WASHINGTON -- Issuers and bondholders could suddenly find that their bonds are worthless and they are liable for millions of dollars in cleanup costs if they own waste sites found contaminated under the Superfund law, analysts warned.

Although no such situation has yet occurred, they cautioned, it is legally possible and appears to be an accident just waiting to happen. Superfund litigants are increasingly searching for "deep-pocket" parties who can share the high costs of hazardous waste cleanup as they venture into the sometimes untested legal territory established by the 1980 law.

"It's not a real world situation right now, but no one wants to be the first one" to get socked with a court order saying they are liable for Superfund damages, said Neal Atterman, vice president of Kidder, Peabody & Co.

Bondholders could even get caught in an"unsuspecting situation," like an airport bond issuance where the investor-owned site was later found to be contaminated, he said.

"The question is, 'What kind of rigor does the developer need to have in developing the site, and what kind of rigor does the investor need to have?" he said.

"The likelihood of pecuniary damage against bondholders and other assorted participants" certainly will affect the yields on their bonds, he added.

David Goodman, an attorney for the Council of Infrastructure Financing Authorities in Washington, agreed the liability could come as an unpleasant surprise. "After a new facility is constructed, authorities may determine the site is already tainted by virtue of prior use, so the current owner -- who perhaps unwittingly inherited the contaminated site -- is in the chain of title and is possibly liable," he said.

The liability of municipal lenders or bondholders could arise under Superfund largely by virtue of the ownership interest many of them retain in property and projects that are financed with bond issues, attorneys said.

In some instances, state law requires a municipality to retain title to property financed with industrial development bonds until the bonds are paid off, even though the developer repaying the bonds has exclusive use of the site, Mr. Goodman said. In other arrangements, municipalities and bondholders hold title to projects while they lease the properties to site operators.

Superfund explicitly exempts lender-owners from liability if their ownership represents strictly a security interest in the project. Courts and regulatory agencies must therefore also look for elements beyond ownership when assigning liability, attorneys said.

In particular, the courts have found liability in cases where there is evidence that lenders had the legal authority to control waste operations at the site and, especially, if they used that authority, attorneys said.

Most cases where the courts have found lenders liable have involved banks and commercial lenders, which tend to be more active than municipalities in managing secured property, Mr. Goodman said.

The only Superfund liability suit to be brought thus far against bondholders and a municipality was decided in favor of the municipality -- the Port of St. Helens, Ore. -- last year by the U.S. Court of Appeals for the Ninth Circuit. The court ruled that the law's security interest exemption applied and the port was not responsible for helping to pay for cleanup of a contaminated site.

But Mr. Goodman said that since that ruling applies only in one region, it provides little solace to potential litigants in other parts of the country where the courts may be less generous toward creditors. He and other attorneys said they fear more suits may be in the offing, and they could be more successful in tagging bondholders with liability.

"The case law is not exhaustive," said Margaret Murphy, an attorney with Shearman & Sterling in New York City and a specialist in bank liability under Superfund. "This is an unexplored area, and it is conceivable that somebody could bring up a case involving serious exposure for a municipality. People just haven't done it yet," she said.

In the Oregon case, Bergsoe Metal Corp. v. Port of St. Helens, the operator of a lead recycling operation financed with industrial development bonds and pollution control bonds, charged that the port issuer and the trustee-bondholder, the U.S. National Bank of Oregon, were liable for cleaning up the lead contamination found on the site.

Under the bond indenture, the Port held title to the recycling plant, and the bank held the warranty deed and other ownership documents in escrow until the bonds were paid off through lease-rental payments by Bergsoe.

The appeals court held that the port's ownership interest in the plant was strictly a security interest, and the port did not exercise enough control or management over the plant operations to make it liable for the contamination.

It found that normal lender activities, such as negotiating and encouraging the building of the plant, and contract provisions giving the municipality the right to inspect the property and repossess it upon foreclosure, did not, in themselves, give the municipality management control of the site.

Mr. Goodman pointed out, however, that another ruling last year by the U.S. District Court for the District of New York was far more ominous than the Bergsoe decision for municipal lender-owners.

In that case, Shapiro v. Alexanderson, the court ruled that Putnam County, N.Y., could be found liable for contamination of a waste disposal site because it owned and exercised control over the site, even though the contamination was apparently caused by an independent contractor who operated the site.

Because the court decisions leave many unanswered questions, the infrastructure financing group has asked the Environmental Protection Agency to address the responsibility of municipal lenders in its proposed lender liability regulations. Mr. Goodman said he would like to see the agency codify the favorable Bergsoe decision.

The agency's proposed regulations, issued in July, primarily address the responsibilities of banks and commercial lenders, although they do clarify that the unwitting acquisition of contaminated property by a municipality through eminent domain or involuntary foreclosure does not expose it to liability.

The financing group is contending that continued uncertainty about a municipality's liability as a lender could "encumber and discourage the development" of badly needed infrastructure projects.

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