The solicitor general has suggested the Supreme Court that it review an appeals court decision that vacated the Environmental Protection Agency's regulation that formerly clarified the secured lender exemption under the Comprehensive Environmental Response, Compensation and Liability Act.

The SG action considered a rarity raises substantively the odds that the Supreme Court will review the ruling, according to banking industry lawyers. The Supreme Court is more likely to grant certiorari and review the case if the government says it wont object, said David T. Buente Jr. of Sidley and Austin in Washington, lawyer for the Commercial Finance Association, one of the trade groups that is asking the Supreme Court to review the ruling. That carries great weight with the court. The case is American Bankers Association et al, vs. Frank J. Kelly, attorney general of the state of Michigan., 94-752. It seeks high court review of a March ruling by a panel of the U.S. Court of Appeals for the D.C. Circuit. The panel split, 2-1, on the case with then-Chief Judge Abner Mikva issuing a strong dissent. The full court, however, declined to review the case.

The case deals with a regulation clarifying that secured lenders are exempt from liability for cleanup of hazardous wastes on property in which they have a secured interest unless they actually exercise decision-making control over the borrowers environmental compliance or overall or substantially all of the operational aspects of the enterprise.

Besides the ABA and CFA, other trade groups joining in the petition for review were Equipment Leasing Association, American College of Real Estate Lawyers and the American Council of Life Insurance.

The rule was issued in response to an 11th Circuit Court of Appeals ruling in U.S. vs. Fleet Factors 901 F.2nd 1550, 1558, a 1990 ruling that the secured lending industry feared might void the secured lender exemption upon a determination that a lender had the mere capacity to influence a borrower.

The SG commented on the case the week of Nov. 14 as a respondent and as lawyer for the EPA. Since it did not seek review of the ruling on behalf of the EPA, Supreme Court rules of procedure say the agency must comment within 30 days of a filing for certiorari in a case involving a government agency if it doesn't petition for review itself.

The secured lending industry is pooling its resources in the case because of its importance. Congress has before it legislation that would clarify the secured lender exemption, but did not complete work on it in this session. While the industries involved are hopeful of congressional action, it cant be certain, Buente said.

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