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.
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