During 1995, Jim Murphy, David Slutzky and Jud Bernstein (vice president, Chemical Bank and former committee chair) engaged U.S. Environmental Protection Agency officials in an active dialogue regarding the impact of the Superfund program upon commercial real estate lending. These discussions resulted in a more complete EPA understanding of the issues associated with commercial real estate investment by MBA lenders. As a result of this dialogue and mounting public pressure, the EPA de-listed approximately 25,000 sites from the Superfund ("CERCLIS") database on January 25, 1995. Until this action by EPA, sites containing contamination or merely suspected to contain contamination remained on the database indefinitely. Of the approximately 25,000 sites removed from the list, the Agency estimated that nearly 6,000 of these locations are, in fact, dean enough to be redeveloped immediately.

In an effort to further mitigate the concerns of commercial mortgage lenders, the EPA issued its new "Policy Toward Owners of Property Containing Contaminated Aquifers" on May 24, 1995. This policy reassures innocent property owners who are situated above contaminated groundwater that the agency will not require these parties to undertake cleanup or pay costs associated with cleanup. The policy also states that, under certain circumstances, the agency will enter into de minimis settlements with owners who have been sued or threatened with contribution suits, thus protecting many parties from litigation.

In response to the EPA's action, MBA executive vice president Warren Lasko sent a letter to the agency on June 23, 1995, expressing MBA's appreciation for the agency's swift response to industry concerns about potential liability resulting from groundwater contamination. In subsequent discussions with agency officials, MBA staff suggested that EPA develop a summary document aimed at bolstering industry awareness of the new groundwater policy. The EPA responded to this request by producing a "fact sheet" on July 14, 1995, that describes the implications of the new policy. The fact sheet, available from MBA or EPA, summarizes the agency's policy and provides examples of transactions that the agency expects to be influenced by the policy.

As a result of ongoing discussions with EPA, MBA was invited to attend an Atlantic Monthly debate regarding legislative reform of the Superfund program. This debate featured EPA administrator Carol M. Browner, Senator Bob Smith (R-N.H.), Representative Sherwood Boehlert (R-N.Y.) and Senator Frank Lautenberg (D-N.J.). At this meeting, EPA administrator Carol Browner was personally thanked for her agency's commitment to Superfund reform initiatives supported by MBA.

Another EPA measure implemented on May 24, 1995, is entitled "Guidance on Agreements with Prospective Purchasers of Contaminated Property." This agency guidance acknowledges that the threat of Superfund liability has discouraged the redevelopment of many sites, further stating that "covenants not to sue" will be necessary to facilitate cleanup/redevelopment transactions. Although this guidance generally applies to the most seriously contaminated sites in the EPA inventory, the guidance effectively opens the door for broader use of prospective purchaser protections.

On June 22, David Steinman, vice president of Mellon Bank's Real Estate Credit Recovery Division, testified on MBA's behalf before the U.S. House Committee on Commerce's Subcommittee on Commerce, Trade and Hazardous Materials. David's statement emphasized the need for statutory language clarifying the secured creditor exemption in Superfund and expressed a willingness to work with the Congress and the EPA to affect improvements to the Superfund program. The statement also encouraged Congress and the EPA to affect improvements to the Superfund program. The statement also encouraged Congress to expand the scope of the secured creditor exemption to include other federal environmental laws. Chairman Mike Oxley (R-Ohio) expressed his appreciation for MBA support of HR 200, the "Lender and Fiduciary Fairness in Liability Act of 1995," cosponsored by Representative Upton (R-Mich.) and Representative Tauzin (D-la.)

On a separate front, the July 1995 issue of Mortgage Banking magazine included an article by David Slutzky and Lawrence Jacobson entitled "EPA's Brownfields Initiatives." This article, which appeared in the summer all-commercial issue of MBA's monthly magazine, provided readers with an overview of recent EPA reform initiatives and examined the implications of these actions on the commercial real estate finance industry.

In a related development, the EPA rule promulgated on Sept. 7, 1995 (Federal Register, Volume 60, Number 173, pp. 46691-46715), will limit the regulatory obligations of parties with a security interest in real estate containing a petroleum underground storage tank (UST) or parties that acquire title or deed to a property with an UST. The final rule, created using comments from several MBA member companies, specifies the conditions under which security interest holders may be exempted from corrective actions, as well as technical and financial responsibility requirements that apply to an UST owner or operator under Subtitle I of the Resource Conservation and Recovery Act (RRA). This rule becomes effective on Dec. 6, 1995.

On Oct. 2, 1995, the EPA and the United States Department of Justice (DOJ) jointly announced their new Policy on CERCLA Enforcement Against Lenders and Government Entities that Acquire Property Involuntarily. The new policy has been created to mitigate lender uncertainty regarding participation in the management of a facility as described in CERCLA. This announcement is a clear indication that EPA and DOJ intend to apply the "interpretations and rationales" originally established in the April 29, 1992 EPA Lender Liability Rule, strongly supported by the MBA and its membership. While this new policy necessarily does not rise to the level of a rulemaking and is subject to change at any time, the statement does reflect a very favorable organizational posture at the highest levels of both the EPA and DOJ.

In 1995, members of the MBA's CREF Environmental Issues Committee opened a dialogue with representatives of the U.S. Conference of Mayors, the National Technical Information Service (NTIS), the Portland Development Commission, the Department of Energy's Lawrence Livermore Laboratories and the Maryland Department of Economic & Employment Development, as well as numerous state officials responsible for voluntary cleanup/redevelopment programs. James Murphy, chair of the CREF Environmental Issues Committee and president of New England Realty Resources Inc., has spearheaded this outreach effort, along with David Slutzky, committee vice chair and senior policy consultant with Environmental Management Group (EMG). In 1996, this committee will welcome Robert Woodcock, vice president, UNUM Life Insurance Company of America, as a new vice-chair.