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What will 2017 Bring? Dramatic Change?

20 Dec 2016

edit_calendar_ssk_47433454In prior years, we knew that regulatory and environmental change was coming but we expected it to be slow and incremental.  With an unknown quantity like President Elect Trump, one thing is clear – no one really knows what may happen.  Here are a few possibilities:

1.  Coal/Cleaner Energy Generation – revitalizing the coal industry was part of Mr. Trump’s midwest stump speeches.  Will Mr. Trump be able to reverse Barack Obama’s Clean Power Plan? What about the Paris Climate Accord?  Certainly, his team is looking at both of those right now. The dispute in Michigan v. EPA, decided in June 2015, continues to rage.  In 2015, the US Supreme Court ruled that the EPA didn’t properly justify its rule governing mercury and toxic pollution (MATS) from power plants because it did not specifically address costs at the initial stage of the rulemaking process. In April, the EPA announced it was standing by its MATS rule and concluded that the benefits far outweighed the costs.  Petitioners continue to litigate whether the EPA properly evaluated costs.  Here in Michigan, new legislation has been passed (and is awaiting the Governor’s signature) intended to encourage additional investment in energy generation and transmission while balancing consumer choice and a greater percentage of renewable energy generation.  Will it work? At a reasonable cost?

2. Power Generation Subsidies/Oil/Gas Generation – Mr. Trump’s attacks on “crony capitalism” would seem to mean that he will stop financial incentives for solar and wind generation.  Will he also attack oil and natural gas supports in the tax code?  Will he open up ANWAR to oil/gas exploration?  Will he scale back attempts to regulate fracking?  This will be difficult in light of the December EPA Report  which concluded that fracking posed problems such as:  fracking water withdrawals compete with other water needs; spills of hydraulic fracturing fluids and chemicals or produced water may impair groundwater resources; injection of hydraulic fracturing fluids into wells may allow gases or liquids to move to groundwater resources; discharge of inadequately treated hydraulic fracturing wastewater to surface water resources; and contamination of groundwater due to disposal or storage of fracturing wastewater.

3. Pipelines – will Mr. Trump reverse the Obama administration’s dim view of oil and gas pipelines such as the Keystone XL and Dakota Access Pipelines?  How will this affect Michigan where public awareness of two 60+ year-old pipelines under the Mackinac Straits has galvanized both sides of the political spectrum into action.  In 2014, Michigan convened a pipeline task force which issued a report in 2015.  In September, 2015, the State entered into a written agreement with Enbridge to prevent the transport of heavy crude oil through the Straits Pipelines.  The task force also recommended that the pipelines be independently evaluated and that additional financial assurance be provided.  The State solicited Requests for Information and Proposals (RFPs) and Enbridge agreed to pay $3.6 Million for the evaluation of the Straits Pipelines.  An independent evaluation of alternatives to the Line 5 pipelines is also underway.  When those will be completed is not known.

4. Infrastructure – Mr. Trump campaigned on infrastructure (although to hear him tell it, that only encompasses airport quality), and Governor Snyder appointed a 21st Century Infrastructure Task Force which concluded that the State needed to be investing $4 Billion more than it was in infrastructure to address roads, bridges, internet, water, sewer and other infrastructure needs.  Given the recent nationally publicized Flint Water debacle, will Michigan find the intestinal fortitude to fully invest in infrastructure or will we continue to patch and delay?  Given the State’s recent fight against a federal judge’s order to deliver clean water, and Michigan legislators “default anti-tax setting,” the future does not bode well.

5. Brownfields – as previously reported, Michigan adopted legislation streamlining its brownfield funding laws and deferred action on Dan Gilbert’s “transformational” brownfield funding legislation.  Will that resurface in early 2017?  I expect it will.

6. Other issues – there are a number of other issues on the horizon including cleanup standards, the maturing of the Great Lakes Water Authority and its ability to deliver clean water and septic services at a reasonable price, Michigan’s effort to reimagine its solid waste program, water withdrawals and protection of the Great Lakes from invasive species and nutrients leading to algal blooms.

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…)

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.

What will be the top green stories of 2014?

8 Jan 2014

greatlakesAs this new year kicks off, we thought we’d look ahead at what we think may be the big stories of 2014 at MichiganGreenLaw.com, in no particular order:

Wetlands – Will EPA and the Army Corps of Engineers finalize guidance regarding the scope of waters regulated under the Clean Water Act? Or will there be new rules or even new legislation?  There are members of Congress on  both sides of this issue and it is unclear which way this issue will go, although the federal trend is to try and govern as many bodies of water no matter what. This fall, EPA published a draft connectivity analysis which many view as a prelude to new regulations attempting to vest the federal government with broad jurisdictional over virtually every drop of water in the country. It will be interesting if the federal government tries to delete the “significant” portion of the Rapanos “significant nexus” test.

• Hydraulic Fracturing –  this continues to be a lightning rod for controversy.  At the end of 2013, the Associated Press reported on both alleged and confirmed environmental problems in 4 states including Ohio and Pennsylvania.  Michigan looks to beef up its oversight of, and its communications regarding, fracking proposals and operations.  The University of Michigan continues to study the technical issues.  The focus on this issue seems to be shifting toward the volumes of water used in fracturing and monitoring withdrawals used for oil and gas production. It appears that the 2012 U.S. Department of the Interior draft rules for fracking on federal and Indian lands remain draft – will they ever be finalized?

• MDEQ Brownfield Process Streamlining.  MDEQ has promised to convene a short-term task force to work on harmonizing, improving and streamlining the various funding mechanisms currently used to incentivize brownfield redevelopment. This can only be a plus.

• MDEQ Cleanup Rules – as required by the Legislature, MDEQ proposed adopting its previously informal standards as formal cleanup rules late in 2013.  The MDEQ will continue to work on improving and in some cases broadening its cleanup rules and criteria – we expect more work on the assumptions of exposure underpinning the standards, more work on vapor intrusion standards and more work on standards and processes applicable to groundwater venting into surface waters.  MDEQ also continues to discuss more rules and standards defining what constitutes “due care” which is an issue for property owners who are not liable pursuant to a BEA and for other reasons.

• Keystone Pipeline.  As we predicted, President Obama and Congress continue to be locked in a politically charged dispute over the Keystone XL pipeline, a proposed 1,700-mile oil pipeline from Canada to Texas.  The President deferred it and lately the pundits have argued that pipelines are safer than transporting shale oil by truck and train.

• Energy Policy In Michigan – at the end of the year, and after a year of “listening” sessions and collecting information, Governor Snyder indicated that he intends to seek legislation improving Michigan’s energy policies, focusing on lowering costs, improving reliability and minimizing environmental impacts.  This will be interesting.

EPA issues its new year’s resolution – ASTM 1527-13

31 Dec 2013

epa_logoAs you know, at Halloween, EPA gave us a “trick” by withdrawing its proposed rule adopting the new ASTM all appropriate inquiry standard.  As you may remember, EPA proposed to leave the old, 2005 standard in place and also allow the use of the new 2013 standard.  This caused some confusion and angst and resulted in EPA’s October 31st action.

Well, as we get ready to start 2014,on December 30th, EPA published an announcement that it was immediately adopting the 2013 standard as satisfying the Federal All Appropriate Inquiry “safe harbor” protecting a new owner, tenant or foreclosing lender from Superfund liability.    EPA kept its “two track” approach of recognizing both the 2005 and 2013 standards as acceptable but repeatedly asserted that it encouraged and anticipated that environmental professionals would “embrace the increased level of rigor” of the 2013 standard and that it intended to publish a proposed rule to remove references to the 2005 standard but wasn’t doing that just yet.  Most interestingly, EPA stated that if it determines in the future that the enhanced standards of the 2013 standard are not being widely adopted, EPA may examine the need to explicitly require the actions specified in the 2013 standard.  With threats like that, it seems likely that the 2013 standard will become de rigueur.

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?