EPA wins banks' applause with plan to ease liability for tanks.

WASHINGTON -- Bankers are cheering a rule proposed recently by the Environmental Protection Agency that limits lenders' responsibility when they make loans for underground storage tanks.

"It is really welcomed by our guys; it should clear up the uncertainty" in making loans for underground storage tanks, said John Byrne, senior counsel for the American Bankers Association.

Alfred Pollard, a lobbyist for the Bankers Roundtable, said the proposed rule "is better than where we are today."

However, he added, "the rule is not as comprehensive as we would like to see." Banks Considered Owners Earlier EPA rules require owners and operators of tanks that hold petroleum and other hazardous substances to prevent, detect, and clean up leaks and compensate third parties for any damages caused by the leaks. Because ownership is broadly defined, some banks that extended credit or foreclosed on property with such tanks could be subject to those EPA requirements.

The new EPA proposal would limit lenders' responsibility for such property.

The ABA favors the new EPA proposal because it provides "a road map to permissible activity" for lenders, Mr. Byrne said.

Because of concerns over liability for contamination caused by underground tanks, "banks have just shied away from making these loans," he said.

Conditions Must Be Met

The EPA proposed the new rule on June 13. Under the proposal, secured creditors such as banks will be exempted from environmental liability rules that apply to underground tank owners and operators, provided they meet certain conditions.

"EPA believes that concerns over environmental liability are making a significant number of lenders reluctant to make loans to otherwise creditworthy owners and operators of USTs," the EPA proposal reads.

Mr. Pollard said the proposal would help lenders that are afraid to make loans on properties that might have underground tanks, as well as encourage them to lend money to clean up property with such storage tanks.

"If I know there is a tank, I would like to get the guy to borrow money to dig up the tank," Mr. Pollard said.

The agency will accept comments on the matter until Aug. 12. The ABA hopes the rule will take effect by the end of the year.

When the ABA surveyed its members in 1991, 62.5% of banks said they had restricted their lending because of environmental concerns, Mr. Byrne said.

The National Association of Convenience Stores, which represents 1,500 companies that run more than 61,000 stores, also favors the EPA's proposed rule.

Lindsay L. Hutter, the trade group's vice president for industry relations and communications, said a 1992 survey of its members on underground storage tanks showed that "about 40% were experiencing very serious problems in securing their tank loans."

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