II

104TH CONGRESS

1ST SESSION S. 394

To clarify the liability of banking and lending agencies, lenders, and

fiduciaries, and for other purposes.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 10 (legislative day, JANUARY 30), 1995

Mr. D’AMATO introduced the following bill; which was read twice and referred

to the Committee on Environment and Public Works

A BILL

To clarify the liability of banking and lending agencies,

lenders, and fiduciaries, 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 ‘‘Asset Conservation,

5 Lender Liability, and Deposit Insurance Protection Act of

6 1995’’.

7 SEC. 2. FEDERAL DEPOSIT INSURANCE ACT AMENDMENT.

8 The Federal Deposit Insurance Act (12 U.S.C. 1811

9 et seq.) is amended by adding at the end the following

10 new section:
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1 ‘‘SEC. 45. FEDERAL BANKING AND LENDING AGENCY LI2 ABILITY.

3 ‘‘(a) GOVERNMENTAL ENTITIES.—

4 ‘‘(1) BANKING AND LENDING AGENCIES.—Ex5 cept as provided in paragraph (3), a Federal bank6 ing or lending agency shall not be liable under any

7 law imposing strict liability for the release or threat8 ened release of a hazardous substance at or from

9 property (including a right or interest in property)

10 acquired—

11 ‘‘(A) in connection with the exercise of re12 ceivership or conservatorship authority, or the

13 liquidation or winding up of the affairs of an

14 insured depository institution, including a sub15 sidiary of an insured depository institution;

16 ‘‘(B) in connection with the provision of a

17 loan, a discount, an advance, a guarantee, in18 surance, or other financial assistance; or

19 ‘‘(C) in connection with property received

20 in a civil or criminal proceeding, or administra21 tive enforcement action, whether by settlement

22 or order.

23 ‘‘(2) APPLICATION OF STATE LAW.—Nothing in

24 this section shall be construed as preempting, affect25 ing, applying to, or modifying a State law, or a

26 right, action, cause of action, or obligation under
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1 State law, except that the liability of a Federal

2 banking or lending agency under a State law shall

3 not exceed the value of the interest of the agency in

4 the asset giving rise to the liability. Nothing in this

5 section shall prevent a Federal banking or lending

6 agency from agreeing with a State to transfer prop7 erty to the State in lieu of any liability that might

8 otherwise be imposed under State law.

9 ‘‘(3) LIMITATION.—Notwithstanding paragraph

10 (1), and subject to section 107(d) of the Comprehen11 sive Environmental Response, Compensation, and

12 Liability Act of 1980 and section 9003 of the Solid

13 Waste Disposal Act, a Federal banking or lending

14 agency that caused or contributed to the release of

15 a hazardous substance may be liable for removal, re16 medial, corrective, or other response action pertain17 ing to that release.

18 ‘‘(4) SUBSEQUENT PURCHASER.—The immu19 nity provided by paragraph (1) shall extend to the

20 first subsequent purchaser of the property from a

21 Federal banking or lending agency, unless the pur22 chaser—

23 ‘‘(A) would otherwise be liable or poten24 tially liable for all or part of the costs of the re25 moval, remedial, corrective, or other response
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1 action due to a prior relationship with the prop2 erty;

3 ‘‘(B) is or was affiliated with or related to

4 a party described in subparagraph (A);

5 ‘‘(C) fails to agree to take reasonable steps

6 necessary to remedy the release or threatened

7 release or to protect public health and safety in

8 a manner consistent with the purposes of appli9 cable environmental laws; or

10 ‘‘(D) causes or contributes to any addi11 tional release or threatened release on the prop12 erty.

13 ‘‘(5) FEDERAL OR STATE ACTION.—If a Fed14 eral agency or State environmental agency is re15 quired to take remedial or corrective action due to

16 the failure of a subsequent purchaser to carry out,

17 in good faith, the agreement described in paragraph

18 (4)(C), the subsequent purchaser shall reimburse the

19 Federal or State environmental agency for the costs

20 of the remedial or corrective action. Any such reim21 bursement shall not exceed the increase in the fair

22 market value of the property attributable to the re23 medial or corrective action.

24 ‘‘(b) LIEN EXEMPTION.—Notwithstanding any other

25 provision of law, any property held by a subsequent pur-
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1 chaser referred to in subsection (a)(4) or held by a Federal

2 banking or lending agency shall not be subject to a lien

3 for costs or damages associated with the release or threat4 ened release of a hazardous substance existing at the time

5 of the transfer.

6 ‘‘(c) EXEMPTION FROM COVENANTS TO REMEDI7 ATE.—A Federal banking or lending agency shall be ex8 empt from any law requiring the agency to grant a cov9 enant warranting that a removal, remedial, corrective, or

10 other response action has been, or will in the future be,

11 taken with respect to property acquired in the manner re12 ferred to in subsection (a)(1).

13 ‘‘(d) DEFINITIONS.—As used in this section:

14 ‘‘(1) FEDERAL BANKING OR LENDING AGEN15 CY.—The term ‘Federal banking or lending agency’

16 means the Corporation, the Resolution Trust Cor17 poration, the Board of Governors of the Federal Re18 serve System, the Comptroller of the Currency, the

19 Office of Thrift Supervision, a Federal Reserve

20 Bank, a Federal Home Loan Bank, the Department

21 of Housing and Urban Development, the National

22 Credit Union Administration Board, the Farm Cred23 it Administration, the Farm Credit System Insur24 ance Corporation, the Farm Credit System Assist25 ance Board, the Farmers Home Administration, the
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1 Rural Electrification Administration, the Small

2 Business Administration, and any other Federal

3 agency acting in a similar capacity, in any of their

4 capacities, and their agents or appointees.

5 ‘‘(2) HAZARDOUS SUBSTANCE.—The term ‘haz6 ardous substance’ means—

7 ‘‘(A) any substance defined in section

8 101(14) of the Comprehensive Environmental

9 Response, Compensation, and Liability Act of

10 1980; and

11 ‘‘(B) petroleum.

12 ‘‘(3) RELEASE.—The term ‘release’ has the

13 same meaning as in—

14 ‘‘(A) section 101(22) of the Comprehensive

15 Environmental Response, Compensation, and

16 Liability Act of 1980, including the use, stor17 age, disposal, treatment, generation, or trans18 portation of a hazardous substance; and

19 ‘‘(B) section 9002(5) of the Solid Waste

20 Disposal Act.

21 ‘‘(e) SAVINGS CLAUSE.—Nothing in this section

22 shall—

23 ‘‘(1) affect the rights or immunities or other de24 fenses that are available under this Act, the Com25 prehensive Environmental Response, Compensation,
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1 and Liability Act of 1980, subtitle I of the Solid

2 Waste Disposal Act, or other applicable law to any

3 party;

4 ‘‘(2) create any liability for any party; or

5 ‘‘(3) create a private right of action against an

6 insured depository institution or lender, a Federal

7 banking or lending agency, or any other party.’’.

8 SEC. 3. CERCLA AMENDMENTS.

9 (a) LENDER AND FIDUCIARY LIABILITY LIMITA10 TIONS.—Title I of the Comprehensive Environmental Re11 sponse, Compensation, and Liability Act of 1980 (42

12 U.S.C. 9601 et seq.) is amended by adding at the end

13 the following:

14 ‘‘SEC. 127. INSURED DEPOSITORY INSTITUTION AND OTHER

15 LENDER LIABILITY.

16 ‘‘(a) LIABILITY LIMITATIONS.—The liability of an in17 sured depository institution or other lender that is liable

18 under any other provision of this Act or subtitle I of the

19 Solid Waste Disposal Act (42 U.S.C. 6991 et seq.) for

20 the release or threatened release of a hazardous substance

21 at, from, or in connection with property—

22 ‘‘(1) acquired through foreclosure;

23 ‘‘(2) subject to a security interest held by the

24 institution or lender;
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1 ‘‘(3) held by a lessor pursuant to the terms of

2 an extension of credit; or

3 ‘‘(4) subject to financial control or financial

4 oversight pursuant to the terms of an extension of

5 credit;

6 shall be limited to the actual benefit conferred on the insti7 tution or lender by a removal, remedial, corrective, or

8 other response action undertaken by another party.

9 ‘‘(b) ACTUAL BENEFIT.—For purposes of this sec10 tion, the actual benefit conferred on an institution or lend11 er by a removal, remedial, corrective, or other response

12 action shall be equal to the net gain, if any, realized by

13 the institution or lender due to the action. For purposes

14 of this subsection, the net gain shall not exceed the

15 amount realized by the institution or lender on the sale

16 of property less acquisition, holding, and disposition costs.

17 ‘‘(c) EXCLUSION.—Notwithstanding subsection (a),

18 but subject to section 107(d) and section 9003 of the Solid

19 Waste Disposal Act (42 U.S.C. 6991b), a depository insti20 tution or lender that caused or contributed to the release

21 of a hazardous substance may be liable for removal, reme22 dial, corrective, or other response action pertaining to that

23 release.

24 ‘‘(d) ENVIRONMENTAL ASSESSMENTS.—
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1 ‘‘(1) DEPOSITORY INSTITUTIONS.—The Admin2 istrator, after consultation with the Federal Deposit

3 Insurance Corporation, shall issue and publish

4 guidelines for insured depository institutions and

5 other lenders to develop and carry out adequate pro6 cedures to evaluate actual and potential environ7 mental risks that may arise from or at property

8 prior to making an extension of credit secured by

9 the property. The requirements may provide for ex10 clusions or different types of environmental assess11 ments as may be appropriate under the cir12 cumstances to account for the levels of risk that may

13 be posed by different classes of collateral. Each Fed14 eral agency having the authority under Federal law

15 to make an examination of an insured depository in16 stitution shall take compliance with the guidelines

17 into account in performing the examinations.

18 ‘‘(2) FINAL GUIDELINES.—Final guidelines re19 quired to be issued pursuant to paragraph (1) shall

20 be issued not later than 180 days after the date of

21 enactment of this section.

22 ‘‘(e) DEFINITIONS.—As used in this section:

23 ‘‘(1) APPROPRIATE FEDERAL BANKING AGEN24 CY.—The term ‘appropriate Federal banking agen25 cy’—
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1 ‘‘(A) has the same meaning as in section

2 3 of the Federal Deposit Insurance Act (12

3 U.S.C. 1813); and

4 ‘‘(B) includes the National Credit Union

5 Administration Board.

6 ‘‘(2) EXTENSION OF CREDIT.—The term ‘exten7 sion of credit’ includes a lease finance transaction—

8 ‘‘(A) in which the lessor does not initially

9 select the leased property and does not during

10 the lease term control the daily operations or

11 maintenance of the property; or

12 ‘‘(B) that conforms with regulations issued

13 by the appropriate Federal banking agency or

14 the appropriate State banking regulatory agen15 cy.

16 ‘‘(3) HAZARDOUS SUBSTANCE.—The term ‘haz17 ardous substance’ has the same meaning as in sec18 tion 45(d)(2) of the Federal Deposit Insurance Act.

19 ‘‘(4) INSURED DEPOSITORY INSTITUTION.—The

20 term ‘insured depository institution’ has the same

21 meaning as in section 3(c) of the Federal Deposit

22 Insurance Act (12 U.S.C. 1813(c)), and shall also

23 include—
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1 ‘‘(A) an insured credit union, as defined in

2 section 101 of the Federal Credit Union Act

3 (12 U.S.C. 1752);

4 ‘‘(B) a bank or association chartered under

5 the Farm Credit Act of 1971 (12 U.S.C. 2001

6 et seq.); and

7 ‘‘(C) a leasing or trust company that is an

8 affiliate of an insured depository institution (as

9 the term is defined in this paragraph).

10 ‘‘(5) LENDER.—The term ‘lender’ means—

11 ‘‘(A) a person (other than an insured de12 pository institution) that—

13 ‘‘(i) makes a bona fide extension of

14 credit to or takes a security interest from

15 a nonaffiliated party; and

16 ‘‘(ii) substantially and materially com17 plies with the environmental assessment

18 requirements imposed under subsection

19 (d), after final guidelines under the sub20 section have been issued;

21 and includes a successor or assignee of any

22 such person;

23 ‘‘(B) the Federal National Mortgage Asso24 ciation, the Federal Home Loan Mortgage Cor25 poration, the Federal Agricultural Mortgage
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1 Corporation, or other entity that in a bona fide

2 manner is engaged in the business of buying or

3 selling loans or interests in loans, if the Asso4 ciation, Corporation, or entity requires institu5 tions from which it purchases loans (or other

6 obligations) to comply substantially and materi7 ally with the requirements of subsection (d),

8 after final guidelines under that subsection have

9 been issued;

10 ‘‘(C) a person engaged in the business of

11 insuring or guaranteeing against a default in

12 the repayment of an extension of credit, or act13 ing as a surety with respect to an extension of

14 credit, to nonaffiliated parties; and

15 ‘‘(D) a person regularly engaged in the

16 business of providing title insurance who ac17 quires the property as a result of assignment or

18 conveyance in the course of underwriting claims

19 and claims settlement.

20 ‘‘(6) PROPERTY ACQUIRED THROUGH FORE21 CLOSURE.—

22 ‘‘(A) IN GENERAL.—The term ‘property

23 acquired through foreclosure’ means property

24 acquired, or the act of acquiring property, from
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1 a nonaffiliated party by an insured depository

2 institution or other lender—

3 ‘‘(i) through purchase at sales under

4 judgment or decree, power of sales,

5 nonjudicial foreclosure sales, or from a

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

8 the property was security for an extension

9 of credit previously contracted;

10 ‘‘(ii) through conveyance pursuant to

11 an extension of credit previously con12 tracted, including the termination of a

13 lease agreement; or

14 ‘‘(iii) through any other formal or in15 formal manner by which the insured depos16 itory institution or other lender tempo17 rarily acquires, for subsequent disposition,

18 possession of collateral in order to protect

19 the interest of the institution or lender.

20 ‘‘(B) EXCLUSION.—Property is not ac21 quired through foreclosure if the insured depos22 itory institution or lender does not seek to sell

23 or otherwise divest the property at the earliest

24 practical, commercially reasonable time, on

25 commercially reasonable terms, taking into ac-
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1 count market conditions and legal and regu2 latory requirements.

3 ‘‘(7) RELEASE.—The term ‘release’ has the

4 same meaning as in section 45(d)(3) of the Federal

5 Deposit Insurance Act.

6 ‘‘(8) SECURITY INTEREST.—The term ‘security

7 interest’ includes rights under a mortgage, deed of

8 trust, assignment, judgment lien, pledge, security

9 agreement, factoring agreement, lease, or any other

10 right accruing to a person to secure the repayment

11 of money, the performance of a duty, or some other

12 obligation.

13 ‘‘(f) SAVINGS CLAUSE.—Nothing in this section

14 shall—

15 ‘‘(1) affect the rights or immunities or other de16 fenses that are available under this Act, subtitle I of

17 the Solid Waste Disposal Act (42 U.S.C. 6991 et

18 seq.), or other applicable law to a party subject to

19 this section;

20 ‘‘(2) create any liability for a party; or

21 ‘‘(3) create a private right of action against an

22 insured depository institution or lender, a Federal

23 agency that regulates an insured depository institu24 tion or other lender, or any other party.
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1 ‘‘SEC. 128. LIABILITY OF FIDUCIARIES.

2 ‘‘(a) IN GENERAL.—The liability of a fiduciary that

3 is liable under any other provision of this Act or subtitle

4 I of the Solid Waste Disposal Act (42 U.S.C. 6991 et seq.)

5 for the release or threatened release of a hazardous sub6 stance at, from, or in connection with property held in a

7 fiduciary capacity, may not exceed the assets held in the

8 fiduciary capacity that are available to indemnify the fidu9 ciary.

10 ‘‘(b) EXCLUSION.—Subsection (a) does not apply to

11 the extent that a person is liable under this Act independ12 ently of the person’s ownership or actions taken in a fidu13 ciary capacity.

14 ‘‘(c) LIMITATION.—Notwithstanding subsections (a)

15 and (d), a fiduciary whose failure to exercise due care

16 caused or contributed to the release of a hazardous sub17 stance may have liability in its personal capacity for a re18 sponse or corrective action pertaining to the release.

19 ‘‘(d) SAFE HARBOR.—A fiduciary shall not be liable

20 in its personal capacity under this Act for—

21 ‘‘(1) undertaking or directing another person to

22 undertake a response action under section 107(d)(1)

23 or under the direction of an on-scene coordinator;

24 ‘‘(2) undertaking or directing another to under25 take a corrective action under section 9003(h) of the

26 Solid Waste Disposal Act (42 U.S.C. 6991b(h));
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1 ‘‘(3) undertaking or directing another to under2 take any other lawful means of addressing hazard3 ous substances in connection with the property;

4 ‘‘(4) terminating the fiduciary relationship;

5 ‘‘(5) including in the terms of the fiduciary

6 agreement a covenant, warranty, or other term or

7 condition that relates to compliance with an environ8 mental law, or monitoring or enforcing the term;

9 ‘‘(6) monitoring or undertaking 1 or more in10 spections of the property;

11 ‘‘(7) providing financial or other advice or coun12 seling to other parties to the fiduciary relationship,

13 including the settler or beneficiary;

14 ‘‘(8) restructuring, renegotiating, or otherwise

15 altering the terms and conditions of the fiduciary re16 lationship; or

17 ‘‘(9) declining to take any of the actions re18 ferred to in paragraphs (3) through (8).

19 ‘‘(e) DEFINITIONS.—As used in this section:

20 ‘‘(1) FIDUCIARY.—The term ‘fiduciary’—

21 ‘‘(A) means a person acting for the benefit

22 of another party as a bona fide—

23 ‘‘(i) trustee;

24 ‘‘(ii) executor;

25 ‘‘(iii) administrator;
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1 ‘‘(iv) custodian;

2 ‘‘(v) guardian of estates or guardian

3 ad litem;

4 ‘‘(vi) receiver;

5 ‘‘(vii) conservator;

6 ‘‘(viii) committee of estates of lunatics

7 or other disabled persons;

8 ‘‘(ix) personal representative; or

9 ‘‘(x) representative in any other ca10 pacity that the Administrator, pursuant to

11 public notice, determines to be similar to

12 the persons listed in clauses (i) through

13 (ix); and

14 ‘‘(B) does not include any person who is

15 acting as a fiduciary with respect to a trust or

16 other fiduciary estate that—

17 ‘‘(i) was not created as part of, or to

18 facilitate, 1 or more estate plans or pursu19 ant to the incapacity of a natural person;

20 and

21 ‘‘(ii) was organized for the primary

22 purpose of, or is engaged in, actively carry23 ing on a trade or business for profit.

24 ‘‘(2) FIDUCIARY CAPACITY.—The term ‘fidu25 ciary capacity’ means the capacity of a person in
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1 holding title to the property, or otherwise having

2 control of or an interest in the property, pursuant

3 to the exercise of the responsibilities of the person

4 as a fiduciary.

5 ‘‘(3) FEDERAL BANKING OR LENDING AGEN6 CY.—The term ‘Federal banking or lending agency’

7 has the same meaning as in section 45(d)(1) of the

8 Federal Deposit Insurance Act.

9 ‘‘(4) HAZARDOUS SUBSTANCE.—The term ‘haz10 ardous substance’ has the same meaning as in sec11 tion 45(d)(2) of the Federal Deposit Insurance Act.

12 ‘‘(5) RELEASE.—The term ‘release’ has the

13 same meaning as in section 45(d)(3) of the Federal

14 Deposit Insurance Act.

15 ‘‘(f) SAVINGS CLAUSE.—Nothing in this section shall

16 affect the rights or immunities or other defenses that are

17 available under this Act, subtitle I of the Solid Waste Dis18 posal Act (42 U.S.C. 6991 et seq.), or other law that is

19 applicable to a person subject to this section. Nothing in

20 this section creates any liability for a party or a private

21 right of action against a fiduciary or any other party.

22 ‘‘(g) INAPPLICABILITY TO FEDERAL BANKING AND

23 LENDING AGENCIES.—Nothing in this section applies to

24 a Federal banking or lending agency.
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1 ‘‘(h) NO EFFECT ON CERTAIN PERSONS.—Nothing

2 in this section affects the liability, if any, of a person

3 who—

4 ‘‘(1)(A) acts in a capacity other than a fidu5 ciary capacity; and

6 ‘‘(B) directly or indirectly benefits from a trust

7 or fiduciary relationship; or

8 ‘‘(2) who—

9 ‘‘(A) is a beneficiary and a fiduciary with

10 respect to the same fiduciary estate; and

11 ‘‘(B) as a fiduciary, receives benefits that

12 exceed customary or reasonable compensation,

13 and incidental benefits, permitted under other

14 applicable law.

15 ‘‘(i) REGULATIONS.—The Administrator, after con16 sultation with the Federal Deposit Insurance Corporation,

17 may promulgate regulations to carry out this section.’’.

18 (b) DEFINITION OF OWNER OR OPERATOR.—Section

19 101(20) of the Comprehensive Environmental Response,

20 Compensation, and Liability Act of 1980 (42 U.S.C.

21 9601(20)) is amended—

22 (1) in subparagraph (A)—

23 (A) in clause (iii) of the first sentence, by

24 inserting ‘‘the United States or’’ after ‘‘aban25 donment, or similar means to’’; and
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1 (B) by striking the second sentence;

2 (2) in subparagraph (D)—

3 (A) in the first sentence, by inserting ‘‘the

4 United States or’’ after ‘‘does not include’’; and

5 (B) in the second sentence—

6 (i) by inserting ‘‘any department,

7 agency, or instrumentality of the United

8 States or’’ after ‘‘shall not apply to’’; and

9 (ii) by striking ‘‘, and such a’’ and in10 serting ‘‘, and the department, agency, or

11 instrumentality of the United States or’’;

12 and

13 (3) by adding at the end the following:

14 ‘‘(E) EXCLUSION OF UNITED STATES, CON15 SERVATOR, OR RECEIVER.—The term ‘owner or

16 operator’ shall not include the United States or

17 any department, agency, or instrumentality of

18 the United States, or a conservator or receiver

19 appointed by a department, agency, or instru20 mentality of the United States, if the United

21 States or the conservator or receiver meets both

22 of the following conditions:

23 ‘‘(i) AUTHORITY.—The United States,

24 conservator, or receiver acquired ownership
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1 or control of a vessel or facility (or any

2 right or interest in a vessel or facility)—

3 ‘‘(I) in connection with the exer4 cise of receivership or conservatorship

5 authority or the liquidation or winding

6 up of the affairs of an entity subject

7 to a receivership or conservatorship,

8 including a subsidiary of the entity;

9 ‘‘(II) in connection with the exer10 cise of any seizure or forfeiture au11 thority; or

12 ‘‘(III) pursuant to a law specify13 ing the property to be acquired.

14 ‘‘(ii) NONPARTICIPATION IN MANAGE15 MENT.—The United States, conservator, or

16 receiver does not participate in the man17 agement of the vessel or facility operations

18 that result in a release or threat of release

19 of hazardous substances and complies with

20 such other requirements as the Adminis21 trator, after consultation with the Federal

22 Deposit Insurance Corporation, may estab23 lish by regulation.

24 ‘‘(F) EXCLUSION OF PERSONS NOT PAR25 TICIPANTS IN MANAGEMENT.—
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1 ‘‘(i) INDICIA OF OWNERSHIP TO PRO2 TECT SECURITY INTEREST.—The term

3 ‘owner or operator’ does not include a per4 son who, without participating in the man5 agement of a vessel or facility, holds indi6 cia of ownership primarily to protect the

7 security interest of the person in the vessel

8 or facility.

9 ‘‘(ii) NONPARTICIPATION IN MANAGE10 MENT PRIOR TO FORECLOSURE.—The term

11 ‘owner or operator’ does not include a per12 son who did not participate in management

13 of a vessel or facility prior to foreclosure,

14 even if the person forecloses on the vessel

15 or facility, sells, re-leases (in the case of a

16 lease finance transaction), or liquidates the

17 vessel or facility, maintains business activi18 ties, winds up operations, undertakes a re19 sponse action under section 107(d)(1) or

20 under the direction of an on-scene coordi21 nator, or undertakes a corrective action

22 under section 9003 of the Solid Waste Dis23 posal Act (42 U.S.C. 6991b), with respect

24 to the vessel or facility, or takes other

25 measures to preserve, protect, or prepare
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1 the vessel or facility prior to sale or dis2 position, if the person seeks to sell, re-lease

3 (in the case of a lease finance transaction),

4 or otherwise divest the vessel or facility at

5 the earliest practical, commercially reason6 able time, on commercially reasonable

7 terms, taking into account market condi8 tions and legal and regulatory require9 ments.

10 ‘‘(G) PARTICIPATION IN MANAGEMENT.—

11 For purposes of subparagraph (F)—

12 ‘‘(i) the term ‘participate in manage13 ment’ means actually participating in the

14 management or operational affairs of a

15 vessel or facility, and does not include

16 merely having the capacity to influence, or

17 the unexercised right to control, vessel or

18 facility operations;

19 ‘‘(ii) a person shall be considered to

20 participate in management while the bor21 rower is still in possession of the vessel or

22 facility encumbered by the security interest

23 only if the person—

24 ‘‘(I) exercises decisionmaking

25 control over the environmental compli-
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1 ance of a borrower, such that the per2 son has undertaken responsibility for

3 the hazardous substance handling or

4 disposal practices of the borrower; or

5 ‘‘(II) exercises control at a level

6 comparable to that of a manager of

7 the enterprise of the borrower, such

8 that the person has assumed or mani9 fested responsibility for the overall

10 management of the enterprise encom11 passing day-to-day decisionmaking

12 with respect to environmental compli13 ance, or with respect to substantially

14 all of the operational aspects (as dis15 tinguished from financial or adminis16 trative aspects) of the enterprise,

17 other than environmental compliance;

18 ‘‘(iii) the term ‘participate in manage19 ment’ does not include conducting an act

20 or failing to act prior to the time that a se21 curity interest is created in a vessel or fa22 cility; and

23 ‘‘(iv) the term ‘participate in manage24 ment’ does not include—
25

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1 ‘‘(I) holding such a security in2 terest or abandoning or releasing such

3 a security interest;

4 ‘‘(II) including in the terms of an

5 extension of credit, or in a contract or

6 security agreement relating to the ex7 tension, a covenant, warranty, or

8 other term or condition that relates to

9 environmental compliance;

10 ‘‘(III) monitoring or enforcing

11 the terms and conditions of the exten12 sion of credit or security interest;

13 ‘‘(IV) monitoring or undertaking

14 1 or more inspections of the vessel or

15 facility;

16 ‘‘(V) requiring or conducting re17 sponse action or other lawful means of

18 addressing the release or threatened

19 release of a hazardous substance in

20 connection with the vessel or facility

21 prior to, during, or on the expiration

22 of the term of the extension of credit;

23 ‘‘(VI) providing financial or other

24 advice or counseling in an effort to

25 mitigate, prevent, or cure default or
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1 diminution in the value of the vessel

2 or facility;

3 ‘‘(VII) restructuring, re4 negotiating, or otherwise agreeing to

5 alter the terms and conditions of the

6 extension of credit or security interest,

7 exercising forbearance; or

8 ‘‘(VIII) exercising other remedies

9 that may be available under applicable

10 law for the breach of a term or condi11 tion of the extension of credit or secu12 rity agreement;

13 if the actions do not rise to the level of

14 participating in management, as defined in

15 clauses (i) and (ii).

16 ‘‘(H) OTHER TERMS.—As used in subpara17 graphs (E) through (G), and this subpara18 graph:

19 ‘‘(i) EXTENSION OF CREDIT.—The

20 term ‘extension of credit’ includes a lease

21 finance transaction—

22 ‘‘(I) in which the lessor does not

23 initially select the leased vessel or fa24 cility and does not during the lease

25 term control the daily operations or
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1 maintenance of the vessel or facility;

2 or

3 ‘‘(II) that conforms with regula4 tions issued by the appropriate Fed5 eral banking agency or the appro6 priate State bank supervisor (as those

7 terms are defined in section 3 of the

8 Federal Deposit Insurance Act (12

9 U.S.C. 1813)) or with regulations is10 sued by the National Credit Union

11 Administration Board, as appropriate.

12 ‘‘(ii) FINANCIAL OR ADMINISTRATIVE

13 ASPECT.—The term ‘financial or adminis14 trative aspect’ includes a function such as

15 a function of a credit manager, accounts

16 payable officer, accounts receivable officer,

17 personnel manager, comptroller, or chief fi18 nancial officer, or a similar function.

19 ‘‘(iii) FORECLOSURE; FORECLOSE.—

20 The terms ‘foreclosure’ and ‘foreclose’

21 mean, respectively, acquiring, and to ac22 quire, a vessel or facility through—

23 ‘‘(I) purchase at sale under a

24 judgment or decree, a power of sale, a

25 nonjudicial foreclosure sale, or from a
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1 trustee, deed in lieu of foreclosure, or

2 similar conveyance, or through repos3 session, if the vessel or facility was se4 curity for an extension of credit pre5 viously contracted;

6 ‘‘(II) conveyance pursuant to an

7 extension of credit previously con8 tracted, including the termination of a

9 lease agreement; or

10 ‘‘(III) any other formal or infor11 mal manner by which the person ac12 quires, for subsequent disposition,

13 possession of collateral in order to

14 protect the security interest of the

15 person.

16 ‘‘(iv) HAZARDOUS SUBSTANCE.—The

17 term ‘hazardous substance’ has the same

18 meaning as in section 45(d)(2) of the Fed19 eral Deposit Insurance Act.

20 ‘‘(v) OPERATIONAL ASPECT.—The

21 term ‘operational aspect’ includes a func22 tion such as a function of a facility or

23 plant manager, operations manager, chief

24 operating officer, or chief executive officer.
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1 ‘‘(vi) RELEASE.—The term ‘release’

2 has the same meaning as in section

3 45(d)(3) of the Federal Deposit Insurance

4 Act.

5 ‘‘(vii) SECURITY INTEREST.—The

6 term ‘security interest’ includes a right

7 under a mortgage, deed of trust, assign8 ment, judgment lien, pledge, security

9 agreement, factoring agreement, or lease,

10 or any other right accruing to a person to

11 secure the repayment of money, the per12 formance of a duty, or some other obliga13 tion.

14 ‘‘(viii) VESSEL OR FACILITY.—The

15 term ‘vessel or facility’ includes an under16 ground storage tank as defined in section

17 9001(1) of the Solid Waste Disposal Act

18 (42 U.S.C. 6991(1)).’’.

19 SEC. 4. SOLID WASTE DISPOSAL ACT AMENDMENTS.

20 (a) DEFINITION OF OWNER AND OPERATOR.—Sec21 tion 9001 of the Solid Waste Disposal Act (42 U.S.C.

22 6991) is amended by adding at the end the following:

23 ‘‘(9) OWNER AND OPERATOR.—The terms

24 ‘owner’ and ‘operator’ do not include any person ex25 cluded from the definition of an ‘owner or operator’
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1 under subparagraphs (E) through (H) of section

2 101(20) of the Comprehensive Environmental Re3 sponse, Compensation, and Liability Act of 1980 (42

4 U.S.C. 9601(20)).’’.

5 (b) LENDER AND FIDUCIARY LIABILITY.—Subtitle I

6 of the Act (42 U.S.C. 6991 et seq.) is amended by adding

7 at the end the following:

8 ‘‘SEC. 9011. LENDER AND FIDUCIARY LIABILITY.

9 ‘‘This subtitle shall be subject to the limitations on

10 liability in sections 127 and 128 of the Comprehensive En11 vironmental Response, Compensation, and Liability Act of

12 1980.’’.

13 SEC. 5. EFFECTIVE DATE.

14 The amendments made by this Act shall be applicable

15 with respect to any claim that has not been finally adju16 dicated as of the date of enactment of this Act.

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