On August 22, the Michigan Court of Appeals upheld 3M Company’s challenge to rules announced by the Michigan Department of Environment, Great Lakes and Energy (EGLE) that regulate the amount of certain per- and polyfluoroalkyl substances (PFAS) in drinking water. In a 2-1 decision, the court found that EGLE violated the Administrative Procedures Act by failing to include a complete regulatory impact statement (RIS) estimating the true cost of the proposed rule on businesses and other groups.
Although EGLE submitted an RIS, their estimates only cover the costs imposed by the proposed drinking water rule, despite this rule triggering a modification to groundwater criteria as well. Because these groundwater criteria could result in cleanup and thus additional costs to businesses, the court held that the RIS was incomplete, rendering the entire rule invalid.
Under Section 5 of the Safe Drinking Water Act, EGLE is required to craft rules setting state drinking water standards and associated monitoring requirements. In an effort to address mounting concerns surrounding PFAS, EGLE proposed enforceable drinking water standards for seven PFAS. These standards, called Maximum Contaminant Levels, or MCLs, are 8 parts per trillion (ppt) for perfluorooctanoic acid (PFOA); 16 ppt for perfluorooctanesulfonic acid (PFOS); 6 ppt for perfluorononanoate (PFNA); 400,000 ppt for perfluorohexanoic acid (PFHxA); 51 ppt for perfluorohexanesulfonic acid (PFHxS); 420 ppt for perfluorobutane sulfonic acid (PFBS); and 370 ppt for hexafluoropropylene oxide dimer acid (HFPO-DA), also known as GenX.
However, the drinking water standards have other regulatory effects as well. Under Part 201 of the Natural Resources and Environmental Protection Act, whenever new drinking water standards arise under the Safe Drinking Water Act, the criteria for hazardous substances in groundwater also change. Part 201 establishes cleanup procedures in the event that contamination exceeds these criteria, which can be a costly undertaking for a business. EGLE felt that their RIS, which must contain an estimate of the statewide compliance costs of the proposed rule, was not required to extend its analysis to groundwater cleanup. And even if it was required to do so, it would not be “practical,” because of wide variability of potentially impacted media and PFAS concentrations.
The majority disagreed, stating that EGLE was “skirting” its statutory requirement and was thus not entitled to deference. According to Judges Gadola and Murray, the statute “must be read in its entirety,” which includes the triggering of additional costs automatically imposed by an associated rule. Because the rule is therefore not in compliance with the Administrative Procedure Act, the rules are invalid.
Judge Maldonado dissented. In her view, the proposed rule in question was only the drinking water rule, as the groundwater criteria arise outside of the specific regulatory process at issue. Judge Maldonado did not dispute the “ripple effect” created by the drinking water rule, but felt it was outside the rulemaking process at hand. She did acknowledge this appears to be a loophole in the rulemaking process, however.
The ruling is a setback for the state government, which has been aggressive at regulating PFAS. However, the court has decided to allow the MCLs to remain in effect until EGLE’s appeals process is exhausted. The PFAS drinking water and groundwater standards still apply, at least for the time being. For more information regarding the PFAS drinking water and groundwater rules, please contact Scott Watson or your Warner Resources, Energy and Environmental Law Practice Group attorney.
Warner Legal Consultant C.J. Biggs contributed to this eAlert.