PRESERVE DUNES, INC. v. DEQ

• Decision Date: 26 December 2002
• Docket Number: Docket No. 231728.
• Parties: PRESERVE THE DUNES, INC., Plaintiff-Appellant, v. DEPARTMENT OF ENVIRONMENTAL QUALITY and Technisand, Inc., Defendants-Appellees.
• Court: Court of Appeal of Michigan — District of US

655 N.W.2d 263

253 Mich. App. 263

PRESERVE THE DUNES, INC., Plaintiff-Appellant, v. DEPARTMENT OF ENVIRONMENTAL QUALITY and Technisand, Inc., Defendants-Appellees.

Docket No. 231728.

Court of Appeals of Michigan.

Submitted April 10, 2002, at Grand Rapids.

Decided October 4, 2002, at 9:00 a.m.

Released for Publication December 26, 2002.

Taglia, Fette, Dumke, Passaro & Kahne, P.C. (by Thomas R. Fette), Beier Howlett, P.C. (by Jeffrey K. Haynes), St. Joseph, Bloomfield Hills, and Neal, Gerber & Eisenberg (by Phil C. Neal and Maria J. Minor), Chicago, Illinois, for Preserve the Dunes, Inc.

Jennifer M. Granholm, Attorney General, Thomas L. Casey, Solicitor General, and James R. Piggush, Assistant Attorney General, for the Department of Environmental Quality.

Howard & Howard Attorneys, P.C. (by James H. Geary), Kalamazoo, for TechniSand, Inc.

Before: OWENS, P.J., and MARKEY and MURRAY, JJ.

MARKEY, J.

Plaintiff, Preserve the Dunes, Inc., appeals by right the trial court's order granting partial summary disposition in favor of defendants Department of Environmental Quality and TechniSand, Inc., and the court's order of no cause of action in favor of defendants following a bench trial. In this lawsuit, plaintiff challenges the DEQ's issuance of an amended permit that allows TechniSand to expand noncritical sand dune mining into a critical dune area adjacent to its noncritical sand mining operation. We reverse and remand.

I. FACTS AND PROCEDURAL HISTORY

Plaintiff, an ad hoc group of local citizens organized for the purpose of this lawsuit, filed this lawsuit in July 1998, under the Michigan Environmental Protection Act (MEPA), M.C.L. § 324.1701 et seq., challenging an amended permit issued by the DEQ in November 1996, which allowed TechniSand to expand a mining operation in a noncritical dune area into an adjacent critical dune area. The land at issue is a sand dune area in Berrien County. That area consists of seventy-one acres of a critical dune area within 126.5 acres of a sand dune. The critical dune area, containing two to three million tons of sand, is on private property approximately one mile inland from Lake Michigan. It is the only critical sand dune area containing elevated dunes east of Interstate Highway 196, which runs along the area's western border. TechniSand is a major supplier of industrial sand and the largest supplier of industrial sand to the foundries of the automobile industry.

Defendant TechniSand incorporated in the state of Delaware on July 12, 1991. On July 31, 1991, TechniSand purchased the "Nadeau Site" property from Manley Brothers of Indiana, Inc. The land deeded to TechniSand from Manley Brothers was part of a much larger transaction in which Fairmont Minerals, Ltd., of Chardon, Ohio, acquired most of the assets belonging to Hepworth Minerals and Chemicals, Inc., of Chesterton, Indiana—a subsidiary of Hepworth PLC of Sheffield, England. TechniSand is a wholly owned subsidiary of Fairmont Minerals, formed in order to acquire some of Hepworth's mining assets. In 1992, Manley's sand mining permit, number TS-NS-107, was transferred to TechniSand as the new owner of the Nadeau Site. TechniSand's original permit allowed the company to mine only noncritical dunes in the eastern parcel of the Nadeau Site.

In 1994, TechniSand applied to the Department of Natural Resources for an amendment of the permit. TechniSand sought permission to mine about 126.5 acres in the western parcel of the Nadeau Site. The proposal to amend the original permit was referred to in various documents as the "Taube Road Expansion" or the "Nadeau Site Expansion." TechniSand sought to extend the mining from the noncritical dune area on the eastern parcel of the site to the critical dune area, and to remove seven million tons of sand from surface operations and 950,000 tons of sand from subsurface operations on 70.45 acres of the 126.5-acre site, and proposed to create two lakes of 9.8 and 13.7 acres respectively and to relocate threatened species of flora.

The record indicates that when TechniSand first sought the amended permit to mine the adjacent Nadeau Site, it did so on the theory that it qualified under M.C.L. § 324.63702(1)(b), an exception to the prohibition against issuing permits for mining in critical dune areas. TechniSand's theory was that it was a permit holder seeking to expand mining operations onto adjacent property, which is essentially the description of who is entitled to the statutory exception. According to that provision, in order to qualify for the exception, the operator seeking the amended permit must have owned before July 5, 1989, the land or the rights to mine dune sand in the land for which the permit is sought. On April 20, 1995, the DNR denied TechniSand's application for an amended permit, explaining that TechniSand was not eligible under the exception from the statutory prohibition against mining in critical sand dune areas because it acquired the property it sought to mine after July 5, 1989. In October 1995, the Governor issued Executive Order No. 1995-18 creating the DEQ and transferring environmental regulatory authority from the DNR to the DEQ. In April 1996, the DEQ sent TechniSand a letter indicating that since 1995 there had been "many changes in State government" and that those changes, coupled with "additional information that TechniSand has apparently supplied to the Michigan Attorney General's office," were instrumental in the government's ability to proceed to review the amendment request. The DEQ letter requested that TechniSand submit modifications to its environmental impact statement (EIS) and its progressive cell-unit mining and reclamation plan in order to "expedite" the processing of the amended mining permit application. The record does not indicate what specific changes in government prompted the DEQ to invite TechniSand to amend and resubmit its application, nor does it indicate what "additional information" TechniSand had "apparently" supplied.

TechniSand amended its application and resubmitted the documents to the DEQ in May 1996. The EIS that was submitted contained a list of "unavoidable adverse impacts" and acknowledged that the proposed expansion of mining operations would significantly impair the environment and would permanently destroy a critical dune. Without explanation regarding under which exception of M.C.L. § 324.63702 TechniSand qualified, the DEQ issued to TechniSand an amended permit to mine in the critical dune area in the Nadeau Site in November 1996.

Several underlying facts are undisputed. Those include the fact that critical dune areas are a natural resource, that sand is a natural resource, and that the critical dune area that is the subject of this litigation has been designated for protection under various environmental statutes since 1978. It was first designated as such under the sand dune protection and management act (SDPMA) by Administrative Rule 281.402 adopted by the DNR on August 17, 1978, as one of thirteen sand dune areas designated. The area was designated a barrier dune under the SDPMA in the DNR publication of Barrier Dune Formation Areas, 1979-1981. The DNR's Land and Water Management Division identified the critical dune area in the Atlas of Critical Dunes. The Legislature adopted the Atlas of Critical Dunes. The DEQ Geological Survey Division also identified the critical dune area in its publication of Designated and Critical Sand Dune Areas in April 1996. It remains a critical dune area today.

The critical dune area at issue is seventy-five feet in height, has a steep inland east-facing slope, and is part of a larger critical dune area. Interstate 196, which does not affect the status of the critical dune area, sits atop the dunes, separating two portions of the critical dune area. There are about two to three million tons of sand in the critical dune area. The amended permit issued to TechniSand allows it to obliterate almost all the critical dune area; only a small portion of the critical dune area will remain if the mining proceeds as planned, and that remaining portion is part of the northeast end of the critical dune area within a conservation easement.

Plaintiff, in its first amended complaint for declaratory and injunctive relief, alleged that under M.C.L. § 324.1701 et seq. (MEPA), M.C.L. § 324.63701 et seq. (the sand dune mining act [SDMA]), and M.C.L. § 324.35301et seq. (the SDPMA), the DEQ violated the MEPA by issuing the amended permit to TechniSand because mining in the critical Taube Road Expansion area of the Nadeau Site will destroy a unique, irreplaceable, and fragile natural resource of this state. The mining will alter the physical, biological, and geological characteristics of the site, a critical dune will be lost, and topsoil and vegetation will be removed. The dune's flora and fauna habitat, including the habitat of two species listed as threatened by the state of Michigan, and the aesthetic quality of the property will be affected because a large percentage of the critical dune will be removed, forever changing the most dominant physical attribute of this site. In addition, plaintiff alleged that the DEQ violated the MEPA by issuing the amended permit in contravention of the legislative mandate within M.C.L. § 324.35302(c) that states that the benefits from alteration or use of a critical dune area "shall occur only when the protection of the environment and the ecology of the critical dune areas for the benefit of the present and future generations is assured." Plaintiff further alleged that the DEQ was without legal authority to issue the amended permit because the exceptions contained in M.C.L. § 324.63702(1) of the SDMA to the otherwise total prohibition against mining in critical dune areas do not apply. Plaintiff asked the court to enjoin the DEQ, to require the DEQ to rescind the amended permit, and to enjoin TechniSand from mining the critical dune area in the Nadeau...