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Buying Contaminated Property (in Michigan) Without Acquiring Liability For The Contamination 


The Minimum You Need To Know About BEAs

By Robert A. Hayes, CPG

It's still news to many people that they can buy contaminated property (in Michigan) without being responsible for the contamination. As more people discover this fact, more people are familiarizing themselves with the law that regulates this action: Part 201 of Michigan's 1994 Public Act 451, as amended [Natural Resources and Environmental Protection Act (NREPA)] and its respective rules. In effect, a portion of this law says that if you purchase contaminated property, you will not be liable for existing contamination if existing contaminants can be distinguished from a future release of contaminants. The basis for this distinction is set forth in a document called a Baseline Environmental Assessment (BEA).

You can download dozens of pages of text from the MDEQ/Environmental Response Division Internet Web Site (, which presents the BEA regulations and detailed guidance describing the process, exceptions, and forms for obtaining an exemption from liability for contamination the purchaser did not cause. However, if you are one of those people primarily interested in the "big picture", preferring to leave the details of a property transaction to an environmental consultant or to a time when you "really have to" delve into the law, this article is for you!

Please be aware that the information provided herein is neither legal advice, a substitute for a careful reading of Part 201 and its respective rules, nor meant to address all aspects of a BEA.

Who is Liable for Contamination? 
Part 201 states that all persons (owners or operators) who are responsible for an activity causing a release or threat of release are liable for the resulting contamination. Usually, a new purchaser of contaminated property has no part in causing the contamination; therefore, the purchaser is not liable (provided proper documentation is prepared in a timely manner). However, if required documentation is not prepared and/or in the event of a future release by the "new" purchaser, the "new" contamination cannot be distinguished from "old" contamination, the new owner/operator will be liable for all contamination.

Who is Not Liable for Contamination? 
A person who becomes an owner or operator of contaminated property (on or after June 5, 1995 / March 6, 1996 for Underground Storage Tanks) may obtain an exemption from liability for existing contamination provided an adequate BEA is conducted prior to or within 45 days of taking control of the property and the results are disclosed to the MDEQ and subsequent purchasers.

Additionally, Part 201 (Section 20126) identifies the following persons (among others) as not liable: 

  • Owner/occupant of residential real property if hazardous substance use at the property is consistent with normal residential use 
    • (This provision generally applies to property used and zoned as residential or to "cleared" property where residential dwellings are being constructed; also, it includes the conversion of commercial or industrial property to residential unless demolition would result in release of a hazardous substance); 
  • Lessee who uses property for a retail, office, or commercial purpose
    • (Often, this is a case-by-case evaluation, primarily applicable to situations where there is no use of hazardous substances.); 
  • Owner/operator of property prior to June 5, 1995 (March 6, 1996 for USTs) and not responsible for an activity causing a release or threat of release; 
  • Owner/operator of property for which contamination on site results solely from migration from an off-site property; 
  • A person holding an easement interest in a facility or holding a utility franchise for providing goods or services, or a person that acquires access via easement; 
  • State or local unit of government that holds or acquires interest in a facility for easement, transportation or utility corridor, or as public right-of-way; 
  • State or local unit of government that acquires ownership or control of a facility as a result of involuntary acquisition, such as bankruptcy, tax delinquency, and abandonment.

What is a BEA? 
Part 201 defines a baseline environmental assessment (BEA) as 

"…an evaluation of environmental conditions which exist at a facility at the time of purchase, occupancy, or foreclosure that reasonably defines the existing conditions and circumstance at the facility so that, in the event of a subsequent release, there is a means of distinguishing the new release from existing contamination."

While this definition forms the foundation of a lengthy and detailed documentation process, you should be familiar with at least two major points. First, the property of concern must be a "facility". MDEQ will not review a BEA conducted on a property that is not a facility. "Facility" is defined as

"… any area, place, or property where a hazardous substance in excess of the concentrations …for unrestricted residential use … has been released, deposited, disposed of, or otherwise comes to be located….". In short, the property must contain chemical concentrations above at least one of the criteria established by the MDEQ as acceptable for residential use (even if it is not residential property).

[NOTE: It is important to understand that a facility is not necessarily restricted to the property being transferred. A facility may involve several properties; it is wherever the hazardous substance "comes to be located". Purchasing a property that is a "facility" without conducting an adequate BEA could result in acquiring the liability for contamination not only at the property purchased but also potentially at other properties the contamination has impacted.]

Usually, an environmental consultant evaluates the property's history, past activities, chemical use, and apparent signs of contamination (i.e., performs a Phase I environmental site assessment that conducts all appropriate inquiry into the previous uses of the property, including a search of pertinent government records, consistent with good commercial or customary practice). If visual or historical evidence indicates the likely presence of contaminants, soil and/or groundwater samples should be collected to verify the presence or absence of contaminants (i.e., a Phase II) and to determine if the property is a facility.

The second major point you should know is that if the property is a facility, the anticipated use of hazardous substances must be compared to the contaminants existing at the property. This comparison is the central focus of the BEA. A BEA sets forth the criteria by which any future release of hazardous substances on the property will be discernable from contamination that existed at the time of purchase, occupancy, or foreclosure. Also, it is this relationship between the existing and anticipated future use that form the basis of the three BEA categories.

How is the BEA Category Determined? 
Hazardous substance(s), if any, used by the new owner or operator are compared with the hazardous substance(s) that exist on the property at the time of property transfer, to identify the type of information necessary in a BEA; hence, the following three BEA categories: 

  • Category N No hazardous substance will be used after new ownership or occupancy commences. (Example: past/existing property used as a gas station and the proposed use of the property is a donut shop) 
  • Category D Different hazardous substance(s) will be used by the new owner or operator compared to existing contaminants. (Example: past/existing property used as an auto collision shop with solvent and metal contamination and proposed use is a lawn spraying service that only uses pesticides) 
  • Category S Same hazardous substances will be used by the new owner or operator compared to any of the existing contaminants. (Example: past/existing property used as an auto collision shop with benzene, paint solvent, and metal contamination and the new use will be a furniture manufacturing and repair that will use paint solvents and metals)

Complexity of the BEA, as well as the type and amount of information required vary considerably between the three categories. Generally, Category N requires the least amount of information, and Category S is the most complicated and time consuming.

How Much Does a BEA Cost? 
Costs for a BEA vary considerably, depending on the property's site-specific conditions, the knowledge, experience and creativity of your environmental professional, and the ability of that professional to conduct an adequate BEA - the first time. A purchaser may incur several types of costs. For example: 

  • Cost to conduct the BEA 
  • Potentially, cost to correct deficiencies (if the BEA is not adequate), and/or 
  • Potentially, the costs to use the BEA as a defense to liability, if the position about liability is ever challenged.

Considering only the cost to conduct a BEA, greater complexity and time translate to increased cost (NOTE: Cost ranges presented are for "common ranges" only; actual cost will vary as indicated above. For most people, the relative costs between categories may be more useful than the actual dollar range.)

  • Category N, usually the least cost category, requires the Phase I environmental site assessment information plus identification and concentration of contaminants present, environmental media affected, and potential for other hazardous substances on the property. (Common cost range: $2,500 to $5,000) 
  • Category D, usually closer in cost to Category N than to Category S, requires the Category N information plus identification of location(s) of known contamination and impacted media and a demonstration that hazardous substances proposed for use have not been released at this location(s). (Common cost range: $3,000 to $7,000) 
  • Category S, usually the highest cost category, requires essentially the same information as Category N plus quantification and delineation of contaminants present, projected fate of the contaminants, and investigation to confirm the presence quantity, and likely extent of unknown contaminants. (Common cost range: $7,000 to more than $15,000)

Alternative Approaches to the BEA 
To help minimize the cost of distinguishing existing contamination from future releases, the BEA process offers several alternative approaches: 

  • Collect environmental data that characterize conditions at the property 
  • Employ engineering controls (for spatial separation) 
  • Establish isolation zones (for spatial separation) 
  • Stipulate conditions 
  • Enter into a Covenant Not to Sue
  • Develop other alternatives with MDEQ

What Time Limitations Apply? 

  • The BEA must be "conducted prior to or within 45 days after the earlier of the date of purchase, occupancy, or foreclosure." 
  • Within 6 months after completion of the BEA, a person may petition the MDEQ for a written determination that the BEA meets the requirements for an exemption from liability. (There is a $750 fee for this written determination.) 
  • If a written determination is not requested, the BEA must be disclosed (i.e., submitted to the MDEQ) no later than 8 months after the earliest of the date of purchase, occupancy, or foreclosure. 
  • To maintain liability protection, each subsequent owner or operator also must disclose the results of the BEA to any person who will become an owner or operator.

In Addition to a BEA, What are the Duties of an Owner or Operator of a Facility? 
Section 20107a states that a person who owns or operates property that he or she has knowledge is a facility must do all of the following with respect to the hazardous substances: 

  • Undertake measures to prevent exacerbation of existing contamination. 
  • Exercise due care by undertaking response activity necessary to mitigate unacceptable exposure to hazardous substances, mitigate fire and explosion hazards due to hazardous substances, and allow for the intended use of the property in a manner that protects the public health and safety. 
  • Take reasonable precautions against the reasonably foreseeable acts or omissions of a third party and the consequences that could result form those acts or omissions.

These "due care" obligations begin when the owner or operator takes control of the property. A person may petition the MDEQ for a determination that the proposed use of the property satisfies the person's obligations under this section of Part 201. This petition, referred to as a Section 7a Compliance Analysis, includes: 

  • Detailed characteristics of property use, 
  • Hazardous substance information, 
  • Plan for response activities, if necessary, and 
  • Evaluation and demonstration of compliance with Section 7a obligations This document is often prepared and submitted with the BEA.

When is a BEA Unnecessary? 
Usually, a baseline environmental assessment (BEA) is not necessary for the following circumstances: 

  • Property that is not a facility, 
  • When the new owner/operator is identified as not liable (Section 26 of Part 201), 
  • When the new owner/operator is willing to accept liability for any contamination associated with the property.


  • Determine if the property you are acquiring is a "facility". 
  • If you purchase a facility, obtain an exemption from liability for existing contamination by carefully following the BEA process and adhering to the time constraints. 
  • Be sure there is a process to distinguish between existing contamination and potential future contamination. 
  • If you are evaluating two or more contaminated properties, those properties that are Category N or D will likely require a less costly BEA than a Category S (same contaminants). 
  • Remember, an owner or operator of contaminated property has a legal obligation to exercise due care. 
  • Work with a competent consultant to assist you with the BEA process.

Buyers beware! There are no minimum requirements for a person to be an "environmental professional" to complete a BEA. Also, since most consultants tend to be "loyal" to the person paying them, it is usually prudent for the purchaser/purchaser's attorney to hire the environmental professional. In the same light, more than one purchaser has been unsure about whose interests were being served by a consultant "selected" from a bank's "list of approved consultants" - even though they were hired directly by the purchaser.

Working with a competent, experienced, creative and honest environmental professional can save you and your client considerable time and money by using technical knowledge along with provisions in Part 201 and the BEA process to find the most cost effective way of obtaining an exemption from liability for your site-specific conditions.

Robert A. Hayes, CPG is President of GeoForensics, Inc., a forensic geology and environmental consulting firm located in Williamston, MI. He may be reached at 517.655.8348 or by e-mail:

This article was originally published in Michigan Lawyers Weekly, December 11, 2000.

©2000 Geoforensics