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3	g	UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
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OFFICE OF
ENFORCEMENTAND
COMPLIANCE ASSURANCE
MAY 2 4 1995
MEMORANDUM	;
SUBJECT: Final Policy Toward Owners of Prope.c£y Containing
Contaminated Aquifers
FROM:	Bruce M. Diamond, Director
Office of Site Remediation Enforcement
TO:	Regional Counsel (Region 1-10)
Waste Management Division Directors (Region 1-10)
Brownfields Coordinators (Regions 1-10)
Attached please find the final "Policy Toward Owners of
Property Containing Contaminated Aquifers." 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 taks
enforcement actions against the owner of such property to require
the performance cif response actions or the payment of response
costs. Further, as outlined in the policy, EPA may consider ag.
rMjUffljs settlements under Section 122(g)(1)(B) of CERCLA where
necessary to protect such landowners from contribution suits.
The development of this policy was announced by the
Administrator as part of the Superfund Administrative.Reforms.
It is also a component of the Agency's Brownfields Initiative to
remov# barriers to economic redevelopment.
The comments received from many Regional and Headquarters
offices, as well as the Department of Justice, were very helpful
in developing this Policy.. I appreciate your assistance,
especially given the short turnaround time.
EPA intends to publish this Policy in the Federal Register
within the next 30 days.
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If you ;h.ave any questions about this Policy, please call
Ellen Kandsll at 703-603-8996, mail code 2273-G or by FAX at 703-
603-9117 or 603-9119.
Attachment
cc: Elliot Laws, OSWER
Lisa Friedman, 0GC '
Bruce Gelbe-r, DOJ .
Linda Boornazian, PPED
Sandra Connors, R5D
Steve Luftig, OERR
Larry Reed, HSED
Earl salo, OGC
crane Harris, qswbr
<¦ PR0^°
Region.-,, Center for Hn.ironn.en.a, ln,ornatim
US EPA Region In
1650 Arch St.
Philadelphia. Pa JPjo?
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IV
jdy.
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. Further, EPA may consider de
minimis settlements under Section 122(g)(1)(B) of CERCLA where
necessary to protect such landowners from contribution suits.
This Policy is subject to the following conditions:
A)	The landowner did not cause, contribute to, orx
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.
1 By this Policy, EPA does not intend to compromise or
affect any right it possesses to seek access pursuant tq Section
104(e) of CERCLA.

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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 existencet
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 should be consulted
in connection with this circumstance.
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, 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..
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
2	See Guidance on Landowner Liability Under Section
107(a)fl) 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 Fed. Reg. 34,235 (August 18, 1989) (hereinafter
"Guidance on Landowner Liability and Section 122(g)(1)(B) De
Minimis Settlements").
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 122faWlHB) 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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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.
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 larg6 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 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.
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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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.
Moreover, in other EPA policies, EPA has asserted its enforcement
discretion in determining which parties not to pursue.
C.	Basis for the Policy
1. The Section 107(b)(3) Defense
Section 107(a) (1) of CERCLA impose.s 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 togthe
release in any manner to establish a prima facie case.
However, Section 107(b)(3) provides an affirmative defense to
liability where the release or threat of release was caused
See Guidance on Landowner Liability and Section
122(gWlWBV 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 Fed. Reg. 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 #9834.13, (December 6, 1989).
8	•
EPA has taken the position that lessees may be "owners"
for purposes of liability. See Guidance on Landowner Liability
and Section 122'fqHlWB) De Minimis Settlements, supra note 2,
footnote 10.
9	See, e.g.. U.S. v. R.W. Mever. Inc.. 889 F.2d 1497,
1507 (6th Cir. 1989)("CERCLA contemplates strict liability for
landowners").
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solely by "an act or omission of a third party other man 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. § 9607(b)(3) .
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
mav affect the migration of contamination in the affected
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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 subjecti(of the release . . . was
disposed of on, in, or at the facility." 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 Sejtin 122(g) fl)(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."
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)(l)(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.
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.
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)fl)(B) De Minimis Settlements, supra
note 2.
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