A property purchaser's tool box: select the right tools to protect yourself from environmental liabilities.

• Author: Murray, Kevin R.
• Position: Legal Brief - Column

My father was a very skilled man. A mechanic by trade, he was also a skilled carpenter, able to fix anything. As a young man, I hung around my dad a lot, and he tried to share many of these skills with me. I learned my way around auto mechanics, welding, basic carpentry and machinery, but one thing I learned early on was that the right tool (even if you had to make it) made the job easier. In fact, without the right tool, the job may suffer.

While I dabble whenever possible with a wrench and hammer, I spend my work life practicing environmental law, more specifically the acquisition and development of contaminated land. It has been more than 30 years since the adoption of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), which arguably had the most profound impact on the acquisition of real property in, well, the last 30 years.

Even so, we still have people approach us unaware of the need to take precautions to protect themselves from environmental liabilities, coming to us with problems that can only be managed and not eradicated.

Appropriate inquiry

The concept of assuming legal liability for past acts of pollution solely on the basis of property ownership is a principle that seems foreign to our legal structure, if not clearly unfair. Yet CERCLA ushered in a regulatory scheme that did just that.

Unprotected landowners face potential joint and several liability for a host of expenses, the most significant of which is the cost to remediate property. The purchase of contaminated real property, whether you know it is contaminated or not, without the proper protocols or tools can result in huge liability. The key is to select the right tool to accomplish the desired result. The first essential tool in the process is proper due diligence, referred to in this context as all appropriate inquiry (AAI).

All appropriate inquiry, as defined in CERCLA, is fundamental to any deal. Let me be very clear: There is no basis for a CERCLA defense without this formal procedure. If the property turns out to have environmental issues, failure to undertake AAI will expose a buyer to legal consequences. AAI is the process of conducting environmental due diligence to determine prior uses and ownership of a property and assess conditions at the property that may be indicative of releases or threatened releases of hazardous substances. AAI must be conducted by an environmental professional and generally takes the form of a Phase I...