## Facts

- A & N Cleaners operated a dry-cleaning business on property in Putnam County, New York, generating condensate wastes associated with dry-cleaning solvents.
- The wastes were disposed of through a floor drain into a dry well beneath the property.
- In 1978, volatile halogenated organic compounds were found in the nearby Brewster Wellfield, a local drinking-water source, and the contamination was publicly reported with health advisories.
- NYDEC sent a March 1, 1979 letter to A & N disapproving its disposal methods; A & N stopped dumping one waste stream but continued discharging ironing-machine condensate into the drain and dry well.
- On March 2, 1979, Jordan W. Berkman and related owners (the “Berkman Defendants”) purchased the property and leased it to A & N, which continued operating.
- In December 1979, Berkman executed an access agreement permitting authorities to enter the property to determine the contamination source.
- Despite public reports and agency investigation, the Berkman Defendants did not meaningfully investigate A & N’s disposal practices or take steps to prevent further releases.
- The United States incurred and expected to incur response costs for the Brewster Wellfield Site and sought cost recovery under CERCLA § 107(a).
- The court held an evidentiary hearing focused on whether the Berkman Defendants could avoid liability through CERCLA § 107(b) affirmative defenses.

## Issues

1. Whether the Berkman Defendants, as owners/lessors, could avoid CERCLA § 107(a) cost-recovery liability by proving an affirmative defense under CERCLA § 107(b).
2. Whether the Berkman Defendants satisfied the third-party/“innocent landowner” requirements, including lack of knowledge or reason to know at purchase, and the exercise of due care and precautions against foreseeable third-party acts.

## Decision

- The court held the Berkman Defendants failed to prove any CERCLA § 107(b) affirmative defense and therefore could not avoid CERCLA liability.
- The court found they had reason to know of potential contamination at the time of purchase given publicized wellfield contamination and agency involvement.
- The court found they did not exercise due care or take precautions because they did not investigate, monitor, or control the tenant’s hazardous waste-disposal practices, even after receiving clear warning signs.
- As a result, the Berkman Defendants remained liable under CERCLA § 107(a) for the government’s response costs.

## Legal Principles

- CERCLA § 107(a) imposes strict liability for response costs on covered persons, including property owners where hazardous substances were disposed.
- CERCLA § 107(b) defenses are limited and narrowly applied; the defendant bears the burden to prove each element by a preponderance of the evidence.
- The § 107(b)(3) third-party defense requires proof that the release and resulting damages were caused solely by a third party other than one in a disqualifying relationship, and that the defendant exercised due care and took precautions against foreseeable third-party acts or omissions.
- “Innocent landowner” protection requires that an owner lack knowledge and lack reason to know of contamination at acquisition, assessed under an objective “reasonable purchaser” standard based on appropriate inquiry under the circumstances.
- Failure to investigate obvious environmental risks and failure to act once alerted to potential contamination defeats the due-care and precaution elements of § 107(b)(3).

## Conclusion

The court rejected the property owners’ attempt to avoid CERCLA cost-recovery liability because public information and regulatory activity gave them reason to know of contamination risks, and their failure to investigate or control their tenant’s waste-disposal practices showed a lack of due care and precautions required for the third-party/innocent landowner defenses.


United States v. A & N Cleaners & Launderers, Inc., 854 F. Supp. 229 (S.D.N.Y. 1994)