Periconi, LLC

How to Insure You Get the Landowner Liability Protections under Superfund

New guidelines published in 2011 assist landowners in insuring that they meet all the requirements - specifically the "continuing obligations" - to avail themselves of the landowner liability protections under the federal Superfund Act. 

Landowner liability protections under the federal Superfund Act (the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or "CERCLA") include the innocent landowner defense to liability, and the contiguous property owner and the bona fide prospective purchaser exemptions from liability.

As an initial step in being able to obtain these protections, it has long been clear that a prospective purchaser must, prior to purchase, undertake a Phase I Environmental Site Assessment ("ESA"), for which EPA finally provided guidance in 2006 in its All Appropriate Inquiry standards, see 40 CFR Part 312.

The Phase I ESA is a preliminary, non-invasive, mostly documentary review of a contaminated property to determine the extent of contamination at the property. See ASTM Standards: E1527-05. The purpose of a Phase I ESA is to try to identify all potential environmental issues (known as "recognized environmental conditions" or "RECs") with a property, so the prospective purchaser acquires an appropriate level of knowledge about the environmental conditions of the property in advance of purchasing it. This due diligence is a key part to the "all appropriate inquiry" required by the statute, and interpreted by regulations developed by the U.S. Environmental Protection Agency, something that must occur before the contaminated property transfers ownership.

But neither EPA nor Congress has provided any guidance on what a landowner needs to do after purchase to comply with the "continuing obligations" requirement of the 2002 amendments to the Superfund Act that created these new protections. And it's clear that the protections can be lost if the landowner is not in compliance. The lack of clarity in the amendments engendered a fear, for example, that the third requirement, see below ("Taking reasonable steps as to releases of hazardous substances, [and] preventing or limiting human, environmental or natural resource exposure to prior releases of hazardous substances. . . ") might actually impose an affirmative obligation to remediate, i.e., stop migration of contamination that would otherwise lead to "human, [or] environmental . . . exposure to prior releases," seemingly in contradiction to the absence of an obligation to remediate that the landowner liability protections seemed to give.

The new "Standard Guide for Identifying and Complying with Continuing Obligations" (E2790-11) has been released by ASTM International (formerly the American Society for Testing and Materials, or ASTM), a private professional standard-setting organization. This standard addresses compliance issues after a person purchases a contaminated property. The owner's obligations for due diligence necessary to avail himself of the CERCLA liability exemptions (or defenses) also include requirements after the property has transferred to him.

The new ASTM Standard applies to continuing obligations for commercial real estate, as well as for forestland and rural properties, and includes properties contaminated by hazardous substances under CERCLA as well as by petroleum products (which are generally outside the scope of CERCLA). Such "continuing obligations" include stopping, preventing, or limiting human exposure to the contaminants on the property.

Specifically, the continuing obligations contemplated by CERCLA include:

  1. Complying with any engineering controls and/or institutional controls (i.e., land use restrictions) established or relied upon in connection with a cleanup action at a property;
  2. Not impeding the effectiveness or integrity of any engineering or institutional controls imposed on a property in connection with a response action;
  3. Taking reasonable steps as to releases of hazardous substances, including stopping continuing releases, preventing threatened future releases, and preventing or limiting human, environmental or natural resource exposure to prior releases of hazardous substances;
  4. Providing full cooperation, assistance and access to persons who are authorized to conduct response actions or natural resource restoration at a property;
  5. Complying with information requests and administrative subpoenas, if necessary; and
  6. Providing legally required notices with respect to releases of any hazardous substances at a property.

The new ASTM Continuing Obligations Standard focuses on the first three continuing obligations listed above, and attempts to formulate and clarify suggested industry methods and procedures for identifying and satisfying those continuing obligations in a manner that is "practical, efficient, and reasonable."

The standard's main drive is the development of a "continuing obligation plan," which is "a plan prepared by the [property owner] to identify continuing obligations and procedures to be taken post-acquisition of the property to satisfy any continuing obligations."

ASTM's new continuing obligation standard utilizes a four-step approach to aid an owner of contaminated property in developing a continuing obligation plan which includes (1) identifying and organizing any continuing obligations; (2) determining the required next steps after purchasing the property; (3) monitoring the required continuing obligations; and (4) maintaining the continuing obligations throughout ownership of the property. In addition, the property owner may not take any affirmative steps in developing the property to move contaminated soil into areas not previously contaminated, or create pathways of migration of contaminated ground water to previously uncontaminated areas. But nothing in the ASTM standard suggests active remediation, e.g., contaminated soil removal or, say, biological agent treatment of groundwater.

By following these steps and developing a continuing obligation plan, the new ASTM standard help property owners in meeting their continuing obligations after purchase of a contaminated property, which, in turn, can help them avail themselves of the defenses and exemptions under CERCLA.

Other parts of the new standard discussed summarily include (1) compliance with land use restrictions established as a result of a response action - e.g., and not trying to build single family homes or a day care center on a property cleaned up only to industrial or commercial standards - and (2) not impeding the effectiveness or integrity of any institutional control used at a property - e.g., not breaching the integrity of a clean-soil or other cap.

If you own (or want to own) a contaminated property and are looking to avail yourself of the landowner liability protections under CERCLA, then following these new standards is critical.

Even though ASTM International is a private body, EPA has, in the past, largely adopted its prescriptive practices for Phase I and Phase II ESAs in its regulations or guidances. Pending any clearer guidance from the EPA, we think the same practice will be followed as to the "continuing obligations" standards, both pre- and post-remediation.

Although the standard attempts to make continuing due diligence easier, the new Continuing Obligation Standard only focuses on "technical, scientific, and procedural issues involved with identifying and performing appropriate continuing obligations under site-specific circumstances;" an environmental attorney is necessary to provide legal advice concerning the landowner liability protection under CERCLA, which, as the new standard notes: "involve complicated legal matters with potentially severe consequences."

We here at Periconi, LLC have over 30 years experience in handling CERCLA matters, including the evaluation and use of landowner liability protections for prospective purchasers or owners of contaminated properties. If you are interested in owning or do own a contaminated property (or property next to a contaminated property), please contact us to see how we can help you.

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