Contributed By McGuireWoods LLP
The Virginia Waste Management Act and the State Water Control Law are the state laws that govern oil and solid and hazardous waste liability issues in Virginia. The statutory language provides, as a general matter, liability for a person who caused or permitted contamination to occur, or for a person who is the owner or operator of a petroleum underground storage tank. This language can be used by the Virginia Department of Environmental Quality to hold an otherwise innocent purchase liable for pre-existing contamination, but the statutes provide defenses for bona fide prospective purchasers and innocent landowners who meet certain standards, which are similar to EPA’s “all appropriate inquiry” standard under CERCLA. Thus, before acquiring contaminated property in Virginia, it is advisable to obtain concurrence from DEQ that a purchaser will be considered a bona fide prospective purchaser.
The allocation of environmental liabilities among purchasers and sellers is a matter of negotiation, so it is hard to state what is a “typical” allocation, other than to say that the most common split is for a seller to retain liability for pre-existing liabilities and for a buyer to be responsible for post-closing environmental liabilities that did not arise before the closing.
Most purchase and sale agreements have a provision wherein the seller represents and warrants that they have not used any portion of the property to store, handle or dispose of hazardous waste. This representation and warranty is usually limited (i) so it does not extend to the period before the seller acquired the property, and (ii) to the seller’s actual knowledge, which is typically defined as the actual knowledge of a specified individual without the duty to investigate or review the due diligence provided. Aside from this express representation and warranty, a buyer typically acquires the property in its “AS-IS, WHERE IS, CONDITION.”