The following parties, often referred to as
"potentially responsible parties" or "PRPs", are subject
to CERCLA liability, as per 42 U.S.C. §9607 (a):
- The present owner or operator of the contaminated
facility.
- Any person who owned or operated the facility at
the time at which hazardous substances were disposed
at the site.
- Any person who arranges for the disposal,
treatment, or transport of hazardous substances owned
by or possessed by such person.
- Any person who accepts hazardous substances for
transfer to a disposal or treatment site selected by
such person.
There are three statutory defenses to liability for
PRPs. As per 42 U.S.C §9607(b), a PRP is not liable if
the release of hazardous substances was caused by:
- An act of God (e.g., hurricane, tornado)
- An act of war.
- An act or omission of a third party other than an
employee or agent and other than a person whose act
occurs in connection with a contractual relationship. A
defendant cannot rely on this "third party" defense
unless the defendant (i) exercised due care with respect
to the hazardous substance and (ii) took precautions to
prevent the foreseeable actions or omissions or the
third party. Due to the narrow scope of this defense,
its principal effect is to provide a defense to an owner
or operator who is the victim of a "midnight dumper".
The Innocent Landowner defense arises out of the
statutory definition of "contractual relationship"
referred to in the third party defense. Congress defined
"contractual relationship" to include real estate
transactions, and then provided that an owner of
contaminated property can establish a defense to CERCLA
liability if (i) the property was acquired after the
hazardous substance was disposed there and (ii) at the
time of acquisition, the owner "did not know and had no
reason to know" that the hazardous substance was
disposed on the property. Further, an owner can
establish that he or she had "no reason to know" only if
he or she conducted appropriate due diligence prior to
the acquisition.
To establish that the defendant had no reason to
know…the defendant 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. … From
42 U.S.C §9601(35)(B) (emphasis added) According to CERCLA all appropriate inquiry into the
previous ownership must be undertaken to comply with the
innocent landowner defense. As a party to a commercial
real estate transaction it is imperative that the
environmental due diligence adheres to both Statute
9601(35)(B) and ASTM Phase I ESA. The American Society
for Testing and Materials (ASTM), which is a private
not-for profit standards-writing organization, has
developed a standard (Designation E 1527-00) for
conducting a Phase I Environmental Site Assessment (ESA).
The Phase I ESA standards were written to establish good
site assessment practices that satisfy the due diligence
responsibilities of participants in commercial real
estate transactions.
This practice is intended to permit a user to satisfy
one of the requirements to qualify for the innocent
landowner defense to CERCLA liability: that is, the
practices that constitute "all appropriate inquiry into
the previous ownership AND uses of the property
consistent with good commercial or customary practice"
as defined in 42 U.S.C.§9601(35)(B). … From
ASTM Phase I ESA Designation E 1527-00, ¶ 1.1
(emphasis added) According to the ASTM (ASTM Designation E 1527-00, ¶
7.3.4), standard historical sources include aerial
photographs, fire insurance maps, property tax files,
recorded land title records, minute topographical maps,
street directories, building department records, and
zoning and land use records.
Historical chains of title can reveal previous owners
and historical uses of a property, but according to the
ASTM it cannot be the sole historical source consulted.
Though the ASTM standard prescribes many historical
sources for determining previous uses of the property,
directories, photographs, and maps do not provide the
required information to identify a list of previous
owners.
This exclusion by the ASTM has led to confusion by
professionals in the environmental, financial, and real
estate communities, incorrectly believing that
historical title records can be eliminated as long as
other historical sources of information have been
utilized in the report. As a result of consultants’
recommendations of sources that do not include a chain
of title, potentially responsible parties and details of
particular ownership are not identified. Yet to satisfy
due diligence and one of the qualifying requirements to
the innocent landowner defense, both previous ownership
and uses of the property must be identified as per both
42 U.S.C §9601(35)(B) and ASTM Phase I ESA standards
(above).
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