The Small Business Liability Relief and Brownfields Revitalization Act: Real Relief or Prolonged Pain?

Dale A. Guariglia, Michael Ford, and Gerald DaRosa

Dale A. Guariglia is a partner in the St. Louis office of Bryan Cave L.L.P.; Michael Ford and Gerald DaRosa are associates in Bryan Cave's Phoenix office.

[32 ELR 10505]

On January 11, 2002, President George W. Bush signed the Small Business Liability Relief and Brownfields Revitalization Act (Act),¹ which includes numerous amendments to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).² The new legislation is designed to relieve small businesses from the financial burden of CERCLA liability, promote brownfields redevelopment, define transactional due diligence standards, and encourage state primacy in enforcement matters. The Act to some degree codifies U.S. Environmental Protection Agency (EPA) policy on certain issues and builds upon other recent CERCLA amendments in narrowing CERCLA's liability scheme and providing relief to certain types of potentially responsible parties.³

The Act provides several CERCLA liability exemptions, including a de micromis exemption (for parties that have contributed only very small amounts of hazardous substances to a contaminated facility), and a municipal solid waste (MSW) exemption (for parties that have contributed only innocuous types of waste). There is an extensive section dealing with the funding of brownfield revitalization efforts, and a section designed to bolster state response programs by encouraging state, rather than federal, enforcement of cleanup responsibility. Finally, the Act contains several liability exemptions and "clarifications" that deal with contaminated properties owned by contiguous landowners, "innocent" landowners, and bona fide prospective purchasers. While the Act's provisions are promising in terms of alleviating certain liability concerns and promoting brownfields development, there are a number of ambiguities that render the true impact of the legislation unclear.

De Micromis Contributors

The Act provides a de micromis exemption from liability for nonowner or operator potentially responsible parties (PRPs) at sites on the national priorities list (NPL), if the PRP can demonstrate that the amount of material containing hazardous substances that the person "arranged for disposal or treatment" or "accepted for transport" was less than 110 gallons of liquid or less than 200 pounds of solid material. However, the availability of the exemption is restricted to situations in which all or part of the disposal, treatment, or transport occurred before April 1, 2001.⁴ The de micromis exemption also does not apply if (1) the material/waste has or could contribute significantly to the cost of the response action or natural resource restoration⁵; (2) the PRP fails to comply with an information request or administrative subpoena; or (3) the PRP has impeded, or is impeding, through action or inaction, the performance of a response action or natural resource restoration at the facility.⁶

The Act also shifts the burden of proof in private party actions to the plaintiff to establish that the requirements of the exemption are not met. Moreover, exempt parties sued for contribution after enactment of the Act by a nongovernmental plaintiff are entitled to recover their costs and attorney fees.⁷

While this de micromis exemption is new to the statute, EPA has implemented a policy of discretionary nonenforcement and settlement with de micromis waste contributors under the authority of 42 U.S.C. § 9622(g).⁸ In general, EPA's policy is to not pursue parties whose hazardous substance contribution to a disposal site is equal to or less than .002% of the total hazardous substance volume disposed of at the site, or 110 gallons or 200 pounds of materials containing hazardous substances. For cases in which the contributor sent only MSW waste, the policy provides that EPA will generally not pursue the party if the contributor is responsible for .2% or less of the total waste volume. In addition, EPA may offer contribution protection by settlement without exchange of money. Under its policy, EPA will typically settle with a qualifying party if the party is sued by other PRPs or faces the likely threat of suit from other parties.

Nonetheless, the new statutory exemption offers greater protection to qualifying de micromis contributors and includes a built-in fee-shifting deterrent against plaintiffs. This provision should effectively encourage greater due diligence by CERCLA plaintiffs, and keep the newly exempt parties out of CERCLA litigation. Where disposal occurs on [32 ELR 10506] or after April 1, 2001 (the statutory deadline under the exemption), de micromis contributors may have to rely on EPA policy to avoid liability. The net result is that certain de micromis contributors now have an additional and potentially more effective option to avoid being dragged into costly litigation.

MSW Generators

The Act's second major provision provides a liability exemption for MSW⁹ disposed of at an NPL site¹⁰ if the generator is (1) an owner, operator, or lessee of residential property; (2) a small business employing on average less than 100 full-time employees; or (3) a nonprofit entity¹¹ employing less than 100 paid individuals.¹² The Act defines "municipal solid waste" (essentially household garbage), and defines an eligible small business in part by reference to the Small Business Act.¹³ The MSW exemption is similar to the de micromis exemption in that both have similar exceptions¹⁴; both shift the burden of proof in private party actions to the plaintiff to establish that the requirements of the exemption are not met¹⁵; and both contain the same fee-shifting provision.¹⁶ Also, EPA's findings as to the applicability of exceptions to the exemptions are not amenable to judicial review.¹⁷

Although this statutory exemption is new EPA's existing policies have touched on the issue of MSW.¹⁸ EPA has generally not identified MSW generators or transporters as PRPs at NPL sites, and has specified that de micromis amounts of MSW are not worthy of pursuit.¹⁹ Nonetheless, the statutory exemption provides a greater certainty of protection to qualifying entities.

Contiguous Property Owners

Under EPA's existing Policy Toward Owners of Property Containing Contaminated Aquifers, the Agency generally will not take enforcement action against a property owner whose property is contaminated solely as a result of subsurface migration of contaminants in an aquifer from outside sources.²⁰ The policy is limited to instances of groundwater contamination, however, and does not specifically address soil contamination. The Act affords neighbors of contaminated or potentially contaminated sites broader, more reliable relief.²¹

Under the Act, owners of property contaminated by an adjacent, non-owned property will not be held liable provided that the owner: (1) has not caused, contributed or consented to the release; (2) is not otherwise a PRP or is not affiliated with a PRP (including affiliation through a business reorganization); (3) has taken appropriate measures regarding the contamination²²; (4) has cooperated with any authorized person performing response actions or natural resource restoration activities; (5) has complied with various legal requirements or requests, e.g., land use restrictions, administrative subpoenas, administrative requests, and notice requirements; and (6) performed all necessary due diligence at the time the property was acquired (making "all appropriate inquiries"), and did not know or have reason to know that the property was or could be contaminated.²³

This provision builds upon existing EPA policy, and should ease liability concerns for neighbors of contaminating sites. The Act does not, however, shift the burden of proof or provide for the recovery of costs or fees in the event of a successful defense involving this provision.²⁴

Prospective Purchasers

The Act also significantly expands EPA's prior policy regarding prospective purchasers, which was relatively restrictive.²⁵ EPA's general position has been that it would enter into an agreement (with a covenant not to sue) with a prospective purchaser of contaminated property if the following criteria are met: (1) an EPA action at the facility has been taken, is ongoing, or is anticipated to be undertaken; (2) EPA receives a substantial benefit, either in the form of a direct benefit for cleanup, or as an indirect public benefit in combination with a reduced direct benefit to EPA, e.g., measures that reduce the risk posed by the site, create or retain jobs, develop abandoned or blighted property, create conservation or recreation areas or provide community services; (3) the continued operation of facility or new site development, with the exercise of due care, will not aggravate or contribute to the existing contamination or interfere with EPA's response action; (4) the continued operation or new development of the property does not pose health risks to the community and those persons likely to be present at the site; [32 ELR 10507] and (5) the prospective purchaser is financially viable. The first two criteria, in particular, exclude a large universe of potentially contaminated sites from eligibility. In contrast, the Act creates an express exemption for so-called bona fide prospective purchasers and broadens the universe of eligible properties and purchasers.

The new bona fide prospective purchaser liability exemption provides an exemption to CERCLA liability for so-called bona fide prospective purchasers whose potential liability is based solely on such person's ownership or operation of a facility.²⁶ To qualify as a bona fide prospective purchaser, a person must acquire ownership of a facility after the date of enactment of the Act, i.e., after January 11, 2002, not impede the performance of a response action or natural resource restoration at the facility, and establish, by a preponderance of the evidence, the following eight criteria:

1. All disposal of hazardous substances at the facility occurred before the person acquired the facility;

2. The person has made all appropriate inquiry into the previous ownership and uses of the facility;

3. The person provided all legally required notices with respect to the discovery or release of any hazardous substances at the facility;

4. The person took reasonable steps, i.e., exercise appropriate care, with respect to the hazardous substances found at the facility;

5. The person provided full cooperation, assistance, and access to persons conducting a cleanup;

6. The person complied with any applicable institutional controls;

7. The person complied with information requests (including CERCLA § 104 requests); and

8. The person is not affiliated with a potentially liable party at the facility via a familial, contractual (other than a contract conveying title to the facility), corporate, or financial relationship.²⁷

For the most part, conditions 3, 5, 6, 7, and 8 are relatively straightforward. However, conditions 1, 2, and 4, depending upon how they are ultimately construed by the courts, may provide significant limitations upon the usefulness of the exemption.

Prior Disposal

First, a bona fide prospective purchaser must prove that "all disposal of hazardous substances at the facility occurred before the person acquired the facility." In other words, the purchaser must prove that no disposal occurred during its ownership. This burden of "proving a negative" could be quite onerous. Potentially, EPA may construe this provision to mean that the exemption is lost if any amount of any hazardous substance is disposed of after the person acquires the property. As a result, this exemption from liability may be most suited for situations in which industrial property will be developed for commercial use rather than continued industrial use where the likelihood of a "disposal" is high.

This same type of burden currently exists under CERCLA for past owners and operators of property who owned or operated the property at the time a disposal occurred.²⁸ In cases against past owners/operators, courts have generally considered a broad array of evidence relevant to determining whether disposal occurred during the period of ownership or operation. For example, courts have considered evidence such as length of period of ownership, activities conducted on the property during ownership, activities of and evidence implicating other prior owners or operators, affidavits or deposition testimony from employees and officers regarding disposal history, affidavits or deposition testimony from employees and officers regarding the absence of spills or other disposal, affidavits or deposition testimony from third parties, photographs or other documentary evidence, state agency reports concerning disposal, and internal reports concerning disposal.²⁹ These types of evidence could be used by a plaintiff to establish that disposal occurred during the purchaser's ownership.

Finally, the term "disposal" has an uncertain meaning, and a court could attribute a broad connotation that encompasses the purely passive migration of existing contamination. In other words, the spreading of existing contamination could be construed to violate this condition.³⁰ The meaning of "disposal" may vary from jurisdiction to jurisdiction, and a broad construction could result in a violation of the condition if, for example, the purchased property contains leaching contaminants, or contaminants leaking from buried drums or tanks.

Due Diligence Standards

The second major condition of the bona fide prospective purchaser exemption requires the person to make "all appropriate inquiries into the previous ownership and uses of the facility in accordance with generally accepted good commercial and customary standards and practices."³¹ Within two years of enactment of the Act, EPA is required to promulgate regulations setting forth standards and practices for establishing what constitutes all appropriate inquiries. In the interim, "the procedures of the American Society for Testing and Materials, including the document known as 'Standard E1527-97,' entitled 'Standard Practice for Environmental Site Assessment: Phase I Environmental Site Assessment Process' shall satisfy the requirements of all appropriate inquiries."³²

American Society for Testing and Materials (ASTM) Standard E1527-97 has become the industry accepted standard for conducting phase I environmental site assessments (Phase I). This standard, however, was updated by ASTM in 2000 and the most recent standard for conducting a Phase I is identified as E1527-00. The standards are very similar, and compliance with E1527-00 will generally meet the requirements of E1527-97.

[32 ELR 10508]

An additional issue raised by this language regarding the ASTM Standards is what additional due diligence, if any, should a property purchaser conduct if the Phase I identifies "recognized environmental conditions."³³ ASTM has also published a standard for conducting Phase II environmental site assessments designated as E1903-97. This standard for conducting a Phase II describes a process for further evaluating a parcel of property with recognized environmental conditions which are identified in the Phase I.

The language of the Act is vague regarding what a prospective purchaser should do if a recognized environmental condition is identified during a Phase I assessment. The Act states that following the ASTM procedure shall satisfy the due diligence requirements and makes specific reference to ASTM Standard E1527-97. It is reasonable, however, to conclude that if recognized environmental conditions are identified in a Phase I, to qualify as a bona fide prospective purchaser, the person may need to conduct Phase II investigation and sampling. One of the stated objectives of the Phase II standard is to evaluate the recognized environmental conditions identified in the Phase I environmental site assessment or transaction screen process for the purpose of providing sufficient information regarding the nature and extent of contamination to assist in making informed business decisions about the property and where applicable, providing the level of knowledge necessary to satisfy the innocent purchaser defense under CERCLA.³⁴ In other words, the ASTM standards themselves contemplate that Phase II assessments may be needed in order to satisfy the requirements of the CERCLA innocent purchaser defense.

In addition, the Act requires a bona fide prospective purchaser to exercise appropriate care with respect to hazardous substances found at the facility by taking reasonable steps to stop continuing releases, prevent any threatened future releases, and prevent or limit human, environmental or natural resource exposure to any previously released hazardous substance (as discussed below). Therefore, it is reasonable to conclude that a purchaser is going to need to conduct additional investigation if recognized environmental conditions are identified in a Phase I report. In other words, how can an owner of property prevent or limit human exposure to any previously released hazardous substances if the owner has not done enough due diligence in order to identify such releases and understand their risks?

Often with industrial property, Phase II site assessment work has been conducted in the past. Where such work has been done to adequately identify the extent of a recognized environmental condition, additional Phase II sampling may not be needed. This would need to be determined on a case-by-case basis depending on the type of contamination and the extent of investigation previously conducted.

"Reasonable Steps"

In order to avail oneself of the bona fide prospective purchaser protection, one must exercise "appropriate care with respect to hazardous substances found at the facility by taking reasonable steps to—

(i) stop any continuing release;

(ii) prevent any threatened future release; and

(iii) prevent or limit human, environmental, or natural resource exposure to any previously released hazardous substance."³⁵

The requirement that a purchaser must stop and prevent future releases as well as prevent exposure from previous releases, could prove to be a painstaking task. Courts consistently interpret the term "release" very broadly to include the passive migration of hazardous substances through soil and groundwater.³⁶ In addition to migration, courts have taken a res ipsa loquitor approach to environmental law and held that the mere existence of hazardous substances in soil or groundwater is in and of itself evidence of a "release."³⁷ Conceivably, in order to obtain protection as a bona fide prospective purchaser a landowner may have to stop and prevent further migration of contaminated groundwater. Given such a scenario, the value of the bona fide prospective purchaser exemption is questionable. Thus, a principal issue of concern is whether the "reasonable step" requirement is so onerous that bona fide prospective purchaser protection is eviscerated.

Similar "reasonable steps" provisions are found in two other locations of the Act: the contiguous property exemption³⁸ and the innocent landowner provision.³⁹ With regard to the contiguous property exemption, the Act specifically eliminates the need for a person to conduct investigations or remediations to groundwater except under special conditions. However, the bona fide prospective purchaser exemption provides no such limitation. An enforcement agency could argue that the "reasonable steps" required of a bona fide prospective purchaser, by implication, entails investigation and remediation of contaminants.

The legislative history of the Act provides little or no guidance regarding reasonable steps specific to the bona fide prospective purchaser exemption. However, with regard to the contiguous property exemption, the Senate Report for S. 350⁴⁰ indicates that reasonable steps would typically include "actions such as notifying appropriate Federal, State[,] and local officials regarding the situation; erecting [32 ELR 10509] and maintaining signs or fences to prevent public exposure; or maintaining any existing barrier or other elements of a response action on [the] property that address the contaminated plume."⁴¹ One would expect the "reasonable steps" for the prospective purchaser exemption to be at least as onerous as those listed in the Senate Report for the contiguous property exemption.

With regard to the innocent landowner provision in the Act, the Senate Report indicates that the reasonable steps "are in addition to the due care requirement of section 107(b)(3)."⁴² (Section 107(b)(3) discusses CERCLA's "third-party defense," which requires that the person exercise "due care with respect to the hazardous substances concerned, taking into consideration the characteristics of such hazardous substance, in light of all the relevant facts and circumstances . . . .") Although the Senate Report does not elaborate on the meaning of "due care," a significant body of case law explains that phrase's meaning.

In general, due care requires that "the defendant . . . demonstrate that he took all precautions with respect to the particular waste that a similarly situated reasonable and prudent person would have taken in light of all relevant facts and circumstances."⁴³ This generally requires affirmative "steps necessary to protect the public from a health or environmental threat."⁴⁴ A review of the case law demonstrates that what constitutes due care can vary widely and is extremely situation-dependent.⁴⁵ As a result, reasonable steps, for purposes of the innocent landowner defense, and by analogy for the bona fide prospective purchaser exemption, may vary widely and be highly fact-specific.

Assuming that the reasonable steps go beyond the requirements of "due care," as suggested in the Senate Report, there could be situations in which a purchaser may be forced to perform investigation and remediation work, and potentially long-term monitoring, in order to be exempt from liability. As a result, it becomes even more critical that any property considered for purchase be thoroughly assessed. Only after due diligence of a property is performed can one evaluate the potential measures necessary to stop a continuing release, prevent any threatened future release, or prevent or limit human, environmental, or natural resource exposure.

Windfall Lien

A bona fide prospective purchaser should be aware that the Act provides for a lien in certain circumstances against any property ultimately purchased by a bona fide purchaser in favor of the United States.⁴⁶ If the United States conducts a response action at the property and has unrecovered response costs, the Act creates a lien for the United States for such costs to the extent the response action increases the fair market value of the property. In other words, a bona fide prospective purchaser will not receive a windfall from the United States if the United States conducts a response action on the purchaser's property and increases the fair market value of the property.

Reduced Settlements

"Ability-to-pay" settlements have been the topic of several EPA guidance documents.⁴⁷ Under the Act, a PRP may enter into a reduced settlement if the party demonstrates an inability or a limited ability to pay response costs.⁴⁸ In determining whether an adequate demonstration has been made, the government must consider the ability of the party to pay response costs and still maintain its basic business operations. A PRP requesting settlement under this provision must provide EPA all information necessary to make a determination, and EPA must make its eligibility determination in writing, specifying the reasons for any ineligibility determination.

Brownfields Funding

The Act also promotes brownfields restoration by providing up to $ 1.25 billion over the next five years. "Brownfields site" is defined as "real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant or contaminant," except for a facility that is subject to any of several different types of enforcement actions or corrective action requirements, e.g., CERCLA administrative order, court order, consent decree, or is listed or proposed for listing on the NPL.⁴⁹ This definition is arguably broader than EPA's traditional definition, which required that the property [32 ELR 10510] be "abandoned, idled, or under-used."⁵⁰ The bulk of the funding ($ 200 million per year) is to be used for site characterization, assessment, and remediation-related activities. Entities eligible to receive these funds directly from the federal government are generally limited to government or quasi-government organizations, although nonprofit organizations may be eligible. The remaining funding ($ 50 million per year) is to be used for state and Indian tribe response programs.

State Response Programs

EPA coordination with state response programs is the final area addressed by the Act.⁵¹ State response programs which include certain elements, including brownfields site inventories, adequate oversight and enforcement, and public participation are eligible to receive grants.⁵² The Act also generally prohibits EPA CERCLA enforcement actions at eligible response sites at which a person is conducting or has conducted a response action that is compliant with state law.⁵³ The new limitations on EPA authority build upon EPA guidance,⁵⁴ and apply only in states that maintain and update at least annually certain public records regarding sites.

The Act allows EPA to take administrative or judicial enforcement action under CERCLA at eligible response sites which are subject to a state program only in the following situations: (1) the state requests EPA's assistance; (2) EPA determines that the contamination has migrated or will migrate across a state line and further response action is needed; (3) contamination has migrated or will migrate onto federal property, and may "impact the authorized purposes of the Federal property"; (4) EPA determines the site may present an "imminent and substantial endangerment to public health or welfare or the environment,"⁵⁵ necessitating additional response actions; or (5) EPA determines, based on newly discovered information, that the conditions at the site require further remediation.⁵⁶

If EPA intends to carry out an otherwise barred action at an eligible response site, it must notify the state of the action that it intends to take. There is also a 48-hour waiting period within which the state must respond to EPA as to whether the release at the eligible response site has been subject to a cleanup conducted under a state program, and, if the state is planning to abate the release or threatened release, any actions that are planned. However, EPA may take immediate action (after giving notice to the state) if it determines that one or more of the exceptions are met. EPA must also submit a report to the U.S. Congress describing the basis for any enforcement action taken under the new provisions, including specific references to the facts demonstrating that an enforcement action is permitted under one or more of the exceptions.⁵⁷ The report must be submitted within 90 days of EPA's initiation of enforcement action.

These new restrictions on EPA enforcement authority are designed to safeguard state cleanup program participants from EPA "overfiling." In brief, in several recent cases defendants have challenged the authority of EPA to bring an enforcement action regarding a violation that has already been addressed with the state enforcement authority.⁵⁸ The extent of the overfiling threat ostensibly mitigated by the Act is unclear. According to the Senate report, EPA has never taken an enforcement action at a brownfield site being addressed under a state cleanup program without a request from the state.⁵⁹ In any event, these provisions should give parties conducting response actions under state programs some assurance that they will not be subject to duplicative federal enforcement.

Finally, the Act generally requires EPA to defer listing certain sites on the NPL where a state-led response action is underway.⁶⁰ The Act defines "eligible response site" as a "brownfield site," excluding sites where EPA has conducted a preliminary assessment or site inspection and determined (after consultation with the state) that the site scores high enough to warrant NPL listing, and warrants further federal action. The Act states that EPA "generally shall defer final listing of an eligible response site" on the NPL if an adequate response action is being conducted under an agreement with (or order from) the state, and the state requests the deferral. While the Act does not remove EPA's discretion to list on the NPL a site where state-led action is being taken, it bolsters the ability of a PRP to keep state voluntary cleanup sites off the NPL.⁶¹

Conclusion

Anyone owning or contemplating purchasing contaminated or potentially contaminated property, or involved in or contemplating CERCLA litigation should carefully review the new law, and should carefully monitor future developments. [32 ELR 10511] TheAct's provisions are lengthy and complex, and will undoubtedly be shaped by new guidance from EPA and judicial decisions. The new prospective purchaser provisions, in particular, are ambiguous in several respects, and adverse judicial interpretations of any of the ambiguities could result in the evisceration of the liability protection. Interested parties should monitor EPA's reaction to the new amendments, as well as administrative and judicial developments, as new guidance and judicial decisions will undoubtedly be forthcoming to interpret the provisions.

1. Pub. L. No. 107-118.

2. 42 U.S.C. §§ 9601-9675, ELR STAT. CERCLA §§ 101-405.

3. In 1996, the Asset Conservation, Lender Liability, and Deposit Insurance Protection Act was signed, providing liability protection for lenders, and in 1999, the Superfund Recycling Equity Act (SREA) was signed, providing a liability exemption with respect to certain types of recyclable materials. For a discussion of the SREA, see Carol J. Miller, Retroactive Application of a New CERCLA Defense: The Superfund Recycling Equity Act, 31 ELR 10867 (July 2001).

4. Act, § 102(a)(1), to be codified at 42 U.S.C. § 9607(o)(1) (subsequent citations are to 42 U.S.C.).

5. Specifically, the exception to the exemption applies when the material containing hazardous substances contributed by the PRP "has contributed significantly or could contribute significantly, either individually or in the aggregate, to the cost of the response action or natural resource restoration." 42 U.S.C. § 9607(o)(2).

6. Id.

7. Id. § 9607(o)(4).

8. See U.S. EPA, REVISED GUIDANCE ON CERCLA SETTLEMENTS WITH DE MICROMIS WASTE CONTRIBUTORS (1996) [hereinafter DE MICROMIS POLICY].

9. For a definition of MSW, see 42 U.S.C. § 9607(p)(4).

10. The exemption does not apply to liability for non-NPL sites, or for natural resource damages claims, federal or state claims under statutes other than CERCLA, or common-law actions.

11. E.g., a 501(c)(3) organization. 26 U.S.C. § 501(c)(3). The organization must have had, on average, no more than 100 paid employees during the past three taxable years at the location from which the MSW was generated. 42 U.S.C. § 9607(p)(1).

12. 42 U.S.C. § 9607(p).

13. 15 U.S.C. §§ 631 et seq.

14. See 42 U.S.C. § 9607(p)(2).

15. Id. § 9607(p)(5). Private nongovernmental parties that bring CERCLA contribution actions against a qualifying party can be assessed the defendant's costs and attorneys fees. Id. § 9607(p)(7).

16. See id. § 9607(p)(2).

17. Id. 9607(p)(3).

18. See DE MICROMIS POLICY, supra note 8; U.S. EPA, POLICY FOR MUNICIPALITY AND MUNICIPAL SOLID WASTE CERCLA SETTLEMENTS AT NPL CO-DISPOSAL SITES (1998).

19. Id.

20. U.S. EPA, Final Policy Toward Owner of Property Containing Contaminated Aquifers, 60 Fed. Reg. 32790 (July 3, 1995).

21. 42 U.S.C. § 9607(q).

22. An owner is not required to conduct groundwater monitoring or conduct groundwater remediation unless it owns a groundwater well that could affect the migration of groundwater in the affected aquifer. Id. § 9607(q)(1)(D).

23. EPA is authorized to issue "no enforcement" letters to qualifying parties and to grant them contribution protection. Id. § 9607(q)(3).

24. Note that a party who does not qualify for this exemption may nonetheless qualify for either the innocent landowner or the bona fide prospective purchaser exemptions. See id. §§ 9607(q)(1)(C), 9607(q)(2)(A).

25. EPA initially issued its Guidance on Landowner Liability Under Section 107(a) of CERCLA, De Minimis Settlements Under Section 122(g)(1)(B) of CERCLA, and Settlements With Respect to Purchasers of Contaminated Property in June 1989. The more recent, amended guidance is Guidance on Agreements With Prospective Purchasers of Contaminated Property, dated May 24, 1995 (see 60 Fed. Reg. 34792 (July 3, 1995)); and Support of Regional Efforts to Negotiate Prospective Purchaser Agreements (PPAs) at Superfund Sites and Clarification of PPA Guidance (Jan. 10, 2001).

26. 42 U.S.C. § 9607(r).

27. Id. §§ 9601(40), 9607(r).

28. Id. § 9607(a)(2).

29. See, e.g., ABB Indus. Sys., Inc. v. Prime Tech., Inc., 120 F.3d 351, 27 ELR 21335 (2d Cir. 1997).

30. See Nurad, Inc. v. Wm. E. Hooper & Sons Co., 966 F.2d 837, 22 ELR 20936 (4th Cir. 1992) (leaking of mineral spirits from underground storage tanks constituted disposal); ABB Indus. Sys., Inc., 120 F.3d at 358 n.3, 27 ELR at 21338 n.3 (declining to decide whether "disposal" includes leakage or spillage from barrels).

31. 42 U.S.C. § 9601(40).

32. Id. § 9601(35)(B).

33. This term is used in ASTM Standard E1527 and means in part

the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of a release of any hazardous substances or petroleum products into structures on the property or into the ground, groundwater, or surface water of the property.

34. ASTM Standard E1903-97.

35. 42 U.S.C. § 9601(40)(D).

36. For example, in United States v. CDMG Realty Co., 96 F.3d 706, 26 ELR 21589 (3d Cir. 1996), the court held that under CERCLA, "release" includes "leaching," and leaching is the process of separating soluble components from some material by percolation. The court noted that the term leaching is commonly used in the environmental context to describe migration of contaminants in landfills by rain and groundwater movement.

37. See, e.g., United States v. Hardage, 761 F. Supp. 1501, 21 ELR 20706 (W.D. Okla. 1990) (court held that unchallenged evidence that hazardous substances are present in soil, surface water, and groundwater on-site, led it to conclude that "release" occurred).

38. 42 U.S.C. § 9607(q).

39. Id. § 9601(35).

40. The Act originated as H.R. 2869, 107th Cong. (2002). However, H.R. 2869 was essentially a merger of S. 350 and H.R. 1831. Due to the lack of legislative history concerning H.R. 2869, the legislative history of S. 350 becomes important.

41. S. REP. No. 107-2 (2001).

42. Id. (emphasis added.)

43. See New York v. Lashins Arcade Co., 91 F.3d 353, 360, 26 ELR 21506, 21510 (2d Cir. 1996) (quoting H.R. REP. No. 96-1016, at 34 (1980)).

44. Idylwoods Assocs. v. Mader Capital, Inc., 956 F. Supp. 410, 420, 27 ELR 21003, 21008 (W.D.N.Y. 1997) (quoting United States v. A&N Cleaners & Launderers, Inc., 854 F. Supp. 229, 238 (S.D.N.Y. 1994) (quoting H.R. REP. No. 99-253, at 187 (1986))).

45. See, e.g., United States v. 150 Acres of Land, 204 F.3d 698, 30 ELR Digest 20300 (6th Cir. 2000) (owners of land presented genuine issue of material fact with regard to due care when owners alleged that they asked regulatory agency to advise them if anything needed to be done, but agency did not respond and evidence suggested that the tests performed in 1987 by agency were negative); Lashins Arcade Co. (maintaining a granular activated carbon filter and taking water samples for volatile organic compound contamination on semi-annual basis were sufficient exercise of due care); Kerr-McGee Chem. Corp. v. Lefton Iron & Metal Co., 14 F.3d 321, 24 ELR 20369 (7th Cir. 1994) (due care not met when purchaser knew of the wood preservatives on-site and made no attempt to remove the polluting chemicals or to take any positive steps to reduce the threat posed by creosote); City of Emeryville v. Elementis Pigments, Inc., No. 99-03719, 2001 WL 964230 (N.D. Cal. 2001) (evidence of due care found by the submission of numerous remedial plans and reports); Idylwoods Assocs. (owner failed to exercise due care when defendants delayed providing an environmental report to county health department; failed to follow the recommendations outlined in its own report; and failed to remove drums and other materials from the site as requested by the authorities); Lincoln Properties, Ltd. v. Higgins, 823 F. Supp. 1528 (E.D. Cal. 1992) (county exercised due care when it tested wells pursuant to statute; performed inspection upon discovery of contamination; took contaminated wells out of service; began destroying wells to prevent possible flow of contamination through the wells; and tested, inspected, and sealed joints in the sewer lines near one of the wells).

46. 42 U.S.C. § 9607(r)(2).

47. See, e.g., U.S. EPA, GENERAL POLICY ON SUPERFUND ABILITY TO PAY DETERMINATIONS (1997); U.S. EPA, MODEL CERCLA PERIPHERAL PARTY CASHOUT CONSENT DECREE; U.S. EPA, MODEL CERCLA ABILITY TO PAY PERIPHERAL PARTY CASHOUT CONSENT DECREE (2001).

48. 42 U.S.C. §§ 9607, 9622(g)(7).

49. Id. § 9601(39)(B).

50. In addition, EPA may authorize funding for excluded sites if it finds that "financial assistance will protect human health and the environment, and either promote economic development or enable the creation of, preservation of, or addition to parks, greenways, undeveloped property, other recreational property, or other property used for nonprofit purposes." Id. § 9601(39)(C).

51. Id. Subtitle C.

52. Id. § 9628(a).

53. Id. § 9628(b).

54. See, e.g., U.S. EPA, INTERIM APPROACHES FOR REQUIRED RELATIONS WITH STATE VOLUNTARY CLEANUP PROGRAMS (1996).

55. The "imminent and substantial endangerment" threshold is used in CERCLA (42 U.S.C. § 9606, ELR STAT. CERCLA § 106) and the Resource Conservation and Recovery Act (RCRA) (42 U.S.C. §§ 6972, 6973, ELR STAT. RCRA §§ 7002, 7003), and its meaning has been the subject of a number of judicial interpretations. In general, the burden of the required showing is relatively low. ("A RCRA claimant need not prove actual harm or an immediate threat to health or the environment to satisfy the 'imminent and substantial endangerment' requirement. A claimant need only show that a present or future threat of potential harm exists"; finding elements of § 7002 claim were met where state agency had determined the pollutant concentrations in the groundwater beneath the subject property far exceeded allowable levels and claimant alleged drinking water supply was threatened.).

56. 42 U.S.C. § 9268(b)(1)(B).

57. Id. § 9628(b)(1)(E).

58. See, e.g., Harmon Indus., Inc. v. Browner, 191 F.3d 894, 29 ELR 21412 (8th Cir. 2000) (finding EPA was precluded from pursuing enforcement action under RCRA where defendant had reached settlement with the state.) See generally Jerry Organ, Environmental Federalism Part II: The Impact of Harmon, Smithfield, and CLEAN on Overfiling Under RCRA, the CWA, and the CAA, 30 ELR 10732 (Sept. 2000) (discussing Harmon Indus., EPA's response to it, and subsequent litigation).

59. S. REP. No. 107-2, at 15 (2001). "EPA administrator Whitman testified that the agency has yet to ever overfile under CERCLA at a brownfields site." Id. at 23.

60. 42 U.S.C. § 9605(h).

61. See U.S. EPA, GUIDANCE ON DEFERRAL OF NPL LISTING DETERMINATIONS WHILE STATES OVERSEE RESPONSE ACTIONS (1995).