AN
ACT Relating to liability under the model toxics control act; and amending RCW
70.105D.020.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
70.105D.020 and 1997 c 406 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.
(8)
"Independent remedial actions" means remedial actions conducted
without department oversight or approval, and not under an order, agreed order,
or consent decree.
(9)
"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.
(10)
"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 includes, 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 includes assignments, pledges, or other rights to or other forms
of encumbrance against the facility that are held primarily to protect a
security interest.
(11)
"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.
(12)
"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;
(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 (13)(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((; or)). The
exemption in this subsection (12)(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;
(iii)
A fiduciary in his, her, or its personal or individual capacity. This
exemption does not preclude a claim against the assets of the estate or trust
administered by the fiduciary or against a nonemployee agent or independent
contractor retained by a fiduciary. This exemption also does not apply to the
extent that a person is liable under this chapter independently of the person's
ownership as a fiduciary or for actions taken in a fiduciary capacity which
cause or contribute to a new release or exacerbate an existing release of
hazardous substances. This exemption applies provided that, to the extent of
the fiduciary's powers granted by law or by the applicable governing instrument
granting fiduciary powers, the fiduciary complies with all of the following:
(A)
The fiduciary properly maintains the environmental compliance measures already
in place at the facility;
(B)
The fiduciary complies with the reporting requirements in the rules adopted
under this chapter;
(C)
The fiduciary complies with any order issued to the fiduciary by the department
to abate an imminent or substantial endangerment;
(D)
The fiduciary 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 fiduciary 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 fiduciary does not exacerbate an existing release.
The
exemption in this subsection (12)(b)(iii) does not apply to fiduciaries 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 fiduciary 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. The exemption in this
subsection (12)(b)(iii) also does not apply where the fiduciary's powers to
comply with this subsection (12)(b)(iii) are limited by a governing instrument
created with the objective purpose of avoiding liability under this chapter or
of avoiding compliance with this chapter; or
(iv)
Any person who has any ownership interest in, operates, or exercises control
over real property where a hazardous substance has come to be located solely as
a result of migration of the hazardous substance to the real property through
the ground water from a source off the property, if:
(A)
The person can demonstrate that the hazardous substance has not been used,
placed, managed, or otherwise handled on the property in a manner likely to
cause or contribute to a release of the hazardous substance that has migrated
onto the property;
(B)
The person has not caused or contributed to the release of the hazardous
substance;
(C)
The person does not engage in activities that damage or interfere with the
operation of remedial actions installed on the person's property or engage in
activities that result in exposure of humans or the environment to the
contaminated ground water that has migrated onto the property;
(D)
If requested, the person allows the department, potentially liable persons who
are subject to an order, agreed order, or consent decree, and the authorized
employees, agents, or contractors of each, access to the property to conduct
remedial actions required by the department. The person may attempt to
negotiate an access agreement before allowing access; and
(E)
Legal withdrawal of ground water does not disqualify a person from the
exemption in this subsection (12)(b)(((iii))) (iv).
((The
exemption in (b)(ii) of this subsection 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.))
(13)
"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.
(14)
"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.
(15)
"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.
(16)
"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.
(17)
"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 (12)(b)(ii) of this section.
(18)
"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 July 23, 1995, this
five-year period shall begin as of July 23, 1995.
(19)
"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.
(20)
"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.
(21)
"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.
(22)
"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.
(23)
"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.
(24)
"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.
(25)(a)
"Fiduciary" means a person acting for the benefit of another party as
a bona fide trustee; executor; administrator; custodian; guardian of estates or
guardian ad litem; receiver; conservator; committee of estates of incapacitated
persons; trustee in bankruptcy; trustee, under an indenture agreement, trust
agreement, lease, or similar financing agreement, for debt securities,
certificates of interest or certificates of participation in debt securities,
or other forms of indebtedness as to which the trustee is not, in the capacity
of trustee, the lender. Except as provided in subsection (12)(b)(iii) of this
section, the liability of a fiduciary under this chapter shall not exceed the
assets held in the fiduciary capacity.
(b)
"Fiduciary" does not mean:
(i)
A person acting as a fiduciary with respect to a trust or other fiduciary
estate that was organized for the primary purpose of, or is engaged in,
actively carrying on a trade or business for profit, unless the trust or other
fiduciary estate was created as part of, or to facilitate, one or more estate
plans or because of the incapacity of a natural person;
(ii)
A person who acquires ownership or control of a facility with the objective
purpose of avoiding liability of the person or any other person. It is prima
facie evidence that the fiduciary acquired ownership or control of the facility
to avoid liability if the facility is the only substantial asset in the
fiduciary estate at the time the facility became subject to the fiduciary
estate;
(iii)
A person who acts in a capacity other than that of a fiduciary or in a
beneficiary capacity and in that capacity directly or indirectly benefits from
a trust or fiduciary relationship;
(iv)
A person who is a beneficiary and fiduciary with respect to the same fiduciary
estate, and who while acting as a fiduciary receives benefits that exceed
customary or reasonable compensation, and incidental benefits permitted under
applicable law;
(v)
A person who is a fiduciary and receives benefits that substantially exceed
customary or reasonable compensation, and incidental benefits permitted under
applicable law; or
(vi)
A person who acts in the capacity of trustee of state or federal lands or
resources.
(26) "Fiduciary capacity" means the capacity of a
person holding title to a facility, or otherwise having control of an interest
in the facility pursuant to the exercise of the responsibilities of the person
as a fiduciary.
