ethical issues that can arise in commercial real estate

Ethical Issues That Can Arise in Commercial Real Estate Transactions

September 14, 2020

2:00 p.m. – 4:00 p.m.

CT Bar Association

Webinar

CT Bar Institute Inc.

CT: 2.0 CLE Credits (Ethics) NY: 2.0 CLE Credits (Ethics)

Seminar Materials Sponsored by

No representation or warranty is made as to the accuracy of these materials. Readers should check primary sources where appropriate and use the traditional legal

research techniques to make sure that the information has not been affected or changed by recent developments.

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https://mpival.com/

Lawyers’ Principles of Professionalism As a lawyer I must strive to make our system of justice work fairly and efficiently. In order to carry out that responsibility, not only will I comply with the letter and spirit of the disciplinary standards applicable to all lawyers, but I will also conduct myself in accordance with the following Principles of Professionalism when dealing with my client, opposing parties, their counsel, the courts and the general public.

Civility and courtesy are the hallmarks of professionalism and should not be equated with weakness; I will endeavor to be courteous and civil, both in oral and in written communications;

I will not knowingly make statements of fact or of law that are untrue;

I will agree to reasonable requests for extensions of time or for waiver of procedural formalities when the legitimate interests of my client will not be adversely affected;

I will refrain from causing unreasonable delays;

I will endeavor to consult with opposing counsel before scheduling depositions and meetings and before rescheduling hearings, and I will cooperate with opposing counsel when scheduling changes are requested;

When scheduled hearings or depositions have to be canceled, I will notify opposing counsel, and if appropriate, the court (or other tribunal) as early as possible;

Before dates for hearings or trials are set, or if that is not feasible, immediately after such dates have been set, I will attempt to verify the availability of key participants and witnesses so that I can promptly notify the court (or other tribunal) and opposing counsel of any likely problem in that regard;

I will refrain from utilizing litigation or any other course of conduct to harass the opposing party;

I will refrain from engaging in excessive and abusive discovery, and I will comply with all reasonable discovery requests;

In depositions and other proceedings, and in negotiations, I will conduct myself with dignity, avoid making groundless objections and refrain from engaging I acts of rudeness or disrespect;

I will not serve motions and pleadings on the other party or counsel at such time or in such manner as will unfairly limit the other party’s opportunity to respond;

In business transactions I will not quarrel over matters of form or style, but will concentrate on matters of substance and content;

I will be a vigorous and zealous advocate on behalf of my client, while recognizing, as an officer of the court, that excessive zeal may be detrimental to my client’s interests as well as to the proper functioning of our system of justice;

While I must consider my client’s decision concerning the objectives of the representation, I nevertheless will counsel my client that a willingness to initiate or engage in settlement discussions is consistent with zealous and effective representation;

Where consistent with my client's interests, I will communicate with opposing counsel in an effort to avoid litigation and to resolve litigation that has actually commenced;

I will withdraw voluntarily claims or defense when it becomes apparent that they do not have merit or are superfluous;

I will not file frivolous motions;

I will make every effort to agree with other counsel, as early as possible, on a voluntary exchange of information and on a plan for discovery;

I will attempt to resolve, by agreement, my objections to matters contained in my opponent's pleadings and discovery requests;

In civil matters, I will stipulate to facts as to which there is no genuine dispute;

I will endeavor to be punctual in attending court hearings, conferences, meetings and depositions;

I will at all times be candid with the court and its personnel;

I will remember that, in addition to commitment to my client's cause, my responsibilities as a lawyer include a devotion to the public good;

I will endeavor to keep myself current in the areas in which I practice and when necessary, will associate with, or refer my client to, counsel knowledgeable in another field of practice;

I will be mindful of the fact that, as a member of a self-regulating profession, it is incumbent on me to report violations by fellow lawyers as required by the Rules of Professional Conduct;

I will be mindful of the need to protect the image of the legal profession in the eyes of the public and will be so guided when considering methods and content of advertising;

I will be mindful that the law is a learned profession and that among its desirable goals are devotion to public service, improvement of administration of justice, and the contribution of uncompensated time and civic influence on behalf of those persons who cannot afford adequate legal assistance;

I will endeavor to ensure that all persons, regardless of race, age, gender, disability, national origin, religion, sexual orientation, color, or creed receive fair and equal treatment under the law, and will always conduct myself in such a way as to promote equality and justice for all.

It is understood that nothing in these Principles shall be deemed to supersede, supplement or in any way amend the Rules of Professional Conduct, alter existing standards of conduct against which lawyer conduct might be judged or become a basis for the imposition of civil liability of any kind.

--Adopted by the Connecticut Bar Association House of Delegates on June 6, 1994

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Table of Contents Agenda ................................................................................................................................................................................... 4

Faculty Biographies ................................................................................................................................................................. 5

Ethical Issues that Can Arise in Commercial Real Estate Transactions Presentation ............................................................. 8

Hazardous Substances, Releases, Liability, Compensation ................................................................................................... 16

Connecticut Rules of Professional Conduct ......................................................................................................................... 39

United States v. Fleet Factors Corp ...................................................................................................................................... 45

Connecticut Administrative Code Title 22a .......................................................................................................................... 55

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1

Ethical Issues that Can Arise in Commercial Real Estate Transactions Speakers Emilee Mooney Scott, Robinson & Cole LLP, Hartford Paty Jimenez, Day Pitney LLP, Hartford Rachel Rosen, Burns & McDonnell, Wallingford Moderator Elizabeth R. Fortino, Winnick Ruben Hoffnung Peabody and Mendel, LLC, New Haven Program Schedule 3:30 Opening remarks and introduction of speakers – Elizabeth Fortino 3:35 Hypothetical Situation Explained – Emilee Mooney Scott and Rachel Rosen 3:55 Lender analysis of hypothetical and lender roles – Paty Jimenez 4:15 Ethical Responsibilities of Attorneys – Emilee Mooney Scott 4:35 Ethical Responsibilities of Licensed Environmental Professionals – Rachel Rosen 4:55 Practical tips for dealing with red flags in these transactions - All 5:00 Questions – Elizabeth Fortino (and open to audience)

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Faculty Biographies Emilee Mooney Scott, Esq. Robinson & Cole LLP 280 Trumbull Street, Hartford, CT 06103 [email protected] 860‐275‐8362

Emilee Mooney Scott is counsel in Robinson+Cole’s Environmental, Energy + Telecommunications Group, with experience in facility compliance and transactional matters. Her experience includes a long‐term placement in the legal department of a client, a multinational manufacturer, where she worked closely with the in‐house and outside environmental and transactional counsel as well as corporate and facility environmental personnel.

Emilee assists clients in complying with federal and state environmental laws, with a particular focus on the management of hazardous and toxic substances. In particular, she has assisted clients with Toxic Substances Control Act registration and reporting requirements, the Emergency Planning and Community Right‐to‐Know Act compliance, and facility chemical safety matters. Emilee also helps clients understand, manage and limit environmental risk associated with business and property transactions, and assists clients in complying with transaction‐triggered compliance requirements like the Connecticut Transfer Act. Paty Jimenez, Esq. Day Pitney LLP 242 Trumbull Street, Hartford, CT 06103‐1212 [email protected] 860‐275‐0494

Patricia "Paty" Jimenez represents private company borrowers and lending institutions in the negotiation of asset‐based lending, financing for corporate acquisitions and real estate lending. She is also experienced in counseling companies in mergers and acquisitions. Prior to joining Day Pitney, Paty was an extern for the Honorable Vanessa L. Bryant of the U.S District

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Rachel Rosen, LEP Burns & McDonnell 108 Leigus Road, Suite 1100, Wallingford, CT 06492 [email protected] 203‐294‐2357

Rachel is a Connecticut Licensed Environmental Professional with 35 years of experience in both the consulting and construction aspects environmental work. She is the manager of the Remediation Department for Burns & McDonnell in the Northeast Region. Her experience includes the investigation and remediation of redevelopment sites, dry cleaners, manufacturing facilities, petroleum storage facilities, and commercial properties. Ms. Rosen has verified/closed/managed countless sites in accordance with Connecticut’s remediation programs, including the Connecticut Transfer Act, the Voluntary Remediation Program, and the Brownfield Remediation & Revitalization Program.

Ms. Rosen is a participant in several industry advocacy groups and actively contributes to the environmental process in Connecticut. She was a member of the Connecticut Brownfield Working Group for over 9 years and is currently a member of the Connecticut Business & Industry Association’s Energy & Environmental Committee (Steering Committee), the Environmental Professionals Organization of Connecticut (Vice‐President), and the Connecticut Society for Women Environmental Professionals (Board Member). Elizabeth Fortino, Esq. – Moderator Winnick Ruben Hoffnung Peabody and Mendel, LLC 110 Whitney Avenue, New Haven, CT 06510 [email protected] 203‐772‐4400 x 306

Elizabeth “Beth” Fortino is an associate at Winnick Ruben Hoffnung Peabody and Mendel, LLC. Beth practices environmental law, counseling private and public‐sector clients in transactional, permitting, compliance and enforcement matters in all areas of environmental law. With a focus on brownfield redevelopment, she advises clients on corporate and real estate due diligence, including permitting, environmental insurance, financing, liability and risk assessments, site investigations and remediation.

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Beth currently serves as Vice Chair of the Environmental Section of the Connecticut Bar Association and the Secretary for the Connecticut Society of Women Environmental Professionals. Beth is also a member of the Young Lawyers Section of the Connecticut Bar Association and the Environmental Professionals’ Organization of Connecticut.

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Ethical Issues that Can Arise in Commercial Real Estate Transactions

Connecticut Legal Conference

Connecticut Bar Association

September 14, 2020

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PanelModerator

Elizabeth R. FortinoWinnick Ruben Hoffnung Peabody and Mendel, LLC, New Haven

Speakers

Emilee Mooney ScottRobinson & Cole LLP, Hartford

Paty JimenezDay Pitney LLP, Hartford

Rachel RosenBurns & McDonnell, Wallingford

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Case Study: Thneed, Inc.

• Manufactures thneeds from truffula fiber

• Historically, raw material stockpiles outdoors and discharged truffula

processing slurry to on-site lagoon, circa 1980 switched to POTW (with

solids filtered out and disposed as solid waste)

• The chemicals used to process truffula fibers used to contain Methyl Ethyl

Death, management recalls transition to different process circa 1990

Then

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Case Study: Thneed, Inc.• Former lagoon/stockpile area is now a parking lot

• Seeking financing to improve/expand facility

• Conversations with the bank have begun and an environmental consultant

has been retained.

Now

To POTW

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Financing and Environmental Law Overview

► Lender Exposure: Why does the Lender care?• Collateral Value

• Liability for Lenders under CERCLA and State Laws

► Environmental Due Diligence • What are Some of the Due Diligence Drivers?

• How Much Due Diligence is Enough?

► Negotiating Environmental Provisions

in the Loan Documents• Loan Agreement

• Environmental Indemnity Agreement

• Environmental Insurance

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What is the lawyer’s confidentiality obligation?

Rule1.6.Confidentiality of Information

“(a) A lawyer shall not reveal information relating to representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation, or the disclosure is permitted by subsection(b),(c), or(d).”

“(b) A lawyer shall reveal such information to the extent the lawyer reasonably believes necessary to prevent the client from committing a criminal or fraudulent act that the lawyer believes is likely to result in death or substantial bodily harm.”

(c) Relates to disclosure to prevent/mitigate a crime or fraud

(d) Relates to lawyer defending him/herself

Note comment to Model Rule 1.6 (comment not adopted in CT):

“Paragraph (b)(1) recognizes the overriding value of life and physical integrity and permits disclosure reasonably necessary to prevent reasonably certain death or substantial bodily harm. Such harm is reasonably certain to occur if it willbe suffered imminently or if there is a present and substantial threat that a person will suffer such harm at a later date if the lawyer fails to take action necessary to eliminate the threat. Thus, a lawyer who knows that a client has accidentally discharged toxic waste into a town's water supply may reveal this information to the authorities if there is a present and substantial risk that a person who drinks the water will contract a life-threatening or debilitating disease and the lawyer's disclosure is necessary to eliminate the threat or reduce the number of victims.” (emphasis added)

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Licensed Environmental Professional Ethics

►Contract

• Non-Disclosure Agreements

• Insurance Coverage

• Professional Ethics

• Reliance, or Perceived Reliance, by Others

►Environmental Regulations

• Who Reports?

• What if no reporting occurs?

• Imminent Hazard to Life and Death

►Regulators’ Requirements

• Hold Paramount Human Health & the Environment

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Lawyers and LEPs Working Together

►Beware differing ethical obligations.

► Note Rule 5.3: When “supervising” non-

lawyer professionals, “a lawyer must

make reasonable efforts to ensure that

the services are provided in a manner

that is compatible with the lawyer's

professional obligations.”

►Are consultant reports protected?

► Sometimes, if “connected intimately to the

rendering of legal advice…” Olson v.

Accessory Controls and Equipment Corp.,

254 Conn. 145 (2000).

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United States Statutes

Title 42. THE PUBLIC HEALTH AND WELFARE

Chapter 103. COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY

Subchapter I. HAZARDOUS SUBSTANCES RELEASES, LIABILITY, COMPENSATION

Current through P.L. 116-145 (06/17/2020)§ 9601. Definitions

For purpose of this subchapter-

(1) The term "act of God" means an unanticipated grave natural disaster or other naturalphenomenon of an exceptional, inevitable, and irresistible character, the effects of whichcould not have been prevented or avoided by the exercise of due care or foresight.

(2) The term "Administrator" means the Administrator of the United States EnvironmentalProtection Agency.

(3) The term "barrel" means forty-two United States gallons at sixty degrees Fahrenheit.

(4) The term "claim" means a demand in writing for a sum certain.

(5) The term "claimant" means any person who presents a claim for compensation under thischapter.

(6) The term "damages" means damages for injury or loss of natural resources as set forth insection 9607(a) or 9611(b) of this title.

(7) The term "drinking water supply" means any raw or finished water source that is or maybe used by a public water system (as defined in the Safe Drinking Water Act [ 42 U.S.C.300f et seq.]) or as drinking water by one or more individuals.

(8) The term "environment" means (A) the navigable waters, the waters of the contiguouszone, and the ocean waters of which the natural resources are under the exclusivemanagement authority of the United States under the Magnuson-Stevens FisheryConservation and Management Act [ 16 U.S.C. 1801 et seq.], and (B) any other surfacewater, ground water, drinking water supply, land surface or subsurface strata, or ambientair within the United States or under the jurisdiction of the United States.

(9) The term "facility" means (A) any building, structure, installation, equipment, pipe orpipeline (including any pipe into a sewer or publicly owned treatment works), well, pit,pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock,or aircraft, or (B) any site or area where a hazardous substance has been deposited,stored, disposed of, or placed, or otherwise come to be located; but does not include anyconsumer product in consumer use or any vessel.

(10) The term "federally permitted release" means (A) discharges in compliance with a permitunder section 402 of the Federal Water Pollution Control Act [ 33 U.S.C. 1342 ], (B)discharges resulting from circumstances identified and reviewed and made part of thepublic record with respect to a permit issued or modified under section 402 of the FederalWater Pollution Control Act and subject to a condition of such permit, (C) continuous oranticipated intermittent discharges from a point source, identified in a permit or permit

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application under section 402 of the Federal Water Pollution Control Act, which arecaused by events occurring within the scope of relevant operating or treatment systems,(D) discharges in compliance with a legally enforceable permit under section 404 of theFederal Water Pollution Control Act [ 33 U.S.C. 1344 ], (E) releases in compliance with alegally enforceable final permit issued pursuant to section 3005(a) through (d) of the SolidWaste Disposal Act [ 42 U.S.C. 6925(a)-(d) ] from a hazardous waste treatment, storage,or disposal facility when such permit specifically identifies the hazardous substances andmakes such substances subject to a standard of practice, control procedure or bioassaylimitation or condition, or other control on the hazardous substances in such releases, (F)any release in compliance with a legally enforceable permit issued under section 1412 oftitle 33 of 1 section 1413 of title 33, (G) any injection of fluids authorized under Federalunderground injection control programs or State programs submitted for Federal approval(and not disapproved by the Administrator of the Environmental Protection Agency)pursuant to part C of the Safe Drinking Water Act [ 42 U.S.C. 300h et seq.], (H) anyemission into the air subject to a permit or control regulation under section 111 [ 42U.S.C. 7411 ], section 112 [ 42 U.S.C. 7412 ], title I part C [ 42 U.S.C. 7470 et seq.], title Ipart D [ 42 U.S.C. 7501 et seq.], or State implementation plans submitted in accordancewith section 110 of the Clean Air Act [ 42 U.S.C. 7410 ] (and not disapproved by theAdministrator of the Environmental Protection Agency), including any schedule or waivergranted, promulgated, or approved under these sections, (I) any injection of fluids or othermaterials authorized under applicable State law (i) for the purpose of stimulating ortreating wells for the production of crude oil, natural gas, or water, (ii) for the purpose ofsecondary, tertiary, or other enhanced recovery of crude oil or natural gas, or (iii) whichare brought to the surface in conjunction with the production of crude oil or natural gasand which are reinjected, (J) the introduction of any pollutant into a publicly ownedtreatment works when such pollutant is specified in and in compliance with applicablepretreatment standards of section 307(b) or (c) of the Clean Water Act [ 33 U.S.C.1317(b), (c) ] and enforceable requirements in a pretreatment program submitted by aState or municipality for Federal approval under section 402 of such Act [ 33 U.S.C. 1342], and (K) any release of source, special nuclear, or byproduct material, as those termsare defined in the Atomic Energy Act of 1954 [ 42 U.S.C. 2011 et seq.], in compliancewith a legally enforceable license, permit, regulation, or order issued pursuant to theAtomic Energy Act of 1954.

(11) The term "Fund" or "Trust Fund" means the Hazardous Substance Superfund establishedby section 9507 of title 26.

(12) The term "ground water" means water in a saturated zone or stratum beneath the surfaceof land or water.

(13) The term "guarantor" means any person, other than the owner or operator, who providesevidence of financial responsibility for an owner or operator under this chapter.

(14) The term "hazardous substance" means (A) any substance designated pursuant tosection 311(b)(2)(A) of the Federal Water Pollution Control Act [ 33 U.S.C. 1321(b)(2)(A)], (B) any element, compound, mixture, solution, or substance designated pursuant tosection 9602 of this title, (C) any hazardous waste having the characteristics identifiedunder or listed pursuant to section 3001 of the Solid Waste Disposal Act [ 42 U.S.C. 6921] (but not including any waste the regulation of which under the Solid Waste Disposal Act [42 U.S.C. 6901 et seq.] has been suspended by Act of Congress), (D) any toxic pollutantlisted under section 307(a) of the Federal Water Pollution Control Act [ 33 U.S.C. 1317(a)

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], (E) any hazardous air pollutant listed under section 112 of the Clean Air Act [ 42 U.S.C.7412 ], and (F) any imminently hazardous chemical substance or mixture with respect towhich the Administrator has taken action pursuant to section 7 of the Toxic SubstancesControl Act [ 15 U.S.C. 2606 ]. The term does not include petroleum, including crude oil orany fraction thereof which is not otherwise specifically listed or designated as ahazardous substance under subparagraphs (A) through (F) of this paragraph, and theterm does not include natural gas, natural gas liquids, liquefied natural gas, or syntheticgas usable for fuel (or mixtures of natural gas and such synthetic gas).

(15) The term "navigable waters" or "navigable waters of the United States" means the watersof the United States, including the territorial seas.

(16) The term "natural resources" means land, fish, wildlife, biota, air, water, ground water,drinking water supplies, and other such resources belonging to, managed by, held in trustby, appertaining to, or otherwise controlled by the United States (including the resourcesof the fishery conservation zone established by the Magnuson-Stevens FisheryConservation and Management Act [ 16 U.S.C. 1801 et seq.]), any State or localgovernment, any foreign government, any Indian tribe, or, if such resources are subject toa trust restriction on alienation, any member of an Indian tribe.

(17) The term "offshore facility" means any facility of any kind located in, on, or under, any ofthe navigable waters of the United States, and any facility of any kind which is subject tothe jurisdiction of the United States and is located in, on, or under any other waters, otherthan a vessel or a public vessel.

(18) The term "onshore facility" means any facility (including, but not limited to, motor vehiclesand rolling stock) of any kind located in, on, or under, any land or nonnavigable waterswithin the United States.

(19) The term "otherwise subject to the jurisdiction of the United States" means subject to thejurisdiction of the United States by virtue of United States citizenship, United Statesvessel documentation or numbering, or as provided by international agreement to whichthe United States is a party.

(20) (A) The term "owner or operator" means (i) in the case of a vessel, any personowning, operating, or chartering by demise, such vessel, (ii) in the case of anonshore facility or an offshore facility, any person owning or operating suchfacility, and (iii) in the case of any facility, title or control of which was conveyeddue to bankruptcy, foreclosure, tax delinquency, abandonment, or similar meansto a unit of State or local government, any person who owned, operated, orotherwise controlled activities at such facility immediately beforehand. Such termdoes not include a person, who, without participating in the management of avessel or facility, holds indicia of ownership primarily to protect his securityinterest in the vessel or facility.

(B) In the case of a hazardous substance which has been accepted fortransportation by a common or contract carrier and except as provided in section9607(a)(3) or (4) of this title, (i) the term "owner or operator" shall mean suchcommon carrier or other bona fide for hire carrier acting as an independentcontractor during such transportation, (ii) the shipper of such hazardoussubstance shall not be considered to have caused or contributed to any release

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during such transportation which resulted solely from circumstances orconditions beyond his control.

(C) In the case of a hazardous substance which has been delivered by a common orcontract carrier to a disposal or treatment facility and except as provided insection 9607(a)(3) or (4) of this title, (i) the term "owner or operator" shall notinclude such common or contract carrier, and (ii) such common or contractcarrier shall not be considered to have caused or contributed to any release atsuch disposal or treatment facility resulting from circumstances or conditionsbeyond its control.

(D) The term "owner or operator" does not include a unit of State or localgovernment which acquired ownership or control through seizure or otherwise inconnection with law enforcement activity, or through bankruptcy, taxdelinquency, abandonment, or other circumstances in which the governmentacquires title by virtue of its function as sovereign. The exclusion provided underthis paragraph shall not apply to any State or local government which hascaused or contributed to the release or threatened release of a hazardoussubstance from the facility, and such a State or local government shall besubject to the provisions of this chapter in the same manner and to the sameextent, both procedurally and substantively, as any nongovernmental entity,including liability under section 9607 of this title.

(E) EXCLUSION OF CERTAIN ALASKA NATIVE VILLAGES AND NATIVECORPORATIONS.-(i) IN GENERAL.-The term "owner or operator" does not include, with

respect to a facility conveyed to a Native village or Native Corporation(as those terms are defined in section 3 of the Alaska Native ClaimsSettlement Act [ 43 U.S.C. 1602 ]) under the Alaska Native ClaimsSettlement Act [ 43 U.S.C. 1601 et seq.]-(I) the Native village or Native Corporation that received the facility

from the United States Government; or

(II) a successor in interest to which the facility was conveyed undersection 14(c) of such Act [ 43 U.S.C. 1613(c) ].

(ii) LIMITATION.-The exclusion provided under this subparagraph shall notapply to any entity described in clause (i) that causes or contributes to arelease or threatened release of a hazardous substance from the facilityconveyed as described in such clause.

(F) EXCLUSION OF LENDERS NOT PARTICIPANTS IN MANAGEMENT.-(i) INDICIA OF OWNERSHIP TO PROTECT SECURITY.-The term "owner

or operator" does not include a person that is a lender that, withoutparticipating in the management of a vessel or facility, holds indicia ofownership primarily to protect the security interest of the person in thevessel or facility.

(ii) FORECLOSURE.-The term "owner or operator" does not include a

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person that is a lender that did not participate in management of avessel or facility prior to foreclosure, notwithstanding that the person-(I) forecloses on the vessel or facility; and

(II) after foreclosure, sells, re-leases (in the case of a lease financetransaction), or liquidates the vessel or facility, maintainsbusiness activities, winds up operations, undertakes a responseaction under section 9607(d)(1) of this title or under the directionof an on-scene coordinator appointed under the NationalContingency Plan, with respect to the vessel or facility, or takesany other measure to preserve, protect, or prepare the vessel orfacility prior to sale or disposition,if the person seeks to sell, re-lease (in the case of a leasefinance transaction), or otherwise divest the person of the vesselor facility at the earliest practicable, commercially reasonabletime, on commercially reasonable terms, taking into accountmarket conditions and legal and regulatory requirements.

(G) PARTICIPATION IN MANAGEMENT.-For purposes of subparagraph (F)-(i) the term "participate in management"-

(I) means actually participating in the management or operationalaffairs of a vessel or facility; and

(II) does not include merely having the capacity to influence, or theunexercised right to control, vessel or facility operations;

(ii) a person that is a lender and that holds indicia of ownership primarily toprotect a security interest in a vessel or facility shall be considered toparticipate in management only if, while the borrower is still inpossession of the vessel or facility encumbered by the security interest,the person-(I) exercises decisionmaking control over the environmental

compliance related to the vessel or facility, such that the personhas undertaken responsibility for the hazardous substancehandling or disposal practices related to the vessel or facility; or

(II) exercises control at a level comparable to that of a manager ofthe vessel or facility, such that the person has assumed ormanifested responsibility-(aa)

for the overall management of the vessel or facilityencompassing day-to-day decisionmaking with respect toenvironmental compliance; or

(bb)

over all or substantially all of the operational functions (asdistinguished from financial or administrative functions) ofthe vessel or facility other than the function ofenvironmental compliance;

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(iii) the term "participate in management" does not include performing anact or failing to act prior to the time at which a security interest is createdin a vessel or facility; and

(iv) the term "participate in management" does not include-(I) holding a security interest or abandoning or releasing a

security interest;

(II) including in the terms of an extension of credit, or in a contractor security agreement relating to the extension, a covenant,warranty, or other term or condition that relates to environmentalcompliance;

(III) monitoring or enforcing the terms and conditions of theextension of credit or security interest;

(IV) monitoring or undertaking 1 or more inspections of the vesselor facility;

(V) requiring a response action or other lawful means of addressingthe release or threatened release of a hazardous substance inconnection with the vessel or facility prior to, during, or on theexpiration of the term of the extension of credit;

(VI) providing financial or other advice or counseling in an effort tomitigate, prevent, or cure default or diminution in the value of thevessel or facility;

(VII)

restructuring, renegotiating, or otherwise agreeing to alter theterms and conditions of the extension of credit or securityinterest, exercising forbearance;

(VIII)

exercising other remedies that may be available underapplicable law for the breach of a term or condition of theextension of credit or security agreement; or

(IX) conducting a response action under section 9607(d) of this titleor under the direction of an on-scene coordinator appointedunder the National Contingency Plan,if the actions do not rise to the level of participating inmanagement (within the meaning of clauses (i) and (ii)).

(H) OTHER TERMS.-As used in this chapter:(i) EXTENSION OF CREDIT.-The term "extension of credit" includes a

lease finance transaction-(I) in which the lessor does not initially select the leased vessel or

facility and does not during the lease term control the dailyoperations or maintenance of the vessel or facility; or

(II) that conforms with regulations issued by the appropriate Federal

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banking agency or the appropriate State bank supervisor (asthose terms are defined in section 1813 of title 12) or withregulations issued by the National Credit Union AdministrationBoard, as appropriate.

(ii) FINANCIAL OR ADMINISTRATIVE FUNCTION.-The term "financial oradministrative function" includes a function such as that of a creditmanager, accounts payable officer, accounts receivable officer,personnel manager, comptroller, or chief financial officer, or a similarfunction.

(iii) FORECLOSURE; FORECLOSE.-The terms "foreclosure" and"foreclose" mean, respectively, acquiring, and to acquire, a vessel orfacility through-(I) (aa

)purchase at sale under a judgment or decree, power ofsale, or nonjudicial foreclosure sale;

(bb) a deed in lieu of foreclosure, or similar conveyancefrom a trustee; or

(cc) repossession,if the vessel or facility was security for an extension ofcredit previously contracted;

(II) conveyance pursuant to an extension of credit previouslycontracted, including the termination of a lease agreement; or

(III) any other formal or informal manner by which the personacquires, for subsequent disposition, title to or possession of avessel or facility in order to protect the security interest of theperson.

(iv) LENDER.-The term "lender" means-(I) an insured depository institution (as defined in section 1813 of

title 12);

(II) an insured credit union (as defined in section 1752 of title 12);

(III) a bank or association chartered under the Farm Credit Act of1971 ( 12 U.S.C. 2001 et seq.);

(IV) a leasing or trust company that is an affiliate of an insureddepository institution;

(V) any person (including a successor or assignee of any suchperson) that makes a bona fide extension of credit to or takes oracquires a security interest from a nonaffiliated person;

(VI) the Federal National Mortgage Association, the Federal HomeLoan Mortgage Corporation, the Federal Agricultural Mortgage

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Corporation, or any other entity that in a bona fide manner buysor sells loans or interests in loans;

(VII)

a person that insures or guarantees against a default in therepayment of an extension of credit, or acts as a surety withrespect to an extension of credit, to a nonaffiliated person; and

(VIII)

a person that provides title insurance and that acquires a vesselor facility as a result of assignment or conveyance in the courseof underwriting claims and claims settlement.

(v) OPERATIONAL FUNCTION.-The term "operational function" includes afunction such as that of a facility or plant manager, operations manager,chief operating officer, or chief executive officer.

(vi) SECURITY INTEREST.-The term "security interest" includes a rightunder a mortgage, deed of trust, assignment, judgment lien, pledge,security agreement, factoring agreement, or lease and any other rightaccruing to a person to secure the repayment of money, theperformance of a duty, or any other obligation by a nonaffiliated person.

(21) The term "person" means an individual, firm, corporation, association, partnership,consortium, joint venture, commercial entity, United States Government, State,municipality, commission, political subdivision of a State, or any interstate body.

(22) The term "release" means any spilling, leaking, pumping, pouring, emitting, emptying,discharging, injecting, escaping, leaching, dumping, or disposing into the environment(including the abandonment or discarding of barrels, containers, and other closedreceptacles containing any hazardous substance or pollutant or contaminant), butexcludes (A) any release which results in exposure to persons solely within a workplace,with respect to a claim which such persons may assert against the employer of suchpersons, (B) emissions from the engine exhaust of a motor vehicle, rolling stock, aircraft,vessel, or pipeline pumping station engine, (C) release of source, byproduct, or specialnuclear material from a nuclear incident, as those terms are defined in the Atomic EnergyAct of 1954 [ 42 U.S.C. 2011 et seq.], if such release is subject to requirements withrespect to financial protection established by the Nuclear Regulatory Commission undersection 170 of such Act [ 42 U.S.C. 2210 ], or, for the purposes of section 9604 of this titleor any other response action, any release of source byproduct, or special nuclear materialfrom any processing site designated under section 7912(a)(1) or 7942(a) of this title, and(D) the normal application of fertilizer.

(23) The terms "remove" or "removal" means 2 the cleanup or removal of released hazardoussubstances from the environment, such actions as may be necessary taken in the eventof the threat of release of hazardous substances into the environment, such actions asmay be necessary to monitor, assess, and evaluate the release or threat of release ofhazardous substances, the disposal of removed material, or the taking of such otheractions as may be necessary to prevent, minimize, or mitigate damage to the publichealth or welfare or to the environment, which may otherwise result from a release orthreat of release. The term includes, in addition, without being limited to, security fencing

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or other measures to limit access, provision of alternative water supplies, temporaryevacuation and housing of threatened individuals not otherwise provided for, action takenunder section 9604(b) of this title, and any emergency assistance which may be providedunder the Disaster Relief and Emergency Assistance Act [ 42 U.S.C. 5121 et seq.].

(24) The terms "remedy" or "remedial action" means 2 those actions consistent withpermanent remedy taken instead of or in addition to removal actions in the event of arelease or threatened release of a hazardous substance into the environment, to preventor minimize the release of hazardous substances so that they do not migrate to causesubstantial danger to present or future public health or welfare or the environment. Theterm includes, but is not limited to, such actions at the location of the release as storage,confinement, perimeter protection using dikes, trenches, or ditches, clay cover,neutralization, cleanup of released hazardous substances and associated contaminatedmaterials, recycling or reuse, diversion, destruction, segregation of reactive wastes,dredging or excavations, repair or replacement of leaking containers, collection ofleachate and runoff, onsite treatment or incineration, provision of alternative watersupplies, and any monitoring reasonably required to assure that such actions protect thepublic health and welfare and the environment. The term includes the costs of permanentrelocation of residents and businesses and community facilities where the Presidentdetermines that, alone or in combination with other measures, such relocation is morecost-effective than and environmentally preferable to the transportation, storage,treatment, destruction, or secure disposition offsite of hazardous substances, or mayotherwise be necessary to protect the public health or welfare; the term includes offsitetransport and offsite storage, treatment, destruction, or secure disposition of hazardoussubstances and associated contaminated materials.

(25) The terms "respond" or "response" means 2 remove, removal, remedy, and remedialaction;,3 all such terms (including the terms "removal" and "remedial action") includeenforcement activities related thereto.

(26) The terms "transport" or "transportation" means 2 the movement of a hazardoussubstance by any mode, including a hazardous liquid pipeline facility (as defined insection 60101(a) of title 49), and in the case of a hazardous substance which has beenaccepted for transportation by a common or contract carrier, the term "transport" or"transportation" shall include any stoppage in transit which is temporary, incidental to thetransportation movement, and at the ordinary operating convenience of a common orcontract carrier, and any such stoppage shall be considered as a continuity of movementand not as the storage of a hazardous substance.

(27) The terms "United States" and "State" include the several States of the United States, theDistrict of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, theUnited States Virgin Islands, the Commonwealth of the Northern Marianas, and any otherterritory or possession over which the United States has jurisdiction.

(28) The term "vessel" means every description of watercraft or other artificial contrivanceused, or capable of being used, as a means of transportation on water.

(29) The terms "disposal", "hazardous waste", and "treatment" shall have the meaningprovided in section 1004 of the Solid Waste Disposal Act [ 42 U.S.C. 6903 ].

(30) The terms "territorial sea" and "contiguous zone" shall have the meaning provided in of 58

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section 502 of the Federal Water Pollution Control Act [ 33 U.S.C. 1362 ].

(31) The term "national contingency plan" means the national contingency plan publishedunder section 311(c) 4 of the Federal Water Pollution Control Act or revised pursuant tosection 9605 of this title.

(32) The terms "liable" or "liability" under this subchapter shall be construed to be the standardof liability which obtains under section 311 of the Federal Water Pollution Control Act [ 33U.S.C. 1321 ].

(33) The term "pollutant or contaminant" shall include, but not be limited to, any element,substance, compound, or mixture, including disease-causing agents, which after releaseinto the environment and upon exposure, ingestion, inhalation, or assimilation into anyorganism, either directly from the environment or indirectly by ingestion through foodchains, will or may reasonably be anticipated to cause death, disease, behavioralabnormalities, cancer, genetic mutation, physiological malfunctions (includingmalfunctions in reproduction) or physical deformations, in such organisms or theiroffspring; except that the term "pollutant or contaminant" shall not include petroleum,including crude oil or any fraction thereof which is not otherwise specifically listed ordesignated as a hazardous substance under subparagraphs (A) through (F) of paragraph(14) and shall not include natural gas, liquefied natural gas, or synthetic gas of pipelinequality (or mixtures of natural gas and such synthetic gas).

(34) The term "alternative water supplies" includes, but is not limited to, drinking water andhousehold water supplies.

(35) (A) The term "contractual relationship", for the purpose of section 9607(b)(3) of thistitle, includes, but is not limited to, land contracts, deeds, easements, leases, orother instruments transferring title or possession, unless the real property onwhich the facility concerned is located was acquired by the defendant after thedisposal or placement of the hazardous substance on, in, or at the facility, andone or more of the circumstances described in clause (i), (ii), or (iii) is alsoestablished by the defendant by a preponderance of the evidence:(i) At the time the defendant acquired the facility the defendant did not

know and had no reason to know that any hazardous substance whichis the subject of the release or threatened release was disposed of on,in, or at the facility.

(ii) The defendant is a government entity which acquired the facility byescheat, or through any other involuntary transfer or acquisition, orthrough the exercise of eminent domain authority by purchase orcondemnation.

(iii) The defendant acquired the facility by inheritance or bequest.In addition to establishing the foregoing, the defendant must establishthat the defendant has satisfied the requirements of section9607(b)(3)(a) and (b) of this title, provides full cooperation, assistance,and facility access to the persons that are authorized to conductresponse actions at the facility (including the cooperation and accessnecessary for the installation, integrity, operation, and maintenance ofany complete or partial response action at the facility), is in compliance

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with any land use restrictions established or relied on in connection withthe response action at a facility, and does not impede the effectivenessor integrity of any institutional control employed at the facility inconnection with a response action.

(B) REASON TO KNOW.-(i) ALL APPROPRIATE INQUIRIES.-To establish that the defendant had

no reason to know of the matter described in subparagraph (A)(i), thedefendant must demonstrate to a court that-(I) on or before the date on which the defendant acquired the

facility, the defendant carried out all appropriate inquiries, asprovided in clauses (ii) and (iv), into the previous ownership anduses of the facility in accordance with generally accepted goodcommercial and customary standards and practices; and

(II) the defendant took reasonable steps to-(aa) stop any continuing release;

(bb) prevent any threatened future release; and

(cc)

prevent or limit any human, environmental, or naturalresource exposure to any previously released hazardoussubstance.

(ii) STANDARDS AND PRACTICES.-Not later than 2 years after January11, 2002, the Administrator shall by regulation establish standards andpractices for the purpose of satisfying the requirement to carry out allappropriate inquiries under clause (i).

(iii) CRITERIA.-In promulgating regulations that establish the standards andpractices referred to in clause (ii), the Administrator shall include each ofthe following:(I) The results of an inquiry by an environmental professional.

(II) Interviews with past and present owners, operators, andoccupants of the facility for the purpose of gathering informationregarding the potential for contamination at the facility.

(III) Reviews of historical sources, such as chain of title documents,aerial photographs, building department records, and land userecords, to determine previous uses and occupancies of the realproperty since the property was first developed.

(IV) Searches for recorded environmental cleanup liens against thefacility that are filed under Federal, State, or local law.

(V) Reviews of Federal, State, and local government records, wastedisposal records, underground storage tank records, andhazardous waste handling, generation, treatment, disposal, and

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spill records, concerning contamination at or near the facility.

(VI) Visual inspections of the facility and of adjoining properties.

(VII) Specialized knowledge or experience on the part of thedefendant.

(VIII)

The relationship of the purchase price to the value of theproperty, if the property was not contaminated.

(IX) Commonly known or reasonably ascertainable informationabout the property.

(X) The degree of obviousness of the presence or likely presence ofcontamination at the property, and the ability to detect thecontamination by appropriate investigation.

(iv) INTERIM STANDARDS AND PRACTICES.-(I) PROPERTY PURCHASED BEFORE MAY 31, 1997.-With

respect to property purchased before May 31, 1997, in making adetermination with respect to a defendant described in clause (i),a court shall take into account-(aa) any specialized knowledge or experience on the part of

the defendant;

(bb)

the relationship of the purchase price to the value of theproperty, if the property was not contaminated;

(cc) commonly known or reasonably ascertainableinformation about the property;

(dd)

the obviousness of the presence or likely presence ofcontamination at the property; and

(ee) the ability of the defendant to detect the contaminationby appropriate inspection.

(II) PROPERTY PURCHASED ON OR AFTER MAY 31, 1997.-Withrespect to property purchased on or after May 31, 1997, anduntil the Administrator promulgates the regulations described inclause (ii), the procedures of the American Society for Testingand Materials, including the document known as "StandardE1527-97", entitled "Standard Practice for Environmental SiteAssessment: Phase 1 Environmental Site Assessment Process",shall satisfy the requirements in clause (i).

(v) SITE INSPECTION AND TITLE SEARCH.-In the case of property forresidential use or other similar use purchased by a nongovernmental ornoncommercial entity, a facility inspection and title search that reveal nobasis for further investigation shall be considered to satisfy the

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requirements of this subparagraph.

(C) Nothing in this paragraph or in section 9607(b)(3) of this title shall diminish theliability of any previous owner or operator of such facility who would otherwise beliable under this chapter. Notwithstanding this paragraph, if the defendantobtained actual knowledge of the release or threatened release of a hazardoussubstance at such facility when the defendant owned the real property and thensubsequently transferred ownership of the property to another person withoutdisclosing such knowledge, such defendant shall be treated as liable undersection 9607(a)(1) of this title and no defense under section 9607(b)(3) of thistitle shall be available to such defendant.

(D) Nothing in this paragraph shall affect the liability under this chapter of adefendant who, by any act or omission, caused or contributed to the release orthreatened release of a hazardous substance which is the subject of the actionrelating to the facility.

(36) The term "Indian tribe" means any Indian tribe, band, nation, or other organized group orcommunity, including any Alaska Native village but not including any Alaska Nativeregional or village corporation, which is recognized as eligible for the special programsand services provided by the United States to Indians because of their status as Indians.

(37) (A) The term "service station dealer" means any person-(i) who owns or operates a motor vehicle service station, filling station,

garage, or similar retail establishment engaged in the business ofselling, repairing, or servicing motor vehicles, where a significantpercentage of the gross revenue of the establishment is derived fromthe fueling, repairing, or servicing of motor vehicles, and

(ii) who accepts for collection, accumulation, and delivery to an oil recyclingfacility, recycled oil that (I) has been removed from the engine of a lightduty motor vehicle or household appliances by the owner of suchvehicle or appliances, and (II) is presented, by such owner, to suchperson for collection, accumulation, and delivery to an oil recyclingfacility.

(B) For purposes of section 9614(c) of this title, the term "service station dealer"shall, notwithstanding the provisions of subparagraph (A), include anygovernment agency that establishes a facility solely for the purpose of acceptingrecycled oil that satisfies the criteria set forth in subclauses (I) and (II) ofsubparagraph (A)(ii), and, with respect to recycled oil that satisfies the criteriaset forth in subclauses (I) and (II), owners or operators of refuse collectionservices who are compelled by State law to collect, accumulate, and deliversuch oil to an oil recycling facility.

(C) The President shall promulgate regulations regarding the determination of whatconstitutes a significant percentage of the gross revenues of an establishmentfor purposes of this paragraph.

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(38) The term "incineration vessel" means any vessel which carries hazardous substances forthe purpose of incineration of such substances, so long as such substances or residuesof such substances are on board.

(39) BROWNFIELD SITE.-(A) IN GENERAL.-The term "brownfield site" means real property, the expansion,

redevelopment, or reuse of which may be complicated by the presence orpotential presence of a hazardous substance, pollutant, or contaminant.

(B) EXCLUSIONS.-The term "brownfield site" does not include-(i) a facility that is the subject of a planned or ongoing removal action

under this subchapter;

(ii) a facility that is listed on the National Priorities List or is proposed forlisting;

(iii) a facility that is the subject of a unilateral administrative order, a courtorder, an administrative order on consent or judicial consent decree thathas been issued to or entered into by the parties under this chapter;

(iv) a facility that is the subject of a unilateral administrative order, a courtorder, an administrative order on consent or judicial consent decree thathas been issued to or entered into by the parties, or a facility to which apermit has been issued by the United States or an authorized Stateunder the Solid Waste Disposal Act ( 42 U.S.C. 6901 et seq.), theFederal Water Pollution Control Act ( 33 U.S.C. 1321 ) [ 33 U.S.C. §1251 et seq.], the Toxic Substances Control Act ( 15 U.S.C. 2601 etseq.), or the Safe Drinking Water Act ( 42 U.S.C. 300f et seq.);

(v) a facility that-(I) is subject to corrective action under section 3004(u) or 3008(h)

of the Solid Waste Disposal Act ( 42 U.S.C. 6924(u), 6928(h) );and

(II) to which a corrective action permit or order has been issued ormodified to require the implementation of corrective measures;

(vi) a land disposal unit with respect to which-(I) a closure notification under subtitle C of the Solid Waste

Disposal Act ( 42 U.S.C. 6921 et seq.) has been submitted; and

(II) closure requirements have been specified in a closure plan orpermit;

(vii) a facility that is subject to the jurisdiction, custody, or control of adepartment, agency, or instrumentality of the United States, except forland held in trust by the United States for an Indian tribe;

(viii) a portion of a facility-(I) at which there has been a release of polychlorinated

biphenyls; and

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(II) that is subject to remediation under the Toxic SubstancesControl Act ( 15 U.S.C. 2601 et seq.); or

(ix) a portion of a facility, for which portion, assistance for response activityhas been obtained under subtitle I of the Solid Waste Disposal Act ( 42U.S.C. 6991 et seq.) from the Leaking Underground Storage Tank TrustFund established under section 9508 of title 26.

(C) SITE-BY-SITE DETERMINATIONS.-Notwithstanding subparagraph (B) and on asite-by-site basis, the President may authorize financial assistance under section9604(k) of this title to an eligible entity at a site included in clause (i), (iv), (v),(vi), (viii), or (ix) of subparagraph (B) if the President finds that financialassistance will protect human health and the environment, and either promoteeconomic development or enable the creation of, preservation of, or addition toparks, greenways, undeveloped property, other recreational property, or otherproperty used for nonprofit purposes.

(D) ADDITIONAL AREAS.-For the purposes of section 9604(k) of this title, the term"brownfield site" includes a site that-(i) meets the definition of "brownfield site" under subparagraphs (A)

through (C); and

(ii) (I) is contaminated by a controlled substance (as defined insection 802 of title 21);

(II) (aa)

is contaminated by petroleum or a petroleum productexcluded from the definition of "hazardous substance"under this section; and

(bb)

is a site for which there is no viable responsible party andthat is determined by the Administrator or the State, asappropriate, to be a site that will be assessed,investigated, or cleaned up by a person that is notpotentially liable for cleaning up the site under thischapter or any other law pertaining to the cleanup ofpetroleum products; and

(cc)

is not subject to any order issued under section 9003(h)of the Solid Waste Disposal Act ( 42 U.S.C. 6991b(h) );or

(III) is mine-scarred land.

(40) BONA FIDE PROSPECTIVE PURCHASER.-(A) IN GENERAL.-The term "bona fide prospective purchaser" means, with respect

to a facility-(i) a person who-

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(I) acquires ownership of the facility after January 11, 2002; and

(II) establishes by a preponderance of the evidence each of thecriteria described in clauses (i) through (viii) of subparagraph(B); and

(ii) a person-(I) who acquires a leasehold interest in the facility after January

11, 2002;

(II) who establishes by a preponderance of the evidence that theleasehold interest is not designed to avoid liability under thischapter by any person; and

(III) with respect to whom any of the following conditions apply:(aa)

The owner of the facility that is subject to the leaseholdinterest is a person described in clause (i).

(bb)

(AA)

The owner of the facility that is subject to theleasehold interest was a person described inclause (i) at the time the leasehold interest wasacquired, but can no longer establish by apreponderance of the evidence each of the criteriadescribed in clauses (i) through (viii) ofsubparagraph (B) due to circumstances unrelatedto any action of the person who holds theleasehold interest; and

(BB)

the person who holds the leasehold interestestablishes by a preponderance of the evidenceeach of the criteria described in clauses (i), (iii),(iv), (v), (vi), (vii), and (viii) of subparagraph (B).

(cc)

The person who holds the leasehold interest establishesby a preponderance of the evidence each of the criteriadescribed in clauses (i) through (viii) of subparagraph (B).

(B) CRITERIA.-The criteria described in this subparagraph are as follows:(i) DISPOSAL PRIOR TO ACQUISITION.-All disposal of hazardous

substances at the facility occurred before the person acquired thefacility.

(ii) INQUIRIES.-(I) IN GENERAL.-The person made all appropriate inquiries into

the previous ownership and uses of the facility in accordancewith generally accepted good commercial and customarystandards and practices in accordance with subclauses (II) and

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(III).

(II) STANDARDS AND PRACTICES.-The standards and practicesreferred to in clauses (ii) and (iv) of paragraph (35)(B) shall beconsidered to satisfy the requirements of this clause.

(III) RESIDENTIAL USE.-In the case of property in residential orother similar use at the time of purchase by a nongovernmentalor noncommercial entity, a facility inspection and title search thatreveal no basis for further investigation shall be considered tosatisfy the requirements of this clause.

(iii) NOTICES.-The person provides all legally required notices with respectto the discovery or release of any hazardous substances at the facility.

(iv) CARE.-The person exercises appropriate care with respect tohazardous substances found at the facility by taking reasonable stepsto-(I) stop any continuing release;

(II) prevent any threatened future release; and

(III) prevent or limit human, environmental, or natural resourceexposure to any previously released hazardous substance.

(v) COOPERATION, ASSISTANCE, AND ACCESS.-The person providesfull cooperation, assistance, and access to persons that are authorizedto conduct response actions or natural resource restoration at a vesselor facility (including the cooperation and access necessary for theinstallation, integrity, operation, and maintenance of any complete orpartial response actions or natural resource restoration at the vessel orfacility).

(vi) INSTITUTIONAL CONTROL.-The person-(I) is in compliance with any land use restrictions established or

relied on in connection with the response action at a vessel orfacility; and

(II) does not impede the effectiveness or integrity of any institutionalcontrol employed at the vessel or facility in connection with aresponse action.

(vii) REQUESTS; SUBPOENAS.-The person complies with any request forinformation or administrative subpoena issued by the President underthis chapter.

(viii) NO AFFILIATION.-The person is not-(I) potentially liable, or affiliated with any other person that is

potentially liable, for response costs at a facility through-

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(aa) any direct or indirect familial relationship; or

(bb)

any contractual, corporate, or financial relationship (otherthan a contractual, corporate, or financial relationship thatis created by the instruments by which title to the facilityis conveyed or financed, by a tenancy, by the instrumentsby which a leasehold interest in the facility is created, orby a contract for the sale of goods or services); or

(II) the result of a reorganization of a business entity that waspotentially liable.

(41) ELIGIBLE RESPONSE SITE.-(A) IN GENERAL.-The term "eligible response site" means a site that meets the

definition of a brownfield site in subparagraphs (A) and (B) of paragraph (39), asmodified by subparagraphs (B) and (C) of this paragraph.

(B) INCLUSIONS.-The term "eligible response site" includes-(i) notwithstanding paragraph (39)(B)(ix), a portion of a facility, for which

portion assistance for response activity has been obtained under subtitleI of the Solid Waste Disposal Act ( 42 U.S.C. 6991 et seq.) from theLeaking Underground Storage Tank Trust Fund established undersection 9508 of title 26; or

(ii) a site for which, notwithstanding the exclusions provided insubparagraph (C) or paragraph (39)(B), the President determines, on asite-by-site basis and after consultation with the State, that limitations onenforcement under section 9628 of this title at sites specified in clause(iv), (v), (vi) or (viii) of paragraph (39)(B) would be appropriate and will-(I) protect human health and the environment; and

(II) promote economic development or facilitate the creation of,preservation of, or addition to a park, a greenway, undevelopedproperty, recreational property, or other property used fornonprofit purposes.

(C) EXCLUSIONS.-The term "eligible response site" does not include-(i) a facility for which the President-

(I) conducts or has conducted a preliminary assessment or siteinspection; and

(II) after consultation with the State, determines or has determinedthat the site obtains a preliminary score sufficient for possiblelisting on the National Priorities List, or that the site otherwisequalifies for listing on the National Priorities List; unless thePresident has made a determination that no further Federal

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action will be taken; or

(ii) facilities that the President determines warrant particular considerationas identified by regulation, such as sites posing a threat to a sole-sourcedrinking water aquifer or a sensitive ecosystem.1 So in original. Probably should be "or".2 So in original. Probably should be "mean".3 So in original.4 See References in Text note below.

Cite as 42 U.S.C. § 9601

Source: Pub. L. 96-510, title I, §101, Dec. 11, 1980, 94 Stat. 2767; Pub. L. 96-561, title II, §238(b), Dec. 22, 1980, 94 Stat. 3300; Pub. L. 99-499, title I, §§101, 114, title V, §517(c)(2), Oct. 17, 1986, 100 Stat. 1615, 1652, 1692, 1774; Pub. L. 100-707, title I, §109(v), Nov. 23, 1988,102 Stat. 4710; Pub. L. 103-429, §7(e)(1), Oct. 31, 1994, 108 Stat. 4390; Pub. L. 104-208, div. A, title I, §101(a) [title II, §211(b)], title II,§2502(b), Sept. 30, 1996, 110 Stat. 3009, 3009-41, 3009-464; Pub. L. 104-287, §6(j)(1), Oct. 11, 1996, 110 Stat. 3399; Pub. L. 106-74, title IV,§427, Oct. 20, 1999, 113 Stat. 1095; Pub. L. 107-118, title II, §§211(a), Jan. 11, 2002, 222, Jan. 11, 2002, 115 Stat. 2360, 2370, 2372, 2375;Pub. L. 115-141, div. N, §§2, Mar. 23, 2018 - 5, Mar. 23, 2018, 132 Stat. 1052, 1053.

Notes from the Office of Law Revision Counsel

current through 6/8/2020

REFERENCES IN TEXT

This chapter, referred to in pars. (5), (13), (20)(D), (G), (35)(C), (D), (39)(B)(iii), (D)(ii)(II)(bb), and (40)(A)(ii)(II), (B)(vii), was in theoriginal "this Act", meaning Pub. L. 96-510, Dec. 11, 1980, 94 Stat. 2767, as amended, known as the ComprehensiveEnvironmental Response, Compensation, and Liability Act of 1980. For complete classification of this Act to the Code, see ShortTitle note below and Tables.

The Safe Drinking Water Act, referred to in pars. (7), (10), and (39)(B)(iv), is title XIV of act July 1, 1944, as added Dec. 16, 1974,Pub. L. 93-523, §2(a), 88 Stat. 1660, as amended, which is classified generally to subchapter XII (§300f et seq.) of chapter 6A ofthis title. Part C of the Safe Drinking Water Act is classified generally to part C (§300h et seq.) of subchapter XII of chapter 6A ofthis title. For complete classification of this Act to the Code, see Short Title note set out under section 201 of this title and Tables.

The Magnuson-Stevens Fishery Conservation and Management Act, referred to in pars. (8) and (16), is Pub. L. 94-265, Apr. 13,1976, 90 Stat. 331, as amended, which is classified principally to chapter 38 (§1801 et seq.) of Title 16, Conservation. Thefishery conservation zone established by this Act, referred to in par. (16), was established by section 101 of this Act ( 16 U.S.C.1811 ), which as amended generally by Pub. L. 99-659, title I, §101(b), Nov. 14, 1986, 100 Stat. 3706, relates to United Statessovereign rights and fishery management authority over fish within the exclusive economic zone as defined in section 1802 ofTitle 16. For complete classification of this Act to the Code, see Short Title note set out under section 1801 of Title 16 andTables.

The Clean Air Act, referred to in par. (10), is act July 14, 1955, ch. 360, as amended generally by Pub. L. 88-206, Dec. 17, 1963,77 Stat. 392, and later by Pub. L. 95-95 Aug. 7, 1977, 91 Stat. 685. The Clean Air Act was originally classified to chapter 15B(§1857 et seq.) of this title. On enactment of Pub. L. 95-95, the Act was reclassified to chapter 85 (§7401 et seq.) of this title.Parts C and D of title I of the Clean Air Act are classified generally to parts C (§7470 et seq.) and D (§7501 et seq.), respectively,of subchapter I of chapter 85 of this title. For complete classification of this Act to the Code, see Short Title note set out undersection 7401 of this title and Tables.

The Atomic Energy Act of 1954, referred to in pars. (10) and (22), is act Aug. 1, 1946, ch. 724, as added by act Aug. 30, 1954,ch. 1073, §1, 68 Stat. 919, which is classified principally to chapter 23 (§2011 et seq.) of this title. For complete classification ofthis Act to the Code, see Short Title note set out under section 2011 of this title and Tables.

The Solid Waste Disposal Act, referred to in pars. (14), (39)(B)(iv), (vi)(I), (ix), and (41)(B)(i), is title II of Pub. L. 89-272, Oct. 20,1965, 79 Stat. 997, as amended generally by Pub. L. 94-580, §2, Oct. 21, 1976, 90 Stat. 2795, which is classified generally tochapter 82 (§6901 et seq.) of this title. Subtitles C and I of the Act are classified generally to subchapters III (§6921 et seq.) andIX (§6991 et seq.), respectively, of chapter 82 of this title. For complete classification of this Act to the Code, see Short Title noteset out under section 6901 of this title and Tables.

The Alaska Native Claims Settlement Act, referred to in par. (20)(E), is Pub. L. 92-203, Dec. 18, 1971, 85 Stat. 688, which isclassified generally to chapter 33 (§1601 et seq.) of Title 43, Public Lands. For complete classification of this Act to the Code, seeShort Title note set out under section 1601 of Title 43 and Tables.

The Farm Credit Act of 1971, referred to in par. (20)(H)(iv)(III), is Pub. L. 92-181, Dec. 10, 1971, 85 Stat. 583, as amended,which is classified generally to chapter 23 (§2001 et seq.) of Title 12, Banks and Banking. For complete classification of this Act

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to the Code, see Short Title note set out under section 2001 of Title 12 and Tables.

The Disaster Relief and Emergency Assistance Act, referred to in par. (23), is Pub. L. 93-288, May 22, 1974, 88 Stat. 143, asamended, known as the Robert T. Stafford Disaster Relief and Emergency Assistance Act, which is classified principally tochapter 68 (§5121 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out undersection 5121 of this title and Tables.

The Federal Water Pollution Control Act, referred to in pars. (31) and (39)(B)(iv), is act June 30, 1948, ch. 758, as amendedgenerally by Pub. L. 92-500, §2, Oct. 18, 1972, 86 Stat. 816, also known as the Clean Water Act, which is classified generally tochapter 26 (§1251 et seq.) of Title 33, Navigation and Navigable Waters. Section 311(c) of the Act was amended generally byPub. L. 101-380, title IV, §4201(a), Aug. 18, 1990, 104 Stat. 523, and no longer contains provisions directing the publishing of aNational Contingency Plan. However, such provisions are contained in section 1321(d) of Title 33. For complete classification ofthis Act to the Code, see Short Title note set out under section 1251 of Title 33 and Tables.

The Toxic Substances Control Act, referred to in par. (39)(B)(iv), (viii)(II), is Pub. L. 94-469, Oct. 11, 1976, 90 Stat. 2003, asamended, which is classified generally to chapter 53 (§2601 et seq.) of Title 15, Commerce and Trade. For completeclassification of this Act to the Code, see Short Title note set out under section 2601 of Title 15 and Tables.

AMENDMENTS

2018-Par. (20)(D). Pub. L. 115-141, §2, substituted "ownership or control through seizure or otherwise in connection with lawenforcement activity, or through bankruptcy, tax delinquency, abandonment, or other circumstances in which the governmentacquires title by virtue" for "ownership or control involuntarily through bankruptcy, tax delinquency, abandonment, or othercircumstances in which the government involuntarily acquires title by virtue".

Par. (20)(E), (F). Pub. L. 115-141, §3(1), (2), added subpar. (E) and redesignated former subpar. (E) as (F). Former subpar. (F)redesignated (G).

Par. (20)(G). Pub. L. 115-141, §3(1), (3), redesignated subpar. (F) as (G) and substituted "subparagraph (F)" for "subparagraph(E)" in introductory provisions. Former subpar. (G) redesignated (H).

Par. (20)(H). Pub. L. 115-141, §3(1), (4), redesignated subpar. (G) as (H) and substituted "of title 12) or" for "of title 12 or" in cl.(i)(II).

Par. (39)(D)(ii)(II)(bb). Pub. L. 115-141, §4, amended item (bb) generally. Prior to amendment, item (bb) read as follows: "is a sitedetermined by the Administrator or the State, as appropriate, to be-

"(AA) of relatively low risk, as compared with other petroleum-only sites in the State; and

"(BB) a site for which there is no viable responsible party and which will be assessed, investigated, or cleaned up by a personthat is not potentially liable for cleaning up the site; and".

Par. (40). Pub. L. 115-141, §5(a), made numerous amendments to structure of par. (40), resulting in substitution of subpar. (A)for former introductory provisions, insertion of subpar. (B) designation, heading, and introductory provisions, redesignation offormer subpars. (A) to (H) as cls. (i) to (viii), respectively, of subpar. (B), redesignation of cls. and subcls. within former subpars.(A) to (H) as subcls. and items, respectively, within cls. (i) to (viii), and realignment of margins.

Par. (40)(B). Pub. L. 115-141, §5(a)(1)(B)-(D), just prior to redesignation of subpar. (B) as cl. (ii) of subpar. (B), substituted"subclauses (II) and (III)" for "clauses (ii) and (iii)" in subcl. (I) and "clause" for "subparagraph" in subcls. (II) and (III).

Par. (40)(H)(i)(II). Pub. L. 115-141, §5(a)(4)(A)(i), just prior to redesignation of subpar. (H)(i)(II) as cl. (viii)(I)(bb) of subpar. (B),inserted ", by a tenancy, by the instruments by which a leasehold interest in the facility is created," after "financed".

2002-Par. (35)(A). Pub. L. 107-118, §223(1), in introductory provisions substituted "deeds, easements, leases, or" for "deeds or"and in concluding provisions substituted "the defendant has satisfied" for "he has satisfied" and inserted before period at end ",provides full cooperation, assistance, and facility access to the persons that are authorized to conduct response actions at thefacility (including the cooperation and access necessary for the installation, integrity, operation, and maintenance of any completeor partial response action at the facility), is in compliance with any land use restrictions established or relied on in connection withthe response action at a facility, and does not impede the effectiveness or integrity of any institutional control employed at thefacility in connection with a response action".

Par. (35)(B). Pub. L. 107-118, §223(2), added subpar. (B) and struck out former subpar. (B) which read as follows: "To establishthat the defendant had no reason to know, as provided in clause (i) of subparagraph (A) of this paragraph, the defendant musthave undertaken, at the time of acquisition, all appropriate inquiry into the previous ownership and uses of the propertyconsistent with good commercial or customary practice in an effort to minimize liability. For purposes of the preceding sentencethe court shall take into account any specialized knowledge or experience on the part of the defendant, the relationship of thepurchase price to the value of the property if uncontaminated, commonly known or reasonably ascertainable information aboutthe property, the obviousness of the presence or likely presence of contamination at the property, and the ability to detect suchcontamination by appropriate inspection."

Par. (39). Pub. L. 107-118, §211(a), added par. (39).


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1999-Par. (20)(D). Pub. L. 106-74 which directed the amendment of subpar. (D) by inserting "through seizure or otherwise inconnection with law enforcement activity" before "involuntary" the first place it appears, could not be executed because the word"involuntary" does not appear in subpar. (D).

1996-Pars. (8), (16). Pub. L. 104-208, §101(a) [title II, §211(b)], substituted "Magnuson-Stevens Fishery" for "Magnuson Fishery".

Par. (20)(E) to (G). Pub. L. 104-208, §2502(b), added subpars. (E) to (G).

Par. (26). Pub. L. 104-287 substituted "section 60101(a) of title 49" for "the Pipeline Safety Act".

1994-Par. (26). Pub. L. 103-429 substituted "a hazardous liquid pipeline facility" for "pipeline".

1988-Par. (23). Pub. L. 100-707 substituted "Disaster Relief and Emergency Assistance Act" for "Disaster Relief Act of 1974".

1986- Pub. L. 99-499, §101(f), struck out ", the term" after "subchapter" in introductory text.

Pars. (1) to (10). Pub. L. 99-499, §101(f), inserted "The term" and substituted a period for the semicolon at end.

Par. (11). Pub. L. 99-499, §517(c)(2), amended par. (11) generally. Prior to amendment, par. (11) read as follows: "The term'Fund' or 'Trust Fund' means the Hazardous Substance Response Fund established by section 9631 of this title or, in the case ofa hazardous waste disposal facility for which liability has been transferred under section 9607(k) of this title, the Post-closureLiability Fund established by section 9641 of this title."

Pub. L. 99-499, §101(f), inserted "The term" and substituted a period for the semicolon at end.


Par. (16). Pub. L. 99-499, §101(a), (f), inserted "The term", struck out "or" after "local government," inserted ", any Indian tribe, or,if such resources are subject to a trust restriction on alienation, any member of an Indian tribe", and substituted a period for thesemicolon at end.


Par. (20)(A). Pub. L. 99-499, §101(f), inserted "The term".

Pub. L. 99-499, §101(b)(2), amended cl. (iii) generally. Prior to amendment, cl. (iii) read as follows: "in the case of anyabandoned facility, any person who owned, operated, or otherwise controlled activities at such facility immediately prior to suchabandonment."

Pub. L. 99-499, §101(b)(3), in provisions following subcl. (iii), substituted a period for the semicolon at end.

Par. (20)(B), (C). Pub. L. 99-499, §101(b)(3), substituted "In the case" for "in the case" and a period for the semicolon at end.

Par. (20)(D). Pub. L. 99-499, §101(b)(1), (f), added subpar. (D). The part of §101(f) of Pub. L. 99-499 which directed theamendment of par. (20) by changing the semicolon at end to a period could not be executed in view of the prior amendment ofpar. (20) by §101(b)(1) of Pub. L. 99-499 which added subpar. (D) ending in a period.

Par. (21). Pub. L. 99-499, §101(f), inserted "The term" and substituted a period for the semicolon at end.

Par. (22). Pub. L. 99-499, §101(c), (f), inserted "The term" and "(including the abandonment or discarding of barrels, containers,and other closed receptacles containing any hazardous substance or pollutant or contaminant)", substituted a period for thesemicolon at end.

Par. (23). Pub. L. 99-499, §101(f), inserted "The terms" and substituted a period for the semicolon at end.

Par. (24). Pub. L. 99-499, §101(d), (f), inserted "The terms" and substituted "and associated contaminated materials" for "orcontaminated materials" and "welfare; the term includes offsite transport and offsite storage, treatment, destruction, or securedisposition of hazardous substances and associated contaminated materials." for "welfare. The term does not include offsitetransport of hazardous substances, or the storage, treatment, destruction, or secure disposition offsite of such hazardoussubstances or contaminated materials unless the President determines that such actions (A) are more cost-effective than otherremedial actions, (B) will create new capacity to manage, in compliance with subtitle C of the Solid Waste Disposal Act [ 42U.S.C. 6921 et seq.], hazardous substances in addition to those located at the affected facility, or (C) are necessary to protectpublic health or welfare or the environment from a present or potential risk which may be created by further exposure to thecontinued presence of such substances or materials;". The part of §101(f) of Pub. L. 99-499 which directed amendment of par.(24) by changing the semicolon at end to a period could not be executed in view of prior amendment of par. (24) by §101(d) ofPub. L. 99-499 which substituted language at end of par. (24) ending in a period for former language ending in a semicolon.

Par. (25). Pub. L. 99-499, §101(e), (f), inserted "The terms" and ", all such terms (including the terms 'removal' and 'remedialaction') include enforcement activities related thereto." The part of §101(f) of Pub. L. 99-499 which directed amendment of par.(25) by changing the semicolon at end to a period could not be executed in view of prior amendment of par. (25) by §101(e) ofPub. L. 99-499 inserting language and a period at end of par. (25).

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Pars. (26), (27). Pub. L. 99-499, §101(f), inserted "The terms" and substituted a period for the semicolon at end.

Par. (28). Pub. L. 99-499, §101(f), inserted "The term" and substituted a period for the semicolon at end.

Par. (29). Pub. L. 99-499, §101(f), inserted "The terms" and substituted a period for the semicolon at end.

Par. (30). Pub. L. 99-499, §101(f), inserted "The terms".

Par. (31). Pub. L. 99-499, §101(f), inserted "The term" and substituted a period for "; and".

Par. (32). Pub. L. 99-499, §101(f), inserted "The terms".

Pars. (33) to (36). Pub. L. 99-499, §101(f), added pars. (33) to (36).

Par. (37). Pub. L. 99-499, §114(b), added par. (37).


1980-Pars. (8), (16). Pub. L. 96-561 substituted "Magnuson Fishery Conservation and Management Act" for "FisheryConservation and Management Act of 1976".

EFFECTIVE DATE OF 1996 AMENDMENT

Pub. L. 104-208, div. A, title I, §101(a) [title II, §211(b)], Sept. 30, 1996, 110 Stat. 3009, 3009-41, provided that the amendmentmade by that section is effective 15 days after Oct. 11, 1996.

Amendment by section 2502(b) of Pub. L. 104-208 applicable with respect to any claim that has not been finally adjudicated as ofSept. 30, 1996, see section 2505 of Pub. L. 104-208 set out as a note under section 6991b of this title.


Pub. L. 99-499, §4, Oct. 17, 1986, 100 Stat. 1614, provided that: "Except as otherwise specified in section 121(b) of this Act [setout as an Effective Date note under section 9621 of this title] or in any other provision of titles I, II, III, and IV of this Act [seeTables for classification], the amendments made by titles I through IV of this Act [enacting subchapter IV of this chapter andsections 9616 to 9626, 9658 to 9660, and 9661 of this title and sections 2701 to 2707 and 2810 of Title 10, Armed Forces,amending sections 6926, 6928, 6991 to 6991d, 6991g, 9601 to 9609, 9611 to 9614, 9631, 9651, 9656, and 9657 of this title andsection 1416 of Title 33, Navigation and Navigable Waters, and renumbering former section 2701 of Title 10 as section 2721 ofTitle 10] shall take effect on the enactment of this Act [Oct. 17, 1986]."

Amendment by section 517(c)(2) of Pub. L. 99-499 effective Jan. 1, 1987, see section 517(e) of Pub. L. 99-499 set out as anEffective Date note under section 9507 of Title 26, Internal Revenue Code.


Pub. L. 96-561, title II, §238(b), Dec. 22, 1980, 94 Stat. 3300, provided that the amendment made by that section is effective 15days after Dec. 22, 1980.

SHORT TITLE OF 2018 AMENDMENT

Pub. L. 115-141, div. N, §1, Mar. 23, 2018, 132 Stat. 1052, provided that: "This division [amending this section and sections9604, 9607, and 9628 of this title] may be cited as the 'Brownfields Utilization, Investment, and Local Development Act of 2018'or the 'BUILD Act'."

Pub. L. 115-141, div. S, title XI, §11011101,, 132 Stat. 1147, provided that: "This title [amending section 9603 of this title andenacting provisions set out as a note under section 9603 of this title] may be cited as the 'Fair Agricultural Reporting Method Act'or the 'FARM Act'."

SHORT TITLE OF 2002 AMENDMENTS

Pub. L. 107-118, §1, Jan. 11, 2002, 115 Stat. 2356, provided that: "This Act [enacting section 9628 of this title, amending thissection and sections 9604, 9605, 9607, and 9622 of this title, and enacting provisions set out as notes under this section andsection 9607 of this title] may be cited as the 'Small Business Liability Relief and Brownfields Revitalization Act'."

Pub. L. 107-118, title I, §101, Jan. 11, 2002, 115 Stat. 2356, provided that: "This title [amending sections 9607 and 9622 of thistitle and enacting provisions set out as a note under section 9607 of this title] may be cited as the 'Small Business LiabilityProtection Act'."

Pub. L. 107-118, title II, §201, Jan. 11, 2002, 115 Stat. 2360, provided that: "This title [enacting section 9628 of this title andamending this section and sections 9604, 9605, and 9607 of this title] may be cited as the 'Brownfields Revitalization andEnvironmental Restoration Act of 2001'."


Pub. L. 104-208, div. A, title II, §25012501,, 110 Stat. 3009-462, provided that: "This subtitle [subtitle E (§§2501-2505) of title II ofdiv. A of Pub. L. 104-208 amending this section and sections 6991b and 9607 of this title and enacting provisions set out as a

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note under section 6991b of this title] may be cited as the 'Asset Conservation, Lender Liability, and Deposit Insurance ProtectionAct of 1996'."


Pub. L. 102-426, §1, Oct. 19, 1992, 106 Stat. 2174, provided that: "This Act [amending section 9620 of this title and enactingprovisions set out as a note under section 9620 of this title] may be cited as the 'Community Environmental Response FacilitationAct'."


Pub. L. 99-499, §1, Oct. 17, 1986, 100 Stat. 1613, provided that: "This Act [enacting subchapter IV of this chapter and sections9616 to 9626, 9658 to 9662, 11001 to 11005, 11021 to 11023, and 11041 to 11050 of this title, sections 2701 to 2707 and 2810of Title 10, Armed Forces, and sections 59A, 4671, 4672, 9507, and 9508 of Title 26, Internal Revenue Code, amending thissection, sections 6926, 6928, 6991 to 6991d, 6991g, 9602 to 9609, 9611 to 9614, 9631, 9651, 9656, and 9657 of this title,sections 26, 164, 275, 936, 1561, 4041, 4042, 4081, 4221, 4611, 4612, 4661, 4662, 6154, 6416, 6420, 6421, 6425, 6427, 6655,9502, 9503, and 9506 of Title 26, and section 1416 of Title 33, Navigation and Navigable Waters, renumbering former section2701 of Title 10 as section 2721 of Title 10, repealing sections 9631 to 9633, 9641, and 9653 of this title and sections 4681 and4682 of Title 26, and enacting provisions set out as notes under this section, sections 6921, 6991b, 7401, 9620, 9621, 9658,9660, 9661, and 11001 of this title, section 2703 of Title 10, sections 1, 26, 4041, 4611, 4661, 4671, 4681, 9507, and 9508 ofTitle 26, and section 655 of Title 29, Labor] may be cited as the 'Superfund Amendments and Reauthorization Act of 1986'."

SHORT TITLE

Pub. L. 96-510, §1, Dec. 11, 1980, 94 Stat. 2767, provided: "That this Act [enacting this chapter, section 6911a of this title, andsections 4611, 4612, 4661, 4662, 4681, and 4682 of Title 26, Internal Revenue Code, amending section 6911 of this title, section1364 of Title 33, Navigation and Navigable Waters, and section 11901 of Title 49, Transportation, and enacting provisions set outas notes under section 6911 of this title and sections 1 and 4611 of Title 26] may be cited as the 'Comprehensive EnvironmentalResponse, Compensation, and Liability Act of 1980'."

TRANSFER OF FUNCTIONS

For transfer of certain functions from Nuclear Regulatory Commission to Chairman thereof, see Reorg. Plan No. 1 of 1980, 45F.R. 40561, 94 Stat. 3585, set out as a note under section 5841 of this title.

TERRITORIAL SEA AND CONTIGUOUS ZONE OF UNITED STATES

For extension of territorial sea and contiguous zone of United States, see Proc. No. 5928 and Proc. No. 7219, respectively, setout as notes under section 1331 of Title 43, Public Lands.

DEFINITIONS

Pub. L. 99-499, §2, Oct. 17, 1986, 100 Stat. 1614, provided that: "As used in this Act [see Short Title of 1986 Amendment noteabove]-

"(1) CERCLA.-The term 'CERCLA' means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980( 42 U.S.C. 9601 et seq.).

"(2) ADMINISTRATOR.-The term 'Administrator' means the Administrator of the Environmental Protection Agency."

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Connecticut Rules - Practice Book

Connecticut Rules of Professional Conduct

CLIENT LAWYER RELATIONSHIPS

As amended through February 11, 2020Rule 1.6. Confidentiality of Information

(a) A lawyer shall not reveal informationrelating to representation of a clientunless the client gives informedconsent, the disclosure is impliedlyauthorized in order to carry out therepresentation, or the disclosure ispermitted by subsection (b), (c), or (d).

(b) A lawyer shall reveal such informationto the extent the lawyer reasonablybelieves necessary to prevent the clientfrom committing a criminal or fraudulentact that the lawyer believes is likely toresult in death or substantial bodilyharm.

(c) A lawyer may reveal such information tothe extent the lawyer reasonablybelieves necessary to:(1) Prevent the client from

committing a criminal orfraudulent act that the lawyerbelieves is likely to result insubstantial injury to thefinancial interest or property ofanother;

(2) Prevent, mitigate or rectify theconsequence of a client'scriminal or fraudulent act in thecommission of which thelawyer's services had beenused;

(3) Secure legal advice aboutthe lawyer's compliance withthese Rules;

(4) Comply with other law ora court order.

(5) Detect and resolve conflicts ofinterest arising from the

lawyer's change ofemployment or from changesin the composition orownership of a firm, but only ifthe revealed information wouldnot compromise the attorney-client privilege or otherwiseprejudice the client.

(d) A lawyer may reveal such information toestablish a claim or defense on behalfof the lawyer in a controversy betweenthe lawyer and the client, to establish adefense to a criminal charge or civilclaim against the lawyer based uponconduct in which the client wasinvolved, or to respond to allegations inany proceeding concerning the lawyer'srepresentation of the client.

(e) A lawyer shall make reasonable effortsto prevent the inadvertent orunauthorized disclosure of, orunauthorized access to, informationrelating to the representation of a client.

Cite as Conn. R. Prof'l. Cond. 1.6

History. P.B. 1978-1997, Rule 1.6. Amended June 26, 2006, to takeeffect Jan. 1, 2007; amended June 14, 2013, to take effect Jan. 1,2014.

Note:

COMMENTARY: This Rule governs the disclosure by a lawyer ofinformation relating to the representation of a client during the lawyer'srepresentation of the client. See Rule 1.18 for the lawyer's duties withrespect to information provided to the lawyer by a prospective client,Rule 1.9(c) (2) for the lawyer's duty not to reveal information relating tothe lawyer's prior representation of a former client and Rules 1.8(b) and1.9(c) (1) for the lawyer's duties with respect to the use of suchinformation to the disadvantage of clients and former clients.

A fundamental principle in the client-lawyer relationshipis that, in the absence of the client's informed consent,the lawyer must not reveal information relating to therepresentation. See Rule 1.0(f) for the definition ofinformed consent. This contributes to the trust that is thehallmark of the client-lawyer relationship. The client isthereby encouraged to seek legal assistance and tocommunicate fully and frankly with the lawyer even as toembarrassing or legally damaging subject matter. Thelawyer needs this information to represent the clienteffectively and, if necessary, to advise the client torefrain from wrongful conduct. Almost without exception,clients come to lawyers in order to determine their rights

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and what is, in the complex of laws and regulations,deemed to be legal and correct. Based upon experience,lawyers know that almost all clients follow the advicegiven, and the law is upheld.

The principle of client-lawyer confidentiality is giveneffect by related bodies of law, the attorney-clientprivilege, the work product doctrine and the Rule ofconfidentiality established in professional ethics. Theattorney-client privilege and work product doctrine applyin judicial and other proceedings in which a lawyer maybe called as a witness or otherwise required to produceevidence concerning a client. The Rule of client-lawyerconfidentiality applies in situations other than thosewhere evidence is sought from the lawyer throughcompulsion of law. The confidentiality Rule, for example,applies not only to matters communicated in confidenceby the client but also to all information relating to therepresentation, whatever its source. A lawyer may notdisclose such information except as authorized orrequired by the Rules of Professional Conduct or otherlaw. See also Scope.

Subsection (a) prohibits a lawyer from revealinginformation relating to the representation of a client. Thisprohibition also applies to disclosures by a lawyer that donot in themselves reveal protected information but couldreasonably lead to the discovery of such information by athird person. A lawyer's use of a hypothetical to discussissues relating to the representation is permissible solong as there is no reasonable likelihood that the listenerwill be able to ascertain the identity of the client or thesituation involved.

Authorized Disclosure. Except to the extent that theclient's instructions or special circumstances limitthat authority, a lawyer is impliedly authorized tomake disclosures about a client when appropriate incarrying out the representation. In some situations,for example, a lawyer may be impliedly authorized toadmit a fact that cannot properly be disputed tomake a disclosure that facilitates a satisfactoryconclusion to a matter. Lawyers in a firm may, in thecourse of the firm's practice, disclose to each otherinformation relating to a client of the firm, unless theclient has instructed that particular information beconfined to specific lawyers.

Disclosure Adverse to Client. Although the publicinterest is usually best served by a strict rulerequiring lawyers to preserve the confidentiality ofinformation relating to the representation of theirclients, the confidentiality Rule is subject to limitedexceptions. Subsection (b) recognizes the overridingvalue of life and physical integrity and requiresdisclosure in certain circumstances.

Subsection (c) (1) is a limited exception to the Rule ofconfidentiality that permits the lawyer to revealinformation to the extent necessary to enable affectedpersons or appropriate authorities to prevent the clientfrom committing a crime or fraud, as defined in Rule1.0(e), that is likely to result in substantial injury to thefinancial or property interests of another. Such a seriousabuse of the client-lawyer relationship by the clientforfeits the protection of this Rule. The client can, ofcourse, prevent such disclosure by refraining from thewrongful conduct. Although subsection (c) (1) does notrequire the lawyer to reveal the client's misconduct, thelawyer may not counsel or assist the client in conduct thelawyer knows is criminal or fraudulent. See Rule 1.2(d).See also Rule 1.16 with respect to the lawyer'sobligation or right to withdraw from the representation ofthe client in such circumstances, and Rule 1.13(c), whichpermits the lawyer, where the client is an organization, toreveal information relating to the representation in limitedcircumstances.

Subsection (c) (2) addresses the situation in which thelawyer does not learn of the client's crime or fraud untilafter it has been consummated. Although the client nolonger has the option of preventing disclosure byrefraining from the wrongful conduct, there will besituations in which the loss suffered by the affectedperson can be prevented, rectified or mitigated. In suchsituations, the lawyer may disclose information relatingto the representation to the extent necessary to enablethe affected persons to prevent or mitigate reasonablycertain losses or to attempt to recoup their losses.Subsection (c) (2) does not apply when a person whohas committed a crime or fraud thereafter employs alawyer for representation concerning that offense.

A lawyer's confidentiality obligations do not preclude alawyer from securing confidential legal advice about thelawyer's personal responsibility to comply with theseRules. In most situations, disclosing information tosecure such advice will be impliedly authorized for thelawyer to carry out the representation. Even when thedisclosure is not impliedly authorized, subsection (c) (3)permits such disclosure because of the importance of alawyer's compliance with the Rules of ProfessionalConduct. The lawyer's right to disclose such informationto a second lawyer pursuant to subsection (c) (3) doesnot give the second lawyer the duty or right to disclosesuch information under subsections (b), (c) and (d). Thefirst lawyer's client does not become the client of thesecond lawyer just because the first lawyer seeks thesecond lawyer's advice under (c) (3).

Subsection (c) (5) recognizes that lawyers in differentfirms may need to disclose limited information to eachother to detect and resolve conflicts of interest, such aswhen a lawyer is considering an association with another

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firm, two or more firms are considering a merger, or alawyer is considering the purchase of a law practice. SeeRule 1.17, commentary. Under these circumstances,lawyers and law firms are permitted to disclose limitedinformation, but only once substantive discussionsregarding the new relationship have occurred. Any suchdisclosure should ordinarily include no more than theidentity of the persons and entities involved in a matter, abrief summary of the general issues involved, andinformation about whether the matter has terminated.Even this limited information, however, should bedisclosed only to the extent reasonably necessary todetect and resolve conflicts of interest that might arisefrom the possible new relationship. Moreover, thedisclosure of any information is prohibited if it wouldcompromise the attorney-client privilege or otherwiseprejudice the client (e.g., the fact that a corporate clientis seeking advice on a corporate takeover that has notbeen publicly announced, that a person consulted alawyer about the possibility of divorce before theperson's intentions are known to the person's spouse, orthat a person has consulted a lawyer about a criminalinvestigation that has not led to a public charge). Underthose circumstances, subsection (a) prohibits disclosureunless the client or former client gives informed consent.A lawyer's fiduciary duty to the lawyer's firm may alsogovern a lawyer's conduct when exploring an associationwith another firm and is beyond the scope of theseRules. Any information disclosed pursuant to subsection(c) (5) may be used or further disclosed only to theextent necessary to detect and resolve conflicts ofinterest. Subsection (c) (5) does not restrict the use ofinformation acquired by means independent of anydisclosure pursuant to subsection (c) (5). Subsection (c)(5) also does not affect the disclosure of informationwithin a law firm when the disclosure is otherwiseauthorized, such as when a lawyer in a firm disclosesinformation to another lawyer in the same firm to detectand resolve conflicts of interest that could arise inconnection with undertaking a new representation.

Where alegal claim or disciplinary charge allegescomplicity of the lawyer in a client's conduct or othermisconduct of the lawyer involving representation of theclient, the lawyer may respond to the extent the lawyerreasonably believes necessary to establish a defense.The same is true with respect to a claim involving theconduct or representation of a former client. Such acharge can arise in a civil, criminal, disciplinary or otherproceeding and can be based on a wrong allegedlycommitted by the lawyer against the client or on a wrongalleged by a third person, for example, a person claimingto have been defrauded by the lawyer and client actingtogether. The lawyer's right to respond arises when anassertion of such complicity has been made. Subsection(d) does not require the lawyer to await the

commencement of an action or proceeding that chargessuch complicity, so that the defense may be establishedby responding directly to a third party who has madesuch an assertion. The right to defend also applies, ofcourse, where a proceeding has been commenced.

A lawyer entitled to a fee is permitted by subsection (d)to prove the services rendered in an action to collect it.This aspect of the rule expresses the principle that thebeneficiary of a fiduciary relationship may not exploit it tothe detriment of the fiduciary.

Other law may require that a lawyer disclose informationabout a client. Whether such a law supersedes Rule 1.6is a question of law beyond the scope of these Rules.When disclosure of information relating to therepresentation appears to be required by other law, thelawyer must discuss the matter with the client to theextent required by Rule 1.4. If, however, the other lawsupersedes this Rule and requires disclosure,subsection (c) (4) permits the lawyer to make suchdisclosures as are necessary to comply with the law.

A lawyer may be ordered to reveal information relating tothe representation of a client by a court or by anothertribunal or governmental entity claiming authoritypursuant to other law to compel the disclosure. Absentinformed consent of the client to do otherwise, the lawyershould assert on behalf of the client all nonfrivolousclaims that the order is not authorized by other law orthat the information sought is protected againstdisclosure by the attorney-client privilege or otherapplicable law. In the event of an adverse ruling, thelawyer must consult with the client about the possibilityof appeal to the extent required by Rule 1.4. Unlessreview is sought, however, subsection (c) (4) permits thelawyer to comply with the court's order.

Subsection (b) requires and subsection (c) permitsdisclosure only to the extent the lawyer reasonablybelieves the disclosure is necessary to accomplish oneof the purposes specified. Where practicable, the lawyershould first seek to persuade the client to take suitableaction to obviate the need for disclosure. In any case, adisclosure adverse to the client's interest should be nogreater than the lawyer reasonably believes necessaryto accomplish the purpose. If the disclosure will be madein connection with a judicial proceeding, the disclosureshould be made in a manner that limits access to theinformation to the tribunal or other persons having aneed to know it and appropriate protective orders orother arrangements should be sought by the lawyer tothe fullest extent practicable.

Subsection (c) permits but does not require thedisclosure of information relat ing to a cl ient 'srepresentation to accomplish the purposes specified in

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subsections (c) (1) through (c) (4). In exercising thediscretion conferred by this Rule, the lawyer mayconsider such factors as the nature of the lawyer'srelationship with the client and with those who might beinjured by the client, the lawyer's own involvement in thetransaction and factors that may extenuate the conductin question. A lawyer's decision not to disclose aspermitted by subsection (c) does not violate this Rule.Disclosure may be required, however, by other Rules.Some Rules require disclosure only if such disclosurewould be permitted by subsection (b). See Rules 1.2(d),4.1(b), 8.1 and 8.3. Rule 3.3, on the other hand, requiresdisclosure in some circumstances regardless of whethersuch disclosure is permitted by this Rule. See Rule3.3(c).

Acting Competently to Preserve Confidentiality.Subsection (e) requires a lawyer to act competentlyto sa feguard in format ion re la t ing to therepresentation of a client against inadvertent orunauthorized disclosure by the lawyer or otherpersons who are participating in the representationof the client or who are subject to the lawyer'ssupervision. See Rules 1.1, 5.1 and 5.3. Theunauthorized access to, or the inadvertent orunauthorized disclosure of, information relating tothe representation of a client does not constitute aviolation of subsection (e) if the lawyer has madereasonable efforts to prevent the access ordisclosure. Factors to be considered in determiningthe reasonableness of the lawyer's efforts include,but are not limited to, the sensitivity of theinformation, the likelihood of disclosure if additionalsafeguards are not employed, the cost of employingadditional safeguards, the difficulty of implementingthe safeguards, and the extent to which thesafeguards adversely affect the lawyer's ability torepresent clients (e.g., by making a device orimportant piece of software excessively difficult touse). A client may require the lawyer to implementspecial security measures not required by this Ruleor may give informed consent to forgo securitymeasures that would otherwise be required by thisRule. Whether a lawyer may be required to takeadditional steps to safeguard a client's informationin order to comply with other law, such as state andfederal laws that govern data privacy or that imposenotification requirements upon the loss of, orunauthorized access to, electronic information, isbeyond the scope of these Rules. For a lawyer'sduties when sharing information with nonlawyersoutside the lawyer's own firm, see Rule 5.3,commentary.

When transmitting a communication that includesinformation relating to the representation of a client, thelawyer must take reasonable precautions to prevent the

information from coming into the hands of unintendedrecipients. This duty, however, does not require that thelawyer use special security measures if the method ofcommunication affords a reasonable expectation ofprivacy. Special circumstances, however, may warrantspecial precautions. Factors to be considered indetermining the reasonableness of the lawyer'sexpectation of confidentiality include the sensitivity of theinformation and the extent to which the privacy of thecommunication is protected by law or by a confidentialityagreement. A client may require the lawyer to implementspecial security measures not required by this Rule ormay give informed consent to the use of a means ofcommunication that would otherwise be prohibited bythis Rule. Whether a lawyer may be required to takeadditional steps in order to comply with other law, suchas state and federal laws that govern data privacy, isbeyond the scope of these Rules.

Former Client. The duty of confidentiality continuesafter the client-lawyer relationship has terminated.See Rule 1.9(c) (2). See Rule 1.9(c) (1) for theprohibition against using such information to thedisadvantage of the former client.

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Connecticut Rules - Practice Book

Connecticut Rules of Professional Conduct

LAW FIRMS AND ASSOCIATIONS

As amended through February 11, 2020Rule 5.3. Responsibilities regarding Non-lawyerAssistance

With respect to a nonlawyer employed or retained by orassociated with a lawyer:

(1) A partner, and a lawyer who individuallyor together with other lawyerspossesses comparable managerialauthority in a law firm shall makereasonable efforts to ensure that thefirm has in effect measures givingreasonable assurance that the person'sconduct is compatible with theprofessional obligations of the lawyer;

(2) A lawyer having direct supervisoryauthority over the nonlawyer shall makereasonable efforts to ensure that theperson's conduct is compatible with theprofessional obligations of the lawyer;and

(3) A lawyer shall be responsible forconduct of such a person that would bea violation of the Rules of ProfessionalConduct if engaged in by a lawyer if:(A) The lawyer orders or, with the

knowledge of the specificconduct, ratifies the conductinvolved; or

(B) The lawyer is a partner or hascomparable managerialauthority in the law firm inwhich the person is employed,or has direct supervisoryauthority over the person, andknows of the conduct at a timewhen its consequences can beavoided or mitigated but fails totake reasonable remedialaction.

Cite as Conn. R. Prof'l. Cond. 5.3

History. P.B. 1978-1997, Rule 5.3. Amended June 26, 2006, to takeeffect Jan. 1, 2007.

Note:

COMMENTARY: Lawyers generally employ assistants in their practice,including secretaries, investigators, law student interns, andparaprofessionals. Such assistants, whether employees orindependent contractors, act for the lawyer in rendition of the lawyer'sprofessional services. A lawyer must give such assistants appropriateinstruction and supervision concerning the ethical aspects of theiremployment, particularly regarding the obligation not to discloseinformation relating to representation of the client, and should beresponsible for their work product. The measures employed insupervising nonlawyers should take account of the fact that they do nothave legal training and are not subject to professional discipline.

Subdivision (1) requires lawyers with managerialauthority within a law firm to make reasonable efforts toensure that the firm has in effect measures givingreasonable assurance that nonlawyers in the firm andnonlawyers outside the firm who work on firm matters actin a way compatible with the professional obligations ofthe lawyer. See Commentary to Rule 1.1 and firstparagraph of Commentary to Rule 5.1. Subdivision (2)applies to lawyers who have supervisory authority oversuch nonlawyers within or outside the firm. Subdivision(3) specifies the circumstances in which a lawyer isresponsible for the conduct of such nonlawyers within oroutside the firm that would be a violation of the Rules ofProfessional Conduct if engaged in by a lawyer.

Nonlawyers Outside the Firm. A lawyer may use nonlawyers outside the firm to assist the lawyer inrendering legal services to the client. Examplesinclude the retention of an investigative orparaprofessional service, hiring a documentmanagement company to create and maintain adatabase for complex litigation, sending clientdocuments to a third party for printing or scanning,and using an Internet-based service to store clientinformation. When using such services outside thefirm, a lawyer must make reasonable efforts toensure that the services are provided in a mannerthat is compatible with the lawyer's professionalobligations. The extent of this obligation will dependupon the circumstances, including the education,experience and reputation of the nonlawyer; thenature of the services involved; the terms of anyarrangements concerning the protection of clientinformation; and the legal and ethical environmentsof the jurisdictions in which the services will beperformed, particularly with regard to confidentiality.See also Rules 1.1 (competence), 1.2 (allocation ofauthority), 1.4 (communication with client), 1.6(confidentiality), 5.4(a) (professional independenceof the lawyer), and 5.5(a) (unauthorized practice oflaw). When retaining or directing a nonlawyeroutside the firm, a lawyer should communicatedirections appropriate under the circumstances to

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give reasonable assurance that the nonlawyer'sconduct is compatible with the professionalobligations of the lawyer.

Where the client directs the selection of a particularnonlawyer service provider outside the firm, the lawyermay need to consult with the client to determine how theoutsourcing arrangement should be structured and whowill be responsible for monitoring the performance of thenonlawyer services. Unless the client expressly agreesthat the client will be responsible for monitoring thenonlawyer's services, the lawyer will be responsible formonitoring the nonlawyer's services.

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Page 1550

901 F.2d 1550 (11th Cir. 1990)20 Envtl.

UNITED STATES of America, Plaintiff-Appellee,v.

FLEET FACTORS CORP., Defendant-Third Party Plaintiff-Appellant,Clifford Horowitz and Murray Newton, Defendants,

Robert Kolodney, Esq., as Trustee of Swainsboro Print Works,Inc., Debtor, Third Party-Defendant.

No. 89-8094.United States Court of Appeals, Eleventh Circuit

May 23, 1990 As Amended May 29, 1990.

Page 1551

[Copyrighted Material Omitted]

Page 1552

Richard E. Miley, Nixon, Yow, Waller & Capers, Augusta, Ga., Douglas J. Good, LauriceFirenze, Ruskin, Schlissel, Moscou, Evans & Faltischek, Mineola, N.Y., for Fleet Factors Corp.

Donald A. Carr, Acting Asst. Atty. Gen., Anne S. Almy, Jennifer A. Haverkamp, Land & NaturalResources Div., U.S. Dept. of Justice, Washington, D.C., for U.S.

Appeal from the United States District Court for the Southern District of Georgia.

Before VANCE [ *] and KRAVITCH, Circuit Judges, and LYNNE [ **], Senior District Judge.

KRAVITCH, Circuit Judge:

Fleet Factors Corporation ("Fleet") brought an interlocutory appeal [ 1] from the district court'sdenial of its motion for summary judgment in this suit by the United States to recover the cost ofremoving hazardous waste from a bankrupt textile facility. The district court denied summaryjudgment because it concluded that Fleet's activities at the facility might rise to the level ofparticipation in management sufficient to impose liability under the Comprehensive EnvironmentalResponse Compensation and Liability Act ("CERCLA"), 42 U.S.C. Secs. 9601-57 (1982 & WestSupp.1988), despite the statutory exemption from liability for holders of a security interest. We agreewith the district court that material questions of fact remain as to the extent of Fleet's participation inthe management of the facility; therefore, we affirm the denial of Fleet's summary judgment motion.

FACTS

In 1976, Swainsboro Print Works ("SPW"), a cloth printing facility, entered into a "factoring"agreement with Fleet in which Fleet agreed to advance funds against the assignment of SPW'saccounts receivable. As collateral for these advances, Fleet also obtained a security interest in SPW'stextile facility and all of its equipment, inventory, and fixtures. In August, 1979, SPW filed for

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bankruptcy under Chapter 11. The factoring agreement between SPW and Fleet continued with courtapproval. In early 1981, Fleet ceased advancing funds to SPW because SPW's debt to Fleetexceeded Fleet's estimate of the value of SPW's accounts receivable. On February 27, 1981, SPWceased operations and began to liquidate its inventory. Fleet continued to collect on the accountsreceivable assigned to it under the Chapter 11 factoring agreement. In December 1981, SPW wasadjudicated a bankrupt under Chapter 7 and a trustee assumed title and control of the facility.

In May 1982, Fleet foreclosed on its security interest in some of SPW's inventory and equipment,and contracted with Baldwin Industrial Liquidators ("Baldwin") to conduct an auction of the collateral.Baldwin sold the material "as is" and "in place" on June 22, 1982; the removal of the items

Page 1553

was the responsibility of the purchasers. On August 31, 1982, Fleet allegedly contracted with NixRiggers ("Nix") to remove the unsold equipment in consideration for leaving the premises "broomclean." Nix testified in deposition that he understood that he had been given a "free hand" by Fleet orBaldwin to do whatever was necessary at the facility to remove the machinery and equipment. Nix leftthe facility by the end of December, 1983.

On January 20, 1984, the Environmental Protection Agency ("EPA") inspected the facility andfound 700 fifty-five gallon drums containing toxic chemicals and forty-four truckloads of materialcontaining asbestos. The EPA incurred costs of nearly $400,000 in responding to the environmentalthreat at SPW. On July 7, 1987, the facility was conveyed to Emanuel County, Georgia, at aforeclosure sale resulting from SPW's failure to pay state and county taxes.

The government sued Horowitz and Newton, the two principal officers and stockholders of SPW,and Fleet to recover the cost of cleaning up the hazardous waste. The district court granted thegovernment's summary judgment motion with respect to the liability of Horowitz and Newton for thecost of removing the hazardous waste in the drums. The government's motion with respect to Fleet'sliability, and the liability of Horowitz and Newton for the asbestos removal costs was denied. Fleet'smotion for summary judgment was also denied. The district court, sua sponte, certified the summaryjudgment issues for interlocutory appeal and stayed the remaining proceedings in the case. Fleetsubsequently brought this appeal challenging the court's denial of its motion for summary judgment.

STANDARD OF REVIEW

The district court's disposition of the summary judgment motion is reviewable de novo because itinvolves legal questions of statutory interpretation. See Florida Power & Light Co. v. Allis ChalmersCorp., 893 F.2d 1313, 1315-16 (11th Cir.1990); Hiram Walker & Sons v. Kirk Line, Inc., 877 F.2d1508, 1513 (11th Cir.1989); Clemens v. Dougherty County, Ga., 684 F.2d 1365, 1368 (11thCir.1982). Under Fed.R.Civ.P. 56(c), summary judgment is only appropriate when "there is nogenuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter oflaw." Allis Chalmers, 893 F.2d at 1318. In evaluating a summary judgment motion, the burden ofestablishing the absence of a material dispute of fact is on the moving party; the court must view allevidence in the light most favorable to the non-movant and resolve all reasonable doubts about thefacts in favor of the non-movant. Id.; WBS-TV v. Lee, 842 F.2d 1266, 1269 (11th Cir.1988); WarriorTombigbee Transportation Co. v. M/V Nan Fung, 695 F.2d 1294, 1296 (11th Cir.1983); see CelotexCorp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986).

DISCUSSION

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The Comprehensive Environmental Response Compensation and Liability Act was enacted byCongress in response to the environmental and public health hazards caused by the improperdisposal of hazardous wastes. United States v. Maryland Bank & Trust Co., 632 F.Supp. 573, 576(D.Md.1986); S.Rep. No. 848, 96th Cong., 2d Sess. 2 (1980), U.S.Code Cong. & Admin.News 1980,p. 6119. The essential policy underlying CERCLA is to place the ultimate responsibility for cleaningup hazardous waste on "those responsible for problems caused by the disposal of chemical poison."Allis Chalmers, 893 F.2d at 1316; United States v. Aceto Agricultural Chemicals Corp., 872 F.2d1373, 1377 (8th Cir.1989); Dedham Water Co. v. Cumberland Farms Dairy, 805 F.2d 1074, 1081 (1stCir.1986). Accordingly, CERCLA authorizes the federal government to clean up hazardous wastedump sites and recover the cost of the effort from certain categories of responsible parties. MarylandBank & Trust Co., 632 F.Supp. at 576.

The parties liable for costs incurred by the government in responding to an environmentalhazard are: 1) the present owners and operators of a facility where hazardous

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wastes were released or are in danger of being released; 2) the owners or operators of a facility atthe time the hazardous wastes were disposed; 3) the person or entity that arranged for the treatmentor disposal of substances at the facility; and 4) the person or entity that transported the substances tothe facility. Allis Chalmers, 893 F.2d at 1317; 42 U.S.C. Sec. 9607(a) (1982 & West Supp.1988). Thegovernment contends that Fleet is liable for the response costs associated with the waste at the SPWfacility as either a present owner and operator of the facility, see 42 U.S.C. Sec. 9607(a)(1), or theowner or operator of the facility at the time the wastes were disposed, see 42 U.S.C. Sec. 9607(a)(2).

The district court, as a matter of law, rejected the government's claim that Fleet was a presentowner of the facility. The court, however, found a sufficient issue of fact as to whether Fleet was anowner or operator of the SPW facility at the time the wastes were disposed to warrant the denial ofFleet's motion for summary judgment. On appeal each party contests that portion of the district court'sorder adverse to their respective interests.

A. Fleet's Liability Under Section 9607(a)(1) [ 2]

CERCLA holds the owner or operator of a facility containing hazardous waste strictly liable to theUnited States for expenses incurred in responding to the environmental and health hazards posed bythe waste in that facility. See 42 U.S.C. Sec. 9607(a)(1); S.Rep. No. 848, 96th Cong., 2d Sess. 34(1980). This provision of the statute targets those individuals presently "owning or operating suchfacilit[ies]." See 42 U.S.C. Sec. 9601(20)(A)(ii). In order to effectuate the goals of the statute, we willconstrue the present owner and operator of a facility as that individual or entity owning or operatingthe facility at the time the plaintiff initiated the lawsuit by filing a complaint. [ 3]

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On July 9, 1987, the date this litigation commenced, the owner of the SPW facility was EmanuelCounty, Georgia. Under CERCLA, however, a state or local government that has involuntarilyacquired title to a facility is generally not held liable as the owner or operator of the facility. [ 4] Rather,the statute provides that

in the case of any facility, title or control of which was conveyed due to bankruptcy, foreclosure, taxdelinquency, abandonment, or similar means to a unit of State or local government, [its owner oroperator is] any person who owned, operated or otherwise controlled activities at such facility

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immediately beforehand.

42 U.S.C. Sec. 9601(20)(A)(iii).

Essentially, the parties disagree as to the interpretation of the phrase "immediately beforehand."The district court reasoned that Fleet could not be liable under section 9607(a)(1) because it hadnever foreclosed on its security interest in the facility and its agents had not been on the premisessince December 1983. The government contends that the statute should be interpreted to referliability "back to the last time that someone controlled the facility, however long ago." Appellee's Briefat 23. Thus, according to the government, the period of effective abandonment of the site by thetrustee in bankruptcy (from December 1983 to the July 1987 foreclosure sale) should be ignored andliability would remain with Fleet since it was the last entity to "control" the facility.

We agree with Fleet that the plain meaning of the phrase "immediately beforehand" meanswithout intervening ownership, operation, and control. Fleet, therefore, cannot be held liable undersection 9607(a)(1) because it neither owned, operated, or controlled SPW immediately prior toEmanuel County's acquisition of the facility. It is undisputed that from December 1981, when SPWwas adjudicated a bankrupt, until the July 1987 foreclosure sale, the bankrupt estate and trustee werethe owners of the facility. Similarly, the evidence is clear that neither Fleet nor any of its putativeagents had anything to do with the facility after December 1983. Although Fleet may have operated orcontrolled SPW prior to December 1983, its involvement with SPW terminated more than three yearsbefore the county assumed ownership of the facility. The fact that the bankrupt estate or trustee maynot have effectively exercised their control of the facility between December 1983 and July 1987 is ofno moment. It is undisputed that Fleet was not in control of the facility during this period. Although atrustee can obviously abdicate its control over a bankrupt estate, it cannot in such a mannerunilaterally delegate its responsibility to a previous controlling entity. To reach back to Fleet'sinvolvement with the facility prior to December 1983 in order to impose liability would torture the plainstatutory meaning of "immediately beforehand." [ 5]

B. Fleet's Liability Under Section 9607(a)(2)

CERCLA also imposes liability on "any person who at the time of disposal of any hazardoussubstance owned or operated any ... facility at which such hazardous substances were disposedof...." 42 U.S.C. Sec. 9607(a)(2). CERCLA excludes from the definition of "owner or operator" any"person, who, without participating in the management of a ... facility, holds indicia of ownershipprimarily to protect his security interest in the ... facility." 42 U.S.C. Sec. 9601(20)(A). Fleet has theburden of establishing its entitlement to this exemption.

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Maryland Bank & Trust, 632 F.Supp. at 578; see United States v. First City National Bank of Houston,386 U.S. 361, 366, 87 S.Ct. 1088, 1092, 18 L.Ed.2d 151 (1967). There is no dispute that Fleet heldan "indicia of ownership" in the facility through its deed of trust to SPW, and that this interest was heldprimarily to protect its security interest in the facility. The critical issue is whether Fleet participated inmanagement sufficiently to incur liability under the statute. [ 6]

The construction of the secured creditor exemption is an issue of first impression in the federalappellate courts. The government urges us to adopt a narrow and strictly literal interpretation of theexemption that excludes from its protection any secured creditor that participates in any manner inthe management of a facility. We decline the government's suggestion because it would largely

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eviscerate the exemption Congress intended to afford to secured creditors. Secured lendersfrequently have some involvement in the financial affairs of their debtors in order to insure that theirinterests are being adequately protected. To adopt the government's interpretation of the securedcreditor exemption could expose all such lenders to CERCLA liability for engaging in their normalcourse of business.

Fleet, in turn, suggests that we adopt the distinction delineated by some district courts betweenpermissible participation in the financial management of the facility and impermissible participation inthe day-to-day or operational management of a facility. In United States v. Mirabile, the first case tosuggest this interpretation, the district court granted summary judgment to the defendant creditorsbecause their participation in the affairs of the facility was "limited to participation in financialdecisions." No. 84-2280, slip op. at 3 (E.D.Pa. Sept. 6, 1985) (available on WESTLAW as 1985 WL97). The court explained "that the participation which is critical is participation in operational,production, or waste disposal activities. Mere financial ability to control waste disposal practices ... isnot ... sufficient for the imposition of liability." Mirabile, No. 84-2280, slip op. at 4; accord United Statesv. New Castle County, 727 F.Supp. 854, 866 (D.Del.1989); Rockwell International v. IU InternationalCorp., 702 F.Supp. 1384, 1390 (N.D.Ill.1988); see also Coastal Casting Service, No. H-86-4463, slipop. at 4(complaint alleging that secured creditor's entanglement with facility's management surpassedmere financial control held sufficient). The court concluded that "before a secured creditor ... may beheld liable, it must, at a minimum, participate in the day-to-day operational aspects of the site. [Here,the creditor] ... merely foreclosed on the property after all operations had ceased and thereafter tookprudent and routine steps to secure the property against further depreciation." [ 7] Id. at 12;

Page 1557

accord United States v. Nicolet, Inc., 712 F.Supp. 1193, 1204-05 (E.D.Pa.1989).

The court below, relying on Mirabile, similarly interpreted the statutory language to permitsecured creditors to

provide financial assistance and general, and even isolated instances of specific, management adviceto its debtors without risking CERCLA liability if the secured creditor does not participate in the day-to-day management of the business or facility either before or after the business ceases operation.

Fleet Factors Corp., 724 F.Supp. at 960 (S.D.Ga.1988); accord Guidice, at 561-62; [ 8] Nicolet,712 F.Supp. at 1205. Applying this standard, the trial judge concluded that from the inception ofFleet's relationship with SPW in 1976 to June 22, 1982, when Baldwin entered the facility, Fleet'sactivity did not rise to the level of participation in management sufficient to impose CERCLA liability.The court, however, determined that the facts alleged by the government with respect to Fleet'sinvolvement after Baldwin entered the facility were sufficient to preclude the granting of summaryjudgment in favor of Fleet on this issue.

Although we agree with the district court's resolution of the summary judgment motion, we findits construction of the statutory exemption too permissive towards secured creditors who are involvedwith toxic waste facilities. In order to achieve the "overwhelmingly remedial" goal of the CERCLAstatutory scheme, [ 9] ambiguous statutory terms should be construed to favor liability for the costsincurred by the government in responding to the hazards at such facilities. Allis Chalmers, 893 F.2d at1317; see Maryland Bank & Trust Co., 632 F.Supp. at 579 (secured creditor exemption should beconstrued narrowly); Note, When a Security Becomes a Liability: Claims Against Lenders inHazardous Waste Cleanup, 38 Hastings L.J. 1261, 1285-86, 1291 (1987) (same) [hereinafter Claims

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Against Lenders]. The district court's broad interpretation of the exemption would essentially require asecured creditor to be involved in the operations of a facility in order to incur liability. This constructionignores the plain language of the exemption and essentially renders it meaningless. Individuals andentities involved in the operations of a facility are already liable as operators under the expresslanguage of section 9607(a)(2). Had Congress intended to absolve secured creditors from ownershipliability, it would have done so. Instead, the statutory language chosen by Congress explicitly holdssecured creditors liable if they participate in the management of a facility.

Although similar, the phrase "participating in the management" and the term "operator" are notcongruent. Under the standard we adopt today, a secured creditor may incur section 9607(a)(2)liability, without being an operator, [ 10] by participating in the financial management of a facility to adegree indicating a capacity to influence the corporation's treatment of hazardous wastes. It is notnecessary for the secured creditor actually to involve itself in the day-to-day operations of the facilityin order to be liable--although such conduct will certainly lead to the loss of the

Page 1558

protection of the statutory exemption. Nor is it necessary for the secured creditor to participate inmanagement decisions relating to hazardous waste. Rather, a secured creditor will be liable if itsinvolvement with the management of the facility is sufficiently broad to support the inference that itcould affect hazardous waste disposal decisions if it so chose. [ 11] We, therefore, specifically rejectthe formulation of the secured creditor exemption suggested by the district court in Mirabile. See, No.84-2280, slip op. at 4.

This construction of the secured creditor exemption, while less permissive than that of the trialcourt, is broader than that urged by the government and, therefore, should give lenders some latitudein their dealings with debtors without exposing themselves to potential liability. Nothing in ourdiscussion should preclude a secured creditor from monitoring any aspect of a debtor's business.Likewise, a secured creditor can become involved in occasional and discrete financial decisionsrelating to the protection of its security interest without incurring liability.

Our interpretation of the exemption may be challenged as creating disincentives for lenders toextend financial assistance to businesses with potential hazardous waste problems and encouragingsecured creditors to distance themselves from the management actions, particularly those related tohazardous wastes, of their debtors. See Guidice, 732 F.Supp. at 562; Note, Interpreting the Meaningof Lender Management Under Section 101(20)(A) of CERCLA, 98 Yale L.J. 925, 928, 944 (1989). Asa result the improper treatment of hazardous wastes could be perpetuated rather than resolved.These concerns are unfounded.

Our ruling today should encourage potential creditors to investigate thoroughly the wastetreatment systems and policies of potential debtors. If the treatment systems seem inadequate, therisk of CERCLA liability will be weighed into the terms of the loan agreement. Creditors, therefore, willincur no greater risk than they bargained for and debtors, aware that inadequate hazardous wastetreatment will have a significant adverse impact on their loan terms, will have powerful incentives toimprove their handling of hazardous wastes.

Similarly, creditors' awareness that they are potentially liable under CERCLA will encouragethem to monitor the hazardous waste treatment systems and policies of their debtors and insist uponcompliance with acceptable treatment standards as a prerequisite to continued and future financialsupport. Claims Against Lenders, supra, at 1294; Note, The Liability of Financial Institutions for

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Hazardous Waste Cleanup Costs Under CERCLA, 1988 Wis.L.Rev. 139, 185 (1988) [hereinafterLiability of Financial Institutions]. [ 12] Once a secured creditor's involvement

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with a facility becomes sufficiently broad that it can anticipate losing its exemption from CERCLAliability, it will have a strong incentive to address hazardous waste problems at the facility rather thanstudiously avoiding the investigation and amelioration of the hazard.

In Maryland Bank & Trust Co., the court aptly described and weighed the competing policyinterests of creditors and the government in interpreting the secured creditor exemption:

In essence, the defendant's position would convert CERCLA into an insurance scheme forfinancial institutions, protecting them against possible losses due to the security of loans with pollutedproperties. Mortgagees, however, already have the means to protect themselves, by making prudentloans. Financial institutions are in a position to investigate and discover potential problems in theirsecured properties. For many lending institutions, such research is routine. CERCLA will not absolvethem from responsibility for their mistakes of judgment.

632 F.Supp. at 580 (citations omitted).

We agree with the court below that the government has alleged sufficient facts to hold Fleetliable under section 9607(a)(2). From 1976 until SPW ceased printing operations on February 27,1981, Fleet's involvement with the facility was within the parameters of the secured creditorexemption to liability. During this period, Fleet regularly advanced funds to SPW against theassignment of SPW's accounts receivable, paid and arranged for security deposits for SPW's Georgiautility services, and informed SPW that it would not advance any more money when it determined thatits advanced sums exceeded the value of SPW's accounts receivable.

Fleet's involvement with SPW, according to the government, increased substantially after SPWceased printing operations at the Georgia plant on February 27, 1981, and began to wind down itsaffairs. Fleet required SPW to seek its approval before shipping its goods to customers, establishedthe price for excess inventory, dictated when and to whom the finished goods should be shipped,determined when employees should be laid off, supervised the activity of the office administrator atthe site, received and processed SPW's employment and tax forms, controlled access to the facility,and contracted with Baldwin to dispose of the fixtures and equipment at SPW. These facts, if proved,are sufficient to remove Fleet from the protection of the secured creditor exemption. Fleet'sinvolvement in the financial management of the facility was pervasive, if not complete. [ 13]

Furthermore, the government's allegations indicate that Fleet was also involved in the operationalmanagement of the facility. Either of these allegations is sufficient as a matter of law to imposeCERCLA liability on a secured creditor. The district court's finding to the contrary is erroneous.

With respect to Fleet's involvement at the facility from the time it contracted with

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Baldwin in May 1982 until Nix left the facility in December 1983, we share the district court'sconclusion that Fleet's alleged conduct brought it outside the statutory exemption for securedcreditors. [ 14] Indeed, Fleet's involvement would pass the threshold for operator liability under section9607(a)(2). [ 15] Fleet weakly contends that its activity at the facility from the time of the auction waswithin the secured creditor exemption because it was merely protecting its security interest in the

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facility and foreclosing its security interest in its equipment, inventory, and fixtures. This assertion,even if true, is immaterial to our analysis. The scope of the secured creditor exemption is notdetermined by whether the creditor's activity was taken to protect its security interest. What is relevantis the nature and extent of the creditor's involvement with the facility, not its motive. To hold otherwisewould enable secured creditors to take indifferent and irresponsible actions toward their debtors'hazardous wastes with impunity by incanting that they were protecting their security interests.Congress did not intend CERCLA to sanction such abdication of responsibility.

CONCLUSION

We agree with the district court that Fleet is not within the class of liable persons described insection 9607(a)(1). We also conclude that the court properly denied Fleet's motion for summaryjudgment. Although the court erred in construing the secured creditor exemption to insulate Fleet fromCERCLA liability for its conduct prior to June 22, 1982, it correctly ruled that Fleet was liable undersection 9607(a)(2) for its subsequent activities if the government could establish its allegations.Because there remain disputed issues of material fact, the case is remanded for further proceedingsconsistent with this opinion.

AFFIRMED and REMANDED.

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Notes:

[*]Judge Robert S. Vance was a member of the panel which heard oral argument but due to his death on December 16, 1989,did not participate in this decision. This case is decided by a quorum. See 28 U.S.C. Sec. 46(d).

[**]Honorable Seybourn H. Lynne, Senior U.S. District Judge for the Northern District of Alabama, sitting by designation.

[1]This court has jurisdiction of this appeal pursuant to 28 U.S.C. Sec. 1292(b).

[2]As an initial matter, we must consider whether this issue is properly before us on appeal. Fleet notes that the district courtheld that it was not liable as the present "owner or operator" of the facility and argues that its appeal did not challenge thisaspect of the court's order. Rather, it only sought to appeal that part of the district court's order denying its motion forsummary judgment. Fleet argues that a party is precluded from seeking reversal of an order, on an interlocutory appeal, if itdid not properly petition for permission to appeal.

Fleet's position is meritless. When a district court certifies an order for appeal, all questions material to that particular orderare properly before the court of appeals. See United States v. Stanley, 483 U.S. 669, 676-77, 107 S.Ct. 3054, 3060, 97L.Ed.2d 550 (1987) (construing Sec. 1292(b) interlocutory appeals to bring entire lower court order before appellate court, notjust precise question certified).

Here, the district court's order clearly certifies this issue for interlocutory appeal. Even if construed otherwise, the district courtexpressly refused to limit its certification order to a specific issue. The district court's order states:

I find that this order disposes of controlling questions of law concerning which there is substantial doubt, including, but notlimited to, my construction of CERCLA's definition of "owner and operator" and the secured lender exemption contained inthat definition: my construction of the CERCLA provisions describing the classes of liable persons; and my construction of thescope of the third-party defense to CERCLA liability.

United States v. Fleet Factors Corp., 724 F.Supp. 955, 962 (S.D.Ga.1988) (emphasis added).

[3]Although the "owner and operator" language of Sec. 9607(a)(1) is in the conjunctive, we construe this language in thedisjunctive in accordance with the legislative history of CERCLA and the persuasive interpretations of other federal courts.See Maryland Bank & Trust Co., 632 F.Supp. at 577-78; see also Guidice v. BFG Electroplating and Manufacturing Co., 732F.Supp. 556, 561 (W.D.Pa.1989) (interpreting statute in disjunctive); Artesian Water Co. v. Government of New CastleCounty, 659 F.Supp. 1269, 1280 (D.Del.1987) (same), affirmed, 851 F.2d 643 (3d Cir.1988). Additionally, we note that Sec.

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9607(a)(2) is phrased in the disjunctive. We can perceive no rational explanation, other than careless statutory drafting, forimposing liability upon "owners or operators" under one section but only holding "owners and operators" liable under anothersection. Cf. Coastal Casting Service v. Aron, No. H-86-4463 slip op. at 3, 1988 WL 35012 (S.D.Tex. April 8, 1988) ("It is wellknown that CERCLA was hastily drafted and adopted, with resulting ambiguities. ...") (available on WESTLAW as 1988 WL35012); Maryland Bank & Trust Co., 632 F.Supp. at 578 ("The structure of section 107(a) [9607(a) ], like so much of thishastily patched together compromise Act, is not a model of statutory clarity."). Our construction of both statutory provisions inthe disjunctive is further supported by the fact that the definitional section of the statute only refers to the phrase "owner oroperator." See 42 U.S.C. Sec. 9601(20)(A).

[4]CERCLA does provide that a state or local government will be liable under these circumstances when it "has caused orcontributed to the release or threatened release of a hazardous substance from the facility...." 42 U.S.C. Sec. 9601(20)(D).This exception, however, is not applicable here.

[5]This interpretation of Sec. 9607(a)(1) is particularly appropriate in the context of the entire statutory scheme. While Sec.9607(a)(1) targets present owners and operators of toxic waste facilities, Sec. 9607(a)(2) focuses on the entities that ownedor operated the facility at the time the wastes were disposed. A narrow reading of this section would not, therefore, create anunintended loophole for individuals or entities to escape liability for improperly disposing hazardous waste.

[6]The government correctly formulates this issue as being comprised of two distinct, but related, means of finding Fleet liableunder Sec. 9607(a)(2). First, Fleet is liable under the statute if it operated the facility within the meaning of the statute.Alternatively, Fleet can be held liable if it had an indicia of ownership in SPW and managed the facility to the extentnecessary to remove it from the secured creditor liability exemption. See United States v. Kayser-Roth Corp., 724 F.Supp.15, 20-21 (D.R.I.1989). Although we can conceive of some instances where the facts showing participation in managementare different from those indicating operation, this is not such a case. The sum of the facts alleged by the government issufficient to hold Fleet liable under either analysis. In order to avoid repetition, and because this case fits more snugly undera secured creditor analysis, we will forgo an analysis of Fleet's liability as an operator.

[7]The court permitted a secured creditor to secure a facility against vandalism by boarding up windows and changing locks,make inquiries as to the cost of disposing various drums of toxins, visit the property in order to show it to prospectivepurchasers, monitor its cash collateral accounts, ensure that receivables went to the proper accounts, and establish areporting system between the facility and the bank. Mirabile, No. 84-2280, slip op. at 5, 8. The court suggested that activitieswhich might bring a secured creditor outside the protection of the exemption included determining the order in which orderswere filled, demanding additional sales from the facility, supervising the operations of the facility, and insisting on certainmanufacturing changes and reassignment of personnel. Id. at 8.

[8]In Guidice, the district court applied this analysis to exempt a bank from CERCLA liability because the bank's activities withrespect to the facility were directed at protecting its security interest rather than controlling the facility's operational,production, or waste disposal activities. 732 F.Supp. at 561-62. The bank's involvement with the facility included meetingswhere it was informed of the status of the facility's accounts, personnel changes, and the presence of raw materials;assistance in procuring a loan from another lender; communicating with local officials to assist the facility with wastewaterdischarge compliance; inspecting the property after it ceased operations; efforts to restructure the facility's loans; and anagreement to provide financing if a particular party purchased the facility at a foreclosure sale. Id. at 562.

[9]Allis Chalmers, 893 F.2d at 1317; United States v. Northeastern Pharmaceutical & Chemical Co., 810 F.2d 726, 733 (8thCir.1986), cert. denied, 484 U.S. 848, 108 S.Ct. 146, 98 L.Ed.2d 102 (1987).

[10]For an example of activity that could subject a secured creditor to liability as an operator, see Kayser-Roth Corp., 724F.Supp. at 22-23.

[11]This narrow construction of the secured creditor exemption is supported by the sparse legislative history on the subject.The Senate version of CERCLA initially lacked an exemption for secured creditors in its definition of "owner or operator." SeeS. 1480, 97th Cong., 2d Sess., reprinted in 2 Senate Comm. on Environmental and Public Works, 97th Cong., 2 Sess., 1 ALegislative History of the CERCLA 470 (Comm. Print 1983). Representative Harsha introduced the exemption to the bill thatwas finally passed stating:

This change is necessary because the original definition inadvertently subjected those who hold title to a ... facility, but do notparticipate in the management or operation and are not otherwise affiliated with the person leasing or operating the ... facility,to the liability provisions of the bill.

Remarks of Rep. Harsha, reprinted in 2 Senate Comm. on Environmental and Public Works, 97th Cong., 2d Sess., 2 A

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Legislative History of the CERCLA 945 (Comm. Print 1983) (emphasis added). The use of the word "affiliated" to describethe threshold at which a secured creditor becomes liable clearly indicates a more peripheral degree of involvement with theaffairs of a facility than that necessary to be held liable as an operator. It also suggests that the interpretation of theexemption intended by Congress is more consistent with the level of secured creditor involvement described in our opinionthan with the management of day-to-day operations standard set forth in Mirabile.

[12]One commentator notes that a narrow construction of the secured creditor exemption

conforms with CERCLA's implicit function of encouraging safer hazardous waste procedures. The possibility that CERCLAliability will depress the value of the security property provides economic incentive for lenders to guard against its misuse.Lending institutions are especially well-equipped for this function. They can require the borrower to submit to periodicenvironmental audits, either as a condition to receiving a loan or by an amendment to an existing agreement. Lenders canalso require warranties from their borrowers guaranteeing that they are in full compliance with hazardous waste laws andregulations.... Ultimately, lenders can refuse to lend money to persons believed to be operating illegal or improper hazardouswaste activities. While there is a clear risk that innocent borrowers will find it difficult to obtain credit because of the nature oftheir business, this result is consistent with CERCLA's general effect of spreading hazardous waste costs industry-wide.

Claims Against Lenders, supra, at 1294 (citations omitted); see also Liability of Financial Institutions, supra, at 183-85(discussing lender strategies for decreasing liability risk under a narrow interpretation of the secured creditor exemption).

[13]Generally, the lender's capacity to influence a debtor facility's treatment of hazardous waste will be inferred from theextent of its involvement in the facility's financial management. Here, that inference is not even necessary because there wasevidence before the district court that Fleet actively asserted its control over the disposal of hazardous wastes at the site byprohibiting SPW from selling several barrels of chemicals to potential buyers. As a result, the barrels remained at the facilityunattended until the EPA acted to remove the contaminants.

[14]The district court summarized the government's allegations of Fleet's conduct at the facility during this period as follows:

Plaintiff alleges that Baldwin moved the barrels that allegedly contained hazardous substances before Baldwin conducted thepublic auction. Plaintiff contends that after the auction, Baldwin auctioned some, but not all, of the machinery and equipmentas is, and in place, and permitted the purchasers to remove the equipment and machinery that they had purchased. Plaintiffasserts that after the auction Fleet signed a document that permitted Nix to have access to the facility for 180 days and toremove any remaining machinery and equipment.... Plaintiff maintains that friable asbestos was knocked loose from thepipes connected to the machinery and equipment by either the purchasers of the equipment at the auction or Nix. Plaintiffalleges that the condition of the chemicals and the asbestos in the facility after Baldwin, Nix, and the purchasers concludedtheir business constituted an immediate risk to public health and the environment....

Fleet Factors, 724 F.Supp. at 960-61. Fleet disputes these material facts. Id. at 961.

[15]During oral argument, counsel for Fleet virtually conceded operator liability for its conduct with respect to the facility whenhe discussed Fleet's potential for liability were it to have fixed a hole in the roof of an SPW building:

JUDGE KRAVITCH: If [Fleet] finds in fixing the roof that there is some asbestos that is being dislodged can it just ignorethat?

....

MR. GOOD: Once it fixes the roof, once it takes over control of fixing the roof, it has opened a potential pandora's box bothas to that asbestos and anything else at that facility underneath it known and unknown.

JUDGE KRAVITCH: Why isn't that analogous to what happened here?

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§ 22a-133v-6. Rules of Professional Conduct.

Connecticut Administrative Code

Title 22a. Environmental Protection

133v. State Board of Examiners of Environmental Professionals

Current through July 1, 2020

§ 22a-133v-6. Rules of Professional Conduct

(a) Definitions

As used in this section, the term licensed environmental professional or licensee shall also

include all individuals placed on an interim list of environmental professionals pursuant to

section 22a-133v of the Connecticut General Statutes.

(b) General

(1) In order to establish and maintain a high standard of integrity, skills and practice in

the environmental profession and to safeguard the environment and the health,

safety, property, and welfare of the public, the following rules of professional

conduct shall apply to every licensed environmental professional. The Board may

conduct investigations regarding the professional conduct of any licensee.

(2) Each licensee and applicant shall be deemed to be thoroughly familiar with all the

provisions of this section.

(3) This section shall apply to all professional services provided by a licensee in

Connecticut, even if a license issued pursuant to section 22a-133v of the

Connecticut General Statutes is not required to provide such services.

(c) Professional Competency

(1) In providing professional services, a licensee shall act with reasonable care and

diligence and shall apply the knowledge and skill of a licensee in good standing

practicing in the applicable field at the time such services are performed.

(2) A licensee may perform professional services only when qualified by education or

experience, and only to the extent such services involve activities with respect to

which such licensee is so qualified. In rendering professional services, a licensee

may rely, in part, upon the advice of one or more persons whom such licensee

determines are qualified by education or experience to the extent that such

reliance is consistent with the common and accepted practice of a licensed

environmental professional.

(d) Professional Conduct

(1) In the rendering of professional services, a licensee shall, at all times, hold

paramount the health, safety and welfare of the public and the environment.

(2) In rendering professional services, a licensee shall at all times:

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(A) Exercise professional judgment;

(B) Follow the requirements and procedures set forth in the applicable

provisions of sections 22a-133o, 22a-133x, 22a-133y and 22a-134a of the

Connecticut General Statutes, sections 22a-133k-1 through 22a-133k-3,

inclusive, sections 22a-133v-1 through 22a-133v-8, inclusive, and 22a-

133q-1 of the Regulations of Connecticut State Agencies, and any other

statute, regulation, permit or other license, approval, or order of the Board

or the Commissioner; and

(C) Make a good faith and reasonable effort to identify and obtain the relevant

data and other information evidencing conditions at a parcel and identify

and obtain such additional data and other information as necessary to

discharge such licensee's obligations under sections 22a-133o, 22a-133x

and 22a-133y and 22a-134a of the Connecticut General Statutes, and

sections 22a-133v-1 through 22a-133v-8, inclusive, and 22a-133q-1 of the

Regulations of Connecticut State Agencies.

(3) If after rendering professional services at a parcel, a licensee learns that a

condition at such parcel, relevant data or other information which existed at the

time such services were rendered, leads to a conclusion or recommendation

contrary to, or significantly different from, the one previously expressed by such

licensee, such licensee shall promptly:

(A) Notify his or her client in writing of such, and

(B) Notify the Commissioner if such conclusion or recommendation was

expressed to the Commissioner in a verification or other document

pertaining to a verification.

(4) A licensee shall not allow the use of his name by, or associate in a business

venture with, any person or firm which such licensee knows or reasonably should

know is engaging in fraudulent business or professional practices.

(5) A licensee shall not, whether orally or in writing, falsify, omit or misrepresent

relevant facts concerning such licensee's:

(A) Past accomplishments or the academic or other qualifications of such

licensee; and

(B) Employers, employees, associates, joint ventures and their past

accomplishments or academic or professional qualifications.

(6) A licensee or applicant shall cooperate fully in an investigation conducted by the

Commissioner or the Board.

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(7) No licensee whose license has expired, and any other individual who does not

have a license, shall render or offer to render professional services or represent

himself as being a licensed environmental professional.

(e) Conflict of Interest

(1) A licensee shall not accept monetary or other compensation or render professional

services, pertaining to a parcel, from persons having or potentially having

conflicting or potentially conflicting interests, unless such licensee fully discloses in

writing to each such person such conflict or potential conflict and each such person

agrees in writing to utilize the services of such licensee notwithstanding such

conflicting or potentially conflicting interests.

(2) A licensee shall not permit any person, other than an employer, partner, employee,

or associate in a professional firm, to share in the fees for professional services

such licensee renders or will render, unless the fee splitting arrangement between

such licensee and any other person has been fully disclosed to and agreed to in

writing by the client engaging the services of such licensee.

(3) A licensee shall conscientiously avoid a conflict or potential conflict of interest with

such licensee's client, but when unavoidable shall immediately upon learning of

such conflict or potential conflict, fully disclose in writing to the client the nature and

source of such conflict or potential conflict. If the conflict or potential conflict is

irresolvable, such licensee shall terminate the rendering of professional services to

such client.

(4) A licensee shall not be involved in any way, or in any way attempt to influence, the

making of a decision by a public body on which such licensee serves regarding

any work such licensee or such licensee's firm has been retained to perform.

(5) A licensee shall not directly or indirectly solicit or accept a gift, loan or other benefit

other than a fee from any person, including, but not limited to a client, contractor,

or subcontractor if such benefit:

(A) Influences, or reasonably gives the appearance that it could influence the

judgment or findings of such licensee; or

(B) Could give rise to the appearance of a conflict or impropriety.

(6) A licensee shall not solicit or accept a contract to render professional services for

or from a public body on which he or she serves as a member, employee, or

advisor. Such licensee shall not participate as a member, advisor, or employee of

a public body with respect to actions or deliberations which pertain to services

provided to such body by such licensee.

(7) A licensee shall not affix, or allow his or her seal to be affixed, on a verification for

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Cite as Conn. Agencies Regs. § 22a-133v-6

History. Effective June 2, 1997; Amended August 6, 2012; Amended August 7, 2015

a parcel in which his or her employer has a financial interest, exclusive of

professional services fees.

(8) A licensee shall not offer, directly or indirectly, to give to a person, except to a full

time employee of such licensee or of such licensee's employer, or a public body

any commission, political contribution, loan, gift or other consideration in order to

secure work.

(f) Contingent Fees

A licensee shall not solicit, offer or render professional services pursuant to any contingent

fee arrangement.

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