The Environmental Protection Agency ("EPA") and Department of Justice ("DOJ") have recently issued a model agreement, or order on consent (the "Model Agreement"), for parties purchasing certain contaminated properties eligible for the "bona fide prospective purchaser" ("BFPP") defense under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"). The Model Agreement gives purchasers of contaminated property an opportunity to receive protection from a federal lawsuit, and provides an avenue for resolving cleanup issues at sites not eligible for the New York State Brownfields Cleanup Program ("BCP").

The BFPP defense allows parties purchasing contaminated property to receive a defense to CERLCA's strict, retroactive liability scheme if it undertakes "all appropriate inquiry" into possible contamination on site, and then implements "reasonable steps" to prevent its spread. The Model Agreement applies to large, complex sites of "federal interest," and offers a federal covenant not to sue if the settling party agrees to certain cleanup steps beyond the "reasonable steps" to prevent offsite migration of contamination required for the BFPP defense.

The terms of the Model Agreement provide useful insight into EPA and DOJ's enforcement policy on eligible sites, which the agencies describe as "sites where there is a federal interest and the work required is complex or significant." While the term "federal interest" is not defined and is therefore open to different interpretations, the model agreement seems to be aimed at sites with large, complex cleanups that are subject to actual or threatened federal enforcement-cases where a federal covenant not to sue would be a valuable protection. It also provides an avenue for resolving environmental issues at sites that are not eligible for entry into the New York BCP because of federal enforcement activity.

The Model Agreement signals greater willingness on the part of EPA to work with parties to resolve environmental issues in real estate transactions involving contaminated properties. EPA had previously taken the position that the BFPP defense was a self-executing, statutory defense, and that therefore "prospective purchaser agreements" were no longer necessary except in unusual cases. The current position appears to be less extreme; EPA and DOJ now appear to be willing to negotiate with parties that are willing to take significant action to address environmental issues at "federal interest" sites.

DOJ's and EPA's intent appears to be that the Model Agreement is available to offer parties an additional level of comfort above and beyond the statutory defense in advance to business decisions. If a party goes beyond the "reasonable steps" required to qualify for a BFPP defense, it may also qualify for a federal covenant not to sue. This is a welcome development for projects facing significant cleanups and future liability uncertainties.