The Building Changed Hands.
The Contamination Didn't.
At a Glance
- Purchasing a contaminated property doesn't necessarily mean inheriting liability for existing contamination.
- Michigan's Baseline Environmental Assessment (BEA) process can provide qualifying purchasers and operators with important liability protection.
- Liability protection doesn't eliminate applicable due care obligations. Owners may still need to manage exposure risks and prevent contamination from spreading.
- Changes in property use, construction, or redevelopment can introduce environmental considerations that weren't present at the time of purchase.
- The goal is simple: understand the property's environmental conditions and have a plan for managing them beyond closing.
Property transactions tend to create a sense of closure.
The environmental assessments are complete. The attorneys have reviewed the documents. Financing is secured. The purchase agreement is signed, and the property has a new owner.
Everyone is ready to move forward.
But there’s an important distinction that can get lost in that process.
The building changed hands. The contamination didn’t. Whatever was in the soil, groundwater, or beneath the building before the transaction is still there afterward.
And while the new owner may have protection from liability for that existing contamination, there may still be responsibilities associated with how the property is used, maintained, and redeveloped.
That’s why environmental due diligence shouldn’t end at closing. It should inform what happens next.
Liability Protection Is Not the Same as Having No Responsibility
Michigan has a regulatory framework that allows contaminated properties to return to productive use without automatically making new owners responsible for cleaning up contamination they didn’t cause.
Under Part 201 of Michigan’s Natural Resources and Environmental Protection Act, qualifying purchasers and operators can obtain liability protection for existing contamination through the Baseline Environmental Assessment (BEA) process. Similar protections are available under Part 213 for certain leaking underground storage tank sites. A properly conducted and disclosed BEA can provide significant protection, provided the purchaser or operator meets the applicable requirements.
That’s an important part of redevelopment.
Without mechanisms like the BEA, the prospect of assuming substantial cleanup liability could discourage investment in former industrial properties, underused commercial buildings, and other sites that communities need to put back into service.
But there’s a distinction between liability for contamination and responsibility for managing a contaminated property.
A BEA does not automatically eliminate the owner’s obligations under Michigan’s due care requirements. Those requirements address how existing contamination is managed so the property can be used safely.
Depending on the circumstances, owners and operators may need to prevent unacceptable exposure, take precautions against the spread of contamination, and comply with applicable land-use restrictions.
Certain exemptions apply, and the specific obligations depend on the property and its conditions.
The important point is that liability protection and due care address different responsibilities.
A purchaser may be protected from having to clean up contamination that was already present while still being responsible for taking appropriate measures to manage it.
A Baseline Environmental Assessment Is More Than a Transaction Document
Environmental investigations are sometimes treated as administrative requirements.
»Complete the assessment.
»Obtain the report.
»Provide it to the lender and attorneys.
»Close the transaction.
»Move on.
That overlooks the value of the information gathered during the investigation. A BEA is an important tool for establishing environmental conditions and supporting applicable liability protection. But the information collected during environmental due diligence can also inform decisions about how the property will be used.
» What contamination is present?
» Where has it been identified?
» What potential exposure pathways need to be considered?
» Are there restrictions on the property’s use?
» Could future construction or maintenance disturb contaminated areas?
Those questions don’t become less relevant after closing. In many cases, they become more important. The BEA itself isn’t intended to serve as a comprehensive environmental management plan for every future activity on the property. But the findings from the environmental investigation should help determine what additional evaluations, controls, or planning may be necessary.
The purpose isn’t simply to establish what the purchaser may or may not be liable for.
It’s also to understand what the property’s conditions mean for the work ahead.
The Risk Changes When the Property Changes
Consider a former industrial property being prepared for redevelopment. The new owner has completed environmental due diligence, obtained applicable liability protection, and developed a plan to reuse the existing building. The property has known soil contamination, but the current site conditions and intended use have been evaluated.
Then the redevelopment plan changes.
The owner decides to expand the parking lot. A new tenant needs additional utility connections. Part of the building will be demolished to accommodate a different use.
Now the project involves activities that weren’t necessarily contemplated during the original acquisition.
An excavation may disturb contaminated soil. Utility work may create a pathway for contamination to move.
Removing an existing paved surface may introduce an exposure pathway that wasn’t previously present.
The contamination itself may not have changed. The activities taking place around it have. And that can change what the project team needs to do to manage the property safely.
This is where environmental planning needs to be part of the larger redevelopment conversation.
Before the scope is finalized, someone should be asking whether the proposed work affects existing environmental conditions.
»Will additional investigation be necessary?
»Are there contaminated materials that need to be managed?
»Could the work affect existing engineering controls or property-use restrictions?
»Are additional precautions required to protect workers, occupants, or neighboring properties?
These questions are considerably easier to address during planning than after construction has already started.
Due Care Is an Ongoing Responsibility
Michigan’s due care requirements recognize that contaminated property can be used productively without necessarily requiring every new owner to clean up all existing contamination. But that use must be managed appropriately.
For owners and operators subject to due care requirements, the necessary actions depend on the nature of the contamination, the property’s current conditions, and how the property is being used.
Those actions may involve maintaining barriers that prevent exposure to contaminated soil, evaluating vapor intrusion, restricting groundwater use, or establishing procedures for activities that could disturb contaminated areas.
They can also involve notification requirements and reasonable precautions concerning the foreseeable activities of contractors, utility workers, and other third parties.
Not every contaminated property requires the same measures.
And the presence of contamination does not automatically mean that a building cannot be occupied or a site cannot be redeveloped. The question is whether the property’s environmental conditions have been adequately evaluated for its intended use.
That requires an understanding of both the contamination and the activities taking place around it.
It also requires recognizing when circumstances change. A due care approach developed for one property use may need to be revisited when the owner introduces new construction, changes occupancy, or modifies the site.
Environmental planning needs to account for those decisions.
Not just the conditions that existed when the property was purchased.
The Contractor Needs to Know What the Owner Knows
One of the most important parts of managing environmental risk is making sure the right information reaches the people doing the work.
» A property owner may have an extensive environmental file.
» The construction manager may have a schedule and a defined scope.
» The excavation contractor may have drawings showing exactly where the new utility line needs to go.
» But does the contractor know that the excavation area contains contaminated soil?
» Has anyone considered how the excavated material will be handled?
» Are there existing controls or restrictions that affect the proposed work?
» Have the appropriate precautions been incorporated into the project?
A contractor working from a construction drawing may not have the information contained in an environmental assessment completed several years earlier. And if that information never makes it into the planning process, the project may encounter problems that could have been anticipated.
» Work may need to stop while additional evaluation takes place.
» Contaminated soil may require different handling or disposal.
The project may need additional controls, revised work procedures, or changes to the construction schedule.
In some circumstances, disturbing contaminated materials without appropriate precautions can create exposure concerns or cause existing contamination to spread.
The environmental documentation may have been available all along. But documentation only helps when the people making decisions understand what it means.
That’s why environmental information needs to be incorporated into the project before work begins.
The Best Time to Address Environmental Risk Is When You Still Have Options
Contaminated properties represent an important redevelopment opportunity.
Former industrial sites, vacant commercial buildings, and underused properties can become productive assets for businesses and communities.
Existing contamination doesn’t necessarily prevent that from happening.
But successful redevelopment depends on understanding the property’s conditions and incorporating that information into the project.
For owners, developers, municipalities, and construction teams, that means asking the right questions early.
Before purchasing or redeveloping a property, consider:
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What do we know about the property’s environmental history?
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Have the appropriate environmental investigations been completed?
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Does the purchaser or operator qualify for liability protection through a BEA?
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What due care obligations or property-use restrictions apply?
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Is the planned use consistent with the property’s environmental conditions?
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Could excavation, demolition, or other construction activities introduce new exposure concerns?
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Have contractors and other affected parties received the environmental information they need?
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Who is responsible for maintaining environmental controls as the property is used?
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When should the property’s environmental conditions and due care measures be reevaluated?
These aren’t questions intended to discourage investment or complicate redevelopment.
They’re questions that help a project team understand what needs to happen before the work begins.
Identifying an environmental concern during planning gives the team an opportunity to evaluate alternatives, establish appropriate controls, and incorporate necessary work into the schedule and budget.
Discovering the same concern after construction has started can be considerably more disruptive.
The difference is preparation.
Closing Is a Milestone. Not the Finish Line.
Environmental due diligence is an important part of acquiring contaminated property.
It helps purchasers understand existing conditions, evaluate potential liability, and make informed decisions about an investment.
But the value of that work shouldn’t end when the transaction is complete. Properties don’t remain static.
Buildings need maintenance. Tenants change. Utilities are repaired. Parking lots are expanded. Structures are renovated or demolished.
Each of those activities can introduce decisions that need to account for the property’s environmental conditions.
The objective isn’t to eliminate every environmental uncertainty before purchasing a property.
It’s to understand what is known, identify what still needs to be evaluated, and establish a process for managing environmental risk as the property changes.
A Baseline Environmental Assessment can help establish protection from liability for existing contamination.
An appropriate due care approach helps address the responsibilities that continue afterward.
Both belong in the conversation.
Because the best time to develop an environmental management strategy isn’t when a contractor uncovers contaminated soil or a redevelopment project runs into an unexpected restriction. It’s when the project team still has the information, time, and flexibility to make informed decisions.
The property may have a new owner. But its environmental history is still part of its future.
Sources & Further Reading
– Michigan EGLE: Baseline Environmental Assessments (BEAs) Guidance on liability protection for qualifying purchasers and operators of contaminated properties.
– Michigan EGLE: Due Care Obligations Requirements for managing existing contamination, preventing unacceptable exposure and maintaining safe property use.
– Michigan EGLE: Due Care Guide (PDF) Detailed guidance on owner and operator responsibilities, including precautions during construction and redevelopment.
– Michigan EGLE: Land or Resource Use Restrictions Information about restrictive covenants, groundwater-use limitations and other environmental controls.
– Michigan EGLE: Baseline Environmental Assessment Submittal Instructions Requirements for submitting a BEA and establishing applicable liability protection.
All five are official Michigan EGLE resources. They’re suitable for the bottom of Jeremy’s article under Sources & Further Reading.
What environmental challenges are you navigating in your facilities? I'd welcome the conversation — drop a comment or reach out directly.
Jeremy Westcott
Jeremy Westcott is Managing Director at Environmental Testing & Consulting, Inc., and a trusted advisor to contractors and facility managers on environmental compliance and enforcement.