The environmental rules reported here address ground tenant immunity from liability for the release of hazardous materials on a site.

Liability immunity from the release of hazardous materials

Amended by SB 989:
Health and Safety Code §25395.84

An innocent landowner, bona fide purchaser or contiguous property owner may qualify for immunity from liability for pollution conditions which are the result of the release or threatened release of hazardous materials.

A bona fide ground tenant who intends to qualify for immunity is required to enter into an agreement with the agency responsible for implementation of a site assessment and response plan. After the agency determines eligibility for immunity, it must issue a certification of immunity within 60 days. If the bona fide ground tenant materially deviates from the agreement or induced agency approval by fraud, the agency may withdraw certification after providing the bona fide ground tenant with an opportunity to cure.

Contribution for the release of hazardous materials

Amended by SB 989:
Health and Safety Code §25395.85

An innocent landowner, bona fide purchaser, contiguous property owner, or bona fide ground tenant who incurred agency oversight costs for the review or implementation of a response plan for the release of hazardous materials may seek contribution from the individual responsible for the release.

Criteria of a bona fide ground tenant eligible for immunity from hazardous substances release

Amended by SB 989:
Health and Safety Code §25395.102

A bona fide ground tenant for purposes of immunity qualification is an individual who meets all of the following criteria:

● acquires a non-fee interest in and has control of a site on or after January 1, 2007 under a ground lease, easement or any means of site access of 25 years or more;

● provides access to the site to a person authorized to conduct response plans or natural resource restoration;

● complies with land use controls and does not interfere with any remedy prescribed in connection with the response action;

● complies with all requests for information concerning the release or threatened release of hazardous substances;

● satisfies notice and reporting requirements relating to hazardous substances required by state and federal law.

To qualify as a bona fide ground tenant in reference to the release of hazardous substances, an individual must show the release of hazardous materials on the site occurred prior to his taking control or obtaining legal title to the site and that he did not contribute to the release, unless the nature of the release did not require reporting to a regulatory authority or regulatory reporting requirements had been met.

The individual must have entered into an agreement with the site owner, a redevelopment agency, the city or county, that revenue sources be dedicated to implementation of the approved response plan and these revenue sources are sufficient and acceptable to the agency. The individual may use a security mechanism or Internal Revenue Code §468B settlement trust which would enable the agency to earmark funds to complete cleanup if the individual designated to implement the plan defaults.

An individual is not potentially liable, or affiliated with a potentially liable party, for the release of hazardous materials, not including passive migration, if the relationship between the parties is:

● a direct or indirect familial relationship;

● a financial, corporate or contractual relationship, unless the relationship is created by the instrument by which the individual obtains control and implements development of the site, or is created by a contract for the sale of goods or services; or

● the result of the reorganization of a business entity potentially liable for the release.

Qualification for immunity from liability for release of hazardous substances

Amended by SB 989:
Health and Safety Code §25395.103

To qualify for immunity, a bona fide ground tenant must enter into an agreement with an agency and one or more of the following entities who agree to be responsible for a site assessment and response plan:

● the site owner;

● a redevelopment agency;

● a city or county.

Any agreement entered into must provide that the responsible party accepts responsibility for the site assessment and response plan. For a health risk assessment, the intended site occupants include anyone who intends to work, reside, or physically enter the site. The site assessment and response plan must be approved by the agency.

Certification of immunity

Amended by SB 989:
Health and Safety Code §25395.104

After obtaining a certification of immunity, a bona fide ground tenant is immune from liability under any applicable statute for a claim made by a person other than an agency for costs or relief in connection with the release of hazardous materials at the site.

An agency will not, after the date of the agreement, require the bona fide ground tenant to take responsive action in regards to the release of hazardous materials.

Immunity will attach to the bona fide ground tenant once the agency certifies in writing that the following have occurred:

● a site assessment has been completed allowing the agency to determine the required remedial actions to insure the safety of the intended site occupants;

● the portion of the site investigation and the response plan required for the safety of the intended site occupants have been implemented, except for the ongoing obligations of the bona fide ground tenant such as operation and maintenance activities, institutional controls, reporting and monitoring; and

● if necessary, an instrument restricting or imposing obligations on the current or future use of the site have been recorded.

If requested by a party to the agreement, the agency must provide written certification that immunity is in effect within 60 days of the date agency finds all conditions have been met. The agency my withdraw certification after reasonable notice and opportunity have been given to the bona fide ground tenant to cure if the agency finds:

● a material deviation exists that has not been approved by the agency; or

● the bona fide ground tenant induced agency approval by fraud.

Immunity also extends to any successor who meets the qualifying conditions and assumes the bona fide ground tenant’s obligations, and the financer of the bona fide ground tenant.

Immunity does not extend nor can it be transferred to a party responsible for the release of hazardous materials prior to obtaining an interest in the site from the bona fide ground tenant or providing financing.

After a response plan is approved and the use of the property changes in a manner that requires higher protection, the agency may require the implementation of a new response plan.

If the response plan relies on engineering or institutional controls to render the site safely suitable for human occupation, to seek immunity, the bona fide ground tenant must provide financial assurances, using the appropriate assurance guidelines, to demonstrate no risk to the health and safety of the intended occupants exist. Unless previously approved by the agency or appropriate authority, the bona fide ground tenant may not make alterations to the site inconsistent with land use controls recorded for the site.

Release of trivial amounts of hazardous materials

Amended by SB 989
Health and Safety Code §25395.105

On and after the date immunity attaches, an individual is eligible for immunity if, during a response action, trivial hazardous materials are released and the agency concludes necessary actions have been taken.

Actions not eligible for liability immunity

Amended by SB 989
Health and Safety Code §25395.106

Liability immunity is not provided from:

● bodily injury or wrongful death;

● a requirement imposed under Chapter 6.5 (beginning with §25100) covering but not limited to corrective action, closure and post-closure requirements;

● a permit violation;

● a criminal act;

● a contractual indemnity agreement between a buyer and seller of real property; or

● new non-trivial releases of hazardous materials contributed to or caused by the bona fide ground tenant.

Effective dates

Amended by SB 989
Health and Safety Code §25395.109

The rules reported here will remain in effect until, and is repealed on, January 1, 2010, unless a statute enacted prior to January 1, 2010 extends or deletes that date.