ENVIRONMENTAL DUE DILIGENCE FOR REAL ESTATE DEVELOPMENT IN MICHIGAN

With recent changes in legislation, both the environmental assessment and brownfield incentives programs in Michigan have new options and requirements. Assessments are more focused on soil gas and vapor intrusion from historical impacts, and although the Baseline Environmental Assessment is still the key document for state liability protection, there is more emphasis on Due Care Plans and No Further Action (NFA) Letters, and on the associated maintenance and control requirements. Incentives are still available, but are now focusing on traditional downtowns and commercial corridors and on projects that have clear financing gaps.

What all of this means is that you have more options when choosing site closure and you will need to consider these options earlier in the development process. Accordingly, the following are some key points by specific asset classes for Real Estate developers to consider.

Downtown Mixed Use
$12.5MM in Clean Michigan Initiative funds have been shifted from the DEQ loan

program to the DEQ grant program, and the Community Revitalization Program is focusing on specific types of urban Redevelopment. There is now greater flexibility in the management and relocation of contaminated soil on site which minimizes transportation and disposal costs.

Commercial
The management of the Above/Underground Storage Tank program has been shifted from the DEQ to the Dept. of Licensing and Regulatory Affairs (LARA) and is closely following the provisions of Part 201 with respect to corrective action activities for venting groundwater.

Liability exemptions continue for lessees that do not cause impacts, but other changes have occurred. Seven chemicals, including Perchlorethylene (PERC), commonly used by dry cleaners, have revised criteria for soil and/or groundwater. Of these seven, two have less restrictive criteria while the remaining five have slightly to significantly more restrictive criteria. The PERC criteria changes were all for the volatilization

pathways which is indicative of the DEQs focus on this issue for due care. Therefore, properties that might not have had a soil vapor concern according to the previous criteria might now exceed the new more restrictive criteria and therefore require more investigation, remediation or the installation of engineering controls. This requirement is expected to undergo additional modifications in the next year or two.

Industrial
Seven chemicals, Including Trichlorethylene (TCE), a common degreasing agent, have revised criteria for soil and/or groundwater. Two are less restrictive criteria but the remaining five have slightly to significantly more restrictive criteria. The TCE criteria changes were all for the volatilization pathways which is indicative of the DEQs focus on this issue for due care Therefore, properties that might previously not have had a soil vapor concern according to the previous criteria might now exceed the new more restrictive criteria and therefore require more investigation, remediation or the installation of engineering controls. This requirement is expected to undergo additional modifications in the next year or two.

Michigan Occupational Health and Safety Administration (MIOSHA) standards, often less restrictive than DEQ, can now be used to evaluate and close manufacturing facilities, where volatilization to indoor air is the only criteria. This change should prove to be more helpful in closing manufacturing facilities with potential indoor air issues.

Senior and Affordable Housing
Although not required by the regulations, an NFA Letter may be necessary to satisfy funding agencies. Alternatively, a Certificate of Completion can be requested from DEQ fol

lowing the completion of any response activity when using controls to achieve closure, but it is still not yet clear whether MSHDA will accept this strategy. HUD is now requiring Radon testing in nine counties in Southern Lower Michigan known as Zone 1 (high risk) and in 30 counties in Mid and Lower Michigan, Monroe County and the Upper Peninsula known as Zone 2 (medium risk) for all environmental reports submitted to HUD after June 4, 2013 (regardless of the date of the report).

Residential Condominiums
There is a new liability exemption for residential condominium owners as long as hazardous substance use within the unit is consistent with residential use.

Local Units of Government
The due care exemption for public use property has been eliminated, resulting in the need for Due Care Plans and operations and maintenance of due care controls. Also, Municipalities no longer have to pledge their full faith and credit for Brownfield Loans.

These changes are largely the result of a collaborative effort between regulators, the regulated community, and professionals. ASTI views these changes as logical and timely and moving in a direction that will streamline the maze of regulatory requirements and shorten the Real Estate development process.

Contact George Kandler today at
800/395-2784 or gkandler@asti-env.com to discuss your next project.

Portfolio is intended to provide information concerning current environmental issues, and is not intended to provide technical or legal advice regarding any particular situation. Specific questions should be addressed to your environmental professional. ©2013 by ASTI