I

104TH CONGRESS

1ST SESSION H. R. 200

To amend the Comprehensive Environmental Response, Compensation, and

Liability Act of 1980, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 4, 1995

Mr. UPTON (for himself and Mr. TAUZIN) introduced the following bill; which

was referred to the Committee on Commerce and, in addition, to the

Committee on Transportation and Infrastructure, for a period to be subsequently determined by the Speaker, in each case for consideration of

such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Lender and Fiduciary

5 Fairness in Liability Act of 1995’’.

6 SEC. 2. LENDER AND FIDUCIARY LIABILITY.

7 (a) DEFINITIONS.—Section 101(20) of the Com8 prehensive Environmental Response, Compensation, and
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1 Liability Act of 1980 (42 U.S.C. 9601(20)) is amended

2 by adding at the end the following new subparagraphs:

3 ‘‘(E) DEFINITION OF PARTICIPATION IN

4 MANAGEMENT.—

5 ‘‘(i) The term ‘participation in man6 agement’ does not include—

7 ‘‘(I) the mere capacity to influ8 ence, or ability to influence, or the

9 unexercised right to control vessel or

10 facility operations; or

11 ‘‘(II) any act of the security in12 terest holder to require another per13 son or itself, to comply with applicable

14 laws or to respond lawfully to disposal

15 of any hazardous substance.

16 ‘‘(ii) A security interest holder will not

17 be deemed to be participating in manage18 ment of a facility unless the security inter19 est holder—

20 ‘‘(I) has undertaken responsibil21 ity for the facility’s hazardous sub22 stance handling or disposal practices;

23 or

24 ‘‘(II) has undertaken overall

25 management of the facility encom-
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1 passing day-to-day decisionmaking

2 over either environmental compliance

3 or over the operational, as opposed to

4 financial and administrative, aspects

5 of the facility. The term ‘operational

6 aspects’ include functions such as that

7 of facility or plant manager, oper8 ations manager, chief operating offi9 cer, or chief executive officer.

10 ‘‘(iii) The term ‘participate in man11 agement’ does not include conducting an

12 act or failing to act prior to the time that

13 a security interest is created in a vessel or

14 facility; and

15 ‘‘(I) the term ‘participate in

16 management’ does not include—

17 ‘‘(aa) holding such a secu18 rity interest or abandoning or re19 leasing such a security interest;

20 ‘‘(bb) including in the terms

21 of an extension of credit, or in a

22 contract or security agreement

23 relating to such an extension,

24 covenants, warranties, or other
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1 terms and conditions that related

2 to environmental compliance;

3 ‘‘(cc) monitoring or enforc4 ing the terms and conditions of

5 the extension of credit or security

6 interest;

7 ‘‘(dd) monitoring or under8 taking 1 or more inspections of

9 the vessel or facility;

10 ‘‘(ee) requiring or conduct11 ing response action or other law12 ful means of addressing the re13 lease or threatened release of a

14 hazardous substance in connec15 tion with the vessel or facility

16 prior to, during, or upon the ex17 piration of the term of the exten18 sion of credit;

19 ‘‘(ff) providing financial or

20 other advice or counseling in an

21 effort to mitigate, prevent, or

22 cure default or diminution in the

23 value of the vessel or facility;

24 ‘‘(gg) restructuring,

25 renegotiating, or otherwise agree-
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1 ing to alter the terms and condi2 tions of the extension of credit or

3 security interest, exercising for4 bearance; or

5 ‘‘(hh) exercising other rem6 edies that may be available under

7 applicable law for the breach of

8 any term or condition of the ex9 tension of credit or security

10 agreement;

11 if such actions do not rise to the level

12 of participating in management, as

13 defined in above.

14 ‘‘(iv) Legal or equitable title acquired

15 by a security interest holder through fore16 closure or its equivalents will be deemed to

17 be held primarily to protect a security in18 terest provided that the holder undertakes

19 to sell, re-lease, or otherwise divest the

20 property in a reasonably expeditious man21 ner on commercially reasonable terms.

22 ‘‘(v) The term ‘security interest’ in23 cludes rights under a mortgage, deed of

24 trust, assignment, judgment lien, pledge,

25 security agreement, factoring agreement,
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1 lease, or any other right accruing to person

2 to secure the repayment of money, the per3 formance of a duty, or some other obliga4 tion.

5 ‘‘(F) PROTECTION FOR FIDUCIARIES FROM

6 INDIVIDUAL LIABILITY—

7 ‘‘(i) The term ‘owner or operator’

8 does not include a fiduciary who holds

9 legal title to, is the mortgagee or secured

10 party with respect to, controls, or man11 ages, directly or indirectly, any facility or

12 vessel for purposes of administering an es13 tate or trust of which such facility or ves14 sel is a part.

15 ‘‘(ii) For purposes of clause (i), the

16 term ‘fiduciary’ means a person who is act17 ing in any of the following representative

18 capacities, but only to the extent such per19 son is acting in such representative capac20 ity:

21 ‘‘(I) An executor or adminis22 trator of an estate, including a vol23 untary executor or a voluntary admin24 istrator.

25 ‘‘(II) A guardian.
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1 ‘‘(III) A conservator.

2 ‘‘(IV) A trustee under a will

3 under which the trustee takes title to,

4 or otherwise controls or manages,

5 property for the purpose of protecting

6 or conserving such property under the

7 ordinary rules applied in State courts.

8 ‘‘(V) A court-appointed receiver.

9 ‘‘(VI) A trustee appointed in pro10 ceedings under Federal bankruptcy

11 laws.

12 ‘‘(VII) An assignee or a trustee

13 acting under an assignment made for

14 the benefit of creditors.

15 ‘‘(VIII) A trustee, or any succes16 sor thereto, pursuant to an indenture

17 agreement, trust agreement, lease, or

18 similar financing agreement, for debt

19 securities, certificates of interest of

20 participation in any such debt securi21 ties, or other forms of indebtedness as

22 to which it is not, in its capacity as

23 trustee, the lender.

24 ‘‘(iii) FIDUCIARY CAPACITY.—A per25 son acts in a ‘fiduciary capacity’ with re-
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1 spect to property if the person holds title

2 to such property, or otherwise has control

3 of or an interest in such property, pursu4 ant to the exercise of such person’s respon5 sibilities as a fiduciary.’’.

6 (b) LIABILITY.—Section 107 of the Comprehensive

7 Environmental Response, Compensation, and Liability Act

8 of 1980 (42 U.S.C. 9607), is amended by adding the fol9 lowing new subsections at the end:

10 ‘‘(n) LIABILITY OF FIDUCIARIES.—

11 ‘‘(1) IN GENERAL.—The liability of a fiduciary

12 that is liable under any other provision of this Act

13 for the release or threatened release of a hazardous

14 substance at, from, or in connection with property

15 held in a fiduciary capacity, may not exceed the as16 sets held in such fiduciary capacity that are avail17 able to indemnify the fiduciary.

18 ‘‘(2) EXEMPTION.—Except as provided in para19 graph (3), a fiduciary (as defined in section

20 101(20)) shall not be liable in its individual capacity

21 under this section.

22 ‘‘(3) EXCEPTIONS.—Nothing in this paragraph

23 may be construed as preventing claims under this

24 Act against—
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1 ‘‘(A) the assets of the estate or trust ad2 ministered by a fiduciary; or

3 ‘‘(B) non-employee agents or independent

4 contractors retained by a fiduciary.

5 ‘‘(4) NEGLIGENCE OR INTENTIONAL MIS6 CONDUCT.—Nothing in this paragraph may be con7 strued as preventing claims under this Act against

8 a fiduciary in its individual capacity whose negligent

9 acts or intentional misconduct caused a release or

10 threatened release of hazardous substances at a fa11 cility or vessel. A fiduciary shall not be attributed

12 with negligence or intentional misconduct of non-em13 ployee agents or independent contractors if the fidu14 ciary has conducted itself without negligence or in15 tentional misconduct with regard to its relationship

16 with such agents or contractors.

17 ‘‘(5) SAFE HARBOR.—A fiduciary shall not be

18 liable in its individual capacity under this Act—

19 ‘‘(A) for undertaking or directing another

20 to undertake a response action under section

21 107(d)(1) or under the direction of an on-scene

22 coordinator;

23 ‘‘(B) for undertaking or directing another

24 to undertake any other lawful means of ad-
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1 dressing hazardous substances in connection

2 with the property;

3 ‘‘(C) for terminating the fiduciary relation4 ship;

5 ‘‘(D) for including in the terms of the fidu6 ciary agreement covenants, warranties, or other

7 terms and conditions that relate to compliance

8 with environmental laws, or monitoring or en9 forcing such terms;

10 ‘‘(E) for monitoring or undertaking 1 or

11 more inspections of the property;

12 ‘‘(F) for providing financial or other advice

13 or counseling to other parties to the fiduciary

14 relationship, including the settler or beneficiary;

15 ‘‘(G) for restructuring, renegotiating, or

16 otherwise altering the terms and conditions of

17 the fiduciary relationship;

18 ‘‘(H) if the property was contaminated be19 fore the fiduciary’s period of service began; or

20 ‘‘(I) for declining to take any of the ac21 tions described in paragraphs (2) through (7).

22 ‘‘(o) LIABILITY LIMITATIONS.—

23 ‘‘(1) ACTUAL BENEFIT.—The liability of a lend24 er that is liable under any other provision of this Act
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1 for the release or threatened release of a hazardous

2 substance at, from, or in connection with property—

3 ‘‘(A) acquired through foreclosure;

4 ‘‘(B) subject to a security interest held by

5 such institution or lender;

6 ‘‘(C) held by a lessor pursuant to the

7 terms of an extension of credit; or

8 ‘‘(D) subject to financial control or finan9 cial oversight pursuant to the terms of an ex10 tension of credit;

11 shall be limited to the actual benefit conferred on

12 such lender by a removal, remedial, or other re13 sponse action undertaken by another party.

14 ‘‘(2) COMPUTATION OF ACTUAL BENEFIT.—For

15 purposes of this section, the actual benefit conferred

16 on an institution or lender by a removal, remedial,

17 or other response action shall be equal to the net

18 gain, if any, realized by such institution or lender

19 due to such action. For purposes of this subsection,

20 the ‘net gain’ shall not exceed the amount realized

21 by the institution or lender on the sale of property

22 less acquisition, holding, and disposition costs.

23 ‘‘(3) EXCLUSION.—Notwithstanding paragraph

24 (1), but subject to the provisions of section 107(d),

25 a lender that caused or contributed to the release of
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1 a hazardous substance may be liable for a response

2 action pertaining to that release.

3 ‘‘(4) DEFINITIONS.—For purposes of this Act

4 the following definitions shall apply:

5 ‘‘(A) PROPERTY ACQUIRED THROUGH

6 FORECLOSURE.—

7 ‘‘(i) IN GENERAL.—The term ‘prop8 erty acquired through foreclosure’ means

9 property acquired, or the act of acquiring

10 property, from a nonaffiliated party by a

11 lender—

12 ‘‘(I) through purchase at sales

13 under judgment or decree, power of

14 sales, nonjudicial foreclosure sales, or

15 from a trustee, deed in lieu of fore16 closure, or similar conveyance, or

17 through repossession, if such property

18 was security for an extension of credit

19 previously contracted;

20 ‘‘(II) through conveyance pursu21 ant to an extension of credit pre22 viously contracted, including the ter23 mination of a lease agreement; or

24 ‘‘(III) through any other formal

25 or informal manner by which the lend-
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1 er temporarily acquires, for subse2 quent disposition, possession of collat3 eral in order to protect its interest.

4 ‘‘(ii) EXCLUSION.—Property is not ac5 quired through foreclosure if the lender

6 does not seek to sell or otherwise divest

7 such property at the earliest practical,

8 commercially reasonable time, on commer9 cially reasonable terms, taking into account

10 market conditions and legal and regulatory

11 requirements.

12 ‘‘(B) LENDER.—The term ‘lender’

13 means—

14 ‘‘(i) a person that makes a bona fide

15 extension of credit to, or takes a security

16 interest from, another party;

17 ‘‘(ii) the Federal National Mortgage

18 Association, the Federal Home Loan Mort19 gage Corporation, the Federal Agricultural

20 Mortgage Corporation, or other entity that

21 in a bona fide manner is engaged in the

22 business of buying or selling loans or inter23 ests therein.

24 ‘‘(iii) any person engaged in the busi25 ness of insuring or guaranteeing against a
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1 default in the repayment of an extension of

2 credit, or acting as a surety with respect to

3 an extension of credit, to another party;

4 and

5 ‘‘(iv) any person regularly engaged in

6 the business of providing title insurance

7 who acquires the property as a result of

8 assignment or conveyance in the course of

9 underwriting claims and claims settlement.

10 ‘‘(C) EXTENSIONS OF CREDIT.—The term

11 ‘extension of credit’ includes a lease finance

12 transaction—

13 ‘‘(i) in which the lessor does not ini14 tially select the leased property and does

15 not during the lease term control the daily

16 operations or maintenance of the property;

17 or

18 ‘‘(ii) that conforms any regulations is19 sued by the appropriate Federal banking

20 agency (as defined in section 3 of the Fed21 eral Deposit Insurance Act) or the appro22 priate State banking regulatory authority.

23 ‘‘(D) FORECLOSURE; FORECLOSE.—The

24 terms ‘foreclosure’ and ‘foreclose’ mean, respec-
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1 tively, acquiring, and to acquire, a vessel or fa2 cility through—

3 ‘‘(i) purchase at sale under a judg4 ment or decree, a power of sale, a

5 nonjudicial foreclosure sale, or from a

6 trustee, deed in lieu of foreclosure, or simi7 lar conveyance, or through repossession, if

8 such vessel or facility was security for an

9 extension of credit previously contracted;

10 ‘‘(ii) conveyance pursuant to an exten11 sion of credit previously contracted, includ12 ing the termination of a lease agreement;

13 or

14 ‘‘(iii) any other formal or informal

15 manner by which the person acquires, for

16 subsequent disposition, possession of collat17 eral in order to protect the security inter18 est of the person.–

19 ‘‘(p) SAVINGS CLAUSE.—Nothing in this section

20 shall—

21 ‘‘(1) affect the rights or immunities or other de22 fenses that are available under this Act or other ap23 plicable law to any party subject to the provisions of

24 this section;
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1 ‘‘(2) be construed to create any liability for any

2 party; or

3 ‘‘(3) create a private right of action against any

4 lender or against any Federal agency that regulates

5 lenders.’’.

6 SEC. 3. INNOCENT LANDOWNER.

7 Section 101(35) of the Comprehensive Environmental

8 Response, Compensation, and Liability Act of 1980 (42

9 U.S.C. 9601 (35)) is amended by redesignating subpara10 graphs (C) and (D) as subparagraphs (D) and (E),

11 respectively, and inserting after subparagraph (B) the

12 following:

13 ‘‘(C)(i) A defendant who has acquired real

14 property shall have established a rebuttable pre15 sumption that he has made all appropriate in16 quiry within the meaning of subparagraph (B)

17 if he establishes that, within 180 days prior to

18 the time of acquisition, he conducted an envi19 ronmental site assessment of the real property

20 which meets the requirements of this subpara21 graph.

22 ‘‘(ii) For purposes of this subparagraph,

23 the term ‘environmental site assessment’ means

24 an assessment of the real property and sur25 rounding areas to obtain commonly known or
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1 reasonably ascertainable information about the

2 property and to assess the obviousness of the

3 presence or likely presence of contamination at

4 the real property, and which consists of each

5 of the following elements:

6 ‘‘(I) Interview of owners, operators,

7 and occupants of the property to determine

8 information regarding the potential for

9 contamination there.

10 ‘‘(II) Review of standard historical

11 sources as necessary to determine previous

12 uses and occupancies of the property since

13 the property was first developed. For pur14 poses of this subclause, the term ‘standard

15 historical sources’ means any of the follow16 ing, providing they are reasonable ascer17 tainable: recorded chain of title documents

18 regarding the real property, including all

19 deeds, easements, leases, restrictions, and

20 covenants, aerial photographs, fire insur21 ance maps, property tax files, USGS 7.5

22 minutes topographic maps, local street di23 rectories, building department records,

24 zoning/land use records, and any other

25 sources that are credible to a reasonable
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1 person and that identify past uses and oc2 cupancies of the property.

3 ‘‘(III) Determination of the existence

4 of recorded environmental cleanup liens

5 against the real property which have arisen

6 pursuant to Federal, State, or local stat7 utes.

8 ‘‘(IV) Review of reasonably ascertain9 able Federal, State, and local government

10 records of sites or facilities that are likely

11 to cause or contribute to contamination at

12 the real property, including, as appro13 priate, investigation reports for such sites

14 or facilities; records of activities likely to

15 cause or contribute to contamination at the

16 real property, including landfill and other

17 disposal location records, underground

18 storage tank records, hazardous waste han19 dler and generator records and spill report20 ing records; and such other reasonable as21 certainable Federal, State, and local gov22 ernment environmental records which re23 flect incidents or activities which are likely

24 to cause or contribute to contamination at

25 the real property.
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1 ‘‘(V) A visual site inspection of the

2 real property and all facilities and improve3 ments on the real property and a visual in4 spection of immediately adjacent prop5 erties, including an investigation of any

6 hazardous substance use, storage, treat7 ment, and disposal practices on the prop8 erty.

9 A record is considered to be ‘reasonably ascer10 tainable’ for purposes of this clause if a copy or

11 reasonable facsimile of the record, or access to

12 it, is obtainable from the government agency by

13 request (within reasonable time and cost con14 straints) and the record is practically

15 reviewable.

16 ‘‘(iii) No presumption shall arise under

17 clause (i) unless the defendant has maintained

18 a complication of the information reviewed in

19 the course of the environmental site assessment.

20 ‘‘(iv) Notwithstanding any other provision

21 of this paragraph, if the environmental site as22 sessment discloses the presence of contamina23 tion at the real property to be acquired, no pre24 sumption shall arise under clause (i) with re25 spect to such contamination unless the defend-
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1 ant has taken reasonable steps, in accordance

2 with commonly available technology, existing

3 law, and generally acceptable engineering prac4 tices, as may be necessary to confirm the ab5 sence of such contamination.

6 ‘‘(v) For the purposes of this paragraph,

7 the term ‘contamination’ means an existing re8 lease, a past release, or the material threat of

9 a release of a hazardous substance, other than

10 de minimis conditions that generally do not

11 present a material risk of harm to public health

12 or welfare or the environment.’’.

13 SEC. 4. LIMITATION OF LIABILITY UNDER SOLID WASTE

14 DISPOSAL ACT.

15 The Solid Waste Disposal Act (42 U.S.C. 6901 et

16 seq.) is amended as follows:

17 (1) By adding at the end of section 1004 the

18 following paragraph:

19 ‘‘(42) The terms ‘operator’, ‘generator’, and

20 ‘transporter’ do not include a person who would not

21 be an owner or operator within the meaning of sub22 paragraphs (E) and (F) of section 101(20) of the

23 Comprehensive Environmental Response, Compensa24 tion and Liability Act of 1980.’’.
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1 (2) By adding at the end of section 9003(h)(9)

2 the following sentence: ‘‘This definition shall be con3 strued to be parallel and comparable to that speci4 fied in section 101(20)(E) of the Comprehensive En5 vironmental Response, Compensation, and Liability

6 Act of 1980.’’.

7 SEC. 5. EFFECTIVE DATE.

8 The amendments made by this Act shall become ef9 fective immediately upon enactment.

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