The Fourth Circuit Court of Appeals recently held that a purchaser of a brownfield could be held liable for the costs of remediating hazardous substances on it, notwithstanding its bona fide prospective purchaser (“BFPP”) defense. In PCS Nitrogen Inc. v. Ashley II of Charleston LLC, 2013 WL 1340018 (4th Cir. April 4, 2013), the Court noted that the current owner or operator of a contaminated facility must establish eight factors to qualify for a BFPP exemption from liability, i.e., (1) all disposal of hazardous substances occurred prior to acquisition; (2) the purchaser conducted “all appropriate inquiry” into the previous ownership and uses of the property; (3) the purchaser provides all legally required notices; (4) the purchaser exercises appropriate care by taking reasonable steps regarding releases of hazardous substances; (5) the purchaser provides cooperation, assistance, and access to the property; (6) the purchaser complies with land use restrictions and institutional controls; (7) the purchaser complies with information requests and administrative subpoenas; and (8) the purchaser is not directly liable for response costs or affiliated with a person who is.
Focusing on the fourth factor, the Court upheld the District Court’s determination that the owner’s delay in filling contaminated sumps was a failure to exercise appropriate care. The Court specifically agreed with the Second Circuit Court of Appeals that, to qualify as a BFPP, an owner must take “all precautions with respect to the particular waste that a similarly situated reasonable and prudent person would have taken in light of all relevant facts and circumstances.” In other words, an otherwise innocent purchaser of a brownfield likely will not be immune from liability as a BFPP if it passively allows contamination to spread instead of addressing it proactively.