Ashland oil, Inc. v. Sonford Products Corp., Kelley v. Tiscornia, and United States v. Fleet Factors Corp.: Upholding EPA`s lender liability rule

Journal Article · Fri Dec 31 04:00:00 EST 1993 · Tort and Insurance Law Journal

OSTI ID:482381

Evans, Jr, W D ^[1]

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1. San Francisco`s Graham & James, Washington, DC (United States)

John Grisham`s novel The Firm relates the story of Mitchell McDeere, a young law school graduate who believes that he is joining a {open_quotes}white shoe{close_quotes} Memphis, Tennessee, firm but discovers that the firm is controlled by the Mob. A similar, but different, {open_quotes}surprise{close_quotes} has befallen banks as a result of toxic waste cleanup cost claims. When the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund) was passed in 1980, banks had no cause for alarm because the Act provided an exemption from its ownership-based liability for any lender holding {open_quotes}indicia of ownership primarily to protect his security interest{close_quotes} in a hazardous waste facility. Based on the statutory language, it seemed reasonably clear that Congress did not intend to impose liability on secured creditors merely for securing a debt with a deed of trust or mortgage. Unfortunately, lender liability for CERCLA claims arose in the mid-1980s out of two lower federal court decisions and the Eleventh Circuit`s controversial, to say the least, 1990 decision in United States v. Fleet Factors Corp (Fleet Factors II). The major issues currently confronting lenders under CERCLA are (1) the extent to which a secured creditor may involve itself in the debtor`s operations, especially during a loan workout program, without becoming liable for cleanup costs as a CERCLA {open_quotes}owner or operator{close_quotes} and (2) whether a lender who forecloses on collateral and takes title is liable under CERCLA. 94 refs.

• OSTI ID: 482381
• Journal Information: Tort and Insurance Law Journal, Journal Name: Tort and Insurance Law Journal Journal Issue: 1 Vol. 29; ISSN TILJED; ISSN 0885-856X
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
CONTAMINATION
INDUSTRY
LEGAL ASPECTS
LENDING INSTITUTIONS
LIABILITIES
REMEDIAL ACTION