New Mexico Administrative Code
Title 20 - ENVIRONMENTAL PROTECTION
Chapter 5 - PETROLEUM STORAGE TANKS
Part 124 - LENDER LIABILITY
Section 20.5.124.2401 - ACTIONS THAT ARE NOT PARTICIPATION IN MANAGEMENT PRE-FORECLOSURE

Universal Citation: 20 NM Admin Code 20.5.124.2401

Current through Register Vol. 35, No. 6, March 26, 2024

A. Actions at the inception of the loan or other transaction.

(1) No act or omission prior to the time that indicia of ownership are held primarily to protect a security interest constitutes evidence of participation in management within the meaning of this subpart.

(2) A prospective holder who undertakes or requires an environmental investigation (which could include a site assessment, inspection, and/or audit) of the storage tank or storage tank system or facility or property on which the storage tank or storage tank system is located (in which indicia of ownership are to be held), or requires a prospective borrower to clean up contamination from the storage tank or storage tank system or to comply or come into compliance (whether prior or subsequent to the time that indicia of ownership are held primarily to protect a security interest) with any applicable law or regulation, is not by such action considered to be participating in the management of the storage tank or storage tank system or facility or property on which the storage tank or storage tank system is located.

B. Loan policing and work out.

(1) Actions that are consistent with holding ownership indicia primarily to protect a security interest do not constitute participation in management for purposes of this part.

(2) The authority for the holder to take such actions may, but need not, be contained in contractual or other documents specifying requirements for financial, environmental, and other warranties, covenants, conditions, representations or promises from the borrower.

(3) Loan policing and work out activities cover and include all such activities up to foreclosure, exclusive of any activities that constitute participation in management.

(4) Policing activities.
(a) Policing the security interest or loan. A holder who engages in policing activities prior to foreclosure will remain within the exemption provided that the holder does not together with other actions participate in the management of the storage tank or storage tank system as provided in Subsection A of this section. Such policing actions include, but are not limited to, the following activities:
(i) requiring the borrower to clean up contamination from the storage tank or storage tank system during the term of the security interest;

(ii) requiring the borrower to comply or come into compliance with applicable federal, state, and local environmental and other laws, rules, and regulations during the term of the security interest;

(iii) securing or exercising authority to monitor or inspect the storage tank or storage tank system or facility or property on which the storage tank or storage tank system is located (including on-site inspections) in which indicia of ownership are maintained, or the borrower's business or financial condition during the term of the security interest; or

(iv) taking other actions to adequately police the loan or security interest (such as requiring a borrower to comply with any warranties, covenants, conditions, representations, or promises from the borrower).

(b) Environmental policing activities. Policing activities also include undertaking by the holder of storage tank environmental compliance actions and voluntary environmental actions taken in compliance with 20.5 NMAC, provided that the holder does not otherwise participate in the management or daily operation of the storage tank or storage tank system as provided in Subsection A of this section, 20.5.124.2404 and 20.5.124.2405 NMAC. A holder who undertakes these actions shall do so in compliance with the applicable requirements in 20.5 NMAC. A holder may directly oversee these environmental compliance actions and voluntary environmental actions, and directly hire contractors to perform the work, and is not by such action considered to be participating in the management of the storage tank or storage tank system. Such allowable actions include, but are not limited to:
(i) release detection and release reporting;

(ii) release response and corrective action;

(iii) temporary or permanent closure of a storage tank or storage tank system;

(iv) storage tank upgrading or replacement; and

(v) maintenance of corrosion protection.

(5) Loan work out. A holder who engages in loan work out activities prior to foreclosure will remain within the exemption provided that the holder does not together with other actions participate in the management of the storage tank or storage tank system as provided in Subsection A of this section.

Disclaimer: These regulations may not be the most recent version. New Mexico may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.