Some Perspective and Recent Developments Regarding Superfund’s Transactional Defenses

Posted on December 21, 2011 by Jeff Civins

To encourage Brownfields development, Congress amended Superfund to add three transactional defenses to potentially responsible party liability: (1) innocent purchaser (IP); (2) bona fide prospective purchaser (BFPP); and (3) contiguous property owner (CPO).  These defenses have shared prerequisites that include: (1) that all appropriate inquiry (AAI) have been performed pre-closing; (2) that specified continuing obligation be performed post-closing; and (3) that, in the case of BFPP and CPO, there be no “affiliation” between the purchaser and a potentially responsible party and, in the case of IP, that the act or omission of the third party giving rise to the contamination not have occurred in connection with a contractual relationship with the IP. 

The purpose of this posting is: (1) to provide context as to how the transactional defenses and their prerequisites relate to each other, as well as to the third party defense; (2) to identify some recent guidance regarding two of those prerequisites--an ASTM standard relating to "continuing obligations" and an EPA memorandum relating to "no affiliation"; and (3) to critique the “no affiliation” discussion of Ashley II of Charleston, LLC v. PCS Nitrogen, Inc., 746 F. Supp. 2d 692 (D.S.C. 2010), a recent case that has garnered much attention.

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