Attorney Gen., Dep't of Nat. Res. v. Gelman Scis.
| Decision Date | 15 September 2022 |
| Docket Number | 357599 |
| Parties | ATTORNEY GENERAL, DEPARTMENT OF NATURAL RESOURCES, NATURAL RESOURCES COMMISSION, and WATER RESOURCES COMMISSION, Plaintiffs-Appellees, v. GELMAN SCIENCES, INC., Defendant-Appellant. and CITY OF ANN ARBOR, WASHTENAW COUNTY, WASHTENAW COUNTY HEALTH DEPARTMENT, WASHTENAW COUNTY HEALTH OFFICER, HURON RIVER WATERSHED COUNCIL, and SCIO TOWNSHIP, Intervening Plaintiffs-Appellees, |
| Court | Court of Appeal of Michigan — District of US |
UNPUBLISHED
Washtenaw Circuit Court LC No. 88-034734-CE
Before: Gleicher, C.J., and Gadola and Yates, JJ.
Defendant Gelman Sciences, Inc. (Gelman), appeals by leave granted the trial court's June 1, 2021 order modifying the prior consent judgment between the original parties in this case. We vacate the trial court's June 1, 2021 order, reinstate the parties' prior consent judgment, and remand to the trial court. On remand, the trial court shall require intervening plaintiffs, the City of Ann Arbor, Washtenaw County, Washtenaw County Health Department, the Washtenaw County Health Officer, Huron River Watershed Council (HRWC) and Scio Township either to file complaints or be dismissed from the case.
This case arises from 1,4-dioxane (dioxane) contamination in Washtenaw County. In the 1960s, Gelman began manufacturing a medical filter known as cellulose triacetate membrane in Washtenaw County. This manufacturing process involved the use of dioxane, which resulted in wastewater containing dioxane. In 1965, Gelman obtained state approval to discharge this wastewater into treatment ponds in Scio Township. In 1970, Gelman also received permission to discharge wastewater from a facility in Ann Arbor, using a spray irrigation method. As a result of Gelman's wastewater disposal, soil and water in Washtenaw County were contaminated with dioxane. At the time these approvals were sought and obtained, dioxane was not on Michigan's critical materials register. It has since been recognized, however, that dioxane constitutes a possible or probable human carcinogen.
In 1988, the Attorney General, on behalf of the Department of Natural Resources, Natural Resources Commission, and Water Resources Commission,[1] initiated this lawsuit against Gelman, alleging that Gelman's activities (1) violated the former water resources commission act, MCL 323.1 et seq.; (2) violated the former environmental protection act, MCL 691.1201 et seq.; (3) violated the former environmental response act, MCL 299.601 et seq., and (4) constituted a common-law public nuisance.[2] The state sought injunctive and monetary relief to abate and remedy the alleged illegal releases of dioxane into the environment by Gelman.
In 1991, the trial court dismissed many of the state's claims, finding that the majority of Gelman's activities did not constitute an unauthorized release of water waste in violation of the environmental statutes and that the state could not maintain a claim for nuisance when the majority of Gelman's activities were lawfully carried out with a permit.[3] The trial court also concluded that any claim that Gelman violated its spray-irrigation permit was time-barred. The trial court declined to dismiss claims relating to "the unpermitted discharge of processed wastewater in the late 1960s," however, finding that there was evidence of "unauthorized overflows from Pond 2 to the marshy area, beyond the permit."
The state and Gelman later reached a settlement agreement regarding the claims not dismissed by the trial court, and in 1992 the trial court entered the parties' proposed consent judgment as an order of the court. As part of the consent judgment, Gelman agreed to implement certain remedial actions to address groundwater and soil contamination. The agreement specified, however, that the consent judgment was not an admission of fault by Gelman, nor was it a waiver of Gelman's rights or defenses with respect to any person, including the state.
The consent judgment provided a dispute resolution process as the exclusive mechanism for resolving disputes arising under the consent judgment, and also contained covenants not to sue and reservations of rights to sue if certain criteria were met. Specifically, the state could reopen litigation to bring additional claims against Gelman in certain limited circumstances. In the event that the state pursued additional claims or proceedings as allowed by the consent judgment, Gelman reserved "all other rights, defenses, or counterclaims that it may have with respect to such matters." The agreement also provided that the consent judgment could not be modified "unless such modification is in writing, signed by all Parties, and approved and entered by the Court."
Since entry of the consent judgment in 1992, the state and Gelman have followed the dispute resolution procedures of the agreement to resolve various disputes. At times, the state has also moved for enforcement of the consent judgment when it perceived Gelman was failing to comply with the agreement. The parties also by agreement amended the consent judgment in 1996, 1999, and 2011. Generally, the amendments related to changes in environmental standards or laws, as well as additions to the scope of the work, as new information emerged about the site conditions.
In 2016, the Michigan Department of Environmental Quality promulgated emergency rules related to the cleanup criteria for dioxane relevant to the groundwater contamination in Washtenaw County. Regarding residential drinking water cleanup, the rules provided that the new cleanup criterion for dioxane in groundwater was 7.2 parts per billion; the criterion was changed because it was determined that the old criterion (established in 2002 at 85 parts per billion) was not protective of public health.
In light of the new criteria, Gelman and the state began negotiations for a fourth amendment to the consent judgment to reflect the new standards. In 2017, Gelman and the state reached a tentative agreement for a fourth amended consent judgment. As of 2017, however, the parties had not yet presented the draft agreement to the trial court as the proposed fourth amended consent judgment; the parties had not submitted any filings or motions to the trial court, and neither Gelman nor the state sought judicial intervention to resolve any disputes or to bring new claims.[4]
In 2016 and 2017, although there was no dispute between the state and Gelman pending before the trial court, the City of Ann Arbor, Washtenaw County, Washtenaw County Health Department, the Washtenaw County Health Officer, HRWC, and Scio Township moved to intervene in the case, seeking to participate in the out-of-court negotiations taking place between the state and Gelman. Over Gelman's objections, the trial court permitted the entities to intervene under MCR 2.209(B). The trial court ordered that the intervenors were permitted to participate in the negotiations but were to "refrain from filing their proposed complaints at this time." The trial court ordered that "[s]hould any of the Intervenors, after participating in negotiations on a proposed Fourth Amended Consent Judgement, conclude in good faith that the negotiations have failed or that insufficient progress has been made during negotiations, they may file their complaint(s) after providing notice to the other parties."[5]
For the next four years, the parties and intervenors engaged in negotiations to amend the consent judgment. At a status conference in November 2020, the parties and intervenors reported that Gelman and the state had agreed to a global settlement. The years of negotiations had resulted in a settlement package consisting of three components: (1) a fourth amended consent judgment, (2) a stipulated order, and (3) a settlement agreement. The fourth amended consent judgment under discussion in 2020 differed from the 2017 draft agreement between Gelman and the state and included heightened responsibilities for Gelman. But although Gelman and the state were willing to enter into this three-part global settlement, Ann Arbor and the Washtenaw intervenors ultimately rejected the settlement, while Scio Township and HRWC were only willing to accept the settlement subject to additional conditions. Gelman reiterated its previous objections to the intervenors' participation because the intervenors had not filed complaints and therefore were not parties to the action. Noting that the negotiations had proved unsuccessful after almost four years, Gelman requested that the trial court require the intervenors to file complaints.
The trial court did not order the intervenors to file complaints, but rejected the possibility of more time for negotiations. Instead, the trial court determined that because an agreement had not been reached, the trial court would unilaterally decide whether to modify the consent judgment. The trial court informed the parties that it would hold a hearing to consider "the science" from the experts in terms of "what should be done legally and why," and to consider the parties' and the intervenors' various viewpoints on the proposed settlement. The trial court entered a scheduling order for a Hearing on Modification of the Consent Agreement. Gelman objected to the trial court's proposed hearing, challenging the trial court's authority to modify the consent judgment and the propriety of the intervenors' role in this case. The trial court denied Gelman's request to move for reconsideration of the scheduling order.[6]
On May 3, 2021, the trial court held a hearing on modification of the consent judgment. The trial court began the proceedings by asking the lawyers and experts to "explain to me the problem and what can be done, what should be done, how it can be done, and then for the parties to tell what they...
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