NY Env Conserv L § 27-1323 (2021)
2021 New York Laws ENV - Environmental Conservation Article 27 - Collection, Treatment and Disposal of Refuse and Other Solid Waste Title 13 - Inactive Hazardous Waste Disposal Sites 27-1323 - Liability Exemptions and Defenses.

§ 27-1323. Liability exemptions and defenses.   1.  Lender  exemption.  (a) For purposes of this title no lender shall incur any liability from any statutory claims of the state as  an  owner or  operator  of  a  site, or a person responsible for the disposal of a hazardous  waste  at  such   site,   provided   such   lender,   without participating in the management of such site, holds indicia of ownership primarily  to  protect the lender's security interest in the site or, if such lender did not participate in the management of such site prior  to a foreclosure on such site, notwithstanding that such lender:  (1) forecloses on such site; and  (2) after foreclosure, sells, releases (in the case of a lease finance transaction),  or  liquidates  such site, maintains business activities, winds up operations, or takes any other measure to preserve, protect  or prepare  such site prior to sale or disposition; provided, however, that such lender shall take actions to sell, release (in the case of a  lease finance  transaction),  or  otherwise  divest itself of such site at the earliest practicable,  commercially  reasonable  time,  on  commercially reasonable  terms,  taking  into account market conditions and legal and regulatory requirements.  (b) This exemption shall not apply to any lender that  has  caused  or contributed  to  the  release or threatened release of a hazardous waste from or onto the site, or to any lender that generated, transported,  or disposed   of,   arranged   for,   or   that   caused   the  generation, transportation, or disposal of hazardous waste from or onto such site.  (c) For purposes of this section:  (1)  The   term   "participating   in   management"   means   actually participating  in  the  management  or operational affairs of a site and does not include  merely  having  the  capacity  to  influence,  or  the unexercised right to control, site operations.  (i)  A  lender  who  holds indicia of ownership primarily to protect a security interest in such site shall be  considered  to  participate  in management  only  if,  while  the borrower is in possession of such site encumbered by the security interest, the lender:  (A)  exercises  decision  making  control   over   the   environmental compliance  related  to  such  site, such that the lender has undertaken responsibility for the hazardous waste handling  or  disposal  practices related to such site; or  (B)  exercises  control  at a level comparable to that of a manager of such  site,  such  that   the   lender   has   assumed   or   manifested responsibility:  (I)  for  the  overall management of such site encompassing day-to-day decision making with respect to environmental compliance; or  (II) over all or  substantially  all  of  the  operational  functions, excluding financial or administrative functions, of such site other than the function of environmental compliance.  (ii) The term "participate in management" does not include:  (A)  Performing  an act or failing to act prior to the time at which a security interest is created in a site;  (B) Holding a security interest or abandoning or releasing a  security interest;  (C) Including in the terms of an extension of credit, or in a contract or  security agreement relating to such extension, a covenant, warranty, or other term or condition that relates to environmental compliance;  (D) Monitoring or enforcing the terms and conditions of the  extension of credit or security interest;  (E) Monitoring or undertaking one or more inspections of such site;  (F)  Requiring  a  response action or other lawful means of addressing the release or threatened release of a  hazardous  waste  in  connection  with such site prior to, during, or on the expiration of the term of the extension of credit;  (G)  Providing financial or other advice or counseling in an effort to mitigate, prevent, or cure default or diminution in the  value  of  such site;  (H)  Restructuring,  renegotiating, or otherwise agreeing to alter the terms and conditions of the extension of credit  or  security  interest, exercising forbearance;  (I)  Exercising  other remedies that may be available under applicable law for the breach of a term or condition of the extension of credit  or security agreement; or  (J)  Conducting  a  response action under 42 U.S.C. Section 9607(d) or under the direction of  an  on-scene  coordinator  appointed  under  the national  contingency  plan  if  the actions do not rise to the level of participating in management within the meaning of this subparagraph.  (2)  The  term  "extension  of  credit"  includes  a   lease   finance transaction:  (i)  In which the lessor does not initially select the leased site and does  not  during  the  lease  term  control  the  daily  operations  or maintenance of such site; or  (ii)  That conforms with regulations issued by the appropriate federal banking agency or the appropriate state bank supervisor (as those  terms are defined in section 3 of the federal deposit insurance act (12 U.S.C. 1813))   or  with  regulations  issued  by  the  national  credit  union administration board, as appropriate.  (3)  The  term  "financial  or  administrative  function"  includes  a function  such  as  that  of a credit manager, accounts payable officer, accounts receivable officer, personnel manager,  comptroller,  or  chief financial officer, or a similar function.  (4)  The  terms  "foreclosure"  and  "foreclose"  mean,  respectively, acquiring and to acquire, a site through:  (i) Purchase at sale under a judgment or decree,  power  of  sale,  or nonjudicial foreclosure sale;  (ii)  A  deed  in  lieu  of  foreclosure  or similar conveyance from a trustee;  (iii) Repossession if such site  was  security  for  an  extension  of credit previously contracted;  (iv)   Conveyance  pursuant  to  an  extension  of  credit  previously contracted, including the termination of a lease agreement; or  (v) Any other formal or informal manner by which the lender  acquires, for subsequent disposition, title to or possession of a site in order to protect the lender's security interest.  (5) The term "lender" means:  (i)  An  insured depository institution as defined in section 3 of the federal deposit insurance act (12 U.S.C 1813);  (ii) An insured credit union as defined in section 101 of the  federal credit union act (12 U.S.C. 1752);  (iii)  A  bank  or  association chartered under the farm credit act of 1971 (12 U.S.C. 2001 et seq.);  (iv) A leasing or trust company that is an  affiliate  of  an  insured depository institution;  (v)  Any person, including a successor or assignee of any such person, that makes a bona fide extension of credit to or  takes  or  acquires  a security interest from a nonaffiliated person;  (vi)  The federal national mortgage association, the federal home loan mortgage corporation, the federal agricultural mortgage corporation,  or any  other  entity  that  in  a  bona fide manner buys or sells loans or interests in loans;  (vii) A person that insures or guarantees against  a  default  in  the repayment of an extension of credit, or acts as a surety with respect to an extension of credit, to a nonaffiliated person; and  (viii) A person that provides title insurance and that acquires a site as  a  result  of assignment or conveyance in the course of underwriting claims and claims settlement.  (6) The term "operational function" includes a function such  as  that of a site or plant manager, operations manager, chief operating officer, or chief executive officer.  (7)  The  term  "security interest" includes a right under a mortgage, deed of trust, assignment, judgment, lien, pledge,  security  agreement, factoring  agreement, or lease, and any other right accruing to a person to secure the repayment of money, the performance  of  a  duty,  or  any other obligation by a nonaffiliated person.   2.  Municipal  exemption. (a) For the purposes of this title no public corporation shall incur any liability from any statutory claims  of  the state as an owner or operator of a site, or a person responsible for the disposal  of  a hazardous waste at such site, if such public corporation acquired such site involuntarily, and such public  corporation  retained such site without participating in the development of such site.  (b)  This exemption shall not apply to any public corporation that has caused or  contributed  to  the  release  or  threatened  release  of  a hazardous waste from or onto the site, or to any public corporation that generated, transported, or disposed of, arranged for, or that caused the generation, transportation, or disposal of hazardous waste, from or onto the site.  (c) When used in this section:  (1)  "Public  corporation"  means  a  public corporation as defined in section sixty-five of the  general  construction  law,  a  local  public authority,  supervisory  district, improvement district within a county, city, town, or village, or Indian nation  or  tribe  recognized  by  the state  or  the  United States with a reservation wholly or partly within the boundaries of New York state, or any combination thereof.  (2) "Involuntary acquisition of ownership or control" includes but  is not limited to the following:  (i)  Acquisitions  by  a public corporation in its sovereign capacity, including but  not  limited  to  acquisitions  pursuant  to  abandonment proceedings or bequest;  (ii)  Acquisitions  by a public corporation, or its agent, acting as a conservator or receiver pursuant to a clear and direct statutory mandate or regulatory authority;  (iii) Acquisitions of assets through foreclosure and its  equivalents, or  otherwise,  by a public corporation in the course of administering a loan, loan guarantee, tax lien, or tax forbearance  agreement,  or  loan insurance program; or  (iv)  Acquisitions  by  a  public  corporation  pursuant  to  seizure, injunction, condemnation, or forfeiture authority;  provided  that  such ownership or control is not retained primarily for investment purposes.  (d)  For  the  purpose  of  this  section, the terms "foreclosure" and "foreclose" mean, respectively, acquiring or  to  acquire  a  brownfield site through:  (1)  purchase  at  sale  under a judgment or decree, power of sale, or non-judicial foreclosure sale;  (2)  a  deed  in  lieu  of  foreclosure,  or  similar  conveyance,  or abandonment from a person or trustee;  (3)  conveyance  pursuant to an extension of credit or tax forbearance previously contracted; or  (4) any other formal or informal manner by which  a  person  acquires, for subsequent disposition, title to or possession of a site in order to protect the security interest of the public corporation or lender.  (e)  "Participating in development" means the carrying out, or causing or permitting the carrying out, of any above-grade improvements  to  the site or any other environmental investigation or remediation, except for those improvements which are part of a site remedial program pursuant to this  article  or  in  furtherance  of  site  safety, such as fencing or lighting, but does not include licensing, regulatory oversight,  or  the mere  capacity  to  regulate  or  influence, or the unexercised right to control the operation of the property. For  purposes  of  this  section, participating in development does not include:  (1) having the capacity to influence management of a site;  (2) having the unexercised right to control or to regulate the site or operations thereof;  (3)  holding, abandoning, or releasing a security interest or tax lien on such site;  (4) including a condition relating to environmental  compliance  in  a contract, permit, license, or security agreement;  (5)  monitoring  or enforcing the terms and conditions of an agreement or tax forbearance agreement;  (6) monitoring or undertaking  one  or  more  inspections  of  a  site including, but not limited to, boring test wells;  (7) exercising other remedies available under applicable laws;  (8)  licensing,  permitting,  or  granting  permits,  certificates  of occupancy and variances as allowed by law and/or regulation;  (9) applying for  or  participating  in  federal  or  state  statutory programs or benefits; or  (10)  declining  to take any of the actions described in subparagraphs one through nine of this paragraph.  (f) Any public corporation that has taken possession of a  site  shall notify  the department of any release of hazardous waste within ten days of obtaining actual knowledge of such release, unless a  shorter  notice period  is  required under any other provision of law, in which case the shorter notice period controls. Failure to notify the department  within the  ten  day or shorter notification period shall result in the loss of the exemption set forth in this section.   3. Fiduciary liability cap. For the purpose of this  title,  liability on  the  part  of  a  fiduciary  shall not exceed the assets held in the fiduciary capacity if such person is not liable  independently  of  such person's  ownership  as  a  fiduciary  or  actions  taken in a fiduciary capacity including, but not  limited  to,  the  fiduciary's  negligently causing  or  contributing  to  the  release  or  threatened  release  of hazardous waste at such site.  (a) For purposes of this subdivision:  (1) the term "fiduciary" means a person  acting  for  the  benefit  of another   party   as  a  bona  fide  trustee;  executor;  administrator; custodian;  guardian  of  estates  or  guardian  ad   litem;   receiver; conservator;  committee  of  estates  of  incapacitated person; personal representative; trustee (including a successor to a  trustee)  under  an indenture  agreement,  trust  agreement,  lease,  or  similar  financing agreement, for debt securities, certificates of interest or certificates of participation in debt securities, or other forms of  indebtedness  as to  which the trustee is not, in the capacity of trustee, the lender; or representative  in  any  other  capacity  that  the  department,   after providing  public  notice,  determines  to  be  similar  to  the various capacities previously described in this paragraph; and does not  include either a person that is acting as a fiduciary with respect to a trust or  other fiduciary estate that was organized for the primary purpose of, or is  engaged  in,  actively  carrying  on a trade or business for profit, unless the trust or other fiduciary estate was created as part of, or to facilitate,  one  or more estate plans or because of the incapacity of a natural person or a person that  acquires  ownership  or  control  of  a property  with the objective purpose of avoiding liability of the person or any other person.  (2) the term "fiduciary capacity" means the capacity of  a  person  in holding  title  to  a  property,  or  otherwise  having control of or an interest in a property, pursuant to the exercise of the responsibilities of the person as a fiduciary.  (b) Nothing in this subdivision affects the rights  or  immunities  or other  defenses  that  are  available under law that are applicable to a person subject to this section; or creates any liability for a person or a private right of action against a fiduciary or any other person.  (c) Nothing in this subdivision applies to a  person  if  that  person acts  in  a  capacity other than that of a fiduciary or in a beneficiary capacity and in that capacity, directly or indirectly, benefits  from  a trust  or  fiduciary  relationship;  or is a beneficiary and a fiduciary with respect to the same fiduciary estate and, as a fiduciary,  receives benefits   that   exceed   customary  or  reasonable  compensation,  and incidental benefits, permitted under other applicable law.  (d) This subdivision does not preclude  a  claim  under  this  chapter against the assets of the estate or trust administered by the fiduciary; or   a  nonemployee  agent  or  independent  contractor  retained  by  a fiduciary.   4. Affirmative defenses. (a) There shall be no  liability  under  this title for a person otherwise liable who can establish by a preponderance of   the  evidence  that  the  significant  threat  to  the  environment attributable to hazardous waste disposed at an inactive hazardous  waste disposal  site  was  caused  solely by: (1) an act of God; (2) an act of war; or (3) an act or omission of a third party other than  an  employee or  agent  of  such  person, or than one whose act or omission occurs in connection  with  a  contractual  relationship  existing   directly   or indirectly   with   such  person  (except  where  the  sole  contractual arrangement arises from a published tariff and acceptance  for  carriage by  a  common  carrier  or  rail),  if  such  person  establishes  by  a preponderance of the evidence that: (i) such person exercised  due  care with respect to the hazardous waste concerned, taking into consideration the  characteristics  of  such hazardous waste, in light of all relevant facts and circumstances, and (ii) 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 any combination of them.  (b) For purposes of this section, (1) the term "act of God"  means  an unanticipated  grave  natural disaster or other natural phenomenon of an exceptional, inevitable, and  irresistible  character,  the  effects  of which  could  not  have been prevented or avoided by the exercise of due care or foresight, (2) the term "contractual relationship" includes, but is  not  limited  to,  land  contracts,  deeds,  or  other   instruments transferring  title or possession, unless the real property on which the site concerned is located was acquired by such person after the disposal or placement of the hazardous waste on, in, or at such  site,  and  such person  establishes one or more of the circumstances described in clause (i), (ii), or (iii) of this  subparagraph  by  a  preponderance  of  the evidence:  (i)  At  the  time  such person acquired the site, such person did not know and had no reason to know that any hazardous  waste  which  is  the  subject  of the significant threat determination was disposed of on, in, or at the site; or  (ii)  Such  person  is  a government entity which acquired the site by escheat, or through any other involuntary  transfer  or  acquisition  or through  the  exercise  of  eminent  domain  authority  by  purchase  or condemnation; or  (iii) Such person acquired the site  by  inheritance  or  bequest.  In addition  to  establishing the foregoing, the person must establish that he or she has satisfied the requirements of  clauses  (i)  and  (ii)  of subparagraph  three  of paragraph (a) of this subdivision, provides full cooperation, assistance,  and  site  access  to  the  persons  that  are authorized  to  conduct  remedial  actions  at  the  site (including the cooperation  and  access  necessary  for  the  installation,  integrity, operation, and maintenance of any complete or partial remedial action at the  site),  is in compliance with any land use restrictions established or relied on in connection with the remedial action at a site, and  does not  impede  the  effectiveness or integrity of any institutional and/or engineering control employed at the site in connection with  a  remedial action.  (c)(1)  To  establish  that  the  person  had no reason to know of the matter described in clause (i) of subparagraph two of paragraph  (b)  of this subdivision, the person must demonstrate to a court that:  (i)  on  or before the date on which the person acquired the site, the person  carried  out  all  appropriate   inquiries,   as   provided   in subparagraphs  two  and  four  of  this  paragraph,  into  the  previous ownership and uses of the site in  accordance  with  generally  accepted good commercial and customary standards and practices; and  (ii) the person took reasonable steps to:  (A) stop any continuing release;  (B) prevent any threatened future release; and  (C)  prevent  or  limit  any human, environmental, or natural resource exposure to any previously released hazardous waste.  (2) Not later than one year after the effective date of this  section, the  commissioner  shall by regulation establish standards and practices for  the  purpose  of  satisfying  the  requirement  to  carry  out  all appropriate inquiries under subparagraph one of this paragraph.  (3)  In  promulgating  regulations  that  establish  the standards and practices referred  to  in  subparagraph  two  of  this  paragraph,  the commissioner shall include each of the following:  (i) the results of an inquiry by an environmental professional;  (ii) interviews with past and present owners, operators, and occupants of  the  site  for  the  purpose  of gathering information regarding the potential for contamination at the site;  (iii) reviews of historical sources, such as chain of title documents, aerial photographs, building department records, and land  use  records, to  determine  previous  uses and occupancies of the real property since the property was first developed;  (iv) searches for recorded environmental  cleanup  liens  against  the site that are filed under federal, state, or local law;  (v)  reviews  of  federal,  state, and local government records, waste disposal records, underground storage tank records, and hazardous  waste handling, generation, treatment, disposal, and spill records, concerning contamination at or near the site;  (vi) visual inspections of the site and of adjoining properties;  (vii) specialized knowledge or experience on the part of the person;  (viii)  the  relationship  of  the  purchase price to the value of the property, if the property was not contaminated;  (ix) commonly known or reasonably ascertainable information about  the property;  (x)  the  degree  of obviousness of the presence or likely presence of contamination  at  the  property,  and  the  ability   to   detect   the contamination by appropriate investigation.  (4)(i)  With  respect  to  property purchased before May thirty-first, nineteen hundred ninety-seven, in making a determination with respect to a person described in subparagraph one of this paragraph a  court  shall take into account:  (A) any specialized knowledge or experience on the part of the person;  (B)  the  relationship  of  the  purchase  price  to  the value of the property, if the property was not contaminated;  (C) commonly known or reasonably ascertainable information  about  the property;  (D)   the   obviousness   of   the  presence  or  likely  presence  of contamination at the property; and  (E)  the  ability  of  the  person  to  detect  the  contamination  by appropriate inspection.  (ii)  With respect to property purchased on or after May thirty-first, nineteen hundred ninety-seven, and until  the  commissioner  promulgates the  regulations  described  in  subparagraph two of this paragraph, the procedures of the American Society for Testing and Materials,  including the  document  known as "Standard E1527-97", entitled 'Standard Practice for Environmental Site Assessment: Phase 1 Environmental Site Assessment Process', shall satisfy the requirements in  subparagraph  one  of  this paragraph.  (5)  In  the case of property for residential use or other similar use purchased  by  a  nongovernmental  or  noncommercial  entity,   a   site inspection   and   title   search  that  reveal  no  basis  for  further investigation shall be considered to satisfy the  requirements  of  this subparagraph.  (d)  Nothing  in  this subdivision shall diminish the liability of any previous owner or operator of the site who  would  otherwise  be  liable under  this  title.  Notwithstanding  this  subdivision,  if such person obtained actual knowledge of the release  or  threatened  release  of  a hazardous  waste  at  the  site when such person owned the site and then subsequently transferred ownership of the site to another person without disclosing such knowledge, such person shall  be  treated  as  a  person responsible  for  the  disposal  of  hazardous waste at the site, and no defense under this  subdivision  shall  be  available  to  such  person. Nothing  in  this  subdivision  shall  affect  the  liability under this section of a person who, by any act or omission, caused  or  contributed to  the  release or threatened release of a hazardous waste which is the subject of such proceeding relating to such site.