Viviano and Zahra call majority opinion ‘needlessly confusing’
By Ben Solis
Gongwer News Service
The Supreme Court last week created a new four-part standard to determine if an agency condition is indeed a rule within the bounds of the Administrative Procedures Act, drawing the ire of dissenting justices who found the ruling to be wholly confusing.
In a 5-2 decision, the majority in Michigan Farm Bureau v. Department of Environment, Great Lakes and Energy (MSC Docket No. 165166) held that a set of 2020 general permit conditions regarding waste spreading at concentrated animal feeding operations – under the auspices of the National Pollutant Discharge Elimination System – lacked the force and effect of law, and that EGLE lacked the power to issue rules relating to that system.
That meant that the conditions in question were not considered rules at all, dismissing the arguments of the plaintiffs, who asserted that they were in fact rules that should have gone through the APA rulemaking process.
The opinion written by Chief Justice Elizabeth Clement was joined by Justice Richard Bernstein, Justice Kyra Harris Bolden, Justice Megan Cavanagh and Justice Elizabeth Welch. The ruling affirmed the Court of Appeals in holding that the Court of Claims lacked subject matter to hear the case under applicable law but vacated the appellate panel’s holding that the discretionary conditions of the general permit were rules.
Although the permit rules question was at the heart of the issue, Justice David Viviano and Justice Brian Zahra dissented by calling Clement’s opinion needlessly confusing, and questioned the new standard she created to determine whether a condition should be considered a rule that would be subject to the APA.
The case arose when the Michigan Farm Bureau, several livestock farms and other associations sued EGLE in the Court of Claims seeking declaratory and injunctive relief.
EGLE administers the National Pollutant Discharge Elimination System as delegated by the federal Clean Water Act, the auspices of the federal Environmental Protection Agency and the Legislature.
The department promulgated rules to provide requirements for the program, including permits and the process by which they are issued. Under a 2023 rule, EGLE is obligated to include the conditions “in addition to or more stringent” than those found in departmental and federal rules if EGLE deems those conditions necessary to achieve water quality standards.
Those standards were promulgated and later codified.
In Michigan Farm Bureau, EGLE issued a general permit in March 2020 that led to a lawsuit, as it imposed new conditions that included a reduction on the limit for phosphorus that may be applied to land. It also revised setback provisions, requiring that farms keep a 35-foot wide vegetated barrier where CAFO waste may not be applied to or near any surface water. That restriction included prohibitions on waste spreading near intake lines or well heads, to name a few, but also near surface water conduits regulated by the state.
Up-gradient state surface waters were deemed OK, however.
Another condition was that the permittee may not apply waste within 100 feet of any surface water, and presumptive three-month ban was set in place during January through March as it related to applying waste on land and transferring waste to other entities that apply waste on land during that period.
The plaintiffs in Michigan Farm Bureau argued that the added conditions exceeded EGLE’s authority and were contrary to CAFO regulations in the state Natural Resources and Environmental Protection Act and the federal Clean Water Act.
Moreover, the plaintiffs argued that the conditions were rules that should have been processed through APA rulemaking process.
The Court of Claims held that the plaintiffs failed to exhaust their administrative remedies to fight the conditions before filing lawsuit, and the Court of Appeals held that the Court of Claims lacked subject matter jurisdiction for different reasons – namely, because the plaintiffs could have requested a declaratory ruling from EGLE and did not.
The Court of Appeals, however, did find that the conditions were rules under the APA because they were in addition to and more stringent than the minimum conditions of the permit.
EGLE next sought leave to appeal before the high court.
On Wednesday, Clement said that the EPA and EGLE rules require every CAFO permit to include certain conditions, but EGLE is given discretion to include extra conditions in permits that can be more stringent if the department decides they are necessary.
As to whether the Court of Claims had subject matter jurisdiction to hear the case, the key was to determine if those conditions were indeed rules.
Clement said the Court of Appeals’ finding that they were rules was unpersuasive.
“In essence, the Court of Appeals concluded that the conditions were rules because they were in addition to and more stringent than the mandatory conditions. But the Court of Appeals did not explain why this necessarily meant that the discretionary conditions were themselves rules,” Clement wrote. “The Court of Appeals recited the general definition of ‘rule’ in MCL 24.207 and noted that the term ‘rule’ does not include ‘a decision by an agency to exercise or not to exercise a permissive statutory power, although private rights or interests are affected,’ but the Court of Appeals did not discuss how the conditions fall within this definition or outside of this exclusion.”
Under the APA’s stated exceptions to the definition of a rule, “a rule does not include a form with instructions, an interpretive statement, a guideline, an informational pamphlet, or other material that in itself does not have the force and effect of law but is merely explanatory.”
Under the state’s version of the APA, Clement said the later instance – other material that in itself does not have the force and effect of law but is merely explanatory – is not considered a rule at all.
“That said, an agency action is a “rule” under the Michigan APA only if it meets, at minimum, the following elements: it is an agency regulation, statement, standard, policy, ruling, or instruction; it is of general applicability; it implements or applies law enforced or administered by the agency, or it prescribes the organization, procedure, or practice of the agency; and it, in itself, has the force and effect of law,” Clement wrote.
She said there was no doubt that or serious debate that the discretionary conditions of the permit at the center of the case satisfied the first and third elements. She also concluded the second element of general applicability.
But does a general permit or its discretionary conditions have the force and effect of law?
“The answer to this question must be ‘no,’” Clement wrote. “EGLE otherwise has no power to make rules to carry out its duties under Part 31 of the NREPA, a point which EGLE concedes. EGLE, therefore, clearly has no power to make rules concerning NPDES permits issued to CAFOs. … If the Legislature has not delegated to an agency the power to make rules, a statement of general applicability issued by the agency cannot be considered a ‘rule’ – either valid or invalid – under the Michigan APA. This is because, if an agency lacks rulemaking power, any statement of general applicability issued by the agency necessarily lacks the force and effect of law, no matter if the agency has issued it following the APA’s rulemaking procedures.”
As a result, Clement added, neither the general permit nor the discretionary conditions contained therein have the fore and effect of law and cannot be considered rules.
“This would be true even if EGLE followed the APA’s rulemaking procedures to issue the general permit and discretionary conditions,” Clement wrote.
Viviano, in dissent, expressed deep concerns with Clements opinions and called it “unfounded.” At one point he declared himself “dumbfounded” by Clement’s reasoning.
“Under NREPA, the APA, and our caselaw interpreting those statutes, it is clear that the 2020 GP is a ‘rule’ that may be challenged in a pre-enforcement declaratory-judgment action under MCL 24.264,” Viviano wrote. “The majority’s attempt to label it as something else is unfounded and not persuasive.”
In another section, Viviano said that “the confusion and contradictions in the new legal regime created by the majority opinion will have to be sorted out in this case and others for years to come.”
“Given that historically over 92 percent of CAFOs have been covered by a general permit, the majority’s erroneous decision will surely be to the financial detriment of CAFOs across the state, which will now be required to engage in an uncertain, laborious, and litigious individual permitting process,” he added. “Indeed, the majority opinion sentences CAFOs, which cannot operate without a permit, to perpetual permitting litigation – including the litigation that will be necessary to parse the majority’s convoluted and confusing opinion.”
He also warned the ruling could lead to agencies without rulemaking authority in a subject area devising regulations that look and act like rules but are called something else to avoid the APA.
Welch concurred with the majority opinion that the general permit cannot be considered rules because EGLE lacked the delegated rulemaking authority related to its NPDES program for CAFOs.
That said, Welch would have devised a simpler solution.
“I would have preferred to avoid resolving this question until the now-stayed administrative proceedings concerning the same legal controversy had concluded,” Welch wrote. “Instead, I believe the preferrable resolution would have been to recognize that the Legislature created a comprehensive and exclusive system of procedures and remedies for challenging EGLE’s exercise of permitting authority under Part 31 of the NREPA. Because declaratory actions under MCL 24.264 are precluded if there is an exclusive remedy provided by a statute that governs EGLE, I would hold that this alone precluded the plaintiffs’ current action.”
Gongwer News Service
The Supreme Court last week created a new four-part standard to determine if an agency condition is indeed a rule within the bounds of the Administrative Procedures Act, drawing the ire of dissenting justices who found the ruling to be wholly confusing.
In a 5-2 decision, the majority in Michigan Farm Bureau v. Department of Environment, Great Lakes and Energy (MSC Docket No. 165166) held that a set of 2020 general permit conditions regarding waste spreading at concentrated animal feeding operations – under the auspices of the National Pollutant Discharge Elimination System – lacked the force and effect of law, and that EGLE lacked the power to issue rules relating to that system.
That meant that the conditions in question were not considered rules at all, dismissing the arguments of the plaintiffs, who asserted that they were in fact rules that should have gone through the APA rulemaking process.
The opinion written by Chief Justice Elizabeth Clement was joined by Justice Richard Bernstein, Justice Kyra Harris Bolden, Justice Megan Cavanagh and Justice Elizabeth Welch. The ruling affirmed the Court of Appeals in holding that the Court of Claims lacked subject matter to hear the case under applicable law but vacated the appellate panel’s holding that the discretionary conditions of the general permit were rules.
Although the permit rules question was at the heart of the issue, Justice David Viviano and Justice Brian Zahra dissented by calling Clement’s opinion needlessly confusing, and questioned the new standard she created to determine whether a condition should be considered a rule that would be subject to the APA.
The case arose when the Michigan Farm Bureau, several livestock farms and other associations sued EGLE in the Court of Claims seeking declaratory and injunctive relief.
EGLE administers the National Pollutant Discharge Elimination System as delegated by the federal Clean Water Act, the auspices of the federal Environmental Protection Agency and the Legislature.
The department promulgated rules to provide requirements for the program, including permits and the process by which they are issued. Under a 2023 rule, EGLE is obligated to include the conditions “in addition to or more stringent” than those found in departmental and federal rules if EGLE deems those conditions necessary to achieve water quality standards.
Those standards were promulgated and later codified.
In Michigan Farm Bureau, EGLE issued a general permit in March 2020 that led to a lawsuit, as it imposed new conditions that included a reduction on the limit for phosphorus that may be applied to land. It also revised setback provisions, requiring that farms keep a 35-foot wide vegetated barrier where CAFO waste may not be applied to or near any surface water. That restriction included prohibitions on waste spreading near intake lines or well heads, to name a few, but also near surface water conduits regulated by the state.
Up-gradient state surface waters were deemed OK, however.
Another condition was that the permittee may not apply waste within 100 feet of any surface water, and presumptive three-month ban was set in place during January through March as it related to applying waste on land and transferring waste to other entities that apply waste on land during that period.
The plaintiffs in Michigan Farm Bureau argued that the added conditions exceeded EGLE’s authority and were contrary to CAFO regulations in the state Natural Resources and Environmental Protection Act and the federal Clean Water Act.
Moreover, the plaintiffs argued that the conditions were rules that should have been processed through APA rulemaking process.
The Court of Claims held that the plaintiffs failed to exhaust their administrative remedies to fight the conditions before filing lawsuit, and the Court of Appeals held that the Court of Claims lacked subject matter jurisdiction for different reasons – namely, because the plaintiffs could have requested a declaratory ruling from EGLE and did not.
The Court of Appeals, however, did find that the conditions were rules under the APA because they were in addition to and more stringent than the minimum conditions of the permit.
EGLE next sought leave to appeal before the high court.
On Wednesday, Clement said that the EPA and EGLE rules require every CAFO permit to include certain conditions, but EGLE is given discretion to include extra conditions in permits that can be more stringent if the department decides they are necessary.
As to whether the Court of Claims had subject matter jurisdiction to hear the case, the key was to determine if those conditions were indeed rules.
Clement said the Court of Appeals’ finding that they were rules was unpersuasive.
“In essence, the Court of Appeals concluded that the conditions were rules because they were in addition to and more stringent than the mandatory conditions. But the Court of Appeals did not explain why this necessarily meant that the discretionary conditions were themselves rules,” Clement wrote. “The Court of Appeals recited the general definition of ‘rule’ in MCL 24.207 and noted that the term ‘rule’ does not include ‘a decision by an agency to exercise or not to exercise a permissive statutory power, although private rights or interests are affected,’ but the Court of Appeals did not discuss how the conditions fall within this definition or outside of this exclusion.”
Under the APA’s stated exceptions to the definition of a rule, “a rule does not include a form with instructions, an interpretive statement, a guideline, an informational pamphlet, or other material that in itself does not have the force and effect of law but is merely explanatory.”
Under the state’s version of the APA, Clement said the later instance – other material that in itself does not have the force and effect of law but is merely explanatory – is not considered a rule at all.
“That said, an agency action is a “rule” under the Michigan APA only if it meets, at minimum, the following elements: it is an agency regulation, statement, standard, policy, ruling, or instruction; it is of general applicability; it implements or applies law enforced or administered by the agency, or it prescribes the organization, procedure, or practice of the agency; and it, in itself, has the force and effect of law,” Clement wrote.
She said there was no doubt that or serious debate that the discretionary conditions of the permit at the center of the case satisfied the first and third elements. She also concluded the second element of general applicability.
But does a general permit or its discretionary conditions have the force and effect of law?
“The answer to this question must be ‘no,’” Clement wrote. “EGLE otherwise has no power to make rules to carry out its duties under Part 31 of the NREPA, a point which EGLE concedes. EGLE, therefore, clearly has no power to make rules concerning NPDES permits issued to CAFOs. … If the Legislature has not delegated to an agency the power to make rules, a statement of general applicability issued by the agency cannot be considered a ‘rule’ – either valid or invalid – under the Michigan APA. This is because, if an agency lacks rulemaking power, any statement of general applicability issued by the agency necessarily lacks the force and effect of law, no matter if the agency has issued it following the APA’s rulemaking procedures.”
As a result, Clement added, neither the general permit nor the discretionary conditions contained therein have the fore and effect of law and cannot be considered rules.
“This would be true even if EGLE followed the APA’s rulemaking procedures to issue the general permit and discretionary conditions,” Clement wrote.
Viviano, in dissent, expressed deep concerns with Clements opinions and called it “unfounded.” At one point he declared himself “dumbfounded” by Clement’s reasoning.
“Under NREPA, the APA, and our caselaw interpreting those statutes, it is clear that the 2020 GP is a ‘rule’ that may be challenged in a pre-enforcement declaratory-judgment action under MCL 24.264,” Viviano wrote. “The majority’s attempt to label it as something else is unfounded and not persuasive.”
In another section, Viviano said that “the confusion and contradictions in the new legal regime created by the majority opinion will have to be sorted out in this case and others for years to come.”
“Given that historically over 92 percent of CAFOs have been covered by a general permit, the majority’s erroneous decision will surely be to the financial detriment of CAFOs across the state, which will now be required to engage in an uncertain, laborious, and litigious individual permitting process,” he added. “Indeed, the majority opinion sentences CAFOs, which cannot operate without a permit, to perpetual permitting litigation – including the litigation that will be necessary to parse the majority’s convoluted and confusing opinion.”
He also warned the ruling could lead to agencies without rulemaking authority in a subject area devising regulations that look and act like rules but are called something else to avoid the APA.
Welch concurred with the majority opinion that the general permit cannot be considered rules because EGLE lacked the delegated rulemaking authority related to its NPDES program for CAFOs.
That said, Welch would have devised a simpler solution.
“I would have preferred to avoid resolving this question until the now-stayed administrative proceedings concerning the same legal controversy had concluded,” Welch wrote. “Instead, I believe the preferrable resolution would have been to recognize that the Legislature created a comprehensive and exclusive system of procedures and remedies for challenging EGLE’s exercise of permitting authority under Part 31 of the NREPA. Because declaratory actions under MCL 24.264 are precluded if there is an exclusive remedy provided by a statute that governs EGLE, I would hold that this alone precluded the plaintiffs’ current action.”
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