LIABILITY AND COST RECOVERY.

SEC. 703. LIABILITY AND COST RECOVERY. (a) Definition of Owner or Operator.—Section 1001(26) of the Oil Pollution Act of 1990 (33 U.S.C. 2701(26)) is amended to read as follows:“(26) ‘owner or operator’—“(A) means—“(i) in the case of a vessel, any person owning, operating, or chartering by demise, the vessel;“(ii) in the case of an onshore or offshore facility, any person owning or operating such facility;“(iii) in the case of any abandoned offshore facility, the person who owned or operated such facility immediately prior to such abandonment;“(iv) in the case of any facility, title or control of which was conveyed due to bankruptcy, foreclosure, tax delinquency, abandonment, or similar means to a unit of State or local government, any person who owned, operated, or otherwise controlled activities at such facility immediately beforehand;“(v) notwithstanding subparagraph (B)(i), and in the same manner and to the same extent, both procedurally and substantively, as any nongovernmental entity, including for purposes of liability under section 1002, any State or local government that has caused or contributed to a discharge or substantial threat of a discharge of oil from a vessel or facility ownership or control of which was acquired involuntarily through—118 STAT. 1070 “(I) seizure or otherwise in connection with law enforcement activity;“(II) bankruptcy;“(III) tax delinquency;“(IV) abandonment; or“(V) other circumstances in which the government involuntarily acquires title by virtue of its function as sovereign;“(vi) notwithstanding subparagraph (B)(ii), a person that is a lender and that holds indicia of ownership primarily to protect a security interest in a vessel or facility if, while the borrower is still in possession of the vessel or facility encumbered by the security interest, the person—“(I) exercises decision making control over the environmental compliance related to the vessel or facility, such that the person has undertaken responsibility for oil handling or disposal practices related to the vessel or facility; or“(II) exercises control at a level comparable to that of a manager of the vessel or facility, such that the person has assumed or manifested responsibility—“(aa) for the overall management of the vessel or facility encompassing day-to-day decision making with respect to environmental compliance; or“(bb) over all or substantially all of the operational functions (as distinguished from financial or administrative functions) of the vessel or facility other than the function of environmental compliance; and“(B) does not include—“(i) A unit of state or local government that acquired ownership or control of a vessel or facility involuntarily through—“(I) seizure or otherwise in connection with law enforcement activity;“(II) bankruptcy;“(III) tax delinquency;“(IV) abandonment; or“(V) other circumstances in which the government involuntarily acquires title by virtue of its function as sovereign;“(ii) a person that is a lender that does not participate in management of a vessel or facility, but holds indicia of ownership primarily to protect the security interest of the person in the vessel or facility; or“(iii) a person that is a lender that did not participate in management of a vessel or facility prior to foreclosure, notwithstanding that the person—“(I) forecloses on the vessel or facility; and“(II) after foreclosure, sells, re-leases (in the case of a lease finance transaction), or liquidates the vessel or facility, maintains business activities, winds up operations, undertakes a removal action under section 311(c) of the Federal Water Pollution 118 STAT. 1071 Control Act (33 U.S.C. 1321(c)) or under the direction of an on-scene coordinator appointed under the National Contingency Plan, with respect to the vessel or facility, or takes any other measure to preserve, protect, or prepare the vessel or facility prior to sale or disposition,if the person seeks to sell, re-lease (in the case of a lease finance transaction), or otherwise divest the person of the vessel or facility at the earliest practicable, commercially reasonable time, on commercially reasonable terms, taking into account market conditions and legal and regulatory requirements;”.(b) Other Definitions.—Section 1001 of the Oil Pollution Act of 1990 (33 U.S.C. 2701) is amended by striking “and” after the semicolon at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting a semicolon, and by adding at the end the following:“(38) ‘participate in management’—“(A)(i) means actually participating in the management or operational affairs of a vessel or facility; and“(ii) does not include merely having the capacity to influence, or the unexercised right to control, vessel or facility operations; and“(B) does not include—“(i) performing an act or failing to act prior to the time at which a security interest is created in a vessel or facility;“(ii) holding a security interest or abandoning or releasing 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 environmental compliance;“(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 vessel or facility;“(vi) requiring a removal action or other lawful means of addressing a discharge or substantial threat of a discharge of oil in connection with the vessel or facility 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 vessel or facility;“(viii) restructuring, renegotiating, or otherwise agreeing to alter the terms and conditions of the extension of credit or security interest, exercising forbearance;“(ix) 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“(x) conducting a removal action under 311(c) of the Federal Water Pollution Control Act (33 U.S.C. 1321(c)) or under the direction of an on-scene coordinator appointed under the National Contingency Plan,118 STAT. 1072if such actions do not rise to the level of participating in management under subparagraph (A) of this paragraph and paragraph (26)(A)(vi);“(39) ‘extension of credit’ has the meaning provided in section 101(20)(G)(i) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. 9601(20)(G)(i));“(40) ‘financial or administrative function’ has the meaning provided in section 101(20)(G)(ii) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. 9601(20)(G)(ii));“(41) ‘foreclosure’ and ‘foreclose’ each has the meaning provided in section 101(20)(G)(iii) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. 9601(20)(G)(iii));“(42) ‘lender’ has the meaning provided in section 101(20)(G)(iv) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. 9601(20)(G)(iv));“(43) ‘operational function’ has the meaning provided in section 101(20)(G)(v) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. 9601(20)(G)(v)); and“(44) ‘security interest’ has the meaning provided in section 101(20)(G)(vi) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. 9601(20)(G)(vi)).”.(c) Definition of Contractual Relationship.—Section 1003 of the Oil Pollution Act of 1990 (33 U.S.C. 2703) is amended by adding at the end the following:“(d) Definition of Contractual Relationship.—“(1) In general.—For purposes of subsection (a)(3) the term ‘contractual relationship’ includes, but is not limited to, land contracts, deeds, easements, leases, or other instruments transferring title or possession, unless—“(A) the real property on which the facility concerned is located was acquired by the responsible party after the placement of the oil on, in, or at the real property on which the facility concerned is located;“(B) one or more of the circumstances described in subparagraph (A), (B), or (C) of paragraph (2) is established by the responsible party by a preponderance of the evidence; and“(C) the responsible party complies with paragraph (3).“(2) Required circumstance.—The circumstances referred to in paragraph (1)(B) are the following:“(A) At the time the responsible party acquired the real property on which the facility is located the responsible party did not know and had no reason to know that oil that is the subject of the discharge or substantial threat of discharge was located on, in, or at the facility.“(B) The responsible party is a government entity that acquired the facility—“(i) by escheat;“(ii) through any other involuntary transfer or acquisition; or118 STAT. 1073“(iii) through the exercise of eminent domain authority by purchase or condemnation.“(C) The responsible party acquired the facility by inheritance or bequest.“(3) Additional requirements.—For purposes of paragraph (1)(C), the responsible party must establish by a preponderance of the evidence that the responsible party—“(A) has satisfied the requirements of section 1003(a)(3)(A) and (B);“(B) has provided full cooperation, assistance, and facility access to the persons that are authorized to conduct removal actions, including the cooperation and access necessary for the installation, integrity, operation, and maintenance of any complete or partial removal action;“(C) is in compliance with any land use restrictions established or relied on in connection with the removal action; and“(D) has not impeded the effectiveness or integrity of any institutional control employed in connection with the removal action.“(4) Reason to know.—“(A) Appropriate inquiries.—To establish that the responsible party had no reason to know of the matter described in paragraph (2)(A), the responsible party must demonstrate to a court that—“(i) on or before the date on which the responsible party acquired the real property on which the facility is located, the responsible party carried out all appropriate inquiries, as provided in subparagraphs (B) and (D), into the previous ownership and uses of the real property on which the facility is located in accordance with generally accepted good commercial and customary standards and practices; and“(ii) the responsible party took reasonable steps to—“(I) stop any continuing discharge;“(II) prevent any substantial threat of discharge; and“(III) prevent or limit any human, environmental, or natural resource exposure to any previously discharged oil.“(B) Regulations establishing standards and practices.—Not later than 2 years after the date of the enactment of this paragraph, the Secretary, in consultation with the Administrator of the Environmental Protection Agency, shall by regulation establish standards and practices for the purpose of satisfying the requirement to carry out all appropriate inquiries under subparagraph (A).“(C) Criteria.—In promulgating regulations that establish the standards and practices referred to in subparagraph (B), the Secretary shall include in such standards and practices provisions regarding each of the following:“(i) The results of an inquiry by an environmental professional.“(ii) Interviews with past and present owners, operators, and occupants of the facility and the real 118 STAT. 1074 property on which the facility is located for the purpose of gathering information regarding the potential for oil at the facility and on the real property on which the facility is located.“(iii) Reviews of historical sources, such as chain of title documents, aerial photographs, building department records, and land use records, to determine previous uses and occupancies of the real property on which the facility is located since the property was first developed.“(iv) Searches for recorded environmental cleanup liens against the facility and the real property on which the facility is located that are filed under Federal, State, or local law.“(v) Reviews of Federal, State, and local government records, waste disposal records, underground storage tank records, and waste handling, generation, treatment, disposal, and spill records, concerning oil at or near the facility and on the real property on which the facility is located.“(vi) Visual inspections of the facility, the real property on which the facility is located, and adjoining properties.“(vii) Specialized knowledge or experience on the part of the responsible party.“(viii) The relationship of the purchase price to the value of the facility and the real property on which the facility is located, if oil was not at the facility or on the real property.“(ix) Commonly known or reasonably ascertainable information about the facility and the real property on which the facility is located.“(x) The degree of obviousness of the presence or likely presence of oil at the facility and on the real property on which the facility is located, and the ability to detect the oil by appropriate investigation.“(D) Interim standards and practices.—“(i) Real property purchased before may 31, 1997.—With respect to real property purchased before May 31, 1997, in making a determination with respect to a responsible party described in subparagraph (A), a court shall take into account—“(I) any specialized knowledge or experience on the part of the responsible party;“(II) the relationship of the purchase price to the value of the facility and the real property on which the facility is located, if the oil was not at the facility or on the real property;“(III) commonly known or reasonably ascertainable information about the facility and the real property on which the facility is located;“(IV) the obviousness of the presence or likely presence of oil at the facility and on the real property on which the facility is located; and“(V) the ability of the responsible party to detect oil by appropriate inspection.118 STAT. 1075“(ii) Real property purchased on or after may 31, 1997.—With respect to real property purchased on or after May 31, 1997, until the Secretary promulgates the regulations described in clause (ii), the procedures of the American Society for Testing and Materials, including the document known as ‘Standard E1527–97’, entitled ‘Standard Practice for Environmental Site Assessment: Phase I Environmental Site Assessment Process’, shall satisfy the requirements in subparagraph (A).“(E) Site inspection and title search.—In the case of real property for residential use or other similar use purchased by a nongovernmental or noncommercial entity, inspection and title search of the facility and the real property on which the facility is located that reveal no basis for further investigation shall be considered to satisfy the requirements of this paragraph.“(5) Previous owner or operator.—Nothing in this paragraph or in section 1003(a)(3) shall diminish the liability of any previous owner or operator of such facility who would otherwise be liable under this Act. Notwithstanding this paragraph, if a responsible party obtained actual knowledge of the discharge or substantial threat of discharge of oil at such facility when the responsible party owned the facility and then subsequently transferred ownership of the facility or the real property on which the facility is located to another person without disclosing such knowledge, the responsible party shall be treated as liable under 1002(a) and no defense under section 1003(a) shall be available to such responsible party.“(6) Limitation on defense.—Nothing in this paragraph shall affect the liability under this Act of a responsible party who, by any act or omission, caused or contributed to the discharge or substantial threat of discharge of oil which is the subject of the action relating to the facility.”.