The United States Environmental Protection Agency (EPA) recently adopted a rule, effective December 6, 1995, specifying the criteria by which lenders may be exempted from the regulatory requirements applicable to "owners and operators" of underground storage tanks (USTs) under Subtitle I of the Resource Conservation and Recovery Act (RCRA). EPA expects the rule to increase the availability of capital to UST owners and operators, which will assist them in complying with the 1998 UST upgrading requirements and other environmental regulations.
The rule exempts from the definition of "owner" persons who maintain an ownership interest in an UST primarily to protect a security interest without participating in the management of the UST or otherwise engaging in petroleum production, refining and marketing. Undertaking administrative, financial management or environmental compliance activities related to the UST or surrounding property -- for instance upgrading an UST -- does not, by itself, constitute "participating in the management" under the rule.
The rule also contains an exemption from the definition of "operator" for security interest holders. A security interest holder is exempt from certain regulatory requirements under RCRA provided the holder is "not in control of or does not have responsibility for the daily operation of the UST."
The rule also provides means by which a security interest holder can foreclose on a property containing an UST and still be exempt from regulation. Helpful steps for a security interest holder to avoid regulation include reselling expeditiously, maintaining a responsible "operator," and emptying and closing the UST.
Once effective, the lenders should benefit from increased protection afforded by the UST rules for both existing and future security interest holdings.
