Pub. 15 2018 Issue 4

14 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S By John Berteau, Associate General Counsel, Compliance Alliance The Why and How of Environmental Risk F or banks, environmental risk man- agement addresses concerns about the present by looking into the past and gazing into the future. A good environmental risk policy looks to the past to identify existing environmental liabilities before making loans secured by commercial real estate—to prevent either the bank or the bor- rower being held liable for cleaning up someone else’s environmental mess. 1 This same policy will also evaluate onsite operations to determine potential future liability and weigh the potential risk for the bank. Practically speaking, much of environmental risk for banks involves assigning liability with regards to the two main pieces of environmental legislation: RCRA and CERCLA. Pronounced “WRECK-ruh” (RCRA), the Resource Conservation and Recovery Act ad- dresses the disposal of hazardous waste, and the