MEbiz Real Estate Insider – ABC 123: DEP Says You’re A PRP – How to avoid becoming an environmental acronym casualty
In ME, anyone who has owned or operated an uncontrolled hazardous substance site from the time a hazardous substance was first deposited up to the present is considered by the ME DEP to be a potentially responsible party, or PRP. Any PRP may be held liable for abatement, cleanup, or mitigation of the contamination, including all costs incurred by the state in relation to the contaminated site, as well as all damages to natural resources resulting from the contamination, REGARDLESS of whether the PRP is, or was, actually the party responsible for the presence of the contamination in the first place.
In order to avoid liability for contamination, a PRP must demonstrate that the contamination was caused by an act of God, and act of War, or by a third party. Third party responsibility is shown by a demonstration that the PRP purchased the property after the hazardous substances were located on the property and that at the time they purchased the property, they did not know and had no reason to know that the property was contaminated. And that is where the AAI comes in. To show that a PRP could not have known about the contamination, they must demonstrate that before they purchased the property in question they performed “all appropriate inquiry,” or AAI, into the previous ownership and uses of the property in accordance with customary practices.
What are customary practices, you ask? Well, there are acronyms involved there, too: ASTM and ESA. The American Society for Testing and Materials, ASTM, has established standards which govern the environmental site assessments, ESAs, to be performed. The existence or non-existence of contamination on the site will dictate the level (or phase) of ESA to be performed.
So the best practice is to perform an AAI before buying property so you are not held liable for the contamination as a PRP. Stay tuned for Part II of your lesson in acronyms when you will learn that VRAP doesn’t necessarily entail the wrapping of anything.