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 operaator.  Liability is based on the type of contamination foundat 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

There are several liability protections that may form the basis for a Comfort Letter. The three most commonly requested types are: Bona Fide Prospective Purchaser (BFPP), Lender, and Contaminated Aquifer.

The Program provides liability clarification for stakeholders that qualify for either a liability defense or application of an enforcement discretion policy. The Program also addresses the potential for IDEM to require a cleanup based on comparing site conditions to objective, risk-based standards found in the RCG. Often these letters include the use of an institutional control in the form of requiring recordation of an environmental restrictive covenant (ERC) on the deed for the Site to ensure land uses do not result in contaminant exposure.

 

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 (March 22, 2012 and applicable revisions) 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 is not transferable to other entities.  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. A 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.

 

Comfort/Site Status Letter Request Timelines

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 a real estate closing to be protected under the law.

 

Comfort/Site Status Letter Requests

Please include the following information in a transmittal letter with your Comfort/Site Status Letter Request and all applicable forms (see below) to facilitate the timely review of your request:

1. The basis in statute or enforcement discretion policy for the Comfort Letter request.

  • the Stakeholder is a government entity exempt from liability under IC 13-25-4-8(e), IC 13-11-2-150(d), or IC 13-11-2-151(b);
  • the Stakeholder is a creditor, lender, or fiduciary exempt from liability under IC 13-23-13-14 (IC 13-11-2-150(b)), IC 13-23-13-15, IC 13-24-1-10 (IC 13-11-2-151(d)), IC 13-24-1-11, or IC 13-25-4-8(c)**;
  • the Stakeholder is not the statutory owner of an underground storage tank pursuant to IC 13-11-2-150(a) because the tank was not used after November 8, 1984 and the Stakeholder was not the person who owned the tank immediately before the discontinuation of the tank’s use;
  • the Stakeholder is exempt from liability or eligible for a defense to liability as a bona fide prospective purchaser (BFPP), contiguous property owner (CPO) or innocent landowner (ILO) pursuant to IC 13-25-4-8(b), IC 13-11-2-150(f), IC 13-11-2-150(g), IC 13-11-2-151(g), or IC 13-11-2-151(h);
  • the Stakeholder is a nonprofit corporation exempt from liability under IC 13-25-4-8(h), IC 13-11-2-150(e), or IC 13-11-2-151(f); or,
  • the Stakeholder satisfies the conditions of IDEM Nonrule Policy Document W-0047, “Property Containing Contaminated Aquifers” (20 IR 1674, January 30, 1997), or IDEM Nonrule Policy Document W-0038 “Property Containing Contaminated Aquifers/Underground Storage Tanks” (23 IR 2141, April 20, 2000).
  1. Names, affiliations, contact information for all project stakeholders
  2. The parcel(s) comprising the site and the corresponding State 18-digit parcel number(s)
  3. A legible copy of the recorded deed(s) or a surveyed legal description(s) for the parcel(s) comprising the site
  4. The date of property acquisition (or proposed property transfer/closing date) 
  5. Whether or not a purchase agreement has been finalized
  6. A black & white site map (no aerial photos) depicting property boundaries, parcel(s) & parcel number(s)
  7. Description of redevelopment project including a site redevelopment/design plan (if available)
  8. Building size(s) (square feet), ceiling height(s), slab thickness, and HVAC air exchange rate(s) (if known VOC contamination & existing on-Site building(s) will continue to be used or are planned to be renovated)
  9. Map(s) depicting all utility corridors to and from the parcel(s) comprising the Site (if known VOC contamination)
  10. Applicable timeframes (application deadline) if this is an SBA Loan financed project
  11. Relevant investigation/remediation reports from other IDEM Programs (noting assigned IDEM site # and IDEM Virtual File Cabinet (VFC) Document #s)
  12. Proposed or existing vapor mitigation system specifications
  13. Proposed building renovation details and/or new building construction specifications
  14. Purchase details (including combining multiple parcels on one deed, acquiring parcels on separate deeds, etc.)
  15. Explanation and associated documentation to support satisfaction of continuing obligations (including steps taken to mitigate exposures) if property already acquired

 

** Lenders requesting a Comfort Letter should also use the Brownfields Comfort/Site Status Letter Request Form

 

 

Important Comfort/Site Status Letter Request Forms

 

Complete each form below and include with your transmittal letter 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 with each form/document/report saved as a separate pdf as part of your request.

 

  1. Brownfields Comfort/Site Status Letter Request Form
  2. Brownfields Comfort/Site Status Letter Request Form (Word)
  3. Brownfields Comfort/Site Status Letter Supplemental Information Request Form
  4. Comfort/Site Status Letter Submittal Checklist

 

Applicable Nonrule Policy Documents and Frequently Asked Questions

 

Brownfields Comfort/Site Status Letter Nonrule Policy Document
IDEM’s Property Containing Contaminated Aquifers Nonrule Policy Document
IDEM’s Property Containing Contaminated Aquifers/Underground Storage Tanks Nonrule Policy Document
Brownfield FAQs

 

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 BFPPs, including prospective tenants, of potentially or known contaminated property is to conduct an AAI-compliant Phase I Environmental Site Assessment (Phase I ESA) prior to acquisition (EPA defines date of acquisition as the date on which a person acquires title to (or leases) the property.) Conducting a Phase I ESA 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 BFPP must provide answers to the user-specific questions to ensure its satisfaction of the Federal AAI rule.

 

The BFPP liability defense is self-implementing; if the applicant meets the pre-purchase statutory criteria and follows the post-acquisition continuing obligations, the applicant should be protected, regardless of whether it has obtained a letter from IDEM. Of course, such liability protection won’t be validated until and unless the BFPP is sued. A Comfort Letter also provides IDEM’s technical opinion on recommended reasonable steps regarding known environmental conditions on the Site in order to satisfy continuing obligations and maintain BFPP protection.

 

AAI-Compliant Phase I ESA Reports

 

Phase I ESA reports have two key expiration dates:

In order for a report to be valid for a property transfer, certain components of the Phase I ESA 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 ESA report must be updated prior to closing:

The shelf life of the Phase I ESA 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 as a BFPP.

  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)

 

Phase I ESA BFPP User Information

 

The name of the entity (the User) for which the Phase I ESA 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 ESA 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 prior to acquisition/leasing and will have to complete a new User Questionnaire

 

Applicable U.S. Environmental Protection Agency Websites & Fact Sheets

 

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

 

Applicable 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.