Are lenders' fears of Superfund liability justified? The conventional wisdom holds that they are. However, this hasty judgment may not be able to withstand legal scrutiny.

Substantial protection from liability for lenders is already provided by §101(20)(A) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).¹ This section excludes from the definition of "owner or operator" a person whose indicia of ownership in a facility are held to protect a security interest, provided that the security holder refrains from "participating in the management" of the facility. The focus of the lender liability debate concerns the types of activities that are considered evidence of "management participation" that would potentially subject a lender to CERCLA liability.