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Published in Michigan Environmental Law Journal, Fall 2018, Vol. 36, No. 2, Issue 105 [view full issue].
Cite: 36 Mich Env Law J 2 (2018)

by Christopher M. Bzdok & Tracy J. Andrews, Principal and Of Counsel, respectively, to Olson, Bzdok & Howard P.C.

In July, the Michigan Supreme Court held in South Dearborn Environmental Improvement Association v. Michigan Department of Environmental Quality that challenges to a Permit to Install for an existing source of air pollution are subject to a 90-day appeal period under Part 55 of the Natural Resources and Environmental Protection Act (NREPA).^[1] While historically the consensus view was that all air permit challenges under Part 55 were subject to a 90-day appeal period,^[2] this proposition had never been tested prior to the South Dearborn case. These authors believe that the Supreme Court’s opinion settles this question in a way that promotes uniformity and makes the process for seeking judicial review of air pollution permits logical and comprehensible.

Background

In 2014, the Michigan Department of Environmental Quality (MDEQ) issued what it termed a “revised” Permit to Install (PTI) to Severstal, a Russian company that owned the former Ford Rouge steel mill in Dearborn, Michigan. The steel mill is a major source of air pollution under Part 55 of NREPA and the Clean Air Act.^[3]

In 2006, the MDEQ had issued an original PTI to Severstal to install pollution control equipment that was intended to resolve a series of violation notices brought by the agency under Part 55. After the equipment was installed, Severstal performed stack tests that showed several emissions sources at the steel mill were exceeding the permit limits. The MDEQ issued another violation notice to Severstal, who proposed to come into compliance by increasing the permit’s emission limits for certain criteria pollutants by hundreds or, in some cases, thousands of tons per year; as well as large percentage increases in the emissions of certain toxic metals.

At first the MDEQ rejected Severstal’s request. However, after the Michigan Economic Development Corporation intervened on Severstal’s behalf, the MDEQ eventually agreed. The MDEQ noticed a “revised” PTI for public comment in February 2014. The South Dearborn Environmental Improvement Association and other community groups objected to the revised PTI on several grounds, including the MDEQ’s decision to apply only those regulations in effect at the time the original permit was issued in 2006—rather than regulations in effect at the time of the permit decision. Nevertheless, the MDEQ issued the revised PTI on May 12, 2014. Shortly after the MDEQ issued the permit, AK Steel bought the facility from Severstal.

The community groups appealed the permit to Wayne County Circuit Court on July 10, 2014—which was 59 days after the MDEQ issued the permit. Five months later, AK Steel filed a motion to dismiss, arguing that the citizens groups’ appeal was untimely. AK Steel argued that MCL 324.5505(8) provided an appeal within 90 days for PTIs for only new sources; and MCL 324.5506(14) provided an appeal within 90 days only for renewable operating permits (ROPs). Therefore, the steel company argued, an appeal of a PTI for an existing source is governed by Section 631 of the Revised Judicature Act (RJA), which states that if judicial review of an agency decision “has not otherwise been provided for by law,” an appeal “shall be made in accordance with the rules of the Supreme Court.”^[4] AK Steel argued that MCR 7.123 was the applicable court rule, and provided only 21 days for an appeal of a PTI for an existing source.

The Circuit Court denied AK Steel’s motion, holding that the appeal was timely because Part 55 provided for it to be filed within 90 days. The Circuit Court held that MCL 324.5505(8) directs appeals of PTIs for existing sources over to MCL 324.5506(14) via an explicit cross-reference; and that MCL 324.5506(14) provides for appeals of permits for existing sources to be filed within 90 days.

AK Steel applied for leave to the Court of Appeals, who agreed to hear the appeal. On July 12, 2016, the Court of Appeals affirmed the Circuit Court—but on different grounds.^[5] The Court of Appeals agreed with AK Steel’s argument that neither MCL 324.5505(8) nor MCL 324.5506(14) set forth an appeal period for a PTI for an existing source.

However, the Court of Appeals agreed with the community groups’ argument that if Part 55 did not provide a 90-day appeal period for PTIs from existing sources, and the appeal was governed by RJA Section 631 instead, then the applicable court rule was MCR 7.119—which provides 60 days to appeal—rather than MCR 7.123, which provides only 21 days. Titled “Appeals from Agencies Governed by the Administrative Procedures Act,” MCR 7.119 states that it “governs an appeal to the circuit court from an agency decision where MCL 24.201 et seq. [the APA] applies.” The Court of Appeals held that because MCR 7.119 applied, MCR 7.123—which is the catch-all for “an appeal to the circuit court from an agency decision that is not governed by another rule in this subchapter”—did not apply.

After the denial of motions for reconsideration, both AK Steel and the MDEQ applied for leave to the Michigan Supreme Court. In lieu of granting leave, the Supreme Court directed the parties to file supplemental briefs on the issues raised in the application, and held oral argument. On July 17, 2018, the Supreme Court issued an opinion affirming the result but on the basis of Part 55, rather than RJA 631 and MCR 7.119; and by a vote of 4 to 3.

The Supreme Court’s Opinion

The majority opinion was written by Justice Richard Bernstein, joined by Justices McCormack, Viviano, and Clement. The opinion began by noting that “the focus of this appeal is on the interplay of MCL 324.5505(8) and MCL 324.5506(14).” As quoted by the Court, MCL 324.5505(8) states:

Any person may appeal the issuance or denial by the [the MDEQ] of a permit to install, a general permit, or a permit to operate authorized in rules promulgated under [MCL 324.5505(6)], for a new source in accordance with ... MCL 600.631.... Petitions for review shall be the exclusive means to obtain judicial review of such a permit and shall be filed within 90 days after the final permit action, except that a petition may be filed after that deadline only if the petition is based solely on grounds arising after the deadline for judicial review. Such a petition shall be filed no later than 90 days after the new grounds for review arise. Appeals of permit actions for existing sources are subject to section 5506(14).^[6]

The Court noted that while the reference in this section to a 90-day period is limited to PTIs for new sources, the last sentence specifically addresses existing sources. The Court concluded that “The plain language of this sentence indicates that we turn to MCL 324.5506(14) for the rules governing appeals of permit actions for an existing source…”^[7]

MCL 324.5506(14), in turn, provides:

A person who owns or operates an existing source that is required to obtain an operating permit under this section, a general permit, or a permit to operate authorized under rules promulgated under section 5505(6) may file a petition with the [the MDEQ] for review of the denial of his or her application for such a permit, the revision of any emissions limitation, standard, or condition, or a proposed revocation of his or her permit. This review shall be conducted pursuant to the contested case and judicial review procedures of the administrative procedures act ..., being [MCL 24.201 to MCL 24.328]. Any person may appeal the issuance or denial of an operating permit in accordance with [MCL 600.631]. A petition for judicial review is the exclusive means of obtaining judicial review of a permit and shall be filed within 90 days after the final permit action…^[8]

The Court recognized that the fourth sentence of the above passage “has been the focus of the disagreement in this case.”^[9] Rejecting arguments that the sentence should be read as referring to only operating permits, the Court held that the proper reading needed to construe the cross-reference in MCL 324.5508(5) together with the fourth sentence in MCL 324.5506(14). To do so, the Court relied on the presence of an indefinite article preceding the word “permit” in MCL 324.5506(14), which “suggests that the statute refers to more than one type of permit.”^[10] The Court also found it noteworthy that the fourth sentence’s use of the bare “permit” contrasted with the more specific nomenclature used for other specific types of permits elsewhere in the two statutory sections. “Four permit types are mentioned by name in MCL 324.5505(8) and MCL 324.5506(14), which indicates that the Legislature knew how to be specific when it so intended.”^[11] The Court also noted that “when the Legislature wanted to use ‘permit’ to refer to a particular previously referenced permit, it used more restrictive language.”^[12] On these bases, the Court concluded:

[A] petition for judicial review of a permit to install for an existing source must be filed within 90 days of the permit being issued. Such a reading harmonizes the meaning of these two statutes.^[13]

The Court therefore affirmed the Court of Appeals in part but for different reasons; vacated the section of the Court of Appeals’ opinion determining that MCR 7.119 established the appeal period if Part 55 did not; and remanded the case to the Circuit Court for further proceedings. Justice Wilder, joined by Chief Justice Markman and Justice Zahra, dissented.

Conclusion

As a result of the Supreme Court’s decision, all challenges to air permits under MCL 324.5505(8) and 324.5506(14) are subject to the same 90-day appeal period. The authors believe this conclusion is grounded in sound textual analysis; and that it also makes sense as a matter of policy. The South Dearborn decision confirms the existence of a uniform appeal period for air pollution permit challenges, which is a reasoned approach that will promote adjudication of the critical public health issues associated with these permits on the merits, rather than dismissing them based on a trap for the unwary.

[1] The full case name is South Dearborn Environmental Improvement Ass’n, Inc, Detroiters Working for Environmental Justice, Original United Citizens of Southwest Detroit, and Sierra Club v. Mich Dep’t of Environmental Quality, Dan Wyant, and AK Steel Corp, 502 Mich 349; ___ NW2d ___ (2018) (Docket Nos. 154524 and 154526). Part 55 of NREPA is MCL 324.5505 et seq.

[2] See, for example, Michigan Appellate Handbook (ICLE), Appendix A, Table of Selected Appeal Periods, stating 90 days for “Air pollution; appeal of permit decision of Department of Environmental Quality – to circuit court” and citing as authority MCL 324.5505(8) and MCL 324.5506(14). As further evidence of a consensus view, in this case the MDEQ did not support AK Steel’s position until after the Court of Appeals opinion.

[3] 42 USC 7401 et seq.

[4] MCL 600.631.

[5] South Dearborn Environmental Improvement Ass’n et al v. Dep’t of Environmental Quality, 316 Mich App 265; 891 NW2d 233 (2016).

[6] South Dearborn, 502 Mich at 362; slip op at 9.

[7] Id. at 362-63; slip op at 10.

[8] Quoted in id. at 366-67; slip op at 14.

[9] Id. at 367; slip op at 15.

[10] Id. at 368; slip op at 16.

[11] Id. at 369-70; slip op at 17.

[12] Id. at 370-71; slip op at 18.

[13] Id. at 372; slip op at 22.