CERCLA’s Rock and Hard Place: A Look at the Interpretive Conundrum Created by the “Innocent Landowner Provision

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) has a provision called the “innocent landowner defense” which is confusing and unclear. This provision creates problems in the courts and leaves people unsure about what to do. One solution could be for the Supreme Court to make a decision about it, but a better solution would be to change the law. This article explains the problem with the innocent landowner provision and suggests a way to fix it. It also discusses whether “subsequent purchasers” need to do environmental due diligence to be protected under CERCLA. In 1980, CERCLA was created to address environmental issues caused by industrial pollution. It holds certain parties responsible for costs related to hazardous substance releases. One defense, called the “third-party defense,” allows a responsible party to avoid liability if they can prove that the release was caused solely by someone else and they took reasonable precautions to prevent it. For example, if a property owner fenced off their land and posted no trespassing signs, but someone still dumped hazardous substances on their property, the owner could use the third-party defense if they took steps to address the contamination. There’s a law that says if you buy a property with pollution on it, you might not be responsible for cleaning it up if you can prove that the pollution was caused by the previous owner. But it’s not always clear if this law applies if you didn’t own the property at the time the pollution happened. To make things clearer, Congress passed a new law in 1986. This new law says that if you do a thorough check of the property before buying it and don’t find any pollution, then you might not be responsible for cleaning it up. But if you don’t do a good check or if you find out about the pollution and still buy the property, then you might be on the hook for cleaning it up. The goal was to make CERCLA’s third-party defense have a due diligence element for subsequent buyers. But Congress didn’t do that. Instead, the defense depends on a contractual relationship, which includes land contracts, deeds, easements, leases, or other instruments transferring title or possession, unless the buyer does all appropriate inquiries before buying and has no reason to believe there’s contamination. So, if a buyer doesn’t do the right inquiries or finds a reason to suspect contamination, their buyer-seller relationship counts as a “contractual relationship” for the defense. The amendment was meant to create a requirement for people to investigate and be responsible for any environmental issues when buying property. However, the way it is written means that a buyer can still be held responsible for environmental issues even if they didn’t know about them when they bought the property. This makes the “innocent landowner provision” almost pointless. In 2002, Congress made a law to protect people who buy property with hazardous substances on it. To use this defense, the buyer has to prove they did a thorough investigation before buying the property, and that they have taken steps to prevent any more pollution from happening. If the law is interpreted in a way that doesn’t consider this investigation, it would be really hard for someone to use this defense. This would make it pointless, because they would have to meet the easier requirements of another defense first. Congress created a problem with the CERCLA law by trying to include a due diligence requirement in the definition of the third-party defense. This has caused confusion and led to different courts interpreting the law in different ways. A better solution would be for Congress to simply add the due diligence requirement as a separate element to the defense itself, rather than trying to define it within the law. This would make the law clearer and easier to understand for everyone involved. If a person buys a property that later turns out to have hazardous substances on it, they may not be liable for the cleanup if they can prove they were not at fault and had no reason to know about the pollution when they bought the property. This amendment would make the rules clearer and fairer for property buyers. In 1986, Congress made a law called CERCLA, which said that people who buy polluted land can’t use the “innocent landowner” defense unless they checked for pollution before buying. But the law is confusing, and courts can’t figure out what it means. Even though a simple change could fix the problem, Congress hasn’t done anything about it. So, for 25 years, the innocent landowner provision has been a big challenge for courts and lawyers. The term facility in environmental law refers to a wide range of places and things where hazardous substances are located. Disposal includes activities that cause waste to enter the environment. Courts have different views on what constitutes “disposal,” and a recent legal case clarified the requirement for intent to dispose of hazardous substances. CERCLA, the environmental law, has limited defenses that are hard to use. The term “release” in environmental law includes any type of movement of contaminants into the environment, even if it happens passively. In some cases, courts have combined the requirement to take precautions with the concept of due care, or have said that the requirement doesn’t apply at all. There are also exceptions in the definition for cases where someone inherits or is given property, or if a government acquires the property involuntarily. In some court cases, it was found that a lease between a potentially responsible party (PRP) and a tenant who caused environmental damage can prevent the PRP from using a third-party defense. However, in another case, it was suggested that a lease only counts as a contractual relationship if the landlord was aware of or controlled the tenant’s handling of hazardous substances. The court also mentioned that a post-release purchase agreement could affect the third-party defense if a new owner takes on some environmental liability from the previous owner. Some courts have also questioned whether a new defense for those who acquire ownership of a facility after a certain date could change the rules for the third-party defense. Overall, different court cases have different interpretations of the third-party defense, and it’s a complex legal issue. Jeffery C. Close is a lawyer who works at a firm in Jacksonville. Before joining the firm in February 2011, he worked as a lawyer for the Florida Department of Environmental Protection. He mainly worked on enforcing laws for hazardous waste and waste cleanup. This column is written for the Environmental and Land Use Law Section.

Source: https://www.floridabar.org/the-florida-bar-journal/cerclas-rock-and-hard-place-a-look-at-the-interpretive-conundrum-created-by-the-innocent-landowner-provision/