WASHINGTON - Hoping to permanently squash efforts to hold banks liable for environmental clean-ups, the American Bankers Association has asked a federal judge for permission to help a Pennsylvania bank in such a case.
The ABA wants to file a friend-of-the-court brief arguing that the Superfund Act protects banks holding only a security interest in a polluted property, said Michael Crotty, the group's deputy general counsel for litigation.
"We'd like to see them win," Mr. Crotty said. "It will help establish a precedent to the benefit of the entire industry."
Bankers have long argued that they shouldn't pay to clean contaminated sites unless they contributed to the mess. A number of businesses and insurers, however, have sued the lenders, arguing that once a bank assumes control of the land, it becomes liable for any environmental damage.
The banking industry has tried twice to derail such suits. One effort failed early this year when the U.S. Supreme Court refused to reconsider a lower court decision rejecting a safe harbor for lenders.
The lower court had ruled in February 1994 that the Environmental Protection Agency exceeded its authority when it passed a rule shielding banks from such suits.
The second effort died late last year. The industry sought a legislative safe harbor, garnering approvals from the House and Senate as part of the Superfund Reform Act. But the bill died during the final days of the 1994 legislative session.
The current case began in 1983 when Dollar Savings Association of New Castle, Pa., financed a long-term lease between the Lawrence Country Industrial Development Authority and a manufacturer, Metcoa.
The company pledged the site and real property as collateral.
Metcoa eventually defaulted on the loans, forcing Dollar Savings to assume general upkeep of the property. It also paid the taxes and insurance.
When environmental officials sued Metcoa for the costs of cleaning up the property, the manufacturer named the bank as a party.
Briefs will be filed in August and oral argument could take place before yearend.