Lender Liability under Pennsylvania Environmental Law

This article examines the potential exposure of creditors to liability under Pennsylvania environmental laws. The theory of environmental liability of creditors first made an appearance in the caselaw resulting from litigation instituted pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. §§ 9601-9675, enacted in 1980 by the United States Congress. CERCLA was designed to place the cost of cleaning up hazardous waste sites on those responsible for the waste. Congress, in an attempt to protect secured creditors from liability under CERCLA, included a security interest exemption. The presence of this exemption suggested that secured creditors might be liable, as owners or operators, under CERCLA for the environmental harm caused by their debtors if they became involved in their debtors\u27 business, and, in fact, a number of federal decisions have so held. Pennsylvania\u27s environmental laws contain provisions under which the theory of environmental liability of lenders may be asserted. Such Attempts have been made, resulting in several rulings by the courts and the Pennsylvania Environmental Hearing Board. This article includes an examination of the significance of those, and other, cases in connection with Pennsylvania\u27s environmental laws