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.. .._ <br />State Water <br />Resources <br />Control Board <br />2014 T Street, <br />Suite 130 <br />Sacramento, CA <br />95814 <br />Mail Code G-8 <br />(916)227-4351 <br />FAX (916) 227-4349 <br />Recycled Paper <br />0 1 9 <br />MEMORANDUM <br />t* � <br />rA jttt <br />t t e t:t ijt��!_'j3F1 <br />Q? MAR -3 AM 11: 54 <br />TO: Regional Board UST Program Managers <br />Local Agency Contacts <br />FROM: llan atton, pager <br />Underground Storage Tank Program <br />DIVISION OF CLEAN WATER PROGRAMS <br />DATE: FEB 2 71997° <br />SUBJECT: LENDER ILIABILITY EXEMPTION <br />Pete Wilson <br />Governor <br />This letter is to inform you that a new state law (Chapter 612 <br />of 1996/ SB1285 Killea) adds Chapter 6.96 "Hazardous Materials <br />Liability of Lenders and Fiduciaries" to Division 20 of the <br />Health & Safety Code. This law was modeled after the federal <br />lender liability regulations (60 FR 46692), which the U.S. <br />Environmental Protection Agency issued on September 7, 1995. <br />State law lists specific actions that lenders must take to <br />retain their liability exemption and is therefore stricter than <br />the federal regulations. <br />The impact of this law on the Underground Storage Tank program <br />should be negligible. In the past, lenders have not been named <br />as responsible parties unless they managed the leak site <br />property. The law should not encourage lenders to take a more <br />active role in property management. The number of <br />foreclosures should not increase appreciably, because the law <br />sets time limits for certain actions to occur in order for <br />lenders to retain their exemption from liability. Also, the <br />law does not exempt lenders from common law lawsuits (e.g., <br />third party claims for nuisance conditions), which should <br />discourage lenders from making loans on contaminated property. <br />Therefore, responsible party searches are not likely to <br />identify increased numbers of lenders. If the search reveals <br />that the lender is a potential responsible party, then the lead <br />agency must evaluate the law to determine if it applies to the <br />specific circumstances of the site. Any lenders named as <br />potentially responsible parties must demonstrate compliance <br />with the 'applicable provisions of the law to retain their <br />exemption. The LOP contract will be modified to include a <br />reference to this new law. <br />Our mission is to preserve and enhance the quality of California's water resources, and <br />ensure their proper allocation and efficient use for the benefit of present and future generations. <br />