ELR Citation: ELR 20424
No(s). 5:90-CV-62 (W.D. Mich. Jan 12, 1993)

The court holds that a bank is not liable for cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) as an owner or operator of a corporate borrower's contaminated sites, even though it demanded that the borrower obtain new management, regularly consulted with the borrower, and monitored the borrower's financial condition. Applying the U.S. Environmental Protection Agency's (EPA's) lender liability rule at 40 C.F.R. §300.1100(c)(1), the court holds that the bank did not "participate in the management" of the borrower's sites, even though two bank representatives served on the borrower's board of directors and the bank issued a letter of credit to secure payment of a bonus for the borrower's chief executive officer based on reduction of the company's indebtedness to the bank. The court also holds that statements by a bank officer concerning the power of the borrower's chief executive officer and owner to fire employees did not constitute control by the bank.

Counsel for Plaintiffs
Paul Novak
State Attorney's Office
Environmental Protection Division
P.O. Box 30212, Lansing MI 48909
(517) 373-7780

Counsel for Defendants
Susan Keener
Miller, Johnson, Snell & Cummiskey
800 Calder Plaza Bldg., Grand Rapids MI 49503
(616) 459-8311