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Prodding Congress to support his bill to protect bankers from paying environmental cleanup liability costs, Sen. Jake Garn, R-Utah, enlisted the aid of a Utah businessman in a Senate hearing Wednesday.

Harris H. Simmons, president and chief executive officer of Zions Bancorp., told members of the Committee on Banking, Housing and Urban Affairs that current environmental liability law is having a chilling effect on industry.The law now make banking agencies potentially liable - under what is called the Superfund Act - to pay for any costs necessary to clean up property that has been polluted by a borrower and then repossessed by the lender.

Simmons, who represented the American Bankers Association, said Garn's bill does not let banks off the hook but is a protection if the bank unwittingly forecloses an environmentally contaminated piece of property.

Garn, ranking Republican on the committee, opened the hearing and said, "The mere threat of environmental liability is inhibiting the flow of credit to various sectors of our economy, in particular the small-business community.

"The issues are really simple: Should government agencies and private lending institutions be forced to pay enormous sums to clean up environmental contamination that they did not cause?"

Simmons illustrated Garn's point by describing what happened to his bank three years ago.

He said his bank had financed an automobile dealership in Salt Lake for many years until the dealer went under and the bank began to foreclose on it.

"At the time we began the foreclosure action, we had a party interested in acquiring the building for 2.8 million," he said.

However, before selling the building the bank performed a site study required by the Environmental Protection Agency. The study found that chemicals had leached into the soil from when the car dealership had owned the site.

Even though the level of chemical waste in the soil was cleaner than federal drinking water standards, Simmons said his bank was forced to spend $440,000 and two years cleaning up the site. The building was then sold for almost half of the original buyer's offer.

"My own bank now has a loan policy which urges loan officers to use `extreme caution' in lending to a specific list of high-risk industries," Simmons said.

"Our economy cannot function without these industries . . . yet banks are very understandably nervous about the huge exposures they may face in lending to these borrowers," he added.