Michigan's Ticking Time Bomb for Property Owners

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What happens when the rules for environmental protection suddenly change? Tens of thousands of blissfully ignorant property owners may be about to find out. 

For the last 18 years, Michigan has touted its Baseline Environmental Assessment (BEA) program as the best in the U.S. for land purchasers. The program is designed for persons who are buying, leasing, or foreclosing on a contaminated property. It allows them to not be held liable for the property’s cleanup, provided they did not cause the contamination and if they conducted a BEA and disclosed the results to the Michigan Department of Environmental Quality.

The BEA program has been viewed as a virtual “get out of jail free” card relating to environmental contamination and it has largely worked that way. Environmental protection was calculated based on protection of people drinking possibly impacted water and preventing direct contact with contaminated (soil). While the possibility of vapors from contaminants was acknowledged, it wasn’t a significant concern.

In May, the MDEQ issued a guidance document regarding vapor intrusion and closures. The guidance, ostensibly aimed at helping open sites achieve closure, may be a game changer for properties owned and used by non-liable persons.

For liable persons and new developments, this may not have major impacts for a variety of reasons — not the least of which is the EPA and more than 20 other states are developing or have announced their own vapor intrusion guidance. 

The guidance poses a significant challenge to those who bought contaminated property in the last 18 years, in part, because of the dramatically lower standards it imposes on volatile contaminants. For example, the MDEQ ratcheted down the level for dry cleaning solvents in groundwater from 17,000 parts per billion (ppb) to 460 ppb (and possibly as low as 5 ppb).

There is a serious risk that owners of former gas stations, manufacturers, and dry cleaner sites, even those with BEAs, may have to investigate and even remediate contamination that, for the last 18 years, was deemed “OK.”

Michigan law requires even non-liable landowners to exercise so-called “due care,” including conducting response activity to mitigate unacceptable exposures and allow for the intended property use in a manner that protects the public health and safety. 

We are starting to hear that lenders and the MDEQ are making noises about applying the new vapor closure guidance as a due care “reopener.” That would mean that a person who bought property, followed the rules, protected themselves, and did what the MDEQ said was acceptable for the last 18 years may now have to engage in expensive studies and possibly remediation or other work to prevent the new risk. 

The MDEQ might say that the possibility has been there all along but, make no mistake, a 99.97 percent reduction in a screening level is going to trigger major tremors. This raises significant questions including: Who needs to investigate? How much investigation is enough? Are the MDEQ’s screening levels (which allow someone to seek the finality of closure) too conservative to act as a standard for due care? 

The EPA has a draft that in some cases is less draconian — but is it acceptable to follow an EPA draft? Is the guidance enforceable? What about sampling concerns relating to background contaminants found in every building? Can one use the OSHA exposure standards for non-residential buildings? And on and on. The MDEQ reports that since the program’s inception in 1995, it has received more than 17,000 BEAs. 

This new guidance opens the possibility that anyone who bought property and thought their BEA protected them from being held liable, could be in for an expensive fix.

Arthur Siegal is a partner with Michigan-based Jaffe Raitt Heuer & Weiss and a regular blogger for DBusiness.

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