Early title transfer of contaminated base closure property: Caveat emptor

Abstract

AbstractThis article discusses the recent enactment of Section 334 of the National Defense Authorization Act for Fiscal Year 1997, which amended Section 120(h)(3)(B) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) to allow the transfer by deed of contaminated federal property before cleanup was complete or the remedy was in place and operating. The authors examine the legislative context of Section 334, the rationale behind its incorporation in the Administration's omnibus legislative package, and the concerns that were raised and addressed during congressional deliberations. The potentially significant implications for local communities considering the acquisition or reuse of contaminated property and private‐sector investors seeking to acquire title are covered in detail. Equally important, the article focuses on what local communities should do to minimize the risk and liability associated with the transfer of contaminated federal property in accordance with Section 334. Where environmental risk is low and the potential for economic development and profit is high, some communities will be willing to accept deferral of cleanup of military property. Ultimately, the effectiveness of this new tool will be determined by the nature of the property, its environmental condition, and the willingness of the parties to allocate risk wisely and establish a purchase price which recognizes the impact of continuing contamination.