also, now with the adoption of Ohio Revised Code 3746.122 from liability to the state of Ohio for the state’s costs in performing investigative and remedial activities to address the release or threatened release of hazardous substances from the facility. 

In order to take advantage of the BFPP defense to liability, a person or entity must acquire ownership of a facility after January 11, 2002, and satisfy the follow criteria:

• All disposal of hazardous substances at the facility occurred prior to acquisition;
• The person performed all appropriate inquiries into the previous ownership and uses of the facility (i.e., obtained a compliant Phase I Environmental Site Assessment);
• The person provides legally required notices with respect to the discovery or release of any hazardous substances at the facility;
• The person exercises appropriate care in dealing with hazardous substances at the facility;
• The person fully cooperates with authorities performing response actions at the facility and responds to any information requests or administrative subpoenas;
• The person complies with applicable land use restrictions and institutional controls; and
• The person is not potentially liable for or “affiliated” with any person that is potentially liable for response costs at the facility. 

Ohio’s BFPP defense as enacted will apply retroactively to causes of action that were initiated prior to the September 14, 2020 effective date. 

The BFPP defense is an alternative for property purchasers and developers that have previously only been able to rely on obtaining a Covenant Not to Sue through Ohio’s Voluntary Action Program (VAP) for liability protections. While the VAP remains in place, in fact the BFPP defense is incorporated into Ohio’s VAP statute, property purchasers and developers can now take advantage of a self-implementing defense, and in place of Ohio EPA’s approval and issuance of a covenant not to sue to protect them from future environmental liabilities. 

The adoption of the BFPP defense to liability on a state level should increase investment and encourage re-development of blighted and contaminated properties in Ohio, especially for property purchasers and developers that are already accustomed to performing environmental due diligence using the AAI standard.

Brouse McDowell’s Environmental team is here to offer our clients the most effective and practical guidance to resolving all aspects of environmental law issues that may arise. We work with clients to identify and prevent environmental risks before they become issues, and we use creative solutions to solve environmental problems when they occur. We offer our clients a deep understanding of regulatory matters, including permitting and compliance with federal, state, local and international environmental laws, the environmental risk associated with commercial and corporate transactions, and environmental litigation.