The change allows an individual to file a “no further action” report before completing remedial actions as long as there is documentation that remedial actions will sufficiently address any threat to the public health and environment. Courtesy PM Environmental
A bill modifying the process for obtaining a “no further action” determination from the state regarding environmental cleanup and establishing toxicity values for hazardous substances became law just before the new year.
Former Gov. Rick Snyder signed Senate Bill 1244 on Dec. 28, and the law went into effect Dec. 31.
The bill amends Part 201 of the Natural Resources and Environmental Protection Act (NREPA) and allows an individual to file a “no further action” (NFA) report before completing remedial actions as long as the person has documented the remedial actions will sufficiently address any threat to the public health and environment posed by any environmental contamination.
Prior to the amendment, those found liable for environmental contamination needed to complete all of the remedial action requirements set forth in Part 201 before completing an NFA.
Adam Patton, national manager of site investigation services for Lansing-based environmental consulting firm PM Environmental — which has a Grand Rapids office — said there is little to no risk individuals will shirk their cleanup obligations after obtaining an early NFA. This is because they have to sign “a legal and binding agreement with the state” called a post-closure agreement, which spells out remedial obligations and financial terms and allows the state to follow up with inspections if necessary.
“This is more of an evolution than a revolution,” Patton said.
The amendment’s main benefit, Patton said, will be that it ensures “more certainty and consistency” for commercial real estate developers and regulatory agencies.
“(It) makes it so once submittals are made to the (Michigan Department of Environmental Quality) and approvals are given, if circumstances change in the meantime, the end result can be approved using the original assumptions and work plans,” Patton said.
“Prior to this, you could have had three plans approved by the MDEQ, and if the criteria changed in the interim, you would have to do a lot more to get approval.”
Matt Eugster, a partner and environmental attorney at Varnum, agreed the amendment does not present a lot of major changes but added a word of caution.
“A lot of times, how much effect statutory changes like this have depends on how they are interpreted by the agency,” he said. “Will the DEQ readily approve NFAs when folks aren’t done, or will they find ways to stretch it out so you’re back in the same place?”
SB 1244 also will require the use of Environmental Protection Agency final toxicity values for every hazardous substance, according to PM Environmental. The firm said it will be a “cost-saving step” using “thoroughly vetted toxicity values” instead of requiring the MDEQ to develop the values itself “without peer review or public comment.”
Hazardous substances include any kind of air or groundwater contamination not caused by a leaking underground storage tank, which would be regulated separately. This could include industrial spills, contamination from vapor degreasers and improper waste disposal.
For hazardous substances that do not have an existing EPA toxicity value, the new law prescribes a process for developing toxicity values that use the best relevant experimentally measured data created either by other states, the World Health Organization, Canada or the European Union, according to PM Environmental.
House Bill 4991, which Snyder signed Dec. 28 along with SB 1244, established the Renew Michigan Fund, allocating $69 million annually to environmental cleanup and public health. Sixty-five percent of the $69 million — or about $45 million — is to be used for environmental cleanup funding, 13 percent will go to waste management and 22 percent will go to recycling.
Mike Kulka, co-founder and CEO of PM Environmental, said sometimes developers, real estate firms and the MDEQ need additional funds beyond what is provided in tax increment financing (TIF) subsidies for a given cleanup project, and this new fund will help them apply for more.
“The DEQ said it would be more palatable to have a funding source to add to the amendment,” he said.
He added: “We are doing 70 projects at a time across the state, including in Grand Rapids, where we have 12 people. This gives us a significant (funding) tool.”
Kulka said the amendment will significantly reduce cleanup costs.
“For example, we had a project with a property with a colorful past. There was a chemical company there that was no longer in business and so there was no pocket to go after for cleanup,” he said. “We found there were vapor issues. It was north of a $7-million transaction, and we were going to have to escrow $150,000 for cleanup. But because of some latitude we have now, we probably won’t spend $10,000 of that.”
He added if a company is looking to move to Grand Rapids but there are higher cleanup costs on the property they are considering than a location elsewhere, such as Kalamazoo, a company in the past might move to Kalamazoo to keep costs low. But now, he believes the Renew Michigan Fund and the streamlined NFA process will defray costs, making certain properties more attractive.
Patton agreed, noting that by requiring brownfield sites to use EPA toxicity values, the amendment makes Michigan an attractive option for companies moving in from states that also follow EPA toxicity values for remediation.
“I think it provides a very effective economic development tool to encourage business growth in Michigan while also providing protection to the environment with funding sources we haven’t had in years,” Kulka added.