To many prospective purchasers and lessees of real property, andto many lenders involved in such transactions, environmental duediligence can seem pro forma; it is simply the box you check inorder to achieve the inevitable completion of the transaction.Those thoughts are according to Matthew Dombroski, anenvironmental litigation attorney at Manatt, Phelps & PhillipsLLP, located in the New York office, and Michael C. Polentz,co-chair of the real estate and land use practice group at Manatt,Phelps & Phillips LLP, located in the Palo Alto office.According to the two, environmental impairment can rear its uglyhead in multiple, extremely costly ways, however, so thoseprospective purchasers and lessees, and their lenders (as well astheir respective environmental counsel), must ensure thatenvironmental due diligence is performed carefully and withoutshortcuts. In particular, they say, these parties should cause anyenvironmental due diligence to be performed so as to satisfy the“All Appropriate Inquiry” or “AAI” requirements for limited safeharbor, including the often-overlooked “freshness” requirements ofthe AAI standard, which will in turn provide the prospectivepurchaser, lessee, and lender a robust environmentalcharacterization of the property for valuation and risk mitigationpurposes.

The views expressed in the commentary below are Dombroskiand Polentz' own.

The federal Comprehensive Environmental Response Compensation& Liability Act (“CERCLA”) and its state analogues generallytake a very expansive view of liability for environmentalcontamination and include owners and operators (e.g., lessees) aspotentially liable parties without regard to whether such partiesactually caused the underlying contamination. Furthermore,because CERCLA liability is joint and several, such an owner oroperator can find itself responsible for the entire cost of cleanup(including certain associated legal fees).