SB1259.DOC

SECTION 1. Chapter 128D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§128D- Contiguous properties. (a) A person that owns real property that is contiguous to or otherwise similarly situated with respect to, and that is or may be contaminated by a release or threatened release of a hazardous substance from, real property that is not owned by that person shall not be considered liable under section 128D-6 solely by reason of the contamination if:

(1) The person did not cause, contribute, or consent to the release or threatened release;

(2) The person is not:

(A) Potentially liable, or affiliated with any other person that is potentially liable, for response costs at a facility through any direct or indirect familial relationship or any contractual, corporate, or financial relationship other than a contractual, corporate, or financial relationship that is created by a contract for the sale of goods or services; or

(B) The result of a reorganization of a business entity that was potentially liable;

(3) The person takes reasonable steps to:

(A) Stop any continuing release;

(B) Prevent any threatened future release; and

(C) Prevent or limit human, environmental, or natural resource exposure to any hazardous substance released on or from property owned by that person;

(4) The person provides full cooperation, assistance, and access to persons that are authorized to conduct response actions or natural resource restoration at the facility from which there has been a release or threatened release, including the cooperation and access necessary for the installation, integrity, operation, and maintenance of any complete or partial response action or natural resource restoration at the facility;

(5) The person:

(A) Is in compliance with any land use restrictions established or relied on in connection with the response action at the facility; and

(B) Does not impede the effectiveness or integrity of any institutional control employed in connection with a response action;

(6) The person is in compliance with any request for information or administrative subpoena issued by the director under this chapter;

(7) The person provides all legally required notices with respect to the discovery or release of any hazardous substances at the facility; and

(8) At the time the person acquired the property, the person:

(A) Conducted all appropriate inquiry within the meaning of section 128D-6(e)(2) with respect to the property; and

(B) Did not know or have reason to know that the property was or could be contaminated by a release or threatened release of one or more hazardous substances from other real property not owned or operated by the person.

To qualify for non-liability under in this subsection, a person must establish by a preponderance of the evidence that the conditions herein have been met.

(b) Any person that does not qualify for non-liability under subsection (a) because the person had, or had reason to have, knowledge specified in subsection (a)(8) at the time of acquisition of the real property, may qualify as a bona fide prospective purchaser under section 128D-6 if the person is otherwise described in that section.

(c) With respect to a hazardous substance from one or more sources that are not on the property of a person that is a contiguous property owner that enters ground water beneath the property of the person solely as a result of subsurface migration in an aquifer, subsection (a)(3) shall not require the person to conduct ground water investigations or to install ground water remediation systems, except when required by federal law.

(d) Nothing in this section shall:

(1) Limit any defense to liability that may be available to the person under any other provision of law; or

(2) Impose liability on the person that is not otherwise imposed by section 128D-6.

(e) The director may:

(1) Issue an assurance that no enforcement action under this chapter will be initiated against a person described in subsection (a); and

(2) Grant a person described in subsection (a) protection against a cost recovery action under section 128D-5."

SECTION 2. Section 128D-6, Hawaii Revised Statutes, is amended to read as follows:

"§128D-6 Liability. (a) Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (c):

(1) The owner or operator or both of a facility or vessel;

(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;

(3) Any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or on any vessel owned or operated by another party or entity and containing such hazardous substances; and

(4) Any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities or sites selected by such person, from which there is a release, or a threatened release, which causes the incurrence of response costs of a hazardous substance;

shall be strictly liable for (A) all costs of removal or remedial actions incurred by the State or any other person[;] to the extent such costs and actions are consistent with this chapter, the state contingency plan, and any other state rules; (B) damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss resulting from such release; and (C) the costs of any health assessment or health effects study carried out consistent with this chapter, the state contingency plan, or any other state rules.

(b) The amounts recoverable in an action under this section shall include interest on the amounts recoverable under [~~subparagraphs (A) through (C). Such~~] subsection (a). The interest shall accrue from the later of:

(1) [~~the~~] The date payment of a specified amount is demanded in writing[,]; or

(2) [~~the~~] The date of the expenditure concerned.

The rate of interest on the outstanding unpaid balance of the amounts recoverable under this section shall be the same rate as is specified for interest on investments of the [~~State's~~] environmental response revolving fund.

(c) There shall be no liability under subsection (a) for a defendant 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:

(1) Any unanticipated grave natural disaster or other natural phenomenon of an exceptional, inevitable, and irresistible character, the effect of which could not have been prevented or avoided by the exercise of due care or foresight;

(2) An act of war;

(3) An act or omission of a third party other than an employee or agent of the defendant[~~, or than one~~] or a person whose act or omission occurs in connection with a contractual relationship, existing directly or indirectly, with the defendant[~~, if the~~]. The defendant [~~establishes~~] shall establish by a preponderance of the evidence that the defendant exercised due care with respect to the hazardous substance concerned, taking into consideration the characteristics of [~~such~~] that hazardous substance, in light of all relevant facts and circumstances; and that the defendant took precautions against foreseeable acts or omissions of any such third party and the consequences that could foreseeably result from such acts or omissions; or

(4) Any combination of the foregoing paragraphs.

To qualify for non-liability under paragraph (3), the defendant shall establish that the defendant has provided full cooperation, assistance, and facility access to the persons that are authorized to conduct response actions at the facility (including the cooperation and access necessary for the installation, integrity, operation, and maintenance of any complete or partial response action at the facility), is in compliance with any land use restrictions established or relied on in connection with the response action at a facility, and does not impede the effectiveness or integrity of any institutional control employed at the facility in connection with the response action.

(d) A defendant may also avoid liability under subsection (a) where the defendant is able to establish that 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. In addition to establishing the foregoing, the defendant must establish that the defendant has satisfied the requirements of [~~section 128D-6(c)(3)~~] subsection (c)(3) and one or more of the following circumstances described in paragraphs (1), (2), or (3) is also established by the defendant by a preponderance of the evidence:

(1) At the time the defendant acquired the facility the defendant did not know and had no reason to know that any hazardous substance [~~which~~] that is the subject of the release or threatened release was disposed on, in, or at the facility;

(2) The defendant is a government entity [~~which~~] that acquired the facility by escheat, [~~or through any~~] other involuntary transfer or acquisition, or through the exercise of eminent domain authority by purchase or condemnation; or

(3) The defendant acquired the facility by inheritance or bequest.

To establish that the defendant had no reason to know, as provided in paragraph (1), the defendant must have undertaken[~~, at the time of acquisition,~~], on or before the date of acquisition of the property, 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.

The defendant must also establish that the defendant took reasonable steps to stop any continuing release, prevent any threatened future release, and prevent or limit any human, environmental, or natural resource exposure to any previously released hazardous substance.

Nothing in this subsection or in [~~section 128D-6(c)(3)~~] subsection (c)(3) shall diminish the liability of any previous owner or operator of [~~such~~] a facility who would otherwise be liable under this chapter. [~~Notwithstanding this definition, if the~~] If a defendant obtained actual knowledge of the release or threatened release of a hazardous substance at [~~such~~] a facility when the defendant owned the real property, and then subsequently transferred ownership of the property to another person without disclosing such knowledge, the defendant shall be treated as liable under [~~section 128D-6(a)(1)~~] subsection (a)(1) and no defense under [~~section 128D-6(c)(3)~~] subsection (c)(3) shall be available to the defendant.

Nothing in this subsection 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~~] that is the subject of the action relating to the facility.

(e) A defendant who is determined to be a bona fide prospective purchaser may also avoid liability under subsection (a) if the person (or a tenant of a person) acquires ownership of a facility and establishes each of the following by a preponderance of the evidence:

(1) All disposal of hazardous substances at the facility occurred before the person acquired the facility;

(2) The person made all appropriate inquiries into the previous ownership and uses of the facility in accordance with generally accepted good commercial and customary standards and practices in an effort to minimize liability; provided that in the case of property in residential or other similar use at the time of purchase by a nongovernmental or noncommercial entity, a facility inspection and title search that reveal no basis for further investigation shall be considered to satisfy the requirements of this subparagraph. 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;

(3) The person provides all legally required notices with respect to the discovery or release of any hazardous substances at the facility;

(4) The person exercises appropriate care with respect to hazardous substances found at the facility by taking reasonable steps to:

(A) Stop any continuing release;

(B) Prevent any threatened future release; and

(5) The person provides full cooperation, assistance, and access to persons that are authorized to conduct response actions or natural resource restoration at a facility, including the cooperation and access necessary for the installation, integrity, operation, and maintenance of any complete or partial response actions or natural resource restoration at the facility;

(6) The person:

(A) Is in compliance with any land use restrictions established or relied on in connection with the response action at a facility; and

(B) Does not impede the effectiveness or integrity of any institutional control employed at the facility in connection with a response action;

(7) The person complies with any request for information or administrative subpoena issued by the director under this chapter; and

(8) The person is not:

(A) Potentially liable, or affiliated with any other person that is potentially liable, for response costs at a facility through:

(i) Any direct or indirect familial relationship; or

(ii) Any contractual, corporate, or financial relationship, other than a contractual, corporate, or financial relationship that is created by the instruments by which title to the facility is conveyed or financed or by a contract for the sale of goods or services; or

(B) The result of a reorganization of a business entity that was potentially liable.

[~~(e)~~] (f) No person shall be liable under this chapter or otherwise under the laws of the State or any of the counties, including the common law, to any government or private parties for costs, damages, or penalties as a result of actions taken or omitted in the course of rendering care, assistance, or advice in compliance with this chapter, the National Contingency Plan, or at the direction of a federal or state on-scene coordinator, with respect to an incident creating a danger to public health or welfare or the environment as a result of any release of a hazardous substance or pollutant or contaminant or the threat thereof. This subsection shall not preclude liability for costs, damages, or penalties as the result of gross negligence or intentional misconduct on the part of such person.

[~~(f)~~] (g) No county or local government shall be liable under this chapter for costs or damages as a result of actions taken in response to an emergency created by the release or threatened release of a hazardous substance or pollutant or contaminant generated by or from a facility owned by another person. This subsection shall not preclude liability for costs or damages as a result of gross negligence or intentional misconduct by the county or local government.

[~~(g)~~] (h) No indemnification, hold harmless, or similar agreement or conveyances shall be effective to transfer from the owner or operator of any vessel or facility or from any person who may be liable for a release or threat of release under this section, to any other person, the liability imposed under this section. Nothing in this subsection shall bar any agreement to insure, hold harmless, or indemnify a party to such agreement for any liability under this section. Nothing in this chapter shall bar a cause of action that an owner or operator or any person subject to liability under this section, or a guarantor, has or would have, by reason of subrogation or otherwise against any person.

[~~(h)~~] (i) In the case of an injury to, destruction of, or loss of natural resources under [~~section 128D-6(a)(4)(B), liability~~] subsection (a)(4)(B), damages shall be solely awarded to the State for natural resources within the State or belonging to, managed by, controlled by, or appertaining to the State. The [~~natural resource trustee for the~~] State shall act on behalf of the public as trustee of such natural resources to recover for such damages. Sums recovered by the [~~natural resource trustee~~] under [~~section 128D-6(a)(4)(B)~~] subsection (a)(4)(B), shall not be limited by the sums which can be used to restore or replace such resources. Any damages recovered by the state attorney general for damages to natural resources shall be deposited in the fund and credited to a special account for the purposes provided above.

[~~(i)~~] (j) [~~Provided that no~~] No liability shall be imposed under this chapter[,] where the party sought to be charged has demonstrated that the damages to natural resources complained of were specifically identified as an irreversible and irretrievable commitment of natural resources in an environmental impact statement, or other comparable environment analysis, and the decision to grant a permit or license authorizes such commitment of natural resources, and the facility or project was otherwise operating within the terms of its permit or license. There shall be no double recovery under this chapter for natural resource damages, including the costs of damage assessment or restoration, rehabilitation, or acquisition for the same release and natural resources. Notwithstanding any other provision of this chapter, there shall be no recovery under this chapter for natural resource damages where such damages have occurred wholly before July 1, 1990.

[~~(j)~~] (k) No person other than a government entity may recover costs or damages under this chapter arising from a release which occurred before July 1, 1990."

SECTION 3. Section 128D-31, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) This part shall apply to any person who chooses to conduct a voluntary response action. However, the exemption from liability in section 128D-40 shall only apply to prospective purchasers[.] and persons who own a contiguous property that are exempt from liability pursuant to section 128D- ."

SECTION 4. Section 128D-32, Hawaii Revised Statutes, is amended by amending the definition of "prospective purchaser" to read as follows:

""Prospective purchaser" means a prospective owner, operator, tenant, developer, lender, or any other party, including a person who would qualify as a bona fide prospective purchaser, who would not otherwise be liable under section 128D-6, prior to a voluntary response action being conducted."

SECTION 5. Section 128D-40, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) To qualify for an exemption from liability, a requesting party that is also a prospective purchaser or an owner of a contiguous property exempt from liability under section 128D- shall enter into a voluntary response agreement with the department prior to becoming the owner or operator of the property, or a property contiguous to the property, that is the subject of the agreement.

(b) Prospective purchasers or an owner of a contiguous property exempt from liability under section 128D- who complete a voluntary response action and receive a letter of completion from the department are exempt from future liability to the department for those specific hazardous substances, pollutants, contaminants, media, and land area addressed in the voluntary response action and specified in a letter of completion from the department. Prospective purchasers of property or properties contiguous to a property for which an owner has completed a voluntary response action and received a letter of completion from the department are exempt from future liability to the department for those specific hazardous substances, pollutants, contaminants, media, and land area addressed in the voluntary response action and specified in the letter of completion issued to the party who conducted the voluntary response action."

SECTION 6. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1259
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII