How to . . .
| Publication year | 1996 |
| Pages | 28 |
| Citation | Vol. 9 No. 6 Pg. 28 |
June, 1996
How To Obtain an Environmental Site Assessment (Or Ignorance Is Not Bliss - Unless You've Investigated)
Rosemary J. Beless, J.
A. THE INNOCENT LANDOWNER'S DEFENSE - AM I INNOCENT OR NAIVE?
In 1980, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) created a set of potentially responsible parties (PRP's) who could be liable for the cost of cleaning up hazardous waste sites. Among these PRP's was the current landowner, even if he had no involvement with the on-site wastes and was unaware of the existence of those wastes. 42 U.S.C. § 9607(a). Because cleanup costs often amount to millions of dollars, the financial risk of land ownership became enormous. This risk plainly discouraged those otherwise interested in purchasing and developing land.
When Congress amended CERCLA in 1986 with the Superfund Amendments and Reauthorization Act (SARA), Congress provided a defense for some such innocent landowners. However, establishing the "innocent landowner" defense is far from easy because of the strict conditions required to prove that a landowner is "innocent." In addition, the burden of proof | for the defense is on the landowner, which makes it far more difficult to escape a trial.
In creating the innocent landowner defense, Congress grafted the innocent landowner provisions onto its preexisting third-party defense. The third-party defense of the original 1980 law required the defendant to establish that: (1) the release or threat of release of a hazardous substance was caused solely by a third party; (2) the defendant exercised due care with respect to the hazardous substance; (3) the defendant had taken precautions against foreseeable acts or omissions and foreseeable consequences of the third-party intervention; and (4) the involved third party had no contractual relationship with the defendant, direct or indirect. See 42 U.S.C. § 9607(b)(3). The vast majority of potentially responsible third parties had some contractual relationship with the defendant, thus, defeating the defense. In the case of landowners, the contractual relationship condition destroyed any ability to shift the cleanup burden to prior owners who were directly responsible for hazardous wastes at the site. See, e.g., United States v. Northernaire Plating Co., 670 F.Supp. 742 (W.D. Mich. 1988); United States v. Hooker Chemicals & Plastics Corp., 680 F.Supp. 546 (W.D. N.Y. 1988).
In the 1986 amendment, Congress modified the contractual relationship condition w ith the innocent landowner provisions. A landowner may escape liability, even in the presence of a contractual relationship, by demonstrating certain facts. First, the property must be purchased by the defendant/landowner "after the disposal or placement of the hazardous substance on, in, or at the facility. . . ." 42 U.S.C. § 9601(35)(A). Second, the defendant/ landowner must establish one of the following three criteria: (1) at the time of purchase the defendant did not know and had no reason to know that any hazardous substance was disposed of on, in, or at the facility; (2) the defendant is a government entity which acquired the property by involuntary transfer, eminent domain, or escheat; or (3) the owner obtained the property by inheritance or bequest. 42 U.S.C. § 9601(35)(A)(i) - (iii). Finally, the defendant landowner must establish that he or she exercised due care with respect to the hazardous substances. 42 U.S.C. § 9607(b)(3).
The full scope of the innocent landowner defense has not yet been defined by the federal circuit courts; how-ever, a number of decisions have begun to provide important guidance to future land purchasers. The availability of the innocent landowner defense has turned on two central questions: (1) did the defendant have reason to know of the hazardous substances at the time of acquisition; and (2) did the defendant exercise due care with respect to those substances?
Whether a landowner had reason to know of hazardous substances at the time of purchase is dependent upon what pre-acquisition investigation the owner made. The statute gives some guidance as to the pre-acquisition investigation required of the innocent landowner. The defense requires that the owner "must have undertaken, at the time of acquisition, all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice in an effort to minimize liability." 42 U.S.C. § 9601(35)(B). The statute continues by defining what factors a court should consider in determining whether the purchaser has made "all appropriate inquiry":
For purposes of the preceding sentence the court shall take into account any specialized knowledge or experience on the part of the defendant, the relationship of the purchase price to the value of the property if uncontaminated, commonly known or reasonably ascertainable information about the property, the obviousness of the presence or likely presence of contamination at the property, and the ability to detect...
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