95-16283. Announcement and Publication of Final Policy Toward Owners of Property Containing Contaminated Aquifers  

  • [Federal Register Volume 60, Number 127 (Monday, July 3, 1995)]
    [Notices]
    [Pages 34790-34792]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 95-16283]
    
    
    
    
    [[Page 34789]]
    
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    Part VI
    
    
    
    
    
    Environmental Protection Agency
    
    
    
    
    
    _______________________________________________________________________
    
    
    
    Announcement and Publication of Final Policy Toward Owners of Property 
    Containing Contaminated Aquifers and Guidance on Agreements with 
    Prospective Purchasers of Contaminated Property and Model Prospective 
    Purchaser Agreement; Notices
    
    Federal Register / Vol. 60, No. 127 / Monday, July 3, 1995 / Notices 
    
    
    [[Page 34790]]
    
    
    ENVIRONMENTAL PROTECTION AGENCY
    
    [FRL-5251-7]
    
    
    Announcement and Publication of Final Policy Toward Owners of 
    Property Containing Contaminated Aquifers
    
    SUMMARY: This policy states the agency's position 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 actions under CERCLA, 42 U.S.C. 106 and 107, against 
    the owner of such property to require the performance of response 
    actions or the payment of response costs.
    
    FURTHER INFORMATION CONTACT: Ellen Kandell, Policy and Program 
    Evaluation Division, Office of Site Remediation Enforcement, 401 M St. 
    S.W., 2273-G, Washington, D.C. 20460. Phone: 703-603-8996, Fax: 703-
    603-9117
    
        Dated: June 21, 1995.
    Bruce M. Diamond,
    Director, Office of Site Remediation Enforcement.
    POLICY TOWARD OWNERS OF PROPERTY CONTAINING CONTAMINATED AQUIFERS
    
    I. Statement of Policy
    
        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 the payment of response 
    costs.\1\ Further, EPA may consider de minimis settlements under 
    Section 122(g)(1)(B) of CERCLA where necessary to protect such 
    landowners from contribution suits.
    
        \1\ By this Policy, EPA does not intend to compromise or affect 
    any right it possesses to seek access pursuant to Section 104(e) of 
    CERCLA.
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        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 landowner within the meaning of this condition. This policy 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 indirect contractual 
    relationship with the landowner. In 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.
        (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 under 
    Section 122(g)(1)(B) to consider de minimis settlements with a 
    landowner that satisfies the foregoing conditions. Such settlements may 
    be particularly appropriate where such a landowner has been sued or 
    threatened with contribution suits. EPA's Guidance on Landowner 
    Liability and Section 122(g)(1)(B) De Minimis Settlements \2\ should be 
    consulted in connection with this circumstance.
    
        \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 
    Property, OSWER Directive No. 9835.9, June 6, 1989, 54 FR 34235 
    (August 18, 1989) (hereinafter ``Guidance on Landowner Liability and 
    Section 122(g)(1)(B) De Minimis Settlements'').
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        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 landowner,3 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 at the site.4
    
        \3\ A more complete discussion of the appropriate consideration 
    that may be sought under Section 122(g)(1)(B) settlements is 
    contained in Section IV.B.3.a. of Guidance on Landowner Liability 
    and Section 122(g)(1)(B) De Minimis Settlements, supra note 2.
        \4\ The Agency has developed guidance which explains the 
    authorities and procedures by which EPA obtains access or 
    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 9834.4-A, August 25, 1988.
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        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 the Policy would be applied, 
    unless the source of contamination and lack of culpability of the 
    property owner are otherwise clear.5 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.
    
        \5\ See Guidance on Landowner Liability and Section 122(g)(1)(B) 
    De Minimis Settlements, supra note 2, for an outline of the types of 
    information which should be provided by the landowner to support a 
    request for a de minimis settlement.
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    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 contaminants 
    relatively large distances from their sources. Thus, 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 
    
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    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 possibility that EPA or third 
    parties may take actions against these landowners.
    
    B. Existing Agency Policy
    
        This policy is related to other guidance that EPA has issued. The 
    Agency has previously published guidance on issues of landowner 
    liability and de minimis landowner settlements.6 Moreover, in 
    other EPA policies, EPA has asserted its enforcement discretion in 
    determining which parties not to pursue.7
    
        \6\ See Guidance on Landowner Liability and Section 122(g)(1)(B) 
    De Minimis Settlements, supra note 2. This guidance analyzes the 
    language in Sections 107(b)(3) and 122(g)(1)(B) of CERCLA.
        \7\ See, e.g., Policy Towards Owners of Residential Property at 
    Superfund Sites, OSWER Directive #9834.6, (July 3, 1991) 
    (hereinafter ``Residential Property Owners Policy'') (stating Agency 
    policy not to take enforcement actions against an owner of 
    residential property unless homeowner's activities led to a 
    release); National Priorities List for Uncontrolled Hazardous Waste 
    Sites, 60 FR 20330, 20333 (April 25, 1995). In this notice the 
    Residential Property Owners Policy was applied to ``* * * 
    residential property owners whose property is located above a 
    groundwater plume that is proposed to or on the NPL, where the 
    residential property owner did not contribute to the contamination 
    of the site.'' See also, Interim Policy on CERCLA Settlements 
    Involving Municipalities or Municipal Waste, OSWER Directive No. 
    9834.13, (December 6, 1989).
    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 threatened 
    release of a hazardous substance.8 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 government need not prove that an owner 
    contributed to the release in any manner to establish a prima facie 
    case.9 However, 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 * * *'' 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 
    omissions.'' 42 U.S.C. Sec. 9607(b)(3).
    
        \8\ EPA has taken the position that lessees may be ``owners'' 
    for purposes of liability. See Guidance on Landowner Liability and 
    Section 122(g)(1)(B) De Minimis Settlements, supra note 2, footnote 
    10.
        \9\ See, e.g., U.S. v. R.W. Meyer, Inc., 889 F.2d 1497, 1507 
    (6th Cir. 1989)(``CERCLA contemplates strict liability for 
    landowners'').
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        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, application of the ``due care'' and 
    ``precautions'' tests of Section 107(b)(3) and evaluation of the 
    appropriateness of a de 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) de minimis settlement.
        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 third party that caused the release. Under 
    Section 101(35)(A) of 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 indirectly, from a person 
    that caused the original release. An 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 Section 
    107(b)(3) defense. Land contracts or instruments 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 
    
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    disposed of on, in, or at the facility.'' 10 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.
    
        \10\ Section 101(35)(A) also excludes from the definition of 
    ``contractual relationship'' certain acquisitions of property by 
    government entities and certain acquisitions by inheritance or 
    bequest, so long as the other requirements of Section 101(35)(A) are 
    met. See 42 U.S.C. 101(35)(A) (ii) and (iii).
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    2. Settlements Under Section 122(g)(1)(B)
        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 122(g)(1)(B) of CERCLA, 42 U.S.C. 9622 
    (g)(1)(B). Under this 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 omission.'' 11
    
        \11\ A detailed discussion of each of these components of 
    Section 122(g)(1)(B) and guidance on structuring settlements under 
    this Section are provided in the Guidance on Landowner Liability and 
    Section 122(g)(1)(B) De Minimis Settlements, supra note 2.
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        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 under Section 107(b)(3), as described 
    above.12
    
        \12\ Id.
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    D. Use of the Policy
    
        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.
    
    [FR Doc. 95-16283 Filed 6-30-95; 8:45 am]
    BILLING CODE 6560-50-P
    
    

Document Information

Published:
07/03/1995
Department:
Environmental Protection Agency
Entry Type:
Notice
Document Number:
95-16283
Pages:
34790-34792 (3 pages)
Docket Numbers:
FRL-5251-7
PDF File:
95-16283.pdf