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Comprehensive Part 201 and Part 213 Amendments Signed Into Law

January 3, 2013

An 18 month environmental reform process yielded the Legislature’s late December 2012 enactment of Public Act 446 of 2012 (Act 446). The new law, which was approved as Senate Bill 1328 and took effect on December 27, 2012, implements many of the recommendations of Governor Snyder’s Environmental Advisory Rules Committee (EARC) and the Michigan Department of Environmental Quality’s (MDEQ) Collaborative Stakeholders Initiative, two innovative groups, which were organized to evaluate and recommend meaningful reform of Michigan environmental remediation laws.

As previously reported in Honigman Environmental Alert, April 9, 2012 and Honigman Environmental Alert, April 24, 2012, the Environmental Advisory Rules Committee was organized by the Michigan Office of Regulatory Reinvention pursuant to Governor Snyder’s executive order. It met for the last six months of 2011 and issued a comprehensive set of recommended revisions to the Part 201 program (laws, rules and policies) and other laws and programs administered by the MDEQ.

The Collaborative Stakeholders Initiative was convened in November 2011 by the Michigan Department of Environmental Quality (MDEQ) to engage stakeholders and regulators in an intense and condensed evaluation of Michigan’s Part 201 clean-up and redevelopment program and the related Brownfield Redevelopment Financing Act (Act 381), which has been used in connection with numerous Part 201 remediation and due care projects.

Honigman partner Richard A. Barr is one of only two private law firm attorneys appointed to both the Environmental Advisory Rules Committee and the Collaborative Stakeholders Initiative. He participated throughout the 18 month process, initiating several important changes included in Act 446.

Highlights of Act 446 include:

Delay in New Part 201 Closure Criteria: At the MDEQ’s request, the December 2012 deadline for the MDEQ’s revision of the Part 201 closure criteria was extended to December 31, 2013. The new law adds a requirement that the new criteria take into account “best practices from other states, reasonable and realistic conditions, and sound science.”

Background Concentrations: The definition of “background concentration” is amended to clarify that a person may use various approved published sources, or a site-specific assessment, to demonstrate background concentrations used to satisfy Part 201 criteria.

Indoor Air: The EARC recommended that the Part 201 rules that allow Michigan Occupational Safety and Health Administration (MIOSHA) and federal workplace exposure standards to be used in lieu of Part 201 criteria for worker exposure to inhalation risks from chemicals used in the workplace be expanded to include chemicals not used in the workplace. Act 446 partially implements the EARC recommendation to allow the use of MIOSHA based standards at facilities covered by specific manufacturing based classifications and which comply with worker exposure and hazardous communication program requirements.

Relocation of Contaminated Soil: More flexible provisions have been added, which should provide more opportunities for contaminated soil to be reused on-site instead of having to be removed to an off-site landfill. The revised law eliminates the requirement to obtain prior MDEQ approval in most cases, except if: (i) the facility is the subject of an MDEQ-approved remedial action plan or no further action report including soil as an affected medium; and (ii) 500 cubic yards or more of contaminated soil are being relocated on-site. The revised law instead requires that notices be provided to the MDEQ within 14 days after the off-site relocation of contaminated soils (if not previously approved by the MDEQ) and for on-site relocations of at least 500 cubic yards of more of contaminated soil at a facility where a remedial action plan or No Further Action Report had been approved by the MDEQ. In all other cases, Part 201 now requires the facility owner to make certain additional disclosures under MCL 324.20116 if and when the owner seeks to transfer an interest in the property.

Part 201 now also includes the following:

  • An owner or operator relocating soil on-site is subject to the “due care” requirements under MCL 324.20107a (e.g., prevent exacerbation, mitigate exposures), even if the owner/operator would not otherwise be subject to those requirements. 
  • The term “contaminated soil” (and, hence, the scope of MCL 324.20120c) is defined to include only soil that exceeds boththe background concentration and the categorical/site-specific cleanup criteria for a particular hazardous substance.  
  • “Uncontaminated soil,” meaning soil that is (i) not contaminated due to human activity or (ii) contaminated as a result of human activity but not above any categorical or site-specific cleanup criteria, is now exempt from the soil relocation requirements.  
  • “Uncontaminated soil” mixed with a Part 115 beneficial use by-product is also exempt.  
  • Soil that is relocated for treatment or disposal in conformance with applicable laws and regulations is now fully exempt. Previously, notice to the MDEQ was required.
  • Contaminated soil that is relocated under MCL 324.20120c is now specifically excluded from the definition of “solid waste” under Part 115 of the Natural Resources and Environmental Protection Act (NREPA).

Reportable Quantities: Part 201 now incorporates the July 1, 2012 edition of the Code of Federal Regulations (CFR) to determine “reportable quantities” that trigger certain release reporting requirements under Part 201, instead of the 1989 CFR edition.

Due Care Compliance: The 2010 Part 201 amendments included a new process for MDEQ approval of “response activity plans,” which the MDEQ agreed includes due care plans. However, the MDEQ also informally took the position that it was not authorized to grant these approvals for due care “plans” if the plans did not require future actions to be taken by the property owner or operator and instead only reported on due care compliance based upon existing conditions. Act 446 addresses this by adding a new section to permit the submittal to the MDEQ of documentation of due care compliance for approval within 45 business days of submission. There are no penalties or deemed approvals of the report if the MDEQ does not reply by this deadline.

No Further Action Reports: No Further Action reports and MDEQ approval letters are now available for portions or all of the facility, some or all hazardous substances, some or all environmental media, and can be limited to certain releases.

Permanent Markers: Permanent markers were generally not required for facilities where the only applicable land use restriction is to protect surface barriers composed of asphalt, concrete or landscaping materials, unless the hazardous substance(s) exceeds: (i) a criterion based on acute toxic effects, reactivity, corrosivity, ignitability, explosivity or flammability; or (ii) 10 times the direct contact cleanup criterion. Public Act 446 eliminates the latter exception.

Certificate of Completion: Part 201 now includes a process for the optional request and issuance of a certificate of completion following the completion of any response activity similar to the no further action letter procedures added in 2010, except that the certificate may be issued without having to achieve closure criteria and a decision is to be made by the MDEQ within 90 days if the response activity was undertaken pursuant to an MDEQ approved remedial action plan; otherwise the MDEQ is to respond within 150 days.

Residential Condo Exemption: The Part 201 liability exemption for owners of residential real property was expanded to include a person who owns or operates a residential condominium unit so long as hazardous substance use within the condominium unit is consistent with residential use or if there is contamination of the general common element, limited common element or common area.

Rulemaking Authority: Most of the Part 201 rules have been rescinded, or will be rescinded as of December 31, 2013. The MDEQ is expected to promulgate replacement rules only as deemed essential to the operation on the Part 201 program and to rely much more upon less formal regulatory tools.

Part 213 Amendments: Several revisions to Part 213 were included to incorporate Part 201 revisions into the leaking underground storage tank (LUST) program, including to permit baseline environmental assessments and due care plans to be prepared for properties subject to Part 213 due to the past or current presence of a LUST, and to permit the application of Part 201’s venting groundwater provisions at Part 213 sites.

Grant and Loan Funding: The amount allocated for Clean Michigan Initiative local cleanup grants has been increased from $37.5 million to $50 million, and the amount allocated for loans has been reduced from $37.5 million to $25 million. The requirement for a governmental unit to pledge its full faith and credit to obtain a loan has been eliminated.

PCB Rules: The PCB regulations of Part 147 have been repealed. PCBs will continue to be regulated under federal law and other Michigan laws, including Part 201.

We expect that 2013 will be an important year of continued transition as the MDEQ continues its reinvention and now begins to implement the comprehensive revisions of Part 201 and Part 213. Act 446 may provide opportunities to obtain MDEQ closure approval and other means of finality for environmental conditions of property that often has been difficult to obtain in recent years.

Please note that effective January 6, 2013, the MDEQ Remediation and Redevelopment Development Division (RRD) will be led by Bob Wagner, who as a Remediation and Redevelopment Division district supervisor was very involved in the recent reforms.

Please contact any member of Honigman's Environmental Practice Group if you have any questions or would like to discuss how these changes may affect you and provide you opportunities in the new year.