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Michigan Environmental Updates

May 24, 2012
Environmental Alert

Michigan Revises LUST Cleanup Law

Michigan Gov. Rick Snyder has signed a package of six bills designed to provide greater flexibility to persons conducting cleanups of leaking underground storage tank (LUST) sites. (Public Acts 108-113 of 2012 (SB0528-SB0533)). The amendments to Part 213 of the Natural Resources and Environmental Protection Act (NREPA), MCL 324.21301 et seq., are intended to spur more cleanups and closures of LUST sites in the state and are effective as of May 1, 2012.

Among other things, the amendments allow a site to be considered "closed" if it meets risk-based screening levels or site-specific target levels appropriate to the property use and conditions. An owner or operator is still required to submit a final assessment and closure report to the Michigan Department of Environmental Quality (MDEQ), but the MDEQ report audit process has been significantly revised. MDEQ now has 90 days to decide whether to audit the report, and it must inform the owner or operator of its intention to audit the report within 7 days after the determination. If MDEQ does not inform the owner or operator of its intention to audit the report within these time limits, MDEQ may not audit the report and it is considered approved by operation of law. If MDEQ decides to audit a report, it must complete its audit within 180 days after the report's submission, and must inform the owner or operator in writing of the results of the audit within 14 days of the completion of the audit. A person whose report is considered approved because MDEQ did not timely perform an audit may request written confirmation from MDEQ that the report is considered approved, and MDEQ must issue such confirmation within 14 days of the request.

MDEQ also is no longer authorized to audit other aspects of a site's cleanup plan – only the final report.

Among other things, the amendments also:

  • Impose on LUST site owners or operators duties similar to the "due care" responsibilities of Part 201 of NREPA 
  • Forbid transfers of an interest in a LUST site without notice to the transferee that the property is a LUST site and describing the general nature and extent of the release 
  • Expressly include in Part 213 the "innocent purchaser" and "baseline environmental assessment" processes, and numerous other concepts, already provided in Part 201 of NREPA 
  • Enable persons to submit scientific or technical disputes with MDEQ to the response activity review panel created pursuant to Part 201
  • Prohibit MDEQ from promulgating any new regulations to implement Part 213

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Developer Who Removed Building Slab May Be Liable for Allowing Previously Covered Contamination to Spread

A landowner whose removal of a concrete slab allegedly allowed rainwater to spread contamination caused by a prior owner may be liable for cleanup costs, a federal court in Michigan has held.

Johnson Controls, Inc. (JCI) previously operated a facility on a 22-acre site in Saline, Michigan. In 1993, JCI and the U.S. Environmental Protection Agency entered into an administrative order on consent (AOC) to perform cleanup actions on the site. In 2006, Saline River Properties, LLC (SRP) acquired part of the site and, as part of a plan to construct condominiums, demolished and perforated portions of a building slab that JCI had left on the site.

SRP sued JCI for failure to comply with the AOC. JCI countersued, alleging that SRP's destruction of the building slab allowed rainwater to infiltrate previously-covered contaminated soils, spreading contamination to other locations and increasing the risk of exposure to persons on the site. JCI argued that the slab removal caused and contributed to the migration of hazardous substances, which equated to a release of the hazardous substances into the environment and triggered liability under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). SRP sought dismissal of the counterclaim on the basis that it could not be liable under CERCLA because it did not cause a release of hazardous substances at the site.

The court ruled in favor of JCI. It held that JCI's claim that SRP had taken "the affirmative action of breaking up the concrete slab, which caused hazardous substances beneath that barrier to migrate into additional soils and ground water," if proven, was sufficient to constitute a "release" and, hence, liability, under CERCLA.

The court also held that SRP had not demonstrated that it qualified for either the "bona fide prospective purchaser" or "innocent landowner" defenses under CERCLA because the break-up of the concrete and its alleged impacts meant that SRP may have impeded JCI's performance of response action and may not have exercised proper due care. It also held that SRP could be liable under Part 201 of Michigan's Natural Resources and Environmental Protection Act for exacerbation of the contamination notwithstanding SRP's earlier performance of a baseline environmental assessment on the property.

Saline River Properties v. Johnson Controls, Inc. , No. 10-10507 (E.D. Mich. 2011).

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Township Held Liable for Raw Sewage Discharges from Private Residences Within Its Borders

The Michigan Supreme Court has held that a municipality can be held responsible for raw sewage discharged into state waters by private citizens within the township's borders.

The case involved numerous failing privately-owned septic systems along the Lake Huron shore in Worth Township. The systems sent raw sewage into the lake and several of its tributaries. In 2004, the Michigan Department of Environmental Quality (MDEQ) and the Township entered into an agreement wherein the Township agreed to construct a municipal sewerage system by June 2008. However, the Township did not construct the system, citing a lack of funds. As a result, MDEQ filed a lawsuit seeking a court order requiring the Township to prevent the sewage discharges.

The Township moved for summary disposition, arguing that neither the courts nor MDEQ has the authority to hold a municipality liable for the discharge of raw sewage from private residences into state waters. However, MDEQ cited a provision of Part 31 of the Natural Resources and Environmental Protection Act (Part 31) that states that the "discharge of any raw sewage …, directly or indirectly, into any of the waters of the state shall be considered prima facie evidence of a violation of this part by the municipality in which the discharge originated unless the discharge is permitted by an order or rule of the [MDEQ]." MCL 324.3109(2).

The Michigan Supreme Court agreed with MDEQ that this provision demonstrated that the Legislature intended to create a presumption that a municipality is in violation of Part 31 when a discharge of raw sewage originates within its boundaries, regardless of who actually caused the discharge. The presumption may be rebutted by a showing that the raw sewage does not cause or risk causing an injury to the public health, safety or welfare, or other interests listed in Part 31. In this case, the presumption could not be rebutted because MDEQ had shown that the raw sewage discharges were causing such an injury.

Accordingly, the Court upheld the trial court's order requiring the Township to take "necessary measures" to stop the raw sewage discharges emanating from private septic systems within its borders. Although the Court's ruling did not go so far as to require the Township to construct a public sewerage system, it noted that "it appears that the parties agree that the most practical and comprehensive method to restrain the discharge is for a sewerage system to be constructed."

DEQ v Worth Township, No. 141810 (Mich. 2012)

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Consultant Not Liable for "Wetland Review" That Did Not Identify Significant Wetlands

The Michigan Court of Appeals has held that a consultant whose "wetland review" on a parcel of land did not identify wetlands was not liable for breach of contract or negligence even though a later "wetland delineation" determined that the property was more than 50% regulated wetlands.

In 2004, Debra and James Weck (Weck) planned to purchase land in the area of a proposed casino site. They retained Villa Environmental Consultants, Inc. (Villa) to perform a Phase I environmental site assessment (ESA). In addition to the standard Phase I ESA, Weck asked Villa to perform a "Wetland Review Please." The specific scope of the "wetland review" was not otherwise spelled out.

Villa's Phase I ESA report advised, in part, that Blood Run Creek "intercepts" the property and that "[t]he wetland inventory map was reviewed on the [Michigan Department of Environmental Quality's] website and [it] indicated potential wetlands near Blood Run Creek that flows through the site. A wetland by definition only has to be wet at the surface 5-7 days during the growing season. A wetland delineation should be completed if any filling of a water feature or depression occurs."

An LLC (apparently set up by Weck) (Owner) then purchased the property. Owner later entered into a letter of intent to sell the property for more than $2 million. The prospective buyer requested Owner to obtain a wetland delineation to determine the extent of any wetlands on the property. The wetland delineation identified 15.2 acres of regulated wetlands on the 29-acre site. The prospective buyer terminated the letter of intent and withdrew its offer to purchase the property.

Owner sued Villa alleging, among other things, breach of contract for failing to properly conduct the contracted-for "wetland review." At trial, both Villa's and Owner's experts agreed that, in the consulting industry, the term "wetland review" means a review of existing documentation to determine whether records indicate the potential for wetlands on the site, and that it is not an investigation to determine whether wetlands are actually present on the site. The court noted that the Phase I ESA report included such a review, noted the potential for wetlands, and recommended a wetland delineation in the event of development. Accordingly, the trial court held for Villa, finding that the Owner contracted for, and received, a "wetland review" and there was no breach of contract.

On appeal, Owner argued that the trial court should have considered that Owner's subjective intent in requesting a "wetland review" was for Villa to determine whether wetlands were present on the site. The appeals court disagreed and affirmed the trial court's decision. The court held that "parties are presumed to understand the plain language of the contracts they sign." Because "[t]here is nothing in the contract to suggest that the parties' agreement was anything other than for a 'wetland review' as defined by [both sides' experts]," and because "there is no dispute that defendant performed such a 'wetland review,'" Villa was not liable for breach of contract or negligence.

Just US Four, LLC v. Villa Envt'l Consultants, No. 300215 (Mich. App. 2011)

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