WAIVER OF LIABILITY FOR LENDING INSTITUTIONS
RESOURCE CONSERVATION AND RECOVERY ACT
A PROJECT UNDER THE STATE/EPA AGREEMENT TO PURSUE REGULATORY INNOVATION

Overview of Project

The purpose of this project is to develop an approach by which the U.S. EPA (Region 5) and the Michigan Department of Environmental Quality (MDEQ) will provide limited lender liability protection to lending institutions that finance redevelopment of sites covered under the federally delegated Resource Conservation and Recovery Act (RCRA) Corrective Action program.  Currently, lender liability protection is available under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and RCRA Underground Storage Tank (UST) programs.  Providing limited liability protection for lending institutions for RCRA Corrective Action sites will reduce a barrier for redevelopment of these sites.

Narrative of the Project

The MDEQ’s Waste Management Division implements the RCRA Corrective Action program in Michigan under the authority of state law and in accordance with its delegation from Region 5.  There are treatment, storage, and disposal facilities (TSDF's) that have closed, gone into bankruptcy, or otherwise are available for transfer to a new owner.  Region 5 and the MDEQ recognize that in certain circumstances the potential to acquire liability for Corrective Action activities through a loan transaction and subsequent foreclosure may discourage a lending institution from providing capital needed to redevelop a brownfield or prevent the creation of one.

Under this pilot project, through a Memorandum of Understanding (MOU), Region 5 and the MDEQ agree to exercise their respective enforcement authorities in a manner that reduces the potential liability of lending institutions at facilities.  The project consists of the following:

• A description of conditions in which the MDEQ will not seek to impose Corrective Action liability upon lending institutions.
• A description of conditions in which Region 5 will not take action under its Corrective Action authorities against lending institutions.
• An evaluation of whether the pilot project aids in the redevelopment of brownfields.

Duration of the Project

The protection afforded under this project applies to lending transactions that take place within between September of 2001 and September of 2004.  The protections afforded to qualifying lending institutions under this project extend for a period of 30 years after the qualifying institution provides the notice required under the project.  The project results will be assessed to determine whether the project should be continued or modified.  A final report on the Lender Liability Protection Project will be prepared by the MDEQ within six months after the end of the three-year evaluation period.

Project Status

The Proposal was submitted in July 1999 and conditionally accepted by EPA in November of 1999.  The project MOU was entered September of 2001, and the project is being implemented.

Project Contact for Divisions

Waste Management Division Contact
    Steve Sliver
    Hazardous Waste Permit Engineer
    Address:  P.O. Box 30241
                   Lansing, MI  48909
    Phone:     517-373-1976
    Fax:         517-373-4797
    E-mail:     slivers@michigan.gov

Environmental Assistance Division Contact:
    De Montgomery
    Waste Management Division Program Contact
    Address:  P.O. Box 30457
                   Lansing, MI 48909-7957
    Phone:     517-373-1238
    E-mail:     montgomd@michigan.gov