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Changes to Michigan’s Environmental Cleanup Program Coming Soon

By Pete Bosanic, P.E. and Steve Price, CHMM, Principals at PM Environmental, Inc.

There are changes on the horizon that will greatly affect environmental cleanups and Baseline Environmental Assessments (BEAs) in Michigan. PM Environmental (PME) has been very involved in this process as Principal’s at PME are on the environmental committees of the Michigan Petroleum Association, Michigan Bankers Association, Michigan Housing Council, involved with the Michigan Chamber of Commerce and have been involved with the stakeholder meetings the last few years.

As you may know, the main environmental law, Part 201 Environmental Remediation of the Natural Resources and Environmental Protection Act (NREPA), P.A. 451 of 1994, as amended, which regulates contaminated sites in Michigan was implemented in 1995. The changes in 1995 were a fundamental change from a strict liability standard to a causation-based liability standard. The Baseline Environmental Assessment (BEA) process, which provides liability exemptions for new purchasers (including banks in foreclosure) of contaminated properties, was created. It has been successful in that over 10,000 contaminated properties being purchased and redeveloped. However, since 1995, it has become continuously harder to obtain a Part 201 closure within reasonable timeframes and costs and there was general agreement among practitioners for further cleanup program enhancements.

Review of Part 201 began in 2005, when the Michigan Department of Natural Resources and Environment (MDNRE) (formerly Michigan Department of Environmental Quality (MDEQ)) asked Public Sector Consultants to facilitate a stakeholder-driven process to review the existing Part 201 law. Public Sector Consultants issued their report in April 2007. The MDNRE responded to the report in November 2007.

Since that time period, Michigan’s environmental cleanup program has been in limbo making it very difficult to achieve closure. During November 2008 through January 2009, the MDNRE held three sessions during which they presented their vision of Michigan’s Cleanup and Redevelopment Program Redesign. From January 2009 through November 2009, the MDNRE held workshops across the State presenting the details of their plan and to solicit stakeholder input.

It became clear to various stakeholders including business and banking associations such as the Michigan Petroleum Association, Michigan Bankers Association, Michigan Chamber of Commerce, the Michigan Manufacturing Association, as well as others, that the MDNRE’s plan would have made it even more difficult to do business in Michigan than it already is. Therefore a variety of stakeholders got involved to draft actual legislation to counter the MDNRE’s plan.

The initial legislation was Senate Bill (SB) 437 and was presented during the fall of 2009. The MDNRE was involved with the stakeholders during legislative meetings over the next several months. After numerous revisions, SB-437 and five companion bills (SB-1345 through SB-1349) passed the senate during August 2010. Identical bills passed the house during October 2010. It appears likely that the bills could be enacted into law in the next month with immediate effect.

Below are some of the major changes:

Baseline Environmental Assessments

• The Category (N, D, S) scheme for BEAs will be eliminated. Instead a BEA that describes the results of an All Appropriate Inquiry (AAI) investigation, sampling and analysis to confirm that the property is a “facility” (i.e. contaminated) will be required. What the industry standard to establish this is yet to be determined.
• Determinations/Affirmations of BEAs will no longer be performed by the MDNRE. BEAs will only be “provided” to the MDNRE and not reviewed by the MDNRE.
o This will have an initial impact with lenders since many prefer an “affirmed” BEA.
o Additionally, the United State Small Business Administration (SBA) requires an affirmed BEA. Stay tuned for how this issue is resolved.
• There will still be the 45-day time to conduct a BEA. The BEA must be provided to the MDNRE within 6 months after the earlier of the date of purchase, occupancy or foreclosure.

Due Care Provisions

• Owners and operators of Facilities still have Due Care obligations as before, and it will become important to complete sufficient Phase II work to be able to document Due Care.
• Expanded to align with Federal Rule for Bona Fide Prospective Purchaser status (i.e. cooperate with persons conducting cleanups, comply with restrictions, can’t interfere with restrictions or response activities).

Process for “No Further Action” Status

• A “No Further Action (NFA)” report and corresponding NFA letter will be established. This does not currently exist in Michigan.
• There will be two types of cleanups including residential or non-residential. Michigan currently has residential, commercial and industrial, with several subcategories.
• Can be self implemented, meaning done in accordance with the statute (and without DNRE involvement) and then submitted to MDNRE for approval, or completed as a Response Activity Plan, with MDNRE involvement.
• Once response activities have been completed, NFA Report is submitted for review by MDNRE with affidavits by submitter and the environmental professional.
• Sets professional liability insurance requirements for firms performing work at $1 million per occurrence/$2 million aggregate.
• MDNRE has 150 days to review report, if not reviewed within that timeframe, NFA is approved.
• Process has “reopeners” for conditions not assessed, remedy failures, etc.
• If NFA Denied by MDNRE, can appeal to the Response Activity Review Panel

Response Activity Review Panel

• Consists of 15 members appointed by MDNRE Director
• 5 members will be assigned to each case
• Can not include MDNRE staff or persons whose main income is derived from contracts with the MDNRE
• Members must have relevant scientific/technical credentials and relevant experience
• Petition process is by fee – $3,500 per site, paid by parties requesting petition
• Panel can adopt, modify or reverse, in whole or in part, the MDNRE’s decision - which then goes to the Director
• Within 10 days after receiving the Panel’s decision, the Director shall issue a final decision regarding the Petition.

Groundwater-Surface Water (GSI) Pathway Implementation Issues

• Modification of rules related to site specific monitoring points
• Modified to exclude utility lines or enclosed sewers, which will be helpful in eliminating GSI as a relevant pathway. This should help make it easier to achieve closure at contaminated sites located in urban areas that don’t have nearby surface water bodies that contamination could reasonably migrate to.
• Statement that Water Quality Standards are GSI criteria

Other Key Points

• There are several other changes to the current law. One of those changes includes taking into consideration the depth below the ground surface of the contamination, which may reduce the potential exposure and serve as an exposure barrier. This is important because the MDNRE often considers all contaminant pathways relevant without taking into consideration the depth of the contamination. This should make it easier to leave contamination in place with land use restrictions.

Please feel free to contact PME at 800 485-0090 to discuss these changes further.

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