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Brownfield Funding Legislation Enacted

5 Jan 2017

law

The bills passed.  At last.  As you may recall from two years ago, I served on an MDEQ-led task force 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 in 2014.  The changes certainly would’ve been introduced earlier but the Flint Water Crisis happened and everyone’s attention was diverted. Earlier this year, a package of six bills was introduced in the Legislature; on the 15th they were passed and on  January 5, 2017, the Governor signed them.  They take effect in 90 days and are now 2016 Public Acts 471-476.

These changes 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.

The most significant changes include:

  • demolition, lead abatement, asbestos abatement dredging and excavation of uncontaminated but unusable soils may be eligible for grant and loan funding, subject to certain criteria and prerequisites (such as a threshold that at least 51% of the eligible activities are part 201 type expenses);
  • one can be technically liable under Part 201, TSCA or RCRA and still be eligible for grant, loan or TIF funding – previously, even someone who submitted a technically deficient BEA was barred from eligibility – with a renewed emphasis on remediation and redevelopment, only those who actually caused contamination are barred from eligibility, again, subject to certain criteria and prerequisites;
  • while the definition of “eligible property” was changed very little, activities eligible for funding through TIF are broadened to include such things as due care expenses, UST removals, solid waste disposal, sediment removal and disposal (where either the sediments or the upland are contaminated), plan preparation and implementation costs (subject to certain conditions and caps), including the costs to track plan compliance and a clearer set of sheeting and shoring costs;
  • overall streamlining of the application and review processes in an effort to speed up the TIF process including giving greater authority to the Michigan Strategic Fund to approve plans of up to $1 Million without waiting for a Fund Board meeting.

There was some tension between those championing redevelopment and those focusing on environmental remediation but, ultimately, the set of changes to the rules and statutes clarifying the process for obtaining loans, grants and tax increment financing for brownfield redevelopment. Not every issue was agreed upon and there was a list of so-called “parking lot issues” (either because they were discussed at length in the parking lot after the meetings or because we “parked them” there as we couldn’t reach consensus).  Hopefully some of these will be addressed in the near future but these changes should streamline, simplify and speed up the process for loan, grant and TIF approvals to enable projects to get started faster than ever, while supporting a greater range of eligible activities than previously available.  Given the Legislature’s unwillingness to approve other similar bills, this was a real accomplishment for brownfield redevelopment in the State of Michigan.

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.

Bill Could Make Brownfield Redevelopment Easier

30 Nov 2012

Michigan Senate Bill 1210, which would amend the state’s Brownfield Redevelopment Financing Act, was recently passed by the Senate and is now on its way to the House.  If enacted, the Bill could further promote urban development throughout the state.  Some of the Bill’s highlights include:

  • creating a “State Brownfield Redevelopment Fund” which would, among other things, support a grant and loan program to fund the costs of eligible activities on eligible property,
  • expanding the definition of “infrastructure improvements” to specifically include underground parking, multilevel parking structures, and urban storm water management systems – allowing, for the first time, TIF funding of these often-critical components to a development,
  • adding historic resources to the Act’s definition of “eligible property” and “eligible activities,”  which will assist in Michigan’s redevelopment program taking a more wholistic approach,
  • eliminating the requirement for municipalities to pay the Michigan Strategic Fund or the Department of Environmental  Quality to review work plans,
  • removing the requirement that a plan be approved before January 1, 2013, thereby allowing the program to continue to support new developments,
  • allowing for approval of either a work plan or a combined brownfield plan, which will reduce the amount of work developers must do, and
  • providing mechanisms to respond to the failure of a project to occur.

Michigan’s brownfield redevelopment law helps to preserve undeveloped property for agriculture, wilderness and recreational use, and also benefits urban centers by returning contaminated, blighted, or obsolete property to productive use and providing for the generation of tax revenue.  We believe that Senate Bill 1210 will improve the law, remove barriers and streamline brownfield redevelopment.

Ballast Rule Changes Make for Strange Bedfellows

19 Sep 2012

 

www.deq.state.or.us/lq/cu/emergency/ballast.htm

Last Thursday the Michigan Senate Committee on Natural Resources, Environment and Great Lakes met to discuss, among other things, Senate Bill 1212.  The bill would amend Part 31 (Water Resources Protection) of the Natural Resources and Environmental Protection Act to require the Michigan Department of Environmental Quality (DEQ) to issue a permit to oceangoing vessels engaging in port operations in Michigan if the vessel flushed its ballast tanks completely while at sea.

Ballast water is water carried by a cargo ship in its hulls when empty to keep the vessel balanced.  A large ship can carry millions of gallons of ballast water.  As a ship takes on cargo, the ballast water, which was taken in wherever the ship last unloaded its cargo, is discharged.  According to the National Wildlife Federation, ballast water from ships is the primary channel for unintentionally introducing invasive aquatic organisms into U.S. waters and most of the 185 invasive species found in the Great Lakes were introduced through ballast water discharge.

Michigan’s current law has been in effect since 2005 and is one of the most stringent ballast laws in the country.  The law requires all oceangoing vessels engaging in port operations in Michigan to obtain a permit from the DEQ.  The Department must issue a permit if the applicant can demonstrate that the vessel will not discharge aquatic nuisance species; or, if the vessel discharges ballast water or other waste, that the operator will use environmentally sound technology and methods, as determined by the DEQ, to prevent the discharge of aquatic nuisance species.

The bill proposes to identify one specific treatment method – deep water exchange – that could satisfy the permit requirements.  In essence, the DEQ would be required to issue a permit if the applicant could demonstrate that the vessel conducted a complete flushing of all ballast tanks with sea water at a location at least 200 nautical miles from shore at a depth of more than 2,000 meters, or another location approved by the U.S. Coast Guard.

At the meeting last Thursday, representatives from the DEQ, the Michigan Attorney General’s Office and the National Wildlife Federation testified against the bill.  Their main argument is that weaker ballast rules would invite more invasive species into the Great Lakes, thereby further jeopardizing the Great Lakes and its related fishing and tourism industries.  Representatives from the Detroit Regional Chamber, Nicholson Terminal & Dock Company and the International Association of Machinists testified in support of the bill, arguing that Michigan is driving away potential business because ships choose to go to ports in states with looser ballast laws.

For a copy of the bill visit here.

To view the Detroit Free Press guest commentary article on Senate Bill 1212 written by Dan Wyant, director of the Michigan Department of Environmental Quality visit here.

 

New UST legislation signed

2 May 2012

Michigan has been lagging in closures of underground storage tanks for some time.   Back in the days of the MUSTFA program which funded tank removals and cleanups based on a 7/8 cent charge per gallon at the pump (extended for another 3 years), tanks were practically flying out of the ground and closures were quickly achieved.  After the money dried up, MDEQ began to take tougher stances and everything ground to a halt.  Reportedly, Michigan has 9100 “open” UST sites – the second most in the Country.

However, following the pattern set out by the successful Part 201 legislation enacted in 2010, a number of stakeholders have pushed a package of bills that were signed by the Governor this week.  These bills, now Public Acts 108, 109, 110, 111, 112, and 113,  will streamline and hopefully speed up the closure process by, among other things:

  • Allowing the MDEQ to audit only final assessment and closure reports, rather than auditing at all steps of the corrective action process;
  • Shortening the period for MDEQ to decide it would or would not audit a report;
  • Allow MDEQ to audit a report only once;
  • Make clearer that a report would be considered approved if MDEQ did not audit it or provide a written response to the owner or operator;
  • Allow an owner or operator whose report was denied to seek approval from the Part 201 Review Panel or petition MDEQ’s Office of Administrative Hearings for a contested case hearing;
  • Provide for a lien in favor of the State for all unpaid costs and damages for which a person was liable and allow that lien to have superpriority status when needed;
  • Prohibit MDEQ from requiring a report to include information beyond that specified in Part 213;
  • Revising the penalties for a person who fails to comply with an administrative order requiring corrective action; and
  • Provide that MDEQ guidelines, bulletins, interpretive statements, operational memoranda, or forms would be advisory, and could not be given the force of law.

The hope is that this will provide clarity, consistency and encouragement to the MDEQ and the regulated community – largely owners of existing and former gas stations – so that they can achieve closure.  Given the slow progress of the Part 201 changes thus far, only time will tell.

CSI pulls into the station; the work continues at a less than glacial pace

15 Mar 2012

Yesterday, the MDEQ, released its CSI report, found here, summarizing the work done by a collaborative group of experts and MDEQ staff over the last 6 weeks (think about that, the MDEQ got something done in six weeks!).  Today, there was a presentation by the 7 work groups.  It does seem that MDEQ may finally be getting the message that the Michigan Legislature sent in 1995 that there should be some tolerance of acceptable risk.   The focus appears to be largely on changing MDEQ policy and statutory language.  I recommend that you read the 100+ page report with 90+ recommendations made, but here are a few points worth noting:

1. GSI – groundwater surface water interface was an issue we struggled with two years ago when I worked on the Part 201 legislation enacted at the end of 2010.  GSI has been one of the two most problematic criteria because MDEQ regularly used it to deny approvals of site closure.  MDEQ has rigidly and conservatively applied these criteria.  As a result of the CSI process,  legislation will be introduced soon that should recognize that not every drop of water in the ground poses a risk to surface water.

2. Brownfields – there were a number of recommendations which are of some urgency as there is a sunset date approaching for the TIF program at the end of this year and legislation is being drafted now.  I am a bit concerned that rather than streamlining this process, there may be a movement toward adding a layer bureaucracy to the approval process. I hope I’m reading the tea leaves wrong on this one.

3. Vapor Intrusion – after GSI, another impediment to closure is the possibility that contaminants might migrate upward into occupied spaces.  How this one plays out remains to be seen.

As this process continues, we will keep you apprised of legislation introduced, rule changes proposed and policies adopted.  Perhaps the MDEQ no longer views industry as the enemy – we’ll see – that’s a paradigm shift that I suspect will take a lot more than 6 weeks.  With a focus largely on policy changes (which can change with the next administration), I remain doubtful that this was a kumbaya moment.

Can DEQ “reinvent itself”? I’m dubious

3 Feb 2012

Today, the MDEQ “rolled out” its 6 week lightning quick Collaborative Stakeholders Initiative (CSI) to “reinvent”  its remediation and brownfield redevelopment programs.  This is the brainchild of Anne Couture who is the interim head of the MDEQ’s Remediation Division. I blogged about this last year.  It is somewhat related to the Governor’s efforts to reinvent State government state-wide.  That effort was largely embodied in the State’s Office of Regulatory Reform, mentioned at the Governor’s State of the State address. Anne  has convened seven groups of lawyers, consultants and MDEQ staff to work on seven major issues:

Group 1: Groundwater Surface Water Interface;

Group 2: Cleanup Criteria;

Group 3: Vapor Intrusion;

Group 4: Free Product, Source Removal, and Csat;

Group 5: Brownfield Redevelopment;

Group 6: Part 201 Rules and Operational Memoranda; and

Group 7: Due Care Obligations

This is going to be a full-blown effort at “shuttle diplomacy” akin to trying to get Israel and the Palestinians together at Camp David.  Later this month, the MDEQ is going to take all of these people to the west side of the State to work on these issues in semi-seclusion.

The MDEQ has set up a website (here) where the public can track what is going on.  I give Anne credit for trying.  The Staff may be interested in this effort, given that the Legislature seems to have “painted a target” (i.e., threatening cutting off funding and further amendments to Part 201) on the MDEQ. However, the staff seems to have ignored the amendments enacted a bit over a year ago (that I worked on) that had many of the same goals as this CSI program.  Therefore,one really has to wonder if the staff may is coming into this CSI with an open mind.  As I blogged about before, we’ve been down this road before and Michigan (once at the forefront) has lagged in getting closures approved. Even if it succeeds on any of the subjects, the CSI would be a step in the process toward new/revised laws and rules.  I’ll keep  you up to date.