Lender Liability Under CERCLA

Monday, January 1st, 1990 at 12:00 am by Stanley M. Spracker & James D. Barnette
Stanley M. Spracker & James D. Barnette, Lender Liability Under CERCLA, 1990 Colum. Bus. L. Rev. 527

Out of CERCLA’s ambiguity, the Eleventh Circuit Court of Appeals has presented lenders with a significant challenge. The broad expansion liability under Fleet Factors’ “capacity to control” test is perceived as an attempt by litigants to add lenders to the list of parties available to fund the cost of cleanup of the nation’s hazardous waste sites. Fleet Factors provides private parties and the federal and state governments with the legal authority to recover cleanup costs from lenders based on limited evidence. Furthermore, even if a lender wanted to play the role of environmental policeman with respect to its borrowers, Fleet Factors would actually discourage such involvement, lest the lender be deemed to have lost the security interest exemption altogether. Pending further action in Congress or at EPA, lenders must await further judicial opinions for guidance and to determine whether Fleet Factors is embraced or rejected as a standard of lender liability. In the meantime, lenders, faced with an ever-changing standard of liability, will continue to require creative approaches in negotiating transactions.

Author Information

Stanley M. Spracker, Partner, Weil, Gotshal & Manges, Washington, D.C. B.A. 1973, University of Wisconsin; J.D. 1980, University of Chicago Law School. Mr. Spracker's principal areas of practice are environmental and workplace health and safety law, focusing on EPA and OSHA. He has extensive experience in Superfund litigation, district court and administrative proceedings under the Resource Conservation and Recovery Act, and insurance litigation involving claims for coverage for costs of hazardous waste cleanups. Mr. Spracker has also lectured extensively and published articles on environmental regulation. James D. Barnette, Associate, Weil, Gotshal & Manges, Washington, D.C. B.A. 1985, Yale College; J.D. 1990, Georgetown University Law Center.