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BANKERS ASSOCIATION PRAISES ENACTMENT OF ENVIRONMENTAL LIABILITY LEGISLATION

 PRINCETON, N.J., May 7 /PRNewswire/ -- The chairman of the New Jersey Bankers Association today praised the enactment of compromise legislation to protect lenders and fiduciaries from being held responsible for environmental cleanups under limited conditions, a move which will benefit economic development, urban revitalization and provide more public funding for cleanup costs.
 "Governor Jim Florio's signing of S-577 constitutes a major step toward alleviating some of the risk involved in making certain loans, particularly commercial loans secured by real estate," said John G. Collins, NJBA chairman and vice chairman of UJB Financial Corp., Princeton.
 The result, he said, should be an increased availability of credit for properties that were, or are, used for manufacturing purposes, and are located primarily in the state's urban areas.
 Previously, lenders could have been held responsible for cleanup costs, despite their lack of responsibility for causing environmental damage, following a foreclosure proceeding at which time damage is discovered. Any property transfer, including foreclosure, automatically triggers an environmental review.
 "Exposure to a potentially costly cleanup, which can often exceed the value of a property several times over, is a risk few lenders are willing to take, and has stalled economic development in areas that desperately need help," said Collins.
 But, he cautioned, the new law is not a panacea as lenders may still be held responsible for cleanup costs under a variety of circumstances, including being subject to a significant negligence standard with a penalty provision that could be imposed on banks during foreclosure.
 He also said the law tightly defines a lender's responsibilities for damage which occurs following foreclosure. Such requirements go beyond the limited liability provisions imposed on banks under a similar federal Environmental Protection Agency regulation.
 "Despite the limitations in the law," noted Collins, "we are hopeful that the enactment of S-577 will breathe new life into our state's urban areas and create jobs, as well as make more funding available for cleanups by putting more properties back on the tax roles."
 Collins said the new law also contains protections for fiduciaries whose own assets have been tapped when the cost of a mandated cleanup exceeds the value of the trust or estate that actually owned the property.
 Collins also expressed the NJBA's gratitude toward the new law's legislative sponsors, Sen. Gerald Cardinale (R-39th district) and Assemblyman John Penn (R-17th district), as well as Gov. Florio, for signing the bill.
 The new law became effective upon its signing by the governor.
 -0- 5/7/93
 /CONTACT: Kurt E. Schaub of the New Jersey Bankers Association, 608-924-5550/


CO: New Jersey Bankers Association ST: New Jersey IN: FIN ENV SU:

MJ-CC -- PH033 -- 6111 05/07/93 16:29 EDT
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Publication:PR Newswire
Date:May 7, 1993
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