Brownfields Agreement

Brownfields Agreement

Drafts a transaction-ready agreement covering due diligence through long-term stewardship with CERCLA liability protections, remediation obligations, and institutional controls.

Prerequisites

1. Phase I/II ESA reports — contaminant data, sampling results, remedial alternatives, cost estimates
2. Party identification — legal names, addresses, organizational details for all signatories (owner, purchaser, lenders, governmental entities)
3. Property records — legal description, site maps, historical use records, prior regulatory correspondence
4. Regulatory program — applicable state VCP or brownfields initiative; EPA grant award details if applicable
5. Cleanup standards — ARARs, state risk-based standards, intended future use (residential / commercial / industrial)
6. Financial terms — funding sources (EPA grants, TIF, private capital), cost-sharing arrangements, financial assurance requirements

Agreement Structure

Preamble and Recitals

Property location and legal description, contamination history, brownfields eligibility under CERCLA §§ 101(39)–(40), AAI completion per ASTM E1527-21 or 40 CFR Part 312, EPA grant references.

Definitions

Source from CERCLA statutory language, 40 CFR Parts 300–312, state VCP rules, ASTM standards. Define: Hazardous Substance, Release, Remediation, Institutional Controls, Engineering Controls, AAI, BFPP, ARARs.

Environmental Liability

BFPP continuing obligations (CERCLA § 101(40)), innocent landowner and contiguous property owner defenses, mutual indemnification, third-party claim procedures.

Remediation Scope

Investigation, cleanup, and monitoring activities; ARARs-based performance standards; contingency protocol for unexpected conditions.

Institutional and Engineering Controls

Include long-term stewardship funding for each control.

Regulatory Compliance

State VCP reporting obligations, EPA grant conditions (Davis-Bacon, competitive procurement, NEPA/NHPA reviews), agency access and inspection rights.

Financial Terms

• Cost allocation by party with milestone-based payment schedule
• Overrun/contingency procedures (typically 10–20% reserve)
• PRP cost recovery rights with allocation of recovered funds
• Financial assurance: escrow, letter of credit, or performance bond
• EPA grant compliance — § 104(k) [VERIFY], Uniform Guidance (2 CFR Part 200) if federal funds
• Environmental insurance requirements (coverage amount, policy terms, premium allocation)

Representations and Warranties

Owner: knowledge of conditions, compliance during ownership, no pending enforcement actions.

Purchaser: BFPP qualifications, no affiliation with prior responsible parties per CERCLA § 101(40)(H), financial capacity.

Covenants

Maintain BFPP status, IC/EC compliance, site access for monitoring, insurance maintenance, new contamination notification protocol.

Dispute Resolution

Negotiation → mediation (environmental law specialist) → arbitration or litigation. Include emergency injunctive relief carve-out.

Execution and Recordation

Signature blocks with authority, conditions precedent to effectiveness, land records recordation, amendment and assignment procedures.

BFPP Continuing Obligations

CERCLA § 101(40) requires the following — draft as affirmative covenants with cure periods:

• [ ] Exercise appropriate care with respect to hazardous substances at the facility
• [ ] Comply with all land use restrictions and institutional controls
• [ ] Not impede effectiveness or integrity of any engineering control
• [ ] Provide full cooperation, assistance, and access for response actions
• [ ] Comply with information requests and subpoenas from regulatory agencies
• [ ] Provide legally required notices upon discovery of any release

Critical: Loss of any continuing obligation eliminates BFPP protection retroactively. Consider step-in rights for governmental counterparty as a cure mechanism.

Guidelines

• AAI standard: Confirm completion per 40 CFR Part 312; ASTM E1527-21 is current [VERIFY supersession of E1527-13]; document in recitals
• Affiliate screen: Purchaser must have no familial or contractual affiliation with any prior owner/operator per § 101(40)(H) — represent and verify
• CERCLA pre-emption: State indemnification cannot override federal CERCLA liability — structure indemnities to complement statutory defenses, not displace them; avoid creating arranger or transporter liability
• State VCP variation: Cleanup standards, IC mechanisms, and oversight requirements vary by state — confirm applicable program before drafting
• Unknown contamination: Include discovery protocol with notification timelines, investigation cost allocation, and remediation responsibility triggers
• Recordation timing: Record environmental covenants promptly at closing; confirm state-specific recording, notarization, and indexing requirements
• Assignment: Preserve BFPP/innocent landowner status on assignment — require regulatory notice; avoid creating successor CERCLA liability