2023 New York Laws › PBH - Public Health › Article 13 - Nuisances and Sanitation › Title 12-A - Inactive Hazardous Waste Disposal Sites › 1389-E - Liability Exemptions and Defenses.

§  1389-e. 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 inquires 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   of
environmental  conservation  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.