On September 21, 2011, EPA issued its fourth major interpretation of CERCLA since the Brownfield amendments in 2002. The new guidance is considered enforcement discretion guidance regarding the affiliation language of CERCLA. The Act focuses on remediation of contaminated sites. This guidance is available at EPA’s website. This enforcement guidance is intended to assist EPA enforcement personnel in exercising their discretion; it is not necessarily binding on courts which face CERCLA liability issues. This means that other third parties potentially liable under CERCLA may still try to sue.  
This new guidance deals with affiliation language in CERCLA, which language serves to limit or disqualify a person from exemptions from clean-up liability under CERCLA, mainly under the bona fide prospective purchaser or the contiguous property owner provisions.
An “affiliation” under CERCLA can eliminate bona fide prospective purchaser or contiguous property owner exempt status in many cases, as affiliation is broad and can encompass familial relationships and many corporate or other relationships as well.

First, EPA advises that four issues have to be analyzed before a person can even be considered for one of these exemptions under CERCLA. The questions involve the following:

• Whether the person seeking exemption is a potentially responsible party at the time of disposal, e.g., an owner, transporter or arranger,
• Whether the person seeking exemption is potentially liable under principles of corporate law, such as successor liability,
• Whether the person seeking exemption is asserting an exempt status as a result of a corporate reorganization through bankruptcy or corporate restructuring, or
• Whether the person seeking exemption has an affiliation with a potentially responsible party.

All of these issues are factors that would tend to negate an exemption from CERCLA liability.

Next, EPA discusses that certain statutory exemptions from clean-up liability remain if affiliations between the person seeking the exemption and another was created by a contractual, corporate, or financial relationships either in the title to the facility that is conveyed, or in a contract for sale of goods or services. Examples are title insurance, street cleaning fees, etc.

EPA found that the following types of affiliations would also not disqualify a person from an exemption from clean-up liability under CERCLA:

• Relationship with parties as to properties other than the one affected by contamination (other parcels, leases, etc.),
• Post-acquisition relationships between the purchaser and the potentially responsible party that arose after the purchase and sale of property (e.g., future subleases),
• Relationships created during title transfer, such as contractual or other financial or indemnity relationships (e.g., insurance), and
• Relationships between tenants and owners for property the tenants are seeking to purchase.

EPA notes that its statement that indemnity agreements between purchasers and sellers will not destroy an exemption from CERCLA liability is contrary to the ruling in Ashley II of Charleston, LLC v. PCS Nitrogen, Inc., 2011 WL 2119256 (DSC 2011), appeal pending. Ashley II held an indemnity agreement between two parties creates an affiliation that eliminates CERCLA exemptions.

EPA’s other related guidance under CERCLA includes:

• Interim Guidance Regarding Criteria Landowners Must Meet in Order to Qualify for Bona Fide Prospective Purchaser, Contiguous Property Owner, or Innocent Landowner Limitations, and CERCLA Liability (March 6, 2003),
• Interim Enforcement Discretion Guidance Regarding Contiguous Property Owners (January 13, 2004), and
• Enforcement Discretion Guidance Regarding the Applicability of the Bona Fide Prospective Purchaser Definition and CERCLA §101(40) to Tenants (January 14, 2009).

Louisiana has similar exemptions from cleanup liability (La. R.S. 30:2272 and 2276), but is not necessarily bound by this EPA guidance.

For further information, contact Louis E. Buatt or Stanley A. Millan.