Liability Issues and Legal Assistance

Indiana Brownfields ProgramLiability at a brownfield is typically the legal responsibility for costs of cleaning up property that is contaminated (or thought to be contaminated) by a past owner or operator. Liability is based on the type of contamination found at the site, either hazardous substances or petroleum. Liability can be both strict and joint and several, depending on the applicable law.

  • Strict liability: owners or operators can be held liable for contamination even if they did not cause or contribute to it, or did not know about it at the time of purchase
  • Joint and several liability: one responsible party, including an owner who never used hazardous substances at the site, could be held liable for the entirety of the cleanup, notwithstanding the existence of other responsible parties

Concerns about liability issues for lenders and prospective purchasers are among the main potential obstacles to brownfields redevelopment.

State Mechanisms for Minimizing and Managing Liability

  • Statutory liability exemptions for political subdivisions, lenders, trustees, fiduciaries, innocent landowners, prospective purchasers and contiguous property owners
  • Risk-Based Cleanup Standards
  • Enforcement discretion policies

For more information about liability issues and legal assistance, please contact Meredith Gramelspacher, Director of the Indiana Brownfields Program & General Counsel, at (317) 233-1430 or mgramels@ifa.in.gov.

Liability Clarification Letters (Comfort and Site Status Letters)

The Indiana Brownfields Program (Program) attempts to eliminate liability concerns for stakeholders at sites where either an enforcement discretion policy or an exemption from liability based in statute applies.  The Program also addresses the potential for the Indiana Department of Environmental Management (IDEM) to require a cleanup based on comparing site conditions to objective, risk-based standards found in the IDEM Remediation Closure Guide Nonrule Policy Document and Remediation Program Guide (RPG). The Program addresses these issues in either a Comfort or Site Status Letter, which is made available under the Brownfields Comfort/Site Status Letter Nonrule Policy Document.

A Comfort Letter is issued to a party that qualifies for an applicable exemption to liability found in Indiana law or application of an IDEM enforcement discretion policy, but is not a legal release from liability.  A Comfort Letter explains the liability exemption or enforcement discretion policy for which the stakeholder has qualified and by which IDEM has determined not to pursue a party for cleanup.  A Site Status Letter is issued to a party that did not cause or contribute to or knowingly exacerbate site contamination and can demonstrate that current levels of contaminants of concern at the brownfield substantially meet current cleanup criteria as established by IDEM.  The potential cleanup liability of the party requesting the letter is not addressed.  The Site Status Letter states that based on a technical analysis of information submitted to IDEM pertaining to site conditions, IDEM concludes that current site conditions do not present a threat to human health or the environment and that IDEM does not plan to take or require a response action at the brownfield site

The Program is requesting additional information be submitted with the Brownfields Comfort/Site Status Letter Request Form.  Please see Brownfields Comfort/Site Status Letter Supplemental Information Request Form 

The length of the time required for the Program to issue a letter varies on the number of other requests already in the queue and the volume of data/reports associated with the site at issue that require review to draft the letter.  Stakeholders should plan for a minimum of 120 days from the time the Program receives all pertinent documentation and information to receive the letter requested.  Note: because the BFPP exemption was designed to be self-implementing, a stakeholder need not have IDEM’s Comfort Letter in hand at the time of closing to be protected under the law. 

The Comfort/Site Status Letter Submittal Checklist should be completed and submitted with your letter request along with all supporting documentation to ensure your request is complete; an incomplete submittal will delay staff review of your request. Please submit a paper copy and CD of each form/document/report as part of your request.  

All Appropriate Inquiries (AAI)

"All appropriate inquiries" or AAI is the process of evaluating a property's environmental conditions and assessing potential liability for any contamination. The Indiana Brownfields Program’s advice to all prospective purchasers of potentially or known contaminated property is to conduct an AAI-compliant Phase I Environmental Site Assessment (Phase I) prior to acquisition.  Conducting a Phase I for Testing and Materials (ASTM) Practice E-1527-13, Standard Practice for Environmental Site Assessment will ensure that you have the most information about potential or recognized environmental conditions on the property, as well as perhaps ensure your eligibility for an exemption from liability for any contamination on the property.  The prospective purchaser must provide answers to the user-specific questions to ensure its satisfaction of the Federal AAI rule.

Phase I reports have two key expiration dates:

In order to be valid for a property transfer, certain components of the Phase I report cannot be older than 180 days.  If more than 180 days has lapsed since the initial report information was collected prior to closing (from the earliest date collected/conducted) the following components of the Phase I report must be updated prior to closing:

    1. Interviews with past and present owners, operators and occupants (40 CFR 312.23)
    2. Searches for recorded environmental cleanup liens (40 CFR 312.25)
    3. Reviews of federal, tribal, state and local government records (40 CFR 312.26)
    4. Visual inspections of the facility and adjoining properties (40 CFR 12.27)
    5. The declaration by the EP (40 CFR 312.21)

The shelf  life of the Phase I report is one year.  If more than one year has lapsed from the date on which the earliest report information was collected prior to closing, an entirely new Phase I report must be obtained to qualify

The name of the entity (the User) for which the Phase I report (and User Questionnaire) was completed needs to match the name of the entity that will be listed on the property deed (unless the party seeking protection is a prospective tenant, in which case it must match the entity identified in the lease agreement).  If the Phase I and User Questionnaire have already been completed for a different-named entity that will not be on the deed (or on a lease), the party seeking liability protection may be able to obtain a reliance letter for use of the report and will have to complete a new User Questionnaire

U.S. EPA’s All Appropriate Inquiries Website
http://www.epa.gov/brownfields/brownfields-all-appropriate-inquiries

U.S. EPA’s Bona Fide Prospective Purchasers Website
http://www.epa.gov/enforcement/bona-fide-prospective-purchasers

U.S. EPA’s All Appropriate Inquiry Fact Sheet
http://www.epa.gov/sites/production/files/2014-08/documents/aaifs.pdf

U.S. EPA’s CERCLA, Brownfields, and Lender Liability Fact Sheet
http://www.epa.gov/sites/production/files/2015-09/documents/lenders_factsheet_1.pdf

 

Laws, Regulations, Policies

Although not a regulatory program, the Indiana Brownfields Program is authorized by statutes that allow for the provision of services and the distribution of financial assistance to communities for assessment and cleanup of brownfield properties. When providing assistance at brownfield sites, the Program must adhere to all existing laws, regulations and policies that relate to protection of human health and the environment and that apply to other IDEM remediation programs.