June 5, 1997, marks the end of the moratorium on the assessment of civil penalties on owners and operators of contaminated properties who have failed to take actions to address known contamination they have caused. These liable parties could face civil penalties of up to $10,000 for each day of violation.
Section 20114 of Part 201 of the Natural Resources and Environmental Protection Act imposes a variety of remediation obligations on property owners and operators who have knowledge that their conduct caused the release of hazardous substances. These obligations are triggered simply by obtaining knowledge about contamination -- no agency involvement is required -- and include:
Determining the nature and extent of the contamination;
Stopping and preventing further releases of hazardous substance;
For releases occurring after June 5, 1995, containing or removing the hazardous substances if technically practical and cost effective;
"Diligently" pursuing "response activities" to achieve the applicable cleanup criteria for the property.
Although Section 20114's remediation requirements actually have been in effect since June 5, 1995, the Michigan legislature provided a two year moratorium on civil penalties in order to give liable parties time to evaluate the environmental condition of their properties and operations and to determine an appropriate course of action for satisfying those requirements. When the moratorium ends this June, parties that have failed to comply with the requirements of Section 20114 may find themselves faced with potentially significant civil penalties. The penalties will date back to the first instance when action was required to be taken in response to knowledge of contamination.
Sources at the Environmental Response Division (ERD) of the Michigan Department of Environmental Quality (MDEQ), which is charged with administering the Part 201 program, have advised us that MDEQ is preparing to bring actions against liable parties promptly after the June 5, 1997 moratorium expiration date. Although ERD is evaluating sites where it believes owners/operators are aware of contamination, indications are that the division will pursue first those with the resources to correct problems. This means larger companies may be particularly at risk. ERD sources have also indicated that the division will not be focusing necessarily on properties with the worst environmental problems, but rather on properties where the MDEQ has notified the owners and/or operators that response actions need to be taken and such actions have not been pursued with diligence.
Since the enactment of Section 20114, many regulated parties have faced uncertainties regarding the scope and extent of their obligations to "diligently pursue response activities." MDEQ issued the only written guidance on the subject in November, 1995, explaining that it expects liable parties to:
Develop a written plan for response activities;
Develop a schedule for implementing response activities which addresses the most significant risks first;
Implement response activities in accordance with that schedule.
MDEQ is currently drafting revisions to the former Act 307 administrative rules that are intended to clarify the obligations of liable parties under Section 20114. The question of the obligations of liable parties who have sold their properties is among the various issues that those rules are expected to address. According to ERD sources, the division considers liable parties that sold their properties after June 5, 1995 to have a continuing obligation to diligently pursue response activities, even after the date of the sale. If this interpretation is incorporated into the new rules, then the issue of continuing obligations under Section 20114 must be addressed carefully in affected property transactions. On the other hand, parties that sold their properties prior to June 5, 1995 remain liable but, according to ERD, have no obligations under Section 20114. The first working draft of these new rules is expected to be released publicly in April or May.
"Although ERD is evaluating sites where it believes owners / operators are aware of contamination, indications are that the division will pursue first those with the resources to correct problems. This means larger companies may be particularly at risk."