2220

Contaminated Real Property Policy Background

Congress enacted the Superfund Amendment and Reauthorization Act of 1986 (SARA) (Public L. No. 99-499, 100 Stat. 1966) to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. §  9601 et seq. Section 120(a) of the Act, 42 U.S.C. § 9620(a), imposes the liability provisions of Section 107, 42 U.S.C. § 9607, upon the United States. Section 129(h), 42 U.S.C. § 9620(h), of the Act sets forth notice and warranting requirements that apply whenever any agency, department, or instrumentality of the United States enters into a contract for the sale or other transfer of real property that is owned by the United States and on which any hazardous substance either (1) has been stored for more than 1 year; (2) is known to have been released; or (3) is known to have been disposed of. (Hazardous substance means that group of substances defined as hazardous under CERCLA (42 U.S.C. § 9601(14) and 40 C.F.R. § 300.6, and that appear at 40 C.F.R. 302.4. See also 40 C.F.R. 261, 40 C.F.R. 373.4(a). The requirements for reporting hazardous substances in connection with the sale or transfer of federal property are in 40 C.F.R. Part 373, which is reprinted on the Asset Forfeiture Bulletin Board.) (Storage means the holding of hazardous substances for a temporary period, at the end of which the hazardous substance is either used, neutralized, disposed of, or stored elsewhere. 40 C.F.R. 373.4(b)). (The term "release" is broadly defined to include, inter alia, any spilling, leaking, pouring, emitting, escape, leaching, or dumping of hazardous substances into the environment. See 42 U.S.C. § 9601(22). The term encompasses both the intentional and unintentional (e.g., accidental) release of hazardous substances.) (The term "disposal" is broadly defined to include, inter alia, any "spilling, leaking, or placing" of any hazardous waste into or on any land or water. See 42 U.S.C. § 9601(29) (incorporating the definition of "disposal" under 42 U.S.C. § 6903(3)). The Land and Natural Resources Division, now the Environment and Natural Resources Division, issued a memorandum dated May 16, 1990, providing guidance to federal agencies involved in forfeitures regarding notice and liability under the statute. This memorandum is reprinted in this Manual at 2281. It is the policy of the Department of Justice that real property that is contaminated or potentially contaminated with hazardous substances may in the exercise of discretion be seized and forfeited upon a determination by the United States Attorney, in the district where the property is located, in consultation with the seizing agency and the Marshals Service, that such action is appropriate. If the United States Attorney chooses to delegate this authority to an Assistant United States Attorney (AUSA), provision should be made for review by a supervisor. This policy is applicable regardless of the type or source of the hazardous substance(s). This policy is applicable to all cases referred to the Department by any agency of the United States. This policy is based on the ability of the United States to invoke an "innocent owner" defense from liability for hazardous substance contamination found on real property, if such contamination resulted from a prior owner's activities, when the real property is acquired through involuntary means (this includes seizures and forfeitures, which are involuntary to the owner) if that federal agency (1) exercises due care once it takes possession of the property, (2) secures the property from other third party actions, and (3) provides notice of those hazardous substance conditions about which the United States knows when it transfers or sells the property. 42 U.S.C. §§ 9601(35) and 9607(b)(3). (Specifically, ...whenever any department, agency, or instrumentality of the United States enters into any contract for the sale or other transfer of real property which is owned by the United States and at which, during the time the property was owned by the United States, any hazardous substance was stored for 1 year or more, known to have been released, or disposed of, the head of such department, agency, or instrumentality must include in such contract notice of the type and quantity of such hazardous substance and notice of the time at which such storage, release, or disposal took place, to the extent such information is available on the basis of a complete search of agency files. 40 C.F.R. 373.1.) To ensure that the United States can avail itself of the "innocent owner" defense in cases involving this class of real property, once the property is seized, federal law enforcement agencies will exercise due care in relation to the property and take precautions against foreseeable acts or omissions of possible third parties. Furthermore, such real property that is forfeited will only be transferred or sold with notice of the potential or actual contamination. (The notice required...for the storage for 1 year or more of hazardous substances applies only when hazardous substances are or have been stored in quantities greater than or equal to 1000 kilograms or the hazardous substance's CERCLA reportable quantity found at 40 C.F.R. 302.4, whichever is greater. Hazardous substances that are also listed under 40 C.F.R. 261.30 as acutely hazardous wastes, and that are stored for 1 year or more, are subject to the notice requirement when stored in quantities greater than or equal to 1 kilogram. 40 C.F.R. 373.2. The notice required for the known release of hazardous substances applies only when hazardous substances are or have been released in quantities greater than or equal to the substance's CERCLA reportable quantity found at 40 C.F.R. 302.4.) Notice must be based on information that is available on the basis of a complete search of agency files. 42 U.S.C. § 9620(h)(3); 40 C.F.R. 373.1. (It is envisioned that this search will involve the seizing agency's casefile(s) relating to the real property. Additionally, the search must include any documentation generated from an environmental assessment or the removal of hazardous substances from the real property.) This notice will be included in the contract of sale and the deed. (A proposed notice is in this Manual at 2282. In light of the "innocent owner" defense, real property that is contaminated or potentially contaminated with hazardous substances due to the activities of a prior owner, should be transferred or sold "as is" and an environmental assessment and/or remediation of the contamination need not be undertaken. (In cases involving illegal drug laboratories, the laboratories should be dismantled and all chemicals and equipment should be seized and removed in accordance with the DEA Agents Manual, Section 6674.0 et seq.) Whenever possible, a commitment from the buyer to clean up the property should be obtained as a part of the contract of sale. However, if the real property becomes contaminated with a hazardous substance after the United States becomes the owner, then the "innocent owner" defense is inapplicable to that contamination. (For purposes of liability under CERCLA (42 U.S.C. § 9607), the United States is considered an owner of real property after a final judgment of forfeiture is entered. Ownership is not construed as including the interest that vests in the United States pursuant to the "Relation Back" doctrine. See, e.g., 21 U.S.C. § 881(h)). This situation normally will arise when the United States operates a business or activity on the property that results in the storage, release, or disposal of hazardous substances (e.g., gasoline stations, metal plating shops, dry cleaners, printers, etc.) In this circumstance, the United States is responsible for (1) all costs of hazardous substance removal and/or remedial action; (2) providing notice of the hazardous substance to a subsequent transferee or purchaser; (3) a warranting covenant to a subsequent transferee or purchaser. (The covenant must warrant that: all remedial action necessary to protect human health and the environment with respect to any such substance remaining on the property has been taken before the date of such transfer; and, any additional remedial action found to be necessary after the date of such transfer shall be conducted by the United States. 42 U.S.C. § 9620(h)(3)(B).) Because of the potential resulting liability and expense, the USA should approve the operation of such a business or activity only in unusual circumstances. (Normally, the costs of removal and/or remedial action must be borne from funds available to the agency conducting operations on the property. EPA's funds, to include the Superfund, are generally not available for remedial actions on federally owned property. See 42 U.S.C. § 9611(e)(3). Short term or emergency responses, known as removal actions, may be undertaken by the Superfund at federally owned properties at the discretion of the EPA.) If at any point the United States Attorney elects, in the exercise of his or her discretion, not to proceed because significant contamination renders the property unmarketable, the United States Attorney should consider the following alternatives: the filing of a release of lis pendens (assuming a lis pendens had been filed) containing notice of the reason (significant contamination) for dismissal of the forfeiture suit; the filing of some other document in the county deed records containing notice of the significant contamination, (if such filing is permitted under the law); notification of a federal, state, or local environmental agency of the significant contamination for purposes of appropriate enforcement action; notification of any lienholders of the significant contamination for such action as they may want to take; and consideration of prosecution, civilly or criminally, for violations of the environmental laws by the private owners, the United States Attorney's Office should contact the Environmental Division (Environmental Crimes or Environmental Enforcement Sections.) None of these alternatives are mandatory. Ultimately, it is within the discretion of the United States Attorney to decide how best to proceed when an election not to proceed with forfeiture is made. [cited in USAM 9-111.400]