Some regulators believe that any loan on real estate of over $250,000 should have a Phase I AAI Environmental Report. Whether $250,000 or $25,000,000 we recommend that you have this important protection. Do not attempt the "scan" approach, they do not offer the same information or show the same 'due diligence'. Our clients continue to fear risk of suits. Liability and the risk of having a law suit filed on you or your company because of an environmental issues is a real risk. This is the best way to protect your liability. Don't settle for those one page scans, you need to prove your due diligence by having a full report done by an independent environmental professional. We have been doing this for over 15 years. Pass this on to the right person.
BOOTHE COMPANIES By: Ben Boothe, Sr. Chairman
CIRCULATE THIS TO ALL OFFICERS AND REAL ESTATE PEOPLE
Protect yourself, reduce or eliminate liability from a property by getting an AAI Environmental Report
By: Ben B. Boothe, Sr., Environmental Consultant and Real Estate Valuations
Ben For years we have been informing our clients, banks, investors that the best insurance they can get to protect themselves from liability of hidden or even known environmental problems on a property is to get a Phase I AAI Environmental Report. Do not take the risk of those "quick scans", they are not complete, some believe they are not in compliance with regulations, and we find that they do not offer the protection that a real report offers. Remember, in life, you get what you pay for. When it comes to legal risk, do not take a chance with a half effort.
An environmental report is much cheaper than buying an insurance policy, and provides more benefits. Environmental Solutions (www.environment-solutions.com) was one of the first firms to comply with the law and notify bankers throughout the country of this new law. The following article is from the EPA, which again confirms the liability protection of a Environmental Phase One AAI report. We recommend that whoever is buying, selling, lending, inheriting, investing, building, developing or foreclosing real estate look at this. Then have your people contact:www.environment-solutions.com and reduce or eliminate your risk.
ENVIRONMENTAL PROTECTION AGENCY
Bona Fide Prospective Purchasers
The bona fide prospective purchaser (BFPP) provision in the 2002 Brownfields Amendments dramatically changed the Superfund liability landscape for landowners.
Persons may now acquire property knowing, or having reason to know, of contamination on the property if they:
- acquire property after January 11, 2002,
- meet the threshold criteria and ongoing obligations outlined below, and
- do not impede the performance of a response action or natural resource restoration.
On this page:
Threshold Criteria and Ongoing Obligation
To qualify as a BFPP, a landowner must meet certain criteria, which is described in the "Interim Guidance Regarding Criteria Landowners Must Meet in Order to Qualify for Bona Fide Prospective Purchasers, Contiguous Property Owner, or Innocent Landowner Limitations on CERCLA Liability ("Common Elements")" (3/6/2003).
To receive the liability protection under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, commonly known as Superfund), a BFPP must perform "all appropriate inquiries" prior to acquiring the property, and demonstrate "no affiliation" with a liable party.
A BFPP must also satisfy the following obligations:
- compliance with land use restrictions and not impeding the effectiveness or integrity of institutional controls;
- taking "reasonable steps" with respect to hazardous substances affecting a landowner's property;
- providing cooperation, assistance and access;
- complying with information requests and administrative subpoenas; and
- providing legally required notices.
EPA provides guidance on these criteria and obligations in its Common Elements guidance for landowner liability protections.
The Superfund statute provides that a BFPP is not liable as an owner/operator for response costs. However, the United States may have a "windfall lien" on a BFPP's property where an EPA response action increased the fair market value of the property. The amount sought as a windfall lien shall be the lesser of the unrecovered response costs or the increase in fair market value at the property attributable to the Superfund cleanup.
Windfall liens arise only where there is federal involvement at a site. At the vast majority of contaminated sites, there is no federal involvement and, therefore, no windfall lien.
EPA's "Interim Enforcement Discretion Policy Concerning 'Windfall Liens' Under Section 107(r) of CERCLA" (7/16/2003) identifies the factors that may lead the United States to assert a windfall lien on a BFPP's property. The policy also provides examples of situations where EPA will generally not pursue a windfall lien and describes EPA and DOJ's approach to settling windfall liens. Finally, the policy provides model comfort/status letters and agreements that EPA may provide in order to address a BFPP's windfall lien concerns. More information on windfall liens is available from the liens category in the Superfund enforcement policy and guidance database.
EPA issued the "Windfall Lien Administrative Procedures" guidance in 2008. This guidance builds on the Interim Enforcement Discretion Policy by providing guidance on:
- the timing for filing notice of a windfall lien on a property after it is purchased by a BFPP, and
- EPA's administrative procedures that should accompany filing a windfall lien notice.
The 2008 guidance includes a "Model Notice of Intent to File a Windfall Lien Letter" that EPA intends to use in order to notify the current owner prior to filing the notice.