• Michigan Legislature Streamlines Environmental Clean Up Laws
  • February 25, 2011 | Author: Alan C. Schwartz
  • Law Firm: Miller Johnson - Grand Rapids Office
  • In December 2010, the Michigan Legislature passed six separate bills (the “Amendments’) that amended Michigan’s primary environmental clean up law, Part 201 of the Natural Resources and Environmental Protection Act (the “Act”).  These changes could impact anyone who owns, leases and/or manages real estate or anyone who plans on selling or buying real estate.  The changes were intended to speed cleanups, resolve technical disputes, and simplify the cleanup process.

    The following is a very general overview of the more significant changes contained in the Amendments:

    • Clean Up Categories Have Been Reduced to Two.  The Amendments reduce the number of clean up categories to two - residential and nonresidential.  As a result, the DEQ will maintain only two sets of generic clean up criteria for properties in Michigan.  For the time being, the residential clean up criteria will be the same as the current generic residential clean up criteria, and the nonresidential clean up criteria will be the current generic industrial clean up criteria.  The Amendments require the DEQ to review and update clean up criteria periodically, and allow for site-specific clean up criteria with the approval of DEQ.  Where land use or resource use restrictions are necessary to achieve clean up, a limited residential or limited nonresidential closure is allowed.  Site specific clean up criteria are permitted with DEQ’s approval.

    • Clean Up Process Has Been Modified.  The Amendments allow liable parties to implement clean ups without supervision by the DEQ in most cases, although a person can request supervision by the DEQ if desired.  If supervision by the DEQ is desired, the DEQ has 150 days to review and respond to response activity plans.  This time period is extended to 180 days for cleanup plans that require public input.  If the DEQ fails to respond in a timely manner, the response activity plan is deemed approved.

    • Verification of Closure.  A person may, but is not required, to submit a No Further Action Report (“NFA Report”) to the DEQ for review and approval in order to verify that it has satisfied its clean up obligations.  If approved, the DEQ will issue a NFA Letter, which constitutes proof that the person has qualified for an exemption from further clean up liability, subject to certain exceptions.  Once an NFA Report has been submitted to the DEQ, the DEQ has 150 days to review and respond (or 180 days, if the NFA Report requires public input), or else the NFA Report is deemed approved.

    • Appeal Process.  A new 15 member response activity review panel has been created to consider appeals of adverse decisions by the DEQ.  The panel is made up of licensed professional engineers or geologists appointed by the DEQ Director who are not employed by the State, and do not perform a significant amount of work under contract with the State.  Any decision by the DEQ may be appealed upon filing a request for appeal along with a $3500 fee.  The panel conducts a hearing on the matter and makes a recommendation to the Director of the DEQ.  The final decision of the DEQ, which may or may not follow the recommendation of the panel, can be appealed to Circuit Court.

    • Changes to BEA Process.  The Amendments redefined “Baseline Environmental Assessment” and eliminated substantially all of the DEQ’s BEA rules.  As a result, there no longer are different types of BEAs, and BEAs are no longer required to provide a reliable method of distinguishing existing contamination at a facility from potential future releases of hazardous substances at the facility.  Instead, a BEA Report is now required to show only the results of “all appropriate inquiry” (generally, a Phase I ESA Report meeting the federal due diligence requirements), and the results of sampling and analysis confirming that the property is a facility.  The time frame for conducting a BEA remains the same (either prior to or within 45 days after the earlier of purchase, occupancy or foreclosure), but the rules for when a BEA has been “completed” (i.e., the BEA Report completed and signed) have been eliminated.  A BEA Report must be disclosed to the DEQ within 6 months of the earlier of purchase, occupancy or foreclosur.

    • Changes to Liability Exemptions.  The exemption from clean up liabilityfor commercial lessees under the Act has been modified to apply regardless of the lessee’s hazardous substance use.  The DEQ had previously limited this exemption to lessees who used an insignificant amount (i.e., less than typical residential use) of hazardous substances.  The lender liability exemption was eliminated, presumably because it was redundant with other liability protections for lenders and financial institutions afforded by the Act.  Also, a new exemption was created for persons who acquire an interest in a facility for purposes of siting, constructing, or operating a wind energy system.

    • Changes to Due Care Obligations.  The Amendments impose new obligations on owners and operators of contaminated property to provide reasonable cooperation, assistance and access to persons conducting a clean up, and to comply with land use and resource use restrictions imposed in connection with the clean up.  Due care obligations have also been extended to State and local governmental entities who own or operate contaminated property for public purposes or public use.  Previously, State and local governmental entities who did not cause the contamination were exempt from due care obligations with respect to public lands.

    • New Notice Requirements.  Under the Amendments, liable parties who obtain knowledge that contamination is migrating beyond the legal boundaries of the facility are now required to notify the affected neighboring property owner and the DEQ within 30 days.  Similarly, oil and gas lessees who cause contamination must notify the owner of the surface property and the DEQ within 30 days. 

    • Good Faith Defense to Civil Fines.  Persons who are responsible for contamination can be fined not more than $25,000 per day for failure to respond to that contamination.  However, those fines cannot be imposed if the person has made a good faith effort to prevent the release and to comply with its obligations under the Act.

    • Burden of Proof.  Prior to the Amendments, the DEQ could assert that a person was potentially liable under the Act by proving only enough evidence to support a “prima facie” case of liability.  At that point, the burden shifted to the potentially liable person to prove that he or she was not liable.  Under the Amendments, the DEQ has the burden of proving that a person is liable under the Act (i.e., is responsible for an activity that caused the contamination, or acquired the property without a BEA).  Therefore, the DEQ’s burden of proving liability under the Act has increased.

    • Private Cost Recovery/Contribution Liability.  If two or more persons are jointly and severally liable for contamination under the Act, each has a claim against the other for its fair share of the clean up costs.  In addition, innocent parties may pursue liable parties for recovery of response costs.  Previously, only necessary costs could be recovered in such lawsuits.  Under the Amendments, costs that are reasonably incurred under the circumstances can now be recovered, which is a less onerous standard of proof. 

    The above is only a brief overview of the more significant provisions contained in the Amendments.