CERCLA Innocent Landowner Defense & Superfund


CERCLA Innocent Landowner Defense & Superfund

CERCLA Innocent Landowner Defense refers to the “Comprehensive Environmental Response, Compensation, and Liability Act” (CERCLA). The CERCLA policy was passed on December 11 in 1980, following the realization that historical hazardous waste disposal and materials handling practices were grossly negligent. The law grants Federal authorities to directly address and respond to the release (or threat of release) of hazardous substances. Particularly those which threaten human health or the environment. In particular, the act aims to identify responsible parties and facilitate cleanup of the contamination. Updated February 8, 2019.

CERCLA Innocent Landowner Defense Laws

CERCLA Innocent Landowner Defense Laws

Disclaimer

Geo Forward is not a law firm, and does not intend to provide legal advice under any capacity. This page contains general information sourced from various government online sources. All respective sources are linked to key terms within this page. For all legal advice, Geo Forward recommends consulting an attorney competent in the areas of environmental law.

Regulations

CERCLA establishes regulations pertaining to closed and abandoned hazardous waste properties. Additionally, CERCLA holds the former owners, operators, or other responsible parties liable for releases. Moreover, it establishes a trust fund with financing by a tax levies, upon the petroleum and chemical industries. The fund pays for required EPA actions, when no other method of funding cleanup is available. For example, when no responsible party is identifiable, the Superfund applies. This trust fund is the reason sites with regulatory oversight under CERCLA refer to as “Superfund” sites.

CERCLA Innocent Landowner Defense Policy

CERCLA Innocent Landowner Defense Policy

National Priorities List

Sites that identify as part of CERCLA become part of a listing within the Environmental Protection Agency’s “National Priorities List.” The EPA will work to identify responsible parties prior to commencing cleanup activities. Responsible parties can be past or present property owners, tenants, operators, waste and hazardous materials transporters, and generators. The EPA may begin cleanup actions itself if responsible parties are not compliant. But, it will exhaust all options to hold the responsible parties liable for the costs.

Two types of response actions are authorized by CERCLA.

  1. Short-term actions occur where prompt response is absolutely necessary.
  2. Long-term actions occur where there are dangers that do not immediately threat human health. These risks are typically subject to reduction by ongoing remediation, for permanent and long-term solutions.
Superfund for CERCLA Contamination Super Fund

Superfund for CERCLA Contamination Super Fund

Liability

CERCLA contains several ways to reduce or eliminate liability (or costs in association with liability), that are sustainable by landowners acquiring properties with contamination. There are three types of property owners according to CERCLA:

  1. Those who obtain property without knowledge of contamination
  2. Governments that obtain contaminated land either involuntarily, or by eminent domain, purchase and/or condemnation.
  3. Those who inherit contaminated property.

Landowners that obtain property and that have no knowledge of contamination at the time of purchase are potentially eligible for the the “Innocent Landowner Defense” to liability. These landowners are eligible if they conduct “All Appropriate Inquiries” (or AAI) prior to purchase, and comply with several other requirements. This is requirement is almost always accomplished by a Phase 1 Environmental Site Assessment Report. 

Innocent Landowner Liability

To qualify for the Innocent Landowner Defense the land owner must not know or have reason to know of contamination. This means that the landowner acquires the property after hazardous substances were disposed. Additionally, the landowner must meet the following responsibilities:

  1. Compliance with land use restrictions, and not impede the effectiveness or integrity of institutional controls.
  2. Taking “reasonable steps” in regard to hazardous substances that are impacting the property in question.
  3. Cooperating and providing assistance and property access.

Contiguous Property Owners

Following the 2002 Brownfields Amendments, the CERCLA “Innocent Landowner Defense” was extended to Contiguous Property Owners, who obtain property that may be contaminated but is not the original source of the contamination. Contiguous Property Owners must meet the criteria of “All Appropriate Inquiries” prior to obtaining the property in question. Additionally, they must demonstrate no affiliation with the responsible party. A Contiguous Property Owner must also satisfy all “reasonable steps.” These are requirements for the innocent land owner defense. Additional requirements are:

  1. Complying with information requests and subpoenas.
  2. Providing legally required notices.

The Bona Fide Prospective Purchaser

In 2002, the Brownfields Amendments also allowed for a “Bona Fide Prospective Purchaser” provision. As a result, the amendments allow for a party to obtain property with knowledge, or having reason to know, about contamination at the property if they:

  1. Obtain the property after January 11, 2002.
  2. Meet the threshold criteria and associated ongoing obligations.
  3. Do not impede response actions or natural resources restorations.

The Bona Fide Prospective Purchaser must complete the “All Appropriate Actions” prior to obtaining the property, and have no affiliation with the responsible party for the contamination. In addition, the Bona Fide Prospective Purchaser must satisfy all reasonable steps required for the Contiguous Property Owner protections.

Windfall Lien

Bonafide Prospective Purchasers are not held liable as an owner or operator for environmental response expense. However, if actions performed by the EPA increase the value of the property, a “windfall lien” may be placed on the property. The windfall lien is only applicable to properties where there is a Federal response. Therefore, most cleanup cases will not fall into this category.

Environmental Questionnaire for SBA Loans

Environmental Questionnaire for SBA Loans

Environmental Due Diligence

For this process to be valid, landowners must conduct environmental due diligence according to State and Federal requirements. And as such, landowners should consult with an Environmental Professional prior to purchasing property with potential contamination. For further information on the CERCLA Innocent Landowner defense, please refer to “Brownfields All Appropriate Inquiries”.