[The following is an excerpted from “Environmental Liability: Managing Environmental Risks in Corporate, Real Estate and Brownfield Transactions” written by Larry Schnapf and published by Lexis Law Publishing]

State Lender Liability Statutes
During the past few years, a handful of states have enacted legislation or promulgated regulations that either add provisions limiting the liability of financial institutions and fiduciaries under state environmental laws or which clarify the scope of the existing lender liability provisions.
The protection afforded to banks by these state statutes varies since many of these state lender liability statutes do no mirror the provisions of  either the federal Lender Liability Amendments to CERCLA or the federal Lender Liability Rule.  For example, some states grant banks complete immunity from environmental liability while others limit the immunity to third-party suits.  Some states specifically extend the protection to lenders acting as trustees or fiduciaries.  Finally, some of the states require financial institutions to perform environmental due diligence to qualify for the liability exemption.  As a result, counsel must carefully review the provisions of each statute where a financial institution conducts business and should also review state case law interpreting these statutes.
Alabama-
The Alabama Hazardous Waste Act excludes from the definition of “operator” a person who holds indicia of ownership in an inactive or abandoned hazardous substances primarily to protect a security interest provided that person does not participate in the management of the site. The statute does not contain a definition for “participating in the management” nor are there any guidelines for how long or in what manner must a secured creditor foreclose on property in order to preserve its immunity from liability. 
Alaska-
The Alaska Environmental Conservation Act excludes from the definition of owner or operator a person who holds indicia of ownership primarily to protect a security interest provided that person does not participate in the management of the site.  The statute does not contain a definition for “participating in the management” nor are there any guidelines for how long or in what manner must a secured creditor foreclose on property in order to preserve its immunity from liability. 

Arizona
The state Department of Environmental Quality has proposed regulations that tracks, in part, the CERCLA Lender Liability Rule.  Under these regulations, persons who do not participate in the management of a facility, hold indicia of ownership primarily to protect a security interest AND conduct a Phase I Environmental Site Assessment for security interests created after the effective date of the regulations are excluded from the definition of owner.  Persons who do not participate in the management of a facility are also excluded from the definition of operator.  The requirements of the Phase I site assessment are also set out in the regulations.
The regulation provides that the term "participation in the management of a facility" does not include the following actions:
(1)	mere ability to influence decision-making;
(2)	unexercised right to control facility operations;
(3)	policing activities prior to foreclosure which are intended to protect a security interest so long as the policing activity does not rise to the level of participation in the management of a facility; and
(4)	loan workouts activities which are defined as reasonable activities to prevent, cure or mitigate a default by a borrower, or steps taken to preserve or prevent the diminution of value of the security provided such acts do not constitute actual participation in the operational affairs of the facility.
In order to preserve its immunity from liability, a secured creditor's foreclosing on property would have to take the following actions:
(1)	do not contribute to or aggravate a release of hazardous substances;
(2)	take such action as may be reasonably necessary to prevent the release or a further release of a hazardous substance;
(3)	undertake to sell or otherwise divest the property in a reasonably expeditious manner using appropriate commercial means after taking the particular facts and circumstances into account provided the person does not otherwise participate in the management of the facility; and
(4)	disclose the known or likely presence of a release of hazardous substances on the property.
Arkansas-
The Arkansas Emergency Response Fund Act excludes from the definition of “responsible party” a person who merely provides financing or loans to a responsible party, or who obtains title to property through foreclosure or through the conveyance of property in total or partial satisfaction of a mortgage or other security interest in property.  The statute does not contain any reference to “participating in the management” nor are there any guidelines for how long or in what manner must a secured creditor foreclose on property in order to preserve its immunity from liability. 

California
The state Hazardous Substance Account Act does not contain a specific secured creditor's exemption but, instead, defines PRPs as those persons liable under section 107(a) of CERCLA.  Since the CERCLA secured creditor's exemption excludes lenders who do not participate in the management of a facility from the definition of owner and operator, lenders should presumably have the same protection under the California statute.
The state legislature has also given lenders certain additional rights under two other statutes. One law provides secured lenders with statutory right to enter and inspect property to determine the extent and location of  a present or past release of hazardous substances into, onto, beneath or from real property under the following circumstances:
•	When the secured lender has a reasonable belief of the existence of a past or present release or threatened release into, onto, beneath or from the real property security and the borrower had not previously disclosed this release to the secured creditor in writing prior to the extension, renewal or modification of  a loan obligation; or 
•	After the commencement of non-judicial or judicial foreclosure proceedings against the property. 
	The secured creditor is required to provide the borrower or a tenant of the borrower with reasonable notice of the borrower’s intent to enter the premises and may only enter the property during normal business hours. Twenty-four hours notice is presumed to be reasonable notice in the absence of any evidence to the contrary. However, the secured creditor is not required to provide reasonable notice in the case of an emergency when the borrower or a tenant of a borrower has abandoned the premises or if it such notice is impracticable.   
Lenders have also be given certain rights in foreclosure actions involving “environmentally impaired" property.  Under section 726.5 of the California Code of Civil Procedure, environmentally impaired property means that the estimated remedial costs relating to a release which was not disclosed in writing to the lender or not known by the lender is 25% of the aggregate market value of security for the loan either at the time of loan or the time of the discover of the release by the borrower, whichever is higher. Any site appearing on the NPL is or the state Superfund law is automatically deemed to be environmentally impaired.  
A lender may elect to take the following actions when a borrower has defaulted and the real property acting as security is “environmental impaired”:
•	 waiver of its lien on any parcel of property that is environmentally impaired and any fixtures or personal property that is attached to the impaired property;
•	 exercise of the rights and remedies of an unsecured 
•	 exercise any rights and remedies of a creditor secured by a deed of trust or mortgage and/or a lien against fixtures or personal  
Before the secured lender may waive its lien on the basis that the contaminated property is environmentally impaired, the lender must provided written notice of default is provided to the borrower, the value of the property must determined by a court and the property must be deemed to be "environmentally impaired" by a court.  If the borrower has other non-contaminated property securing its loan obligations, a secured lender waiving its rights must first foreclose on this additional collateral to the extent required by law. A lender will not be entitled to waive its rights if the borrower or a related affiliated or agent did not knowingly or negligently caused or contributed to the release or threatened release, the borrower or is related entities did not have knowledge of the release of threatened release, or made a written disclosure to the borrower in connection with a loan transaction. 
Special Note:	Because of these exemptions, some lending institutions try to insert language in their loan documents that the borrower had knowledge of the release or had causes or contributed to the release. Unless borrowers have actual knowledge of such a release or have actually contributed to such a release, borrowers should vigorously resist the inclusion of such language in their loan agreements since these provisions might be used as evidence or an admission of liability  in a contribution action by an unrelated third party. 
Colorado
Both the state Superfund law and state version of RCRA track their federal counterparts by providing that persons who hold indicia of ownership primarily to protect a security or lienhold interest will not be considered owners liable for releases if they do not participate in the management of the property.
The state Superfund law was amended to provide that a lender who forecloses on contaminated property will not be liable for any third-party liability resulting from the migration of the contaminants from the property during the lender's ownership of the property if the lender did not knowingly or recklessly cause or allow others to cause new contamination or pollution. However, to gain this immunity from third-party liability, the lender must do the following:
(1)	perform a Phase I investigation to determine the presence of contamination at the property; and
(2)	take reasonable steps to resell the property.
The limited protection from third-party liability only applies to actions that were filed after July 1, 1990.
Delaware-
The Delaware Hazardous Substance Cleanup Act excludes from the excludes from the definition of owner or operator a person who holds indicia of ownership primarily to protect a security interest provided that person does not participate in the management of the site.  The statute does not contain a definition for “participating in the management” nor are there any guidelines for how long or in what manner must a secured creditor foreclose on property in order to preserve its immunity from liability. 

Georgia-
The Georgia Hazardous Site Response Act excludes from the definition of owner or operator any person who holds indicia of ownership primarily to protect a security interest in a facility or who acts in good faith solely in a fiduciary capacity provided such persons did not actively participate in the management, disposal or release of hazardous wastes, hazardous constituents or hazardous substances from the facility. There is no definition of what constitutes “actively participating in management” nor are there any rules for foreclosing on property.
Hawaii-
The Hawaii Environmental Response Law excludes from the definition of owner or operator any “person or financial institution who holds or held a lien , encumbrance, security interest, or loan agreement that attaches or is attached to the facility, vessel, or real property” provided that the person or financial institution made no decision or took no action that caused or causes, contributes or contributed to a release or threatened release of a hazardous substance from or at a facility, vessel or real property.
Illinois
The state Superfund law was amended in December, 1995 as part of the state’s Brownfield legislation. This package of legislation eliminated strict, joint and several liability in cost recovery actions filed the state or private parties against responsible parties, including lenders.  
The brownfield legislation amended the secured creditor exemption contained in the Illinois state Superfund law which excluded financial institutions from the definition of owner or operator. Originally, the definition of financial institution only pertained to the Illinois Housing Development Authority. Now, that term applies to any financial institution that is regulated pursuant to the Illinois Banking Act. Under the Illinois secured creditor exemption, a financial institution will not be liable as an owner or operator of a vessel or facility unless it (1) acquired ownership, operation, management, or control  of a vessel or facility through foreclosure, pursuant to the terms of security interest held by the financial institution or under the terms of an extension of credit made by that entity AND (2) the financial institution exercises "actual, direct and continual or recurrent managerial control in the operation of the vessel or facility that causes a release ... resulting in removal or remedial action."  It is interesting to note that this statute also contains a rebuttable presumption against state claims and a conclusive presumption against private party claims that the defendant (including by inference, a financial institution) has undertaken an appropriate inquiry and therefore may assert the innocent purchaser’s defense if it conducts a environmental site assessment that meets the requirements of the statute and the site assessment did not disclose the presence or likely presence of any releases or threatened releases.  
The Brownfields legislation further reformed the state Superfund law by excluding certain categories of persons from the 4 classes of PRPs who may be required to perform a response action. One of these excluded categories of persons who may not be required to perform a response action by either the state or a private party includes financial institutions who acquire ownership, operation, management or control of a site through foreclosure, a deed in lieu of foreclosure, receivership, by exercising of an assignment of rents, as mortgage in possession or otherwise under the terms of a security interest held by the financial institution or under the terms of an extension of created made by that entity UNLESS the financial institution takes actual physical possession of the site and directly causes a release of a regulated substances that results in a response action. 
Indiana-
The Indiana Superfund Law provides that a secured or unsecured creditor or fiduciary is not liable for releases or threatened release of hazardous substances from a facility unless the creditor or fiduciary exercised actual and direct managerial control over the use, generation, treatment, storage or disposal of hazardous substances at the facility.
	In addition, the statute provides that a fiduciary’s liability for a release or threatened release at a facility held by the fiduciary may only be satisfied out of the assets held by the fiduciary in the estate or trust that contained the facility.
	Under the statute, a  “creditor” is anyone who has extended creditor to an owner or operator of a facility, has an interest in a facility to secure an extension of credit, or has acquired title or right to title to the facility upon default, at foreclosure or in lieu of foreclosure pursuant to an extension of credit which is secured by an interest in the facility. However, a person who grants an extension of credit solely for purpose of allowing the debtor to avoid environmental liability will not  fall within the definition of creditor. There are is no definition for “actual and direct managerial control” nor any foreclosure guidelines.
	
Kentucky-
Kentucky takes an approach that is different from CERCLA and most other state Superfund laws. Instead of excluding secured creditors from the definition of a liable party, Kentucky law creates an affirmative defense for lenders. In addition to the usual affirmative defense available to any liable party, financial institutions who acquire title to a site by foreclosure, an assignment, deed in lieu of foreclosure , enforcement of a mortgage lien or other security interest as well as financial institutions who serve as fiduciaries may assert a defense to liability if they can establish all of the following:
•	The financial institution only served in an administrative, custodial, financial or similar capacity proper to ownership;
•	 The financial institution did not control or direct the handling of the material causing the environmental emergency, or control or direct the handling of the hazardous substance, pollutant or contaminants at the site before the acquisition;
•	The financial institution did not participate in the day-to-day management of the facility prior to acquisition;
•	At the time of acquisition, the financial institution did not know and had no reason to know that a hazardous substances , pollutant or contaminant had been disposed at the site. To establish this requirement, the lender must meet the same elements contained in the CERCLA innocent purchaser’s defense.
•	In taking steps to protect or preserve the value of the site, the financial institution must have complied with state environmental law;
•	The financial institutions nor any of its employees, agents or contractors caused or contributed to an environmental emergency, or a release or threatened release of a hazardous substance, pollutant or contaminants; and
•	The financial institution complied with release reporting requirements..
Louisiana
The lender liability provision of the state Liability for Hazardous Substance Remedial Action statute takes a different similar to Kentucky. Under this provision, any person who acquires ownership or control of property through a foreclosure proceeding by virtue of a security interest or who manages property for the purpose of administering an estate or trust containing the property may assert a defense to liability provided the secured creditor has not caused the discharge or disposal of hazardous substances or knew at the time the security interest was perfected that the property contained hazardous substances.
Maine-
The state has a limited exemption for lenders. A financial institution will not be liable as a responsible party if holds a security interest in or acquires ownership of an uncontrolled hazardous substance site primarily to protect its security interest provided the lender does not participate in the “actual management” of the uncontrolled hazardous substance site.  The exemption will not apply, though,  if the lender has “caused, contributed to or exacerbated a release or threatened release of a hazardous substance on or from the uncontrolled site.”
However, even foreclosing lenders who are exempt from liability as a responsible party may nevertheless find themselves liable to the state for response costs. If the lender has acquired title to an uncontrolled hazardous substance site, the  lender may be liable for response costs incurred by the state not only for the period that the lender had ownership of the property but also for the time the lender had a security interest in the property. The liability of the lender is capped at the amount of the proceeds from the sale or disposition of the property minus any out-of pocket expenses.  

 Maryland-
The Maryland Hazardous Substances Spill Response Law contains a comprehensive secured creditor’s exemption. The statute excludes from the definition of “responsible person” the following persons:
1. a person who holds indicia of ownership in the site containing hazardous substances or property located on the site primarily to protect a valid and enforceable lien
2. A holder of a mortgage or deed  of trust on a site containing a hazardous substance or property located on the site so long as the person does not participate in the day-to-day management of the site and the person did not directly causes the discharge of a hazardous substance on or from the site.  
3. A holder of a mortgage or deed  of trust on a site containing a hazardous substance or property located on the site who acquires title so long as the person does not participate in the day-to-day management of the site and the person did not directly causes the discharge of a hazardous substance on or from the site.
The statute also contains an exemption for a corporate fiduciary who has legal title to a site containing a hazardous substance or property located on the site for the purpose of administering an estate or trust in the site or property located on the site unless the fiduciary participates in the day-to-day management of the site or directly causes the discharge of a hazardous substance on or from the site.
For purposes of the lender and fiduciary sections, the term “management” means directing or controlling operations, production or treatment of a hazardous substance , storage or disposal of a hazardous substance, or remediation of a hazardous substance release. The term does not include rendering advice on financial matters, providing financial assistance or actions taken to protect or secure the site if the advice, assistance or actions do not involve the treatment, storage, or disposal of a hazardous substance or remediation of a hazardous substance release.    
Massachusetts
		The Massachusetts Oil and Hazardous Material Release Prevention and Response Act has lender liability provisions which are similar to the federal CERCLA Lender Liability Rule although the state provisions differ from the federal rule in several significant ways.  The state statute applies to secured lenders, wholly-owned subsidiaries of secured lenders and persons who have rights of participation in a security interest.  In addition, the lender liability protections of the statute also extend to fiduciaries.
The term "indicia of ownership primarily to protect a security interest" applies to traditional instruments such as mortgages, deeds of trust, pledges, liens, assignments and any other right or encumbrances against personal or real property.  It also includes security interests which have a contingent interest component to assure repayment of a financial obligation.  However, the term does not apply to interests in property that are held for investment purposes, leases or consignments that would not be considered a secured transaction under state commercial law and any interest of a person acting as a trustee of a property or business.
A secured lender will be considered "participating in the management of a site or vessel" if it substantially divests from the borrower or any other person possession or control of the aspects of the operation involving management of oil or hazardous materials.  The following actions specifically will not constitute participating in the management of a facility:
(1)	requiring or conducting an assessment of the site or facility;
(2)	periodically or regularly monitoring the business conducted at the site or facility;
(3)	inserting covenants, warranties or representations in the loan documents requiring compliance with environmental laws, proper handling of hazardous materials or providing the lender with periodic information regarding oil or hazardous materials activities;
(4)	providing general business or financial advice or guidance to the borrower so long as the advice or guidance does not pertain to the management of oil or hazardous materials;
(5)	providing information advice on how a borrower may comply with state or federal environmental laws, and how a borrower may identify and select a hazardous waste disposal facility; and
(6)	engaging in workouts, restructuring or refinancings and undertaking other activities to protect and preserve the value of the security interest so long as the lender does not become involved in the aspects of the borrower's operations involving the management of oil or hazardous materials.
A secured lender who acquires ownership or possession of a site or a vessel will not be considered an owner or operator of that vessel if it satisfies all of the following requirements:
(1)	immediately notifies the state environmental authority of any release or threatened release;
(2)	provides reasonable access to state employees or contractors performing response actions;
(3)	takes all reasonable steps to contain the release and limit exposure of other persons to the release such as by erecting fencing;
(4)	complying with the state NCP if the secured lender undertakes a voluntary response action; and
(5)	diligently trying to sell or otherwise divest itself of ownership or possession of the site or vessel.
In determining whether a secured lender has acted diligently to divest itself of the property, the following factors must be examined:
(1)	the use that the site or vessel was put during the period that the lender owned or operated the property;
(2)	market conditions;
(3)	the extent of contamination and the impact this contamination had on marketability;
(4)	the extent that the secured lender complied with applicable environmental laws; and
(5)	any legal constraints that may have effected the sale or divestment of the property.
The statute contains certain presumptions for determining if a lender has diligently acted to sell or divest itself of the site or vessel.  These presumptions are based on the length of time that the secured lender owned or operated the site or vessel.  For the first 18 months, there is a rebutable presumption that the lender is acting diligently to divest itself of the property or vessel.  A party seeking to impose liability on a lender during this initial period has the burden of proof to establish by a preponderance of the evidence that the lender was not acting diligently to divest itself of the property.  If the secured lender has not divested itself of the site or vessel after 18 months, then the lender has the burden of proof during the next 42 months to demonstrate by a preponderance of the evidence that it has acted diligently to divest itself of the property.  If the secured lender has still failed to divest itself of the property after five years but can demonstrate by a preponderance of the evidence that it has satisfied all of the six requirements for being excluded from the definition of owner or operator, then the lender will only be liable to the state for response costs incurred by the state up to the value of the property.  While it is unclear from the statute, it would appear that such a qualifying secured lender will not be liable for response costs incurred by third parties.
Even if the secured lender qualifies for the exemption from liability, this immunity only applies to releases that took place prior to the date that the lender acquires ownership or possession of the site or vessel.  A lender who meets the test for the secured lender's exemption will still be considered an owner or operator, and hence liable for releases that begin after the date that the owner or operator acquired ownership or possession even if the hazardous materials were placed on the property prior to that date.
Furthermore, a secured lender who otherwise qualifies for the secured lender's exemption will forfeit its immunity if it abandons a site where there is a release or threatened release of oil or hazardous materials.
Fiduciaries who acquire title to or exercise control over a site or vessel may also be exempt from the definition of owner or operator provided the fiduciary satisfies certain conditions.  In such a case, the grantor or settlor of the estate shall be liable for response costs to the extent that the assets of the estate are inadequate to pay for the response costs.
The following categories of persons fall within the definition of fiduciary:
(1)	a person acting as an executor, administrator, guardian or conservator;
(2)	a trustee under a will or inter-vivos instrument creating a trust under which the trustee takes title to or otherwise controls or manages property for the purpose of conserving it;
(3)	a court-appointed receiver;
(4)	a trustee appointed under the federal bankruptcy laws;
(5)	an assignee or a trustee acting under an assignment made for the benefit of creditors;
(6)	a trustee pursuant to an indenture agreement or similar financing agreement, debt securities, certificates of interest of participation in any such debt certificates and any successor of such trustee; and
(7)	any person who holds legal title to, controls or manages, directly or indirectly, any site or vessel as a fiduciary for the purpose of administering an estate or trust which contains the site or vessel.
The rules for fiduciaries that assume ownership or control over a site or vessel are similar to those that apply to secured lenders.  However, the fiduciary rules contain two additional notification requirements.  A fiduciary who is acting pursuant to an assignment made for the benefit of creditors must notify the state upon the acceptance of that assignment.  In addition, a fiduciary is required to notify the state when the fiduciary learns or has a reasonable basis to believe that the assets of the estate or trust will not be sufficient to respond to an imminent hazard to public health or the environment.
As far as a fiduciary's obligations to perform a response action, the fiduciary is only required to take reasonable steps to contain a release or prevent exposure to other persons when there are sufficient assets in the estate.  If the fiduciary has made the required notifications to the state and there are insufficient funds in the estate or trust to respond to a release, a fiduciary will not be required to utilize its own or use any funds to respond to a release.
For purposes of determining whether sufficient funds exist in an estate or trust to respond to a release or threatened release, a fiduciary must include the following:
(1)	any assets in the estate or trust in which the site or vessel are included;
(2)	any assets that are or are placed in any other estate or trust by action of or on behalf of settlor or grantor of the estate or trust after the fiduciary learns of the release provided that the settlor or grantor is or was an owner or operator of the site or vessel and such estate or trust is managed or controlled by the fiduciary; and
(3)	any assets that are transferred out of the estate by the fiduciary at the time or after the fiduciary learns of the release or threatened release for less than full and fair consideration as determined by the fiduciary in good faith.
Michigan-
This state whose attorney general successfully challenged EPA’s Lender Liability Rule has a secured creditor’s exemption in the Michigan Environmental Response Act (“MERA”) which is similar to the vacated federal rule. Indeed, it appears that the Michigan legislature amended and expanded MERA’s secured creditor’s provisions to largely incorporate the principles of the vacated rule.
MERA excludes from the definition of  operator any person who holds indicia of ownership primarily to protect a security interest unless that person participates in the management of  a facility. The definition of “owner” also excludes a person who holds indicia of ownership, including but not limited to, a vendor’s interest under  a recorded land contract, unless that person participates in the management of the facility.  Both definitions also exclude fiduciaries who act in compliance with the portion of the secured creditor’s exemption addressing fiduciaries.
MERA does not contain any guidelines for foreclosure. Thus, it is unclear if a lender must try to sell the property or if it can keep title indefinitely while retaining its immunity from liability. However, MERA does contain a detailed definition of “participating in management”. 
Like CERCLA, , MERA provides requires that a lender actually participate in the management or operational affairs of a facility” to be considered “participating in management”. This requires acts that “exceed the mere capacity to influence, ability to influence or the unexercised right to control a facility.”  Like CERCLA, the term “operational aspects” includes functioning as a plant manager, operations manager, chief operating officer or chief executive officer. The term does not encompass financial or administrative functions of the business such as credit manager, accounts payable or receivables manager, personnel manager, controller or chief financial officer.
A lender holding a security interest will be deemed to be participating in the management of as facility when it takes any of the following actions while the borrower is in possession of the facility:
1. Exercises decision-making control over the borrower’s environmental compliance;
2. undertakes responsibility for the borrower’s hazardous substance handling or disposal practices;
3. exercises control at a level comparable to a manager of the business so that the lender has assumed or manifested day-to-day decision-making over either or both of the following:
a. environmental compliance
b. all or substantially all of the non-environmental “operational aspects” of the business. 
The following actions, however, will not be considered “participating in the management” of a facility:
•	any act or omission prior to the time the lender held indicia of ownership primarily to protect a security interest;
•	undertaking or requiring an environmental inspection or requiring the borrower to comply with environmental laws or take response actions required by law
•	Taking loan policing actions or engaging in workouts that are consistent with holding indicia of ownership primarily to protect a security interest. These actions do not have to be specifically authorized in the underlying loan documents. 
	MERA also contains provisions for fiduciaries, including bank trust departments and bankruptcy trustees. The statute provides that fiduciaries who have not participated in management of a property prior to assuming ownership or control as a fiduciary will not be liable as an owner or operator of the property However, this exception from liability does not exclude the following actions:
•	 relieve the fiduciary from personal liability resulting for negligence, gross negligence, reckless, wilful or intentional misconduct nor does it apply to any assumptions of personal liability by the fiduciary;
•	prevent any claims against the assets of the estate or trust that contains the facility or any other estate of the grantor, decedent, ward or other person whose estate or trust contains the facility that is administered by the fiduciary. Such claims may be asserted against the fiduciary in its representative capacity.
	The MERA secured creditor’s exemption contains an interesting section that applies to bank trust departments. This section provides that a bank who owns or controls property pursuant to a fiduciary agreement and has not previously participated in the management of the property  prior to assuming ownership or control will not be liable as an owner or operator of the facility so long as the bank as only served in an administrative, custodial or financial capacity and has not exercised “sufficient” involvement to control the owner’s or operator’s handling of hazardous substances.   
Minnesota

The state Environmental Response and Liability Act ("MERLA") excludes from the definition of “responsible party” a mortgagee who obtains title through foreclosure of a mortgage or by receipt of the deed to the mortgaged property in lieu of foreclosure.  Moreover, a mortgagee of a holder of a security interest in assets or inventory at a facility will not be considered to be an operator of the facility simply because the mortgagee or secured creditor has a capacity to influence the operation of the facility to protect its security interest in the property or assets.  
In addition to the secured creditor provision in the general liability section of MERLA, another secured creditor provision was added to the state voluntary cleanup program which was added to MERLA  by the "Land Recycling Act".  The state voluntary cleanup program provides that lenders who extend financing for sites that are to be voluntarily remediated will not be liable for remediating the contamination at the site that is not covered by the voluntary cleanup. The funding may be provided  to the person actually undertaking the response action or the developer/purchaser of the contaminated property.  In addition,  any certificate of completion issued by the state will apply to the lender who provided financing to the person who performed the response action or the developer/purchaser of the contaminated property.    
Missouri
The state Superfund provides that a person who holds indicia of ownership without participating in the management of real or personal property shall not be considered an owner or operator or real or personal property nor a person having control over the real or personal property.  Lenders who become owners of real or personal property are also not liable for response costs or third-party liability arising from contamination or pollution that took place prior to the date that the lender assumed ownership of the property.  In addition, the lender-owner will also not be liable for any new contamination or pollution that occurs during its ownership of the property so long as the lender-owner does not knowingly or recklessly cause or allow others to cause new contamination AND the lender-owner takes reasonable steps to resell the property.  The state Superfund also provides that a fiduciary shall not be personally liable to any beneficiary for any diminution of property value because of non-compliance with environmental laws.
The statute indicates that "participating in the management" of property does not include monitoring a debtor's business or acquiring title in lieu of foreclosure to satisfy a debt.  However, the law does not indicate what constitutes taking reasonable steps to resell the property.
The law contains a list of the kinds of financial institutions that are covered by the lender liability provision.  These include a bank, bank holding company, a savings and loan association, a credit union, an insurance company, a consumer finance company, or a mortgage company which holds a bona fide security interest that was not obtained primarily for the purpose of avoiding environmental liability.  The law then lists a number of actions that financial institutions may take that fall within the protection of the state lender liability provisions.  These include:
(1)	foreclosing on a debt;
(2)	receiving an assignment of a debt;
(3)	receiving a deed in lieu of foreclosure or other conveyance in partial or full satisfaction of a debt;
(4)	obtaining a receiver in anticipation of foreclosure regardless if the lender actually becomes the owner of the property; or
(5)	obtaining title pursuant to an execution of judgment when the financial institution is a regulated creditor principally in the business of extending credit.
The state version of RCRA also contains a secured creditor exemption for persons who hold indicia of ownership in an underground storage tank primarily for the purpose of protecting a security interest in or a lien on the tank or the property where the tank is located so long as the person does not participate in the management of the underground storage tank or is not otherwise primarily engaged in petroleum production, refining and marketing.  This law also provides that "participating in management" does not include monitoring a debtor's business or acquiring title in lieu of foreclosure to satisfy a debt.
Montana-
The Montana secured creditor exemption is nearly identical to the federal provision prior to the Lender Liability Amendments. The Montana provision excludes from the definition of “owns or operates” any person “holding indicia of ownership of a facility primarily to protect a security interest in the facility or other location unless the holder has participated in the management of the facility. There are no definitions describing what constitutes “participation in management” .
Nebraska-
The Nebraska Petroleum Products and Hazardous Substances Storage and Handling Act contains a secured creditor’s exemption similar to the RCRA provision for USTs. The Nebraska statute provides that a person who does not participate in the management of an underground storage tank and is not otherwise engaged in petroleum production, refining and marketing  will not be considered the owner of the UST if:
1. the person holds indicia of ownership primarily to protect a security interest in the UST or a lienhold interest in the property where the UST is locates; or
2. Acquires ownership of the UST or the property where the UST is located pursuant to a foreclosure of a security interest in the tank or the lienhold interest in the property where the UST is located, a sale under a judgment or decree, conveyance under a power of sale contained within a trust deed or from a trustee, or an assignment or deed in lieu of foreclosure.  	 
New Hampshire
The New Hampshire Hazardous Waste Cleanup Fund ("HWCF") has a secured creditor's exemption that is modeled on the CERCLA provision.  Under the HWCF there are essentially two categories of "holders" who will not be liable to the state or any third persons for response costs associated with releases of hazardous waste or materials.  The first category of secured creditor is a "holder" who is defined as any person holding indicia of ownership primarily to protect a security interest in real or personal property.  The second category is a "qualifying holder" who is a holder who does not participate in the management of a facility.

		The HWCF tracks the federal definition for what constitutes holding indicia of ownership primarily for the purpose of protecting a security interest with two exceptions.  A lender may establish that it is holding the security interest primarily for the purpose of protecting its security interest if it lists the property or sale within five months of foreclosure.  In addition, within the first three years following foreclosure, that a holder is entitled to a presumption that it holds ownership primarily for the purpose of protecting its security interest.
The HWCF definition of participation in the management of a facility" mirrors the federal definition.  In addition, the statute contains this list of activities that do not constitute participating in the management of a facility:
(1)	taking title by foreclosure or similar means;
(2)	conducting or requiring a borrower to perform an environmental site assessment;
(3)	withholding funds under an existing loan obligation or restructuring or renegotiating the terms of a borrower's obligations including, but not limited to, the payment of interest, extension of payment periods or the issuance of additional funds;
(4)	providing financial advice to the borrower;
(5)	requiring or advising the borrower to comply with state or federal environmental laws;
(6)	collecting rents, maintaining utility services and securing the facility from unauthorized entry; and
(7)	undertaking any cleanup action approved by the state.
The scope of liability of the two categories of holders is not congruent.  A qualifying holder cannot be liable to the state or any other persons for response costs associated with the cleanup for releases of hazardous substances since by definition it is not participating in the management of a facility and does not have indicia of ownership.  However, a qualifying holder will lose its immunity from liability if it negligently or intentionally causes a release.  If a release occurs during the time that a qualifying holder has indicia of ownership, the holder will have limited liability for releases that it may demonstrate were not caused by its acts or omissions.  In such cases, the holder will be liable for the lessor of the value of the secured property or the amount of indebtedness secured by the facility.
The HWCF also applies to fiduciaries.  Under the statute, a fiduciary includes the following persons acting in a representative capacity:
(1)	a person acting as an executor, administrator, guardian or conservator;
(2)	a trustee under a will under which the trustee takes title to or otherwise controls or manages property for the purpose of conserving the property;
(3)	a court-appointed receiver;
(4)	a trustee appointed under the federal bankruptcy laws;
(5)	an assignee or a trustee acting under an assignment made for the benefit of creditors;
(6)	a trustee pursuant to an indenture agreement or similar financing agreement, debt securities, certificates of interest of participation in any such debt certificates and any successor of such trustee; and
(7)	any person who holds legal title to, controls or manages, directly or indirectly, any facility as a fiduciary for the purpose of administering an estate or trust which contains the facility.
If a person qualifies as a fiduciary, that person shall not individually be liable to the state or third persons for releases that take place during the time the person is acting as a fiduciary unless the releases are due to negligent acts or omissions or intentional misconduct.  However, the HWCF does not preclude asserting claims relating to releases of hazardous waste and materials against a fiduciary in its representative capacity or against the assets of the estate or trust administered by the fiduciary.
New Jersey

		The Spill Compensation and Control Act (the "Spill Act") provides that a person who holds indicia of ownership of a vessel or facility primarily to protect a security interest and who does not participate in the management of the vessel or facility shall not be deemed to be an owner or operator of the vessel or facility, a discharger or a responsible party and shall not be liable for cleanup costs or damages resulting from discharges from the vessel or facility.

		The lender liability provisions of the Spill Act are virtually identical to the federal rule.  The Spill Act contains the same definitions for "indicia of ownership," "primarily to protect a security interest," "security interest," "participation in the management of a facility," "holder" and "fair consideration."  Thus, a holder who does not actually participate in the management or operational affairs of its borrower, or who merely has the ability to influence or has unexercised right to control vessel or facility operations will not be considered to be participating in the management of a facility.  Likewise, a holder may engage in policing or workout activities prior to foreclosure and may foreclose on the vessel or facility if it tries to sell or divest the property within 12 months using commercially reasonable means without losing the immunity from liability.  A holder will not be deemed to be participating in the management of a facility if it undertakes a response action.  Like the federal rule, the immunity from liability does not apply to lenders acting as generators or transporters of hazardous substances.
The Spill Act does contain some interesting features that are not contained in the federal rule.  For example, the exemption does not apply to new discharges occurring after the date of foreclosure that occur because of negligent acts or omissions.  However, if a property has both pre-existing and new discharges, a lender may perform an environmental audit and submit it to the state to determine for which discharges the lender must assume responsibility.  The state is required to furnish its determination within 30 days of receipt of the audit.
If a holder who forecloses on a vessel or property has actual knowledge of a pre-foreclosure discharge, the holder must notify the state within 30 days of foreclosure or face civil penalties of up to $25,000.  Similarly, a holder who becomes actually aware of a new discharge after foreclosure must immediately notify the state or be subject to a civil penalty of up to $10,000.
If a discharge has taken place at a facility or vessel which comprises or is part of a trust, receivership estate, guardianship estate or the estate of a deceased person, Spill Act liability will only attach to the assets of the trust or estate and not the individual assets of the fiduciary.
Ohio-

The Ohio lender liability statute essentially tracks the EPA Lender Liability Rule. The statute contains the same definitions and the same rules for foreclosure. Like the federal rule, a lender will not be deemed to be participating in the management of  property and will not be subject to any enforcement action if it conducts a voluntary cleanup or takes other non-remedial environmental compliance activities at a property following foreclosure so long as such activities comply with state regulatory requirements. However, a lender may still be liable as a generator or transporter.
The Ohio lender liability statute also contains a separate section for fiduciaries. This section states that a fiduciary or trustee who acquires ownership or control over property will not be personally liable for any response costs incurred at the property provided the fiduciary or trustee did not previous operate, own or participate in the management of the property. However, a fiduciary or trustee may forfeit their immunity from liability if they engage in wilful or wanton misconduct or intentional tortious conduct which causes a release or they fail to take actions to keep the property in compliance with environmental laws. The fiduciary provisions do not prevent the filing of any claims against the assets or corpus of an estate.
Oregon
The state Removal or Remedial Action to Abate Health Hazards Act contains a security interest holder exemption similar to the federal provision.  The state legislature recently instructed the state Environmental Quality Commission ("EQC") to promulgate rules clarifying the scope of this exemption.  In particular, the regulations must identify the activities that are consistent with holding and protecting a security interest as well as the activities that a security interest holder may take to supervise the activities of a borrower during the life of a loan to protect its security interest or during foreclosure that will not expose the lender to liability.  In adopting these regulations, the EQC must provide that the mere capacity or unexercised right to influence the management of a facility's hazardous substance activities will not void the exemption.  The EQC was also instructed to promulgate regulations identifying the circumstances under which fiduciaries shall be exempt for contamination at sites the fiduciary holds in a fiduciary capacity.
Pennsylvania
The secured creditor's exemption of the state Hazardous Sites Cleanup Act ("HSCA") operates in the same manner as its CERCLA counterpart.  The definition of owner or operator excludes any person who holds indicia of ownership in a site without participating in the management of the site.
However, the HSCA contains additional clarifying language that is not contained in CERCLA.  The exclusion specifically applies to financial institutions and their affiliates or parents who satisfy the following three conditions:
(1)	acquired the site by foreclosure or by deed in lieu of foreclosure as a result of enforcing a mortgage or security interest held by the financial institution, its parent or affiliate;
(2)	the site was acquired before the financial institution, affiliate or parent had knowledge that the site was on the NPL or the state counterpart to the NPL; and
(3)	the financial institution, affiliate or parent did not manage or control activities at the site which contributed to the release or threatened release of hazardous substances.

	The HSCA secured creditor's exemption also contains a definition of "management."  Under this definition, a financial institution will not be considered participating in the management of a site if it participates in or supervises the "finances or fiscal operations of a responsible person or an owner or operator in connection with a loan to, services provided for or fiscal obligation of that responsible person or an owner or operator or actions taken to protect or preserve the value of the site or operations conducted on the site."
	In May, 1995, the Pennsylvania legislature enacted the Economic Development Agency, Fiduciary and Lender Environmental Liability Protection Act (the “Lender Liability Act”) which was part of  the state’s comprehensive Brownfields legislative initiative. The Lender Liability Act specifically repeals strict and joint liability for persons holding indicia of ownership without participating in the management of a facility and replaces this liability scheme with a fault-based standard. In addition, to the extent that other provisions of the HSCA or other state laws impose liability on lenders or fiduciaries or are inconsistent with the provisions of  the Lender Liability Act, the provisions of the Lender Liability Act shall prevail. Plaintiffs seeking to impose liability on lenders will have the burden of proof to establish the extent of damages or response action costs caused by a lender or fiduciary.  
	The Lender Liability Act provides that a lender who engages in “routine practices of commercial lending, including , but not limited to, the providing of financial services, holding of security interests, workout practices, foreclosure or the recovery of funds from the sale of property “ will not be liable under any state environmental laws or their common law equivalents. A lender may lose its immunity from liability if the lender, its employees or agents:
	1. directly cause an immediate release or directly exacerbate a release of regulated substances on or from the property; or,
	2.  knowingly and willfully compelled the borrower to take any action that causes an immediate release or violate any environmental laws.
	Even if a lender loses its immunity from liability, the Lender Liability Act contains a limitation on the scope of a lender’s liability.  The limitation of liability provides that the lender shall only be liable for the response action costs that are directly attributable to the lender’s action and that the lender shall only be liable for those costs if the lender’s actions were a “proximate and efficient cause of the release or violation”.   Moreover, a lender shall not be liable for response actions that arise solely from  releases which took place prior to foreclosure. If a lender exacerbates a pre-existing release after foreclosure, the lender shall only be responsible for that the portion of the response action costs that are attributable to the lender’s exacerbation of the release. In addition, if a release is discovered during the course of conducting a due diligence investigation, the release shall be presumed to a pre-existing release for which the lender is not responsible. Finally, the Act provides that mere ownership or control of the property by itself shall not trigger liability for a lender. 
	 The Lender Liability Act also limits the liability of fiduciaries. The law provides that persons who act or have acted as a fiduciary shall not be liable in their personal or individual capacity unless all three of the following conditions apply:
	1. A release of regulated substances took place when fiduciary services were provided ;
	2. the fiduciary had the express power and authority to control the property which the caused the release or where the release took place; and
	3. the release was caused by an act or omission of the fiduciary which constituted gross negligence or wilful misconduct according to the law or standards in effect at the time of the release.
	These restrictions do not prohibit the filing of any claims against a fiduciary in its representative capacity. For claims brought against a fiduciary,  the same limitations of liability apply to fiduciaries as to lenders. 
	In addition to the limitations on liability, the Lender Liability Act also contains affirmative statutory defenses to liability for lenders and fiduciaries. These defenses are in addition to any defenses that a lender or fiduciary could assert under common law. 
	A lender or fiduciary can avoid liability for a release or threatened release that it is otherwise responsible for by showing that the release or threatened release was caused by any of the following:
	1. an  Act of God;
	2. An intervening act of a public agency
	3.  Migration from adjacent property owned by third parties
	4. Actions taken or omitted in the course of rendering advice or assistance under environmental laws or at the direction of the state; 
	5.   An act of a third party who was not an agent or employee; and
	6. Liability arising after foreclosure provided the lender or fiduciary exercised due care and took reasonable precautions against foreseeable actions of third parties and the consequences of such actions. The lenders or fiduciary’s actions will be measured against the knowledge at that time. 
		The legislation also contains definitions for “fiduciary”, “foreclosure”, “Indica of Ownership” “foreclosure”, “lender” and “Security Interest” which are somewhat similar in scope to the terms used in the CERCLA Lender Liability Rule. The statute also establishes a standard for due diligence which financial institutions need to be aware of since one of the defenses to liability involves exercising due care and taking precautions. The definition of environmental due diligence refers to many of the components contained in the Standard Practice for Environmental Site Assessments (E-1527) established by the American Society for Testing and Materials (“ASTM”) Act..
Vermont
The Vermont Solid Waste Management Law was amended by "An Act Limiting the Liability of Secured Creditors and Fiduciaries for the Release of Hazardous Materials."  The amendment not only defined the scope of lender liability but also provided a mechanism for lenders to obtain contribution protection from the state when the lender could otherwise be liable for response costs.
The definition of secured lender differs somewhat from the federal definition of holder.  Vermont defines a secured lender as any person who holds indicia of ownership which was "furnished by the owner or person in lawful possession" of the property.  Furthermore, the indicia of ownership is not primarily to protect a security interest but "primarily to assure the repayment of a financial obligation."  Indicia of ownership includes participation rights that are held by a financial institution "solely for legitimate commercial purposes, in making or servicing loans." The term secured creditor specifically extends to a person who acquires ownership of a facility by assignment from another person who qualifies as a secured lender.
The statute provides that a secured lender or fiduciary shall not be liable as an owner or operator in the event that any of the following takes place:
	(1)	a secured lender holds indicia of ownership primarily to assure repayment of a financial obligation;
	(2)	a fiduciary acquires ownership status through appointment under law or by conducting activity that is a part of a fiduciary's duties or falls within the fiduciary's scope of authority;
	(3)	requiring or conducting financial or environmental assessments of a facility;
	(4)	monitoring the operations of a facility;
	(5)	requiring compliance with environmental laws through covenants in loan documents;
	(6)	providing advice or guidance regarding general business and financial aspects of a borrower's operation;
	(7)	engaging in workouts, restructurings or refinancings;
	(8)	extending or denying credit to a person owning or lawfully possessing a facility;
	(9)	requiring or undertaking actions in an emergency that are designed to prevent individuals from being exposed to hazardous materials to contain a release;
	(10)	requiring or conducting abatement, investigation, remediation or removal activities in response to a release provided the secured lender or fiduciary does the following:
(a)	provide thirty days advance notice to the state unless the thirty-day period is waived by the state;
(b)	preparation of a workplan by a qualified consultant prior to the commencement of the activities.  However, if the state notifies the secured lender or fiduciary that it intends to review the workplan, the activity cannot be started until the workplan is approved;
(c)	an appropriate investigation is performed prior to taking any abatement, remedial or removal activities;
(d)	regular progress reports and a final report must be submitted to the state;
(e)	all non-privileged materials are preserved for ten years following the completion of the work;
(f)	individuals living near the facility are not exposed to unacceptable health risks; and
(g)	the activity complies with all requirements and orders of the state environmental authorities.
A secured lender or a fiduciary will forfeit its immunity from liability if its actions cause, contribute to or worsen a release or threatened release of a hazardous material.
The statute does allow a secured lender or a fiduciary who wishes to take possession or title of a facility where there has been a release or who wishes to undertake response actions to enter into an agreement with the state that will limit the liability of the secured lender or fiduciary.  If the state finds that the secured lender or fiduciary has complied with the agreement and does not cause, contribute to or worsen the release, the maximum liability that the secured lender or fiduciary could face will be either the liability set forth in the agreement or in the absence of such a provision, the fair market value of the property in its remediated state less any response costs incurred by the lender or the fiduciary.  The secured lender and fiduciary would also receive contribution and indemnity protection from any claims that may be filed by other PRPs.
The state is not required to enter into this agreement with a secured lender or fiduciary.  Instead, the secretary of natural resources must first determine that a release or threatened release exists, that there will be a substantial benefit to the public and that the proposed activity will not contribute or worsen conditions nor expose individuals living near the facility to unacceptable health risks.  After finding that an agreement is appropriate, the state is required to publish a notice in a newspaper serving the area where the facility is located announcing the state's intention to enter into the agreement and describing the actions to be taken.
Finally, any secured lender or fiduciary who becomes aware of a release or suspected release is required to immediately notify the state environmental agency.  While a secured lender or fiduciary will not automatically forfeit their immunity to liability by failing to report the release or suspected release, they could be subject to fines and could become liable for response costs if the failure to report worsens or contributes to the environmental contamination at the site.
§ 11.07	State Superlien Statutes
Lenders enter into financing transactions expecting to be repaid according to the terms of the loan.  Thus, in addition to direct liability for cleanup costs, lenders are concerned with the impact that environmental liability may have on the borrower's ability to repay its loan obligations.
The enormous cleanup liabilities under CERCLA as well as the operating and corrective action requirements of RCRA may not only render a borrower insolvent but also significantly impair the value of contaminated collateral.  Environmental laws that restrict development of former hazardous waste sites or prohibit construction activity in ecologically sensitive areas such as wetlands can severely erode the value of real estate used to secure a borrower's loan obligations.  If a borrower is forced to file a bankruptcy petition, a creditor's rights may be affected by pending cleanup obligations.  Finally, many states have enacted Superlien laws that subordinate previously perfected security interests.
Nearly two dozen states have non-priority environmental lien laws that operate in the same manner as general commercial liens.  The cleanup costs incurred by environmental agencies in those states take precedence over all other claims except previously perfected security interests.  However, during the past few years, six states have enacted so-called "Superlien" provisions within their mini-Superfund laws.  These laws, which were initially adopted to ensure that states could recover the costs of publicly-financed cleanups of hazardous waste sites, grant a first priority lien on various assets of PRPs equal to the amount of cleanup expenditures incurred by the state that is superior to previously perfected mortgages or security interests.
The Superliens not only subordinate the rights of lenders with previously perfected security interests but also subordinate the rights of a bona fide purchaser who bought property without notice of the contamination or who acquired title through abandonment, foreclosure, a deed in lieu of foreclosure or a bankruptcy order.  In addition, these laws can jeopardize the solvency of de minimis PRPs whose limited assets may be attached despite their tenuous connection to a hazardous waste site.
Interestingly, only a limited number of liens have actually been filed.  Instead, states are prospectively wielding these laws like a sword of Damocles over the assets of the PRPs in order to extract concessions for privately-financed settlements.  Nevertheless, it is extremely important that corporate managers, lenders and their counsel be aware of the requirements of these laws and the risks they represent.
The "Superlien" laws vary considerably from state to state.  Some of the Superlien statutes merely impose a priority lien on the property which is subject to the cleanup while others attach to all of the assets of the responsible party, including personal property and business revenues located or derived from within the state.
While some Superliens only become effective after the lien has been recorded, several states permit a "secret" Superlien, which attaches to the property before public notice of the lien is filed.  These are particularly onerous provisions because a prudent lender who diligently searches the public records may nevertheless find its interest subordinated by the "hidden" Superlien.
Finally, some states permit the Superlien to apply retroactively and prevail over security interests that were perfected before the Superlien law was enacted.
Surprisingly, the Superlien legislation has spawned only a handful of lawsuits but, thus far, these statutes have withstood those challenges.
For example, in Kessler v. Tarrats, the plaintiff charged that the New Jersey Superlien amounted to an unconstitutional taking of private property and impermissibly interfered with private contracts.  However, the Appellate Division of the Superior Court of New Jersey ruled that the strong public interest in cleaning up hazardous waste sites warranted the impairment of private contract rights.  Furthermore, the court noted that since the plaintiff had placed the hazardous materials on the property, there could be no "taking" because it was the plaintiff's acts which had caused the diminution in market value of the property.
Likewise, in Chicago Title Insurance Company v. Kumar, the issue was whether the Massachusetts superlien law rendered title to land unmarketable.  In that case, the defendant insured claimed that the possibility that the state might attach a lien on its property because of contamination undisclosed at the time the property was acquired was a title defect.  The plaintiff denied coverage to the defendant insured on a claim under its title insurance policy, which alleged that the existence of the Massachusetts superlien rendered the defendant's title to contaminated property unmarketable.  The plaintiff denied the claim and filed suit for a declaratory judgment.  In upholding plaintiff's denial of the claim, the Appeals Court of Massachusetts observed that one could have a perfected title in valueless land.  The court also said that while the possibility that a superlien may be imposed on the land may render the property uneconomical, it did not affect title to the land and the plaintiff's denial of coverage was upheld.

		While a New Jersey court in Simon v. Oldmans Township, did allow a purchaser of property at a tax sale to rescind the sale when state environmental authorities subsequently asserted a superlien, it was a narrow ruling that is probably limited to tax sales where the purchaser does not initially acquire full legal title to the land.  In that case, the notice of the superlien had not been filed when the tax sale took place and the plaintiff claimed that the defendant withheld information that the property was contaminated.  The court said it was essential to maintain the integrity of title recordation and that a purchaser of tax certificates should be entitled to relief when the public records did not reveal any superlien and he had no reason to suspect land was contaminated.
Much to the relief of lenders, the superlien laws have not proven to be the lethal enforcement weapon that was once feared.  Perhaps because of a credit crunch that has reduced the resources available to perform cleanups, states are now rarely using their superlien authority.  Indeed, during the past few years, Arkansas, Tennessee and Texas repealed their superlien provisions.
Connecticut
The legislature created a two-tiered superlien, in which a super-priority lien attaches to the contaminated property or the property from which the spill emanated and a non-priority lien applies to all other real estate and personal property of the person responsible for the discharge.
There are important restrictions to the super-priority lien.  First, it only subordinates encumbrances that were created on or after July 3, 1983 and does not apply to residential real estate.  Second, it is not superior to security interests in real estate that have been transferred in accordance with the Connecticut negative declaration law.  This law requires industrial establishments generating 100 kilograms of hazardous waste  per month, or dry-cleaners, furniture strippers, auto body repair shops and paint shops regardless of the quantity of hazardous waste generated, to file a negative declaration that there has been no discharge of hazardous waste or that such a discharge has been cleaned up before the establishment can be transferred.
In addition, the law provides that a lien cannot be placed on property where a retail service station is located provided that any underground storage tanks located on the property conform with the applicable technical standards, any previous spill has been removed in accordance with the Connecticut Department of Environmental Protection (DEP) regulations, and any waste or oil remaining on the site is managed in conformance with DEP requirements.
Particularly significant is that a lender who acquires title to contaminated property by foreclosure or tender of a deed in lieu of foreclosure will only be liable for cleanup costs equal to the value of the property.
The lien does not take effect until a certificate of lien is filed in the land records of the town where the property is located.  The certificate must describe the real estate affected by the lien, the amount of the lien, the name of the owner and the person responsible for the spill.  The certificate of lien must contain the lien amount, the owner's name and the person responsible for the discharge.
LOUISIANA
	The state has a partial Superlien statute. Under this statute, the state is granted a lien against “immovable property” to recover response costs which is perfected by filing a notice of lien containing the legal description of the immovable property in the mortgage records of the parish where the immovable property is located. The lien takes priority against all existing encumbrances, liens or other security interests affecting the property. Previously perfected encumbrances filed against the property shall continue to have a priority lien only for the fair market value of the property prior to the remedial action. The state shall have a priority lien on the amount of the increase in the fair market value of the property resulting from the remedial actions.
Maine
This is one of the most far-reaching of the Superlien statutes.  Under the Uncontrolled Hazardous Substance Site Act, the state is not only granted a super-priority lien on the contaminated property but all real estate, fixtures, improvements, equipment, machinery, materials and other personal property involved in the discharge can be forfeited to the state.  Proceeds from the sale of the property are used to reimburse the state for cleanup and reasonable expenses of the forfeiture proceedings.  Funds remaining after the state has satisfied its cleanup expenses are distributed to mortgagees.  Any money left over is then forfeited to the state and may not be distributed to unsecured creditors or creditors holding liens on personal property used at the site.
Massachusetts
This statute is similar to Connecticut's law since it creates a two-tiered system.  Under the Oil and Hazardous Material Release and Response Act, a super-priority lien affects the remediated property, whereas a non-priority lien attaches to all the other real and personal property of the party responsible for the discharge.  However, the superpriority lien does not apply to residential property.
The lien is not effective until a Statement of Claim is filed with the registry of deed where the property is located and in each registry district where the responsible person has registered title to land.  If the property subject to the lien is personal property, the Statement of Claim is to be filed in accordance with the provisions of the Massachusetts Uniform Commercial Code.
In Acme Laundry Co. v. Massachusetts, the state Supreme Court ruled that the state could impose a lien on contaminated and uncontaminated property owned by a responsible party for investigative and monitoring costs even where the responsible party had performed a cleanup.
Michigan
The Michigan superlien law also has a two-tiered priority scheme.  The state is granted a non-priority lien for all unpaid costs and damages on the facility that has been subject to the response action.  However, there are two instances where the lien may be converted to a priority lien. 
The first means for obtaining a super-priority lien occurs if the attorney general determines that the lien will be insufficient to cover the state’s response costs. In such as case, the attorney general may file a petition in the circuit court where the facility is located seeking either (1)  priority over all other liens encumbering the facility where the response action took place or (2) a non-priority lien upon all of the other real or personal property of the person owning the facility. However, the following categories of properties are not subject to this non-priority lien: 
-(1)	assets of a qualified pension plan or individual retirement account;
(2)	assets held expressly to finance a dependent's college education; and
(3)	non-business real or personal property totaling $500,000 or less although no more than $25,000 of these assets may be cash or securities.

	A petition seeking a super-priority lien for this situation must set forth the type of lien sought, a description of the property and why the lien is necessary.  The court is required to promptly hold a hearing and give notice of the hearing to the responsible person and anyone holding liens or perfected security interests in the real property subject to the lien.
		The second circumstance under which the state may obtain a super-priority lien is when the response action taken by the state increases the market value of the real property. If the state has unpaid response costs, the state may obtain a super-priority lien for the amount of the increased value of the property until the costs are satisfied.

		The priority and non-priority liens arise when the state first incurs response costs and are perfected against real property when a notice of lien is filed with the register of deeds in the county where the property is located. A lien on personal property is perfected when the state makes the required filing pursuant to the requirements of  the Uniform Commercial Code and  a notice of the lien is mailed to the owner of the property. When the state has been reimbursed for its response costs, a notice of release of lien shall be filed. If additional response actions were required and were completed prior to or at the time of the filing of the notice of release of lien, the state will also file a notice stating that all required response actions have been completed.  
 
New Hampshire
The state is granted a superlien upon the business revenues and all the real and personal property of the person who is liable for the cleanup, including innocent landowners who are strictly liable for contamination caused by a predecessor in interest.
The lien is not effective until a Notice of Lien is filed in the registry of deeds in the county where the real property is located.  To perfect the lien on business revenues or personal property, the Notice of Lien must be filed with the Secretary of State.
New Jersey
This is a two-tiered Superlien similar to those of Connecticut and Massachusetts.  The super-priority lien applies only to the contaminated property, while a non-priority lien attaches to all other real and personal property and business revenues of the discharger.  However, the super-priority lien does not apply to property containing six or less residential dwellings.

		The lien takes effect after a Notice of Lien is filed with the Superior Court Clerk.  The Notice of Lien must include a description of the property and identify the cleanup costs.
		If the lien attaches to property that is owned by a lender who qualifies as a holder under the state lender liability provisions, the state's right of recovery is limited to the actual financial benefit conferred upon the holder by the cleanup and shall not exceed the amount realized from the sale or disposition of the property.
		Rhode Island
		This statute is not a true Superlien law but is a concern to creditors with interests in personal property since it provides that vessels and other personal property used to transport or dispose of hazardous wastes will be forfeited to and sold by the state and the proceeds applied towards response costs, unpaid penalties and the expenses of seizure and sale.
§ 11.08	Federal Superlien
SARA authorized the EPA to impose a lien against real and personal property that is subject to a federal response action.  The lien is not a "superlien" because it is subject to security interests that were recorded prior to the date the federal cleanup is perfected.  This federal cleanup lien does not have to be recorded but, instead, is automatically perfected at the time the owner of the property receives actual notice of the lien or when the federal response action is commenced, whichever occurs later.