Opinion ID: 767758
Heading Depth: 2
Heading Rank: 1

Heading: The Structure of the CERCLA Defenses

Text: 13 The basic liability structure under CERCLA is set forth at 42 U.S.C. § 9607(a): 14 Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section-- 15 (1) the owner and operator of a . . . facility, [and] 16 (2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of, 17 . . . shall be liable for 18 (A) all costs of removal or remedial action incurred by the United States Government or a State or an Indian tribe not inconsistent with the national contingency plan; 19 . . . . Ibid. The CERCLA defenses are: 20 (b) Defenses 21 There shall be no liability under subsection (a) of this section for a person otherwise liable who can establish by apreponderance of the evidence that the release or threat of release of a hazardous substance and the damages resulting therefrom were caused solely by-- 22 . . . . 23 (3) an act or omission of a third party other than 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 . . . , if the defendant establishes 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. 24 42 U.S.C. § 9607(b). The CERCLA definitions state: 25 (35)(A) The term contractual relationship, for the purpose of section 9607(b)(3) of this title, includes, but is not limited to, land contracts, deeds or other instruments transferring title or possession, unless the real property on which the facility concerned is located was acquired by the defendant after the disposal or placement of the hazardous substance on, in, or at the facility, and one or more of the circumstances described in clause (i), (ii), or (iii) is also established by the defendant by a preponderance of the evidence: 26 (i) At the time the defendant acquired the facility the defendant did not know and had no reason to know that any hazardous substance which is the subject of the release or threatened release was disposed of on, in, or at the facility. 27 . . . . 28 (iii) The defendant acquired the facility by inheritance or bequest. 29 In addition to establishing the foregoing, the defendant must establish that he has satisfied the requirements of section 9607(b)(3)(a) and (b) of this title. 30 (B) To establish that the defendant had no reason to know, as provided in clause (i) of subparagraph (A) of this paragraph, the defendant must have undertaken, at the time of acquisition, all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice in an effort to minimize liability. For purposes of the preceding sentence the court shall take into account any specialized knowledge or experience on the part of the defendant, the relationship of the purchase price to the value of the property if uncontaminated, commonly known or reasonably ascertainable information about the property, the obviousness of the presence or likely presence of contamination at the property, and the ability to detect such contamination by appropriate inspection. 31 . . . . 32 (D) Nothing in this paragraph shall affect the liability under this chapter of a defendant who, by any act or omission, caused or contributed to the release or threatened release of a hazardous substance which is the subject of the action relating to the facility. 33 42 U.S.C. § 9601. 34 Based on these provisions, the framework for considering the Bohatys' liability is this: The present owners of a facility are liable for the costs incurred in removing toxic substances from the facility, unless 35 (1) they can establish by a preponderance of the evidence that the release of the substances and the damages resulting from the release were caused solely by an act or omission of a third party who was neither 36 (a) the present owners' employee nor 37 (b) someone who was in a contractual relationship with the owners; 38 and (2) the owners 39 (a) exercised due care with respect to the substances, in light of all relevant facts and circumstances, and 40 (b) took precautions against the foreseeable actions and omissions of third parties. 41 The statutory definitions state, non-exclusively, that the following contractual relationships satisfy (1)(b) above and thus create liability for owners: land contracts, deeds, or other instruments transferring title or possession, unless 42 (i) the present owners acquired their interest in the real property on which the facility is located after the disposal or placement of the substances, and 43 (ii) the present owners 44 (A) did not know, and had no reason to know, after all appropriate inquiry, of the substances, or 45 (B) acquired their interests by inheritance or bequest. 46 Thus, present owners who acquired their interests by inheritance or bequest can avoid liability without having undertaken all appropriate inquiry with respect to the disposal or placement by third parties of hazardous substances on the land before they acquired it. However, they must have exercised due care with respect to the substances, in light of all relevant facts and circumstances, and taken precautions against the foreseeable actions and omissions of third parties, while they have owned the land. Present owners who acquired their interests by land contracts, deeds, or other instruments transferring title or possession, and not by inheritance or bequest, must also have undertaken all appropriate inquiry when they acquired the property to avoid liability. 47 The 12/45 interest that Ethel Bohaty bought from the three other relatives was transferred by quit-claim deed, and was not an inheritance or bequest. On first consideration, it appears that for this interest to avoid liability, Ethel must show that she undertook all appropriate inquiry when she bought it. But see infra at 14-15. The remaining 33/45 interest can avoid liability if the Bohatys establish by a preponderance of the evidence that (1) the disposal or placement occurred before 1982, (2) the release of the substances and the damages resulting from the release were caused solely by an act or omission of a third party (i.e., that they did not cause or contribute to the release, and (3) they exercised due care with respect to the substances, in light of all relevant facts and circumstances, and took precautions against the foreseeable actions and omissions of third parties since they have owned the land. 48 The Bohatys concede that they are the owners of the property, and thus that they are potentially responsible parties under § 9607(a)(1); they dispute that they are potentially responsible parties under § 9607(a)(2), as the government argues, because they contend that no disposal of hazardous substance has occurred while they owned the property. The Bohatys also concede that a release of hazardous substances has occurred on the property, that at least one of the three parcels is a facility, and that the government incurred removal costs. They dispute the amount of the removal costs claimed by the government. 49 The issues on appeal are (1) whether the district court erred when it decided that the Bohatys do not qualify for the innocent landowner defense of §§ 9607(b)(3) and 9601(35) set out above; (2) whether the district court erred when it decided that the two unaffected parcels are part of the facility; (3) whether the district court erred when it found that the costs of disposing of the empty barrels and the underground tank were properly part of the removal costs; and (4) whether the Bohatys were deprived of due process by the actions of the EPA and the district court.