STATE OF MICHIGAN
IN THE TRIAL COURT FOR THE COUNTY OF ISABELLA
Lake Isabella Development, Inc.
A Michigan Corporation,
Plaintiff,
Case No: 01-596-CZ
V
Hon. William T. Ervin
Michigan municipal corporation,
The Michigan Department of
Environmental Quality, a state agency,
Defendants.
________________________________
Alan M. Greene
Attorney for Plaintiff
39577 Woodward Avenue, Suite 300
Bloomfield Hills, MI 48304-2820
Thomas W. Hall, Jr.
Co-Counsel for Plaintiff
300 South University
Mt. Pleasant, Mi 48858
Paul M. Lubienski
Attorney for Michigan Onsite Wastewater
Recycling Association (MOWRA)
Amicus Brief Filer
23511 Ford Road
Dearborn, MI 48128
John J. Lynch
Attorney for Village of Lake Isabella
555 North Main
Mt. Pleasant, MI 48858
Kathleen Cavanaugh
Assistant Attorney General
Attorney for MDEQ
300 S. Washington Square, Suite 530
Lansing, MI 48913
________________________
OPINION AND ORDER ON MDEQ’S MOTION FOR SUMMARY DISPOSITION
On December 20, 2001, the Defendant Michigan Department of Environmental Quality
filed a Motion for Summary Disposition pursuant to MCR 2.116(C)(8) alleging that Plaintiff has failed to state a claim upon which relief can be granted. Plaintiff filed a Cross-Motion for Summary Disposition on January 24, 2002, pursuant to MCR 2.116(I)(2) which allows the court to grant summary disposition to the non-moving party when the court deems it appropriate.
The Court denies the Defendant, Michigan Department of Environmental Quality’s Motion for Summary Disposition and Grants Plaintiff’s Cross-Motion for Summary Disposition.
This is a land use case involving 25 acres of land adjacent to Lake Isabella. The Property is zoned LR-1 (Lake Residential), which allows single family dwellings. Plaintiff proposes to develop single-family homes on the property in the form of a site condominium project. Each home site meets all of the setback, lot size, lot width and other requirements of the LR-1 district. The Project is permitted as a matter of right and requires no re-zoning, special use approvals or variances. Pursuant to the Village’s Zoning Ordinance, only site plan approval is required for Plaintiff to commence development of the Project.
The Plaintiff submitted its request for site plan approval on May 22, 2000. Plaintiff’s site plan included a proposal to construct a private wastewater disposal system to serve the development because the Village does not have a public sewer system. The Property is lakefront land and contains soils that are predominantly not suitable for on-site septic systems. Moreover, the Village’s Zoning Ordinance emphasizes the paramount importance of protecting the water quality of Lake Isabella. Individual septic systems on lakefront land would not be consistent with such an objective. Thus, in order to develop the land as zoned, the Plaintiff proposed to construct the private sewage treatment facility to serve the project.
After holding two public hearings on the site plan, the Planning Commission, at its meeting on September 21, 2000, granted site plan approval for the Project, conditional on Plaintiff’s obtaining and submitting to the Village all required state and county permits and approvals for the project. Following the grant of the site plan approval, the Plaintiff proceeded to seek the required State and County approvals. With respect to the wastewater treatment facility, Plaintiff submitted detailed engineering plans and a permit application to the MDEQ. The MDEQ, however, would not undertake its review and issue the permit until the Village provided the resolution required by the MDEQ Rule 299.2933(4).
Consequently, Plaintiff requested the approval of such a resolution be placed on the agenda for a Village Council meeting. At a Village Council meeting held on March 20, 2001, the Village Council rejected the request to provide the resolution required by the MDEQ Rule. As a result, the MDEQ has refused to process further Plaintiff’s permit application and the project is essentially dead because the Property cannot be developed without the provision of a suitable and safe sewage disposal system.
Plaintiff filed this action against the Village asserting claims for, among other things, a regulatory taking and violation of substantive due process of law. Plaintiff contends that the Village’s action was arbitrary and unreasonable and precludes the Property from being developed as zoned. Plaintiff sought declaratory, injunctive and/or mandamus relief. The Village filed a motion for summary disposition. The Court partially granted the Village’s motion as to Plaintiff’s request for mandamus relief, finding that the Village had no obligation as a matter of law to provide the requested resolution, and denied the Village’s motion with respect to the remainder of Plaintiff’s claims. The Village’s application for leave to file an interlocutory appeal was denied by the Court of Appeals by Order dated October 30, 2001.
In its summary disposition motion, the Village devoted a large part of its argument to attacking the validity of the MDEQ Rule at issue. As a general matter, Plaintiff agreed with the Village that the MDEQ Rule was invalid. The Plaintiff asserts that the Rule plainly exceeds the statutory authority given the MDEQ and, in fact, is directly contrary to the public policy objectives of the applicable State law. In addition, the Plaintiff asserts that the Rule has the effect of granting the community unfettered discretion to block the construction of safe and suitable sewage treatment facilities, which are under the exclusive regulatory jurisdiction of the MDEQ and to thus bar, any reasonable development of certain lands without specific intent standards by which to measure its conduct.
It is undisputed that a privately-owned sewage treatment facility as proposed by Plaintiff is specifically authorized under applicable Michigan law, subject to regulation and permitting by the MDEQ. See MCL 324.4104 et seq. Although State law authorizes such a private treatment facility, the MDEQ has adopted a rule requiring that, as a condition for proceeding with a permit application for a private treatment facility, the local governmental agency must adopt a resolution agreeing to accept responsibility for the private sewage system if the private owner fails to maintain or operate it in accordance with the permit. In particular, the rule states:
Plaintiff filed a first Amended Complaint on November 2, 2001, which asserts in Count IV that the Michigan Department of Environmental Quality (MDEQ) exceeded the scope of their rule making authority in promulgating Rule 299.2933(4) and was therefore invalid. The MDEQ filed a Motion for Summary Disposition on December 20, 2001, pursuant to MCR 2.116(C)(8) alleging that Plaintiff has failed to state a claim upon which relief can be granted. Plaintiff filed a Cross-Motion for Summary Disposition on January 24, 2002. Plaintiff’s cross-motion is brought pursuant to MCR 2.116(I)(2) which allows the court to grant summary disposition to the non-moving party when the court deems it appropriate. The Court granted the request of the Michigan Onsite Wastewater Recycling Association (MOWRA) to file an Amicus Brief. The Court heard oral arguments and took the matter under advisement to review the law. Upon review of Plaintiff’s motion this court, upon its own initiative, raises the issue of whether Plaintiff’s (I)(2) motion is more appropriately addressed as a (C)(10) motion alleging that there exists no genuine issue of material fact and that the case should be decided as a matter of law. This Court acknowledges that the timing is early for a (C)(10) motion as the MDEQ filed their motion within one month of filing their answer to the First Amended Complaint.
A (C)(8) motion for summary disposition, on the grounds that the opposing party has failed to state a claim upon which relief can be granted, tests the legal sufficiency of a pleaded claim. The inquiry is whether the claim made is so clearly unenforceable as a matter of law that no factual development could possibly justify a right to recovery. Karrar v Barry County Road Commission, 127 Mich App 821 (1983). All factual allegations are taken as true along with any reasonable inferences or conclusions which may fairly be drawn from the facts alleged. Kinnunen v. Bohlinger, 128 Mich App 635 (1983).
In ruling on a motion for summary disposition alleging that the complaint fails to state a claim, all factual allegations in support of the claim are accepted as true, as well as any reasonable inferences or conclusions that can be drawn from the facts alleged, but mere statements or conclusions that are not supported by allegations of fact will not suffice to state a cause of action. Golec v Metal Exchange Corp, 208 Mich App 380 (1995).
On a (C)(10) motion for summary disposition alleging that there is no genuine dispute as to any material fact, the court must consider affidavits, pleadings, depositions, and any other documentary evidence filed. The Court must find that it is impossible for a claim to be supported at trial because of some deficiency which cannot be overcome before it can properly grant summary disposition. Michigan Mutual Insurance Co. v Heatilator Fireplace, Division of Vega Industries, Inc., 126 Mich App 837 (1983).
A motion for summary disposition grounded on the absence of genuine issue as to any material fact is designed to test whether there is factual support for the claim. Libralter Plastics, Inc. v Chubb Group of Ins. Companies, 199 Mich App 482 (1993).
Summary disposition motions should not be granted if genuine issues exist as to any material fact. The test for whether a genuine issue exists is whether, giving benefit of reasonable doubt to the party opposing the motion, the record might be developed which would leave a material issue upon which reasonable minds might differ. Stebbins v Concord Wrigley Drugs, 164 Mich App 204 (1987).
MCR 2.116(I)(2) specifically authorizes the court to render summary disposition in favor of the non-moving party if it appears that such party is entitled to judgment. MCR 2.116(I)(2) is subject to 2.116 (G)(5) and 2.119 (E)(2) concerning the materials the court can take into consideration when determining summary disposition. Although a motion is not necessary for summary disposition to be granted in favor of the party opposing a motion, all those materials that would have been necessary to support a motion, if it had been made, are required to grant relief to the non-moving party under MCR 2.116 (I)(2). Dean, Robert and Ronald Longhofer, Michigan Court Rules Practice, 4th Ed., p. 382.
Plaintiff claims in Count IV of the First Amended Complaint that there are no statutory requirements that explicitly or implicitly require municipalities to be responsible for a sewage disposal system and that Rule 2933(4) exceeds the scope of MDEQ’s statutory delegation. Rule 2933(4) reads as follows:
When the owner of the proposed sewerage system is not a governmental agency, the application for a permit shall include a resolution form the local governmental agency having jurisdiction, stating that the governmental agency shall assume responsibility for the effective and continued operation and maintenance of the proposed sewerage system if the owner in any way fails to perform in that capacity. A copy of contractual or other arrangements between the owner and the governmental agency which provide for the continuity of service agreement, shall also be submitted. Rule 299.2933(4).
The Michigan Court of Appeals set forth the test to determine the validity of rules created by an agency in Dykstra v Michigan Dep’t of Natural Resources, 198 Mich App 482 (1993). First, is the rule within the subject matter of the enabling statute? Second, does the rule comply with the legislative intent underlying the enabling statute? Third, is the rule arbitrary and capricious?
IS THE RULE WITHIN THE SUBJECT MATTER OF THE ENABLING STATUTE?
The statutory preamble provides the subject matter that the Natural Resource and Environmental Protection Act MCL 324.101 is intended to effect.
An act to protect the environment and natural resources of the state; to codify, revise, consolidate, and classify laws relating to the environment and natural resources of the state; to regulate the use of certain lands, waters, and other natural resources of the state; to prescribe the powers and duties of certain state and local agencies and officials; to provide for certain charges, fees, and assessments; to provide certain appropriations; to prescribe penalties and provide remedies; to repeal certain parts of this act on a specific date; and to repeal certain acts and parts of acts.
The Michigan Department of Environmental Quality was specifically provided with the authority to promulgate and enforce rules the department considered necessary in conducting and operating sewage systems.
Sec. 4104. The department may promulgate and enforce roles as the department considers necessary governing and providing a method of conducting and operating all or a part of sewerage systems including sewage treatment works. The department shall classify sewage treatment works with regard to size, type, location, and other physical conditions affecting those works and according to the skill, knowledge, experience, and character that the person who is in charge of the active operation of the sewage treatment works has to possess in order to successfully operate the works, to prevent the discharge of deleterious matter capable of being injurious to the health of the people, or to other public interests. The department shall examine or provide for the examination of persons as to their qualifications to operate sewage treatment works. The department shall promulgate rules regarding the classification of sewage treatment works, the examinations for certification of operators for those works, and the issuance and revocation of certificates, and shall issue and revoke certificates in accordance with those rules. Every sewage treatment works subject to this part shall be under the supervision of a properly certified operator, except that this section does not require the employment of a certified operator in a waste treatment works that receives only wastes that are not potentially prejudicial to the public health. (Emphasis added) MCL 324.4101.
It is clear that the legislature empowered the Michigan Department of Environmental Quality to promulgate rules and the rule at issue is within the subject matter of the enabling statute.
DOES THE RULE COMPLY WITH THE LEGISLATIVE INTENT
UNDERLYING THE ENABLING STATUTE?
The MDEQ argues that the following statute makes the discharge of sewage the responsibility of the municipality.
(2) The discharge of any raw sewage of human origin, directly or indirectly, into any of the waters of the state shall be considered prima facie evidence of a violation of this part by the municipality in which the discharge originated unless the discharge is permitted by an order or rule of the department. If the discharge is not the subject of a valid permit issued by the department, a municipality responsible for the discharge may be subject to the remedies provided in section 3115. If the discharge is the subject of a valid permit issued by the department pursuant to section 3112, and is in violation of that permit, a municipality responsible for the discharge is subject to the penalties prescribed in section 3115. (Emphasis added) MCL 314.3109(2)
Furthermore, the Michigan Department of Environmental Quality’s position is that the local unit of government is strictly liable for the discharge of sewage within its jurisdiction. In sum, Section 3109 imposes strict liability.
When interpreting a statute, the court should look at the plain language of the statute. Mason County Civil Research Council v County of Mason, 343 Mich 313, (1955). Prima Facie Evidence is defined as “a fact presumed to be true unless disproved by some evidence to the contrary.” Blacks Law Dictionary, 6th Edition. The language of the statute is clear and should not be interpreted in a manner contrary to the plain language used by the legislature. If the legislature intended the municipality to have strict or absolute liability they could have stated that in plain language. The MDEQ is trying to stretch the interpretation of the statute beyond its plain meaning to justify its position.
This Court also notes that MCL 324.3109(2) reads specifically: “a municipality responsible for the discharge.” This wording of the statute would have no meaning if this court were to find that the municipality had strict liability because with strict liability it wouldn’t matter if it was responsible or not for the discharge.
The words “prima facie evidence” used in the statute allows a municipality to rebut the presumption that a discharge of raw sewage into the waters of the state is a violation by the municipality. If the municipality had strict liability as argued by MDEQ, than why would it be necessary to have a resolution from the municipality to assume responsibility for the effective and continued operation and maintenance of the sewage system. In effect, they would already be responsible for it because, according to MDEQ, they have strict liability for any discharge of sewage within its jurisdiction.
The statute [MCL 324.3109(2)] is intended to regulate the discharge of both private and public sewage systems. The rule grants absolute discretion to the local governmental agency without any objective criteria to reject sewage disposal methods authorized by statute and regulated by Michigan Department of Environmental Quality. An arbitrary rejection of the requested resolution of the local governmental authority prevents safe and sound sewage treatment practices which are authorized and encouraged by the law, and would thus require the use of individual septic systems or some other sewage disposal system which are discouraged by the law. Under the rule promulgated by the agency which requires the local governmental agency to pass a resolution that they will assume responsibility for the sewage system should the developer be unable to maintain it before the developer is able to get past the application process, the local governmental agency has unfettered discretion for denial of systems which would otherwise be encouraged by laws and regulations. This unchecked discretion allows a local governmental unit to prevent development or simply roadblock a specific developer that they may dislike without any standards or rational basis. If the municipality does not have a sewage system of its own it may not, as in this case, pass a resolution because it does not want the potential liability. The purpose of the statute is to regulate discharge of sewage, not to prevent the development of reliable sewage treatment plants. Thus, this rule is not rationally related to the legislative purpose in any manner.
IS THE RULE ARBITRARY AND CAPRICIOUS?
A rule is arbitrary if it is fixed or arrived at through an exercise of will or by caprice, without consideration or adjustment with reference to principles, circumstances, or significance. A rule is capricious if it is apt to change suddenly or is freakish, or whimsical. If a rule is rationally related to the purpose of the statute, it is neither arbitrary nor capricious. Further, if there is any doubt as to the invalidity of a rule in this regard, the rule must be upheld. Dykstra v Michigan Dep’t of Natural Resources, 198 Mich App 482 (1993).
The MDEQ argues that requiring local governmental agencies to be responsible for sewage systems in their jurisdictions simplifies and promotes efficient enforcement of the laws prohibiting pollution of the water of the state. They argue it eliminates the need for MDEQ to track down private parties who may go bankrupt or simply abandon the system. In addition, municipalities have the tools and means to adequately fund and manage sewage systems through use of assessments and these tools are not available to private parties or the MDEQ.
However, the statute gives the MDEQ, through the Attorney General’s Office, the power to abate or correct a health concern if there is a failure of a sewage system, along with the authority to issue fines, collect attorney fees, and impose criminal penalties on private parties as well as on municipalities. MCL 324.3115. In many cases, the state has more resources then the municipalities to track down private parties who may not be residents of the municipality. Even if it was easier for the municipality to track the party down, that is not sufficient reason to require the municipality to be responsible for taking the system over.
If the MDEQ is concerned about the future operations of the system there are safeguards that can be put into place before the permit is issued to ensure that the sewage system will be operated and maintained in an appropriate manner. As pointed out in the Amicus Brief filed by the Michigan Onsite Wastewater Recycling Associations (MOWRA), a consent order could be signed by the developer prior to obtaining the permit requiring the developer to pay an escrow amount or posting a bond to be used by MDEQ to fix future problems with the system. This is currently done under the “Safe Drinking Water Act” found at MCL 325.1001 et seq and Michigan Administrative Code Rules 325.211 et. seq. The MDEQ could have, as an option for the developer, to get a resolution from the municipality agreeing to assume responsibility for the sewage system as rule 2933(4) now requires.
It seems as though MDEQ is “putting the cart before the horse” by requiring a local governmental agency to pass a resolution stating that it will assume responsibility for the sewage system if the owner fails to perform. It prohibits the developer from even getting on first base of the application process if, for whatever reason, the municipality decides not to pass the resolution. Either the project is derailed or the developer will be forced to use some other sewage disposal method that may be more harmful. This goes against the intent of the statute which encourages safe and sound sewage treatment practices. Requiring a municipality to assume responsibility for the sewage system if the owner fails to operate or maintain it in a satisfactory manner is one way the MDEQ can ensure that the sewage system will be operated in a satisfactory manner but it is not the only way. The MDEQ has other options for ensuring the safe operation and maintenance of the private sewage system. Thus, if a municipality refuses to sign a resolution because of costs or liability the rule has resulted in arbitrary and capricious results that were not the intention of the statute.
The court finds that MDEQ Rule 299.2933(4) does not comply with the legislative intent underlying the enabling statute and is arbitrary and capricious. Therefore, the court finds that Rule 299.2933(4) created by they MDEQ invalid.
IT IS HEREBY ORDERED AND ADJUDGED that Defendant Michigan Department of Environmental Quality’s Motion for Summary Disposition is denied and Plaintiff’s Cross-Motion for summary disposition is granted.
February 19, 2003 _____________________________
Hon. William T. Ervin