When Must Contamination Be Reported in MD??

In late 2014, the Maryland Department of the Environment (MDE) proposed several new regulations and policies. Supporters hailed these measures for their greater protection of the Chesapeake Bay and opponents decry their partisan motivations, particularly given their timing during the lame-duck period of the O’Malley administration. We do not become involved in the motivations, but we do generally watch news of local environmental and regulatory changes, to help our clients understand their implication.

One of the recent, proposed regulatory changes related to reporting requirements for owners of property found to be contaminated. In reviewing this proposed regulation, we came to feel compelled to oppose the low level of chemical concentrations that would require agency notification. We found the reportable concentrations to be only 10% to 20% of the corresponding drinking water concentrations allowable by the federal EPA. As such low thresholds, we found the reporting requirements to be potentially onerous and negatively impactful upon the local commercial real estate industry.

We contacted the agency within the public comment period, both to praise them for adding much-needed certainty to previously confusing reporting requirements, but also to request amelioration of the specific conditions under which reporting will be required. Here is our letter to MDE on this matter:

“This email is to thank MDE for publishing draft regulations addressing the specifics of reporting requirements relative to the discovery of environmental contamination on real property. The draft regulations add much needed clarity to a reporting policy and practice that has been nebulous and open to widely differing interpretation. The regulated community is well-served by greater certainty of agency expectation.

That said and as detailed below, we cannot help but be concerned over (1) a potential dampening of the local commercial real estate market for redevelopment-eligible properties and (2) the seeming lack of full public discourse regarding the selection of the specific chemical concentration thresholds for agency reporting.

Accordingly, this letter seeks MDE’s consideration of certain modifications to the pending regulations that [1] better support sensitive real estate transactions over fears of an over-zealous ordering of investigative and remedial expenditure and [2] raise chemical concentration reporting criteria to those more reflective of serious contamination conditions truly warranting immediate investigation and/or corrective action. We feel that raising such thresholds would do much to address the otherwise dampening effect this regulation may have on the local commercial real estate industry.

As an environmental consultant preparing Phase I Environmental Site Assessments (ESAs) and the like in Maryland, Advanced Land and Water, Inc. (ALWI) has long shared the challenge of giving clients accurate advice in terms of reporting requirements with our colleagues throughout the profession. For a long time, our profession was beset with ambiguity and differing interpretations regarding the reporting of findings of chemical contamination of soil and water free project management software. Both our profession and clients benefit from clarity and predictability. Your office certainly has our support in recognizing and implementing predictive clarity.

However, many in our profession and among the regulated community are concerned that the new reporting requirements may be problematic for the commercial real estate industry in general and those who order and use pre-acquisition environmental studies in particular because the degree to which our work may be held confidential is lessened. Buyers may be less likely to undertake tests that verify contamination and sellers may be less likely to allow such tests to occur.

Buyers will be confronted with “as-is” purchase decisions, which easily could slow the frequency and pace of commercial real estate transactions and redevelopment investment. This is because owners may feel more exposed to investigative and remedial costs and liabilities than heretofore was the case, which may diminish the frequency and thoroughness of sampling and analytical activities. More transactions will be walked from based on an investigative recommendation (than on the outcome of conducting an investigation), which harms real estate transactions and businesses (there are more than one might think) benefiting from them.

We consultants may find marginal greater solace in an updated listing and accounting of various potential contaminants and an objective tool for assessing the concentration that amounts to “bad.” However, under the proposed regulation, the mere act of sampling, before one knows the result and can apply if to the MDE tables, exposes those responsible to an affirmative reporting requirement unless the results happen to be below stated concentration thresholds.

One obvious improvement would be in the careful and systematic revisit of reporting thresholds, from “We’d like to know because it could come to be important” concentrations, to higher “Oh my gosh, this is a huge problem if not addressed immediately” levels. More property transactions could be consummated, more economic activity in land redevelopment projects could be fostered, and the agency would seem more like a beneficial partner than a feared adversary in the redevelopment process.

We’d welcome the chance to discuss some specific ideas we have about appropriate concentration thresholds for a revised table. Meanwhile, we hope you accept these suggestions in the constructive manner intended. Please add us to the parties interested in this pending regulation. Please notify us of any meetings or hearings or additional comment opportunities that arise. Thank you for your attention.”

We’ll update this blog if and when MDE responds.

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