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Want to raise taxes by $79 Million Each Year? Governor Snyder does

31 Jan 2018

On Tuesday, Gov. Snyder announced a proposal to spend $79 Million annually on brownfield site clean-up, waste management planning, asbestos removal, recycling grants, water quality monitoring and state park infrastructure.

These are all laudable goals – but one has to question  – where is the money to come from?  The Governor wants to raise a fee on garbage disposal by 1,200%

The Governor asserts that Michigan only recycles 15% of its waste (he’d like it to be 30%) and that “to reduce waste in Michigan landfills” he’d like to increase the “surcharge” currently imposed on landfills from $0.36 per ton to $4.75 per ton.  Presently, this surcharge (which was the result of negotiations between the State and industry) provides funds to the State’s Solid Waste Management Fund which helps fund permitting and licensing of landfills and other solid waste management facilities, inspections, permit and license enforcement, monitoring and inspections of landfills and solid waste management facilities. In short, the surcharge pays (along with other fees paid by the industry) for the permitting and regulation of the facilities paying the fee.

One has to wonder why landfills should be paying:

  • $45 Million each year to remediate and redevelop existing and future contaminated sites which in most cases have nothing to do with regulated and permitted landfills;
  • $5 Million each year for water quality monitoring grants which definitely have nothing to do with landfills;
  • $5 Million each year for state park infrastructure which, again, are unrelated to landfills.

Isn’t that why we pay taxes?  Shouldn’t those regulated communities pay the costs which have nothing to do with landfills?  Also, there is a State superfund law (Part 201) that requires polluters to pay for their pollution.

One can argue that paying $9 Million for local governments’ solid waste planning and $15 Million for grants to municipalities to support recycling should be covered by the State’s general fund, as well, as those functions have nothing to do with regulating those who pay the fee.  When you go to get your driver’s license, would you want to be charged an additional $100 to pay for roadside cleanup of stuff like tires and debris?  It is tangentially related to driving so, does that make it OK?

There is Michigan Constitutional law that says that the answer is “no” and that this “fee” is a disguised illegal tax being snuck past the taxpayers.

Michigan voters have regularly approved bonds to fund remedial and other environmental expenditures, knowing that it was an investment in our health and economy. Why is Governor Snyder afraid to ask the taxpayers to do so again?  Perhaps one word: Flint?

MDEQ rescinds vapor intrusion guidance – uncertainty reigns – what is clean enough?

21 Jun 2017

Back in the 1990’s, there was uncertainty about when a cleanup was truly completed – “how clean is clean?” was the question and it seems that those days may be returning – at least for a while.

The MDEQ announced Tuesday that it was rescinding major parts of its May 2013 Vapor Intrusion Guidance which we blogged about when it was published.  This 2013 guidance addressed part of the question of how clean is “clean enough” when a brownfield redevelopment or cleanup does not reduce the residual contamination to zero.  Vapor intrusion is explained in this link but, basically, it is the threat that some contaminants may migrate upward from soils and groundwater into buildings at unsafe levels.  For the last four years, people in Michigan have relied on and been guided by the 2013 Guidance.

MDEQ has been trying for years to update its clean up rules and standards which have been in place for some 15 years.  The thought was that new data and studies were available and the cleanup standards which were largely driven by conservative assumptions should be brought up to date.  Due to somewhat arcane legal reasons, MDEQ set October 27, 2017, as its date for promulgating these new rules and have been working hard (and continues to work  hard) to meet this deadline (the most current version available at the moment can be found here but updates are expected soon).

Review your BEA or due care plan (if you have one); if your site doesn’t have volatile compounds – rest easier. If it does, your BEA might be subject to an EPA evaluation if there is a concern about vapors migrating into occupied spaces – even off-site spaces. 

Until MDEQ adopts its new rules, MDEQ will include a standard caveat in approval letters issued moving forward that screening levels used “may not reflect the best available science.” That level of uncertainty may chill many deals and plans under consideration or drive them to more expensive cleanups.    

Logically,  MDEQ argues that they should similarly update the vapor intrusion standards and include them in the rules package.  Vapor intrusion has been in the press a lot recently including this article that discusses 4,000 sites which the State might be looking to address an issue which was thought put to bed or wasn’t simply an issue when the site was granted closed status.

This is where the uncertainty kicks in.  MDEQ doesn’t typically address direct human health threats – that would be the State Health Department.  The same State Health Department that allegedly missed the Flint Water Crisis and whose director and chief medical officer have been indicted. The State Health Department takes a fairly conservative approach to vapor intrusion and has told MDEQ that its standards are too lenient.  MDEQ has developed new hyper-conservative standards that could cause sites which previously passed to now fail.

What is a property owner/developer to do?  First, review your BEA and due care plan (if you have one); if your site doesn’t have volatile compounds – rest easier.  If it does, it is possible your property might be subject to EPA action if there is a concern about vapors migrating into occupied spaces – particularly off-site spaces.  The owner of the site profiled in the MiLive article above found their BEA protection weaker than they had thought and are now dealing with an EPA demand for payment.

For future deals, buyers and lenders may want more aggressive due diligence and cleanup programs to ensure that vapor intrusion is not a risk. This may sideline properties which, until recently would’ve been accepted using the MDEQ’s 2013 Guidance.

Until MDEQ adopts its new rules (which may not take effect until next Spring), the MDEQ will be reviewing and approving requests to approve “no further action” based on current standards but MDEQ will include a standard caveat in approval letters issued moving forward that screening levels used “may not reflect the best available science.”   That level of uncertainty may chill many deals and plans under consideration or drive them to more expensive cleanups or site-specific cleanups which require far more and expensive justification.

CSI Part II – MDEQ rolls out brownfield tax increment financing proposal – five major changes you should know about

11 Nov 2014

moneyAs you may recall from this spring, I was asked to serve on MDEQ’s initiative to  review and improve the “patchwork quilt” of statutes and rules regarding brownfield redevelopment incentives, grants and loans.  A CSI II group (of which, in full disclosure, I chaired the Legislative Committee) met regularly over the Spring and Summer and MDEQ has announced two meetings (see the attached flyer) to roll out the proposed changes. These changes have not yet been introduced in the Legislature and thus, are currently only an MDEQ internal recommendation. The hope is that these changes will be introduced shortly.

if passed, these proposed changes should streamline, simplify and speed up the process for loan, grant and TIF approvals to enable projects to get started faster than ever before while supporting a greater range of eligible activities than previously available.

There was some tension between those championing redevelopment and those focusing on environmental remediation but ultimately, there was agreement on a set of changes and clarification of the rules and statutes to clarify the process for obtaining loans, grants and tax increment financing for brownfield redevelopment.  The five most significant changes include: (more…)

Michigan Pipelines Under Review

29 Oct 2014

pipeline

Spills from pipelines were very newsy over the last couple of years.  There was the Kalamzoo River oil spill and a number elsewhere.  As with most things, eventually the public and news media tire of it and move on to something else.  A recent Indiana spill into Lake Michigan barely made any news.  Interestingly, this summer, the State of Michigan created a Michigan Petroleum Pipeline Task Force to review issues relating to pipelines transporting petroleum products around the State.  Despite federal jurisdiction by the  federal Pipeline and Hazardous Materials Safety Administration, the Task Force is looking at issues including:

  • Michigan’s emergency management preparedness for spills,
  • Coordination of permitting issues for pipeline upgrades and replacement, and
  • The creation of a state website to serve as an information clearinghouse for residents who have questions or concerns about pipelines.

The Task Force’s members are Co-Chairs: Dan Wyant, Michigan Department of Environmental Quality and Bill Schuette, Michigan Attorney General, and John Quackenbush,  Michigan Public Service Commission, Keith Creagh, Michigan Department of Natural Resources, Jon Allan, DEQ’s Office of the Great Lakes, Kirk Steudle, Michigan Department of Transportation and Col. Kriste Kibbey Etue, Michigan State Police.

As Michigan is looking at pipeline risks and preparedness, so should you.

(more…)

The Supreme Court, Environmental Law and Statutes of Repose

12 Jun 2014

SupremeCourtKennedyCenter022This week, the US Supreme Court issued an opinion in the case of CT Corp. v. Waldburger.  The decision dealt with whether the federal Superfund law’s statute of limitations trumps North Carolina’s statute of repose.  In an uncharacteristically short opinion, the Court held that it does not.

Defendant CTS contaminated property which it sold and which was then resold to the plaintiffs.  Plaintiffs sued under the federal Comprehensive Environmental Response, Compensation and Liability Act (the Superfund statute or CERCLA).   CERCLA’s statute of limitations states that if there is a State statute of limitations that begins to run before the federal limitations period begins, then the typically long federal period (which includes a provision that does not “start the clock” until the wrong was “discovered”) to bring suit  governs.  North Carolina has what’s called a “statute of repose” which, in this case, lapsed in 1997, 14 years before the plaintiffs discovered their injuries and filed suit. (more…)

But they already did a phase I….

2 May 2014

cautionWhen a seller or lender gives a prospective buyer a phase I environmental site assessment (ESA) and it concludes there are no recognized environmental concerns, that means you’re “good to go,” right? Well, not so fast.  There are some things to check on which include:

1.  When was the ESA performed and to what standard?  Standards have changed over the years and if the ESA is 6 months old or older, parts of it will need to be updated.  Sometimes ESAs done for lenders don’t include all the elements a buyer must include to satisfy the All Appropriate Inquiry standard.  It is also possible for much older ESAs, that circumstances may have changed and you’re better served just starting over.

2.  For whom was the ESA prepared and can you rely on it?  Most ESAs were prepared for a specific client and often include a limit on who can “use” them.  There’s no certainty on whether a use limit actually prevents you from relying on an ESA to assert the innocent landowner defense but it is likely that such a limit would prevent you from seeking recourse from the consultant that prepared it, if it turns out to be inadequate.

3. Even if you can rely on it, will the consultant stand behind it?  Often, consultants will “let” you rely on their old ESAs for a fee.  The question to ask is – is it worth it? I have seen consultants attempt to contractually limit their exposure to $50,000 or their available insurance or their fee whichever is less!  I have also seen consultants say that they will only be liable for direct losses and will not be liable for so-called consequential losses such as lost value or revenue.  This means that the consultant will only be liable for the actual harm (breaking things or hurting people) they cause and not for any errors or oversights they make in actually doing their work!

In short, there are many pitfalls to relying on a so-called “clean” prior phase I and the list above only scratches the surface.  We still live in a caveat emptor world and you, as buyer, need to take steps to beware.

Earth Day at 44…. still crying?

22 Apr 2014

Earth Day brings me right back here

Earth Day brings me right back here

Happy Earth Day 44.  We have come a long way from the challenges and problems that led to the first Earth Day –  a 1969 oil spill in Santa Barbara, California; the dead zone in Lake Eriesmog in Los Angeles and burning rivers in the Midwest.

The first Earth Day led to the creation of the US Environmental Protection Agency and the passage of environmental laws like the Clean AirClean Water, and Endangered Species Acts.  As the EPA and its state counterparts have continued to regulate, there has been a backlash of business and media outcry which certainly impacts the public’s views.

The challenges we face today are more complex and likely more daunting than those of 44 years ago.  We still have oil spills, but they are from rail cars, pipelines, larger ships and deeper wells.  Lake Erie and many other bodies of water are still challenged by more diffuse and “below the radar” sources of contamination.  While reducing the impacts of asbestos, lead and NOx from our daily lives, and healing the ozone hole, we now face questions regarding greenhouse gasses, smog impacts from and in China unlike anything LA ever faced, and the challenges and benefits posed by fracking.

Once the “low hanging fruit” of easy cleanups were “picked,” what we were left with was less shocking or engaging than dead fish and burning rivers.  Consequently, there’s much more debate about the best way to address them or whether they need to be addressed at all.  The issues are just as important – maybe more so, but it’s unlikely that our polarized nation would agree on what changes would be best, if any.