[CPEO-BIF] A view from Michigan

["Robert Hersh" <b_hersh@verizon.net>]

Responding to Larry Schnapf recent posting about how Michigan deals with
the due care issue ,  Steve Luzkow has sent CPEO's brownfields listserve
the following short article.  Please post comments to CPEO's BF
listserve (brownfields@list.cpeo.org)

Thanks
Bob Hersh


December, 2004

Small Business Liability Relief and Brownfields Revitalization Act: AKA
The No Liability Relief Ever Act

By

Steve Luzkow
Environmental Risk Manager
Standard Federal Bank

For those of you who are practicing environmental consultants who
conduct due diligence for purchasers at contaminated properties, and
particularly those of you interested in Brownfield Redevelopment, it
should be no surprise that the "innocent purchaser defense" is
improbable under CERCLA and has been since initial passage in 1980.
CERCLA placed strict joint and several liability on property owners,
meaning that if you owned it, own it, or sold it, the contamination
cleanup liabilities never go away.  This liability scheme was successful
for responsible party recoveries for a few select number of sites, but
had the undesired effect of imposing financial and legal burdens on
"innocent purchasers" to the degree where an "Act of Congress" was
necessary to address, in part, the liability scheme and add inducements
for municipalities to invest in, and for developers to purchase,
Brownfield properties.  This Act of Congress in January 2002 is called
the Small Business Liability Relief and Brownfields Revitalization Act.


In reality, the Act not only fails to provide adequate relief, it
dispels any notion that an "innocent purchaser defense" can be applied.
It is fortified and layered with additional technical hurdles, including
the new "All Appropriate Inquiry" (AAI) standards (currently in draft
form) for establishing a "bona fide purchaser" and "contiguous property
owner" defense.    Why the new revitalization effort won't work is that
it simply does not provide substantial relief for cleanup and, in fact,
is more onerous than most state risk-based cleanup programs.    

Let's examine the most "damaging" requirements of the Act in comparison
to Michigan's requirements for an exemption of liability.  First,
Michigan affords a purchaser an exemption of liability if, through a
subsurface investigation, contamination is discovered and a Baseline
Environmental Assessment (BEA) is prepared.  Fundamental to Michigan's
program, in very general terms, is the limited burden on a purchaser to
prevent unacceptable exposure on the property for a given land use.
This is a sharp contrast to the Draft Rules'1 prescribed innocent
purchaser defense that, in part, the landowner must "Exercise
appropriate care by taking reasonable steps to stop continuing releases,
prevent any threatened future release, and prevent or limit human,
environmental , or natural resources exposure to any previously released
hazardous substance."  Second, an innocent purchaser is exempt for
cleanup obligation under Act 451, Part 20126 if they had ".undertaken
all appropriate inquiry into the previous ownership and uses of the
property."  The Draft Rules  states ".an inability to identify a release
or threatened release during the conduct of all appropriate inquiries
does not negate the landowners responsibilities.to take reasonable steps
to stop a release, prevent a threatened release, and prevent exposure to
a release or threatened release." In brief, this means a purchaser of a
clean site will always have a risk of certain remedial obligations.

The responsibility of an innocent purchaser to stop a release and
prevent exposure is no different then the risk-based closures required
for responsible parties in Michigan and other progressive states.  In
other words, under the rules, if a purchaser complies with existing and
proposed due diligence requirements, they still have obligations to
conduct an on-site and off-site risk-based cleanup if contamination
exists on the property, going well beyond the prevention of exposure to
site occupants.  I suppose one can interpret that the limited
responsibility to stop a release and preventing exposure compared to
defaulting to Federal risk-based cleanup is a benefit.    

Are there really knowledgeable conspirators who feel, given the other
Brownfield financial incentives, that the amendments, layered with new
imposing due diligence requirements, will encourage Brownfield
development?  How did this happen?  How did rational individuals
knowingly conspire to restate and reaffirm a failed piece of legislation
as an innovative means to reform the strict regulatory approach of
CERCLA, and who were these individuals or groups? The Act was supported
by republicans and democrats, the real estate industry, environmental
groups, and was touted as revolutionary because it represents the first
CERCLA Amendments that change the liability scheme.  At best we can only
hope that they were misinformed.  To add insult to injury, the Draft
Rules   states benefits that ".include increased numbers of cleanups,
reduced use of Greenfields, potential increases in property values."
EPA further states   that it ".is confident that the new liability
protections.if they comply with the all appropriate inquiries
provisions, will result in increased benefits."  

If there is any encouraging trend in Brownfield development, it will
stem from the initiatives of States, who like Michigan, develop programs
that truly promote Brownfield Development and can selectively choose to
take advantage of the Federal financial incentives   As far as liability
relief.....  

           
Any thoughts on this???


Steve Luzkow
Environmental Risk Manager
Mail Code M0900-560
Standard Federal Bank / ABN AMRO
Phone: 248.822.5739
Fax:      248.637.2686 


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