The Asset Conversation, Lender Liability, and Deposit Insurance Protection Act of 1996 amended the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to clarify under what circumstances secured creditors would and would not lose the protection of a statutory exemption from CERCLA § 107(a) owner or operator liability. This safe harbor exempts from liability a person who holds indicia of ownership in a facility provided that the indicia is held primarily to protect a security interest, and that the person does not participate in the management of the facility. Identifying the scope of the exemption became problematic over the last decade due to undefined legislative terms and conflicting judicial decisions interpreting, for example, the term "participating in management." This uncertainty fueled concerns within the lending community of unpredictable exposure to cleanup costs for contaminated properties. The 1996 CERCLA amendments reduce this uncertainty by defining key terms and providing types of actions that lenders can take which are consistent or inconsistent with the exemption. This Comment describes the history of the safe harbor exemption and focuses on the 1996 CERCLA amendments. This Comment concludes that the amendments provide important protection for secured creditors against potential cleanup costs, although statutory and non-statutory incentives remain for secured creditors to be wary of contaminated properties.
Recommended CitationRon Burke, Sailing in Safe Harbors: Recent Developments Regarding Lender Liability under CERCLA, 16 Pace Envtl. L. Rev. 143 (1998)
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