(a)(1) A lender who holds indicia of ownership primarily to protect a security interest in a property, business including its tangible and intangible assets or establishment, as defined in section 22a-134, and does not participate in the management of such property, business or establishment, shall not be liable for any damages, assessment, fine or other costs imposed by the state for the containment, removal or mitigation of such a spill or discharge, or for any order of the commissioner to abate or remediate such spill or discharge from, or in connection with a property, business or establishment.

(2) A lender who did not participate in management of a property, business or establishment, but acquires right, title or interest in a property, business, including its tangible or intangible assets, or establishment by foreclosure, shall not be liable for any damage, assessment, fine or other costs imposed by the state for the containment, removal or mitigation of such a spill or discharge, or for any order of the commissioner to abate or remediate such spill or discharge provided such lender seeks to sell, re-lease, in the case of a lease finance transaction, or otherwise divest itself of the property, business or establishment at the earliest practicable, commercially reasonable time, on commercially reasonable terms, taking into account market conditions and legal and regulatory requirements, after the foreclosure.

(b) For the purposes of this section:

(1) “Participate in management” means actually taking part in the management or operational affairs of a property, business or establishment, but does not mean merely having the capacity to influence or the unexercised right to control the property, business or establishment operations. A lender holding indicia of ownership primarily to protect a security interest in a property, business or establishment shall be considered to participate in management only if, while the borrower is still in possession of the property, business or establishment encumbered by the security interest, the lender exercises decision-making control over the borrower's environmental compliance activities such that (A) the lender has undertaken responsibility for the hazardous substance handling or disposal practices related to the property, business or establishment, or (B) the lender exercises control at a level comparable to that of a property, business or establishment manager to the point where the lender has assumed or manifested responsibility for the overall management encompassing day-by-day decision-making with respect to environmental compliance or decision making over all or substantially all of the operational functions, as distinguished from financial or administrative functions, of the property, business or establishment other than the function of compliance with environmental protection laws. “Participate in management” does not mean: (i) Performing an act or failing to act prior to the time at which a security interest is created in a property, business or establishment; (ii) holding such a security interest or abandoning or releasing such a security interest; (iii) including in the terms of an extension of credit, or in a contract or security agreement relating to the extension, a covenant, warranty or other term or condition that relates to compliance with environmental protection laws; (iv) monitoring or enforcing the terms and conditions of the extension of credit or security interest; (v) monitoring or undertaking one or more inspections of the property, business or establishment; (vi) requiring a response action or other lawful means of containing, removing or attempting to mitigate a discharge or spill prior to, during or on the expiration of the term of the extension of credit; (vii) providing financial or other advice or counseling in an effort to mitigate, prevent or cure default or diminution in the value of the property, business or establishment; (viii) restructuring, renegotiating or otherwise agreeing to alter the terms and conditions of the extension of credit or security interest; (ix) exercising forbearance; (x) exercising other remedies that may be available under applicable law for the breach of a term or condition of the extension of credit or security agreement; or (xi) containing, removing or otherwise mitigating a spill or discharge;

(2) “Extension of credit” means a lease finance transaction in which the lessor does not initially select the leased property, business, including tangible and intangible assets, or establishment and does not during the lease term control the daily operations or maintenance of the property, business or establishment, or the lease or finance transaction provided such transaction conforms to regulations issued by the federal banking agency or the state bank supervisor, as those terms are defined in the Federal Deposit Insurance Act (12 USC 1813), or in regulations issued by the National Credit Union Administration Board;

(3) “Financial or administrative function” means a function of a credit management officer, accounts payable officer, accounts receivable officer, personnel manager, comptroller or chief financial officer or similar function;

(4) “Foreclosure” and “foreclose” means, respectively, acquiring, and to acquire, a property, business or establishment through (A) purchase at sale under a judgment or decree, a power of sale, a nonjudicial foreclosure sale, a deed in lieu of foreclosure, or similar conveyance from a trustee, or repossession, if the property, business, including its tangible and intangible assets, or establishment was security for an extension of credit previously contracted, including the termination of a lease agreement, or (B) any other formal or informal manner by which a lender acquires, for subsequent disposition, title to or possession of a property, business, including its tangible and intangible assets, or facility in order to protect its security interest;

(5) “Lender” means (A) an insured depository institution, as defined in Section 3 of the Federal Deposit Insurance Act (12 USC 1813); (B) an insured credit union, as defined in Section 101 of the Federal Credit Union Act (12 USC 1752); (C) a bank or association chartered under the Farm Credit Act of 1971 (12 USC 2001 et seq.); (D) a leasing or trust company that is an affiliate of an insured depository institution; (E) any person, including a successor or assignee of any such person, that makes a bona fide extension of credit to, or takes or acquires a security interest from, a nonaffiliated person; (F) the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal Agricultural Mortgage Corporation, or any other person or entity that in a bona fide manner makes, buys or sells loans or interests in loans; (G) a person who insures or guarantees against a default in the repayment of an extension of credit or acts as a surety with respect to an extension of credit to a nonaffiliated person; and (H) any person who provides title or other insurance and who acquires a property, business or establishment as a result of assignment or conveyance in the course of underwriting claims and claims settlement;

(6) “Operational function” means a facility or plant manager, operations manager, chief operating officer or chief executive officer; and

(7) “Security interest” means a right under a mortgage, deed of trust, assignment, judgment lien, pledge, security agreement, factoring agreement or lease and any other right accruing to a person to secure the repayment of money, the performance of a duty or any other obligation by a nonaffiliated person.

(P.A. 98-253, S. 6.)