The U.S. Environmental Protection Agency has issued an underground storage tank (UST) rule to ease regulations and limit the liability of lenders.
EPA said the action should make more credit available to petroleum marketers and other small businesses that have underground tanks on their properties.
The rule limits the regulatory obligations of financial firms and others who own security interests in property that holds petroleum USTs.
EPA acknowledged that creditors have been reluctant to extend loans to the small businesses for fear of incurring UST cleanup liability if the business goes broke and the lender takes possession through foreclosure.
A break for lenders
The rule makes a lender eligible for an exemption from all federal UST rules before and after foreclosure.
The lender would not be liable for cleanup costs from a contaminated property if it does not engage in petroleum production, refining and marketing, participate in management or operation of the UST, or store petroleum in the UST after foreclosure.
The rule outlines a range of activities, including foreclosure, lenders can undertake to manage and protect their collateral without being held responsible for compliance.
It allows them to require that the property be maintained in an environmentally sound manner as well as to provide financial, administrative, or other advice to a borrower to clean up the property if it is contaminated.
Marketers pleased
The Petroleum Marketers Association of America (PMAA) praised the EPA action, which it has long sought.
Phillip Chisholm, PMAA executive vice-president, said the rule should free up much needed loan money for petroleum marketers seeking to make environmental upgrades.
A PMAA survey last year reported that marketers had trouble obtaining loans, and nearly half of those who did get loans said the terms were toughened by lenders' concerns about liability. Copyright 1995 Oil & Gas Journal. All Rights Reserved.
