S. Dearborn Envtl. Improvement Ass'n, Inc. v. Dep't of Envtl. Quality
| Decision Date | 18 March 2021 |
| Docket Number | 350032 |
| Citation | 336 Mich.App. 490,971 N.W.2d 46 |
| Parties | SOUTH DEARBORN ENVIRONMENTAL IMPROVEMENT ASSOCIATION, INC., Petitioner-Appellant, and Detroiters Working for Environmental Justice, Original United Citizens of Southwest Detroit, and Sierra Club, Petitioners, v. DEPARTMENT OF ENVIRONMENTAL QUALITY and Dan Wyant, Respondents-Appellees, and AK Steel Corporation, Appellee. |
| Court | Court of Appeal of Michigan — District of US |
Olson, Bzdok & Howard, PC, Traverse City (by Christopher M. Bzdok and Tracy J. Andrews ) for South Dearborn Environmental Improvement Association, Inc.
Great Lakes Environmental Law Center (by Nicholas Leonard ) for Detroiters Working for Environmental Justice, Original United Citizens of Southwest Detroit, and Sierra Club.
Dana Nessel, Attorney General, Fadwa A. Hammoud, Solicitor General, and Neil D. Gordon, Assistant Attorney General, for the Department of Environmental Quality and Dan Wyant.
Driggers, Schultz & Herbst, Troy (by William C. Schaefer ) and Adam P. Hall for AK Steel Corporation.
Before: Tukel, P.J., and Jansen and Cameron, JJ.
Cameron, J. South Dearborn Environmental Improvement Association, Inc. (South Dearborn), an environmental advocacy group, appeals a circuit court order affirming the decision of the Department of Environmental Quality (the DEQ) to issue a permit for an existing source of air pollution to Severstal Dearborn, LLC (Severstal).1 We affirm.
This appeal arises out of the DEQ's decision to issue Permit to Install (PTI) 182-05C in 2014. Before PTI 182-05C was issued, the DEQ had issued three earlier permits: PTI 182-05, PTI 182-05A, and PTI 182-05B. In a prior appeal concerning the issuance of PTI 182-05C, our Supreme Court summarized the facts surrounding the issuance of the permits as follows:
After the petition for judicial review was filed in the circuit court, AK Steel purchased the steel mill, intervened in the appeal, and then moved to dismiss under MCR 2.116(C)(1) (lack of jurisdiction). AK Steel argued that South Dearborn's petition for judicial review was untimely filed and, therefore, the circuit court lacked jurisdiction over the case. The circuit court concluded that South Dearborn had 90 days from the date that PTI 182-05C was issued to file a petition for judicial review. The circuit court thereafter found that South Dearborn's petition was timely filed and denied AK Steel's motion to dismiss.
AK Steel applied to this Court for leave to appeal the circuit court's decision on jurisdiction. This Court affirmed, but on different grounds. Specifically, this Court held that the petition was timely because it was filed within the 60-day period provided by MCR 7.119. South Dearborn Environmental Improvement Ass'n, Inc. v. Dep't of Environmental Quality , 316 Mich. App. 265, 277-278, 891 N.W.2d 233 (2016), vacated in part 502 Mich. 349, 917 N.W.2d 603 (2018).
AK Steel sought leave to appeal in the Michigan Supreme Court. Following oral argument, our Supreme Court harmonized the provisions of MCL 324.5505(8) and MCL 324.5506(14) and held that "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." South Dearborn Environmental Improvement Ass'n, Inc. , 502 Mich. at 370-372, 917 N.W.2d 603. Accordingly, because the petition for judicial review was timely filed 59 days after PTI 182-05C was issued, our Supreme Court held that the circuit court properly denied AK Steel's motion to dismiss, and the matter was remanded to the circuit court for further proceedings. Id. at 374, 917 N.W.2d 603.
Between September 2018 and December 2018, the parties filed their briefs in the circuit court. South Dearborn argued that the DEQ's issuance of PTI 182-05C was not authorized by law. In essence, South Dearborn argued that the DEQ unlawfully processed Severstal's permit in a way that allowed the company to evade a number of current air-pollution standards. South Dearborn further argued that the 2014 modification of the 2007 permit was not authorized or governed by any rule and that the modification specifically violated rules promulgated by the agency. South Dearborn asserted that as a result of these irregularities, the DEQ's issuance of PTI 182-05C was contrary to law, in excess of the agency's authority, based on improper procedure, and arbitrary and capricious.
In response, the DEQ and AK Steel argued that the case did not involve a typical challenge to an air-pollution permit that authorized changes to a factory or new construction of pollution-emission sources. Instead, the matter involved a simple modification to an existing permit to update certain emission limits in the 2007 permit. The DEQ argued that federal regulations promulgated after 2007 to limit certain emissions did not apply because Severstal was not proposing to make major changes to its mill. The DEQ asserted that, under these circumstances, it had no authority to impose post-2007 air-pollution regulations on Severstal.
Following a hearing in July 2019, the circuit court affirmed the DEQ's decision to issue PTI 182-05C.2 At the outset, the circuit court explained that it was to determine whether the DEQ's decision was authorized by law. The circuit court noted that a decision was not authorized by law if it violated a statute or constitution, exceeded the agency's statutory authority or jurisdiction, materially prejudiced a party as a result of unlawful procedure, or was arbitrary and capricious. The circuit court then found that the DEQ's decision was authorized by law. Specifically, the court found that the DEQ, when issuing PTI 182-05C, was permitted to consider and apply the circumstances that existed when PTI 182-05B was issued in 2007. This appeal followed.
"A final agency decision is subject to court review but it must generally be upheld if it is not contrary to law, is not arbitrary, capricious, or a clear abuse of discretion, and is supported by competent, material and substantial evidence on the whole record." VanZandt v. State Employees’ Retirement Sys. , 266 Mich. App. 579, 583, 701 N.W.2d 214 (2005). See also Const. 1963, art. 6, § 28. In this case, Part 55 of the NREPA does not require the DEQ to conduct an administrative hearing before it issues a permit. Consequently, no contested-case hearing was held.
When the agency's governing statute does not require the agency to conduct a contested case hearing, the circuit court may not review the evidentiary support underlying the agency's determination. Judicial review is limited in scope to a determination whether the action of the agency was authorized by law. The agency's action was not authorized by law if it violated a statute or constitution, exceeded the agency's statutory authority or jurisdiction, materially prejudiced a party as the result of unlawful procedures, or was arbitrary and capricious. Courts review de novo questions of law, including whether an agency's action complied with a statute. [ Natural Resources Defense Council v. Dep't of Environmental Quality , 300 Mich. App. 79, 87-88, 832 N.W.2d 288 (2013) (quotation marks and citations omitted).]
Further, "[a] ruling is arbitrary and capricious when it lacks an adequate determining principle, when it reflects an absence of consideration or adjustment with reference to principles, circumstances, or significance, or when it is freakish or whimsical." Henderson v. Civil Serv. Comm. , 321 Mich. App. 25, 44, 913 N.W.2d 665 (2017) (quotation marks and citation omitted). "This Court adopted this particular formulation of the authorized-by-law standard, in part, because it focuses on the agency's power and authority to act rather than on the objective correctness of its decision." Id. (quotation marks and citation omitted).
Finally, "[w]hether a circuit court applied the appropriate standard...
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