BFPP, Innocent Landowner, Contiguous Owner: The Three Protections a Phase I Supports
Week 3 of Phase I, Piece by Piece.
Last week covered why CERCLA makes property owners nervous: liability that attaches to whoever owns the land, regardless of fault. This week is about the way out. Congress wrote three protections into the law for owners who investigate before they buy. They overlap, but each fits a different situation, and the one you end up relying on often depends on what your Phase I finds.
Bona fide prospective purchaser (BFPP)
This is the protection most buyers end up using, because it is the only one that still works when you know the property is contaminated. Added by the 2002 Brownfields Amendments, it applies to property acquired after January 11, 2002. To qualify, a buyer must:
Complete All Appropriate Inquiries (a Phase I) before acquiring the property
Show that all disposal of hazardous substances happened before they took ownership
Not be affiliated with anyone liable for the contamination
Meet the continuing obligations described below
Since the 2018 BUILD Act, tenants can also qualify as BFPPs in some situations, which matters for long-term ground leases. One catch: if EPA pays for a cleanup that raises the property's value, it can place a windfall lien on the property for the increase.
Innocent landowner
The oldest of the three, dating to 1986. It protects a buyer who did All Appropriate Inquiries and, at the time of purchase, did not know and had no reason to know about the contamination. That is a narrow door. If your Phase I identifies a REC and you buy anyway, you knew, and this defense is off the table. In practice it covers contamination a proper Phase I could not have found: a buried tank with no records, no surface clues and no history in any database.
Contiguous property owner
This one covers contamination that migrated onto your property from someone else's. The classic case is a groundwater plume from a neighboring gas station or dry cleaner. To qualify, you must not have caused or contributed to the release, must not be affiliated with the party responsible, and must have done All Appropriate Inquiries without learning of the contamination before you bought. If you did know about the plume when you bought, you may still qualify as a BFPP instead.
The obligations that come after closing
None of the three is a one-time pass. All of them carry continuing obligations, and falling short can cost you the protection years after closing:
Take reasonable steps to stop any continuing release and prevent exposure
Cooperate with and give access to anyone authorized to do cleanup work
Comply with land use restrictions, such as a deed notice or a ban on groundwater use, and don't undermine controls like a cap or vapor barrier
Provide legally required notices about hazardous substances you find
Respond to information requests and subpoenas
What counts as reasonable depends on the site. On a property with a known REC, it might mean maintaining a vapor barrier or not drilling a water well. A Phase I that names the conditions tells you what you are signing up for.
Where the Phase I fits
All three protections require All Appropriate Inquiries before you acquire the property. A Phase I done to ASTM E1527-21 is the standard way to meet that requirement, and timing matters: key parts must be completed within 180 days before closing. Skip it or let it go stale, and none of the three is available.
The bottom line
The protections are real, but they're conditional: on doing the Phase I before you buy, and on acting like a responsible owner after. Your environmental attorney decides which one fits your deal; your Phase I is the evidence. See how our Phase I ESAs work, or request a quote.
Next week: ASTM E1527-21 vs. E1527-13, what changed and why it matters.
