Michigan Court Rejects Judicial Review of Agency Decisions

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SandBar 8:2, July, 2009 Recommended citation: McCauley, Michael, Michigan Court Rejects Judicial Review of Agency , 8:2 SandBar 9 (2009). Michigan Court Rejects Judicial Review of Agency Decisions Anglers of the Ausable, Inc. v. Dep’t of Envtl. Quality, 2009 Mich. App. LEXIS 723 (Mich. Ct. App. Mar. 31, 2009). *Michael McCauley, 2L, University of Mississippi School of Law* A Michigan appellate court recently held it does not have jurisdiction over a Michigan Department of Environmental Quality (DEQ) decision granting a permit for the discharge of treated wastewater into the Kolke River. The court found that judicial review is limited under the Michigan En viron mental Protection Act (MEPA) to conduct that is likely to result in destruction of Michigan’s natural resources, not administrative decisions. However, the court affirmed the trial courts finding that the discharge of the wastewater resulted in a MEPA violation Background In 2004, Merit Energy purchased a production facility. Pursuant to the transfer agreement, Merit Energy entered into a settlement agreement with the DEQ that required treating a sixty-acre plume of contaminated water, which had begun to pollute nearby residential wells. The DEQ issued a permit for treating the water, transporting it via pipeline across state-owned property, and discharging it into the Kolke River. An easement was granted to Merit Energy to transfer and discharge the water at a rate of 700 gallons per minute into the river over a ten-year period. Residents living along the affected waterway filed a cause of action under MEPA, alleging the increased water volume would result in sedimentation and flooding that would interfere with recreational activities. Additionally, they argued the easement DEQ granted did not convey the right to discharge treated water. A circuit court enjoined Merit Energy from discharging any treated water into the Kolke Creek water system. Merit Energy and the DEQ appealed, arguing the circuit court lacked jurisdiction and challenging the court’s finding of a prima facie1 violation of the MEPA. Limits of Judicial Review The defendants first argued that the state court lacked jurisdiction, citing part Part 201 of MEPA, which states that “a state court does not have jurisdiction to review challenges to a response activity approved by the department under this part.”2 The court rejected this argument, holding that the “Corrective Action Plan” was approved under Part 615 of MEPA which did not bar the state’s jurisdiction. While the appellate court held it had jurisdiction, it dismissed DEQ from the cause of action since the MEPA “requires conduct that has violated, or is likely to violate, MEPA.”3 Because plaintiffs challenged the DEQ’s approval of the corrective action plan, rather than the discharge of pollutants, the court held that DEQ’s review of the plan and issuance of the permit was administrative. Therefore, the court erred in failing to dismiss the DEQ from the action since an administrative decision does not meet the MEPA’s language of a violation. In doing so, the court declined to broaden the scope of MEPA to include administrative decisions stating “an improper administrative decision alone does not harm the environment.”4 Easement, Common Law, and MEPA Claims The defendants next argued that the trial court erred in ruling that Merit Energy’s easement, given to the company by DEQ, did not grant the right to discharged treated water. The appellate court agreed, finding that the purpose of the easement was to construct and operate a pipeline on state property. “Operate” was held to mean the operation of a pipeline that would discharge treated water into Kolke Creek. In Michigan, property owners are allowed to drain their land into an adjacent watercourse, and they may grant those rights to a nonriparian property owner. The easement to Merit Energy was therefore valid. The appellate court affirmed the trial court’s ruling that Merit Energy’s proposed plan to discharge treated water would result in increased sedimentation and flooding, thus impairing the riparian rights of the plaintiff. The plaintiffs have riparian rights because their land abuts Kolke Creek, thereby granting them property rights. The court rejected the defendant’s argument that because the land in question was traditionally flooded, the additional drainage flooding could not be a MEPA violation. The court relied on expert testimony that established the long-term effect of Merit Energy’s discharge of treated water would be “qualitatively different” from the short-term, traditional flooding. Additionally, using a reasonable use test it found no clear error in the trial courts ruling that the drop in water quality and harm to aquatic life would interfere with plaintiffs’ use thereby affecting their common law riparian rights. Finally, the appellate court affirmed the trial courts finding of a prima facie MEPA violation. To make a prima facie case under MEPA, the plaintiff must show that “the defendant has or is likely to pollute, impair, or de stroy the air, water, or other natural re sources.”5 The court noted the standard in “determining whe ther a plaintiff has made out a prima facie MEPA violation, the trial court may either (1) make de tailed and specific findings that the de fendant’s conduct is likely to pollute, im pair, or destroy, the air, water, or other natural resources, or (2) find that the defendant has violated an applicable pollution control standard.”6 The court rejected the defendant’s argument that a specific finding is an option only when there is no applicable pollution control standard. The court relied primarily on caselaw and the statute’s focus on polluting conduct in reaching its conclusion that discharge of treated water would pollute the river. Conclusion Although the appellate court found that the circuit court should have dismissed the action against the DEQ due to lack of jurisdiction, the court held that Merit Energy was properly barred from discharging treated water, because the rate of discharge would pollute or impair natural resources in violation of MEPA. By excluding administrative decisions from MEPA, the court substantially limits plaintiffs’ options to hold agencies accountable for damage caused by administrative decisions. Endnotes 1. Prima facie means “on first appearance but subject to further evidence or information.” Blacks Law Dictionary, 551 (2nd pocket ed. 2001). 2. Anglers of the Ausable, Inc. v. Dep’t of Envtl. Quality, 2009 Mich. App. LEXIS 723 (Mich. Ct. App. Mar. 31, 2009). 3. Id. at 16. 4. Id. 5. Id. at 31.
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SandBar 8:2, July, 2009
Recommended citation: McCauley, Michael, Michigan Court Rejects Judicial Review of Agency , 8:2 SandBar 9 (2009).

Anglers of the Ausable, Inc. v. Dep’t of Envtl. Quality, 2009 Mich. App. LEXIS 723 (Mich. Ct. App. Mar. 31, 2009).

Michael McCauley, 2L, University of Mississippi School of Law

A Michigan appellate court recently held it does not have jurisdiction over a Michigan Department of Environmental Quality (DEQ) decision granting a permit for the discharge of treated wastewater into the Kolke River. The court found that judicial review is limited under the Michigan En viron mental Protection Act (MEPA) to conduct that is likely to result in destruction of Michigan’s natural resources, not administrative decisions. However, the court affirmed the trial courts finding that the discharge of the wastewater resulted in a MEPA violation

Background
In 2004, Merit Energy purchased a production facility. Pursuant to the transfer agreement, Merit Energy entered into a settlement agreement with the DEQ that required treating a sixty-acre plume of contaminated water, which had begun to pollute nearby residential wells. The DEQ issued a permit for treating the water, transporting it via pipeline across state-owned property, and discharging it into the Kolke River. An easement was granted to Merit Energy to transfer and discharge the water at a rate of 700 gallons per minute into the river over a ten-year period.
Residents living along the affected waterway filed a cause of action under MEPA, alleging the increased water volume would result in sedimentation and flooding that would interfere with recreational activities. Additionally, they argued the easement DEQ granted did not convey the right to discharge treated water. A circuit court enjoined Merit Energy from discharging any treated water into the Kolke Creek water system. Merit Energy and the DEQ appealed, arguing the circuit court lacked jurisdiction and challenging the court’s finding of a prima facie1 violation of the MEPA.

Limits of Judicial Review
The defendants first argued that the state court lacked jurisdiction, citing part Part 201 of MEPA, which states that “a state court does not have jurisdiction to review challenges to a response activity approved by the department under this part.”2 The court rejected this argument, holding that the “Corrective Action Plan” was approved under Part 615 of MEPA which did not bar the state’s jurisdiction.
While the appellate court held it had jurisdiction, it dismissed DEQ from the cause of action since the MEPA “requires conduct that has violated, or is likely to violate, MEPA.”3 Because plaintiffs challenged the DEQ’s approval of the corrective action plan, rather than the discharge of pollutants, the court held that DEQ’s review of the plan and issuance of the permit was administrative. Therefore, the court erred in failing to dismiss the DEQ from the action since an administrative decision does not meet the MEPA’s language of a violation. In doing so, the court declined to broaden the scope of MEPA to include administrative decisions stating “an improper administrative decision alone does not harm the environment.”4

Easement, Common Law, and MEPA Claims
The defendants next argued that the trial court erred in ruling that Merit Energy’s easement, given to the company by DEQ, did not grant the right to discharged treated water. The appellate court agreed, finding that the purpose of the easement was to construct and operate a pipeline on state property. “Operate” was held to mean the operation of a pipeline that would discharge treated water into Kolke Creek. In Michigan, property owners are allowed to drain their land into an adjacent watercourse, and they may grant those rights to a nonriparian property owner. The easement to Merit Energy was therefore valid.
The appellate court affirmed the trial court’s ruling that Merit Energy’s proposed plan to discharge treated water would result in increased sedimentation and flooding, thus impairing the riparian rights of the plaintiff. The plaintiffs have riparian rights because their land abuts Kolke Creek, thereby granting them property rights. The court rejected the defendant’s argument that because the land in question was traditionally flooded, the additional drainage flooding could not be a MEPA violation. The court relied on expert testimony that established the long-term effect of Merit Energy’s discharge of treated water would be “qualitatively different” from the short-term, traditional flooding. Additionally, using a reasonable use test it found no clear error in the trial courts ruling that the drop in water quality and harm to aquatic life would interfere with plaintiffs’ use thereby affecting their common law riparian rights.
Finally, the appellate court affirmed the trial courts finding of a prima facie MEPA violation. To make a prima facie case under MEPA, the plaintiff must show that “the defendant has or is likely to pollute, impair, or de stroy the air, water, or other natural re sources.”5 The court noted the standard in “determining whe ther a plaintiff has made out a prima facie MEPA violation, the trial court may either (1) make de tailed and specific findings that the de fendant’s conduct is likely to pollute, im pair, or destroy, the air, water, or other natural resources, or (2) find that the defendant has violated an applicable pollution control standard.”6 The court rejected the defendant’s argument that a specific finding is an option only when there is no applicable pollution control standard. The court relied primarily on caselaw and the statute’s focus on polluting conduct in reaching its conclusion that discharge of treated water would pollute the river.

Conclusion
Although the appellate court found that the circuit court should have dismissed the action against the DEQ due to lack of jurisdiction, the court held that Merit Energy was properly barred from discharging treated water, because the rate of discharge would pollute or impair natural resources in violation of MEPA. By excluding administrative decisions from MEPA, the court substantially limits plaintiffs’ options to hold agencies accountable for damage caused by administrative decisions.

Endnotes
1. Prima facie means “on first appearance but subject to further evidence or information.” Blacks Law Dictionary, 551 (2nd pocket ed. 2001).
2. Anglers of the Ausable, Inc. v. Dep’t of Envtl. Quality, 2009 Mich. App. LEXIS 723 (Mich. Ct. App. Mar. 31, 2009).
3. Id. at *16.
4. Id.
5. Id. at *31.