I

104TH CONGRESS

1ST SESSION H. R. 544

To protect financial institutions from liability for damages caused by failure

to remove asbestos from a residential or commercial building in which

the financial institution holds a security interest if an accredited asbestos

management planner has recommended in-place management of the asbestos, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 17, 1995

Mr. SCHUMER introduced the following bill; which was referred to the Committee on Banking and Financial Services and, in addition, to the Committee on Commerce, 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 protect financial institutions from liability for damages

caused by failure to remove asbestos from a residential

or commercial building in which the financial institution

holds a security interest if an accredited asbestos management planner has recommended in-place management

of the asbestos, 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,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Asbestos Management

3 Incentive Act’’.

4 SEC. 2. FINDINGS.

5 Congress finds the following:

6 (1) Although asbestos is hazardous, the risk of

7 asbestos-related disease depends upon exposure to

8 airborne asbestos fibers.

9 (2) Data available to the Environmental Protec10 tion Agency suggest that average airborne asbestos

11 levels in buildings are very low. Accordingly, the

12 health risk to most building occupants also appears

13 to be very low.

14 (3) The Environmental Protection Agency has

15 estimated that only 20 percent of all buildings (in16 cluding public and commercial buildings, residential

17 apartment buildings of 10 units or more, and Fed18 eral buildings) contain friable asbestos-containing

19 material.

20 (4) The Environmental Protection Agency has

21 found that removal of asbestos is often not the best

22 course of action to reduce asbestos exposure. In fact,

23 by releasing asbestos-containing material fibers into

24 the air, an improper or unnecessary removal can cre25 ate a dangerous situation where none previously ex-
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1 isted and could result in a net increase in human ex2 posures and risks.

3 (5) The Environmental Protection Agency re4 quires asbestos removal only to prevent significant

5 public exposure to airborne asbestos fibers during

6 building demolition or renovation activities.

7 (6) Many lending institutions require the re8 moval of asbestos, regardless of its condition, from

9 commercial buildings before approving loans secured

10 by those buildings because of the potential liability

11 for the health of the occupants or property damages

12 for failure to remove the asbestos.

13 (7) The Environmental Protection Agency rec14 ommends a pro-active, in-place management pro15 gram whenever intact asbestos-containing material is

16 discovered.

17 (8) The American Medical Association’s Council

18 on Scientific Affairs has stated that ‘‘it is better

19 that society use its limited financial resources in

20 learning how to live safely with [asbestos] than in

21 attempting to remove it totally from the environ22 ment.’’

23 (9) The September 1991 report of the Health

24 Effects Institute’s Asbestos Literature Review Panel

25 stated that ‘‘there does not appear to be sufficient
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1 risk to the health of general occupants to justify ar2 bitrarily removing intact asbestos-containing mate3 rial from well-maintained buildings’’. The report also

4 acknowledged that ‘‘because custodial and mainte5 nance workers may be transiently exposed to higher

6 levels of asbestos, their added life-time risk of cancer

7 may be appreciably higher.’’

8 SEC. 3. EFFECT OF ASBESTOS INSPECTION ON LENDING IN9 STITUTIONS.

10 (a) LIABILITY IMMUNITY.—A lending institution that

11 makes a loan or other extension of credit secured by a

12 mortgage or other lien on a commercial building shall not

13 be liable, from the time the loan or other extension of cred14 it is made until it is renegotiated or a superseding loan

15 or other extension of credit is made, under any Federal,

16 State, or local law to any person for injuries, costs, dam17 ages, expenses, loss, or other obligation (including claims

18 for indemnification or contribution and claims by third

19 parties for death, personal injury, illness or loss of or dam20 age to property or economic loss) which results from the

21 presence of asbestos-containing material in the building in

22 any case in which—

23 (1) the building was constructed during the 5-

24 year period ending on the date that the loan or other

25 extension of credit is made, and the building’s con-
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1 struction manager certifies that the building con2 tains no asbestos-containing material; or

3 (2) the building—

4 (A) is one for which an asbestos inspection

5 was conducted in accordance with section 6

6 after January 1, 1989, and during the 5-year

7 period ending on the date that the loan or other

8 extension of credit is made (as demonstrated by

9 appropriate documentation);

10 (B) has not been significantly rebuilt or

11 renovated in the area that contains asbestos12 containing material since that inspection was

13 completed;

14 (C) is one in which that portion of asbes15 tos-containing material which the management

16 planner recommended for removal has been re17 moved in accordance with the Occupational

18 Safety and Health Act and the regulations pro19 mulgated pursuant to section 7(a); and

20 (D) is one in which an operations and

21 maintenance program is currently being con22 ducted in accordance with section 8 and the

23 regulations promulgated pursuant to section

24 7(a) for remaining asbestos-containing mate-
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1 rials which the management planner rec2 ommended be handled in place.

3 (b) LIMITATION.—The immunity from liability pro4 vided in subsection (a) shall not apply if—

5 (1) the lending institution requires removal of

6 asbestos-containing material that the management

7 planner has recommended be handled in place; or

8 (2) the lending institution requires an asbestos

9 inspection of the building despite the fact that—

10 (A) the loan applicant demonstrates, with

11 appropriate documentation, that the conditions

12 in subsection (a)(1) or (a)(2) have been satis13 fied; or

14 (B) the loan applicant demonstrates, with

15 appropriate documentation, that all asbestos16 containing material has been removed from the

17 building.

18 (c) EXCLUSION.—The immunity from liability pro19 vided in subsection (a) shall not apply to a subsidiary of

20 a lending institution in any case in which the lending insti21 tution makes a loan or other extension of credit secured

22 by a mortgage or other lien on a commercial building, and

23 the subsidiary is the person to which the loan or other

24 extension of credit is made. For purposes of this sub25 section, the term ‘‘subsidiary’’ means any company that
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1 is owned or controlled, directly or indirectly, by a lending

2 institution.

3 (d) EFFECTIVE DATE.—This section shall take effect

4 upon the promulgation of regulations by the Adminis5 trator of the Environmental Protection Agency pursuant

6 to section 7(a).

7 SEC. 4. LIABILITY IN THE EVENT OF FORECLOSURE.

8 In the case of a lending institution that is immune

9 from liability with respect to a commercial building under

10 section 3 and acquires title to such building through fore11 closure or other exercise of rights under a security inter12 est, the immunity from liability shall continue in effect so

13 long as the lending institution maintains the operations

14 and maintenance program for the building in accordance

15 with the regulations promulgated pursuant to section 7(a),

16 the Environmental Protection Agency asbestos guidance

17 documents, and this Act.

18 SEC. 5. CONSTRUCTION OF ACT.

19 The requirement by a lending institution that a loan

20 applicant conduct an asbestos inspection in accordance

21 with this Act of a building to be secured by a loan, and

22 the conducting of an operations and maintenance program

23 in the building after foreclosure or other exercise of rights

24 under a security interest, shall not be construed as partici25 pation in the management of the building by the lending
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1 institution and shall be considered to be an activity carried

2 out by the lending institution solely to protect the institu3 tion’s security interest.

4 SEC. 6. ASBESTOS INSPECTION REQUIREMENTS.

5 (a) IN GENERAL.—For purposes of this Act, an as6 bestos inspection of a commercial building, if the loan ap7 plicant chooses to obtain one, shall be conducted by a

8 qualified management planner for the purpose of deter9 mining whether asbestos-containing material is present in

10 the building. If an inspection reveals the presence of asbes11 tos-containing material, the management planner shall

12 recommend specific response actions for each individual

13 area of the building where such material is found. The

14 recommendations shall be made in accordance with the

15 regulations promulgated pursuant to section 7(a) and with

16 the Environmental Protection Agency asbestos guidance

17 documents.

18 (b) MANAGEMENT PLANNER QUALIFICATIONS.—For

19 purposes of this Act, a qualified management planner is

20 a person who meets all of the following requirements:

21 (1) The person must be accredited, pursuant to

22 title II of the Toxic Substances Control Act, as an

23 inspector and management planner for asbestos-con24 taining material in a public or commercial building.
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1 (2) The person must not own or control or be

2 under the control of (A) any entity which carries out

3 response actions for asbestos-containing material

4 from buildings, (B) any owner or manager of the

5 building being inspected, or (C) any lending institu6 tion making a loan or other extension of credit se7 cured by a mortgage or other lien on the building

8 being inspected. For purposes of this paragraph, a

9 person controls an entity if the person, directly or

10 indirectly, owns any amount of the voting stock or

11 other type of ownership interest in the entity.

12 (c) ACCREDITATION OF MANAGEMENT PLANNERS

13 FOR PUBLIC AND COMMERCIAL BUILDINGS.—Section 206

14 of the Toxic Substances Control Act (15 U.S.C. 2646) is

15 amended as follows:

16 (1) Paragraph (2) of subsection (a) is amended

17 by inserting before the comma the following: ‘‘or for

18 a public or commercial building’’.

19 (2) Clause (ii) of subsection (a)(1)(A) is amend20 ed by inserting before the period the following: ‘‘or

21 for public or commercial buildings’’.

22 SEC. 7. ENVIRONMENTAL PROTECTION AGENCY REQUIRE23 MENTS.

24 (a) ASBESTOS INSPECTION AND MANAGEMENT

25 STANDARDS FOR PUBLIC AND COMMERCIAL BUILD-
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1 INGS.—Not later than 1 year after the date of the enact2 ment of this Act, the Administrator of the Environmental

3 Protection Agency shall promulgate regulations governing

4 the inspection and management of asbestos in public and

5 commercial buildings for purposes of this Act only. The

6 regulations shall include—

7 (1) detailed guidelines for management plan8 ners to determine whether asbestos-containing mate9 rial should be removed or managed in place in a

10 public or commercial building;

11 (2) appropriate practices for conducting oper12 ations and maintenance programs in public or com13 mercial buildings in which asbestos-containing mate14 rial is managed in place; and

15 (3) standards, applicable to persons complying

16 with section 8(1), for periodic surveillance of asbes17 tos-containing material that is managed in place in

18 commercial buildings, including standards for the

19 training of maintenance and custodial staff working

20 in such buildings that are equivalent to the stand21 ards for the training of maintenance and custodial

22 staff of local educational agencies under title II of

23 the Toxic Substances Control Act.

24 (b) REVISION OF ENVIRONMENTAL PROTECTION

25 AGENCY ASBESTOS GUIDANCE DOCUMENTS.—The Ad-
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1 ministrator of the Environmental Protection Agency shall

2 periodically update, revise, and republish the Environ3 mental Protection Agency asbestos guidance documents.

4 SEC. 8. OPERATION AND MAINTENANCE REQUIREMENTS.

5 For purposes of section 3(a)(2)(D), the following re6 quirements must be met after an asbestos inspection of

7 the building concerned is conducted:

8 (1) The owner or operator shall ensure that the

9 remaining asbestos-containing material is visually in10 spected, not less frequently than every 6 months, by

11 a member of the maintenance or custodial staff, or

12 another person, who has undergone training in ac13 cordance with the standards contained in the regula14 tions promulgated pursuant to section 7(a)(4).

15 (2) All remaining accessible asbestos-containing

16 material in public and maintenance areas of the

17 building, including asbestos in thermal system insu18 lation and spray-on and trowelled-on asbestos-con19 taining material but excluding intact vinyl floor tile

20 and ceiling tile in public areas, shall be prominently

21 labeled. The owner or operator shall ensure that ac22 cess to any remaining asbestos-containing material

23 located in inaccessible areas, such as in spaces be24 tween floors or walls of the building, is permitted
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1 only to persons who have been notified of the pres2 ence of the asbestos-containing material.

3 (3) After the inspection referred to in section

4 3(a)(2)(A), a report on the inspection shall be kept

5 on file in the building. Such report shall include an

6 accounting of remaining asbestos-containing mate7 rial, any such material recommended for removal,

8 and any removal that has taken place since the pre9 vious inspection. Such report shall be available in

10 the building, in the administrative offices or other

11 appropriate place for inspection by tenants and em12 ployees in the building, maintenance workers of the

13 building, and building contractors. The inspection

14 report shall be updated after each subsequent in15 spection pursuant to paragraph (1) and after any

16 change in condition of asbestos-containing material

17 being managed in place.

18 (4) After each inspection pursuant to para19 graph (1), the owner of the building shall notify

20 maintenance workers of the building, either in writ21 ing or by posting notice, that an inspection has oc22 curred and that an inspection report is available for

23 inspection.
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1 SEC. 9. RELATIONSHIP TO OTHER LAW.

2 (a) CLEAN AIR ACT.—Nothing in this Act shall be

3 construed or interpreted to preempt, supersede, or other4 wise affect any requirement to remove asbestos from a

5 building pursuant to section 112 of the Clean Air Act (42

6 U.S.C. 7412), as implemented through regulations known

7 as the national emission standards for hazardous air pol8 lutants (40 C.F.R. 61).

9 (b) LIMITED REQUIREMENTS.—Nothing in this Act

10 shall be construed or interpreted as a general requirement

11 for inspections or operations and maintenance programs

12 in public and commercial buildings. The requirements of

13 sections 6, 7, and 8 are established solely to enable lending

14 institutions to satisfy the conditions of this Act for pur15 poses of obtaining immunity from liability under section

16 3.

17 SEC. 10. DEFINITIONS.

18 For purposes of this Act, the following definitions

19 apply:

20 (1) The term ‘‘asbestos-containing material’’

21 has the meaning given that term by section 202(4)

22 of the Toxic Substances Control Act (15 U.S.C.

23 2642(4)).

24 (2) The term ‘‘commercial building’’ means any

25 building that is not a publicly owned building and

26 that is not a school building as defined in section
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1 202(13) of the Toxic Substances Control Act, except

2 that such term does not include any residential

3 building of fewer than 10 units that is not part of

4 a complex of other residential buildings under com5 mon ownership.

6 (3) The term ‘‘EPA asbestos guidance docu7 ments’’ means—

8 (A) the most current version of the publi9 cation of the Environmental Protection Agency

10 titled ‘‘Guidance for Controlling Asbestos-Con11 taining Materials in Buildings’’ (also known as

12 the ‘‘Purple Book’’);

13 (B) the most current version of the publi14 cation of the Environmental Protection Agency

15 titled ‘‘Managing Asbestos in Place’’ (also

16 known as the ‘‘Green Book’’); and

17 (C) any other publication of the Environ18 mental Protection Agency, including any guid19 ance documents published pursuant to section

20 7(a), published for the purpose of enabling

21 building owners to select and apply appropriate

22 asbestos control and abatement actions in their

23 buildings.

24 (4) The term ‘‘lending institution’’ means (A) a

25 bank, savings and loan association, credit union, or
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1 similar institution insured by, or subject to the su2 pervision, approval, or regulation of, the Board of

3 Governors of the Federal Reserve System, the Fed4 eral Deposit Insurance Corporation, the Comptroller

5 of the Currency, the Office of Thrift Supervision, or

6 the National Credit Union Administration; (B) any

7 other person, including an insurance company, that

8 makes direct loans or other extensions of credit se9 cured by mortgages or other liens on commercial

10 buildings; (C) any Federal agency to the extent the

11 agency makes direct loans or other extensions of

12 credit secured by mortgages or other liens on com13 mercial buildings; and (D) the Federal Deposit In14 surance Corporation, the National Credit Union Ad15 ministrator Board, and the Resolution Trust Cor16 poration, in such corporation’s or Board’s capability

17 as conservator, receiver, or liquidating agency for

18 any insured depository institution (as that term is

19 defined in section 3 of the Federal Deposit Insur20 ance Act). The term does not include any institution

21 or Federal agency engaged primarily in the purchase

22 of mortgage loans.

23 (5) The term ‘‘mortgage’’ means a lien as is

24 commonly given to secure advances on, or the un25 paid purchase price of, a commercial building (and
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1 related real estate) under the laws of the State in

2 which the building is located, together with the cred3 it instrument, if any, secured thereby. The term in4 cludes second mortgages and other subsequent liens

5 on a commercial building given to secure advances

6 or loans.

7 (6) The term ‘‘response action’’ has the mean8 ing given that term by section 202(11) of the Toxic

9 Substances Control Act (15 U.S.C. 2642(11)).

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