The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA or Superfund)¹ has been construed to impose strict, joint and several, and retroactive liability on owners and operators of sites where there is a release of a hazardous substance.² The U.S. Environmental Protection Agency (EPA or the Agency) is charged with the responsibility of enforcing CERCLA to clean up the nation's toxic waste sites. Though CERCLA sets up a fund to pay for cleanup,³ the Act also envisions that those responsible for the contamination will pay cleanup costs. Thus, the Act provides for cost recovery actions, which may be brought by EPA and others who have the responsibility for cleanup.⁴

One vexing issue that has arisen under CERCLA is the liability for cleanup costs of a lender that holds a security interest, such as a mortgage, in the site.⁵ CERCLA § 101(20)(A) says that the phrase "owner or operator" does not include a person who, without participating in the management of a facility, holds indicia of ownership primarily to protect a security interest in the facility.⁶ Thus, CERCLA exempts from liability secured creditors, such as mortgagees, that do not participate in the management of the hazardous waste site.⁷