Mortgage lenders are optimistic President-elect Bill Clinton and his newly named environmental chief will lead the way to a solution to the continuing controversy over their liability for pollution cleanup of foreclosed assets.

"I think the outlook for a solution is very good," said Alfred Pollard, director of government relations for the Savings and Community Bankers of America. "Clinton is very familiar with this type of issue and Carol Browner has a reputation for finding a middle ground between environmentalists and business," added Pollard, who also heads a coalition of lenders that has worked for both regulatory and legislative fixes to the problem. Browner, who is Florida's environmental secretary, has been named by Clinton to be the next administrator of the Environmental Protection Agency.

Pollard and other participants in the debate expect the lender liability question to be faced ultimately in the context of reauthorization of the Superfund law - the Comprehensive Environmental Response, Compensation and Liability Act (Cercla) - which expires in 1994.

Meanwhile, the EPA, in a letter to Pollard, said it won't publish at least until spring a regulation designed to clarify lender liability for foreclosed assets affected by leaking underground storage tanks. The EPA earlier had hoped to publish a proposed rule by late last month. (See The Mortgage Marketplace, Sept. 28, page 1.)

The new regulation will be more limited than one published earlier under Cercla because the relevant statute has a more restrictive secured creditor exemption. In the letter to Pollard, the agency said it had been meeting with trade associations and interest groups to learn their views on the issue.

Cercla regulates sites on which hazardous waste has been found, and the the Resource Conservation and Recovery Act (RCRA) deals with underground storage tanks.

The EPA in April published a regulation under Cercla that went some distance toward resolving the lender liability issue. Under the rule, lenders are not liable for cleanup costs if they don't participate in the management of the polluting business. They are considered to participate in management unless they fail either part of a two-pronged test:

* The lender "exercises decision-making control over the borrower's environmental compliance, such that the indicia holder has undertaken responsibility for the borrower's hazardous substance handling or disposal practices."

* The lender "exercises control at a level comparable to that of a manager of the borrower's enterprise such that the holder has assumed or manifested responsibility for the overall management of the enterprise encompassing the day-to-day decisionmaking of the enterprise with respect to (A) environmental compliance or (B) all, or substantially all, of the operational (as opposed to financial or administrative) aspects of the enterprise other than environmental compliance."

The regulation, however, did not go as far as lenders wanted, so they continued to push a broader legislative solution that failed in the closing days of the 102nd Congress. The rule also has been attacked in court by the Chemical Manufacturers Association and the Michigan attorney general. A petition to overturn the regulation is before the U.S. Circuit Court of Appeals for the District of Columbia.

They are opposed in their petition by a group of interveners comprised of the American Council on Life Insurance, the American Bankers Association, the Commercial Finance Association, the Equipment Leasing Association of America and the American College of Real Estate Lawyers.

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