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President Bush recently signed the Small Business Liability Relief and Brownfields Revitalization Act (the Act) into law. This new law amends the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), more commonly known as Superfund. As explained in greater detail below, the Act will likely have an impact on environmental due diligence and the drafting of loan documents.
CEKCLA holds four categories of parties liable for cleanup of hazardous substances: current owners and operators of contaminated property; owners and operators at the time of disposal; persons who arrange for the disposal of hazardous substances (commonly referred to as "generators"); and certain transporters of hazardous substances. Liability has been interpreted to be retroactive, strict, joint, and several. Statutes such as CERCLA that impose liability based simply on one's status as an "owner or operator" have been a source of concern for lenders. With respect to "owner" liability, lenders are concerned about whether they can be held directly liable for cleanup either simply by virtue of their security interest in states where secured parties hold legal title to collateral or where they take title through foreclosure or analogous means. Lenders are also concerned about whether they can incur direct "operator" liability in instances when they have the ability to control, or actually take control of, the borrower's operations. Much of the concern about direct owner/operator liability under CERCLA was allayed …