 |
The EPA has identified more than 66,000 EPA- and state-tracked contaminated properties and mine sites (comprising over 35 million acres) with the potential for development as solar, wind, biomass, and/or geothermal facilities. However, before launching such a project, you should take a serious look at potential liability.
In a reference guide that addresses potential liability issues when siting renewable energy projects on contaminated property, the EPA tends to downplay the potential. In addition to the bona fide protective purchaser (BFPP) issues discussed in yesterday’s Advisor, EPA’s reference guide points out issues that may exist for those who lease property and tenants of BFPPs.
Attend the Superfund Site Management webinar on March 12 to use the EPA’s Superfund Redevelopment Initiative (SRI) to your advantage. Learn more.
What about leasing?
According to the EPA, potential liability concerns for renewable energy projects commonly arise when a developer leases contaminated property to build and operate a generation facility. For example, the installation of renewable energy infrastructure often may require activities such as grading or earth removal and the installation of footings, power lines, and other infrastructure.
A developer will need to make a careful technical and legal analysis of the property and the proposed activities to determine whether these or other activities may exacerbate existing contamination or whether the appropriate “reasonable steps” are being taken to achieve and maintain CERCLA liability protection.
Superfund Site Management: How to Remediate Land Under the EPA’s Redevelopment Initiative
Learn how other companies have remediated thousands of acres of underutilized Superfund sites, so you can start planning to redevelop yours. Register today!
What if the owner is a BFPP?
Tenants may have BFPP protection from CERCLA liability if they enter into a lease with an owner who is itself a BFPP.
If the owner loses its own BFPP status through no fault of the tenant, the EPA says it will deal with issues on a property-specific basis and not pursue the tenant so long as the lessee meets the BFPP liability provisions discussed in yesterday’s Advisor, with the exception of the all appropriate inquiry (AAI) provision. Although there is no AAI requirement for a tenant with derivative BFPP status, a tenant may need to obtain information on the prior uses of the property to have an informed basis on which to comply with the other BFPP requirements.
What if the owner is not a BFPP?
Many developers who lease contaminated property for renewable energy projects may not lease from a BFPP. If the owner is not a BFPP, the EPA says the Agency intends to treat the tenant as a BFPP when the tenant itself meets all the BFPP provisions.
Notwithstanding CERCLA’s requirement that a person must have acquired ownership of a property after January 11, 2002, in order to qualify for BFPP liability protection, the EPA has stated its intent to treat tenants as BFPPs if their lease agreement was executed after that date so long as they also meet the other BFPP provisions.