Permit to construct on wetlands issued by the Michigan Department of Environment, Great Lakes, & Energy (the Department); MCL 324.30304; First Amendment challenge to the indemnification clause in the permit; Whether the Supreme Court’s “unconstitutional-conditions test” applied to the Takings Clause also applies to the Petition Clause; Scope of the indemnification clause; Whether Michigan’s sovereign immunity barred plaintiffs’ state-law claim; Ex Parte Young; Pennhurst State Sch & Hosp v Halderman; Congressional abrogation; Allen v Cooper

[This appeal was from the WD-MI.] The court held that the indemnification clause in the state wetlands construction permit issued to plaintiffs-Gmeiners was constitutional where it only required them to pay for harms resulting from their own conduct. Michigan law required plaintiffs to obtain a permit to create a walking path for their property on Torch Lake because the pathway would have an adverse effect on the wetlands on the property. They were eventually granted the permit. At issue was an indemnification clause requiring plaintiffs to “‘indemnify and hold harmless’ Michigan for ‘all claims or causes of action arising from’ the ‘acts or omissions’ that the Gmeiners took in ‘connection with [the] permit.’” They interpreted the clause as relieving “Michigan of liability even for its own misconduct in a suit they might bring against the State.” They sued, alleging a First Amendment right to petition claim, and a state-law ultra vires claim challenging the Department’s authority to impose an indemnification clause. The district court dismissed all claims at the pleadings stage. On appeal, the court noted that “the Supreme Court has never extended its ‘two-part’ unconstitutional-conditions test in the takings context to other rights.” But while that test may not apply to the Petition Clause, the court assumed without deciding that it does. It also noted that “some Justices have doubted whether the right to ‘petition’ includes the right to sue.” Assuming it does, the court held that its “narrow view of the indemnification clause place[d] it well within the States’ ‘regulatory tradition.’” The court concluded that the clause required plaintiffs “to pay only for ‘harms resulting from’ their conduct, so it” posed no unconstitutional-conditions problem, even under the takings test. It further held that Michigan’s sovereign immunity barred plaintiffs’ state-law ultra vires claim, and no exception saved it. Affirmed.