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Will 2014 be the year that Michigan Brownfields take off?

30 Dec 2013

brownfieldFor the last 20 years, we have seen the innovative and aggressive Michigan brownfield liability and redevelopment laws move redevelopments forward.   While some of these projects have been big, all of them have been what I like to characterize as “low hanging fruit.”   This makes sense because, for all the incentives available, at the end of the day, if you rehab a building that no one wants to occupy, the incentives available won’t make the difference.  While not easy to redevelop, these sites have been redeveloped while other major environmental sites (either very large, very contaminated or in less desireable locations) continued to lay fallow.

So, it is logical that downtown Detroit and areas of Ann Arbor and Grand Rapids and Lansing have seen major brownfield redevelopment pushes and that smaller projects in outer ring suburbs with sound economies have also benefited from the State’s brownfield programs.

But now, we have some major projects that are not “low hanging fruit.”  The Packard Plant is paid for and soon will be owned by a Brazilian developer with big plans. He calls it the “best opportunity in the world” and he sounds serious.  Work on the long-stalled Uniroyal site is reportedly moving forward.  DTE recently sold its Marysville Michigan Plant to a St. Louis developer with experience in Brownfields.  There has been talk for years about Detroit looking at Turin Italy as a model for post-industrial redevelopment and the TV show, Morning Joe recently came to Detroit to tout its urban revival.  I saw this article about the creative redevelopment of a Spanish cement plant, and now I wonder whether we will see this sort of investment and creativity in Detroit and southeast Michigan brownfields which are not the easiest of sites to redevelop.  If so, it will be a very exciting time in Michigan.  Michigan clearly has the supply; now it is time to see if there is sufficient demand.

EPA backpeddles on due diligence – now what?

31 Oct 2013

Tuesday, the EPA announced that it was withdrawing its August proposal to add the soon to be adopted ASTM 2013 due diligence standard to the possible acceptable approaches to meet the All Appropriate Inquiry due diligence standard.

Despite the fact that ASTM has not released the 2013 standard, EPA proposed to include this new “secret” standard as an alternative to the ASTM 2005 standard which it adopted almost exactly 8 years ago today.   One of the primary concerns expressed by the regulated community was, given that EPA was approving both standards, and given the differences between the standards, what should lenders and purchasers do when the standards differed?    Assuming that ASTM still promulgates this standard (which I expect it will), what does this mean?  EPA can certainly revisit this and perhaps dump the 2005 standard for the 2013.  EPA specifically said that it “will address the comments received in any subsequent final action.” Or EPA may let the 2005 standard stand.

Certainly, the introduction of a new standard may raise uncertainty in the field.  While we suspect that EPA’s failure to adopt the 2013 standard gives one “cover” to stick with the 2005 standard, one never knows what the Courts could do.  Certainly, it is worth considering further clarification of what a report means in discussing “Recognized Environmental Conditions (REC)” and “Historical Recognized Environmental Conditions (HREC).”

Further clarity is also advisable regarding past releases where some contamination remains in place but no cleanup is presently required and about what is and is not a  “de minimis” condition.

Certainly, one should consider seeking inclusion in Phase I ESAs information regarding vapor migration including the possiblity of vapor migration from off-site.  One point of contention and expense is likely to be whether one can rely on information obtained from database searches without reviewing agency files.  This practice would increase both the price of a Phase I and the confidence that users, or prospective buyers may place on site assessment results.  Merely relying on a database service has always been something of a tricky proposition in some cases.

Ultimately, if the new standard is viewed as more effective, the lending community will compel its use regardless of what  EPA says will satisfy CERCLA’s all appropriate inquiry standard.

The Ticking Reopener “Timebomb”

9 Oct 2013

For 18 years, Michigan has touted its BEA program as the best in the US for land purchasers.  It has been viewed as a virtual “get out of jail free” card relating to environmental contamination.  This May, the MDEQ issued a guidance document regarding vapor intrusion and closures.  I blogged about it previously.

This guidance poses a significant challenge to property owners because of the dramatically lower standards it imposes on volatile contaminants.  By example, MDEQ ratcheted down the level for dry cleaning solvents in groundwater from 25,000 parts per billion (ppb) to 9.4 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 due care including conducting response activity to mitigate unacceptable exposures and allow for the intended use of the facility 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.  The MDEQ reports that it has received over 17,000 BEAs.  This new guidance (which may be subject to a number of challenges) opens the possibility that anyone who bought a property and thought their BEA protected them could be in an expensive fix.

Is the 18 year ride over?