By Ben Solis
Gongwer News Service

Attorneys for the Department of Environment, Great Lakes and Energy asked the Michigan Supreme Court Wednesday to overturn a Court of Appeals holding that invalidated rules setting limits on PFAS, which could be detrimental to mitigation of the "forever chemicals" in the future.

Justices of the high court heard oral arguments Wednesday morning in 3M Company v. EGLE (MSC Docket No. 166189) at the start of its November case call.

The lawsuit came to the high court following a divided Court of Appeals holding that the department failed to issue a proper regulatory impact statement as the Administrative Procedures Act requires and as a result the rules setting limits on PFAS were invalid (See Gongwer Michigan Report, August 23, 2023).

Although EGLE issued a regulatory impact statement with the rules, it did not address costs related to groundwater cleanup, which the rules would affect.

EGLE argued it was not required to estimate the costs to businesses that would occur because it lacked the necessary information to make an estimate. It also argued that the agency only needed an impact statement as it related to the proposed rule, which dealt with drinking water, and not on the groundwater cleanup that could be required because of the new rule.

The majority on the Court of Appeals disagreed.

Assistant Attorney General Richard Cole said agencies are required under Section 45 of the Administrative Procedures Act to prepare a regulatory impact statement. The key language at stake in the appeal deals with Subsection 3 of the APA, requiring agencies to estimate the actual statewide compliance costs of proposed rules.

EGLE proposed the PFAS limits under the Safe Drinking Water Act, Cole said, and provided 3M with detailed estimates of costs that would be incurred under that act. Cole added that those cost estimates under the Safe Drinking Water Act complied with the plain language of the APA.

"Our position that the proposed rule means the 'rule set' at issue, and nothing more, is supported by three opinions of this court … that have held that the word 'the' has a specific limiting meaning, and under that precedent, the proposed rule means 'the proposed drinking water amendments,'" Cole said. "Despite expressly acknowledging the plain language of the statute, the majority below declared that it would instead look to the entirety of the statute to find that cost estimate should not just be limited to the proposed rule, (but also) any other rule impacted by the amendments."

Justice Richard Bernstein asked Cole if this has happened in other states. Cole said New Jersey addressed a similar claim by 3M in its own courts, which found the issue focused more on whether an agency could be silent, and whether it had addressed all the potential ripple effects of a rule. The court in New Jersey found that it had not.

Justice Elizabeth Welch noted that the Great Lakes Environmental Center in amicus briefs raised issues that weren't directly argued by the parties, which includes an argument of mootness and a failure on 3M's part to exhaust all administrative remedies before bringing its lawsuit. Welch asked why the last part wasn't raised on appeal.

"Before the Court of Claims, we did address standing, and we did raise both of the issues that the amici had addressed," Cole said. "The court ruled against us, and we did not include it as part of our appeal, and it's not part of the issue today. However, it's clear that they have raised important issues, and we think, in fact, that there is a significant standing question, and we would be happy to address it if the court would like further briefing on the issue."

On the issue of mootness, Welch asked Cole how the court should proceed given the groundwater rules are, for now, more or less separated. Cole said the mootness issue goes into the standing conversation because they are one in the same. The drinking water rules no longer establish groundwater contamination standards, he added, and that was because the groundwater division promulgated its own rules, establishing separate criteria for PFAS.

Welch asked, if the court were to agree with EGLE, does that make the case moot? Cole said yes, adding that vacation of the lower court's rulings was the proper remedy if the bench were to decide the issue was moot.

Justice Megan Cavanagh said she understood the argument of needing to construe the APA such that an agency is only required to include items that are actually in compliance with those rules, but she was stuck on the Part 201 cleanup statute. She wondered why the statute must reference the rule it is invoking, and why was that not a proper consideration before the court in the case?
Cole said the APA only requires a cost estimate for the proposed rule. Under that plain language, Cole said the Department of Attorney General does not believe any agency had to go into ripple or secondary effects.

"Frankly, there's good reasons for that. The Legislature declared it, and we're here to apply the Legislature's language. We think that is the plain meaning. But understand how state government works. It makes sense," Cole said. "State agencies are these large entities made up of multiple divisions. EGLE is a good example … (it) has multiple divisions, each responsible for its own environmental issues. They're experts in that individual area, but they're not an expert in all the other areas. We know there can be overlay. We know that the drinking water might establish groundwater, and the groundwater standards might apply to solid waste disposal sites or leaking underground storage tanks."

Cole reiterated his position that the language selected by the Legislature says an agency is only obligated to provide estimated compliance costs for the proposed rule, and the rule set at issue established maximum contaminant levels for PFAS in drinking water.

Cavanagh further pondered what invalidating the rules would mean for public water supplies, which she concluded might affect municipalities that would no longer be required to comply with drinking water standards that a company like 3M might have had to comply with.

Cole agreed, saying that PFAS is believed to be more toxic than was understood even just a few years ago, and protections for public water supplies would whither in the wake of the Court of Appeals' decision, if upheld by the high court.

Nessa Coppinger, representing 3M, said the case was simple in that EGLE must adhere to the APA, and it failed to do so.

"This unremarkable finding, applicable on extremely limited if not unique circumstances, does not merit the court's review," Coppinger said. "It does not involve a legal principle of major significance to the state's jurisprudence, and EGLE has not established grounds for review under (court rules). If the court does undertake review of the Court of Appeals' decision, it should be affirmed."

To find otherwise, Coppinger said, would "condone EGLE's decision to ignore the Legislature's unequivocal mandate in the APA that an-APA required regulatory impact statement must contain an estimate of the actual statewide compliance costs of its proposed rules."

Justice Brian Zahra asked Coppinger if it was possible for there to be costs that result from a rule that are not actual compliance costs. She said it's possible there are other aspects of the APA for regulatory impact statements that may not fall under what she described as a small directive.

Zahra asked how the court should draw the line between what should be estimated and what doesn't need to be, as the justice was searching for a limiting principle to produce not just in this case but potentially others.

"The direct costs of the rule are those that come into place because there is no more legal or other action that is required before those costs must be undertaken as compliance costs. Here, EGLE has said itself that these are the costs of the rule," Coppinger said. "They said that in the draft RIS that did not go to the public; that's the exact language of the rule. And they also acknowledged initially that those were costs of the rule. It's EGLE's own choice that it made to decide that it need not address these costs. Because it said, 'well, we'll deal with them later.' But here, there is no later. There is only one rule making."

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