Prospective Purchaser Agreements

January 1995

Citation:

ELR 10035

Issue

Author

Howard M. Shanker and Laurent R. Hourcle

Congress initially intended the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund)¹ to provide a statutory framework for addressing what Congress believed to be a manageable number of sites presenting significant risks to human health and the environment.² CERCLA's liability scheme, however, has had an unanticipated chilling effect on the willingness of parties to purchase or otherwise use contaminated sites throughout the country.³

In 1989, the U.S. Environmental Protection Agency (EPA) issued guidance that outlined the context within which EPA would consider providing prospective purchasers of contaminated property with covenants not to sue under CERCLA, i.e., prospective purchaser agreements.⁴ This Dialogue describes EPA's use of prospective purchaser agreements and discusses ways in which the Agency's approach could be improved. It also provides insight into some of the practical considerations relevant to negotiating such agreements.

Howard M. Shanker is an environmental attorney with the Phoenix, Arizona, office of Fennemore Craig. Mr. Shanker is currently representing a prospective purchaser in discussions with EPA. Laurent R. Hourcle is an Associate Professor of Environmental Law at the George Washington University. Professor Hourcle joined the faculty after retiring from the Air Force in 1992 as a colonel. His last assignment was as counsel on environmental and base closure matters in the Office of General Counsel, Department of Defense. The authors would like to thank Ros Tobe, a George Washington University, LL.M. candidate, and Jeffrey Thacker, an associate with Fennemore Craig, for their assistance with this article.

Prospective Purchaser Agreements

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Prospective Purchaser Agreements