Ohio Adopts CERCLA Bona Fide Prospective Purchaser Defense

On June 16, Ohio Governor DeWine signed into law H.B. 168, which creates a “bona fide prospective purchaser” (BFPP) affirmative defense to liability for performing investigative or remedial activities that arise out of release or threatened release of hazardous substances.  Ohio follows a number of other states that have similarly enacted a BFPP defense or otherwise exclude BFPPs from liability.  The defense provides that a person is “immune from liability” under Ohio’s environmental laws, including liability under O.R.C. Chapters 3704, 3734, or 6111, for such investigative or remedial activities.  Further, the BFPP defense applies “retroactively” to pending causes of action that were initiated prior to the law’s effective date of September 14, 2020.

The BFPP defense will be familiar to many purchasers of commercial property as it is a primary driver in performing pre-acquisition real estate due diligence in order to avoid potential liability under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).  CERCLA imposes strict, joint and several liability on current owners and operators of facilities where a release or threatened release of hazardous substances has occurred, as well as past owners and operators of a facility at the time when disposal of hazardous substances occurred, arrangers for such disposal and certain transporters of hazardous substances to such facilities.  The statute imposes broad liability for response costs associated with the investigation and remediation of such releases or potential releases.  However, the statute also contains a BFPP affirmative defense to liability under CERCLA.

Importantly, the CERCLA BFPP defense offered no protection to liability under state environmental cleanup laws.  The new Ohio BFPP defense provides such liability protection and, in closely following the structure of the federal corollary, allows purchasers of brownfields and other contaminated properties to acquire property with knowledge of contamination from past releases of hazardous substances without acquiring any associated liabilities so long as certain prescribed conditions are met.

First and foremost of these conditions is that a person must be able to demonstrate that they are a BFPP of the facility.  Ohio borrows the definition from CERCLA, which provides that a person must be able to show that:

  • All disposal of hazardous substances at the facility occurred prior to acquisition;
  • the person made all appropriate inquiry (AAI) into the previous ownership and uses of the facility (e.g. obtained a valid Phase I report);
  • the person provides legally required notices with respect to the discovery or release of any hazardous substances;
  • the person exercises appropriate care with respect to hazardous substances at the property (including taking reasonable steps to stop continuing releases and prevent future releases, and prevent exposures);
  • the person provides full cooperation, assistance, and access to persons performing response actions;
  • the person is in compliance with land use restrictions and does not impede institutional controls;
  • the person complies with information requests and administrative subpoenas; and
  • the person is not potentially liable or “affiliated” with any person that is potentially liable for response costs at the facility.

In addition, Ohio’s defense also requires that the state’s cause of action rests on the person’s status as an owner or operator of the facility, and the person does not impede a response action or a natural resource restoration at the facility.

While many of the above requirements are somewhat easily established under most scenarios (such as preparing a valid Phase I environmental site assessment), other requirements may be more difficult to establish and less certain as to whether they are satisfied.  For instance, “appropriate care” includes taking reasonable steps to stop continuing releases and prevent future releases.  Given the complexity of many contaminated sites, there can be significant debate over whether efforts to address a release are adequate to meet the “reasonable steps” standard.  Indeed, it is possible that a party would need to conduct an extensive site cleanup to satisfy this requirement.  On that note, the new BFPP defense is incorporated into Ohio’s VAP statute, but leaves in place the option to take a site through a traditional VAP investigation and cleanup, which can offer liability protection via obtaining a Covenant Not to Sue (CNS) from Ohio EPA.

In addition to establishing the affirmative defense, the legislation also includes some conforming changes to the VAP statute and a few modifications, such as addressing circumstances where a CNS is voided because an institutional control or activity and use limitation was violated.  Whereas a CNS was automatically voided when such controls were violated, the statute now authorizes (but does not mandate) the Director to issue an order voiding a CNS. Consequently, such discretionary actions of the Director are appealable.

The new BFPP defense should be received as welcome news to purchasers of brownfields, as it provides another option for avoiding liabilities associated with the purchase of contaminated property.  This option may be preferable as it potentially avoids entry of a site into a full-blown VAP cleanup with the need for governmental approvals to obtain liability protection.  On the other hand, the BFPP defense only comes into play once litigation has commenced and the court determines whether or not all necessary requirements have been met, which can present myriad additional risks.  Regardless, it is always good to have options and brownfield purchasers can now evaluate how best to insulate themselves from liability, giving consideration both to this new affirmative defense as well as a traditional VAP cleanup.

Updated OSHA Guidance Demonstrates Employers’ Need for Further Pandemic Planning (US)

VirusOn May 19, 2020, OSHA issued two updated memorandums to regional administrators and state plan designees. The first updated the agency’s enforcement guidance for recording COVID-19 cases in the workplace. As we discussed here, OSHA originally indicated on April 10, 2020 that it would be exercising “enforcement discretion” and focusing COVID-19 recordkeeping requirements in the healthcare, emergency response, and correctional institution fields only—except where there was objective evidence reasonably available to an employer that a COVID-19 case was work-related. The aim was to allow vital COVID-19 response resources to be allocated elsewhere. Continue Reading

Political Debate Heats Up Over Private Financial Institutions and the Fossil Fuel Industry Amidst COVID-19 Economic Uncertainty

Financial Stock MarketGiven the current economic stressors affecting the fossil fuel industry, there is growing political interest in investment policies that financial institutions are applying to that industry.  On May 7, Republican lawmakers penned a letter to the Trump Administration that cited the economic instability of the COVID‑19 pandemic as the basis for a request for regulatory action to prevent financial institutions from diverting their private funds away from the fossil fuel industry.  This request comes on the back of political uncertainty over how such investment institutions would treat the fossil fuel industry under federal coronavirus stimulus programs.  The investment industry may be finding itself as a new frontier for energy policy and climate change debates.

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Heavy-Duty Truck and Engine Regulation by US EPA and CARB: Agency Rulemaking in the COVID-19 Era

The US Environmental Protection Agency (US EPA) and the California Air Resources Board (CARB) flagsare proceeding with development of proposed rules for on-road heavy-duty vehicle and engine regulation. As previously covered in our blog, US EPA and DOT already issued a final rule in early April rolling back greenhouse gas emission (GHG) standards in the context of light-duty vehicles. In anticipation of forthcoming regulation, we are following regulatory developments proposed for the heavy-duty vehicle and engine sector. Anticipated requirements include more stringent NOx standards, changes to test procedures, requirements for zero-emission vehicles in California, and consideration of advanced technologies.

Federal Clean Trucks Initiative

US EPA issued an Advanced Notice of Proposed Rulemaking (ANPR) in January 2020 requesting pre-proposal comments on its Cleaner Trucks Initiative for highway heavy-duty vehicles and engines. Next steps identified at the end of the notice included publishing a Notice of Proposed Rulemaking (NPRM) in 2020 after reviewing comments. In the Fall 2019 Unified Agenda, the agency listed the projected date for the NPRM as June 2020 although there could be delays in publication as a result of the COVID-19 pandemic. Continue Reading

Is the UK Heading Towards a Duty on Businesses to Prevent Breaches of Human Rights?

In April 2017, the UK Joint Committee on Human Rights suggested that it might be appropriate for a Briefcase of Money“failure to prevent” mechanism, such as the one found in section 7 of the Bribery Act 2010, to be applied to business and human rights.  Earlier this year, the British Institute of International and Comparative Law (“BIICL”) published the results of a study that considered the feasibility of introducing such a mechanism in the UK, with reference to the UN Guiding Principles on Business and Human Rights (UNGPs). Continue Reading

US Supreme Court Adopts “Functional Equivalent” Standard for Discharges of Pollutants to Surface Water Through Groundwater

Water treatment plantRecently, in a 6-3 decision in County of Maui v. Hawaii Wildlife Fund (Maui), the United States Supreme Court held that a discharge of pollution to groundwater may be regulated under the Clean Water Act (CWA).  The Supreme Court’s review arose from a case involving a wastewater treatment and reclamation facility in Hawaii that injects through disposal wells 4 million gallons per day of partially-treated waste water hundreds of feet deep into groundwater. The wells are located roughly half a mile from the Pacific Ocean, and dye tracer studies revealed the injected wastewater reached the ocean within 84 days. The facility had not obtained a National Pollution Discharge Elimination System (NPDES) permit under the CWA for its operation of the injection wells Continue Reading

WEBINAR May 13 – UK ESH Webinar Series – Health and Safety Considerations for the Construction Sector – As Lockdown Unlocks

The restrictions during the COVID-19 lockdown, and wider health and safety considerations in relation to the potential spread of the virus, mean that many businesses in the construction sector have had to, or will have to, adapt to new ways of working as the UK comes out of lockdown. Although the plan for coming out of lockdown is currently uncertain, businesses can start to plan for the likely implications that “unlocking the lockdown” will have in connection with health and safety law.

Join Gary Lewis for the second session in our UK ESH Webinar Series on 13 May 2020 from 2-3 p.m. BST – register here – as he discusses some of the key considerations that the sector will face.

US EPA Issues Best Practices for Cleaning and Disinfecting Public Spaces, Workplaces, Businesses, Schools and Homes

VirusOn April 29, 2020, US EPA and the CDC issued guidance on how best to disinfect and clean workplaces, schools, and other public spaces as the US economy begins to re-open during the COVID-19 pandemic. The guidance, mainly directed to employers, facility managers, and public school officials, is part of the larger federal “Guidelines for Opening Up America Again.” However, EPA adds that this particular guidance can be applied to individuals’ households as well. Continue Reading

WEBINAR May 6 – UK ESH Webinar Series – Plastics Packaging Tax Update

From April 2022, the UK government is proposing to introduce a new tax on plastic packaging manufactured in, or imported into, the UK and containing less than 30% recycled plastic. Currently, the detailed policy design for the plastics tax is under consultation until 20 May 2020. Join Anita Lloyd and Caroline Almond for the first session in our UK ESH Webinar Series on 6 May 2020 at 2 p.m. BST – register here – as they discuss some of the key points of the proposed new tax regime and explain what will and will not fall within its scope.

CDC/OSHA COVID-19 Guidance for Meat and Poultry Industry Also Useful for Other Employers

On April 26, 2020, the US Centers for Disease Control and Prevention (CDC) and the US Occupational Safety Virusand Health Administration (OSHA) issued interim guidance for the US meat and poultry industry.  The guidance contains a number of recommendations aimed at stemming transmission among workers in this particularly vulnerable industry, which continues to face plant shutdowns over COVID-19 outbreaks.  Although aimed at this critical industry specifically, the structured guidance also contains useful direction to other industries working under parallel conditions—namely close contact between workers and/or workers and the public. Continue Reading