Section Six
LAWS, REGULATIONS, AND LIABILITY
89    ENVIRONMENTAL SITE ASSESSMENTS:
BUILDING AN INNOCENT LANDOWNER DEFENSE
S. Andrew Bowman, Partner
McHale, Cook & Welch
Indianapolis, Indiana 46204
INTRODUCTION
Since the passage by Congress of the Superfund Amendments and Reauthorization Act of 19861
(SARA), which amended the Comprehensive Environmental Response, Compensation and Liability
Act of 19802 (CERCLA), the environmental site assessment (ESA) has become an essential component of commercial real estate transactions. One only has to look at the most recent clean-up cost
estimates published by the United States Environmental Protection Agency (U.S. EPA) to realize that
an unwary purchaser can be subjected to staggering environmental liability. According to the U.S.
EPA,3 the average cleanup costs are as shown in Table I.
When faced with such potential liability, spending a few thousand dollars to obtain a thorough ESA
would appear to be money well spent. Once it is recognized that an ESA can be a useful risk
management tool, the prospective purchaser must address the more difficult question of how to
obtain an adequate ESA which will maximize his ability to obtain the protection of the so-called
"innocent landowner defense" provided by Sections 107(b)(3) and 101(35) of CERCLA. This article
will discuss the landowner liability provisions of Section 107(a)(1) of CERCLA, the third party
defense provided by Section 107(b)(3) and the de minimis landowner settlement provision contained in
Section 122(g)(1)(B) of CERCLA. After a review of recent court decisions interpreting these statutory
provision, some suggestions for obtaining an appropriate ESA will be presented.
Liability Under CERCLA
Pursuant to Section 107(a)(1),4 the current owner of real property from which there is a release or a
threatened release, of a hazardous substance is strictly, jointly and severally liable for all costs of
removal or remedial action incurred by the government, any other necessary costs incurred by any
other person and damages for injuries to natural resources caused by such a release. The current
owner is liable even though he did not dispose of or place hazardous substances on the property.5
The Section 107(b)(3) Third Party Defense
The current landowner may avoid liability under CERCLA only in the event that he can satisfy the
stringent requirements of the third party defense provided by Section 107(b)(3).6 Section 107(b)(3)
provides, in relevant part:
"There shall be no liability under subsection (a) of this section for a person otherwise liable
who can establish by a preponderance of the evidence that the release or threat of release of
a hazardous substance and the damages resulting therefrom were caused solely by —... (3)
Table I.   Average Remediation Costs
Remedial Investigation/Feasibility Study $ 1,300,000
Remedial Design 1,500,000
Remedial Action 25,000,000
Operation and Maintenance 3,770,000
$31,570,000
46th Purdue Industrial Waste Conference Proceedings, 1992 Lewis Publishers, Inc., Chelsea, Michigan 48118.
Printed in U.S.A.
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