ELR Citation: ELR 20994
No(s). 84-2280 (E.D. Pa. Sep 4, 1985)

The court holds that a hazardous waste site owner's secured creditors, including one who foreclosed on the site, may be held liable for response costs under §107 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) only if they exercised control over the nuts-and-bolts operation of the site. The statutory definition of "owner or operator" excludes persons who do not participate in management and hold indicia of ownership primarily to protect a security interest. The court notes that the problem of creditor liability is analogous to the problem of stockholder liability. There is an inference that a stockholder who actively participates in management may be held liable. The court distinguishes between the nuts-and-bolts involvement in decisionmaking in the shareholders cases and the strictly financial involvement in the case before it. The participation must be in the management of the "facility," i.e., the operational, production, or waste disposal activities. In the instant case, one creditor, ATB, merely foreclosed on the property after all operations had ceased and then took prudent and routine steps to secure the property. It is free from liability and entitled to summary judgment. A second creditor, the Small Business Administration, had authority to participate in management but apparently did not, and so is also not liable. A third creditor, Mellon, sent advisors, one of whom may have participated in day-to-day nonfinancial management decisions. Though the court rejects the argument that Mellon should be held liable because it refused to provide the operator with enough money to meet environmental obligations, the court reserves judgment until it develops more of a record on Mellon's involvement in management.

Counsel are listed at 15 ELR 20992.