Capital Brief: Ohioan Plans Bill to Clarify Lender Liability

Lenders who hold property contaminated by hazardous chemicals would get a clearer picture of their responsibilities under a measure to be introduced this week.

Rep. Michael G. Oxley, chairman of the hazardous materials subcommittee of the House Commerce Committee, last week released draft portions of his bill in order to get feedback from Democrats on his panel and the Environmental Protection Agency. The final version is expected this week, according to a congressional source.

The Ohio Republican's bill would mandate that a lender that did not participate in management of a contaminated property held as collateral is not responsible for cleanup costs.

The draft stated that "participation in management" does not include providing financial advice to a debtor in an effort to avoid a default.

The bill would also clarify that banks' trust departments are not responsible for the cleanup of contaminated properties managed as part of an estate or trust.

Sen. Robert C. Smith, R-N.H., is expected to introduce a similar bill in the Senate next week, an industry source said.