Exceptions to Michigan’s Environmental Liability Protection Program and Michigan’s Due Care Obligations

It is well known to the purchasers/lessors of real estate within Michigan that there is a protocol that was established in 1995 by the former Michigan Department of Environmental Quality (MDEQ), known as the Baseline Environmental Assessment (BEA) that provides environmental liability protection to new owners/occupants of contaminated land.  However, within the regulations of the Michigan Department of Environment, Great Lakes, and Energy (EGLE), there are several situations were a BEA is not required of a new owner/occupant of historically contaminated land (i.e., “facility” under Part 201 and “Property” under Part 213). With these exemptions, the new owner/occupant of such a parcel of land will have the same level of protection as if he/she had prepared and submitted a BEA to the EGLE, as long as the new owner is not responsible for any new releases during its ownership. 

Under Parts 201 and 213 of the Natural Resources and Environmental Protection Act, Public Act 451 of 1994, as amended (NREPA), the following are some of the more common liability exemptions for a perspective owner/occupant with respect to contamination at a facility resulting from a historic release.

The following apply to private parties:

  • The owner or operator of property onto which contamination has migrated unless that person is responsible for an activity causing the release that is the source of the contamination;
  • A person who acquires a facility as a result of the death of the prior owner or operator of the facility, whether by inheritance;
  • A person who owns or operates a facility in which the release or threat of release was caused solely by one or more of the following:

(i) An act of God.

                        (ii) An act of war.

(iii) An act or omission of a third party;

  • A person who owns severed subsurface mineral rights or severed subsurface formations or who leases subsurface mineral rights or formations;
  • A person who holds a license, easement, or lease, or who otherwise occupies or operates property, for the purpose of siting, constructing, operating, or removing a wind energy conversion system or any component of a wind energy conversion system (i.e., a wind farm) [this exemption is unique to Part 201 only and interestingly enough does not apply to solar farm projects]; and,
  • A person who holds an easement interest in a facility or holds a utility franchise to provide service, for the purpose of conveying or providing goods or services, including, but not limited to, utilities, sewers, roads, railways, and pipelines; or a person that acquires access through an easement.

The following exemptions apply to governmental units only:

  • The state or a local unit of government that acquired ownership or control of a facility involuntarily through bankruptcy, tax delinquency, abandonment, or other circumstances in which the government involuntarily acquires title or control by virtue of its governmental function or as provided in this part; a local unit of government to which ownership or control of a facility is transferred by the state or by another local unit of government that is not liable under this subsection or the state; or a local unit of government that acquired ownership or control of a facility by seizure, receivership, or forfeiture pursuant to the operation of law or by court order.
  • A state or local unit of government that holds or acquires an easement interest in a facility, or otherwise holds or acquires an interest in a facility for a transportation or utility corridor, including sewers, pipes, and pipelines, or public right of way.

Along with exemptions from environmental liability for a new owner/occupant are exemptions from Michigan’s Due Care Obligations, which are also included in both Parts 201 and 213.  In general, the following are the Due Care Obligations, although the wording varies from Part 201 to Part 213:

  • Prevent anyone using the property from unacceptable exposures to the existing contamination.
  • Prevent anyone from taking actions that cause exacerbation of the existing contamination, such as migration from your property.
  • Take reasonable precautions against the foreseeable acts of third parties, such as contractors, utility workers, etc.
  • Cooperate with and provide access to the person responsible for cleaning up the existing contamination and don’t interfere with their actions.
  • Be aware of and comply with any land or resource use restrictions placed on the property due to the existing contamination.

However, Sections 201 and 213 of the NREPA allow relief from the first three Due Care Obligations listed above for persons onto which contamination has migrated unless that person is responsible for an activity causing the release that is the source of the contamination.  This also applies person who holds a utility easement and a person who owns severed subsurface mineral rights or severed subsurface formations or who leases subsurface mineral rights or formations.

So by conducting thorough environmental due diligence, especially in the case of proving that the historic impacts on a parcel are due to offsite migration, a new owner may be able to obtain environmental liability protection, as well as reduce the more onerous of the Due Care Obligations.

To learn more about Michigan’s environmental protection laws, click here to register for the webinar on August 19.

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