The Congressional Research Service (CRS), which provides investigative and research support for congressional offices, has published a report that concludes the recently enacted “Small Business Liability Relief and Brownfields Revitalization Act” (Public Law No. 107-118) (SBA Act) is confusing to prospective purchasers of contaminated land. In addition to providing funding for the clean-up of contaminated urban industrial sites (or “brownfields”), the new statute gives an exemption from Superfund liability for certain small businesses, innocent landowners, and “bona fide” prospective purchasers.

The CRS report notes that “since the prospect of Superfund liability has long been thought to chill investment in real property that is known or feared to be contaminated,” Congress and the Environmental Protection Agency (EPA) have sought to address the problem. The SBA provides a statutory definition of “bona fide prospective purchaser” and then grants an outright exemption from liability, provided that the buyer:
· demonstrates that all hazardous substance disposal at the facility occurred pre-acquisition
· makes “all appropriate inquiries” into contamination at the site
· exercises “appropriate care” as to hazardous substances found at the facility by taking “reasonable steps” to stop releases and prevent any future threatened releases
· provides full cooperation and access to persons authorized to conduct response actions or natural resource restorations
· complies with pertinent land use restrictions and does not impede institutional controls
· is not potentially liable, or affiliated with anyone who is
The CRS report notes that “issues remain” because the Act leaves the definition of “reasonable steps” open to interpretation. CRS believes “if a landowner guesses incorrectly, his/her liability exemption disappears,” prompting some in the regulated community to advocate the use of both the new “bona fide” standard and the old “prospective purchaser agreement” (PPA) when entering into a brownfields acquisition. According to the CRS report, EPA plans to publish guidance in the future that will address these questions.

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