The U.S. Environmental Protection Agency has issued a final "Policy Toward Owners of Property Containing Contaminated Aquifers," which was announced by the Administrator as part of the Superfund Administrative Reforms. This bulletin briefly summarizes the policy, its significance and considerations in relying on it.
Natural subsurface processes such as infiltration and groundwater flow often carry contaminants large distances from their sources, resulting in potential CERCLA liability of any person owning property to which contamination has migrated.1 This potential liability has slowed community development and redevelopment by making lenders and buyers wary of potentially significant liability. With this new policy, EPA intends to lower the barriers to property transfers by reducing uncertainty regarding enforcement actions by EPA or third parties.
Summary of the Policy Statement
This policy states that, subject to certain conditions, "where hazardous substances have come to be located on or in a property solely as the result of subsurface migration in an aquifer from a source or sources outside the property, EPA will not take enforcement action against the owner of such property to require the performance of response actions or the payment of response costs. Further, EPA may consider de minimis settlements under section 122(g)(1)(B) of CERCLA where necessary to protect such landowners from contribution suits."2
Application of this policy is subject to the following conditions:
- The landowner did not cause, contribute to, or exacerbate the release or threat of release through an act or omission;3
- The person that caused the release is not an agent or employee of, or in a contractual relationship with, the landowner;4
- There is no alternative basis for the landowner's liability, such as generator or transporter liability under section 107(a)(3) or (4) of CERCLA, or liability as an owner based on the existence of a source of contamination on the property other than the contamination that migrated from a source outside the property.
The policy is based on the CERCLA "innocent landowner" defense,5 which, in addition to the preceding requirements, requires the defendant to establish that he exercised "due care" with respect to the hazardous substance. Under the new policy, the landowner is not required to take any affirmative steps to investigate or prevent the activities that gave rise to the original release in order to satisfy the "due care" or "precautions" elements of the section 107(b)(3) defense.
Significance of Policy Statement
This policy statement is consistent with previous EPA practices regarding enforcement actions. It is intended to reduce the uncertainty of owners, prospective purchasers and lenders regarding the possibility that EPA or third parties may take enforcement actions.
Although not binding, according to EPA officials it is a "strong" policy statement because it (1) creates uniform guidance, consistent with past EPA enforcement practices, stating that EPA does not intend to take enforcement actions against such landowners, (2) states that such landowners need not take affirmative actions to satisfy the "due care" element of the "innocent landowner" defense, and (3) allows for de minimis settlements if a landowner is threatened with a contribution suit.
Considerations in Relying on the Policy
Although this is a "strong" policy statement, reliance on its application to specific property raises several issues. Due to the complexity of these issues, parties should seek legal advice when considering them. These issues include:
- The policy is intended as guidance in regional EPA enforcement actions, and does not create substantive rights in any person, nor is it binding on the EPA, states or third parties. It does not preempt enforcement actions by state agencies under state statutes, nor does it protect landowners from contribution or tort claims by third parties.6
- The policy does not provide any mechanism for advance confirmation of its application to specific property. Although some EPA regions issue "comfort letters" stating their belief that certain property is subject to this policy, these letters are not binding on EPA, nor do they preclude contribution suits from third parties.
- Because it is a policy statement, although unlikely, it is subject to change at any time at the EPA's discretion. At this time the EPA does not have any plans to create a rule implementing this policy.
- CERCLA section 107(a)(1) imposes potential liability on any "owner" of contaminated property. 42 U.S.C. § 9607(a)(1). [ ^ return to article text ]
- 60 Fed. Reg. 34790 (July 3, 1995). EPA's willingness to enter de minimis settlements depends on the likelihood that a particular landowner is or will be subject to a contribution suit. For requirements regarding de minimis settlements, see Guidance on Landowner Liability Under Section 107(a)(1) of CERCLA, De Minimis Settlements Under Section 122(g)(1)(B) of CERCLA, and Settlements with Prospective Purchasers of Contaminated Property, OSWER Directive No. 9835.9, June 6, 1989, 54 Fed. Reg. 34235 (August 18, 1989). ^
- This policy does not apply to properties containing groundwater wells which may affect the migration of contamination in the affected aquifer. Landowners of such properties, however, are not precluded from asserting a section 107(b)(3) "innocent landowner" defense. ^
- A "contractual relationship," except in limited specified circumstances, includes and land contract, deed, or instrument transferring title to or possession of real property. CERCLA § 101(35)(A). Land contracts are not considered "contractual relationships" if the land was acquired after the placement or disposal or the hazardous substances on, in or at the facility, and the landowner establishes that at the time of the acquisition he did not know or have any reason to know of such disposal or placement. ^
- CERCLA section 107(b)(3) provides an affirmative defense to liability where the release or threat of release was caused solely by "an act or omission of a third party other than an employee or agent of the defendant, or than one whose act or omission occurs in connection with a contractual relationship, existing directly or indirectly, with the defendant..." ^
- A de minimus settlement, discussed above, is binding upon the EPA and states and precludes contribution claims by third parties. ^