EPA Seeks to Protect Banks From Liability

The Environmental Protection Agency on Wednesday proposed limiting banks’ liability in cleaning up properties contaminated by hazardous materials, a move aimed at encouraging lending to stimulate the sluggish economy.

The rules, developed by the EPA over the last 10 months, would clarify when lenders are liable for cleaning up toxic waste under the 1980 Superfund law.

The law provided federal money to clean up polluted sites but allowed the government to sue those responsible for the contamination. It originally exempted from liability lenders whose only interest in a property stems from having lent to the owner. But recent court decisions have eroded the exemption.

A federal appeals court last year found a lender liable because it could have exercised influence over the borrower’s hazardous waste decisions but did not.

F. Henry Habicht, EPA deputy administrator, said the new regulations are aimed at exempting lenders unless they take an active role in managing the day-to-day operations of their borrowers.