Vol. 17, No. 4, Summer 1999, Issue 56
Michael L Robinson, Chair
Linda L. Blais, Editor
Steven E. Chester, Assistant Editor
Cite this publication as 17 Mich Env L J, No 4, p (1999).
The Journal is published three times per year, to inform members of Section activities and other matters of interest to environmental lawyers. Subscription is without charge to members and law student members of the Environmental Law Section. Subscription price is $40.00 (U.S.) per year for non-members. Single issues, as available, may be purchased for $14.00 per issue. To subscribe or purchase single issues please remit funds directly to: State Bar of Michigan, Michigan Environmental Law Journal, Michael Franck Building, 306 Townsend Street, Lansing, Michigan 48933-2083. Copyright 1999 by the Environmental Law Section of the State Bar of Michigan. All rights reserved.
State of the Law 1999 Articles
Recent Developments in Environmental Law
By: Joseph M. Polito, Esq., and Jeffrey L. Woolstrum, Esq. ,Honigman Miller Schwartz and Cohn, Detroit
The following summarizes selected Michigan environmental judicial decisions from May 1998 through May 1999, and statutory and regulatory developments from June 1998 through June 1999. While not encompassing every environmental decision, statute, or rule during these periods, the intent was to include those developments having significant import to environmental law practitioners.
Clean Air Act
Atwood v Wayne Co, No 98-71777 (ED Mich, Sept 14, 1998).
Plaintiffs, residents of Wayne County, Michigan ("County"), sued the County and Carol Browner, Administrator of the United States Environmental Protection Agency ("EPA"), challenging the authority of the County to implement and enforce the National Emission Standards for Hazardous Air Pollutants ("NESHAP") for asbestos ("Asbestos NESHAP"). This action was one of a series of lawsuits brought by the plaintiffs to block the implosion of the J.L. Hudson Building in Detroit, Michigan. The plaintiffs claimed that EPA had improperly delegated authority to implement and enforce the Asbestos NESHAP to the County and sought orders to compel Browner to comply with the Clean Air Act, 42 USC 7401 et seq. ("CAA"), and to enjoin the County from entering the J.L. Hudson Building for any purposes connected with the Asbestos NESHAP.
The County moved for summary judgment, arguing that EPA had properly delegated authority to implement and enforce the Asbestos NESHAP to the State of Michigan, not to the County, and that the County acted as an agent of the State of Michigan pursuant to a "work contract" between the County and the State of Michigan.
The court found that EPA has delegated authority to implement the Asbestos NESHAP to the State of Michigan, not to the County, and that the County, acting pursuant to the work contract and state procedures and regulations, served as an agent of the State to implement the Asbestos NESHAP in Wayne County. The court found that the plaintiffs had presented no authority to support their argument that the State of Michigan could not contract with the County to implement the Asbestos NESHAP in Wayne County on behalf of the State. Therefore, the court granted the County's motion for summary judgment. Moreover, because the claims against the County had been dismissed, the court found that there was no basis for relief against Browner and, therefore, the court granted Browner's motion to dismiss the plaintiffs' complaint.
Clean Water Act
National Mining Ass'n v Army Corps of Eng'rs, 330 US App DC 329; 145 F3d 1399 (1998).
Section 404 of the CWA authorizes the United States Army Corps of Engineers ("COE") to issue permits for the discharge of dredged or fill material into navigable waters at specified disposal sites. Excavation activities that involved the removal of material from waters, such as landclearing, ditching, and channelization, were not regulated under Section 404 until passage of the "Tulloch Rule." As part of a settlement agreement in North Carolina Wildlife Fed'n v Tulloch, No C90-713-CIV-5-BO (ED NC, 1992), EPA and the COE agreed to revise the term "discharge of dredged material" to include small-volume incidental fallback. The effect of the Tulloch Rule was that a Section 404 permit was required for mechanized landclearing, ditching, channelization, or other excavation, and the focus turned to the environmental effect of the activity, rather than on the size of the discharge. The rule created a rebuttable presumption that an activity is regulated under Section 404 and shifted the burden to the regulated party to show, prior to commencing the project, that the federal government does not have jurisdiction over the activity. In order to do this, the party must prove that the activity associated with the discharge has only de minimis environmental effects. The plaintiffs in this case, various trade associations whose members engage in dredging and excavation, challenged the Tulloch Rule on four grounds: (1) it was inconsistent with the language and intent of the Clean Water Act, 33 USC 1251 et seq. ("CWA"); (2) it violated the Administrative Procedures Act, 5 USC 551 et seq. ("APA"), because it exempted navigational dredging and excluded landclearing from a grandfather clause; (3) it violated plaintiffs' due process rights because it was vague and shifted the burden to regulated parties to show that their activities were not covered; and (4) it was promulgated in violation of the APA's procedural requirements. The United States District Court for the District of Columbia granted the plaintiffs' motion for summary judgment and entered an injunction prohibiting the COE and EPA from enforcing the regulation anywhere in the United States. The district court subsequently issued a stay of its injunction, however, allowing the COE to enforce the rule.
On appeal, the defendants argued that wetland soil, sediment, debris, or other material in the waters of the United States undergo a "legal metamorphosis" during the dredging process, becoming a "pollutant" under the CWA. If a portion of the material being dredged then falls back into the water, argued the defendants, there has been an addition of a pollutant to the waters of the United States. The Court of Appeals for the District of Columbia Circuit disagreed, holding that "[b]ecause incidental fallback represents a net withdrawal, not an addition, of material, it cannot be a discharge." The court continued, "we fail to see how there can be an addition of dredged material when there is no addition of material."
The defendants also pointed to some specific exemptions contained in CWA Section 404(f) to support their position that fallback could reasonably be considered "discharge": "the discharge of dredged or fill material . . . is not prohibited . . . or otherwise subject to regulation" when the discharge results from "normal farming, silviculture, and ranching activities such as plowing, seeding, cultivating, [or] minor drainage . . . and maintenance of drainage ditches." 33 USC 1344(f)(1). The defendants argued that the use of the term "discharge of dredged or fill material" to describe the consequences of the protected activities reflected a congressional belief that fallback is a form of discharge. The court again rejected the defendants' argument, however, noting that some of the named activities may produce fallback, but they may also produce actual discharges (additions of pollutants), so that Section 404(f) "accomplishes a useful purpose simply by exempting them insofar as they produce the latter." Other exemptions seem "just as unlikely to produce fallback as actual discharge, so we are reluctant to draw any inference other than that Congress emphatically did not want the law to impede these bucolic pursuits."
The court continued that it was not holding that the COE may not legally regulate some forms of redeposit under its Section 404 authority, only that by asserting jurisdiction over any redeposit, including incidental fallback, the Tulloch Rule "outruns the [COE's] statutory authority." Although the defendants cited opinions from other circuits in support of their position that redeposit may be regulated under Section 404, the court noted that all of the decisions predated the Tulloch Rule and, therefore, none of them addressed the fallback issue directly. In fact, held the court, none of them contained any language suggesting that regulation of fallback would be appropriate.
On the remaining question of remedy, the defendants challenged the district court's nationwide injunction, arguing that: (1) the plaintiffs were not entitled to an injunction because they presented no record evidence, and the district court made no explicit findings, as to the elements necessary for injunctive relief; and (2) that even if the plaintiffs were entitled to an injunction, the district court erred by granting nationwide relief to the plaintiffs and non-parties alike. On the first argument, the court held that the district court was well within its broad discretion in finding that the complaint placed the agencies on notice that appellees sought both declaratory and injunctive relief and the district court was not required to make express findings as to the elements necessary for a permanent injunction. The court also rejected the defendants' second argument, holding that "when a reviewing court determines that agency regulations are unlawful, the ordinary result is that the rules are vacated -- not that their application to the individual petitioners is proscribed." The court of appeals, therefore, affirmed the district court's judgment.
Following the court of appeals' ruling, the COE instructed its district offices to continue to enforce the Tulloch Rule as it had since the district court's earlier order granting a stay of the injunction. On July 9, 1998, after the appeals court became aware of the COE instruction, it issued an order vacating the portion of the district court's opinion staying the prohibition of enforcement of the Tulloch Rule.
United States v Muskegon Co, 33 F Supp 2d 614 (WD Mich, 1998).
Muskegon County ("County") had been sued by theUnited States concerning alleged violations of the County's discharge limitscontained in its National Pollutant Discharge Elimination System ("NPDES")permit for its publicly-owned wastewater treatment works ("POTW"). Severallocal governments, which had helped fund the County's sewer system ("MunicipalUsers"), intervened as plaintiffs in the lawsuit. The Municipal Users alleged,among other things, that the County had violated its NPDES permit by failingto enforce its Industrial Pretreatment Program. In response to these allegations,several industrial users of the sewer system ("Industrial Users") intervenedas defendants in the lawsuit.
All of the Municipal Users and some of the larger Industrial Users had entered into service agreements with the County regarding the use of the sewer system. These service agreements established "uniform concentration limits" ("UCL") on discharges to the sewer system and contained clauses stating that the purpose of the sewer system was "to provide the maximum possible service to each Contractee and person served by the System." Although not all of the Industrial Users had direct contractual relationships with the County, a Michigan Circuit Court had held in a related lawsuit that those industrial users without individual agreements had "identical contract rights . . . as third party beneficiaries of the municipal agreements."
In order to settle the Municipal Users' claims in the federal litigation, the County and the Municipal Users negotiated a consent judgment that required the County to adopt a new sewer use ordinance with discharge limits that were more stringent than the UCLs established in the service agreements. In addition, the consent judgment required the County to amend each of the existing service agreements to incorporate the new ordinance. This requirement extended to all service agreements, including the service agreements between the County and the Industrial Users who were not parties to the consent judgment.
The Industrial Users argued that the court should not approve the consent judgment because it would unfairly interfere with their contractual rights under the service agreements. The court, however, disagreed. First, the court held that the Industrial Users could not claim any third-party beneficiary rights under the Municipal Users' service agreements. The court noted that each service agreement contained a "reservation of rights" clause, which allowed the County to adopt a new sewer use ordinance in order to comply with applicable law, and a clause that allowed the County to terminate the service agreement upon two years notice. Based on these provisions, the court held that the Industrial Users did not have any vested interest in the UCLs fixed in the Municipal Users' service agreements. With respect to the Industrial Users that had entered into individual service agreements with the County, the court held that the consent judgment would not materially interfere with those agreements=2E First, the court noted that the County had provided each Industrial User with the required notice that their individual agreements would be terminated effective January 1, 2000. Thus, the court concluded that even if the consent judgment interfered with the Industrial Users' contract rights, such interference would be small due to the short duration of the agreements' remaining terms. Further, the court held that the County had a right to amend its ordinance to impose more stringent discharge limits under the terms of the existing service agreements in any case.
Accordingly, because the court also held that the consent judgment served the public interest by resolving a dispute without further litigation, and served the goals of the CWA, the court approved the entry of the consent judgment between the Municipal Users and the County.
Charfoos & Co v Secretary of the Army Corps of Eng'rs, No 97-CV-74206-DT (ED Mich, Apr 3, 1998).
Charfoos and Company ("Charfoos") owned a 57-acre parcel of land in Harrison Township, Michigan, that contained approximately 43 acres of wetlands. The site was approximately 900 feet from Lake St. Clair and 150 feet from the Clinton River Cut-Off Canal. In 1997, the Michigan Department of Environmental Quality ("MDEQ") issued a permit authorizing Charfoos to fill the wetlands and develop the parcel. The Army Corps of Engineers ("COE") subsequently notified Charfoos that it needed a federal fill permit prior to developing the site. Charfoos filed suit, seeking a declaration that the COE lacked jurisdiction over the site. Charfoos argued that the COE's jurisdiction under the CWA is limited to navigable waters and adjacent wetlands, and that the wetlands on the site were not adjacent to navigable waters. The COE argued in response that the court had no jurisdiction to consider this challenge to the COE's jurisdiction over the wetland area because there had not yet been any final agency action.
The court first noted that Section 404 of the CWA authorizes the Secretary of the Army to issue permits for the discharge of dredged or fill materials. Under CWA Section 404(g), EPA may delegate this authority to a state. In 1984, EPA delegated wetlands permitting authority under CWA Section 404 to Michigan under a Memorandum of Agreement ("MOA")=2E Under CWA Section 404(g)(1), the delegation did not cover "waters which are presently used, or are susceptible to use in their natural condition or by reasonable improvement as a means to transport interstate or foreign commerce shoreward to their ordinary high water mark, including . . . wetlands adjacent thereto."
The court did not address whether the COE jurisdiction actually extended to the wetlands on the site under the delegation exception provided in CWA Section 404(g)(1). Rather, it agreed with the COE that the court did not have jurisdiction to consider the question. First, the court held that it lacked jurisdiction under the CWA to review pre-enforcement actions by the COE. The court stated, therefore, that determinations by the COE that it has jurisdiction over wetlands cannot be reviewed except in the context of an enforcement action or a final permit decision.
The court also rejected Charfoos' argument that it was a "third party beneficiary" and, therefore, had contractual rights under the MOA. The court held that it lacked jurisdiction over a claim for declaratory relief or specific performance against the United States based on a breach of contract theory because such an action must be brought in the United States Court of Claims and that, in any event, Charfoos' claim remained, in essence, an impermissible pre-enforcement challenge to the COE.
Finally, the court disposed of Charfoos' claim that, under applicable United States Supreme Court precedent, the court may review an agency's assertion of jurisdiction where the agency has acted "in excess of its delegated powers and contrary to a specific [statutory] prohibition." The court held that, before a court may step in, the agency's action must be "manifestly outside of its delineated authority." In this case, the COE maintained that the Clinton River Cut-Off Canal, to which the wetlands were allegedly "adjacent," is at or below Lake St. Clair's or the Clinton River's ordinary high water mark, and therefore falls within its jurisdiction. "Given the close proximity of the wetlands in question to the Clinton River Cut-Off Canal and Lake St. Clair," the court stated that it "cannot conclude that the [COE] is acting manifestly outside its jurisdiction." Accordingly, the court granted the COE's motion to dismiss for lack of subject matter jurisdiction.
Michigan Peat v EPA, 7 F Supp 2d 896 (ED Mich, 1998) and No 98-1595 (CA 6, Apr 28, 1999).
Bay-Houston Towing Company's Michigan Peat Division ("Michigan Peat") owns or controls two non-contiguous parcels of wetlands in Minden Township, Michigan. Michigan Peat had continuously mined peat from a part of "Minden North" since 1958. Peat mining involves removing the peat moss by clearing surface vegetation and allowing the peat moss to dry in the sun. The process involves the discharge of fill material into wetlands and is, therefore, regulated under Section 404 of the CWA. Although Michigan has been delegated authority to administer its own permitting program for the discharge of dredged or fill material into wetlands, if EPA objects to a permit issuance decision, the State is barred from issuing the permit. If the State cannot resolve EPA's objections, the authority to enforce Section 404 of the CWA reverts to the COE.
In 1991, MDEQ's predecessor agency, the Michigan Department of Natural Resources ("MDNR"), informed Michigan Peat that it needed a permit to continue to mine peat. Michigan Peat filed the application and also sought to expand its peat mining activities to "Minden South." Michigan Peat withdrew this application so that it could prepare a comprehensive environmental assessment, however, and filed a second application in 1994=2E After reviewing the assessment, EPA formally objected to the issuance of any permit. In 1995, MDNR found that the Minden Bog was a rare and irreplaceable wetland ecosystem with significant ecological and scientific value and proposed a permit that would allow peat mining of less acreage, shorter duration, and more minimized environmental impact than that requested by Michigan Peat. The permit proposed by MDNR: (1) acknowledged that 749 acres of Minden North were mined prior to 1980 and, therefore, neither the state nor federal governments had Section 404 jurisdiction; (2) classified 202 acres of Minden North as eligible for an "after-the-fact" permit because mining had occurred there prior to the effective date of the CWA; and (3) denied authority to mine peat on the remaining 1049 acres of Minden North and the entire South Minden parcel. EPA withdrew its objections and MDNR issued the permit. Because Michigan Peat did not agree with all the terms of the permit, however, Michigan Peat did not sign the permit and it did not take effect. Michigan Peat filed an administrative appeal opposing the conditions imposed by the "after-the-fact" permit and filed a regulatory takings claim against the State in the Michigan Court of Claims.
Following transfer of authority from MDNR to MDEQ, MDEQ sought EPA's approval to settle the takings claim but EPA rejected the proposal. In 1997, MDEQ issued a "state-only" permit stating that due to EPA's continued objections, the State was precluded from authorizing the project under CWA Section 404 and permitting authority was, therefore, transferred from MDEQ to the COE. Michigan Peat subsequently sued the State and federal authorities to enjoin them from exercising oversight or enforcement authority over Michigan Peat's attempts to mine peat.
The United States District Court for the Eastern District of Michigan considered motions to dismiss by the State and federal agencies. EPA argued that the court was without jurisdiction because there was no final agency action ripe for judicial review. MDEQ argued that the Eleventh Amendment bars a suit against the State without its consent and that Michigan Peat failed to state a claim upon which relief could be granted. The court accepted EPA's argument, holding that EPA's only actions in the matter, commenting upon and objecting to any proposed permit and issuing a compliance order to Michigan Peat, did not constitute reviewable actions and, therefore, the court was without subject matter jurisdiction. The court also accepted MDEQ's argument, finding that there was nothing in the record to indicate that the State had waived its Eleventh Amendment immunity. Michigan Peat merely alleged that MDEQ adhered to federal law in the Section 404 permitting process. The court, therefore, granted the defendants' motions to dismiss. Michigan Peat appealed.
In an opinion issued April 28, 1999, the Sixth Circuit Court of Appeals first held that EPA's actions were final actions and were, therefore, reviewable. The court noted that EPA had voiced its objections throughout the application process but ultimately withdrew them and agreed to the proposed permit that MDEQ sent to Michigan Peat in 1995=2E Although the permit specifically stated that it was not final or valid until signed and accepted by Michigan Peat and returned to MDEQ, "the logical conclusion is that the EPA's action was final. Statutorily, there was nothing left for the EPA to do once it signed off on the proposed permit." In addition, if Michigan Peat had signed the permit, it would have waived its appellate remedies. The Sixth Circuit held that the district court had erred, then, in dismissing Michigan Peat's action against the federal government.
The Sixth Circuit next held, however, that the district court had not erred in dismissing Michigan Peat's action against the state because the Eleventh Amendment protects Michigan and MDEQ from Michigan Peat's claims. Congress has not abrogated Michigan's immunity and Michigan has not waived such immunity: "The fact that Michigan volunteered to involve itself in the Section 404 program does not constitute consent to be sued in federal court." The Sixth Circuit, then, affirmed in part and reversed in part the district court's ruling and remanded for further proceedings.
United States v Bay-Houston Towing Co, 33 F Supp 2d 596 (ED Mich, 1999).
The United States brought the instant suit alleging that Michigan Peat was conducting the following activities in violation of the CWA: (1) discharging pollutants via peat bog drainage water through six separate ditch outfalls into the Black River Drain without an NPDES permit under Section 402 of the CWA; (2) discharging dredged or fill material into wetlands without a permit under Section 404 of the CWA; and (3) violating the EPA administrative compliance order issued under Section 309(a) of the CWA. The government sought an injunction requiring Michigan Peat to immediately cease further discharges of pollutants into the Black River Drain, cease further discharges of dredged or fill material into the wetlands on the Minden Site, submit a wetland restoration plan to EPA for its approval, and restore the wetlands in accordance with the plan following its approval by EPA. The government also sought civil penalties of not more than $25,000 per day for each violation. On July 24, 1998, MDEQ issued an NPDES permit to Michigan Peat authorizing the discharge of peat bog drainage water into the Black River through three outfalls. Michigan Peat then sought summary judgment as to Counts 1 and 2.
With respect to Count 1, Michigan Peat argued that Count 1 is moot because the permit issued by MDEQ authorizes the discharge of peat bog drainage water into the Black River. While it conceded that a permit had been issued, the government argued that the claim is not moot because the injunctive relief it sought would require Michigan Peat to "reduce the number of outfalls that discharge pollutants to the Black River and comply with other requirements contained in the permit." Count 1 asked the court to require Michigan Peat to "immediately cease further discharges of pollutants into the Black River Drain, except in compliance with [the NPDES permit issued by MDEQ]." The court rejected Michigan Peat's request for summary judgment, holding that the allegation was sufficient to require the court to review Michigan Peat's compliance with the permit. The court stated, however, that it could not "issue an anticipatory injunction in the event that Michigan Peat may violate the permit. The claim under Count 1 is limited to specified violations of the permit identified by the government within 60 days of this Memorandum and Order."
As to Count 2, the government pointed to the following activities of Michigan Peat as being regulated by the CWA: (1) the use of mechanized landclearing equipment to move dredged peat, clay and vegetation to the side of the ditch in the course of excavating and maintaining drainage ditches; (2) the use of that equipment to spread the excavated peat from the side of the ditch onto the bog for future harvest; (3) the use of that equipment to disc the wetland fields, to push peat across the field, and to pile peat into temporary harvest windrows; and (4) the creation of haul roads and use of large vegetation to create the foundation for temporary harvest windrows.
Section 404 of the CWA authorizes the COE to issue permits for the discharge of dredged or fill material into the navigable waters at specified disposal sites. Excavation activities that involved the removal of material from waters, such as landclearing, ditching, and channelization, were not regulated under Section 404 until passage of the "Tulloch Rule." As part of a settlement agreement in North Carolina Wildlife Fed'n v Tulloch, No C90-713-CIV-5-BO (ED NC, 1992), EPA and the COE agreed to revise the term "discharge of dredged material" to include small-volume incidental fallback. The effect of the Tulloch Rule was that a Section 404 permit was required for mechanized landclearing, ditching, channelization, or other excavation, and the focus was on the environmental effect of the activity, rather than on the size of the discharge.
Michigan Peat relied on the decision in National Mining, supra, to argue that the activities pointed to by the government do not constitute regulated "discharges" and, even if the activities exceeded the scope of protected activity in National Mining, they are similarly incidental to removal because material is only temporarily deposited into the bog as one of several stages in its ultimate removal.
The court held that the instant case "has nothing to do with the Tulloch Rule because the activities identified by the government are very different from incidental fallback. Unlike incidental fallback, these activities involve purposeful relocation. . . . [Michigan Peat] removes materials from the bog and, after a varying period of time, deliberately redeposits the materials in other locations within the bog at varying distances." The court further pointed out that Michigan Peat's activities constituted "sidecasting" (placing removed soil in a wetland but at some distance from the point of removal) which, as National Mining stated, has always been subject to Section 404 regulation. In addition, spreading the sidecasted bog material from the side of the ditch into the bog for future harvest also involves relocating the bog materials for a period of time varying from a few hours to a few days and, like sidecasting, can also constitute "addition." Discing also entails, albeit in a more limited manner, deliberately displacing bog materials. The court held, then, that the facts were sufficient to raise a triable issue as to whether discing and the other activities identified by the government constitute regulated "discharges" under the CWA.
The court next reviewed whether Michigan Peat's activities may be categorized as "discharges" when the bog material is only temporarily displaced into other areas of the bog before being removed from the bog. Michigan Peat argued that the roads it constructed in the Minden Bog were created solely for the purpose of moving mining equipment for the company's peat harvesting operations and pointed to the CWA provision that the discharge of dredged or fill material for "the purpose of construction or maintenance of . . . temporary roads for moving equipment . . . is not prohibited or otherwise subject to regulation." 33 USC 1344(f)(1)(E). The court held, though, that whether the roads are temporary is a question of fact. The last road was built in 1985 but none of the roads has been abandoned to date.
Michigan Peat also sought summary judgment as to the question of whether it has discharged "fill material," which is defined as "any material used for the primary purpose of replacing an aquatic area with dry land or of changing the bottom elevation of a waterbody." 33 CFR. 323.2(e) and 33 CFR 232.2. The court held that, contrary to Michigan Peat's argument, Michigan Peat's use of indigenous bog vegetation and clays to create haul roads and windrow foundations could constitute the discharge of "fill materials" under the CWA. The court, therefore, denied Michigan Peat's summary judgment motion.
Aetna Casualty & Surety Co v Dow Chem Co, 10 F Supp 2d 771 (ED Mich, 1998) and 10 F Supp 2d 800 (ED Mich, 1998).
Dow Chemical Company and Dow Corning, Inc. (collectively, "Dow") have been pursued by numerous third-parties and governmental entities arguing that Dow is responsible for alleged environmental contamination at certain industrial sites. Dow sought indemnity from 48 of Dow's insurance carriers (collectively, "Insurance Carriers") under a series of comprehensive general liability ("CGL") policies it purchased between 1944 and 1985, including excess policies it first purchased in 1955. One of the Insurance Carriers filed a declaratory judgment action against Dow and the other Insurance Carriers requesting that the court determine the rights and liabilities of the parties. In the interest of resolving the dispute efficiently, the parties agreed to focus on just 10 sites: Brookhurst; Cliffs-Dow; Daffron & Pinion; Harris/Farley Street; Hartley & Hartley; Midland, Texas; Monahans, Texas; Petro Processors, Inc. ("PPI"); Silresim; and Conalco (collectively, "Final Sites").
The court first considered the Insurance Carriers' arguments that Dow could not show that the "sudden and accidental" exception to the pollution exclusions contained in some of their policies applied. Dow argued that the Insurance Carriers were not entitled to summary judgment regarding seven of the Final Sites because there were genuine issues of material fact as to whether some of the damage at those sites was the result of sudden and accidental events. The court ruled that, to survive the motion for summary judgment, Dow must show, for each site, a factual basis that: (1) there was a discrete, identifiable, isolated discharge or release that can be separated from the historical, ongoing, gradual discharges or releases of pollution or contaminants that occurred in the normal course of operation; (2) each of those discrete discharges can be considered "sudden and accidental;" and (3) some of the relevant damage at a particular site arguably may be traced to those discrete "sudden and accidental" discharges. The court granted the Insurance Carriers' motions for summary judgment with regard to several sites for which Dow had not met its burden of proving there had been "sudden and accidental" discharges and denied the motions with respect to several sites for which Dow had established a genuine issue of material fact as to whether there had been a "sudden and accidental" discharge within the relevant insurance policy periods.
On the second motion, one Insurance Carrier argued that its accident-based insurance policies did not require it to provide indemnification coverage of Dow's claims at the Cliffs-Dow site because Michigan law defines "accident" to afford coverage only where property damage is caused by sudden, unintended, and unexpected events or actions. Because the relevant policies did not define the term "accident," the court deferred to the Michigan Supreme Court's definition of that term: "an undesigned contingency, a casualty, a happening by chance, something out of the usual course of things, unusual, fortuitous, not anticipated, and not naturally to be expected." The court held that Michigan law did not support the Insurance Carrier's argument that intentional acts that cause unintended and unexpected property damage cannot be construed as "accidents." Dow had shown that it did not expect or intend to cause the property damage at the Cliffs-Dow site. Therefore, the court denied the Insurance Carrier's motion for summary judgment on the issue.
In the second opinion, issued on June 8, 1998, the court considered summary judgment motions by several of the Insurance Carriers who argued that Dow's notice of "occurrences," "claims," or "suits" was untimely and caused them prejudice, thus precluding indemnification under the policies. The court ruled that the Insurance Carriers must show: (1) that Dow's notices to the Insurance Carriers of occurrences, claims, and suits were untimely; and (2) the Insurance Carriers suffered actual prejudice as a result of Dow's delay in providing notice of occurrences, claims and suits. The court interpreted Michigan law such that notice was timely under Dow's typical CGL policies if it was provided within a "reasonable time, dependent upon the facts and circumstances of the case."
Dow argued that its decisions as to when to provide notice to the Insurance Carriers regarding third-party suits were reasonable because: (1) it reasonably concluded that it could select which of its Insurance Carriers it would notify and reasonably concluded that the selected primary insurer would then seek contribution from the other Insurance Carriers if it so desired; and (2) its notice decisions regarding governmental agency environmental actions were reasonable because it gave notice to the Insurance Carriers once it determined that the legal uncertainties and coverage questions were sufficiently settled and coverage was available and because the Insurance Carriers' routine and repeated coverage denials led Dow to reasonably conclude that notice to the Insurance Carriers would be futile prior to the time it finally did provide notice. The court held, however, that Dow failed to point to any policy language or case law to support its argument that notice provided to one insurer suffices as notice to all other insurers and precludes those other insurers from successfully asserting a late notice defense. The court also ruled that Dow likewise failed to cite to any Michigan case law interpreting the relevant notice language in the insurance policies as permitting the insured to unilaterally decide whether and when coverage is available and to unilaterally decide which of its insurers it will notify simply because those decisions may be "reasonable" under the circumstances.
On the issue of whether the Insurance Carriers have suffered actual prejudice as a result of Dow's delay in providing notice of occurrences, claims, and suits, the court noted that an insurer has been prejudiced "where the delay `materially' impairs an insurer's ability to contest its liability to an insured or the liability of the insured to a third party." The court rejected the Insurance Carriers' argument that Michigan courts presume the insurer has been prejudiced simply by observing the length of the delay in providing notice. The court held that an insurer's "bald assertion that witnesses have died, documents have been lost or destroyed, or opportunities have been lost is insufficient to show actual prejudice." Instead, the insurer must show that its interests were actually prejudiced, not just speculate that its interests were prejudiced.
The court stated that to determine whether an Insurance Carrier was prejudiced by delay, the court must consider whether the delay has materially impaired the Insurance Carrier's ability to: (1) investigate liability and damage issues so as to protect its interests; (2) evaluate, negotiate, defend, or settle a claim or suit; (3) pursue claims against third parties; (4) contest the liability of the insured to a third party; and (5) contest its liability to the insured. The court applied the foregoing principles in reviewing the circumstances of the notice provided to each Insurance Carrier for each of the sites and granted or denied each Insurance Carrier's motion for summary judgment based on the particular facts and circumstances.
Comprehensive Environmental Response, Compensation and Liability Act
Carter-Jones Lumber Co v Dixie Dist Co, 166 F3d 840 (CA 6, 1999).
Carter-Jones Lumber Company ("Carter-Jones") owned property in Columbus, Ohio ("Site"), which became contaminated by polychlorinated biphenyls ("PCBs") released from transformers stored on the property by Top Dollar Liquidators ("Top Dollar"), the lessee of the Property. Dixie Distributing Co. ("Dixie") purchased ten transformers containing PCBs in 1985, and Harry Denune ("Denune"), Dixie's president, chief executive officer, and only shareholder, apparently negotiated the purchase. In 1986, Dixie sold three of the transformers, and in June, 1987, Dixie sold the seven remaining transformers to Top Dollar. Top Dollar then moved four of them to the Site.
In July 1988, a citizen notified the Ohio Environmental Protection Agency ("OEPA") that transformers were being scrapped at the Site, and that oil was leaking onto the ground. OEPA inspected the Site and discovered the four PCB-containing transformers, two of which showed evidence of leakage. One transformer had been damaged by an employee who opened a valve on it. In May 1989, Denune moved the trailer containing the four transformers from the Site to another property that he owned. OEPA then ordered Denune to clean up the Site.
Carter-Jones entered into a Consent Order with OEPA to clean up the Site and ultimately incurred more than $3 million in cleanup costs. Carter-Jones then sued Dixie and Denune under the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC 9601 et seq. ("CERCLA"), to force them to contribute to pay the cleanup costs=2E The United States District Court for the Southern District of Ohio found Dixie to be liable for 50 percent of Carter-Jones' costs, and Denune liable for 30 percent. The court initially found Dixie and Denune to be jointly and severally liable, but following a motion for reconsideration, amended its order to hold each of them severally liable only. Dixie and Denune appealed the judgment and Carter-Jones cross-appealed the decision of the court holding Dixie and Denune only severally liable.
Under CERCLA, any person who has arranged for disposal of hazardous substances is liable for response costs if that person intended to enter into a transaction that included an arrangement for disposal of hazardous substances. On appeal, the Sixth Circuit stated that "the most probative evidence of intent will be objective evidence of what actually happened rather than evidence describing the subjective state of mind of the actor." The Sixth Circuit held that whether a party "arranged for disposal" is a question of fact, not law, and may be reversed on appeal only if the finding of the district court was clearly erroneous=2E The Sixth Circuit held that the district court's finding of fact that Dixie and Denune intended to arrange for disposal was not clearly erroneous because there was evidence on the record supporting that finding. "The result of the many transactions was that the transformers were indeed being scrapped rather than reused. Arguably shady practices were used by defendants and those with whom they dealt. The district court's inference that defendants intended the arrangement for disposal cannot be overturned on the evidence in this case under a clearly erroneous standard."
The Sixth Circuit next turned to whether Dixie and Denune were protected by the third party defense under CERCLA, which requires proof that the cleanup costs at issue were for a release of hazardous substances caused solely by acts or omissions of a third party, rather than the defendant. To maintain a third party defense, there can be no contractual relationship between the third party and the defendant, either direct or indirect. In this case, however, "[b]ecause the third party alleged to have been the sole cause of the release was the employee of Top Dollar, the person with whom Dixie was said to have arranged for disposal, the third party defense is unavailable." The Sixth Circuit stated that the third party defense would not apply even if the actions of Top Dollar's employee "were intentional and criminal," as long as they were "not unforeseeable."
Dixie and Denune also argued that their right to due process of law was violated by CERCLA because it provides no definite standard to guide a court in allocating responsibility for cleanup costs in a contribution action. Under CERCLA, a court may allocate responsibility for cleanup costs among liable parties "using such equitable factors as the court determines are appropriate." The Sixth Circuit rejected this argument, holding that CERCLA is not unconstitutionally vague because federal courts have traditionally had the power to fashion any remedy deemed necessary and appropriate to do justice in a particular case.
In addition, Denune argued that the trial court erred in holding him personally liable. The Sixth Circuit apparently considered it unclear whether the trial court had based Denune's personal liability on the fact that he had personally participated in making arrangements for disposal, or on the fact that he had held positions as president, CEO, and sole shareholder of Dixie. The Sixth Circuit noted that if the trial court had based its decision on a finding of fact that Denune had personally participated in making arrangements for disposal, that holding would be reversible only for clear error. In contrast, if the trial court had held that Denune was liable solely because of the corporate positions he held, then that would be a conclusion of law subject to a much stricter review on appeal. Because the trial court appeared to have relied at least in part on Denune's corporate positions, the Sixth Circuit reviewed the issue of Denune's personal liability de novo.
Considering the issue of Denune's personal liability as an arranger, the Sixth Circuit relied on a recent United States Supreme Court case holding that a parent corporation that exercised control over the operations of a subsidiary may not, without more, be held liable as an operator of a polluting facility owned or operated by the subsidiary unless the corporate veil is pierced. The Sixth Circuit noted that the Supreme Court additionally held that "a corporate parent that actively participated in, and exercised control over the operations of the facility itself may be held directly liable in its own right as an operator of the facility." The court held, then, that Denune could "be liable as an arranger for disposal due to his status as the sole shareholder of Dixie if Ohio law would allow the piercing of the corporate veil, and he [could] also be held liable in his own right due to his intimate participation in the arrangement for disposal." (Emphasis added). The court noted that under Ohio law, a corporate officer can be held personally liable for a tort committed while acting within the scope of his employment. The Sixth Circuit held that the district court's findings of fact satisfied the Bestfoods requirement that an officer be actively involved in the arrangements for disposal before individual liability may be imposed and, therefore, Denune was properly held individually liable.
The court then considered whether the district court had erred by allocating separate shares to Denune and Dixie and holding that each was responsible only for its own share, rather than jointly and severally liable for both shares. Carter-Jones argued that this issue should be decided as a matter of federal law on the grounds that CERCLA grants authority to the district court to impose joint and several liability on contribution defendants. The Sixth Circuit, however, refused to provide an answer based on federal law, because it felt that it would be more appropriate to consider whether the Ohio law of corporations would resolve this issue=2E The Sixth Circuit concluded that "unrelated defendants are to be made severally liable only, rather than jointly and severally liable, in an action for contribution under CERCLA," relying on its decision in Centerior Service Co v Acme Scrap Iron & Metal Corp, 153 F3d 344, 356 (CA 6, 1998). The court, however, held that CERCLA should not be presumed to alter state law governing the liability of corporations and their officers and owners. Under Ohio corporate law, both a corporation and an officer are liable for the wrongful acts of an officer in the performance of his corporate duties. It was therefore appropriate to assign joint and several liability to Dixie and Denune for Denune's share of the response costs, based on Denune's actions as an officer of Dixie. The court was not so quick to conclude that joint and several liability is appropriate for a corporate shareholder. The Sixth Circuit concluded, "[i]f the corporate veil may be pierced under Ohio law to reach Denune as the sole shareholder, then he will be jointly and severally liable for Dixie's share of the response costs." Because the district court did not address the issue of veil piercing and the Sixth Circuit did not have enough evidence to make a determination on the issue, the Sixth Circuit remanded to the district court for consideration of the issue.
Kalamazoo River Study Group v Rockwell Int'l, No 1:95-CV-838 (WD Mich, Dec 7, 1998) and 171 F3d 1065 (CA 6, 1999).
In 1990, MDNR found that a three-mile portion of Portage Creek, ending at the Kalamazoo River and a 35-mile portion of the Kalamazoo River ("Site") were heavily contaminated with PCBs. MDNR also determined that three paper companies were responsible for the contamination HM Holdings, Inc., Georgia-Pacific Corporation and Simpson Plainwell Paper Company. These three companies joined with a fourth paper company, James River Company, to form an unincorporated association, the Kalamazoo River Study Group ("KRSG"), and voluntarily agreed to conduct an investigation into contamination at the Site.
In 1989, Benteler Industries ("Benteler") had purchased a manufacturing facility located north of Morrow Lake, which is an impoundment on the Kalamazoo River. A 3,200-foot drainage ditch is located on Benteler's property that runs toward Morrow Lake. When Benteler bought the property, it discovered PCB contamination throughout the property. As a result, in 1993, Benteler began cleaning up the PCB contamination pursuant to a remedial action work plan approved by MDNR. All clean up activities were completed by October 1993 and on October 16, 1996, MDNR issued Benteler a clean closure letter.
Although the members of KRSG had not admitted liability or been held legally liable for the contamination at the Site, they had incurred substantial costs in connection with the RI/FS, and would incur additional costs in connection with the cleanup of the Site. Accordingly, KRSG filed suit in December 1995 in the United States District Court for the Western District of Michigan, against several businesses, including Benteler, Eaton Corporation ("Eaton"), and Rockwell International ("Rockwell"), under CERCLA, Part 201 of the Michigan Natural Resources and Environmental Protection Act, MCL 324.20101 et seq. ("NREPA"), and common law theories, seeking to recover its investigation and cleanup costs. In particular, KRSG alleged that Benteler's facility discharged oil-containing wastewater, stormwater and cooling water through the plant's drainage pipes and into the drainage ditch on Benteler's property. According to KRSG, the discharged water transported PCB-contaminated soil and sediment from the drainage ditch and released it into Morrow Lake, then to the Kalamazoo River and downstream to the Site.
The PCBs found at the Site were of the trademark name "Aroclor," which included four different, specific types: Aroclors 1242, 1248, 1254 and 1260. The court stated that the evidence of contributions of PCBs to the Site by the KRSG members was sufficient to determine their responsibility and to impose the costs of clean-up activities on them. The members of KRSG did not contest their liability as principal sources for Aroclor 1242 contamination, but argued that Eaton and Rockwell were responsible for the Aroclor 1254 contamination and sought contribution from Eaton and Rockwell for contamination associated with this type of PCB.
For Eaton, the court found that, although Eaton had discharged oils into the ground and sewers, there was no evidence that these oils had contained PCBs, and thus no evidence that Eaton had contributed to the PCB contamination in the River. The court stated that "[g]iven the evidence that Eaton was discharging large quantities of cutting and quench oils into the sewer lines which were discharged into the [R]iver, if those oils contained PCBs, those PCBs should be present in the ditch and the [R]iver." The court, therefore, entered judgment in favor of Eaton.
As to Rockwell, the court held that KRSG had introduced evidence that Rockwell used PCB-containing oils in its industrial processes. Over the years, Rockwell's various oil waste storage facilities had released so much PCB-containing oil into the River that its banks were saturated with oil, and the River itself developed an oily sheen on its surface. Numerous studies showed that PCBs, including Aroclor 1254, were discovered in every area on the Rockwell site where oils had been handled=2E The court found that Rockwell's discharges of oils containing PCBs were "neither minor nor insignificant." The court stated that "the evidence is sufficient to enable the Court to conclude that PCBs were regular ingredients of the Rockwell plant's process oils, and that they were released to the River in measurable or detectable quantities." Accordingly, the court held that Rockwell was liable for the release of PCBs to the Site. Therefore, the court held that the members of KRSG were entitled to contribution from Rockwell to pay for cleaning up the Site.
Benteler moved for summary judgment, arguing that KRSG could not prove that Benteler had contributed PCBs to the Site. In support of its motion, Benteler presented evidence that the PCBs found in the ditch were confined to the area of the ditch nearest its facility approximately 600 feet from the headwall. Benteler's evidence included the remedial action work plan approved by MDNR that limited Benteler's cleanup activities to the PCB contamination in the first 600 feet of the ditch. MDNR did not require Benteler to clean up the remaining 2,600 feet of the ditch because test results indicated that there were either no PCBs detected or no PCBs detected in excess of Michigan's most stringent cleanup criteria. In addition, Benteler pointed out that soil samples were taken in 1996 further along the drainage ditch at 1,500, 2,000, 2,500, and 2,700 feet from the headwall at the facility which showed non-detectable levels of PCBs. In addition, Benteler offered hydrogeological evidence that the drainage ditch did not have enough water to carry material to the Kalamazoo River. Benteler's experts contended that, due to volume of the water and permeability of the soil in this area, any water discharged into the drainage ditch would soak into the ground prior to reaching Morrow Lake, even with rainfall calculated at twice normal levels. In opposition to Benteler's motion, KRSG relied largely on the testimony of its own hydrogeologist, who criticized the assumptions of Benteler's hydrogeological evidence. KRSG's expert opined that "[a] logical interpretation of the facts leads to the conclusion that the ditch has discharged water and PCBs to the Kalamazoo River" and, therefore, PCBs from Benteler's facility are within the borders of the Site.
The district court granted Benteler's motion, finding that KRSG's expert's conclusion was unreliable and KRSG appealed. On appeal, KRSG argued that its expert's affidavit creates a "classic `battle of the experts' concerning whether PCBs from Benteler's property contributed to PCB contamination at the Site" and, therefore, the district court erred in ruling in favor of Benteler. The appeals court agreed with KRSG that credibility determination, the weighing of evidence, and the drawing of legitimate inferences are issues for the jury to decide, not the district court judge. The appeals court also found, however, that the district court did not "choose sides" to resolve a battle of the experts. Rather, the appeals court stated, the district court focused on the factual underpinnings of KRSG's expert's conclusions. The appeals court noted that, in reviewing expert testimony, a court may look beyond the conclusions of the experts to determine whether the expert testimony rests on a reliable foundation. Here, when the district court did so, it found that KRSG's expert's conclusions were based on "speculation, conjecture and possibility" and that "the inadequate factual basis makes Dr. Brown's affidavit scientifically unreliable." The appeals court stated that "the scientific evidence that provides the basis for [KRSG's expert's] opinion on causation is not sufficient to allow a jury to find that it is more probable than not that Benteler caused PCB contamination at the Site."
In addition, the appeals court found that KRSG's opposition was based primarily on a critique of Benteler's expert's method of calculating the volume of water discharged into the ditch. Specifically, KRSG argued that there was sufficient water flow to carry PCBs through the entire 3,200-foot length of the ditch and into Morrow Lake. The appeals court stated that KRSG "fail[ed] to produce any affirmative evidence that this increased amount of water is sufficient to carry PCBs down the ditch and into the lake," and failed to explain why there were no significant levels of PCBs in the ditch. Also, because it was undisputed that there was a 1,700-foot gap where no PCBs had been detected, the appeals court further stated that "the evidence presented leaves a `gap' that is simply too wide to allow a jury to speculate on the ultimate issue of causation." Thus, the appeals court affirmed the district court's grant of summary judgment in favor of Benteler.
Centerior Serv Co v Acme Scrap Iron & Metal Corp, 153 F3d 344 (CA 6, 1998).
In October 1990, EPA issued a unilateral administrative order ("UAO") under CERCLA to Centerior Service Company ("Centerior") and two other companies ordering them to perform an emergency removal action at the Huth Oil Services ("Huth") site near Toledo, Ohio. This site had become contaminated with PCBs as a result of waste oil reclamation activities conducted by Huth from 1938 until 1990. Centerior and the two other UAO respondents spent approximately $9.5 million complying with the UAO. In August 1994, Centerior and the two other UAO respondents then filed a complaint in federal district court against more than 125 defendants, including several federal agencies, which had allegedly disposed of waste oil at the site. The complaint asked the court to allow the plaintiffs to recover all their cleanup costs from the defendants under Section107(a) of CERCLA, and to hold the defendants jointly and severally liable.
On September 13, 1996, the district court, in response to motions filed by several defendants, ruled that the plaintiffs were not entitled to maintain a CERCLA Section 107 joint and several liability action and could maintain only an action for contribution under Section 113(f)(1) of CERCLA. The court also stated that it would construe the complaint as asserting a contribution claim, rather than a cost recovery claim, and certified the issue for interlocutory appeal to the Sixth Circuit.
The Sixth Circuit affirmed the district court's ruling. "We find that parties who themselves are [potentially responsible parties ("PRPs")], potentially liable under CERCLA and compelled to initiate a hazardous waste site cleanup, may not bring an action for joint and several cost recovery, but are limited to actions for contribution governed by the mechanisms set forth in CERCLA §113(f)." The Sixth Circuit noted that the five courts of appeals that have directly addressed the issue have all ruled that a party that is liable under CERCLA may not assert a cost recovery claim seeking joint and several liability under CERCLA Section 107(a). The Sixth Circuit also noted that the Fifth, Eighth, and Eleventh Circuits have also supported this view, although they have not directly ruled on the issue. The court stated that it would treat these decisions as "persuasive background."
The plaintiffs argued that their claim was not a contribution claim because no judgment had been entered against them determining that they were liable and they had not entered into a settlement with EPA that might be construed as a tacit admission of liability. The Sixth Circuit rejected this argument because under common law there is no requirement that a party must be determined to be liable before it may seek contribution; instead, it is enough "that a plaintiff act under some compulsion or legal obligation to an injured party when he or she discharged the payment. [Citations omitted.] A [UAO] requiring cleanup in the face of penalties or fines clearly satisfies such a requirement." The court also noted that the plaintiffs had taken no affirmative steps to contest their liability, which they could have done by seeking reimbursement of their cleanup costs from EPA under CERCLA Section 106(b)(2). The court stated that "we expressly leave open the question of whether volunteers, or parties who are truly innocent, may seek joint and several cost recovery," following the lead of the First and Seventh Circuits.
The court rejected the plaintiffs' policy argument that PRPs should be entitled to assert cost recovery claims for joint and several liability against other liable parties, as an incentive to perform cleanups. The court observed that the plaintiffs had not voluntarily agreed to do the cleanup under an Administrative Order on Consent ("AOC"), but instead had been issued a UAO. The court noted that even if the plaintiffs had been more cooperative with EPA and entered into an AOC, CERCLA provides other incentives for cooperative parties, including the fact that a court may consider a party's cooperation with the government as an equitable factor in allocating costs among all liable parties. The court stated: "Under such a framework, plaintiffs need not worry about getting stuck with so called `orphan shares.'"
The court rejected the plaintiffs' argument that PRPs who perform work under a UAO must be able to assert cost recovery claims because CERCLA Section 113(g)(3), which establishes a statute of limitations for contribution actions, does not specify the date on which the limitations period begins to run for costs incurred under a UAO. The court found that it was not necessary to rule on the statute of limitations issue, because none had been presented to it; nonetheless, the court observed that there are ways to deal with the bad drafting in the CERCLA statute of limitations provision, and noted that the Tenth Circuit, in Sun Co v Browning-Ferris Indus, 124 F3d 1187 (CA 10, 1997), had done so by applying CERCLA Section 113(g)(2), which applies to initial actions for recovery of costs.
United States v Brighton Twp, 153 F3d 307 (CA 6, 1998).
From 1960 until 1973, the Township of Brighton ("Township") contracted with Vaughan Collett, and his son Jack (collectively, "Collett"), to allow Township residents to dispose of waste on three acres in the southwest corner of Collett's property in exchange for a monthly fee paid by the Township. Collett also accepted waste from other commercial, industrial, and non-resident sources until 1967, when the Township negotiated a new contract with Collett that provided for the exclusive use of the dump by Township residents. The contracts between Collett and the Township required that the dump "meet specifications of and be under the supervision of the [Township's] Board of Appeals." Further, the Township Board often made special appropriations for the dump, such as bulldozing and other maintenance activities, when Collett failed to perform those activities to the Township's satisfaction. The Township also took responsibility for correcting conditions at the dump when it came under the scrutiny of state regulators. The Township eventually paid for the final closure of the dump in 1973 under increasing pressure from state officials to bring the dump into compliance with applicable solid waste regulations.
In 1989, an inspection team from EPA discovered a cluster of 200 deteriorating drums on the parcel that had released hazardous substances to the surrounding soil and groundwater. After spending over $490,000 to clean up the dump, the United States sued Collett and the Township to recover those costs under Section 107 of CERCLA. The United States District Court for the Eastern District of Michigan held that the Township's level of participation in the dump made it an "operator" of the facility, as that term is defined under CERCLA. In addition, the court held that there was no basis for dividing responsibility for the contamination between the Township and Collett and, therefore, imposed joint and several liability on the Township for the entire amount of the cleanup costs.
The Township appealed the trial court's ruling on three grounds. First, the Township argued that the 3-acre portion of the parcel used by Township residents was separate from the "facility" where the leaking drums were found. Second, the Township argued that, even if the entire parcel constituted a single "facility," the Township did not exercise sufficient control over the facility to incur liability as an "operator." Third, the Township argued that, even if it was liable for some amount of harm, the harm and the associated cleanup costs were divisible among the Township and Collett.
On the Township's first argument, the Sixth Circuit upheld the trial court's ruling that the entire 15-acre parcel constituted a single facility for purposes of imposing CERCLA liability. The Sixth Circuit noted that "an area that cannot be reasonably or naturally divided into multiple parts or functional units should be defined as a single `facility' even if it contains parts that are non-contaminated." The court held that, although there were no drums discovered in the southwest portion of the parcel where Township residents generally left their waste, there was no reasonable way to divide Collett's parcel into multiple parts. Evidence presented at trial indicated that Collett often moved waste from one part of the property to another for salvaging purposes so that it was impossible to identify the source of the hazardous substances found at any particular location on the site. Moreover, other testimony indicated that some residents disposed of appliances in the northern part of the parcel. The court concluded that "Collett used the entire property as a dump, and so it is appropriately classified as a single facility."
On the Township's second argument concerning its status as an "operator" of the dump, the Sixth Circuit held that, in order to be liable as an "operator" under CERCLA, the Township must have exercised "actual control" over the activities at the dump as opposed to merely possessing an "ability to control" the dump through regulation. "[M]ere regulation does not suffice to render a government entity liable, but actual operation (or `macromanagement') does," the court stated. The Sixth Circuit listed the following factors that a trial court should weigh to determine whether a government entity has exercised actual control over a facility: "the government's expertise and knowledge of the environmental dangers posed by hazardous waste, establishment and design of the facility, participation in the opening and closing of the facility, hiring or supervising employees involved in activities related to pollution, determination of the facility's operational plan, monitoring of and control over hazardous waste disposal, and public declarations of responsibility over the facility and/or its hazardous waste disposal." The Sixth Circuit held that the trial court had not developed sufficient facts to determine whether the Township was an "operator" of the dump and remanded the case back to the trial court to consider these factors, "as well as any other factors indicative of actual control" over the dump.
Regarding the Township's third basis for appeal, the divisibility of cleanup costs, the Township argued that if it was liable as an operator of the dump, it should only be liable for the 3-acre portion where Township residents disposed of waste or, alternatively, it should only be liable to the extent Township residents contributed to the disposal of the leaking drums. The trial court had held the Township failed to demonstrate that there "was a reasonable basis to conclude that the harm [was] divisible and whether the harm [was] capable of being divided." The Sixth Circuit, however, held that the trial court applied the wrong standard for determining divisibility. The "proper standards for divisibility come from the Restatement (Second) of Torts, which seeks a reasonable basis for determining the contribution of each cause to a single harm," the Sixth Circuit stated. The Sixth Circuit further clarified that a court should not consider fairness-based factors, such as the degree of care exercised by a liable party or the degree of cooperation with government officials, for purposes of determining divisibility. Such factors, the court held, are appropriate in a lawsuit brought by one liable person seeking contribution against another, but are not appropriate in a cost recovery action brought by the government. The court distinguished the divisibility defense to joint and several liability from the equitable allocation principles available under CERCLA: "[t]he former is legal, the latter is equitable; the respective tests used to execute them should reflect this distinction." Accordingly, the Sixth Circuit remanded the matter back to the trial court to reconsider the possible bases of dividing cost between the Township and Collett.
G & H Landfill PRP Group v American Premier Underwriters, Inc, No 96-CV-72947 (ED Mich, Feb 19, 1999).
A PRP Group that is remediating the G&H Landfill Site in Macomb County, Michigan, under a consent decree with EPA and a parallel consent decree with the State of Michigan, sued United Railroad Corporation ("URC") and a number of other parties, seeking contribution for remediation costs. The PRP Group claimed that URC was liable under both CERCLA and Part 201 because URC had owned a portion of the landfill site ("Site") at a time when hazardous substances were disposed of at the Site. The PRP Group claimed that URC was a successor-in-interest to Michigan Central Railroad Company ("MCRR"), which in turn had owned a nine-acre portion of the Site from 1955 through 1973. From approximately 1958 through 1967, MCRR had leased the nine acres to New York Central Railroad ("NYCRR"), which used the property to transport liquid waste in tank cars for disposal in a pit located elsewhere on the Site.
URC asked the court to grant it summary judgment based on three arguments. First, URC argued that it could not be held liable under Part 201, because Part 201, unlike CERCLA, imposes liability on a past owner or operator only if the owner or operator was "responsible for an activity causing a release or threat of release." MCL 20126(1)(b). The court agreed that under Part 201, "merely being a landlord, in the absence of some other conduct which could render [URC] `responsible for an activity causing a release or threat of release,' is an insufficient basis upon which to incur liability under NREPA." The court interpreted the phrase "responsible for an activity causing a release" narrowly, finding that the Michigan legislature added this requirement so that past owners and operators would be liable under Part 201 "only if they had a direct role in the polluting activity." The court concluded that merely receiving rental income was not a "direct role in the polluting activity" of the lessee so as to render the owner liable under Part 201. The court concluded that URC was not "responsible for an activity causing a release" at the G&H Landfill, and, therefore, could not be held liable as a former owner under Part 201.
The court distinguished a decision by the United States District Court for the Eastern District of California in which that court had imposed CERCLA liability on a railroad that had leased a rail facility to another party that used it to load and unload rail cars containing agricultural chemicals. In that case, the California court had held that the railroad lessor did not qualify for the third party defense under CERCLA, and, therefore, was a liable owner under CERCLA. The court held that the California case was not helpful in determining whether URC should be held liable under Part 201 because it dealt with the third party defense under CERCLA, rather than liability under Part 201, which offers broader exemptions from liability than the CERCLA third party defense.
URC's second argument was that it could not be held liable as a past owner under CERCLA because the PRP Group had not presented enough evidence of liability under CERCLA. The four elements of liability under CERCLA are: (1) the polluted site in question is a "facility," as defined in CERCLA; (2) the defendant is a "covered person," as defined in CERCLA; (3) there has been a release or threatened release of a hazardous substance from the facility; and (4) the release or threatened release caused the plaintiff to incur necessary response costs consistent with EPA guidelines. The court rejected URC's argument, and held that there was enough evidence concerning URC's ownership of the Site during the time hazardous substances were disposed of, the release of those substances, and the subsequent cleanup to allow the PRP Group to proceed with the trial on the theory that URC was liable as an owner under CERCLA.
Third, the court considered URC's argument that it could not be held liable for contribution under CERCLA because it was protected from such contribution suits under MCL 324.20129(6), which provides, in relevant part, that "a person who is not liable under this part, including a person who [performs an adequate baseline environmental assessment] and who is otherwise in compliance with Section 20107(a) [due care obligations], shall be considered to have resolved his/her liability to the state in an administratively approved settlement under [CERCLA] and shall by operation of law be granted contribution protection under section 113(f)(2) of [CERCLA] . . . ." The Michigan legislature added this provision in 1995 as a part of its effort to limit the environmental liability of landowners who did not contribute to the contamination on their properties in order to encourage the acquisition and redevelopment of contaminated properties. Although the provision was probably intended primarily to benefit new owners who perform baseline environmental assessments ("BEAs"), it was drafted broadly enough to include past owners like URC who are not liable under Part 201 because they are not "responsible for an activity causing a release."
The court held that considerations of "federal supremacy and preemption" compelled it to hold that this provision of Michigan law could not protect URC against contribution claims by the PRP Group based on CERCLA. The court emphasized that Section 113(f)(1) of CERCLA subjects any liable party, including owners (whether or not they are "responsible for an activity causing a release") to contribution claims based on CERCLA. The court reasoned that a state legislature should not be able to protect a class of owners against contribution suits based on a federal statute. The court reasoned that MCL 324.20129(6) "is in direct conflict with" CERCLA, because it "undermines CERCLA's broad remedial purpose" by imposing a more forgiving test of liability than CERCLA does, and by "extending CERCLA contribution protection to entities that have not entered a settlement with the United States or the State of Michigan." Therefore, the court granted URC's motion for summary judgment on the Part 201 claim but denied URC's motion on the CERCLA claims.
Resource Conservation and Recovery Act
United States v Kelley Technical Coatings, Inc, 157 F3d 432 (CA 6, 1998).
Kelley Technical Coatings, Inc. ("Kelley") operates two paint manufacturing plants in Louisville, Kentucky. Arthur Sumner ("Sumner") was Kelley's Vice President in charge of manufacturing operations. Sumner's duties included overseeing the manufacturing process, including the storage and disposal of hazardous waste. He was also responsible for Kelley's compliance with environmental regulations. The Kentucky Department of Environmental Protection discovered between 600 and 1000 drums located behind one of Kelley's manufacturing plants during a July 1992 inspection=2E The drums had been stored on-site for more than 90 days and at least some of the drums were leaking. Before the inspection, Kelley employees had poured contaminated rain water from the drums onto the ground, and had spilled some of the paint residue in the drums on the ground while consolidating the contents of various drums.
A federal grand jury indicted Kelley and Sumner on three separate counts: (1) conspiracy to store and dispose of hazardous waste without a permit, (2) storage of hazardous waste without a permit, and (3) disposal of hazardous waste without a permit. Kelley and Sumner were acquitted on the conspiracy charges but were convicted on the remaining charges. The court imposed a $225,000 fine on Kelley, and a $5,000 fine and a prison term of 21 months on Sumner.
On appeal, Kelley's and Sumner's primary argument was that the district court had given improper instructions to the jury concerning the kinds of knowledge which a defendant must have to support a criminal conviction under the Resource Conservation and Recovery Act, 42 USC 6901 et seq. ("RCRA"). Kelley and Sumner had been charged under Section 3008(d)(2)(A) of RCRA, which authorizes the imposition of criminal penalties for anyone who "knowingly treats, stores, or disposes of any hazardous waste identified or listed under this subchapter" either "without a permit," or "in knowing violation of any material condition or requirement of such permit." The trial court had instructed the jury that it could find the defendants guilty only if it found that, among other things, the defendants had "knowingly stored material" at the plant for more than 90 days, and that the defendants "knew that the material was waste and that it had the potential to be harmful to others or to the environment."
The trial court gave a similar instruction on the charge of knowing disposal. The trial court also instructed the jury that the United States was not required to prove that the defendants knew that the material was either a listed hazardous waste or a characteristic hazardous waste, or that the defendants knew that they were required to obtain a permit before storing or disposing of the material. Kelley and Sumner argued on appeal that the trial court should have instructed the jury that it could convict the defendants only if it determined that they knew that the paint residues in the drums were regulated hazardous wastes, and knew that they were legally required to obtain a permit.
To prevail on this argument, Kelley and Sumner had to persuade the Sixth Circuit to overrule or distinguish numerous cases which hold that a criminal defendant can be convicted even if the defendant does not know that his acts are illegal, including United States v Dean, 969 F2d 187 (CA 6, 1992). Kelley and Sumner argued that two United States Supreme Court decisions decided after Dean undermined the reasoning in Dean, but the appeals court rejected this argument. Kelley and Sumner also argued that a recent decision by the Fifth Circuit in United States v Ahmad, 101 F3d 386 (CA 5, 1996) was inconsistent with Dean. In Ahmad, the Fifth Circuit had held that in a criminal prosecution involving the CWA, the trial judge should have instructed the jury that the government had to prove that the defendant knew that the substance he discharged was a "pollutant."
The Sixth Circuit held that neither the two Supreme Court cases nor the Ahmad case had held that knowledge of the law or knowledge of the regulatory requirements was an element of the criminal offense, but had instead been decided on the basis of whether the defendant had knowledge of facts, such as the fact that a firearm was capable of firing automatically, the fact that the subject of a pornographic picture was a minor, or the fact that the substance discharged into water was a pollutant. The Sixth Circuit concluded that the instructions in this case were proper because they required the government to prove that Kelley and Sumner each had knowledge of the fact that Kelley was storing and disposing of paint residues, knowledge that the paint residues were wastes, and knowledge that the wastes had the potential to harm others or the environment. The court concluded that it was not necessary for the government to prove that either defendant had knowledge that the residues qualified as either a listed waste or a characteristic waste under RCRA.
The Sixth Circuit also rejected an argument by Kelley and Sumner that they believed that the materials being stored were not hazardous wastes, but were instead raw materials or offspecification materials that they intended to reuse in the paint manufacturing process. The Sixth Circuit considered this argument only briefly, noting that the jury had been instructed that the defendants had to know that the materials were waste, and expressing the opinion that defendants "were not ignorant about the hazardous nature of the materials they were handling."
Davis v Sun Oil Co, 148 F3d 606 (CA 6, 1998).
In 1985, Donald Davis purchased from Sun Oil Company ("Sunoco") land in Ohio on which Sunoco had operated a gasoline station. Prior to the sale, Sunoco informed Davis that it was removing the four gasoline underground storage tanks ("USTs") on the property. After the sale, Davis learned that Sunoco had apparently left the UST piping in place when the tanks were removed. Sunoco and Davis subsequently entered into a letter agreement under which Sunoco agreed to clean up the remaining contamination on the property. When Sunoco failed to clean up the property in accordance with the letter agreement, Davis sued Sunoco in Ohio state court in May 1991, alleging nuisance, breach of contract and fraud. In March 1995, the trial court adopted a referee's recommendation that Sunoco be found liable for breach of contract and fraud and that Davis be awarded specific performance of the letter agreement as well as compensatory and punitive damages. In January 1996, the Ohio Court of Appeals affirmed the decision of the trial court and further ordered Sunoco to complete the cleanup of the property in an expedited manner.
Prior to the state court decisions, in October 1993, Davis filed a RCRA citizen suit in the United States District Court for the Southern District of Ohio alleging that Sunoco's actions had "contributed to and caused the disposal of solid or hazardous waste on the property which may present an imminent and substantial endangerment to health or environment" in violation of RCRA. In July 1995, Sunoco moved for summary judgment in the federal action, claiming that the doctrine of res judicata prevented Davis from maintaining the federal suit. Sunoco argued that, if Davis was successful in his RCRA citizens suit, Davis would not be entitled to anything more than an order requiring Sunoco to take "necessary action" to remediate the property, which is exactly the relief Davis had already received from the state court. The district court granted Sunoco's motion and Davis appealed.
In determining whether the district court properly applied the doctrine of res judicata to Davis' federal claim, the Sixth Circuit reviewed the district court's reasoning on whether the claim "might have been litigated" in the state court proceedings or whether, instead, the federal courts enjoyed exclusive jurisdiction over RCRA actions. The Sixth Circuit found that the citizen suit provision of RCRA did not expressly provide exclusive jurisdiction to federal courts. Although RCRA provides that citizen suits "shall be brought in district court for the district in which the alleged violation occurred or the alleged endangerment may occur," the court noted that the term "shall," as it is used in the statute, does not divest the state courts of jurisdiction over RCRA claims. Therefore, the Sixth Circuit held that, because Davis could have brought a RCRA citizen suit claim in the state action, but failed to do so, Davis' federal suit was barred by the doctrine of res judicata. Accordingly, the Sixth Circuit affirmed the district court's entry of summary judgment for Sunoco.
Pape v Army Corps of Eng'rs, No 2:98-CV-78 (WD Mich, June 5, 1998).
Dale K. Pape, Sr. had sued the COE under the citizen suit provisions of RCRA, claiming that the COE had improperly disposed of hazardous waste at a former military site near Raco, Michigan ("Raco Site"), thus damaging "the wildlife in the area around the Raco Site and the area's beauty." The United States District Court for the Western District of Michigan dismissed Pape's lawsuit on the grounds that he did not have "standing" to bring the suit because he had not suffered a concrete and particularized injury caused by the COE's action. The court held that Pape failed to satisfy this requirement for standing because his injury was only hypothetical and conjectural.
Pape claimed that he had been injured by the COE's disposal activities because he regularly visited the "area around" the Raco Site and had made plans to camp near the site in October of 1998, and that those visits "have and will continue to be negatively affected, as both the number of wildlife sightings and the beauty of the area have diminished." Although the court recognized that "the desire to use or observe an animal species, even for purely esthetic purposes," may confer standing, the court held that Pape's claimed injury was too speculative. At the hearing, Pape's attorney could not precisely identify the locations that Pape claimed to have visited in the "area around" the Raco Site. In addition, the campground that Pape intended to visit was over two miles from the site. The court held that Pape's "vague expression of an intention to vacation at this campground in October 1998, where he anticipates that the number of wildlife sightings and scenic beauty may be diminished, does not suffice to establish a concrete and particularized injury," which is necessary for standing. Accordingly, the court dismissed Pape's lawsuit.
Toxic Substances Control Act
Charter Twp of Van Buren v EPA, 10 F Supp 2d 766 (ED Mich, 1998).
Under the federal Toxic Substances Control Act, 15 USC 2601 et seq. (TSCA), EPA authorized Wayne Disposal, Inc. (WDI) to dispose of wastes containing PCBs in concentrations of 50 or more parts per million at WDI's landfill in the Township. The Township then filed an action in the United States District Court for the Eastern District of Michigan in 1997 challenging EPA's action. On April 14, 1997, the court denied the Township's request for a preliminary injunction that would have stayed EPA's approval for WDI to accept PCB-containing waste while the parties litigated the case. In a final decision on the merits issued on March 20, 1998, the court again rejected the Township's challenge to the approval and noted that the Township was continuing to make several arguments that the court had previously rejected in its ruling declining to issue a preliminary injunction. These arguments were that EPA did not consider data allegedly showing that the landfill site is located in a groundwater recharge zone, that EPA relied on "state evidence" and that the landfill's compliance record warranted denying the PCB approval. The court had rejected these arguments in its April 1997 ruling, and held in its March 1998 ruling that the Township had given the court no reason to reconsider its rulings on those issues.
The court also rejected the Township's argument that EPA had improperly failed to consider the economic impact of its decision to issue the PCB approval. The court observed that TSCA requires EPA to consider "reasonably ascertainable economic consequences" in promulgating rules, and said that EPA, in adhering to the TSCA rules, "presumably addresses economic consequences." In addition, the court held that TSCA language cited by the Township did not, contrary to the Township's position, require that EPA perform a "distinct economic analysis" regarding the PCB approval. Finally, the court found that the administrative record of EPA's decision failed to support the Township's contention that EPA improperly failed to consider public health effects before issuing the TSCA approval. The court, therefore, dismissed the Township's case.
Olin Corp v Yeargin, Inc, 146 F3d 398
(CA 6, 1998).
Olin Corporation ("Olin") owns and operates a chlorine manufacturing plant in Charleston, Tennessee, that utilizes a mercury-cell electrochemical process. In 1997, Olin contracted with Yeargin Corporation ("Yeargin") to conduct certain on-site construction and maintenance services, including the replacement of a header pipe used in the plant's manufacturing processes. Olin's contract with Yeargin provided that "[Yeargin] agrees to protect, indemnify, and hold [Olin] harmless from any and all loss, damage, liability, claims, demands, costs, or suits of any nature whatsoever asserted by employees of [Yeargin] or third persons . . . for property damage, personal injury or death, or otherwise in each case arising out of, in connection with or incidental to Work performed under this Contract."
During the replacement of the header pipe by Yeargin employees, an undetermined amount of caustic soda and toxic mercury spilled onto the floor and onto the clothes and skin of the Yeargin employees. Afterwards, the Yeargin employees who were exposed to the mercury did not clean or decontaminate their bodies, tools or equipment upon leaving the Olin plant, thereby causing them to contaminate their motor vehicles and homes, and expose their spouses to the mercury.
As a result of the exposure to mercury, the Yeargin employees and their spouses filed several lawsuits against Olin in the United States District Court for the Eastern District of Tennessee, seeking compensatory and punitive damages. The Yeargin employees alleged that they became physically ill as a result of their exposure to mercury and sought recovery under such theories as negligence, assault and battery, strict liability, trespass and nuisance to real property, and loss of consortium. The Yeargin employees also alleged that once they began to show symptoms of mercury poison, Olin intentionally mislead them into believing they suffered merely from the flu. The employees further claimed that Olin attempted to conceal its misconduct by falsely reporting to them that testing of the employees' homes did not reveal mercury contamination. To recover from Olin's alleged misrepresentations, the Yeargin employees also asserted against Olin claims of negligent misrepresentation, fraudulent misrepresentation, intentional infliction of emotional distress, and outrageous conduct.
On August 6, 1992, the trial court entered an order holding that, because Olin was the statutory employer of the Yeargin employees, their claims of negligence, assault and battery, strict liability, and loss of consortium were barred by the exclusive remedy provision of the Tennessee Workers' Compensation Act. Four months later, the trial court dismissed the Yeargin employees' fraudulent misrepresentation claims on the grounds that the employees had failed to provide sufficient evidence to support their claims. Prior to trial, however, Olin settled the remaining claims with the Yeargin employees and their spouses.
In addition to the amount paid as a result of the settlement with the Yeargin employees and their spouses, Olin incurred attorneys fees, fines, civil penalties and other costs relating to: (1) a complaint filed by the Tennessee Department of Labor with the State of Tennessee Occupational Safety and Health Review Commission, alleging violations of the state's Occupational Safety and Health Act ("OSHA"); (2) a claim filed by EPA against Olin in the amount of $1,000,000, alleging violations of the CAA; and (3) an administrative order filed by EPA for violations of CERCLA, requiring Olin to reimburse EPA's oversight costs and to clean up the contamination at the plant.
To recover the costs it incurred, Olin then sued Yeargin seeking indemnity under its contract with Yeargin as well as contribution under CERCLA and the Tennessee Uniform Contribution Among Tortfeasors Act ("TUCATA"). The trial court dismissed Olin's contractual indemnity claim seeking reimbursement for the amount Olin paid in settlement to the Yeargin employees and for its CERCLA and OSHA costs. In addition, the trial court dismissed Olin's claims for contribution under TUCATA and its claims for contribution under CERCLA seeking reimbursement for costs associated with the Yeargin employees' transport of mercury to their homes. The trial court also denied Yeargin's motion for summary judgment on Olin's breach of contract claim. Later, on February 11, 1997, the district court denied subsequent motions filed by Olin regarding its remaining claims. Thereafter, Olin appealed to the United States Court of Appeals for the Sixth Circuit.
On Olin's claim for contractual indemnity, the Sixth Circuit disagreed with the trial court's decision related to the costs, fines and penalties Olin incurred for its alleged violation of environmental laws. The Sixth Circuit held that while there was no specific reference in the agreement to environmental liability, the language was sufficiently broad to encompass various costs, fines and penalties incurred by Olin in connection with its alleged violations of federal and state environmental laws because the violations caused property and personal injuries to the Yeargin employees and their spouses. Yeargin was, therefore, required under the indemnity agreement to reimburse Olin for such costs.
As to Olin's other claims for contribution, however, the Sixth Circuit agreed with the trial court in several respects. First, the Sixth Circuit held that Yeargin need not indemnify Olin for Olin's own negligence because the contractual language of the indemnity agreement was too ambiguous to impose such a duty. In addition, the court held that Yeargin did not owe Olin reimbursement for any payments in connection with Olin's settlement agreement with the Yeargin employees and their spouses because under Tennessee's comparative negligence standard, Olin was only responsible for settling its portion of liability. Olin was, thus, not entitled to contribution to the extent that Olin's payments to the Yeargin employees and their spouses represented compensation for Olin's allegedly fraudulent conduct or for compensation for the employee's trespass and nuisance claims. Likewise, the court held that Olin is not entitled to statutory contribution under TUCATA because the right for contribution under TUCATA arises only when the party has paid more than his proportional share of liability and Olin did not provide evidence that the settlement agreements between the Yeargin employees and their spouses resolved both the claims against Olin and against Yeargin.
Accordingly, the Sixth Circuit affirmed the trial court's decision in all respects, except for Olin's claim for contractual indemnification for the various costs, fines and penalties it incurred in connection with its violation of various state and federal environmental statutes. Therefore, the Sixth Circuit reversed the trial court's order granting Yeargin's motion for summary judgment on this claim and remanded the action to the trial court for further proceedings.
NAACP-Flint Chapter v Engler, No 205264 (Mich Ct App, Nov 24, 1998).
The plaintiffs, a group of environmental and civil rights organizations and concerned citizens, brought suit against the Governor of Michigan and MDEQ, challenging MDEQ's decision to grant an air emission permit for a wood waste electric generating incinerator in Genesee Township. The plaintiffs alleged that the issuance of the permit violated Title VI of the Federal Civil Rights Act of 1964; the Equal Protection Clause of the Michigan Constitution, Mich. Const 1963, art I, § 2; the Michigan Environmental Protection Act ("MEPA")(now Part 17 of NREPA); and the Michigan Civil Rights Act. The complaint sought broad equitable relief to enjoin operation of the incinerator and to require MDEQ to revise the air permit for the incinerator. In the course of litigation, all of the plaintiffs' claims were dismissed except for the claims under the Michigan Civil Rights Act. After a trial without a jury, the trial court dismissed the Michigan Civil Rights Act claim.
Although the trial court dismissed the last claim before it, i.e. the Michigan Civil Rights Act claim, the trial court issued an injunction against the defendants directing them not to issue air permits for "major air pollution sources" in Genesee County until MDEQ had developed and adopted policies and procedures to ensure that MDEQ's air permit procedures adequately protect the public health, safety, and general welfare pursuant to Mich Const 1963, art IV §§ 51 and 52 and Part 55 of NREPA. After the court's decision, the plaintiffs filed a motion to amend their complaint to add claims under Mich Const 1963, art IV, §§ 51 and 52 and Part 55 to conform with the trial court's decision, but that motion was denied by the trial court.
The defendants appealed and the plaintiffs cross-appealed the trial court's decision. The defendants presented three arguments to the court of appeals: (1) the trial court erred by issuing an injunction on a claim the plaintiffs did not plead and which was not before the court, (2) the trial court could not issue an injunction after dismissing the last of the plaintiffs' claims because at that time there was no longer a case pending before the court, and (3) the issuance of the injunction violated principles of separation of powers.
The court of appeals found that it was undisputed that the plaintiffs did not seek an injunction on the ground that the MDEQ air permit process violated the Michigan Constitution and Part 55. No such claim was contained in the complaint and the plaintiffs did not argue such a theory at trial. The appeals court held that the trial court had no authority to issue an injunction on the basis of claims that were neither pleaded in the plaintiffs' complaint nor requested by the plaintiffs at any time before or during trial. The court ruled that granting an injunction in such circumstances violated principles of due process because the defendants had no notice of the need to defend against the claim. Therefore, the court of appeals vacated the injunction issued by the trial court. The court of appeals found it unnecessary to address the defendants' remaining arguments.
The plaintiffs also appealed the trial court's dismissal of their claim under the Michigan Civil Rights Act. The appeals court upheld the trial court's decision, finding that the alleged failure of MDEQ to consider race when issuing an air emission permit does not amount to a denial of the full and equal enjoyment of the goods, services, privileges, advantages, or accommodations of a place of public accommodation or public service and, therefore, the plaintiffs had failed to allege a valid claim under the Michigan Civil Rights Act.
The plaintiffs also appealed the trial court's dismissal, before trial, of their claim that the issuance of the air emission permit for the incinerator violated the Equal Protection Clause of the Michigan Constitution. The plaintiffs argued that the issuance of the permit violated the Equal Protection Clause because emissions from the incinerator would have a disparate impact on minorities living near the incinerator, a community that allegedly was already exposed to more environmental hazards than the general population. The trial court had dismissed this claim because the plaintiffs failed to plead or present evidence that the defendants intentionally discriminated against them in issuing the permit. The court of appeals agreed, holding that a mere disparate impact, without intentional or purposeful discrimination, is not a violation of the Equal Protection Clause of the Michigan Constitution. Therefore, the court of appeals upheld the dismissal of the Equal Protection Clause claim because the plaintiffs had not alleged any intentional or purposeful discrimination. The court of appeals vacated the injunction against the MDEQ, but otherwise affirmed the trial court's ruling.
Inland Lakes and Streams
Kiesel Intercounty Drain Drainage Dist v Department of Natural Resources, 227 Mich App 327; 575 NW2d 791 (1998).
The Kiesel Intercounty Drain Drainage District ("Kiesel") was established in 1969 to provide drainage for approximately six square miles of land in Bay and Midland Counties. Construction of the drainage project was interrupted on several occasions, but eventually the portions of the drain in Bay County were completed and, in 1990, Kiesel obtained the necessary rights of way to complete the portion of the drain planned for Midland County. MDNR, however, notified Kiesel that it could not complete the Midland County portion of the drain unless it obtained a permit under the Wetland Protection Act (currently codified as Part 303 of NREPA) ("Wetland Act"). The Michigan Department of Agriculture also notified Kiesel that a permit under the Inland Lakes and Streams Act (now codified at Part 301 of NREPA) ("ILSA") would be required to complete the project. Kiesel initially applied for a permit for a scaled down version of the project, but the permit was denied. Kiesel then filed a lawsuit in the Midland County Circuit Court seeking a declaration that the Midland County portion of the drainage project was exempt from permitting requirements under both ILSA and the Wetland Act. The trial court, on cross motions for summary disposition, initially ruled that because the project was an extension of a drain, permits under both ILSA and the Wetland Act were required. Upon a motion by Kiesel, the trial court reconsidered its decision in light of the Michigan Court of Appeals decision in MDNR v Huron County Road Comm'n, 212 Mich App 510; 538 NW2d 68 (1995). In Huron County, the court of appeals ruled that a project to extend an existing drain and to add a 1,200 foot branch drain was exempt from Wetland Act permit requirements under the Wetland Act's exemption for "maintenance, operation or improvement which includes straightening, widening, or deepening" of an existing drain. The court of appeals ruled that exempt maintenance and improvement activities were not limited to straightening, widening, or deepening an existing drain, but could also include extending an existing drain. Also, in the Huron County opinion, the court of appeals ruled for similar reasons that the same project was exempt from ILSA permitting requirements under ILSA's exemption for "maintenance and improvement" of a drain constructed before January 1, 1973.
In light of the decision in Huron County, the trial court reconsidered its earlier decision and granted summary judgment to Kiesel, ruling that the Midland County portion of the drainage project was exempt from both Wetland Act and ILSA permitting requirements as maintenance and improvement of an existing drain. MDNR then appealed. By the time the court of appeals heard this appeal, the Michigan Supreme Court had vacated the decision in Huron County, without analysis. In reviewing this appeal, the court of appeals focused on a provision of ILSA that had not been brought to its attention by the litigants in the Huron County case or the litigants in the Kiesel appeal. Section 30102(d) of ILSA states that an ILSA permit is required before anyone may "create, enlarge or diminish an inland lake or stream." The court held that, in light of this provision, the extension or enlargement of an existing drain could not be exempt from ILSA permitting requirements as maintenance and improvement of an existing drain. Therefore, the court ruled that the Midland County portion of the Kiesel drain was subject to ILSA permitting requirements. The court of appeals also held that it was unnecessary for that court to determine whether a Wetland Act permit also was required for the Kiesel project, given that the project could not go forward until Kiesel obtains the necessary ILSA permit.
Huggett v Department of Natural Resources, 232 Mich App 188; 590 NW2d 747 (1998).
In 1982, the State of Michigan deeded a parcel of land containing wetlands ("Site") to Michigan National Bank. The deed provided that the land could be used only for peat farming and, if this provision was violated, the State had the option to repossess the parcel. Wallace A. Huggett ("Huggett") later acquired the Site. Huggett sought to build a cranberry farm on 200 acres of the Site, which would have required filling in some of the wetlands. MDNR denied Huggett a wetland permit to begin the construction of the farm. Huggett then sued MDNR, claiming that his proposed farm construction did not require a permit under the Wetland Act based on the "farming exemption" under Section 30305(2)(e), which exempts certain uses from the permit requirements, including farming and agricultural use. The trial court held that the farming exemption was not limited to farms already existing and operational as of October 1, 1980, and that the exemption included all activities essential to begin the successful operation of a farm. MDNR appealed.
The appeals court stated that the Wetland Act had originally been enacted for the purpose of delegating authority to the state under the CWA. The court further stated that, for the State to administer the wetland protection provisions of the CWA, the State's analogous statute "must be enforced in accordance with, and be just as, or more stringent than, its federal counterpart." Because the CWA's farming exemption "applies only to ongoing, established farming operations [and] activities which convert an area into farmland or bring an area into farming use are not exempted," the court held that, by analogy, the Wetland Act farming exemption applies only to established farm uses and not activities required to produce new farmland. The court found additional support for its holding in the language of the Wetland Act. The court noted that the Wetland Act's farming exemption lists "minor drainage" as an example of a permissible farming activity, and that "minor drainage" is defined to refer only to activities on "land in established use for agriculture."
Further, the court noted that the other exemptions of the Wetland Act specifically exempt some forms of farm construction, such as construction of farm ponds and farm roads. Because "no other farm related construction is specifically allowed," the court stated that "it would be improper to infer that other farm related construction activities are implied or that the word `farming' [as used in the Wetland Act exemption] implicitly includes construction activities not explicitly included in the other [the Wetland Act farming exemptions]." Therefore, the court of appeals reversed the decision of the trial court.
Kernen v Homestead Dev Co, 232 Mich App 503; 591 NW2d 369 (1998).
Lloyd and Donna Kernen ("Kernen") and Homestead Development Company ("Homestead") own adjoining parcels of land in Holly Township ("Holly"). Kernen's parcel is partially covered by wetlands. Homestead's parcels also contains wetlands, which are connected to the Kernens' wetlands by a culvert. Homestead planned to develop its property into a manufactured home community and sought to connect its development into Holly's municipal wastewater treatment system. After this initial request was denied, MDNR issued an NPDES permit allowing Homestead to discharge treated sewage into its wetlands, which, in turn, would flow through the culvert into Kernen's wetlands. Kernen originally challenged the validity of Homestead's permit in administrative proceedings before MDNR on the basis that it did not comply with the requirements of various water pollution statutes and constituted an illegal trespass onto the Kernens' property. Kernen's challenges were dismissed and the permit was upheld. Kernen then filed suit in Oakland County Circuit Court seeking an order requiring an end to the discharge and future damages, claiming trespass, nuisance and violations of MEPA. Kernen also sought a reversal of MDNR's decision to issue the NPDES permit to Homestead. The trial court found that Kernen had failed to show harm sufficient to warrant an injunction and awarded nominal damages on the trespass claim. The court also affirmed MDNR's decision to issue the NPDES permit. Both parties appealed, Kernen on the issue of injunctive relief and Homestead on the trespass claim.
The appeals court determined that the trial court erred in its decision to grant Kernen's damages on the trespass claim. The court stated that anticipatory, or threatened, trespass cannot support a claim for damages and that the trial court should have considered the trespass claim only in the context of Kernen's request for injunctive relief. With respect to Kernen's request for injunctive relief, the appeals court stated that "injunctive relief is an extraordinary remedy that issues only =2E . . when there exists a real and imminent danger of irreparable injury." The appeals court found that Kernen had failed to show specific or irreparable harm and, therefore, did not establish a right to injunctive relief. In balancing the benefit of an injunction to Kernen against the inconvenience and damage that would be caused to Homestead by granting the injunction, the appeals court found that the trial court had not abused its discretion in holding that the harm of any injunction to Homestead would be considerable, outweighing Kernen's general claims of lowered property value and exclusive use of the wetlands by Kernen.
Corduroy Rubber Co v Home Indemnity Co, No 191846 (Mich Ct App, Mar 12, 1999).
Corduroy Rubber Company ("CRC") owned and operated a rubber factory from 1919 through December 1986 and used trichloroethylene ("TCE") as a degreasing agent in the manufacturing process. In 1978, CRC acquired Cadillac Molded Rubber Company ("CMR"), which also used TCE as a degreasing agent. On August 2, 1984, an above-ground TCE tank collapsed at CMR's plant in Cadillac, Michigan, causing a large spill of TCE. CRC and CMR (collectively, "Corduroy") sued the parties that had manufactured, sold, and installed the TCE tank ("Tank Defendants") to recover remediation costs resulting from the TCE spill. Corduroy settled its claims for $103,400, and released the Tank Defendants from further liability. Subsequently, CRC sold its assets, including the CMR Cadillac plant, to Hutchinson, S.A=2E ("Hutchinson"), which then conveyed the assets to Hutchinson's wholly-owned subsidiary, Paulstra CRC ("Paulstra"). Corduroy remained responsible under the asset purchase for any environmental liability caused before December 4, 1986, including the 1984 TCE spill.
In 1991, the State sued the owners of the property adjacent to the CMR Cadillac plant ("Kysor Defendants") under CERCLA and Part 201 of NREPA to require them to remediate groundwater contamination. One of the Kysor Defendants filed a third-party claim against Paulstra to force it to help pay for the groundwater remediation. Because Corduroy had assumed responsibility under the asset purchase agreement for any environmental contamination caused before December 1986, Corduroy assumed responsibility for defending the Kysor claim. The court in the Kysor case granted judgment in favor of Paulstra and Corduroy. Corduroy then sued five insurance companies ("Insurers"), including Home Indemnity Company ("Home"), seeking a declaratory judgment that Home and the other Insurers had a duty to indemnify Corduroy for its costs in defending against the claim by the Kysor Defendants. The trial court concluded that by releasing the Tank Defendants, Corduroy had destroyed Home's right of subrogation and that Corduroy, therefore, could not sue Home under the policy. The trial court also held that Corduroy's claim for defense costs was covered only by insurance policies that were in effect when the groundwater contamination was discovered, not policies in effect when the TCE spill occurred and, therefore, dismissed Corduroy's claim against the other Insurers.
In its first opinion, the Michigan Court of Appeals affirmed the trial court's decision on both grounds. In lieu of granting leave to appeal, the Michigan Supreme Court vacated the appeals court's opinion and remanded the case to the court of appeals for further consideration of Corduroy's arguments on the subrogation issue. The supreme court also remanded for reconsideration of the issue of which insurance policies apply.
On remand to the Michigan Court of Appeals, Corduroy argued that the doctrine of impairment of subrogation did not bar its claim against Home to recover legal costs incurred in defending the Kysor litigation. Corduroy argued that the subrogation clause in the insurance policy did not apply because Home had never paid a loss under the policy for which it could seek reimbursement. The court of appeals held, however, that Corduroy had breached a requirement of the insurance policy by releasing a potential tortfeasor, the Tank Defendants, from liability and thereby destroying Home's rights to seek reimbursement from them. The court of appeals rejected Corduroy's argument that an insurer must make a payment under the policy before it has the right to seek reimbursement.
In its first opinion, the court of appeals had held that if Corduroy had not released the Tank Defendants, CRC would have had a claim against the Tank Defendants for attorney fees incurred in the Kysor litigation because Corduroy had been forced to defend the Kysor litigation due to the Tank Defendants' wrongful acts that resulted in the rupture of the TCE tank. The Kysor court, however, found that the 1984 TCE tank collapse had not contributed to the contamination at the site. Corduroy argued that the trial court had erred in its finding. On remand, the court of appeals held that Corduroy had no basis on which to recover from the Tank Defendants the attorney fees Corduroy had incurred in the Kysor litigation, because there was no evidence that the Tank Defendants had acted maliciously or fraudulently with respect to the rupture of the TCE tank. Because Corduroy had no right to recover attorney fees from the Tank Defendants, Home had no subrogation rights for attorney fees. The court concluded, therefore, that the trial court had erred in granting judgment in favor of Home on the ground that Corduroy's action on the insurance policy was barred by its destruction of Home's subrogation rights.
In its first opinion, the court of appeals had held that the trial court correctly applied the manifestation approach to determine the trigger for insurance coverage. Under the manifestation approach, insurance coverage is triggered at the time the damage is discovered. The court had based its decision on the theory that it would be difficult, if not impossible, to determine the precise timing of the property damage in such cases. In light of Gelman Sciences, Inc v Fidelity & Cas Co, 456 Mich 305; 572 NW2d 617 (1998), the court of appeals on remand reversed its first opinion. In Gelman, the Michigan Supreme Court held that the determination of when an occurrence takes place for the purpose of determining if coverage exists under a particular policy depends on the policy language, rather than the type of injury alleged. Therefore, if a policy contains standard comprehensive general liability policy language that defines an occurrence as "an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the insured," then coverage would be triggered when property damage first occurred and under subsequent policies during which the damage continued to occur. In its remand opinion, the court of appeals remanded to the trial court for a determination of whether the policy language requires the application of the injury-in-fact approach and other related determinations, such as when the property damage first occurred and continued to occur, and which policies were in existence during those periods.
Arco Indus Corp v American Motorists Ins Co, 232 Mich App 146; 594 NW2d 61 (1998) and 233 Mich App 143; 594 NW2d 74 (1998).
Arco Industries Corporation ("Arco") began manufacturing automobile parts in Schoolcraft, Michigan, in 1967. Arco used volatile organic compounds ("VOCs") to clean the parts during the manufacturing process and to remove plasticol from the plant floor. The floor was designed with a trench system that drained waste into an unlined seepage lagoon located in the back of the plant. VOCs that were dumped or spilled onto the plant floor contaminated the seepage lagoon and groundwater. In November 1985, MDNR notified Arco that the seepage lagoon was contaminated with VOCs and that the company had been identified as the source. After Arco failed to remedy the contamination, MDNR filed suit against Arco in federal court in October 1987 to compel the company to remedy the VOC contamination and pay response costs incurred by the State. Subsequently, in October 1989, Arco and the State entered into a consent decree in which the company agreed to pay $450,000 in response costs and attorneys' fees. It also agreed to implement a soil and groundwater remediation program. In the meantime, Arco's insurer, American Motorists Insurance Company ("AMICO"), refused to defend or indemnify the underlying litigation between the company and MDNR, alleging that the insurance contract did not cover this type of incident. As a result, in February 1987, Arco filed suit against AMICO and six other insurance companies that had issued environmental policies since 1967, seeking to compel them to defend and indemnify the company in any potential MDNR suit. In response to this suit, AMICO, which had issued annual insurance policies to Arco from 1968 through 1974, argued that the VOC contamination was not a covered "occurrence" under the meaning of the policies because the company either intended or expected the pollution that resulted from its manufacturing process. AMICO's policies defined an "occurrence" as an accident that results in property damage during the policy period. The six other insurance companies settled with Arco before trial.
In previous decisions, the Michigan Supreme Court has determined that "occurrences" within the meaning of AMICO's policies had occurred, resulting in damages during the periods covered by AMICO's policies.
In a decision issued on October 8, 1998, the court of appeals considered AMICO's argument that the pollution exclusion contained in three of AMICO's seven policies issued to Arco precluded coverage for claims arising from a discharge of contaminants unless the discharge was "sudden and accidental." AMICO claimed no discharge at Arco's facility was sudden or accidental and, therefore, the discharges were not covered by the three policies that contained the pollution exclusion. The court of appeals found that, under Michigan law, the term "sudden" in a pollution exclusion in an insurance policy is defined with a "temporal element that joins together conceptually the immediate and the unexpected." Similarly, the court found that "accidental" refers to an event occurring "unexpectedly and unintentionally; by chance."
The court of appeals found that there was adequate evidence of a number of "accidental" discharges during the relevant policy periods, including evidence of: (1) several unintentional spills of mop buckets holding five to six gallons of solvents; (2) drums of solvents that were punctured by forklifts or hunters' guns; and (3) numerous spills of drums of solvents. The court found that all of these incidents were "accidental" for purposes of AMICO's pollution exclusion. The court also found that each of these events contained the temporal element of suddenness or unexpectedness that brought them within the "sudden and accidental" exception to the pollution exclusion. Therefore, the court found that Arco was entitled to coverage under the three policies that contained pollution exclusions.
AMICO also argued that the trial court erred when it ruled that an "owned property" exclusion of coverage for the cost damage to property owned, occupied, rented, used, or in the control of the insured, did not excuse AMICO from indemnifying Arco for the costs of remediating contaminated soil on Arco's property. The appeals court ruled that AMICO did not dispute that groundwater under Arco's property was not covered by the "owned property" exclusion. Therefore, because the contamination to the soil on Arco's property posed a substantial threat that contaminants would migrate from the soil to the groundwater, the appeals court ruled that the trial court had properly held that the remediation of the soil on Arco's property was covered by AMICO's policies.
AMICO's final claim on appeal was that the trial court had improperly allocated to AMICO a 68.63 percent share of Arco's liability. The trial court had allocated AMICO's share of liability based on the "ratio of AMICO's limits to the limits available under all the policies were [sic] effective over the period of time which the damage occurred." In other words, the trial court essentially multiplied the number of years AMICO provided coverage by the limits contained in AMICO's policies to determine the total coverage provided by AMICO's policies and then compared that amount to the total coverage provided by all of the relevant insurance policies. The court of appeals evaluated the trial court's method of allocating liability among several insurance providers and several other methods of liability allocation and held that a different method of allocation, known as the "time on the risk" method, should be applied in cases such as this one involving continuous property damage and successive policies of liability coverage. Under the time on the risk approach, an insurer is liable for the amount of damages that presumably occurred during the policy period. Applying this method, the court found that AMICO provided coverage for 7 of the 20 years at issue, or 35 percent of the time during which covered releases occurred. Therefore, the court of appeals held that AMICO was responsible for only 35 percent, rather than 68.63 percent of Arco's losses, up to the maximum coverage of $3.5 million.
In a cross appeal, Arco argued that the trial court erred in determining that Arco was not entitled to defense costs incurred after Arco received a letter from MDNR in November 1985 but before MDNR filed a complaint against Arco in October 1987. The court of appeals agreed that a letter from MDNR, such as that sent to Arco in 1985, can be the functional equivalent of a "suit" so as to trigger an insurer's responsibility to provide a defense to its insured. Although the court of appeals found that the MDNR letter sent to Arco was not as strongly worded as some letters that had previously been found by Michigan courts to constitute a "suit" for purposes of triggering an insurer's duty to defend the insured, the court found that: (1) the letter contained a clear implication that Arco was causing unlawful pollution and MDNR intended to take enforcement action to remedy the situation; and (2) MDNR had the power to take substantial action against Arco. Therefore, the court found that the November 1985 letter constituted a "suit" that gave rise to AMICO's duty to defend Arco. Accordingly, the appeals court reversed the trial court and ruled that Arco was entitled to recover its defense costs between November 1985 and October 1987. The court of appeals, therefore, affirmed in part and reversed in part the trial court's decision and remanded the case to the trial court for further proceedings.
In an opinion issued on December 11, 1998, the court of appeals, on second remand on rehearing, affirmed the trial court's determination that Arco could not collect 12 percent penalty interest under MCL 500.2006. The court held that the purpose of that section is to penalize insurers for "dilatory practices in settling meritorious claims" and not to "compensate a plaintiff for delay in recovering benefits to which he or she is ultimately determined to be entitled." The trial court had specifically found that AMICO had disputed its defense obligation to Arco in good faith, that there were legitimate issues being contested, and that there had been no effort to delay or to forestall the recovery of benefits given the complexity of the case." The court of appeals affirmed this determination that Arco was not entitled to 12 percent penalty interest because AMICO's obligation to pay benefits was reasonably in dispute.
Bituminous Casualty Corp v RJ Taylor Corp, No 203334 (Mich Ct App, May 8, 1998).
R.J. Taylor Corporation ("Taylor") and Modular Installation ("Modular") (collectively, "builders") constructed a modular classroom building for a local school. After an investigation indicated that the ventilation system in the building was faulty as installed, allowing sewer gas and carbon dioxide to collect inside the building, the builders were sued by a number of parties who alleged injuries from the exposure to hazardous gases and other airborne pollutants. The builders sought defense and indemnity from their insurer, Bituminous Casualty Corporation ("Bituminous"), from whom they held a commercial general liability insurance policy. Bituminous denied coverage, however, citing a pollution exclusion in the policy, and filed suit for declaratory relief. The trial court granted a motion by Bituminous for summary disposition, holding that the absolute pollution exclusion in the policy was valid and that, therefore, Bituminous had no duty to defend or indemnify Taylor.
The issue on appeal was whether the specific terms of the pollution exclusion, included by special endorsement to the policy, applied to relieve Bituminous of its obligation to otherwise provide defense and indemnity. The builders first argued that because an asbestos exclusion endorsement in the policy specifically stated that it modified coverage under, among other forms, the products/completed operations form, the fact that the pollution exclusion endorsement did not specifically list products/completed operations liability indicated that the exclusion was not meant to apply to that liability. The court noted, however, that the policy in question does not include a separate form for products/completed operations coverage because that coverage is included under the general liability coverage form. Because the general liability coverage was specifically modified by the pollution exclusion, the court held that any comparison between the two endorsements is of no importance to the coverage issue. The builders also argued that the inconsistency between the provision for coverage and the pollution exclusion creates an ambiguity which should be resolved in favor of coverage. The court rejected this argument as well, holding that because the pollution exclusion itself is clear and limits Bituminous' obligations as expressed generally in the policy, the circuit court properly gave effect to the exclusion in granting Bituminous summary disposition.
The builders' second argument on appeal was that, when viewed in conjunction with an "Important Notice" sent by Bituminous, the builders had a reasonable expectation that the pollution exclusion did not apply. The notice was sent contemporaneously with the policy to provide general advice and contained language which implied that coverage existed for the area in question. The court held, however, that the builders' reliance on the notice to establish a reasonable expectation of coverage was misguided because there were "emphatic indications" in the notice that the policy alone determined coverage. "It would be poor public policy to force an insurer to broaden coverage provided in its contracts especially where in direct contradiction of specific and prominently announced provisions of those contracts as an incidental consequence of that insurer's attempt to provide information through general notices to its policyholders." The appeals court, therefore, affirmed the trial court.
Graham v Providence Washington Ins Co, No 211718 (Mich Ct App, Aug 4, 1998).
The co-trustees of the Elizabeth Graham Trust ("Graham") sued six insurance companies in Oakland County Circuit Court, including Providence Washington Insurance Company ("Providence"), seeking an order establishing that some or all of the insurers must reimburse Graham for any cleanup costs that Graham might be required to pay under CERCLA or Part 201 of NREPA. The trial court ruled that Providence was responsible according to the terms of the standard CGL insurance policy that it had issued to Graham. The circuit court based its decision on the so-called "manifestation theory," according to which insurance coverage is triggered under a CGL insurance policy that protects against "occurrences," provided that the environmental contamination is discovered during the term of the insurance policy. The trial court found that the contamination at issue was discovered during the term of the Providence policy, and that Providence, therefore, must provide coverage to Graham.
When the court issued its ruling, none of the parties had taken discovery, and there was no reliable evidence in the record to show when the environmental contamination had first occurred. After the Michigan Court of Appeals affirmed the ruling, Graham asked the Michigan Supreme Court to review the case. In 1997, the supreme court held the appeal in abeyance because it was about to rule on the legal issue involved in another case already before the supreme court.
In January 1998, the Michigan Supreme Court ruled that it is improper to use the "manifestation theory" to determine whether coverage had been triggered under a CGL policy which insures against "occurrences" instead of "accidents." The supreme court ruled that coverage under an occurrence-type CGL policy is triggered not by manifestation (discovery) of the injury, but instead by the occurrence of an "injury in fact," even if it is difficult to prove exactly when the "injury in fact" occurred. Gelman Sciences, Inc v Fidelity & Casualty Co, 456 Mich 305; 572 NW2d 617 (1998).
One week after issuing its decision in Gelman, the Michigan Supreme Court vacated the judgment of the court of appeals in Graham and remanded it to the court of appeals for reconsideration in light of the Gelman decision.
On remand, the court of appeals decided that the trial court should not have issued its ruling in favor of Graham and against Providence before the parties had an opportunity to take discovery to obtain evidence showing when the "injury in fact" had occurred. The court of appeals acknowledged, as the supreme court had predicted in Gelman, that in many cases "proving the date of injury in fact with any degree of certainty may be difficult if not impossible." Nonetheless, the parties were entitled to an opportunity to develop evidence on this issue.
Federal Insurance Company ("Federal"), one of the defendants that apparently had issued an insurance policy covering one of the later policy terms involved in the case, argued that it should be dismissed because, under the "injury in fact" theory, the environmental contamination must have occurred before, rather than during, the term of the insurance policy it had issued. The court of appeals rejected this argument and held that if any incremental environmental degradation occurred during the term of Federal's policy, then Federal could also be held liable, either jointly and severally or pro-rata, for any damage that occurred while its policy was in effect. The appeals court remanded the case to Oakland County Circuit Court for further proceedings.
Michigan Millers Mutual Ins Co v Bronson Plating Co, No 198018 (Mich Ct App, June 23, 1998).
After its insurers denied Bronson Plating Company's ("Bronson") request for defense and indemnity in connection with environmental remediation actions brought by EPA and MDNR, Bronson filed suit against the insurers. The trial court held that the insurance carriers did not owe Bronson defense or indemnity and Bronson appealed. The Michigan Court of Appeals affirmed the trial court's opinion, first holding that the trial court had properly concluded that the insurers had no duty to defend or indemnify Bronson under any of the policies because no "occurrence" had taken place. The court held that the policy's definition of "occurrence" was clear and unambiguous, providing coverage only where an accident occurs that was "neither expected nor intended from the standpoint" of the insured. Bronson failed to present any evidence that any accident occurred and merely speculated that an accident was possible. The court held that the mere possibility of an accident did not rebut the evidence presented by the insurers that no accident had occurred. Bronson's own officers and an employee testified that no spills or accidents had occurred. In addition, chemical contamination was the "`natural, foreseeable, expected, and anticipatory result' . . . of decades of deliberate, intentional, and purposeful chemical discharges by Bronson as part of its routine manufacturing processes." The court held that the insurers had no duty to defend because there was no occurrence providing coverage under the policies.
The Michigan Court of Appeals also upheld the trial court's ruling that the pollution exclusion contained in many of the policies barred coverage. The exclusions barred coverage for discharges that were not "sudden and accidental." The court held that Bronson's intentional discharge of its plating wastes, which contained chemical contaminants, as part of its normal operations over a period of more than 30 years could not be considered either sudden or accidental. Finally, the court held that the excess insurance carriers had no duty to defend or indemnify Bronson because the substantive language in the excess policies was identical or virtually identical to the coverage language in the underlying policies. Therefore, to the extent that coverage under the primary policies was barred by the lack of an occurrence and by the pollution exclusions, coverage under the excess policies is likewise barred.
Saginaw Co v John Sexton Corp, 232 Mich App 202; 591 NW2d 52 (1998).
John Sexton Corporation and People's Garbage Disposal, Inc. (collectively, "Landfill Operators") operate municipal solid waste landfills in Saginaw County. Saginaw County's solid waste management plan ("Plan") stated that the county would "explore and pursue all feasible means of financing sound and equitable solid waste management in Saginaw County" and expressly identified a surcharge ordinance as one possible revenue source. Approximately two months after MDEQ approved the Plan, Saginaw County adopted the Saginaw County Solid Waste Ordinance ("Ordinance") which regulates certain landfill operations and imposed a $0.50 per ton surcharge on solid waste disposed of in municipal waste landfills located within the county. The Landfill Operators refused to pay the surcharge, arguing that it was an illegal tax, it was preempted by Part 115 of NREPA, it was unconstitutionally discriminatory, and Saginaw County did not have authority to adopt the Ordinance in the first instance. Saginaw County sued the Landfill Operators in the Saginaw County Circuit Court, which upheld the surcharge provision of the Ordinance. On appeal, the Michigan Court of Appeals affirmed the circuit court's decision and rejected each of the Landfill Operators' arguments.
First, the appeals court held that the surcharge was a valid user fee rather than an unlawful tax. The court acknowledged that, if the surcharge was a tax, it would be unlawful under the Headlee Amendment to the Michigan Constitution, which prohibits local governments from levying a new tax without voter approval. The court, however, distinguished a fee from a tax, stating that "a fee generally is exchanged for a service rendered or a benefit conferred, and some reasonable relationship exists between the amount of the fee and the value of the service or benefit." A tax, on the other hand, is imposed primarily for producing revenue. The court held that the surcharge contained in the Ordinance qualified as a fee because it was "reasonably related to the costs involved in managing the county's disposal of solid waste." The court noted that Saginaw County collected approximately $400,000 in surcharges in 1994 and expended approximately $450,000 in implementing the solid waste and recycling programs contained in the Plan.
Second, the appeals court held that, although Part 115 preempted the provisions of the Ordinance governing the day-to-day operations of landfills, Part 115 did not preempt the surcharge provision=2E The court noted that Part 115 expressly preempts only local ordinances that govern the location or development of a landfill. The court also distinguished other court cases concerning the preemption of local ordinances because those ordinances affected the operation of landfills. Rather than affecting location, development, or operation of landfills, Saginaw County's surcharge simply imposed a fee "on those who haul garbage to landfills" the court stated. Therefore, the court held that the surcharge was not preempted by Part 115.
Third, the appeals court held that the surcharge did not unconstitutionally discriminate against persons disposing of waste in Saginaw County. The Landfill Owners argued that the surcharge "creates a classification of persons who utilize landfills and improperly imposes the costs of the county's solid waste program on them, when the program benefits all the county residents." The court dismissed this argument, holding that it was reasonable for Saginaw County to impose the surcharge solely on people disposing of waste within the county because "those people =2E . . increas[ed] the county's solid waste management burden."
Finally, the appeals court held that Saginaw County was authorized under two separate statutes to adopt the surcharge ordinance. The court held that the general authority to regulate matters relating to "county affairs" granted under Section 11 of the County Board of Commissioners Act, MCL 46.1 et seq., constituted "at least one basis" for adoption of the Saginaw Ordinance. The court stated that the "surcharge was intended to fund the enforcement of the county's solid waste management plan, and therefore related to county affairs." The court also found authority for the surcharge under Section 11520(1) of Part 115, which states in part that "[f]ees collected by a [county] health officer under this part shall be deposited with the city or county treasurer." After reviewing the various provisions contained in Part 115 that authorize the collection of fees, the court stated that, "[b]ecause none of the fees specifically authorized by the Act represent fees that a county could collect as fees `under this part,' we conclude that § 11520(1) must contemplate that the counties may impose various solid waste fees of its own, such as the instant surcharge." Accordingly, the court held that the Saginaw County "possessed authority to pass the surcharge ordinance under [Part 115]" as well.
Alcona Co v Wolverine Env'tl Prod'n, 23 Mich App 238; 590 NW2d 586 (1998).
Wolverine Environmental Production ("Wolverine") is involved in extensive natural gas drilling operations in Alcona and Alpena Counties in accordance with permits issued by the Supervisor of Wells ("Supervisor") under Part 615 of NREPA, MCL 324.61501 et seq. Part 91 of NREPA, concerning soil erosion and sedimentation control, MCL 324.9101 et seq., authorizes a county to administer and enforce MDEQ rules concerning soil erosion and sedimentation control throughout the county. Alcona adopted a soil erosion and sedimentation control ordinance and Alpena adopted a resolution to enforce Part 91. Each county required Wolverine to obtain a permit from the county for earth moving activities related to the access roads, pipelines, and processing plants of Wolverine's drilling operations. Alcona's ordinance stated that "access roads to well production sites shall be subject to permit requirements." Alpena's resolution also required a permit under the same circumstances as in the Alcona ordinance. Wolverine did not obtain permits for its access roads from the counties. Alcona filed an action for injunctive relief and assessment of civil fines, and Alpena filed an action for injunctive relief, civil fines, and a surety for each well site, pipe or flow line, or central processing facility to insure the installation and completion of required corrective or protective measures. Wolverine claimed that the Legislature merely delegated to the counties the limited authority to enforce the rules promulgated by MDEQ. Wolverine also argued that its well activities were specifically exempted from soil erosion permit requirements in the rules because they were instead subject to the control and permit requirements of Part 615 of NREPA. Therefore, argued Wolverine, where the rules did not require a permit, the counties had no separate authority for imposing such a requirement. Alcona filed a motion for summary disposition on the issue of its authority to administer and enforce Part 91. The court held that the Legislature did not intend to vest power over ancillary well activities exclusively with the Supervisor or preempt counties from implementing their own soil erosion programs. The court, therefore, granted Alcona's motion for partial summary disposition.
On appeal, the Michigan Court of Appeals first reviewed Part 91 and its administrative rules, MAC R 323.1701 et seq., and Part 615. To achieve the stated objective of Part 91, to provide and implement a "unified statewide soil erosion and sedimentation control program," MDNR promulgated rules establishing permit requirements for certain "earth changes." Permits are required under the rules for "an earth change which is in connection with . . . oil, gas, and mineral wells, except the installation of those wells under permit from the supervisor of wells and wherein the owner-operator is found by the supervisor of wells to be in compliance with the conditions of the sediment act." MAC R 323.1704. Part 615 provides the Supervisor with broad powers over all matters related to the regulation of oil and gas wells and is specifically empowered to "do whatever is necessary =2E . . to implement this part, whether or not indicated, specified, or enumerated." MCL 324.61506(a). The court stated that the issue in this case seemed to be one of preemption and that it needed to answer two questions to determine whether Wolverine was required to obtain permits from the counties: (1) "whether counties are granted the authority under Part 91 to either enforce the act or implement their own rules regarding soil and sedimentation;" and (2) if counties cannot implement their own independent rules, "whether Part 91 limits counties' authority to require permits for well access roads, pipelines, and processing facilities, in addition to wellheads."
With respect to the first inquiry, the court held that a plain reading of Part 91 evidenced a "clear Legislative intent to vest counties with limited authority to enforce only the rules promulgated by MDEQ," not to implement their own rules. At the same time, however, cities, villages, and townships are expressly authorized under Part 91 to enact ordinances that are more restrictive than the MDEQ rules. This grant of authority to cities, villages, and towns, without granting such authority to counties, necessarily implies a restriction on county authority." In addition, the court noted that, given Part 91's objective of establishing a unified statewide soil erosion and sedimentation control program, the Legislature would not authorize the implementation of a wide variety of different policies throughout the state. Following the trial court's analysis of Part 91 as allowing independent county implementation of soil erosion and sedimentation control plans would "essentially vitiate the statute's purpose of uniformity" if each county in the state could potentially enact a different set of rules. Therefore, held the court, the trial court had improperly determined that Alcona and Alpena were authorized to implement their own soil erosion programs.
The court turned next to whether the Legislature and MDEQ intended for "earth changes" connected with the access roads, pipelines, and processing facilities of wells to require Part 91 permits where a Part 615 permit had already been issued. The counties argued that, although the wellhead itself is included under the exception to the permitting requirement under Part 91, the access roads, pipelines, and processing facilities are not included and, therefore, the counties should be able to enforce the permit requirement for these activities whether or not they were permitted under Part 615. The court held that the plain language of the exception in the Part 91 rules "seems to include a broader range of well facilities than merely the wellhead. The installation of wells would seem to necessitate the use of access roads, pipelines, and processing facilities." In addition, the court could find no language under Part 615 of NREPA that limited the authority of the Supervisor only to the "well site." The Supervisor is granted authority over waste to soil and water in all oil and gas operations, including soil erosion and sedimentation problems in connection with all parts of a well, not just a wellhead and any permit issued by the Supervisor would necessarily include ancillary well facilities. Therefore, earth changes that could potentially impact soil erosion and sedimentation control in connection with the ancillary parts of oil and gas wells, such as access roads, pipelines, and processing facilities, would fall within the exception to the Part 91 permit requirements. "Counties cannot require well owners and operators to obtain permits pursuant to Part 91 for wellheads, access roads, pipelines or processing facilities where they have a permit from the supervisor of wells and are found by the supervisor of wells to be in compliance with the conditions of [Part 91]." Therefore, the court of appeals reversed the trial court's grant of summary disposition and remanded for further proceedings.
Gumma v D & T Constr Co, No 207530, 1999 WL 203055 (Mich Ct App, Apr 9, 1999).
Hanna and Rehab Gumma purchased two subdivided residential lots from D&T Construction Company ("D&T"). The two lots were originally part of a 117-lot subdivision that had been foreclosed upon by the original developer's lender. Originally, D&T had purchased 18 of the lots, including the two sold to the Gummas, from the lender. While constructing a home upon the lots, the Gummas unearthed several buried drums containing hazardous materials. The Gummas then sued D&T, claiming that it had violated the Michigan Land Sales Act and that, under Part 201 of NREPA, D&T was responsible for the costs of cleaning up the contamination from the drums. The trial court held that D&T had violated the Land Sales Act by not providing the Gummas with a current property report prior to the sale, but that D&T was not liable for the cleanup of the Gummas' property under Part 201 because D&T did not cause the contamination.
On appeal, the court of appeals first discussed D&T's obligations under the Land Sales Act, which states that a "person may not dispose of any interest in subdivided property unless a current property report [is] delivered to the purchaser and the purchaser is afforded a reasonable opportunity to examine the property report prior to the disposition." The property report must disclose the physical characteristics of the subdivided lot and any unusual conditions relating to health and safety. A purchaser who has not received a property report in advance of signing a purchase agreement is entitled to cancel the agreement within five days after actually receiving the report.
The court of appeals upheld the trial court's ruling that D&T violated the Land Sales Act by failing to provide the Gummas with a property report prior to the sale. D&T argued that it was not required to provide the Gummas with a property report because D&T was merely a prior purchaser of the subdivided lots and was not the developer who originally subdivided the property. The court of appeals disagreed, holding that, under the plain meaning of the statute, the disclosure requirement applies to "persons" without regard to their status as a purchaser or developer. The court further held that D&T had an obligation to submit the property report even though the original developer had not complied with the Land Sales Act. "[T]he Land Sales Act does not condition a person's duty to deliver a current property report on past compliance with the requirements of the Land Sales Act by other persons," the court held.
Next, the court of appeals held that the trial court had not conducted a full inquiry into whether D&T was a responsible person under Part 201 for cleanup costs associated with the contaminated lots. Part 201 generally holds a property owner liable for releases of hazardous substances on or from its property. A defense to this strict liability scheme is available, however, to an owner of property that has been contaminated by a third party who is neither an agent nor employee of the owner and who is not in a contractual relationship with the owner. This so-called "third party" or "innocent landowner" defense is not available, however, unless the owner exercises "due care" and takes "reasonable precautions" against the acts of others with respect to the contamination. The trial court had only considered whether D&T was in a contractual relationship with the person who disposed of the buried drums and failed to consider whether D&T acted with "due care" or took "reasonable precautions" concerning the contamination. Accordingly, the court sent the case back to the trial court in order to develop a factual record concerning D&T's actions. D&T argued that no further facts were necessary for the court to decide this issue because "the contamination was not discovered while D&T held title to the property and [D&T] did not allow anyone to conduct any activity on the property while title was held by D&T." The court of appeals disagreed, stating that an appeals court should not resolve the evidentiary deficiencies of the trial court. The court of appeals, therefore, returned the case to the trial court for further proceedings regarding D&T's status as an innocent landowner under Part 201.
Cipri v Bellingham Frozen Foods, Inc, No 197678, 1999 WL 194158 (Mich Ct App, Apr 6, 1999).
Richard Cipri owns Baker Lake, a 25-acre private lake in Van Buren Township fed by a spring and several small streams. Bellingham Frozen Foods ("Bellingham"), which processes vegetable products, including sweet corn, contracted with a third party to remove corn husks to be used eventually as silage for cattle feed. The contractor's feed bunker was located near a natural spring that drained into streams flowing into Baker Lake. Cipri alleged that the contractor received over 22,000 tons of corn husks from Bellingham between 1990 and 1991, and because the amount was too large to fit into the contractor's feed bunker, the corn husks that were stored outside fermented and produced over 1 million gallons of leachate, which flowed into Baker Lake and killed the lake's aquatic life.
Cipri filed a seven-count complaint against Bellingham, including claims under Parts 17 and 201 of NREPA, and claims for trespass, negligence and nuisance. At trial, with respect to the negligence, trespass and negligence claims, the jury found that Bellingham had breached its duty of care toward Cipri by allowing the sweet corn leachate to pollute Baker Lake and killed the fish therein, and, thus, awarded $90,000 in damages to Cipri. With respect to the statutory Part 17 and Part 201 claims, the trial court declined to order Bellingham to restore the lake under Part 17, and decided that Bellingham did not arrange for the disposal of hazardous substances under Part 201. Both Cipri and Bellingham appealed these findings to the court of appeals.
Upon Cipri's first appeal on the Part 201 claim, the appeals court found error in the trial court's failure to consider Bellingham's liability because Bellingham's arrangement for the disposal or treatment of the corn husks could support liability under Part 201, even if Bellingham did not cause the husks to become hazardous. The case was, therefore, returned to the trial court on the Part 201 claim.
On appeal, Cipri argued that the trial court erred in refusing to order Bellingham to restore the lake. The appeals court, however, held that "[c]onsiderable evidence supported the conclusion that the lake was recovering naturally and therefore restoration was not `required' under [Part 17]." Further, the appeals court stated that testimony supported the trial court's conclusion that the effectiveness of Cipri's proposed restoration efforts was "questionable." Therefore, the appeals court declined to overturn the trial court's findings regarding Cipri's Part 17 claim.
Cipri also argued that the trial court erred when it concluded that Bellingham was not a responsible party under Part 201 because Bellingham did not arrange for the disposal of hazardous substances. The trial court applied the following test for imposing liability under Part 201: under Part 201, in deciding a claim of arranger liability, the requisite inquiry is whether the party intended to enter into a transaction that included an "arrangement for" the disposal of hazardous substances. Once this intent is found, an arranger is held strictly liable even when it has no control over the process leading to a release of hazardous substances.
The appeals court found that although the trial court identified the correct test for liability under Part 201, it erred in it's application of the test to the facts of this case. The appeals court noted that Bellingham had entered into an agreement to dispose of the sweet corn by-product, and that Bellingham had no use for the by-product. The appeals court also stated that: "Although we agree that recycling is a goal to be encouraged, we must enforce the statute as written. Once the trial court found that Bellingham intended to dispose of the sweet corn by-product, strict liability attached under [Part 201], and the trial court's inquiry should have stopped." Therefore, the appeals court held that the trial court erred in finding that Bellingham was not a responsible party under Part 201 and reversed the trial court's decision on this claim.
Finally, Bellingham, on its cross-appeal, argued that the trial court erred in finding that it had a duty of care to Cipri under both Parts 17 and 201. On this issue, the court noted that there are no published cases discussing whether Parts 17 or 201 impose a duty of care toward the general public. In determining whether a duty of care exists, the question is whether Bellingham was under an any obligation for the benefit of Cipri. The appeals court concluded that Bellingham was within the class of persons intended to be protected by Parts 17 and 201 and that the trial court did not err in finding that Bellingham had a duty of care toward Cipri. Accordingly, the appeals court affirmed in part and reversed in part the trial court's findings on Cipri's Part 17 and 201 claims.
Burba v Mills, No 201787 (Mich Ct App, Sept 4, 1998).
Robert and Eleanor Burba ("Burbas") sold property containing underground fuel storage tanks to Gerald and Rachel Mills ("Mills") under a land contract. The Burbas commenced an action in Midland County Circuit Court to compel the Mills to pay the remaining balance of the land contract. The Mills counterclaimed, alleging that damages resulting from contamination caused by leaking USTs on the property should be set off against the remaining balance on the land contract. The trial court entered an order in favor of the Burbas requiring the Mills to pay the remaining balance on the land contract. The trial court apparently offset some amount of the land contract balance to reflect the environmental damages caused by the USTs. The Mills then appealed the trial court's denial of their request for attorney fees under Part 201 of NREPA.
The court of appeals denied the Mills' appeal, ruling that, prior to the 1995 amendments to Part 201, the award of attorney fees under Part 201 was subject to the discretion of the trial court and that, under Part 201 as amended in 1995, attorney fees are only available to parties that comply with a statutory notice requirement. Because the Mills did not comply with the notice requirement, the appeals court found no abuse of discretion by the trial court and, therefore, affirmed the decision of the trial court.
City of Port Huron v Amoco Oil Co, 229 Mich App 616; 583 NW2d 215 (1998).
The City of Port Huron ("City") voluntarily performed a cleanup of contamination and then sought to recover its cleanup costs from Amoco Oil Company and Grand Trunk Western Railroad (collectively, "Defendants") under Part 201 of NREPA. The St. Clair County Circuit Court awarded the City $l.25 million. On appeal, the Defendants argued that the City was not entitled to recover its cleanup costs under Part 201 because it had not conducted a remedial investigation ("RI") or feasibility study ("FS") regarding the contamination. Part 201 provides that a private party may recover its cleanup costs "consistent with rules relating to the selection and implementation of response activities promulgated under" Part 201. The administrative rules promulgated under Part 201 provide that MDEQ "may" request the preparation of an RI, the performance of an RI, and the preparation of a FS by a private party performing a cleanup. The court of appeals rejected Defendants' argument that the City could not recover its costs unless it had prepared an RI plan, performed an RI, and prepared an FS. Relying on the use of the word "may" in the Part 201 rules, the court of appeals held that the City was not required to have performed these measures in order to recover its cleanup costs unless it was requested to do so by MDEQ.
In reaching this conclusion, the court of appeals also stated that the trial court did not err in deciding not to interpret Part 201 in conformance with case law holding that a party must perform an RI/FS in order to recover its cleanup costs under CERCLA. The court of appeals stated that Part 201 "differs from its federal counterpart in a crucial respect by affording a private party greater flexibility in recovering its cleanup costs from a responsible party." In addition, the court of appeals upheld the trial court's determination that the costs incurred by the City to excavate 22,000 cubic yards of soil were "necessary," within the meaning of the provision of Part 201 authorizing the recovery of "necessary" cleanup costs. Defendants argued that the determination that the soil was contaminated was largely founded on human observations and unreliable photoionization detector ("PID") readings. Defendants also pointed out that laboratory testing of the soils, which Defendants asserted was the only reliable method used by the City for assessing whether soil was contaminated, was used only during the last two weeks of the cleanup. As a result, Defendants argued, the record did not show that all the soils removed were contaminated.
The court of appeals acknowledged that Defendants had presented some evidence that the City might have removed soil that was not contaminated. Nonetheless, the court of appeals declined to reverse the trial court's award of cleanup costs because the court of appeals stated that it was not left with the "definite and firm conviction" that the trial court's decision was "clearly erroneous." The court of appeals stated that there was still substantial evidence in the record supporting the trial court's findings. Although Defendants argued that the City did not use laboratory data to direct most of the excavation work and that that data proved that clean soils were excavated, the court of appeals noted that the City resorted to lab data only when field observations and PID readings indicated that the City had reached clean soils. In fact, the court stated, almost 25 percent of the samples collected under this protocol were contaminated, suggesting that the field observations and PID readings were fairly reliable.
Underground Storage Tanks
Bio-Tech, Inc v Department of Natural Resources, No 201861, 1999 WL 203041 (Mich Ct App, Apr 9, 1999).
Under the former Michigan Underground Storage Tank Financial Assurance ("MUSTFA") Act, the state legislature created an investment fund to help reimburse property owners for the expense of cleaning up contaminants released from leaking USTs. MDNR was authorized by the MUSTFA Act to prepare an annually updated list of approved UST contractors. Entities not on the MUSTFA list were not legally precluded from performing work on UST cleanups, but UST owners and operators were eligible for reimbursement of cleanup expenses only if they hired approved MUSTFA list contractors.
Bio-Tech, Inc. ("Bio-Tech") applied to and was qualified by MDNR to be included on the MUSTFA list. In October, 1993, the MUSTFA Act and the Leaking Underground Storage Tank Act were amended to provide that only consultants meeting new statutory requirements could perform work on UST releases. As a result of these amendments, the MUSTFA list was abolished and a new list of qualified UST consultants was created by the state Department of Management and Budget. Bio-Tech applied for inclusion on the qualified consultant list and Bio-Tech's president, Stephen H. Sutherland, applied for certification as a certified UST professional. In February 1995, however, Bio-Tech and Sutherland were notified that their applications for inclusion on the new lists of qualified consultants and certified professionals had been denied.
Bio-Tech and Sutherland then sued MDNR on the theory that inclusion on the MUSTFA list constituted a "license" that could not be revoked without due process of law. Bio-Tech and Sutherland argued that, under the state and federal constitutions, a license, once bestowed, becomes a protected property interest that may not be revoked without appropriate due process protection afforded to the aggrieved party. Therefore, if inclusion on the MUSTFA list constituted a license, it would have been a vested right that could not have been revoked without due process of law. The trial court held in favor of Bio-Tech and Sutherland, and MDNR appealed.
The court of appeals reversed the trial court and held that inclusion on the MUSTFA list did not constitute a "license." The court noted that "license" had been defined under Michigan law as permission by competent authority to do an act which, without such permission, would be illegal. No provision of the MUSTFA Act contained any language indicating that the legislature intended to grant licenses to perform work on UST releases to those entities included on the MUSTFA list. To the contrary, an entity not included on the MUSTFA list was not prohibited by law from performing work on UST releases. Hence, the court of appeals held inclusion on the MUSTFA list, while it did create a valuable right, did not create a license, and removal from the list was not, therefore, deprivation of a constitutionally protected property interest.
RCO Eng'g v ACR Indus, No 201436, 1999 WL 193934 (Mich Ct App, Apr 6, 1999).
ACR Industries, Inc. ("ACR") and its predecessor company used facilities on property owned by Robert Blanchard and Robert and Mary Kazmarek (collectively, "defendants") for manufacturing aerospace equipment. The predecessor company placed a 3,000 gallon UST on the property and petroleum products used by ACR during the manufacturing process were routinely dumped into the tank until ACR moved from the property. After Paul Carollo purchased the property and leased it to RCO Engineering ("RCO"), RCO began removing the UST. RCO later confirmed that there had been a release of hazardous substances from the UST and chose to remediate the site using a Type A cleanup. RCO then brought suit against the defendants under the former Environmental Response Act ("MERA"), now codified as Part 201 of NREPA, alleging that ACR was liable for approximately $1,500,000 in response activity costs incurred in cleaning up contamination of the property caused by the leaking of hazardous substances from the UST. The defendants filed a counter-claim seeking contribution for any remediation costs and alleging that RCO was liable for all costs because RCO was the owner of the UST at the time of the release. The counter-claim also alleged that RCO acted negligently in remediating the contamination. Two of the issues debated during the trial was whether a Type A or Type B cleanup should have been used to remediate the site and whether the issue of cost should enter into any examination of the appropriate type of cleanup. A jury found the defendants liable but because RCO failed to prove that more than $990,000 in response activity costs had been necessary and RCO had already been reimbursed by the state for that amount under the former Underground Storage Tank Financial Assurance Act ("MUSTFA"), now codified as Part 215 of NREPA, MCL 324.21501 et seq., RCO was not entitled to any costs from the defendants.
On appeal to the Michigan Court of Appeals, RCO argued that the defendants should not have been allowed to present evidence on whether a Type A or Type B cleanup was most cost-effective under the circumstances. The defendants argued that the administrative rules promulgated pursuant to MUSTFA specifically state that the costs of alternative types of remedies should be considered before choosing a type of cleanup. RCO argued that cost should not be considered until after a cleanup type had been chosen. The court held that the rules recognize that "the goal of minimizing costs could be critically compromised if cost is not considered until after a final decision is made on the type of cleanup to be employed." The rule stating that the "remedial action type proposed shall be at the option of the person proposing the remedial action" does not mean, continued the court, "that the choice of remedial action cannot be challenged on the grounds of cost-effectiveness." Although the party proposed the remedial action has the discretion to select the type of cleanup, it is imperative that the party consider the cost of the alternatives. Therefore, the trial court's admission of material concerning whether RCO had properly considered cost when selecting the remedy was not an abuse of discretion.
The trial court did not allow RCO to present testimony establishing that the lack of leachable contamination in a given soil sample does not mean that contamination is not present. RCO argued that the trial court had, therefore, allowed the defendants to mislead the jury about the extent of the contamination. The court of appeals rejected this argument, noting that the fact that a Toxicity Characteristic Leaching Procedure ("TCLP") test does not measure the total amount of contaminates in a sample was amply made by two witnesses. The court held that "any further speculation on what contamination might be present in the soil would only have served to confuse and mislead the jury" and that, therefore, the trial court had not abused its discretion in disallowing such speculative testimony.
The "collateral source rule" provides that the recovery of damages from a tortfeasor is not reduced by the plaintiff's receipt of money in compensation for his injuries from other sources. RCO argued that the trial court erred when it found that this rule did not apply and that, therefore, any recovery awarded to RCO should be reduced by the $990,000 payment from MUSTFA. The court of appeals held that because RCO's action was based on MERA, the collateral source rule is inapplicable by definition and would be at odds with MERA's cost-limiting goal.
RCO next attempted to argue that if the defendants were entitled to the benefits of the MUSTFA reimbursement, then RCO was entitled to recover its legal fees as a result of the creation of the "common fund." The court of appeals held, however, that because the legislature did not intend to allow private parties to recover their attorney fees under MERA, the trial court had not erred in excluding evidence on its fees.
RCO argued that the trial court should have declared a mistrial after an MDNR environmental quality analyst testifying on behalf of the defendants was allowed to testify that he had sent criticisms of RCO's remedial efforts to a MUSTFA fraud investigator with the Michigan State Police. Although it agreed that the testimony should not have been allowed, the court of appeals held that the "singular comment" made by the witness regarding the issue "was [not] so egregious or prejudicial that a mistrial was necessary" because "any potential prejudice was cured by the timely and strongly-worded cautionary instruction given by the trial court" to the jury to disregard the statements.
The court of appeals held that the trial court had properly excluded speculative testimony about the possible effect that recharacterization of the soil might have had on the overall cleanup costs. The court of appeals also rejected RCO's argument that the trial court had erred when it failed to give four requested supplemental jury instructions and when it awarded mediation sanctions to the defendants for attorney fees. The court of appeals found no clear abuse of discretion on the part of the trial court. The opinion of the trial court was, therefore, affirmed by the court of appeals.
Attorney General v Cagney, No 199421 (Mich Ct App, Feb 5, 1999).
The State of Michigan brought suit against Thomas Cagney ("Cagney"), seeking injunctive and monetary relief under the former Underground Storage Tank Regulatory Act ("USTRA"), MCL 299.701 et seq., to abate and remedy the unlawful USTs on Cagney's property. Cagney argued that the tanks on his property fell within the exception from USTRA regulation for farm or residential tanks of 1,100 gallons or less. The trial court disagreed, however, and granted the State's motion for summary disposition, ordering Cagney not to use the tanks or to remove them unless in compliance with authorized procedures. The court also imposed a civil fine for Cagney's failure to comply with the applicable regulations.
On appeal, Cagney first argued that the trial court had erred in granting summary disposition on the basis that there was no genuine issue of material fact. Cagney alleged that the State's affidavits were fabricated, that the USTs on his property were exempt from regulation, and that no regulated substances were stored in the tanks after the effective date of USTRA. The Michigan Court of Appeals rejected these arguments. The only affidavit Cagney submitted in response to the State's motion for summary disposition was his own "bare assertion" that there were no USTs on his property. Cagney was uncooperative during discovery and did not produce any verifiable evidence that the land was used for farming or as his residence. The State, however, clearly showed that the property where the USTs were located was used as a commercial airport. Although Cagney attempted to argue that the tanks were not being used, the court held that this was irrelevant because the Fire Prevention Code, MCL 29.1 et seq., regulates tanks both currently and formerly in use to store flammable materials and makes no exceptions for farm or residential tanks. "[T]he fact that the tanks are dormant is even more compelling evidence of the need for proper closure," the court held. Because Cagney failed to provide any evidence that would show a genuine issue of material fact, the court of appeals affirmed the trial court's grant of summary disposition.
Although Cagney argued that the trial court lacked the authority to revise its order to include the imposition of a civil fine, the court of appeals affirmed the trial court on this matter as well. The trial court had reserved the issue of liability for past registration fees and civil fines pending Cagney's compliance with the court's closure order. The State subsequently moved to revise the trial court's order to include the fine and supported its motion with the affidavit of a UST removal expert who calculated the fine. Cagney did not offer any contradictory evidence challenging the fine and the court held that the trial court had not erred in revising the order to include the fine. Cagney also unsuccessfully tried to argue that the action was barred by the statute of limitations covering injury to persons or property. Because Cagney did not raise the issue until 18 months after the suit was filed and long after he had filed his answer, and because Cagney's wrongful acts were of a continuing nature extending the date the period of limitations would run until the wrong was abated, the court rejected his argument. The appeals court, therefore, affirmed the trial court's order.
Pitsch v ESE Mich, Inc, 233 Mich App 578; 593 NW2d 565 (1999).
Gary Pitsch ("Pitsch") entered into an agreement with J & S Group ("J & S") for the purchase of property in Cadillac. The agreement was contingent upon the completion of an "acceptable" environmental assessment and a week after signing the purchase agreement, Pitsch retained ESE Michigan ("ESE") to perform a Phase I environmental assessment to identify potential environmental hazards. In a report dated June 6, 1991, ESE identified the possible existence of a large capacity UST that once held fuel oil, the presence of oil stains near the building on the property, the existence of a pipe possibly associated with a UST, and the existence of insulation that possibly contained asbestos. ESE recommended to Pitsch that it be retained to perform a Phase II investigation to analyze soil and groundwater samples. Pitsch attempted to initiate the Phase II investigation but J & S denied him access to the property. Pitsch requested that the parties close on the sale of the property but J & S declined to close, claiming that Pitsch had breached the contract by failing to close on the agreement within 30 days of receiving the Phase I report. Pitsch filed suit in August 1991 to force the sale.
Following a court order on June 17, 1992, that J & S comply with the sales agreement, J & S and Pitsch entered into a settlement agreement whereby Pitsch agreed to hold J & S harmless and indemnify it against any claims arising out of the contamination to the extent that the hazard was disclosed in the ESE reports and other documents. On July 31, 1992, J & S conveyed the property to Pitsch, who began response activity to remedy the contamination. In March 1993, Pitsch learned that Dunbar Excavating Company ("Dunbar") had removed at least one UST from the property between 1987 and 1991, releasing hazardous substances into the soil in the process.
Pitsch filed suit in September 1994, bringing claims against J & S, Dunbar and ESE for recovery of response activity costs under Part 201 of NREPA and for negligence and misrepresentation. The trial court subsequently granted: (1) Dunbar's motion for summary disposition on the basis that the negligence claim against it was barred by the statute of limitations; (2) summary disposition for Dunbar and J & S on the Part 201 claims because the court found that Part 201 did not create a private cause of action for the recovery of response costs; and (3) summary disposition for ESE on the ground that there was no genuine issue of fact as to whether ESE breached its duty of care because it disclosed the existence of contamination resulting from a UST and recommended against the purchase.
On appeal, the court held that Part 201 expressly created a private cause of action for the recovery of response activity costs from PRPs. Part 201 expressly states that persons identified as liable "shall be liable for . . . necessary costs of response activity incurred by any other person." The court rejected the defendants' argument that a determination of liability by MDEQ is a prerequisite to an action to recover response activity costs and held that Part 201 did not require state action in all cleanup projects under the act. The court also rejected the defendants' argument that a PRP may only recover response costs from other PRPs in an action for contribution after it enters into a settlement agreement with the State or the State initiates a cost recovery action against it. The court held that "[a] construction of [Part 201] that limits a private party's remedy to contribution would leave some of those who voluntarily undertake response activity costs without a remedy. . . . In cases where the owner did not cause the release, his action is not one for contribution, but rather is designed to shift the entire cost of response activity to the party or parties that caused the release." The court ruled that this interpretation would have the effect of discouraging voluntary remedial action. The court held, therefore, that the trial court erred in granting summary disposition to J & S and Dunbar regarding Pitsch's claim under Part 201.
The court, however, rejected Pitsch's argument that the trial court had erred in granting summary disposition to ESE on the negligence claim. Pitsch argued that ESE negligently failed to inform him that Dunbar told ESE that he had removed a UST from the property, the contents of which leaked on the property, and that ESE observed "free product" in the trench it dug to determine the presence of a UST. Pitsch did not offer any evidence, though, that ESE had observed free product in the trench and even if ESE failed to inform Pitsch of Dunbar's admission, ESE had clearly and unequivocally informed Pitsch that a UST had been removed from the property, that surrounding soil was contaminated with fuel oil, and that a cleanup would be necessary. The court stated that Pitsch purchased the property in spite of ESE's report, not in reliance on it. In this case, the court held that summary disposition had been properly granted.
To support his claim of misrepresentation against ESE, the court held that Pitsch was required to show that: (1) ESE made a representation regarding a material fact, (2) the representation was false, (3) ESE knew the representation was false or made it recklessly, (4) ESE intended Pitsch would act on the representation, (5) Pitsch acted in reliance on the representation, and (6) Pitsch suffered injury as a result. The court held that Pitsch did not present any evidence to prove the falsity of ESE's statement that it observed no "free product." In addition, the court held that there was no genuine issue of fact as to whether ESE made statements regarding the groundwater and contamination either recklessly or without knowing whether the statements were true or false and Pitsch did not allege that ESE was otherwise negligent in completing the investigation. The court, therefore, held that the trial court had correctly granted summary disposition in favor of ESE on Pitsch's misrepresentation claim.
Pitsch argued that the trial court had erred in granting summary disposition for Dunbar on the statute of limitations issue because the applicable limitations period was six years under the statute of repose, MCL 600.5839, rather than the three-year period provided in MCL 600.5805(8). The statute of repose covers injuries "arising out of the defective and unsafe condition of an improvement" and applies to claims against state licensed architects or professional engineers who "perform or furnish the design or supervision of the construction of the improvement." The limitation period for the statute of repose begins to run "after the time of the occupancy of the completed improvement, use or acceptance of the improvement." The court held that, contrary to Pitsch's argument, the removal of a UST was not an "improvement" for the purpose of applying the statute of repose's limitations period. "[T]he term `improvement' refers to a product, object, or some other tangible item that remains on the real property after the contractor completes his work." The appeals court, therefore, affirmed in part and reversed in part the trial court's opinion.
Spiek v Department of Transp, 456 Mich 331; 572 NW2d 201 (1998).
In 1961, the plaintiffs purchased residential property located on Eleven Mile Road in the City of Warren. The property now abuts a service drive to Interstate 696. The plaintiffs filed a complaint in the Michigan Court of Claims against the Michigan Department of Transportation ("MDOT") for inverse condemnation, alleging that the service drive had interfered with the use and enjoyment of their property and rendered it worthless, constituting a taking of property for public purpose without just compensation. The trial court granted MDOT's motion for summary disposition, stating that while the plaintiffs had suffered an intrusion on their property, "there is a certain burden that each of us must bear" for the common good=2E The Michigan Court of Appeals reversed the trial court, holding that the trial court had erred in not providing the plaintiffs an opportunity to establish that the "use and enjoyment of their property has been detrimentally affected to a degree greater than that of the citizenry at large in conjunction with the normal use of the highway. If they can so establish, then they are entitled to compensation . . . ."
The Michigan Supreme Court, however, reversed the court of appeals, holding that the complaint failed to "allege an essential element of their cause of action: that the damage to their property is of a unique or peculiar character different from the effects experienced by all other similarly situated property owners." The supreme court concluded that the case was "barred by the well-accepted rule that property owners are not entitled to compensation for highway noise that is necessarily incident to proximity to a highway." The persistent passing of vehicles on the road is commonly referred to by courts as a "legalized nuisance" and, as such, immunity against recovery for the effects of the nuisance exist under the common-law doctrine of damnum absque injuria (a loss or injury which does not give rise to an action for damages against the person causing it). "Where harm is shared in common by many members of the public, the appropriate remedy lies with the legislative branch and the regulatory bodies created thereby . . . . Only where the harm is peculiar or unique in this context does the judicial remedy become appropriate." Therefore, the supreme court held that summary disposition in favor of MDOT was appropriate.
Bolt v City of Lansing, 459 Mich 152; 587 NW2d 264 (1998).
The City of Lansing ("Lansing") established a storm water service charge ("Service Charge") in order to help defray the cost of the administration, operation, maintenance, and construction of a combined sewer overflow ("CSO") control project. Lansing was required to conduct the CSO control project in order to comply with the CWA. Lansing estimated that the total cost of the project over the next 30 years would be $176 million and anticipated that half of that cost would be paid for with monies collected under the Service Charge. The amount of the Service Charge imposed on each parcel of property was based on the size of pervious areas (e.g., vegetated areas that absorb rain water) and impervious areas (e.g., paved areas that impede absorption and, thus, increase run off) within the parcel. The Service Charge was invoiced on the December tax statement and was due the following March. A failure to pay the Service Charge could result in late charges and property liens.
Alexander Bolt, a Lansing resident, received a bill for $59.83 for the Service Charge that applied to his 5,400 square-foot parcel. Eleven days before the Service Charge was due, he challenged its constitutionality in the Michigan Court of Appeals. Bolt argued that the Service Charge was a "disguised tax" that required voter approval under the Headlee Amendment to the Michigan Constitution, which prohibits local units of government from levying any new tax without a public vote. The Court of Appeals held that the Service Charge was a user fee, rather than a tax, and was not subject to the Headlee Amendment restrictions. Bolt then appealed to the Michigan Supreme Court.
The supreme court summarized the issue as follows: "If, as [Bolt] contends, the charge is a tax, it unquestionably violates the Headlee Amendment . . . . However, if the charge is a user fee, as the city maintains, the charge is not affected by the Headlee Amendment." The Court, then acknowledged, however, that "[t]here is no bright-line test for distinguishing between a valid user fee and a tax that violates the Headlee Amendment." Generally, the Court noted that a "`fee' is `exchanged for a service rendered or a benefit conferred, and some reasonable relationship exists between the amount of the fee and the value of the service or benefit.' A `tax,' on the other hand, is designed to raise revenue.'" The court then reviewed three primary criteria that distinguish a fee from a tax. First, a "fee must serve a regulatory purpose rather than a revenue-raising purpose." Second, a "fee must be proportionate to the necessary costs of the services." Third, a fee must be paid voluntarily. Applying these three criteria to the Service Charge, the supreme court held that it was a tax that required voter approval under the Headlee Amendment.
The supreme court noted that the Service Charge was used to invest in infrastructure that would benefit Lansing residents for many years, rather than simply to defray the costs of a regulatory activity. The Court also found that the amount of the Service Charge did not correspond to the benefits conferred. Nearly three-quarters of all Lansing residents were already served by separated sewers and would not receive any benefit from the CSO control project; however, the Service Charge applied to all property owners, rather than just those that actually benefited from the project. Next, the supreme court found that the Service Charge lacked any significant element of regulation because the charge was based solely on the volume of storm water runoff and did not consider "the presence of pollutants on each parcel that contaminate such runoff and contribute to the need for treatment." Finally, the supreme court found that payment of the Service Charge was not voluntary because the "property owner has no choice but to use the service and is unable to control the extent to which the service is used." The supreme court concluded, therefore, that the Service Charge is a tax and is not a valid user fee. "To conclude otherwise would permit municipalities to supplement existing revenues by redefining various government activities as `services' and enacting a myriad of `fees' for those services," the court stated. Accordingly, the supreme court reversed the court of appeals and held that the Service Charge was an unconstitutional tax.
Ahearne v Bloomfield Twp, No 204335 (Mich Ct App, May 14, 1999).
Bloomfield Township was served by a sewer system that was constructed in the late 1920s and that carried both sanitary sewage and storm water runoff to a sewage treatment plant. During periods of heavy rainfall, the combined volume of sewage and storm water carried in the system occasionally exceeded the volume that the could be discharged to the treatment plant. When that happened, the system discharged untreated sewage directly to the Rouge River in violation of the federal CWA. In order to comply with the requirements of the federal act, the Township and two other municipalities served by the system agreed to construct a combined sewer overflow retention basin ("CSO Project"), which captures and holds the raw sewage so that it can discharge to the treatment plant when the flow has subsided. Construction of the CSO Project was financed through the sale of municipal bonds. In order to repay its allocated share of the bonded debt, the Township created a special assessment district, which includes over 2,000 residences served by the CSO Project, and levied rates ranging from $35 per year to $350 per year on each parcel within the district. A group of property owners within the district challenged the district's creation because it did not confer any special benefit on their property and did not increase their property values. Accordingly, the property owners argued that the assessment on their property was a tax that required voter approval before it could be imposed. The Oakland County Circuit Court dismissed the property owners' lawsuit and the owners appealed.
On appeal, the Michigan Court of Appeals first distinguished a special assessment from a tax. "Unlike a tax, which is imposed to raise revenue for general governmental purposes, a special assessment is designed to recover the costs of improvements that confer local and peculiar benefits upon property within a defined area," the court stated. The court then established two requirements that must be met in order for a special assessment to be deemed valid. First, the "special assessment must confer a benefit upon the assessed properties beyond that provided to the community as a whole." Second, "the amount of the special assessment must be reasonably related to the benefits derived from the improvement."
The property owners argued that the only tangible benefit from the CSO Project was a cleaner Rouge River, which benefited the community as a whole, and accordingly, the property owners within the district received no special benefit from the project. The appeals court disagreed, stating that the property owners had overlooked "the most direct and particularized benefit" conferred by the CSO Project: "It allows [the property owners] to continue receiving sewer service from [the Township]." The court noted that the Township was under no affirmative duty to provide sewer service to the property owners and could have elected to discontinue providing that service rather than construct the CSO Project. The court further noted that it was undisputed that the Township could have created a special assessment district to fund the construction of a new sewer system and that it would "defy logic to prevent [the Township] from using special assessments to fund the conversion of a legally defective sewer system into a legally proper sewer system."
The property owners also argued that the CSO Project had not increased the value of their properties. Although the court acknowledged that property values within the special assessment district had not changed appreciably since the construction of the CSO Project, the court held that the "essential question is not whether there was any change in market value, but rather whether the market value of the assessed property was increased as a result of the improvement." In answering this question, the court examined the market values both with and without the CSO Project. Without the CSO Project, the court determined, "the market value of plaintiffs' properties would undoubtedly have been substantially reduced" because the properties would not have been served by any sewer system. Accordingly, the court determined that the Township had properly created the special assessment district and affirmed the trial court's dismissal of the lawsuit.
The Nominating Committee met in June to select nominees for the Environmental Law Section Council, Secretary-Treasurer, and Vice-Chair. Beth Gotthelf, Mike Robinson, Chere Calloway and Tom Wilczak served on the Nominating Committee. The Committee considered the selection criteria in the Section By-Laws. Based on that criteria, the Committee recommends:
John Byl, Susan Johnson, Michael Leffler, Sharon Newlon, and Susan Topp to positions on the Council; Beth Gotthelf to chair; Charles Toy to vice-chair and John Tatum to secretary-treasurer The election for these positions will be held at the annual business meeting of the Environmental Law Section on September 15, 1999, at the Amway Grand Hotel in Grand Rapids.