McDowell & Associates you could say was a “startup” itself about 34 years ago, and it is now a mid-sized company with offices in Ferndale and Midland, Michigan. McDowell & Associates is a geotechnical and environmental engineering, geotechnical, and construction testing firm which serves developers, construction companies, and industrial clients. One of the company’s specialties is environmental and geotechnical due diligence. Doug McDowell, who oversees the company’s environmental assessment division, is an environmental engineer who has been with the company for about 20 years.

Q: Doug, as you know, there has been a move toward creating cheaper urban space for entrepreneurs who are starting companies and don’t have the financing for expensive rent. With all the vacant buildings around (especially in urban areas like Detroit), there is a huge supply of buildings and land that could serve that need. What has your experience been in Detroit with some of these older buildings?

A: Over the last 5 years or so, we have assisted clients who have purchased over 10 industrial buildings in SE Michigan with square footages between 150,000 and 750,000. Most of the buildings were historic manufacturing facilities. Environmental issues have included abandoned underground storage tanks, waste fill areas, residual PCB contamination, asbestos, lead paint, to name a few. In some cases, Brownfield funding sources were used to offset these environmental expenses. Geotechnical issues have included areas with failed foundations and areas where failure to maintain the sites resulted in building damage.

Q: Many entrepreneurs are eyeing these types of properties because they are so inexpensive. What is your number one recommendation to these perspective buyers/tenants when they look at a building?

A: Do not put significant faith in seller provided environmental information. As with any business deal, time and money are metrics that control the final calculation of success or failure. Establish a relationship of trust with an environmental due diligence team that blends scientific and legal resources. Start environmental due diligence early in the transaction timeline, and provide as much time in the purchase agreement as you can so that you do not get boxed into a corner.

Q: What can a good environmental/geotechnical consultant offer to these prospective tenants/buyers?

A: A good consultant will deliver practical opinions based on its reasoned inquiry and experience. Many consultants get lost in the research project and fail to connect the dots in a manner that allows clients to make well-informed decisions.

We provide environmental assessments ranging from the Phase I Environmental Site Assessment (or history report), the Phase II Environmental Site Assessment (sampling and testing of soil, groundwater, surface water, soil gas, building materials) through the Baseline Environmental Assessment (documents contamination on the property to the State of Michigan and limits liability after purchase.) We incorporate geotechnical investigations into our environmental assessment process in a way that provides cost savings to our clients.

We start every project with our client’s goals in mind. I mean this both in terms of how we endeavor to protect our clients from unforeseen circumstances as well as how we focus on the final development and ultimate site users at the outset of the project.

For example – we were retained to consult on a project where a “pure” environmental consultant had previously conducted significant evaluation of a property to demonstrate that contamination in shallow groundwater would not present a health threat to future users of the property once a building was constructed. What they had failed to consider was how to build a building on the property with a contaminated groundwater table that would have to be temporarily depressed in order to support footing construction. The high costs associated with disposal of dewatering fluids were such that the transaction fell apart, well after the completion of an involved indoor air study.

Q: Is hiring a consultant expensive for a prospective purchaser?

A: Costs vary significantly depending on site conditions, client objectives, future use, and historic uses. However, these costs are typically a very small fraction of the overall development or acquisition cost, even in the depressed real estate market we live in today. In situations where a client attempts to limit scope significantly during the due diligence process to reduce cost, then that client is taking on more risk due to uncertainty.

With the advent of Brownfield funding mechanisms to offset due diligence expenses, we have found that our costs become even less of an issue to a deal if Brownfield funding is being considered. The most important part of a transaction is to kick that process off very early and to allow time for everything to be approved by the appropriate government agency prior to spending significant funds.

Q: How long does it take to perform the type of site assessments that you’re talking about?

A: We can complete a site assessment (Phase I through BEA) as quickly as 30 days, but 60 – 90 is comfortable. If Brownfield funding is a consideration, the timeline is driven by local and state agencies that can easily exceed those time periods. We can sprint, but when we do, our client takes some risk of encountering a surprise at the last minute due to the amount of time required to get government agencies to respond to information requests. As a result of our extensive experience in the Southeast Michigan, we have an in-house library of historical resources, copies of MDEQ files, USEPA files, and thousands of boring logs. The information helps us cut down the timeline and uncertainty

Q: Once the site assessments have been performed, is that it or is there more work you would recommend?

A: If a site is contaminated, the purchaser takes on some obligations even with the BEA process. CERCLA has continuing obligations of which an owner of contaminated land must be aware. In Michigan, the purchaser has due care obligations toward future site users and innocent third parties.

We have several clients for whom we complete annual due care compliance visits to help make sure they are on top of the requirements. Though they are in the minority, we have found situations where these follow-up visits are of value.

Q: Can you describe a few of the most common environmental issues that are encountered in these former industrial sites?

A: There are relative easy issues to deal with – asbestos, underground storage tanks, historic fill, surface contamination from historic spills, etc., basically issues that can be handled under the Rules developed to implement Parts 201 and 213 of Act 451.

The more complex issues are those that cross into other regulations such as PCBs (regulated by TSCA), waste fills (where hazardous waste and landfill regulations can be brought into play), clean-ups where materials that might be considered hazardous waste are generated like lead paint or fugitive dust.

Q: Many of these entrepreneurs and startup companies are on tight budgets and may view environmental due diligence as a deal killer so they are tempted to skip the due diligence step. Are environmental issues deal killers? Also, what’s the downside if they don’t perform due diligence?

A: Every purchaser of property, particularly historic industrial property with complex environmental issues, needs to go into the transaction with a due diligence team that he or she trusts. The environmental consultant, environmental legal counsel, and transactional attorney need to be working hand in hand so that the timing and stipulations of the transaction match the issues at hand. In my experience, the deal killers happen when those items are not well orchestrated and a “surprise” during environmental due diligence disrupts things.

Purchasers of suspect land/buildings that view the due diligence process as a box to check, miss an opportunity to identify environmental issues before they get into trouble during development, construction, or refinancing. We view our role in the process as problem solver, not problem identifier. Virtually every environmental problem has a solution. The key is creating a scenario where time is available to solve the problem. While Michigan has a very useful law with the BEA process, there are a few environmental issues that can kill a deal. These typicaly involve extraordinary levels of contamination for which there are no funds available in the deal, or environmental issues are present and the purchaser cannot use the BEA for protection.

Q: What about geotechnical issues?

A: For properties with historical industrial buildings located on them, geotechnical issues that affect foundation support are not normally the driver of the due diligence process. In fact the historical building allows us to look at how the building has performed over its lifetime and get an idea of how the structure will behave in the future. However, in situations where building additions are required to support plans for future use, there can be significant geotechnical issues. Matching an addition to a building that has sat and settled for 50 years or so can be a bit complicated if soil conditions are not ideal.

Q: Last, but not least, you’re a West Point graduate. Does that background help when you are at these sites?

A: West Point was founded by Thomas Jefferson in 1802 to produce critically thinking engineers and leaders at a time when our nation was just beginning to grow and develop. The educational and leadership training was founded on the honor code. That foundation of integrity affects my practice every day. Clients learn very quickly that while they may not like what they hear from McDowell & Associates about their property, they are not going to be sold a bill of goods. We strive to help our clients understand the costs they are going to incur on a development project related to real environmental problems at the outset so that they are not surprised at the end. We bracket our cost estimates with a low estimate (relatively optimistic) and high estimate (relatively pessimistic). Our clients are rarely surprised by the outcome.

We thank Doug McDowell of McDowell & Associates for taking the time to provide his insight on due diligence associated with industrial property reuse.

The post Interview – an Environmental Consultant’s Perspective on Industrial Property Reuse appeared first on Dawda PLC.

Michigan residents are paying close attention to gas and pipeline transport issues in the region because of our water resources.

What is the main issue in Michigan? Two words – groundwater withdrawal. Many Michigan rivers and streams are fed by groundwater. With fracking pads using up to 20 million gallons of water, the concern is fracking near waterbodies will result in reducing water levels to a point that fishing and boating will be adversely impacted. Recently, because of local opposition to oil and gas leases along the “Holy Waters” section of the AuSable River, the DNR designated those leases as non-production leases. In addition, the sensitivity of this issue for Michigan residents has prompted the MDEQ to re-evaluate its fracking rules.

Michigan residents are also concerned about oil transport through the Great Lakes region. Companies like Enbridge are building or expanding pipelines in Michigan to handle the increased production of oil elsewhere. There are also plans to build an oil shipping port in Superior Wisconsin so that up to 35,000 barrels (about 1.4 million gallons) of oil from Alberta’s tar sands can be shipped to refineries around the Great Lakes.

As many recall, in 2010 one of Enbridge’s oil pipelines near Marshall, Michigan ruptured spilling over one million gallons (about 24,000 barrels) of diluted bitumen (“dilbit”) oil into the Kalamazoo River – a spill that Enbridge is still cleaning up. While Michigan residents understand the need for oil, they are not interested in a repeat of the Enbridge spill – especially one that would involve one of the Great Lakes.

Although water is abundant around the Great Lakes, it is used by many for recreational purposes in addition to industrial/commercial uses. As a result, there is significant interest and demands for it to be managed so that it can be enjoyed by the greatest number of people.

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You have probably heard many concerns being raised about something called PFAS. PFAS stands for per- and polyfluoroalkyl substances, which are a group of widely used compounds that have been used in everything from non-stick pots and pans to firefighting foam.  They have also been used for furniture, carpeting and clothing to give those products a spill-resistant, water repellant quality.  Their large molecular compounds and their structure not only provides the non-stick, foaming and water repellant properties that are useful to humans, it also makes them very stable and resistant to breakdown, either by nature or human processes.  This is why they are called “forever chemicals” and makes them potentially dangerous because they have a tendency to bioaccumulate, or build up in the food chain.

What you probably have not heard of is PFAS’ relationship to Major League Baseball.  The Detroit Free Press recently reported that a number of professional baseball players were potentially exposed to PFAS-impacted drinking water when they played with the West Michigan White Caps in Grand Rapids.

According to the Detroit Free Press, a number of baseball players, including Detroit Tiger Nicholas Castellanos, were potentially exposed to PFAS while staying with a host family in Grand Rapids whose drinking water well has been contaminated by a former shoe factory owned by Wolverine Worldwide.

Should these players be concerned?  It’s really an open issue.  PFAS compounds have received close scrutiny lately because of their bioaccumulative properties and certain studies that have linked high concentrations of the compounds to problems observed in laboratory test animals.  However, there is no consensus as of yet as to whether there is a safe limit.  Also, the baseball players stayed with the family short periods of time.

The U.S. EPA has set a drinking water standard of 70 parts per trillion (ppt). One ppt is the equivalent of one drop of substance in 20,000 swimming pools.

However, there is some question as to whether or not the U.S. EPA’s level is adequately protective of human health.  For example, Michigan’s PFAS Science Advisory Panel assessed PFAS and its related compounds in its December 7, 2018 report.  In that report, the Panel concluded that “if one accepts the probable links between PFOA exposure and adverse health effects detected in the epidemiological literature as critical effects for health risk assessment, then 70 ppt in drinking water might not be sufficiently protective for PFOA.”

Some states have taken a more restrictive approach.  New Jersey has a drinking water standard of 13 ppt for PFNA and a proposed regulation of 14 ppt for PFOA.  California, on the other hand, has a combined PFOA and PFOS limit of 70 ppt with notification levels for PFOA at 14 ppt and PFOS at 13 ppt.

Michigan has cleanup standards for PFOA and PFOS but no established drinking water standard.  The residential and non-residential drinking water clean-up standard for groundwater is 0.07 parts per billion (ppb), or 70 ppt.  The groundwater/surface water interface criteria (GSI) is 0.12 ppb, or 12 ppt for PFOS.  Up until recently, Michigan has relied on the EPA standard of 70 ppt for PFOA and PFOS combined; however, Michigan has recently started a rule-making process for PFAS compounds in drinking water, and it is expected that the final rule will be much lower than this.

Most likely, Michigan will adopt a drinking water standard similar to the health screening levels established by the Michigan Department of Health and Human Services.  Those levels are 9 ppt for PFOA, 8 ppt for PFOS, 9 ppt for PFNA, 84 ppt for PFHxS and 1,000 ppt for PFBS. In addition, Michigan has recently cautioned Michigan residents from touching foamy water near sites that have been contaminated with PFAS compounds.

Michigan has a new rulemaking process and the PFAS rulemaking will be one of the first to go through this process.  Even if rules are established, they could be challenged because Michigan has a new law (MCL 24.232(9)) that prohibits rules that are more stringent than a federally established level unless it can be established that there is a clear and convincing need to exceed the federal level.  Since the Federal Government has not formally adopted a standard for PFAS, this may not be an issue, however, given the stakes involved, there is a possibility that some interested party could challenge it.  Whatever level (or levels) the State arrives at, you should expect even more scrutiny of PFAS issues around the State.

The post PFAS and Professional Baseball appeared first on Dawda PLC.

If you are interested in the presentation, you can do the following:

• ATTEND IN PERSON. To attend the event at the Kellogg Center in East Lansing, Michigan, you must fill out the online registration form here.

• LISTEN REMOTELY VIA THE LIVE WEBINAR. You must register for the GotoMeeting webinar by completing the registration here. Upon registration, you will be provided a confirmation email and the link to join the webinar.

• LISTEN TO A RECORDED WEBINAR AFTER THE EVENT. The MDEQ plans on posting the webinar by March 23, 2012. We will update this information when it becomes available and you also can check the Remediation Division’s website and the CSI page.

I will be participating in the event and will provide an update shortly thereafter.

The post Reinventing Michigan’s Cleanup and Redevelopment Programs – Update appeared first on Dawda PLC.