Prospective Purchaser Agreements

Howard M. Shanker and Laurent R. Hourcle

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.

[25 ELR 10035]

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.

Background

The potentially exorbitant costs associated with CERCLA response actions have led to the creation of a class of property that has a "negative value," i.e., potential response costs are greater than the properties' value.⁵ In light of this phenomenon, otherwise nonliable parties are understandably hesitant to purchase contaminated sites and assume liability as "owners" under CERCLA.⁶ As a result, many contaminated sites throughout the country are simply abandoned.⁷

In response to this trend, EPA published its prospective purchaser settlement guidance on June 6, 1989. The guidance provides a means by which abandoned or otherwise dormant sites can be put to beneficial use. But it also sets stringent parameters for use of prospective purchaser settlements.⁸ As a result, EPA regions have, in the past, been[25 ELR 10036] reluctant to entertain prospective purchaser agreements signing only a handful between 1989 and 1993.⁹

EPA appears, however, to be reevaluating the utility of such agreements.¹⁰ For example, there is currently an internal initiative encouraging the Agency's regional offices to interpret the guidance liberally, and enter into more such agreements. EPA anticipates liberalizing and updating the guidance to reflect this initiative.¹¹ Moreover, the Administration's 1994 proposal for Superfund reform would have specifically designated bona fide prospective purchasers as a protected class — provided that they met certain criteria.¹² Finally, it should be noted that a growing number of states have begun providing prospective purchasers with state-law based covenants not to sue.¹³

The Guidance

EPA's 1989 prospective purchaser guidance enumerates five basic criteria that EPA considers in determining whether or not to take part in an agreement.¹⁴ Even though EPA has moved to construe these factors liberally, the factors still tend to limit the availability of such agreements except in specific circumstances.¹⁵ The following section of this Dialogue reviews the factors identified in EPA's guidance and advances a few suggestions for improvement.

* Enforcement Action Must Be Anticipated by the Agency at the Facility. Because of its policy not to become entangled in purely private real estate transactions, EPA will only provide covenants not to sue in instances where the Agency contemplates an enforcement action.¹⁶ Such enforcement actions may be based on removal as well as remedial activities. If response actions will not be conducted pursuant to CERCLA, however, EPA believes it has no basis to enter into such an agreement pursuant to the guidance. This limitation may have a chilling effect on prospective purchasers of contaminated sites that are, for example, being addressed under the Resource Conservation and Recovery Act (RCRA),¹⁷ or state law, even though the prospective owner or operator of the site remains potentially liable under CERCLA.

To encourage reuse of contaminated property, EPA should consider, on a case-by-case basis, covenants not to sue for prospective purchasers, even if cleanup or enforcement is conducted under a program other than CERCLA, so long as CERCLA liability is of concern.

[25 ELR 10037]

* A Substantial Benefit, Not Otherwise Available, Must Be Received by the Agency for Cleanup. If EPA believes that its anticipated response costs can be recouped through other means, it will not entertain covenants not to sue prospective purchasers.¹⁸ In other words, EPA will generally not enterinto a prospective purchaser agreement if a financially viable potentially liable party is available.

To expand use of prospective purchaser settlements, EPA should consider changing its interpretation of "otherwise unavailable benefit" to include the public interest in a prompt return of property to beneficial use.¹⁹ Moreover, even if EPA expects — in the long run — to receive a particular economic or environmental benefit through other means, a prospective purchaser's prompt payment or response action in exchange for a settlement agreement should qualify as an otherwise unavailable benefit.²⁰

* Continued Operation or New Development at the Site Must Not Contribute to Contamination or Interfere With the Remedy. If available information indicates that the prospective purchaser's planned activities are likely to aggravate or contribute to existing contamination, EPA either will not enter into an agreement, or will include restrictions in the agreement to prohibit the operations or activities of concern.²¹ If insufficient information is available, EPA will not enter into the agreement.

* Consideration Must Be Given to Risks Posed by New or Continued Operations to People Likely to Be Present at the Site. EPA will only enter into prospective purchaser settlements after evaluating potential health risks associated with future on-site operations.²²

* The Prospective Purchaser Must Be Financially Viable. Financial viability is essential if the purchaser consents to undertake remedial activities.²³ Where a prospective purchaser provides a lump sum payment in exchange for a covenant not to sue, financial viability is still necessary if the property is to be put to productive use. EPA has, in some instances, taken a security interest in assets other than the affected property to ensure prospective purchaser compliance.²⁴

If the foregoing criteria are met, and the Agency determines that entering into an agreement is in the public interest, the Agency will grant a covenant not to sue the prospective purchaser for response costs arising under CERCLA §§ 106 and 107(a) and RCRA § 7003.²⁵ Usually, states are included as signatories to the agreement and the covenants are crafted to include applicable state laws.²⁶ The operable covenant not to sue generally states that:

The United States and [the relevant state] covenant not to sue or take any other civil or administrative action against [the prospective purchaser] for any and all civil liability for reimbursement of response costs or for injunctive relief pursuant to Sections 106 and 107(a) of CERCLA, or Section 7003 of RCRA and [specific state laws].²⁷

The consideration required from the prospective purchaser, according to the guidance, is generally a cash payment that may or may not be dedicated to response activities at the site. The guidance does, however, acknowledge that consideration may take the form of a removal action, or if a Record of Decision has been signed, performance of remedial activities.²⁸

Moreover, the guidance sets forth recommended provisions for inclusion in any agreement, including provisions granting the United States an irrevocable right to enter the property, and the purchaser's release of any claims against the federal government.²⁹ The guidance also provides that agreements should expressly reserve EPA's right to assert any claims against the prospective purchaser that are not set forth in the covenant not to sue. Examples of such potential claims include those arising from:

* releases from the purchaser's operations;

* substances released after the date of acquisition;

* activities that exacerbate existing contamination;

* failure to cooperate with the Agency;

* failure to exercise due care with respect to contamination at the facility; and

* criminal liability.³⁰

[25 ELR 10038]

Application of the Guidance

Consideration

The prospective purchaser settlement agreements that have been entered into to date conform in general to the standards set by the guidance. Of particular interest are the fact-based differences in the amount or type of consideration provided by prospective purchasers and the flexibility with which EPA appears to be approaching such agreements. As discussed below, EPA has settled in a variety of manners with prospective purchasers.

At the Tennessee Chemical Company site, EPA Region IV entered into an interim agreement that allowed a prospective purchaser, with some limitations, to: (1) bring consultants onto the site to determine the extent of contamination; (2) operate existing pollution control and abatement equipment and continue reclamation and reforestation programs initiated by the bankrupt Tennessee Chemical Company; and (3) operate the chemical manufacturing facility.³¹ At the end of the interim period, the prospective purchaser decided to purchase the facility and a final agreement was signed. As consideration for the final agreement, in addition to promising to continue pollution abatement and control and reforestation operations, the prospective purchaser agreed to make up the difference, if any, between the $ 180,000 the United States sought from bankruptcy court and the actual award.³²

In a 1993 settlement governing the Sol Lynn site in Texas, a prospective purchaser agreed to deposit the money for the purchase of the property ($ 150,000) into an escrow account — one-half of which was to be paid to EPA Region VI.³³ Obviously the seller had to be included in this transaction. Thus, the prospective purchaser essentially paid no additional consideration — beyond the cost of the property — for EPA's covenant not to sue. EPA, on the other hand received money from a sale of property that without a prospective purchaser agreement would have been essentially unmarketable.

In 1991, Region X entered into an agreement for the Fick Foundry property at the Commencement Bay Superfund Site³⁴ with BankAmerica/Seafirst. As consideration for the agreement, BankAmerica had to conduct a thorough examination and cleanup of the upland property and contribute $ 350,000 toward EPA's Commencement Bay cleanup.

In 1991, Region V negotiated an agreement for the Continental Steel site. As consideration, the prospective purchasers agreed to pay a total of $ 225,000 — $ 15,000 to EPA and $ 210,000 to the Indiana Department of Environmental Management.³⁵

In short, the consideration necessary to enter into such an agreement is negotiated on a case-by-case basis. Clearly it must result in a benefit to EPA that is not otherwise available. The parameters of that benefit, however, appear to be flexible.

Recommended Provisions

Negotiators should consider asking for inclusion of two additional provisions that appear, in varying forms, in some — but not all — of the agreements. These provisions address: (1) contribution protection for the purchaser; and (2) the transferability of protection under the agreement to subsequent purchasers.³⁶

Contribution protection pursuant to Section 113(f) of CERCLA, shields a prospective purchaser from private CERCLA cost recovery suits. EPA should be willing to include such protection for activities addressed in the agreement to the extent that the government has resolved the prospective purchaser's potential liability, if any.

A transferable covenant not to sue also increases the utility of such an agreement — for obvious reasons, the foremost of which is future marketability of the site. As an example of such a provision, the BankAmerica agreement, discussed above, provided a transferable covenant not to sue for past sediment contamination, provided successors in interest agreed to be bound by the terms of the agreement, including its reopeners.

Finally, especially in instances when an agreement may be terminated or in instances in which an interim agreement may have been entered into, a prospective purchaser should consider including a clause to the effect that the covenant not to sue and the contribution protection survive termination of the agreement.

Superfund Reauthorization

The Administration's 1994 proposed Superfund reform bill included language that identified bona fide prospective purchasers as a special class of owners that would be conditionally exempt from Superfund liability. It appears reasonably likely that CERCLA reauthorization — whenever it occurs — will include provisions addressing prospective purchaser liability.

The Administration's 1994 proposal would have created a new CERCLA § 101(39) to define a "bona fide prospective [25 ELR 10039] purchaser" as "a person who acquires ownership of a facility after enactment of [the] provision," and who can establish that: (1) all active disposal of hazardous substances occurred before acquisition; (2) he or she conducted a site audit of the facility in accordance with commercially reasonable and generally accepted standards and practices; (3) he or she provided all required notices about discovery or release of any hazardous substances at the facility; (4) he or she exercised due care and took reasonably necessary steps to address releases; (5) he or she cooperated with those responsible for response actions at the facility; and (6) he or she is "not affiliated with" any other liable person through a familial, contractual, corporate, or financial relationship other than that associated with conveyance of title to the facility.³⁷

If a purchaser met these criteria, he or she would have been excluded from the CERCLA liability scheme under CERCLA § 107(a)(5)(C), which the Administration bill would have added.³⁸ This exclusion, however, would probably have limited EPA's willingness to negotiate, on a case-by-case basis, covenants not to sue prospective purchasers. Thus — even if Congress had adopted the provision — an otherwise bona fide prospective purchaser would still risk RCRA liability absent a prospective purchaser agreement. Moreover, except in states that adopt similar provisions, prospective purchasers would have had to negotiate separate agreements with applicable states or face liability based on state environmental statutes.

The Administration bill also would have granted the United States the authority to place a lien on facilities owned by bona fide prospective purchasers for any unrecovered response costs that increased the properties' value. Such liens, however, could not have exceeded the increase in fair market value of the property attributable to the response action.³⁹ Government liens on remediated property are already provided for by CERCLA § 107(1).⁴⁰ The question of whether EPA intends to place a lien on the property at issue will be a factor in a prospective purchaser's willingness to enter into an agreement, and should be addressed prior to executing the agreement.⁴¹

Conclusion

Prospective purchaser agreements offer a means by which contaminated property can be put to constructive use. Such agreements also offer EPA an opportunity for payment or assistance even when no financially viable potentially responsible party is available. While EPA appears committed to increased use of prospective purchaser agreements, whether or not such agreements will remain as a viable alternative after Superfund reauthorization remains to be seen. Regardless of the language included in the final legislation, however, it appears reasonably likely that Congress will recognize the benefit to providing bona fide prospective purchasers with special status under CERCLA. In the meantime, the pressure is again on EPA to issue new, more flexible guidance to encourage settlements with prospective purchasers.

1. 42 U.S.C. §§ 9601-9675, ELR STAT. CERCLA §§ 101-405.

2. United States v. Akzo Coatings of America, Inc., 949 F.2d 1409, 1417, 22 ELR 20405, 20406 (6th Cir. 1991) ("Congress . . . grossly underestimated the number of sites requiring cleanup and the monies necessary to remedy the problem."), citing H.R. REP. NO. 1016, 96th Cong., 2d Sess., pt. 1, 18 (1980), reprinted in 1980 U.S.C.C.A.N. 6119, 6120 (noting that in "1979 the EPA estimated that as many as 30,000 to 50,000 sites existed, of which between 1,200-2,000 present a serious risk to public health.").

3. This problem is apparent, for example, in the business community's failure to reuse inner city industrial property, and complicates efforts to provide for reuse of closing military bases.

Dr. Benjamin F. Chavis Jr., the former Executive Director of the NAACP, testified on April 12, 1994, before the Senate Environment and Public Works Committee on the Administration's Superfund Reform proposal and its provisions to address this dysfunctional aspect of CERCLA liability:

Impact on Greenfields/Brownfields

To its credit the Administration recognizes that this is a major problem, and that the current liability system is a positive disincentive to development and voluntary cleanup during the sale of property, contrary to the claims of its defenders.

The bill's [Administration proposal] full exemption from liability for new buyers of contaminated property is a major break with long standing ideology and should be applauded. It will combat the disincentive to invest in inner cities.

available in LEXIS, Legis library, Federal Document Clearing House Congressional Testimony (CNGTST) file.

4. EPA, EPA GUIDANCE ON LANDOWNER LIABILITY UNDER SECTION 107(a)(1) AND DE MINIMIS SETTLEMENTS UNDER SECTION 122(g)(1)(B) OF CERCLA, AND SETTLEMENTS WITH PROSPECTIVE PURCHASERS OF CONTAMINATED PROPERTY, 54 Fed. Reg. 34235 (June 6, 1989) [hereinafter EPA GUIDANCE].

5. According to EPA estimates, an average Superfund cleanup costs between $ 25 to $ 30 million. SUBCOMM. ON INVESTIGATIONS AND OVERSIGHT OF THE COMM. ON PUBLIC WORKS AND TRANSPORTATION, ADMINISTRATION OF THE FEDERAL SUPERFUND PROGRAM, H.R. REP. NO. 35, 103d Cong., 1st Sess. at 5 (1993).

6. See 42 U.S.C. § 9607(a)(1), ELR STAT. CERCLA § 107(a)(1). Under the "innocent purchaser exception," a party may avoid CERCLA liability if it acquires contaminated property unknowingly, despite exercising due diligence. Id. §§ 9607(b)(3), 9601(35)(A) & (B), ELR STAT. CERCLA §§ 107(b)(3), 101(35)(A) & (B). This exception to liability is of limited utility to sophisticated purchasers since, as a practical matter, the level of inquiry required should, in most cases, be sufficient to discover any environmental contamination at the site.

7. See, e.g., SUPERFUND REAUTHORIZATION, SUBCOMM. ON SUPERFUND, RECYCLING, SENATE COMM. ON ENVIRONMENT AND PUBLIC WORKS, AND SOLID WASTE MANAGEMENT OF THE 103d CONG., 1st SESS., S. HEARING NO. 412 at pp. 147-48 (1993) (containing remarks of Senator John H. Chafee that ". . . the Superfund program has essentially frozen economic redevelopment of contaminated sites in my State and many others.").

8. The EPA guidance reflects some legitimate concerns about such prospective purchaser settlements. For example, in the guidance, EPA expressed a concern that it has not determined the nature and extent of the contamination at many of the sites for which a prospective purchaser agreement might be sought. Therefore, it would be premature for the Agency to know whether the proposed "productive use" of the site might interfere with the eventual remedy. EPA also noted a concern that prospective purchaser agreements might be premature until EPA has determined which parties might be liable for the contamination at issue. Finally, EPA expressed the concern that changed circumstances could cause a proposed use of a site to be inadequately protective of people living or working there. EPA GUIDANCE, supra note 4, at 34241.

9. See Superfund: Purchaser Agreements, Supplemental Guidance Will Ease Polluted Property Sale, Official Says, 24 Env't Rep. (BNA) 1522 (Dec. 17, 1993)(according to an EPA attorney, 11 prospective agreements have been entered into by EPA since the 1989 guidance); Stephen M. Feldman, CERCLA Liability, Where It Is and Where It Should Not Be Going: The Possibility of Liability Release for Environmentally Beneficial Land Transfers, 23 ENVTL. L. 295 n.112 (1993).

Agreements reached during this period include: (1) Agreement and Covenant Not to Sue [between Environmental Systems Corporation of Michigan, Bofors Nobel, Inc., LOMAC, Inc., the state of Michigan, and EPA] (signed by EPA on Mar. 24, 1987); (2) Agreement and Covenant Not to Sue re: Kellogg Gondola Project Located Within the Bunker Hill Superfund Site, EPA Region X, No. 1089-07-01-122 (signed by EPA Aug. 9 and 11, 1989); (3) Agreement and Covenant Not to Sue [between EPA, the state of Tennessee, Boliden Intertrade, A.G., TCC Holding, B.A., and TCC Acquisition, Inc.] (effective Sept. 20, 1990); (4) Agreement and Covenant Not to Sue re: Fick Foundry Property/Sediment Contamination Located Within the Commencement Bay Nearshore/Tideflats Superfund Site, In re Bankamerica Corp., EPA Region X, No. 1090-11-16-101 (signed by EPA Feb. 13 and Mar. 25, 1991); (5) Agreement and Covenant Not to Sue [between Just-A-Wee Corp., Syndicate Sales, Inc., Just-D Limited Partnership, the state of Indiana, and EPA] (signed by EPA Region V on Apr. 8, 1991); (6) Consent Decree with Tully Automotive Ltd., prepared for United States v. Jessee Roofing & Pointing Co., Inc. (no Civil Action No. given) (S.D. Iowa) (signed by EPA Apr. 22, 1991); (7) Agreement and Covenant Not to Sue re: Indian Bend Wash Superfund Site, In re State of Arizona Department of Transportation, EPA Region 9, Docket No. 91-13 (signed by EPA June 21 or 27, 1991); (8) Agreement and Covenant Not to Sue re: Transmission Line Right-of-Way Within The Florida Steel Superfund Site, In re Florida Power & Light Co., EPA Region IV (no Docket No. given) (signed by EPA Region IV Sept. 14, 1992); (9) Agreement and Covenant Not to Sue, In re Mid-Atlantic Wood Preservers Superfund Site, EPA Region III, Docket No. III-93-48-DC (signed by EPA Sept. 21, 1993); (10) Agreement and Covenant Not to Sue re: Nappan Property, Croydon TC Superfund Site, In re Norman D. Leibowitz, EPA Region III, Docket No. III-93-51-DC (signed by EPA Sept. 22 and 30, 1993); (11) Agreement and Covenant Not to Sue, In re Superior Toy & Manufacturing Co., No. 90 B 4481 (Bankr. N.D. Ill.) (signed by EPA Sept. 23, 1993); (12) Consent Decree, United States v. Sharon H. Lynn, No. H 91-0955 (S.D. Tex., Oct. 14, 1993) (all on file with Mr. Shanker).

10. More recent prospective purchaser agreements signed by EPA include: (1) Agreement and Covenant Not to Sue, In re Anaconda Smelter Superfund Site, Old Works/East Anaconda Development Area Operable Unit, EPA Region VIII, EPA Docket No. CERCLA 94-12 (signed by EPA Apr. 29, 1994); (2) Agreement and Covenant Not to Sue re Health-Tex Property — Peterson/Puritan Superfund Site, In re Alpha-Realty Corp., EPA Region I (no Docket No. given) (signed by EPA June 21 and July 8, 1994); (3) Agreement and Covenant Not to Sue re Pacific Sound Resources Superfund Site, In re the Port of Seattle, EPA Region X (no Docket No. given) (signed by EPA Aug. 22, 1994); (4) Agreement and Covenant Not to Sue, In re Browning-Ferris Industries of New York, Inc., EPA Region II Index No. II-CERCLA-94-0221 (signed by EPA Oct. 13 and 14, 1994) (all on file with Mr. Shanker).

11. See Superfund: Purchaser Agreements, Supplemental Guidance Will Ease Polluted Property Sale, Official Says, 24 Env't Rep. (BNA) at 1522 (according to an EPA attorney "the guidance appears much more stringent than its application" and EPA expects to issue a supplemental guidance).

12. See infra notes 37-39. As of this writing, Superfund reform efforts have been abandoned by the 103d Congress, and EPA has announced its intention to pursue administrative fixes to the Superfund program. Death of Superfund Reform Turns Attention to EPA, 104th Congress, INSIDE EPA'S SUPERFUND REP., Oct. 6, 1994, at 1.

13. See, e.g., IND. CODE § 13-7-8.9-18; MICH. STAT ANN. § 299.614. See also Massachusetts: Developers of Contaminated Properties Would Be Shielded From Future Liability, 25 Env't Rep. (BNA) 1349 (Nov. 11, 1994) ("Redevelopers of contaminated properties in Massachusetts would be protected from future liability for cleanup activities under a program unveiled . . . by state officials."); New York: Program Encourages Voluntary Cleanups in Exchange for Release From Liability, 25 Env't Rep. (BNA) 1317 (Nov. 4, 1994) ("Real estate developers and others can voluntarily clean up contaminated sites that were polluted by others in exchange for release from liability for past contamination under a program announced [by the governor of New York]); Washington: New Law Grants State Greater Authority to Clean Up Dangerous Industrial Waste, 25 Env't Rep. (BNA) 26 (May 6, 1994) (a new law allows the Washington state attorney general to enter into prospective purchaser settlements). See also Remediation Agreement and Release, [between Oregon Department of Environmental Quality (DEQ), Terminal Transfer, Inc., and Yeon Street Partners (date stamped by DEQ June 3, 1991)]; De Minimis Consent Decree re: Lake Union Air Parcel C Property, State v. Committee for the Seattle Commons, No. 93-2-23265 (King, Wash. County Ct., Sept. 4, 19 (Sept. 20, 1993) (all on file with Mr. Shanker).

14. EPA GUIDANCE, supra note 4, at 34241-42.

15. Agency officials, however, do have the discretion — only sparingly used — to depart from guidance or interpret it broadly. Id. at 34243.

16. Id. at 34241.

17. Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901-6992k, ELR STAT. RCRA §§ 1001-11012.

18. EPA GUIDANCE, supra note 4, at 34241-42.

19. For example, in appropriate cases, EPA should consider the potential for creation of jobs or the agreement of a local government or organization to maintain property for use as a park or community recreation center, to be an otherwise unavailable benefit.

20. Another step EPA could take to encourage those considering whether to purchase previously contaminated property is to craft covenants under which a prospective purchaser's payment of consideration would qualify as a "necessary cost of response" under CERCLA § 107(a)(1)-(4)(B), 42 U.S.C. § 9607(a)(1)-(4)(B), ELR STAT. CERCLA § 107(a)(1)-(4)(B). This approach would expedite and finance cleanups while enabling prospective purchasers to seek reimbursement of their costs from liable parties.

21. EPA GUIDANCE, supra note 4, at 34242.

22. Id.

23. Id.

24. See, e.g., Agreement and Covenant Not to Sue [between EPA, the state of Tennessee, Boliden Intertrade, A.G., TCC Holding, B.A., and TCC Acquisition, Inc.] (effective Sept. 20, 1990) (Boliden entered into a security agreement granting EPA and the state a security interest in certain of the assets, other than real property, of TCC Acquisition, Inc., as security for its performance of the agreement) (on file with Mr. Shanker).

25. 42 U.S.C. § 6973, ELR STAT. RCRA § 7003. This provision relates to EPA's authority to abate imminent hazards from solid or hazardous waste.

26. Unless the state is a signatory or otherwise bound to the agreement, a prospective purchaser agreement cannot protect the purchaser from subsequent state enforcement.

27. See, e.g., Agreement and Covenant Not to Sue, In re Superior Toy & Manufacturing Co., No. 90 B 4481 (Bankr. N.D.Ill.) (signed by EPA Sept. 23 1993) (on file with Mr. Shanker).

28. EPA GUIDANCE, supra note 4, at 34242.

29. Id.

30. Id. at 34242-43. As part of its new policy to encourage more prospective purchaser agreements, EPA should — depending on the proposed activities of the prospective purchaser — consider shortening the list of reserved rights to include those applicable to: (1) postacquisition releases of hazardous substances resulting from the purchaser's operations, i.e., an independent basis for CERCLA liability; (2) significant aggravation of, or contribution to, preacquisition contamination resulting from the purchaser's negligence or willful misconduct; (3) interference with other parties' cleanup activities; and (4) the prospective purchaser's criminal liability.

31. See Interim Agreement and Covenant Not to Sue, [between EPA, the state of Tennessee, and Boliden Intertrade, A.G., TCC Holding, B.A., and TCC Acquisition, Inc.] (Mar. 20, 1990) (on file with Mr. Shanker).

32. Agreement and Covenant Not to Sue [between EPA, the state of Tennessee, Boliden Intertrade, A.G., TCC Holding, B.A., and TCC Acquisition, Inc.] (effective Sept. 20, 1990) (on file with Mr. Shanker).

33. Consent Decree, United States v. Sharon H. Lynn, No. H 91-0955 (S.D. Tex., Oct. 14, 1993) (on file with Mr. Shanker).

34. Agreement and Covenant Not to Sue re: Fick Foundry Property/Sediment Contamination Located Within the Commencement Bay Nearshore/Tideflats Superfund Site, In re Bankamerica Corp., EPA Region X, No. 1090-11-16-101 (signed by EPA Feb. 13 and Mar. 25, 1991) (on file with Mr. Shanker).

35. Agreement and Covenant Not to Sue [between Just-A-Wee Corp., Syndicate Sales, Inc., Just-D Limited Partnership, the state of Indiana, and EPA] (signed by EPA, Region V on Apr. 8, 1991) (on file with Mr. Shanker).

36. See, e.g., Agreement and Covenant Not to Sue [between EPA, the state of Tennessee, Boliden Intertrade, A.G., TCC Holding, B.A., and TCC Acquisition, Inc.] (effective Sept. 20, 1990) (contribution protection); Agreement and Covenant Not to Sue re: Fick Foundry Property/Sediment Contamination Located Within the Commencement Bay Nearshore/Tideflats Superfund Site, In re Bankamerica Corp., EPA Region X, No. 1090-11-16-101 (signed by EPA Feb. 13 and Mar. 25, 1991) (transfer of protection); Agreement and Covenant Not to Sue, In re Superior Toy & Manufacturing Co., No. 90 B 4481 (Bankr. N.D.Ill.) (signed by EPA Sept. 23, 1993) (transfer of protection with EPA's prior approval); Consent Decree, United States v. Sharon H. Lynn, No. H 91-0955 (S.D. Tex., Oct. 14, 1993) (contribution protection) (all on file with Mr. Shanker).

37. S. 1834, 140 CONG. REC. S1058, S1072-73 (daily ed. Feb. 7, 1994).

38. Id. at S1065.

39. Id. at S1066.

40. 42 U.S.C. § 9607(1), ELR STAT. CERCLA § 107(1).

41. See, e.g., Agreement and Covenant Not to Sue [between Just-A-Wee Corp., Syndicate Sales, Inc., Just-D Limited Partnership, the state of Indiana, and EPA] (signed by EPA, Region V on Apr. 8, 1991) (prospective purchaser, Tully, agreed to buy site only if EPA and private liens were removed) (on file with Mr. Shanker).