Tracing the Evolution of the Phrase “Continuing Obligations”
A new “CERCLA Continuing Obligations” discussion group recently began in Linkedin – actually its a subgroup within the “Environmental Issues in Business Transactions” discussion group that Larry Schnapf manages. Given this, it seemed right to quickly review how the phrase “continuing obligations” came into being and where its heading.
It started with CERCLA’s Brownfield Amendments. However, the phrase “continuing obligations” appears nowhere in the Amendments or in CERCLA generally. Rather, the Amendments list post-purchase requirements that must be shown “by a preponderence of evidence” in order to successfully assert CERCLA defenses made newly available in the Amendements – namely, the Bona Fide Prospective Purchaser Defense, the Contiguous Property Owner Defense, and the Innocent Landowner Defense (which was actually modified from the pre-Amendments version).
EPA’s Common Elements Guide Coins the Phrase “Continuing Obligations.”
About 2 years after the Amendments, EPA appeared to first use the phrase “continuing obligations.” When describing the Agency’s view of the Amendment’s post-purchase requirements, the Common Elements Guide characterized them as “continuing obligations.”
Several of the conditions a landowner must meet in order to achieve and maintain a landowner liability protection are continuing obligations. This section discusses those continuing obligations: (1) complying with land use restrictions and institutional controls; (2) taking reasonable steps with respect to hazardous substance releases; (3) providing full cooperation, assistance, and access to persons that are authorized to conduct response actions or natural resource restoration; (4) complying with information requests and administrative subpoenas; and (5) providing legally required notices. Common Elements Guide, p. 6.
EPA’s AAI Rule Further Discusses Continuing Obligations.
About a year after the Common Elements Guide, in 2004, EPA’s proposed rule for All Appropriate Inquiries also relied on the phrase continuing obligations. In addition to performing AAI, the rule’s preamble explained, “the statute requires that persons, after acquiring a property, comply with continuing obligations …” 69 Fed. Reg. 52542, 52568 (2004). Importantly, the requirement to perform continuing obligations exist even if AAI “fail[ed] to identify an environmental condition or identify a release or threatened release of a hazardous substance…” Id. at 52546. And, for example, [n]one of the continuing obligations “for the bona fide prospective purchaser liability protection is contingent upon the results of the conduct of all appropriate inquiries.” Id. The preamble to the final rule on AAI provides similar statements. See, e.g., 70 Fed. Reg. 66070, 66073.
EPA’s Brownfields Factsheet and OIG Report on Continuing Obligations.
More recently, in April 2009, an EPA Fact Sheet on Brownfield Grants explains that “grantees are prohibited from using grant money to pay response costs at a brownfield site for which the grantee is potentially liable under CERCLA.” In addition to complying with AAI, the Factsheet goes on to explain that to be eligible for CERCLA liability protection property purchasers must comply with continuing obligations. Finally, EPA’s recent Office of Inspector General Report covering AAI compliance also noted continuing obligations. In that report, which has sparked spirited discussions on the Commonground blog and the Center for Public Environmental Oversight listserve, the OIG found that 35 of 35 AAI reports reviewed at EPA grant sites did not meet the AAI rule’s requirements. It further mentioned that it had intended to also review compliance with continuing obligations, but that “[d]ue to priority isssues … we did not complete an evaluation of continuing obligations at brownfield properties.” OIG Report, p. 1.
Wisconsin’s Continuing Obligations Program and CO-like Programs in Other States.
At least one state has adopted the phrase “continuing obligations” to characterize its requirements to manage property during and after cleanup. See WDNR Continuing Obligations to Protect Health and the Environment. Generally, Wisconsin’s COs refer to those required during the state oversight of cleanup and particularly those set forth within cleanup approvals. As Wisconsin explains, “[m]ost continuing obligations originate in the state’s approval of a cleanup that leaves some residual contamination.”
While Wisconsin seems to be the only state to have adopted the phrase “continuing obligations” (at least as far as I know), other states impose continuing obligation-like requirements. See my blog article re Michigan’s “due care” requirements. For example, Michigan requires owners of contaminated property to comply with institutional controls and can even issue civil penalties for failure to do so. Finally, California’s AB 389, like the CERCLA Amendments, offers liability relief for contaminated property purchasers. Though AB 389 doesn’t use the phrase “continuing obligations” it does address the requirement to take “appropriate care” of contaminated properties.
ASTM’s Forthcoming Continuing Obligations Guide.
A forthcoming ASTM Guide on Continuing Obligations (a standard Guide currently in the drafting and balloting phases of the ASTM process) intends to spefically address, with information and guidance, recommended procededures for continuing obligations – particularly continuing obligations for institutional controls and continuing obligations to take “reasonable steps.” The development of this Guide was sparked by an perceived need for guidance in this important yet vague area of post-purchase management of contaminated property.