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DEQ's Prospective Purchaser Agreement

October 6, 2011

Overview

The 2011 Oregon Legislature has passed a new law, House Bill 3325, that helps buyers of contaminated property avoid future environmental liabilities.

One risk-management tool available to buyers of property on which there is known contamination is DEQ's Prospective Purchaser Agreement -- or PPA. A PPA is an agreement with the State of Oregon, Department of Environmental Quality, under which the buyer agrees to do certain tasks in exchange for a release of liability.

Under the new law, anyone agreeing to a PPA will now be protected against claims by private third parties arising out of the contamination. Prior to HB 3325, the release of liability only protected buyers from later actions or claims by the Oregon Department of Environmental Quality for clean up costs associated with the acquired property. The new law also provides buyers with liability protection from oil releases to "waters of the state," which could be either surface water or ground water.

A PPA will still involve incurring certain costs in exchange for the agreement. For example, the DEQ may require a buyer to take measures to protect occupants of the purchased property from any vapors, or may require tests to determine the extent of the contamination. And there are other requirements that a buyer must follow, such as paying a $2,500 deposit to enter the program.

Under the new law, a buyer using a PPA as part of a real property purchase will have an added layer of statutory protection against suits from third parties.  The PPA is now an even more effective tool to consider as part of any risk-management analysis.

If you have any additional questions about PPA or other risk-management strategies related to contaminated properties, please contact the Schwabe attorney with whom you work or:

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