Federal & State Protections
When purchasing contaminated property, new owners and operators should consider developing and maintaining liability protection for existing contamination. Federal liability protection may be established by conducting All Appropriate Inquiries (AAI) to demonstrate an innocent landowner, contiguous property owner, or bona fide prospective purchaser defense as described in the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).
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At the state level, liability protection may be established by completing appropriate documentation that is submitted to state agencies for review and record keeping. In Michigan, an entity may buy, lease, or foreclose on a contaminated parcel of real estate and be protected from liability for cleanup of existing contamination by completing a Baseline Environmental Assessment (BEA) and disclosing the BEA to the Michigan Department of Environment, Great Lakes and Energy (EGLE) as well as subsequent potential purchaser(s)/title holder(s) of the property.
Environmental Due Diligence Process
The environmental due diligence process can help protect from potential liability associated with contamination at a target property by (1) determining if RECs are present (i.e. Phase I ESA), (2) identifying if impacts (contamination) are present above cleanup standards (i.e. Phase II ESA), (3) providing liability protection for existing contamination above those cleanup standards (e.g. AAI – Federal, BEA – Michigan), and (4) evaluating impacts, intended uses and exposure pathways to develop a plan to maintain liability protection.
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Mitten staff are trained in liability protection strategies which can help establish the appropriate approach for your property acquisition.