AN ACT
Relating to clarifying the liability of lenders under the model toxics control
act; amending RCW 70.105D.020; and reenacting and amending RCW 70.105D.030.
BE IT ENACTED BY THE LEGISLATURE
OF THE STATE OF WASHINGTON:
Sec.
1. RCW
70.105D.020 and 1994 c 254 s 2 are each amended to read as follows:
(1)
"Agreed order" means an order issued by the department under this
chapter with which the potentially liable person receiving the order agrees to
comply. An agreed order may be used to require or approve any cleanup or other
remedial actions but it is not a settlement under RCW 70.105D.040(4) and shall
not contain a covenant not to sue, or provide protection from claims for
contribution, or provide eligibility for public funding of remedial actions
under RCW 70.105D.070(2)(d)(xi).
(2)
"Department" means the department of ecology.
(3)
"Director" means the director of ecology or the director's designee.
(4)
"Facility" means (a) any building, structure, installation,
equipment, pipe or pipeline (including any pipe into a sewer or publicly owned
treatment works), well, pit, pond, lagoon, impoundment, ditch, landfill,
storage container, motor vehicle, rolling stock, vessel, or aircraft, or (b)
any site or area where a hazardous substance, other than a consumer product in
consumer use, has been deposited, stored, disposed of, or placed, or otherwise
come to be located.
(5)
"Federal cleanup law" means the federal comprehensive environmental
response, compensation, and liability act of 1980, 42 U.S.C. Sec. 9601 et seq.,
as amended by Public Law 99-499.
(6) "Foreclosure
and its equivalents" means purchase at a foreclosure sale, acquisition, or
assignment of title in lieu of foreclosure, termination of a lease, or other
repossession, acquisition of a right to title or possession, an agreement in
satisfaction of the obligation, or any other comparable formal or informal
manner, whether pursuant to law or under warranties, covenants, conditions,
representations, or promises from the borrower, by which the holder acquires
title to or possession of a facility securing a loan or other obligation.
(7)
"Hazardous substance" means:
(a)
Any dangerous or extremely hazardous waste as defined in RCW 70.105.010 (5) and
(6), or any dangerous or extremely dangerous waste designated by rule pursuant
to chapter 70.105 RCW;
(b)
Any hazardous substance as defined in RCW 70.105.010(14) or any hazardous
substance as defined by rule pursuant to chapter 70.105 RCW;
(c)
Any substance that, on March 1, 1989, is a hazardous substance under section
101(14) of the federal cleanup law, 42 U.S.C. Sec. 9601(14);
(d)
Petroleum or petroleum products; and
(e)
Any substance or category of substances, including solid waste decomposition
products, determined by the director by rule to present a threat to human
health or the environment if released into the environment.
The
term hazardous substance does not include any of the following when contained
in an underground storage tank from which there is not a release: Crude oil or
any fraction thereof or petroleum, if the tank is in compliance with all
applicable federal, state, and local law.
(((7)))
(8) "Holder" means a person who holds indicia of ownership
primarily to protect a security interest. A holder includes the initial holder
such as the loan originator, any subsequent holder such as a
successor-in-interest or subsequent purchaser of the security interest on the
secondary market, a guarantor of an obligation, surety, or any other person who
holds indicia of ownership primarily to protect a security interest, or a
receiver, court appointed trustee, or other person who acts on behalf or for
the benefit of a holder. A holder can be a public or privately owned financial
institution, receiver, conservator, loan guarantor, or other similar persons
that loan money or guarantee repayment of a loan. Holders typically are banks
or savings and loan institutions but may also include others such as insurance
companies, pension funds, or private individuals that engage in loaning of
money or credit.
(9)
"Indicia of ownership" means evidence of a security interest,
evidence of an interest in a security interest, or evidence of an interest in a
facility securing a loan or other obligation, including any legal or equitable
title to a facility acquired incident to foreclosure and its equivalents.
Evidence of such interests include, mortgages, deeds of trust, sellers interest
in a real estate contract, liens, surety bonds, and guarantees of obligations,
title held pursuant to a lease financing transaction in which the lessor does
not select initially the leased facility, or legal or equitable title obtained
pursuant to foreclosure and their equivalents. Evidence of such interests also
include assignments, pledges, or other rights to or other forms of encumbrance
against the facility that are held primarily to protect a security interest.
(10)
"Operating a facility primarily to protect a security interest"
occurs when all of the following are met: (a) Operating the facility where the
borrower has defaulted on the loan or otherwise breached the security
agreement; (b) operating the facility to preserve the value of the facility as
an ongoing business; (c) the operation is being done in anticipation of a sale,
transfer, or assignment of the facility; and (d) the operation is being done
primarily to protect a security interest. Operating a facility for longer than
one year prior to foreclosure or its equivalents shall be presumed to be
operating the facility for other than to protect a security interest.
(11)
"Owner or operator" means:
(a)
Any person with any ownership interest in the facility or who exercises any
control over the facility; or
(b) In
the case of an abandoned facility, any person who had owned, or operated, or
exercised control over the facility any time before its abandonment;
The
term does not include:
(i) An
agency of the state or unit of local government which acquired ownership or
control involuntarily through bankruptcy, tax delinquency, abandonment, or
circumstances in which the government involuntarily acquires title. This
exclusion does not apply to an agency of the state or unit of local government
which has caused or contributed to the release or threatened release of a
hazardous substance from the facility; or
(ii) A
person who, without participating in the management of a facility, holds
indicia of ownership primarily to protect the person's security interest in the
facility. Holders after foreclosure and its equivalent and holders who
engage in any of the activities identified in subsection (12) (e) through (g)
of this section shall not lose this exemption provided the holder complies with
all of the following:
(A)
The holder properly maintains the environmental compliance measures already in
place at the facility;
(B)
The holder complies with the reporting requirements in the rules adopted under
this chapter;
(C)
The holder complies with any order issued to the holder by the department to
abate an imminent or substantial endangerment;
(D)
The holder allows the department or potentially liable persons under an order,
agreed order, or settlement agreement under this chapter access to the facility
to conduct remedial actions and does not impede the conduct of such remedial
actions;
(E)
Any remedial actions conducted by the holder are in compliance with any
preexisting requirements identified by the department, or, if the department
has not identified such requirements for the facility, the remedial actions are
conducted consistent with the rules adopted under this chapter; and
(F)
The holder does not exacerbate an existing release.
The
exemption in this subsection (11)(b)(ii) does not apply to holders who cause or
contribute to a new release or threatened release or who are otherwise liable
under RCW 70.105D.040(1) (b), (c), (d), and (e); provided, however, that a
holder shall not lose this exemption if it establishes that any such new
release has been remediated according to the requirements of this chapter and
that any hazardous substances remaining at the facility after remediation of
the new release are divisible from such new release.
(((8)))
(12) "Participation in management" means exercising
decision-making control over the borrower's operation of the facility,
environmental compliance, or assuming or manifesting responsibility for the
overall management of the enterprise encompassing the day-to-day decision
making of the enterprise.
The
term does not include any of the following: (a) A holder with the mere
capacity or ability to influence, or the unexercised right to control facility
operations; (b) a holder who conducts or requires a borrower to conduct an
environmental audit or an environmental site assessment at the facility for
which indicia of ownership is held; (c) a holder who requires a borrower to
come into compliance with any applicable laws or regulations at the facility
for which indicia of ownership is held; (d) a holder who requires a borrower to
conduct remedial actions including setting minimum requirements, but does not
otherwise control or manage the borrower's remedial actions or the scope of the
borrower's remedial actions except to prepare a facility for sale, transfer, or
assignment; (e) a holder who engages in workout or policing activities
primarily to protect the holder's security interest in the facility; (f) a
holder who prepares a facility for sale, transfer, or assignment or requires a
borrower to prepare a facility for sale, transfer, or assignment; (g) a holder
who operates a facility primarily to protect a security interest, or requires a
borrower to continue to operate, a facility primarily to protect a security
interest; and (h) a prospective holder who, as a condition of becoming a
holder, requires an owner or operator to conduct an environmental audit,
conduct an environmental site assessment, come into compliance with any
applicable laws or regulations, or conduct remedial actions prior to holding a
security interest is not participating in the management of the facility.
(13)
"Person" means an individual, firm, corporation, association,
partnership, consortium, joint venture, commercial entity, state government
agency, unit of local government, federal government agency, or Indian tribe.
(((9)))
(14) "Policing activities" means actions the holder takes to
insure that the borrower complies with the terms of the loan or security
interest or actions the holder takes or requires the borrower to take to
maintain the value of the security. Policing activities include: Requiring
the borrower to conduct remedial actions at the facility during the term of the
security interest; requiring the borrower to comply or come into compliance
with applicable federal, state, and local environmental and other laws,
regulations, and permits during the term of the security interest; securing or
exercising authority to monitor or inspect the facility including on-site
inspections, or to monitor or inspect the borrower's business or financial
condition during the term of the security interest; or taking other actions
necessary to adequately police the loan or security interest such as requiring
a borrower to comply with any warranties, covenants, conditions,
representations, or promises from the borrower.
(15)
"Potentially liable person" means any person whom the department
finds, based on credible evidence, to be liable under RCW 70.105D.040. The
department shall give notice to any such person and allow an opportunity for
comment before making the finding, unless an emergency requires otherwise.
(((10)))
(16) "Prepare a facility for sale, transfer, or assignment" means
to secure access to the facility; perform routine maintenance on the facility;
remove inventory, equipment, or structures; properly maintain environmental
compliance measures already in place at the facility; conduct remedial actions
to clean up releases at the facility; or to perform other similar activities
intended to preserve the value of the facility where the borrower has defaulted
on the loan or otherwise breached the security agreement or after foreclosure
and its equivalents and in anticipation of a pending sale, transfer, or
assignment, primarily to protect the holder's security interest in the
facility. A holder can prepare a facility for sale, transfer, or assignment
for up to one year prior to foreclosure and its equivalents and still stay
within the security interest exemption in subsection (11)(b)(ii) of this
section.
(17)
"Primarily to protect a security interest" means the indicia of
ownership is held primarily for the purpose of securing payment or performance
of an obligation. The term does not include indicia of ownership held
primarily for investment purposes nor indicia of ownership held primarily for
purposes other than as protection for a security interest. A holder may have
other, secondary reasons, for maintaining indicia of ownership, but the primary
reason must be for protection of a security interest. Holding indicia of
ownership after foreclosure or its equivalents for longer than five years shall
be considered to be holding the indicia of ownership for purposes other than
primarily to protect a security interest. For facilities that have been
acquired through foreclosure or its equivalents prior to the effective date of
this act, this five-year period shall begin as of the effective date of this
act.
(18)
"Public notice" means, at a minimum, adequate notice mailed to all
persons who have made timely request of the department and to persons residing
in the potentially affected vicinity of the proposed action; mailed to
appropriate news media; published in the newspaper of largest circulation in
the city or county of the proposed action; and opportunity for interested
persons to comment.
(((11)))
(19) "Release" means any intentional or unintentional entry of
any hazardous substance into the environment, including but not limited to the
abandonment or disposal of containers of hazardous substances.
(((12)))
(20) "Remedy" or "remedial action" means any action
or expenditure consistent with the purposes of this chapter to identify,
eliminate, or minimize any threat or potential threat posed by hazardous
substances to human health or the environment including any investigative and
monitoring activities with respect to any release or threatened release of a
hazardous substance and any health assessments or health effects studies
conducted in order to determine the risk or potential risk to human health.
(((13)))
(21) "Security interest" means an interest in a facility created
or established for the purpose of securing a loan or other obligation.
Security interests include deeds of trusts, sellers interest in a real estate
contract, liens, legal, or equitable title to a facility acquired incident to
foreclosure and its equivalents, and title pursuant to lease financing
transactions. Security interests may also arise from transactions such as sale
and leasebacks, conditional sales, installment sales, trust receipt
transactions, certain assignments, factoring agreements, accounts receivable
financing arrangements, easements, and consignments, if the transaction creates
or establishes an interest in a facility for the purpose of securing a loan or
other obligation.
(22)
"Industrial properties" means properties that are or have been
characterized by, or are to be committed to, traditional industrial uses such
as processing or manufacturing of materials, marine terminal and transportation
areas and facilities, fabrication, assembly, treatment, or distribution of manufactured
products, or storage of bulk materials, that are either:
(a)
Zoned for industrial use by a city or county conducting land use planning under
chapter 36.70A RCW; or
(b)
For counties not planning under chapter 36.70A RCW and the cities within them,
zoned for industrial use and adjacent to properties currently used or
designated for industrial purposes.
(23)
"Workout activities" means those actions by which a holder, at any
time prior to foreclosure and its equivalents, seeks to prevent, cure, or
mitigate a default by the borrower or obligor; or to preserve, or prevent the
diminution of, the value of the security. Workout activities include:
Restructuring or renegotiating the terms of the security interest; requiring
payment of additional rent or interest; exercising forbearance; requiring or
exercising rights pursuant to an assignment of accounts or other amounts owed
to an obligor; requiring or exercising rights pursuant to an escrow agreement
pertaining to amounts owed to an obligor; providing specific or general
financial or other advice, suggestions, counseling, or guidance; and exercising
any right or remedy the holder is entitled to by law or under any warranties,
covenants, conditions, representations, or promises from the borrower.
Sec.
2. RCW
70.105D.030 and 1994 c 257 s 11 and 1994 c 254 s 3 are each reenacted and
amended to read as follows:
(1)
The department may exercise the following powers in addition to any other
powers granted by law:
(a)
Investigate, provide for investigating, or require potentially liable persons
to investigate any releases or threatened releases of hazardous substances,
including but not limited to inspecting, sampling, or testing to determine the
nature or extent of any release or threatened release. If there is a
reasonable basis to believe that a release or threatened release of a hazardous
substance may exist, the department's authorized employees, agents, or
contractors may enter upon any property and conduct investigations. The
department shall give reasonable notice before entering property unless an
emergency prevents such notice. The department may by subpoena require the
attendance or testimony of witnesses and the production of documents or other
information that the department deems necessary;
(b)
Conduct, provide for conducting, or require potentially liable persons to
conduct remedial actions (including investigations under (a) of this
subsection) to remedy releases or threatened releases of hazardous substances.
In carrying out such powers, the department's authorized employees, agents, or
contractors may enter upon property. The department shall give reasonable
notice before entering property unless an emergency prevents such notice. In
conducting, providing for, or requiring remedial action, the department shall
give preference to permanent solutions to the maximum extent practicable and
shall provide for or require adequate monitoring to ensure the effectiveness of
the remedial action;
(c)
Indemnify contractors retained by the department for carrying out
investigations and remedial actions, but not for any contractor's reckless or
wilful misconduct;
(d)
Carry out all state programs authorized under the federal cleanup law and the
federal resource, conservation, and recovery act, 42 U.S.C. Sec. 6901 et seq.,
as amended;
(e)
Classify substances as hazardous substances for purposes of RCW 70.105D.020(((6)))
(7) and classify substances and products as hazardous substances for
purposes of RCW 82.21.020(1);
(f)
Issue orders or enter into consent decrees or agreed orders that include deed
restrictions where necessary to protect human health and the environment from a
release or threatened release of a hazardous substance from a facility. Prior
to establishing a deed restriction under this subsection, the department shall
notify and seek comment from a city or county department with land use planning
authority for real property subject to a deed restriction;
(g)
Enforce the application of permanent and effective institutional controls that
are necessary for a remedial action to be protective of human health and the
environment; ((and))
(h) Require
holders to conduct remedial actions necessary to abate an imminent or
substantial endangerment pursuant to RCW 70.105D.020(11)(b)(ii)(C); and
(i)
Take any other actions necessary to carry out the provisions of this chapter,
including the power to adopt rules under chapter 34.05 RCW.
(2)
The department shall immediately implement all provisions of this chapter to
the maximum extent practicable, including investigative and remedial actions
where appropriate. The department shall adopt, and thereafter enforce, rules
under chapter 34.05 RCW to:
(a)
Provide for public participation, including at least (i) the establishment of
regional citizen's advisory committees, (ii) public notice of the development
of investigative plans or remedial plans for releases or threatened releases,
and (iii) concurrent public notice of all compliance orders, agreed orders,
enforcement orders, or notices of violation;
(b)
Establish a hazard ranking system for hazardous waste sites;
(c)
Establish reasonable deadlines not to exceed ninety days for initiating an
investigation of a hazardous waste site after the department receives information
that the site may pose a threat to human health or the environment and other
reasonable deadlines for remedying releases or threatened releases at the site;
(d)
Publish and periodically update minimum cleanup standards for remedial actions
at least as stringent as the cleanup standards under section 121 of the federal
cleanup law, 42 U.S.C. Sec. 9621, and at least as stringent as all applicable
state and federal laws, including health-based standards under state and
federal law; and
(e)
Apply industrial clean-up standards at industrial properties. Rules adopted
under this subsection shall ensure that industrial properties cleaned up to
industrial standards cannot be converted to nonindustrial uses without approval
from the department. The department may require that a property cleaned up to
industrial standards is cleaned up to a more stringent applicable standard as a
condition of conversion to a nonindustrial use. Industrial clean-up standards
may not be applied to industrial properties where hazardous substances
remaining at the property after remedial action pose a threat to human health
or the environment in adjacent nonindustrial areas.
(3) Before
November 1st of each even-numbered year, the department shall develop, with
public notice and hearing, and submit to the ways and means and appropriate
standing environmental committees of the senate and house of representatives a
ranked list of projects and expenditures recommended for appropriation from
both the state and local toxics control accounts. The department shall also
provide the legislature and the public each year with an accounting of the
department's activities supported by appropriations from the state toxics
control account, including a list of known hazardous waste sites and their
hazard rankings, actions taken and planned at each site, how the department is
meeting its top two management priorities under RCW 70.105.150, and all funds
expended under this chapter.
(4)
The department shall establish a scientific advisory board to render advice to
the department with respect to the hazard ranking system, cleanup standards,
remedial actions, deadlines for remedial actions, monitoring, the
classification of substances as hazardous substances for purposes of RCW
70.105D.020(((6))) (7) and the classification of substances or
products as hazardous substances for purposes of RCW 82.21.020(1). The board
shall consist of five independent members to serve staggered three-year terms.
No members may be employees of the department. Members shall be reimbursed for
travel expenses as provided in RCW 43.03.050 and 43.03.060.
(5)
The department shall establish a program to identify potential hazardous waste
sites and to encourage persons to provide information about hazardous waste
sites.
