Should Banks Change Their Environmental Due Diligence Policies to Reflect the Revised USEPA Rule on All Appropriate Inquiry?

This article raises questions about the environmental due diligence programs common among lenders and suggests changes. The article describes the statutory, regulatory, and case law changes that have largely eliminated the liability risk that caused lenders to institute due diligence programs, and questions whether lenders have an interest in requiring borrowers to follow the new ASTM standard. The article examines the differences between environmental liabilities and environmental costs and explains why those differences should be taken into account. Finally, the article recommends a case-by-case approach to dealing with environmental issues rather than the simplistic view that looks at environmental due diligence as a yes or no question.