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Showdown Over MDEQ Review Panels?

12 Feb 2019

Showdown Over MDEQ Review Panels?

As we previously blogged, Governor Whitmer recently issued two Executive Orders and one Executive Directive, all focusing on the environment. One of the Governor’s Executive Orders made a number of changes to the MDEQ. Citing the EO’s dissolution of two government panels and reorganization of a third, the Michigan House voted to overturn this EO and the Senate is moving in the same direction.

After the House vote, the Governor held a meeting with the press where she repeatedly said that the House had “voted against clean drinking water.” When asked about the EO’s panels, she said they had only met twice, weren’t essential and stood in the way of cleaning up Michigan’s water.
This is not intended to be an exhaustive legal analysis of all the questions raised but a few factors that are not receiving much attention of yet.

The Panels in Question

The Rules Committee’s charge is to review draft rules to ensure that the proposed rules: (a) do not exceed the law’s rule-making delegation of authority; (b) reasonably implement and apply the law authorizing the rules and are consistent with other applicable laws; (c) are necessary and suitable to achieve their purposes in proportion to the burdens they create; (d) are as clear and unambiguous as reasonably appropriate; (e) based on sound and objective scientific reasoning. At the end of the process, the law still leaves the ultimate regulatory decisionmaking with the Director of the MDEQ and the Governor.

The Environmental Permit Review Commission is to advise the DEQ Director on: (1) disputes related to permit applications and (2) contested cases regarding a permit decision. If a permit applicant challenges a permitting decision and the dispute is not resolved informally, the Director selects and convenes a three-person Panel from the 15 person Commission. The Panel hears both sides and makes a recommendation to the Director and applicant. The Director issues a written decision that either agrees or disagrees with the Panel’s recommendations.

In a contested case regarding a permit, an administrative law judge (ALJ) would preside, make the final decision, and issue the final decision for the DEQ. Any party to the case may seek review of the ALJ’s decision by a three-person Panel selected from the Commission. The Panel’s review would be limited to the record in the contested case and the Panel could adopt, remand, modify, or reverse, in whole or in part, a final decision and order. The Panel’s decision would become the DEQ’s final decision.

On the Governor’s side

There is no question that the Governor is legally authorized to reorganize the State’s administrative agencies . After the House vote, the Governor asked the Michigan Attorney General for an opinion on the legality of the Environmental Rules Review Committee and the Environmental Permit Review Commission. The Governor cited an April 2018 letter from the US EPA that raised questions about how these laws would impact federal programs where Michigan has been delegated authority to administer – including the Clean Water Act and the Clean Air Act. Advocates of the Panels state that the bills on which EPA commented were revised in response to EPA’s comments. However, in its letter, EPA indicated that it would likely request that the program revisions be submitted for review and would ask for an Attorney General opinion clarifying the laws’ impacts on the federal programs. That has not happened yet.

On the Legislature’s side

The Governor’s statements regarding clean water and the panels are hyperbole. The Rules Panel was only appointed in October of 2018 and the Permit Panel was appointed in August. That there have only been two meetings thus far proves nothing regarding their efficiency or impact on Michigan’s environment. The Governor seems to be conflating the fight over these two panels with her entire EO, brushing off a question about the possibility of reissuing the EO without eliminating the panels.

The legal issue at stake

No one questions the Governor’s right to reorganize the DEQ. That authority is clear in the Constitution and State law. However, my research hasn’t found anything addressing this exact issue. What this may turn on is a discussion regarding the separation of powers between the Legislature and the Governor and an arcane definition in the Executive Organization Act of 1965 which defines a “type III transfer” as one abolishing an existing commission and its powers and functions are transferred to a principal department of the State. Are the functions transferred when a legislative process has been eliminated? Does the Governor have the right to effectively undo laws passed by a prior administration by executive fiat?

These are the kinds of arcane question lawyers live for and everyone else dreads. Time will tell but it does seem like the Governor is trying to prove she won’t be pushed around – whether that is a good use of her political capital, when most Michiganders care more about the roads and schools than they do about two panels, remains to be seen.

New Governor: New Priorities; New Organization

4 Feb 2019

Soon to be a relic of the past?

Governor Whitmer is moving quickly to put her stamp on an agency that is important to her goals. Given her campaign slogan of “fix the damn roads” it is somewhat of a surprise that her second and third Executive Orders relate to the MDEQ – or as it will be known going forward, the Department of Environment, Great Lakes and Energy (DEGLE or EGLE?).

It is not uncommon for new governors to try to recreate the MDEQ in their own images. In 2009, Governor Granholm merged the DNR and DEQ into one agency  and, in 2011, Governor Snyder split them up again.

In addition to the name change, Executive Order 2019-2 also creates new offices within the Department including the offices of: (i) Climate and Energy; (ii) the Clean Water Public Advocate and (iii) the Environmental Justice Public Advocate, as well as the Interagency Environmental Justice Response Team. There is a focus on “assuring that all Michigan residents benefit from the same protections from environmental hazards” and integrating environmental justice concepts into agency decision making. The Clean Water Advocate appears to be both an ombudsman and a change agent relating to drinking water concerns. The Office of Climate and Energy is to focus on both improving governmental mitigation of climate impact and climate change adaptation and to provide guidance and assistance for greenhouse gas reduction. The old Office of the Great Lakes housed in the DNR and the Agency for Energy are now housed in the DEGLE. Also, the Permit Review Commission created last summer is abolished.

Executive Order 2019-3 attempts to strengthen the Michigan PFAS Action Response Team (MPART) created by Governor Snyder to help inform the public about perfluoroalkyl and polyfluoroalkyl substances (PFAS), locate contamination, and take action to protect sources of drinking water from these chemicals.

Executive Directive 2019-12 enters Michigan into the U.S. Climate Alliance, a bipartisan coalition of governors from 19 other states that are committed to reducing greenhouse gas emissions consistent with the goals of the Paris Agreement.

These actions are consistent with Governor Whitmer’s focus on Flint during the campaign, her campaign promises and Director Clark’s past experience and expertise in alternative energy. At this point, with no new resources, how the reconstituted agency will take on these new roles or what functions will receive less priority will be questions that Governor Whitmer and Director Clark will have to answer.

The contamination problem that no one talks about and that seems to defy solution

15 Aug 2018

A chemical threat to Michigan’s drinking water that regulators were unaware of and don’t know what to do about.  Sound familiar? Thinking Flint and lead in the water?  Well, you’d be wrong and it’s not just a Michigan problem.

The chemicals are per- and polyfluoroalkyl substances (PFAS), and they are now a national health concern as they are beginning to show up in all sorts of places including dumps, groundwater, lakes, and drinking water.  Michigan has been called “ground zero,” but it is by no means alone.

PFAS chemicals have been used to make cookware, clothes, shoes, furniture, and even food packaging!  They are also used in fire-fighting foams.  PFAS includes a family of chemicals but currently the focus has been on two of the PFAS chemicals, as we learn more, those concerns may expand.  Unlike many other chemicals, there has been little study on the safety of these chemicals.  What is known is that, like PCBs,  PFAS chemicals are stable (they don’t degrade), they bio accumulate (the higher up the food chain you are, the more you likely have) and they pose remediation challenges because of their stability.  Unlike PCBs, they are water soluble which makes them much harder to control.  As a result, they are widely found in the environment and are already present in the blood of virtually everyone in the developed world.

Some studies indicate that PFAS chemicals may:

  • affect growth, learning, and behavior of infants and older children
  • lower a woman’s chance of getting pregnant
  • interfere with the body’s natural hormones
  • increase cholesterol levels
  • affect the immune system
  • increase the risk of certain types of cancer

They are a human health and environmental concern but there is little consensus on what levels of these chemicals are safe in your system.

According to the Michigan Department of Environmental Quality (MDEQ), there are more than a dozen communities where PFAS has been detected.  Some Michigan communities have been discovered to be using PFAS-impacted groundwater for their drinking-water supply.

In November 2017, Governor Snyder issued executive order (EO) No 2017-4 creating a multi-agency “Michigan PFAS Action Response Team” to, among other things, “make inquiries, conduct studies, consult with federal agencies, and receive public comments.”  The State reportedly will test 1380 water systems and 460 schools for PFAS.

In December 2017, the legislature passed PA 201 which, inter alia,  included $23.2 million for state PFAS remediation.  It passed 109 to 1 in the House and 33-4 in the Senate but that may be a drop in the bucket as more sites are discovered.  This spring, MDEQ asked regulated wastewater treatment plants (WWTP) to conduct a screening of their industrial users to identify PFAS sources including landfills that treat their leachate through the WWTP; develop and implement a monitoring plan to evaluate the possible sources; reduce or eliminate PFAS sources; evaluate impacts and submit reports.

The EPA set a lifetime health advisory (LHA) level for two PFAS in drinking water, perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS). The LHA level is 70 parts per trillion (ppt, equal to 70 ng/L) for PFOA and PFOS combined, or individually if only one is present. The EPA has not set health advisory levels for other PFAS chemicals. The State of Michigan is using 70 ppt for decision making purposes.

In the absence of federally-enforceable limits, some states are developing their own guidance and enforcement limits. The limits set by the states range from 400 times higher to 5 times less than the current EPA advisory levels.

Litigation over this contaminant has already begun in New York, Minnesota, Michigan and many other states.

For a State that dealt with PBB contamination  in the 1970’s, a whole host of contamination issues from the 1970’s until now and then the Flint lead crisis, Michigan seems to have learned its lesson and is jumping on the PFAS problem with both feet but the ubiquity and complexity of PFAS appears to make this the biggest, most difficult and most expensive environmental issue Michigan may have ever faced.

Wisconsin Great Lakes Withdrawals Under the Radar

3 May 2018

In the hew and cry regarding Nestle and its attempt to withdraw 400 gallons of water per minute (more on that in another post), I’ve seen almost no press regarding two attempts from Wisconsin to withdraw far more than that.

Withdrawals of water from the Great Lakes are governed by the Great Lakes Compact which was approved by all eight Great Lakes states, Ontario, Quebec, and the U.S. Congress, and signed by President George W. Bush in 2008.

The Compact bans the diversion of Great Lakes water outside the basin, with certain exceptions.  Two situations allow a community outside the Great Lakes basin, if approved by the States to apply for a diversion when:

  1. A community that is located partially in the Great Lakes basin may apply for a diversion.
  2. A community that is located within a county that is partially in the basin, may apply for a diversion.

Any community applying for a diversion must demonstrate that it has exhausted all available options for getting water. A diversion must be a last resort.  Any request for a diversion must be approved by all eight Great Lakes states and so any state may veto the diversion application.

The City of Waukesha, Wisconsin, a few miles west of Milwaukee, is outside the Great Lakes basin but in a county partially in the basin.  In 2016, Waukesha applied for a diversion of water from Lake Michigan arguing that the City’s water supply is contaminated with radium, a naturally occurring carcinogen.  Waukesha’s application was the first test of the Great Lakes Compact.  On June 21, 2016, the eight Great Lakes states voted to approve Waukesha’s diversion request with restrictions. One of the most important conditions that all water diverted from Lake Michigan to Waukesha must be returned, resulting in no net loss of water from the Great Lakes.

People in Michigan are familiar with Foxconn, a Chinese company that briefly toyed with the possibility of locating in Michigan. Instead, Wisconsin made a reportedly $4 Billion offer and Foxconn is locating in Racine, Wisconsin. On Wednesday, April 25th, the State of Wisconsin announced that it would allow a diversion of an average of 7 million gallons a day of Lake Michigan Water. Of that, 5.8 million gallons is to be used by Foxconn whose plant is located in both the Great Lakes and Mississippi River basins.  Reportedly, 2.7 million gallons per day will not be returned to the Great Lakes basin, largely because of evaporation.

This diversion does not require unanimous approval under the Compact because less than 5 million gallons per day will be lost.

By way of comparison, the MDEQ’s recent Nestle permit which was the subject of much opposition allows 576,000 gallons of groundwater to be withdrawn and bottled.  Oddly, no one in the Michigan press has noticed,  yet.

 

Want to raise taxes by $79 Million Each Year? Governor Snyder does

31 Jan 2018

On Tuesday, Gov. Snyder announced a proposal to spend $79 Million annually on brownfield site clean-up, waste management planning, asbestos removal, recycling grants, water quality monitoring and state park infrastructure.

These are all laudable goals – but one has to question  – where is the money to come from?  The Governor wants to raise a fee on garbage disposal by 1,200%

The Governor asserts that Michigan only recycles 15% of its waste (he’d like it to be 30%) and that “to reduce waste in Michigan landfills” he’d like to increase the “surcharge” currently imposed on landfills from $0.36 per ton to $4.75 per ton.  Presently, this surcharge (which was the result of negotiations between the State and industry) provides funds to the State’s Solid Waste Management Fund which helps fund permitting and licensing of landfills and other solid waste management facilities, inspections, permit and license enforcement, monitoring and inspections of landfills and solid waste management facilities. In short, the surcharge pays (along with other fees paid by the industry) for the permitting and regulation of the facilities paying the fee.

One has to wonder why landfills should be paying:

  • $45 Million each year to remediate and redevelop existing and future contaminated sites which in most cases have nothing to do with regulated and permitted landfills;
  • $5 Million each year for water quality monitoring grants which definitely have nothing to do with landfills;
  • $5 Million each year for state park infrastructure which, again, are unrelated to landfills.

Isn’t that why we pay taxes?  Shouldn’t those regulated communities pay the costs which have nothing to do with landfills?  Also, there is a State superfund law (Part 201) that requires polluters to pay for their pollution.

One can argue that paying $9 Million for local governments’ solid waste planning and $15 Million for grants to municipalities to support recycling should be covered by the State’s general fund, as well, as those functions have nothing to do with regulating those who pay the fee.  When you go to get your driver’s license, would you want to be charged an additional $100 to pay for roadside cleanup of stuff like tires and debris?  It is tangentially related to driving so, does that make it OK?

There is Michigan Constitutional law that says that the answer is “no” and that this “fee” is a disguised illegal tax being snuck past the taxpayers.

Michigan voters have regularly approved bonds to fund remedial and other environmental expenditures, knowing that it was an investment in our health and economy. Why is Governor Snyder afraid to ask the taxpayers to do so again?  Perhaps one word: Flint?

MDEQ rescinds vapor intrusion guidance – uncertainty reigns – what is clean enough?

21 Jun 2017

Back in the 1990’s, there was uncertainty about when a cleanup was truly completed – “how clean is clean?” was the question and it seems that those days may be returning – at least for a while.

The MDEQ announced Tuesday that it was rescinding major parts of its May 2013 Vapor Intrusion Guidance which we blogged about when it was published.  This 2013 guidance addressed part of the question of how clean is “clean enough” when a brownfield redevelopment or cleanup does not reduce the residual contamination to zero.  Vapor intrusion is explained in this link but, basically, it is the threat that some contaminants may migrate upward from soils and groundwater into buildings at unsafe levels.  For the last four years, people in Michigan have relied on and been guided by the 2013 Guidance.

MDEQ has been trying for years to update its clean up rules and standards which have been in place for some 15 years.  The thought was that new data and studies were available and the cleanup standards which were largely driven by conservative assumptions should be brought up to date.  Due to somewhat arcane legal reasons, MDEQ set October 27, 2017, as its date for promulgating these new rules and have been working hard (and continues to work  hard) to meet this deadline (the most current version available at the moment can be found here but updates are expected soon).

Review your BEA or due care plan (if you have one); if your site doesn’t have volatile compounds – rest easier. If it does, your BEA might be subject to an EPA evaluation if there is a concern about vapors migrating into occupied spaces – even off-site spaces. 

Until MDEQ adopts its new rules, MDEQ will include a standard caveat in approval letters issued moving forward that screening levels used “may not reflect the best available science.” That level of uncertainty may chill many deals and plans under consideration or drive them to more expensive cleanups.    

Logically,  MDEQ argues that they should similarly update the vapor intrusion standards and include them in the rules package.  Vapor intrusion has been in the press a lot recently including this article that discusses 4,000 sites which the State might be looking to address an issue which was thought put to bed or wasn’t simply an issue when the site was granted closed status.

This is where the uncertainty kicks in.  MDEQ doesn’t typically address direct human health threats – that would be the State Health Department.  The same State Health Department that allegedly missed the Flint Water Crisis and whose director and chief medical officer have been indicted. The State Health Department takes a fairly conservative approach to vapor intrusion and has told MDEQ that its standards are too lenient.  MDEQ has developed new hyper-conservative standards that could cause sites which previously passed to now fail.

What is a property owner/developer to do?  First, review your BEA and due care plan (if you have one); if your site doesn’t have volatile compounds – rest easier.  If it does, it is possible your property might be subject to EPA action if there is a concern about vapors migrating into occupied spaces – particularly off-site spaces.  The owner of the site profiled in the MiLive article above found their BEA protection weaker than they had thought and are now dealing with an EPA demand for payment.

For future deals, buyers and lenders may want more aggressive due diligence and cleanup programs to ensure that vapor intrusion is not a risk. This may sideline properties which, until recently would’ve been accepted using the MDEQ’s 2013 Guidance.

Until MDEQ adopts its new rules (which may not take effect until next Spring), the MDEQ will be reviewing and approving requests to approve “no further action” based on current standards but MDEQ will include a standard caveat in approval letters issued moving forward that screening levels used “may not reflect the best available science.”   That level of uncertainty may chill many deals and plans under consideration or drive them to more expensive cleanups or site-specific cleanups which require far more and expensive justification.

Infrastructure funding in the age of austerity – just don’t call it a “tax”

17 Jan 2017

As demands for municipal services increase, costs go up and tax revenues flatten or fall, what is a municipality to do?  Most Michigan politicians have decided that even to suggest more taxes is the kiss of death.  Everyone agrees Michigan’s roads need work.  The gas tax went up on January 1 and even that increase was widely viewed as an inadequate to fully improve our sub-par roads. Recently, a Michigan State study indicated that nationally, roughly 12% of households cannot afford the cost of water services and, if water rates rise to cover repair and upgrade expenses due to the aging of our systems and other factors, that unaffordability factor may go up to almost 36% in the next five years.

The Governor’s 2016 Infrastructure Commission, appointed in the wake of the Flint Water Crisis, reported that we need a modern infrastructure system to compete globally, to have economic prosperity, and to have healthy citizens and a healthy environment.  However, the Commission did not answer the all-important question of how to fund all of this work.  The Commission reports that Michigan lags behind every other state in the region in capital funding for infrastructure and that Michigan needs to spend $4 Billion more every year than it currently does just to align with an average state and the State’s needs.  This would be a 7% increase in spending.  The Commission did not address how Michigan should fund this shortfall.

The business group, Business Leaders for Michigan issued a report earlier this month. That Report reached the same conclusion and proposed that the State ramp up its spending and opened a door to creative and novel financing approaches including user fees which the Report indicated may be used to fund costs of “services, enhancements to increase the quality of life, and … administrative and regulatory processes.”  This report discusses such fundraising approaches as: fees per mile traveled (vs gasoline taxes); public-private partnerships; fees based on property value increase; fees which take into account all lifetime system costs; selling or leasing systems to raise funds for new infrastructure improvements; toll roads and other more “outside the box” approaches.

We have seen this before but not on a statewide approach such as when municipal governments try to fund environmental initiatives, such as stormwater management (required by federal law). The cities of Lansing, Jackson and Detroit all adopted stormwater “fees” based on the paved acreage of various properties within their jurisdiction.  Clearly, to the municipalities, this seems like a good idea – otherwise, why would they keep doing it? Reportedly, nine Michigan communities have created stormwater utilities to impose such charges (Adrian, Ann Arbor, Berkley, Chelsea, Harper Woods, Jackson, Marquette, New Baltimore, and St Clair Shores).

The Michigan Supreme Court established a three part test to distinguish between a fee and a tax: (1) “a user fee must serve a regulatory purpose rather than a revenue-raising purpose;” (2) “user fees must be proportionate to the necessary costs of the service;” and (3) “user fees must be voluntary.”  Bolt v Lansing, 459 Mich 152, 161-162 (1998)

Unfortunately for the municipalities, the Michigan Courts keep striking these fees down as illegal, hidden taxes.  In the case of Jackson County v City of Jackson, the plaintiffs challenged a stormwater management charge imposed by the Jackson City Council. The Court of Appeals ruled that the charge was a tax imposed in violation of §31 of the Headlee Amendment to the Michigan Constitution. The court held that the charge: (1) did not serve a regulatory purpose because it shifted funding of certain activities from the general fund to the charge; (2) was disproportionate to the benefits conferred upon the payor as there were no payor-specific benefits; and (3) was not voluntary because there was no way to avoid the charge by doing, or not doing, something.   The Court of Appeals cited Bolt v Lansing, which invalidated a similar stormwater charge on similar bases. Ultimately, both courts held these “charges” to be taxes subject to, and failing to meet, Headlee Amendment requirements.

Last year, the Michigan Legislature saw the introduction of a bill that would authorize such “fees,” regarding water and sewer, ostensibly to make them harder to defeat in Court under the Bolt test. The need is real and I am a big believer in top quality infrastructure which needs to be paid for.  My question is, with the 1978 Headlee Amendment that puts the size and cost of government in the hands of the taxpayers, and with a backdrop of fees rising beyond what some citizens can afford – can and should our Legislature try to pass this off by various “fees” without getting the voters’ approval as well as other “creative” solutions, some of which may cost the taxpayers less in the short run but more in the long run?  I’m all for the efficiencies in purchasing and scheduling that Governor Snyder has been pushing for but, as we watch more and more systems fail (like the recent Fraser sinkhole), it is clear that we cannot continue to push this off – if the citizens see that, they should be willing to pay for it. If these expenses get passed on in the form of fees which are not voted on and the citizenry gets hit with larger fees that they were not told about, who thinks that will play well at the voting booth?