Final Policy Toward Owners of Property Containing Contaminated Aquifers

Transcript

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2 If you have any questions about this Policy, please call Ellen Kandell at 703-603-8996, mail code 2273-G or by FAX at 703- 603-9117 or 603-9119. Attachment cc: Elliot Laws, OSWER Lisa Friedman, OGC Bruce Gelber, DOJ Linda Boornazian, PPED Sandra Connors, RSD Steve Luftig, OERR Larry Reed, HSED Earl Salo, OGC Crane Harris, OSWER 2

3 Policy Toward Owners of Property Containing Contaminated Aquifers STATEMENT OF POLICY I. Based on the Agency's interpretation of CERCLA, existing EPA guidance, and EPA's Superfund program expertise, it is the Agency's position that 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 1 the payment of response costs. de Further, EPA may consider minimis settlements under Section 122(g)(1)(B) of CERCLA where necessary to protect such landowners from contribution suits. This Policy is subject to the following conditions: A) The landowner did not cause, contribute to, or exacerbate the release or threat of release of any hazardous substances, through an act or omission. The failure to take affirmative steps to mitigate or address groundwater contamination, such as conducting groundwater investigations or installing groundwater remediation systems, will not, in the absence of exceptional circumstances, constitute an "omission" by the This policy landowner within the meaning of this condition. may not apply where the property contains a groundwater well, the existence or operation of which may affect the migration of contamination in the affected aquifer. These cases will require fact-specific analysis. B) The person that caused the release is not an agent or employee of the landowner, and was not in a direct or In indirect contractual relationship with the landowner. cases where the landowner acquired the property, directly or indirectly, from a person that caused the original release, application of this Policy will require an analysis of whether, at the time the property was acquired, the landowner knew or had reason to know of the disposal of hazardous substances that gave rise to the contamination in the aquifer. 1 By this Pol icy, E PA does not in tend t o compr omise o r affe ct any suant t right it po s to se ek acce ss pur ssesse o Secti on 104 (e) of CERCLA. 3

4 C) There is no alternative basis for the landowner's liability for the contaminated aquifer, such as liability as a generator or transporter under Section 107(a)(3) or (4) of CERCLA, or liability as an owner by reason of the existence of a source of contamination on the landowner's property other than the contamination that migrated in an aquifer from a source outside the property. In appropriate circumstances, EPA may exercise its discretion de minimis under Section 122(g)(1)(B) to consider settlements with a landowner that satisfies the foregoing conditions. Such settlements may be particularly appropriate where such a landowner EPA's has been sued or threatened with contribution suits. Guidance on Landowner Liability and Section 122(g)(1)(B) De 2 should be consulted in connection with this Minimis Settlements circumstance. In exchange for a covenant not to sue from the Agency and statutory contribution protection under Sections 113(f)(2) and 122(g)(5) of CERCLA, EPA may seek consideration from the 3 landowner, such as the landowner's full cooperation (including but not limited to providing access) in evaluating the need for and implementing institutional controls or any other response actions 4 at the site. The Agency intends to use its Section 104(e) information gathering authority under CERCLA, 42 U.S.C. § 9604(e), as appropriate, to verify the presence of the conditions under which 2 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 , OSWER Dir ective No. 98 35.9, J une 6, 1989, Property Reg. 54 Fed. 34,235 (Aug , 1989) (herei nafter ust 18 " Guidance on Landowner Liability and Section 122(g)(1)(B) De Minimis Settlements "). 3 A more comp lete d iscussi on of t he app ropriat e consi derati on that may be sough Sectio n 122( g)(1)(B ) settl ements is t under n Sect ion IV. B.3.a. of G uidance on Landowner Liability contained i , supra note 2. and Section 122(g)(1)(B) De Minimis Settlements 4 The Agenc y has develop ed guid ance w hich ex plains the ess or authorities es by w hich E PA obta ins acc rocedur and p information . See Entry and Continued Access under CERCLA , OSWER Directive # 9829.2 , June 5, 1987 ; Guidance on Use and Enforcement of CERCLA Information Requests and Administrative Subpoenas , OSWER Directive 9 834.4- A, Augu st 25, 1988. 4

5 the Policy would be applied, unless the source of contamination 5 and lack of culpability of the property owner are otherwise clear. Accordingly, failure by an property owner to provide certified responses to EPA's information requests may, by itself, be grounds for EPA to decline to offer a Section 122(g)(1)(B) de minimis settlement. II. DISCUSSION A. Background Nationwide there are numerous sites that are the subject of response actions under CERCLA due to contaminated groundwater. Approximately 85% of the sites on the National Priorities List have some degree of groundwater contamination. Natural subsurface processes, such as infiltration and groundwater flow, often carry Thus, contaminants relatively large distances from their sources. the plume of contaminated groundwater may be relatively long and/or extend over a large area. For this reason, it is sometimes difficult to determine the source or sources of such contamination. Any person owning property to which contamination has migrated in an aquifer faces potential uncertainty with respect to liability as an "owner" under Section 107(a)(1) of CERCLA, 42 U.S.C. § 9601(a)(1), even where such owner has had no participation in the handling of hazardous substances, and has taken no action to exacerbate the release. Some owners of property containing contaminated aquifers have experienced difficulty selling these properties or obtaining financing for development because prospective purchasers and lenders sometimes view the potential for CERCLA liability as a significant risk. The Agency is concerned that such unintended effects are having an adverse impact on property owners and on the ability of communities to develop or redevelop property. EPA is issuing this policy to address the concerns raised by owners of property to which contamination has migrated in an aquifer, as well as lenders and prospective purchasers of such property. The intent of this policy is to lower the barriers to transfer of such property by reducing uncertainty regarding the 5 See Guidance on Landowner Liability and Section 122(g)(1)(B) De Minimis Settlements , supra note 2, fo r an o utline of the types of support information should be pro vided by the landown er to which a request for a de minimis settlement . 5

6 possibility that EPA or third parties may take actions against these landowners. Existing Agency Policy B. This policy is related to other guidance that EPA has issued. The Agency has previously published guidance on issues of 6 landowner liability and de minimis landowner settlements. Moreover, in other EPA policies, EPA has asserted its enforcement 7 discretion in determining which parties not to pursue. C. Basis for the Policy 1. The Section 107(b)(3) Defense Section 107(a)(1) of CERCLA imposes liability on an owner or operator of a "facility" from which there is a release or 8 threatened release of a hazardous substance. A "facility" is defined under Section 101(9) as including any "area where a hazardous substance has . . . come to be located." The standard of liability imposed under Section 107 is strict, and the 6 See Guidance on Landowner Liability and Section 122(g)(1)(B) De Minimis Settlements note 2. This gu idance , supra e lang uage in Sectio ns 107 (b)(3) and 122 analyzes th (B) of (g)(1) CERCLA. 7 See . g ., Policy Towards Owners of Residential Property at , e ective #9834. 6, (Jul y 3, 1 991) Superfund Sites , OSWER Dir r "Res identia (hereinafte rty Ow ners Po licy") (stati ng Agen cy l Prope policy not to tak e enfor cement action s again st an o wner o f residential prope rty unl ess hom eowner 's acti vities led to a release); National Priorities List for Uncontrolled Hazardous Waste , 60 Fed. R eg. 20 333 (Ap ril 25 , 1995) . In this no tice Sites 330, 20 roperty Owners Polic y was a pplied to the Residen tial P tial p "...residen owners whose proper ty is l ocated above a roperty groundwater plume that i s propo sed to or on the NPL , wher e the residential prope rty own er did not co ntribut e to th e cont aminati on of the site ." , See also Interim Policy on CERCLA Settlements , OSWER Dir ective # Involving Municipalities or Municipal Waste ecembe r 6, 19 89). 9834.13, (D 8 EPA has tak en the posi tion t hat les sees ma y be " owners" for purposes of lity. See Guidance on Landowner Liability and liabi Section 122(g)(1)(B) De Minimis Settlements , supra note 2, fo otnote 10. 6

7 government need not prove that an owner contributed to the release 9 facie case. in any manner to establish a However, Section prima 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 . . ." In order to invoke this defense, the defendant must additionally establish, by a preponderance of the evidence, that "(a) he exercised due care with respect to the hazardous substance concerned taking into consideration the characteristics of such hazardous substance, in light of all relevant facts and circumstances, and (b) he took precautions against foreseeable acts or omissions of any such third party and the consequences that could foreseeably result from such acts or 42 U.S.C. § 9607(b)(3). omissions." a. Due Care and Precautions An owner of property may typically be unable to detect by reasonable means when or whether hazardous substances have come to be located beneath the property due to subsurface migration in an aquifer from a source or sources outside the property. Based on EPA's interpretation of CERCLA, it is the Agency's position that where the release or threat of release was caused solely by an unrelated third party at a location off the landowner's property, 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. Not only is groundwater contamination difficult to detect, but once identified, it is often difficult to mitigate or address without extensive studies and pump and treat remediation. Based on EPA's technical experience and the Agency's interpretation of CERCLA, EPA has concluded that the failure by such an owner to take affirmative actions, such as conducting groundwater investigations or installing groundwater remediation systems, is not, in the absence of exceptional circumstances, a failure to exercise "due care" or "take precautions" within the meaning of Section 107(b)(3). The latter conclusion does not necessarily apply in the case where the property contains a groundwater well and the existence or operation of this well may affect the migration of contamination in the affected aquifer. In such a case, 9 See , e . g ., U . S . v . R . W . Meyer, Inc ., 889 F.2d 1497, 1507 (6 th t liabi Cir. 1989)( A conte mplates stric "CERCL lity fo r land owners" ). 7

8 application of the "due care" and "precautions" tests of Section 107(b)(3) and evaluation of the appropriateness of ade minimis settlement under Section 122(g)(1)(B) require a fact-specific analysis of the circumstances, including, but not limited to, the impact of the well and/or the owner's use of it on the spread or containment of the contamination in the aquifer. Accordingly, this Policy does not apply in the case where the property contains a groundwater well, the existence or operation of which may affect the migration of contamination in the affected aquifer. In such a case, however, the landowner may choose to assert a Section 107(b)(3) defense, depending on the case-specific facts and circumstances, and EPA may still exercise its discretion to enter into a Section 122(g)(1)(B) settlement. de minimis b. Contractual Relationship The Section 107(b)(3) defense is not available if the act or omission causing the release occurred in connection with a direct or indirect contractual relationship between the defendant and the Under Section 101(35)(A) of third party that caused the release. CERCLA, a "contractual relationship" for this purpose includes any land contract, deed, or instrument transferring title to or possession of real property, except in limited specified circumstances. Thus, application of the defense in the circumstances addressed by this Policy requires an examination of whether the landowner acquired the property, directly or An indirectly, from a person that caused the original release. example of this scenario would be where the property at issue was originally part of a larger parcel owned by the person that caused the release. If the larger parcel was subsequently subdivided, and the subdivided property was eventually sold to the current landowner, there may be a direct or indirect "contractual relationship" between the person that caused the release and the current landowner. Even if the landowner acquired the property, directly or indirectly, from a person that caused the original release, this may or may not constitute a "contractual relationship" within the meaning of Section 101(35)(A), precluding the availability of the Land contracts or instruments Section 107(b)(3) defense. transferring title are not considered "contractual relationships" if the land was acquired after the disposal or placement of the hazardous substances on, in or at the facility under Section 101(35)(A) and the landowner establishes, pursuant to Section 101(35)(A)(i), that, at the time of the acquisition, the landowner "did not know and had no reason to know that any hazardous substance which is the subject of the release . . . was disposed 8

9 10 of on, in, or at the facility." Thus, in the subdivision scenario described above, the current landowner might still qualify for the Section 107(b)(3) defense if he or she did not know or have reason to know that the original landowner had disposed of hazardous substances elsewhere on the larger parcel. Settlements Under Section 122(g)(1)(B) 2. To address concerns that strict liability under Section 107(a)(1) could cause inequitable results with respect to landowners who had not been involved in hazardous substance disposal activities, Congress authorized the Agency to enter into de minimis settlements with certain property owners under Section Under this 122(g)(1)(B) of CERCLA, 42 U.S.C. § 9622 (g)(1)(B). Section, when the Agency determines that a settlement is "practicable and in the public interest," it "shall as promptly as possible reach a final settlement" if the settlement "involves only a minor portion of the response costs at the facility concerned" and the Agency determines that the potentially responsible party: "(i) is an owner of the real property on or in which the facility is located; (ii) did not conduct or permit the generation, transportation, storage, treatment or disposal of any hazardous substance at the facility; and (iii) did not contribute to the release or threat of release ... through any act or 11 omission." The requirements which must be satisfied in order for the Agency to consider a settlement with landowners under the de minimis settlement provisions of Section 122(g)(1)(B) are substantially the same as the elements which must be proved at trial in order for a landowner to establish a third party defense 12 under Section 107(b)(3), as described above. D. Use of the Policy 10 (35)(A ) also exclude s from the de Section 101 n of finitio "contractua l rela tionshi p" cert ain ac quisiti ons of proper ty by government entiti es and certain acqui sitions by inh eritan ce or bequest, so long other r equire ments o f Secti on 101 (35)(A) are as the See 42 U.S.C. § 101( 35)(A)( ii) and (iii) . met. 11 A detailed discus sion of each o f thes e compo nents o f Sect ion 122(g)(1)(B guidanc e on st ructur ing set tlement s unde r this ) and Section are provi ded in the Guidance on Landowner Liability and Section 122(g)(1)(B) De Minimis Settlements , supra note 2. 12 Id . 9

10 This Policy does not constitute rulemaking by the Agency and is not intended and cannot be relied on to create a right or a benefit, substantive or procedural, enforceable at law or in equity, by any person. Furthermore, the Agency may take action at variance with this Policy. For further information concerning this Policy, please contact Ellen Kandell in the Office of Site Remediation Enforcement at (703) 603-8996. 10

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