Put most simply, the innocent landowner defense allows owners of contaminated property toescape CERCLA liability if the contamination was placed on the property before acquisition, andthe landowner did not know, or have reason to know, at the time of acquisition of thecontamination's presence. As discussed below, the landowner also has several continuingobligations after the land is bought and contamination is discovered if he or she is to hold on toinnocent landowner status. The defense evolved over three enactments. It began with the original Superfund Act in 1980. (5) There, Congress created the Act's basic liability scheme, unchanged to this day. As mentioned, thatscheme subjects the present owner of the facility to strict, joint, and several liability for cleanup andother costs. One of the few defenses to this stringent liability scheme is the "third-party defense,"available when the defendant can show by a preponderance of the evidence that the release or threatof release was caused solely by "an act or omission of a third party other ... than one whose act oromission occurs in connection with a contractual relationship , existing directly or indirectly, withthe defendant ...." (6) The third-party defense requiresfurther that the defendant establish that (a)he/she exercised due care as to the hazardous substance concerned, and (b) took precautions againstforeseeable acts or omissions of the third party. (7) To the Congress of 1980, the "contractual relationship" exception to the third-party defense must have made perfect sense. Why should a site owner escape CERCLA liability under the defensewhen the third party who caused the contamination was an entity with whom the owner hadcontractual dealings? The potential for manipulation seemed obvious. Others pointed out, however,that the contractual-relationship exception might have an untoward result. If the instruments ofconveyance between a seller and buyer of land were viewed as placing them in a "contractualrelationship," a buyer whose property had been contaminated solely by a predecessor in the chainof title was in a bind. Despite innocence, the buyer could not invoke the third-party defense. Heor she remained liable under CERCLA as an owner of the property. In 1986 amendments to CERCLA, (8) Congress resolved the instruments of conveyanceconundrum. "Contractual relationship," the Act now says, does indeed include such instruments,but with a big exception (in effect, an exception to an exception). The exception is for the landownerwho acquired the property after the hazardous substance was disposed of or placed there, and -- at the time [the landowner] acquired the facility ... [he/she] did not know and had no reason to know that any hazardous substance which is the subjectof the release or threatened release was disposed of on, in, or at thefacility. (9) The 1986 amendments went on to explain: to establish that a defendant "had no reason to know," he/she "must have undertaken, at the time of acquisition, all appropriate inquiry into the previousownership and uses of the property ...." (10) The1986 amendments thus answered one question: whendoes "contractual relationship" include land contracts? But they created another: What does "allappropriate inquiry" involve? Congress did include a brief definition of "all appropriate inquiry"in the 1986 amendments, but just a few years later efforts began in Congress to provide moredetailed guidance. These clarifying efforts culminated in 2002 in the SBA. The SBA instructs EPA to establish by regulation "standards and practices" that satisfy the "all appropriate inquiry" requirement. Theregulations, required by January 11, 2004, must include -- inquiry by an environmental professional interviews with past and present owners, operators, and occupants of thefacility reviews of historical sources, such as chain of title documents and aerialphotographs, and land use records searches for recorded environmental cleanup liens review of government records, waste disposal records, and hazardous wasterecords visual inspection of the facility specialized knowledge or experience on the part of the landacquirer the relationship of the purchase price to the value of the property ifuncontaminated reasonably ascertainable information about the property,and the obviousness of the property contamination, and the ability to detect thecontamination by appropriate investigation. (11) Plainly, these regulations, when issued, will be a quantum leap beyond the existing CERCLA in the degree of guidance available to land purchasers. (12) Not all property owners will be subject to the new "all appropriate inquiry" regulations. The SBA grandfathers property purchased before May 31, 1997; it need only comply with CERCLA'sstandards for "all appropriate inquiry" prior to the SBA. These less specific standards are -- specialized knowledge or experience on the part of the land acquirer the relationship of the purchase price to the value of the property ifuncontaminated reasonably ascertainable information about the property the obviousness of the property contamination, and the ability to detect the contamination by appropriateinspection. (13) Property purchased on or after May 31, 1997, but before the new regulations are promulgated, must satisfy American Society for Testing and Materials procedures -- including its document entitled"Standard Practice for Environmental Site Assessment: Phase 1 Environmental Site AssessmentProcess." Finally, nongovernmental or noncommercial entities that buy property for residential orsimilar use need only do a "facility inspection and title search," if they reveal no basis for furtherinvestigation. The SBA adds further prerequisites for invoking the innocent-landowner defense, relating to the defendant's conduct after land purchase. He/she must cooperate with those conductingthe response action, comply with any land use restrictions linked to the response action, andnot impede institutional controls. Further, he/she must take "reasonable steps" to stop anycontinuing release, prevent any threatened future release, and prevent or limit human,environmental, or natural resource exposure to any previously released hazardous substance. (14) In sum , the innocent-landowner defense to CERCLA liability is available on two multi-part conditions. Both must be satisfied. First , the release must have been caused solelyby a third party lacking a contractual relationship, direct or indirect, with the defendant. Alandowner lacks a contractual relationship with predecessors in the chain of title if the disposalof the hazardous substances on the site preceded acquisition and at time of land acquisitionhe/she did not know and had "no reason to know" that the hazardous substance had beendisposed of there. "No reason to know," in turn, means that before the date of acquisition,he/she made "all appropriate inquiry" (as defined above). Second , the landowner must haveexercised due care and taken precautions against foreseeable acts of the third party, cooperatedwith the response action, complied with pertinent land use restrictions, and not impededinstitutional controls. Further, he/she must take "reasonable steps" to stop any continuingrelease, prevent any threatened future release, etc. At large contaminated sites, the number of parties swept into the CERCLA liability netcan be daunting -- occasionally in the hundreds. To address this, CERCLA requires EPA,when appropriate, to enter into "de minimis settlements" with certain liable parties whoseblameworthiness was deemed by Congress to be minor. (15) A de minimis settlement enables aparty identified by EPA as potentially liable to settle early with EPA and thereby avoidprotracted, expensive negotiations with the agency and a myriad of other liable parties over theallocation of liability at the site. At the same time, it allows the government to focus itsresources on negotiations or litigation with the major parties. One type of liable party eligible for de minimis settlement is the innocent landowner. When "practicable and in the public interest," the agency is directed by CERCLA to settlepromptly with a landowner if the settlement involves only a "minor portion" of the responsecosts and the landowner "in the judgment of [EPA]" -- owns the land where the facility is located did not conduct or permit the generation, transportation, storage,treatment, or disposal of any hazardous substance at the facility did not contribute to the release or the threat of release of a hazardoussubstance through action or omission, and did not buy the real property with actual or constructive knowledge thatthe property was used for the generation, transportation, storage, treatment, or disposal of anyhazardous substance. (16) Note the several terms (e.g., "in the judgment of EPA") that give EPA wide discretion as to whether to offer de minimis settlements. Note also the absence of "all appropriate inquiry"and certain other prerequisites for innocent-landowner status as a third-party defense. Notwithstanding, EPA guidance demands all appropriate inquiry for de minimis settlementeligibility as well. (17) The guidance documentmakes a two-step argument. First, it asserts thatCERCLA's de minimis settlement prerequisite that the landowner lack "constructiveknowledge" is similar to the "had no reason to know" language in CERCLA'sinnocent-landowner-as-defense provision. Second, since "had no reason to know" requires allappropriate inquiry, the lack-of-constructive-knowledge prerequisite for settlement must beread to do the same. (18) Indeed, as a general matter,EPA's willingness to enter into de minimissettlements with landowners is based on the likelihood the landowner can successfully assertinnocent landowner status as part of a third-party defense.