BFPP Status: How It Protects Property Buyers...Or Doesn’t

Environmental due diligence plays a critical role in any commercial or industrial real estate transaction. Buyers want to understand the property’s condition, manage risk, and determine whether they can avoid liability for someone else’s contamination. One potential protection comes from qualifying as a Bona Fide Prospective Purchaser (BFPP) under federal law, CERCLA. However, BFPP status doesn’t work the way many buyers assume, and it does not function as a universal shield in California.

Why A Phase I Matters Before Any BFPP Determination

To qualify for BFPP status, a buyer must complete All Appropriate Inquiries (AAI) before closing. The most common way to meet AAI requirements is through a Phase I Environmental Site Assessment conducted under ASTM standards.

A strong Phase I looks at the site’s historical uses, aerial and mapping records, environmental databases, surrounding land uses, regulatory files, and interviews with knowledgeable parties. The goal is not just to identify Recognized Environmental Conditions but to construct a reliable picture of how past activities might have affected soil, groundwater, soil vapor, or indoor air.

When questions arise from the Phase I, buyers sometimes authorize limited sampling through a Phase II investigation. Sampling does not automatically lead to cleanup obligations, but it helps buyers understand whether “reasonable steps” may be required after purchase to maintain BFPP status.

What BFPP Status Does — and Doesn't — Mean

A buyer can qualify as a BFPP only when a property is purchased after January 11, 2002 and the buyer meets all statutory elements in CERCLA. When those elements are satisfied, federal law protects the buyer from becoming a “Potentially Responsible Party” for pre-existing contamination.

But BFPP status often gets misunderstood. Buyers do not receive a blanket exemption from responsibility. They must take steps after closing that prevent the release of hazardous materials, avoid making known contamination worse, and comply with any land use restrictions already tied to the site. They also must cooperate with ongoing investigation or cleanup work.

More importantly, only the U.S. EPA and federal courts recognize BFPP status. California agencies—whether dealing with hazardous substances, groundwater impacts, vapor intrusion, or underground storage tanks—do not treat BFPP status as a complete defense under state law. A buyer who qualifies as a BFPP at the federal level still must comply with California’s separate reporting and cleanup requirements.

That distinction often surprises buyers. BFPP status can reduce the risk of federal Superfund liability, but it does not prevent state agencies from requiring investigation or remediation when contamination threatens human health or the environment.

Do States Offer an Equivalent to BFPP?

California does not offer a formal BFPP program. Instead, the state focuses on reporting obligations, cleanup requirements, and risk-based decision making. When contamination is discovered, California agencies may allow a buyer to manage risk through site-specific remedies, land use controls, or long-term monitoring. These approaches can reduce costs and avoid full remediation when exposure remains controlled, but they do not mirror the protections offered by BFPP under CERCLA.

In practice, buyers often use the federal BFPP framework as an added layer of protection, while understanding that California will still expect appropriate investigation, reporting, and—when necessary—cleanup.

Can Anyone Call Themselves a BFPP?

Not quite. Many buyers assume they automatically qualify by completing a Phase I. BFPP status requires more. The buyer must:

• Complete AAI before the purchase.
• Avoid affiliation with any party responsible for contamination.
• Take “reasonable steps” after closing that prevent exposure, prevent new releases, and prevent conditions from worsening.
• Cooperate with regulators during any ongoing cleanup or investigation.
• Follow existing land use restrictions or institutional controls.

A buyer who satisfies only some of these requirements does not qualify. And if a buyer stops satisfying them after closing, they can lose BFPP status even years later.

Because of these layers, BFPP status helps buyers protect themselves, but it never functions as a way to acquire a distressed property and walk away from the environmental realities on the ground.

How BFPP Status Helps During Property Evaluation

The BFPP framework gives buyers more confidence when evaluating older properties, former industrial sites, or assets with known or suspected contamination. When used effectively, BFPP protections allow buyers to:

• Investigate a site without inheriting federal liability for past contamination;
• Understand site conditions before committing to redevelopment;
• Access federal protections that can reduce long-term CERCLA exposure.

But these protections only work when the buyer documents compliance at every stage—before closing and continuing afterward.  And, again, this is only for federal liabilities.

Reporting and Disclosure Obligations Still Apply

Environmental due diligence often uncovers information that requires reporting to state or local agencies, regardless of BFPP status. Petroleum impacts, solvent releases, vapor intrusion concerns, or other conditions that pose a threat to health or the environment may trigger mandatory notification. Buyers also may need to disclose certain conditions to tenants or future purchasers.

These obligations vary depending on site conditions and which agency regulates the risk. When contamination appears significant or creates exposure concerns, early communication with the appropriate agency helps prevent enforcement actions later.

FAQs: Practical Answers for Prospective Purchasers

Do I automatically qualify as a BFPP if I complete a Phase I?

No. A Phase I is required, but buyers must also avoid affiliation with responsible parties and take specific actions after closing to maintain protection.

Can I buy a contaminated property, claim BFPP status, and avoid cleanup?

No. BFPP protection does not allow buyers to ignore known contamination. Buyers must take steps that prevent exposure and avoid worsening existing conditions. State agencies may still require investigation or remediation.

Does California recognize BFPP status?

Not formally. California honors federal law but continues to enforce its own cleanup and reporting requirements. Federal protection does not eliminate state obligations.

Is there a state alternative to BFPP?

California does not have a BFPP equivalent. Instead, agencies rely on risk-based approaches, reporting requirements, and cleanup oversight tailored to the specific site.

Should I always perform a Phase II?

No. A Phase II becomes necessary when the Phase I identifies unresolved concerns or when lenders, insurers, or redevelopment needs require sampling. Phase II work helps buyers maintain BFPP protections by clarifying what “reasonable steps” they must take after closing.

The Bottom Line

Environmental due diligence and BFPP protections allow buyers to pursue commercial and industrial properties without inheriting historical contamination liabilities. A strong Phase I, adherence to All Appropriate Inquiries and careful compliance with both federal and state requirements are essential. With proper planning and legal guidance, buyers can move forward even when a property has a complicated environmental history.

Footnotes

[1] EPA All Appropriate Inquiries Guidance — https://www.epa.gov/brownfields/all-appropriate-inquiries
[2] ASTM E1527-21 Standard — https://www.astm.org/e1527-21.html
[3] EPA BFPP Guidance — https://www.epa.gov/brownfields/bona-fide-prospective-purchasers
[4] California Department of Toxic Substances Control — https://dtsc.ca.gov
[5] State Water Resources Control Board — https://www.waterboards.ca.gov
[6] Regional Water Board Map — https://www.waterboards.ca.gov/waterboards_map.html
[7] SWRCB Underground Storage Tank Program — https://www.waterboards.ca.gov/ust
[8] California CUPA Directory (CERS) — https://cers.calepa.ca.gov
[9] Office of Environmental Health Hazard Assessment — https://oehha.ca.gov