On August 22, 2023, a split panel of the Michigan Court of Appeals held that the Department of Environment, Great Lakes, and Energy (EGLE) violated the Administrative Procedures Act (APA) by promulgating a new rule establishing drinking water standards for seven PFAS compounds. The required regulatory impact statement (RIS) did not consider compliance costs associated with a change in cleanup standards that would automatically spring from adopting new drinking water standards.
The new rules became effective on August 3, 2020, but were promptly challenged by 3M Company. 3M claimed that EGLE had not fully accounted for the compliance costs associated with the rules, as required by the APA. While promulgated under Michigan’s safe drinking water law, Michigan’s general environmental cleanup law provides that a state drinking water criterion becomes the groundwater cleanup criterion if it is more stringent than a criterion established under the cleanup law. EGLE established groundwater cleanup criteria for two of the more well-studied PFAS compounds, PFOS and PFOA, under its cleanup law as a combined 70 parts per trillion (ppt) for drinking water. The new drinking water standards for these compounds would have lowered these criteria to 16 ppt and 8 ppt, respectively. Adopting the new drinking water standards would also establish cleanup standards for five other PFAS compounds.
In preparing the RIS, EGLE estimated the compliance costs associated with the operation of water supplies, including costs to sample for these seven PFAS compounds and to install and operate treatment systems to meet the standards in their drinking water supplies if necessary. Although recognizing that promulgation of these rules would also change the existing cleanup criteria for PFOS and PFOA, EGLE stated that it was not practical to determine the impact of that change. EGLE also did not estimate costs associated with cleanup criteria for the five other PFAS compounds, noting that these costs would already be reflected in the costs associated with the PFOS and PFOA criteria.
The Michigan Court of Appeals rejected EGLE’s arguments that (1) EGLE lacked the necessary information to estimate the cleanup costs, and (2) the Court should have deferred to EGLE’s determination that it could not estimate those costs. The Court held that the APA requires an agency to provide an estimate of the actual statewide compliance costs associated with adopting all new rules, and that difficulty in estimating those compliance costs was not a valid reason for failing to provide them. Therefore, EGLE’s failure to estimate the impact of the new drinking water rules on the costs of compliance with Michigan’s general cleanup statute was a failure to comply with its statutory obligations under the APA. The Court affirmed the underlying decision of the Court of Claims that had reached the same conclusion.
The trial court stayed the effectiveness of its decision pending the exhaustion of all appeals, so the drinking water rules remain in place while the State considers appealing to the Michigan Supreme Court. Even if this decision delays the adoption of the State’s new drinking water criteria and the establishment of cleanup standards for the five new PFAS compounds, any long-term effect on PFOS and PFOA-driven cleanups will likely be limited. EGLE has already established stringent groundwater/surface water interface (GSI) cleanup standards for these compounds of 11 ppt and 66 ppt, respectively, which is the driver for many PFAS-impacted groundwater sites. EGLE is also aggressively using those standards, initially developed as discharge standards under Michigan’s water laws, to push for evaluation and remediation of stormwater discharges. Additionally, U.S. EPA has proposed federal safe drinking water standards for PFOS and PFOA at 4 ppt each, which, if adopted, would ultimately become the new drinking water and groundwater cleanup standards for PFOS and PFOA in Michigan. In the meantime, we can anticipate that EGLE will continue to identify and evaluate potential PFAS source areas throughout the State to prepare for the transition to more stringent cleanup levels in the near future.
About the Author:
Sharon Newlon is a Member and Environmental, Energy & Sustainability Practice Group Co-Chair in Dickinson Wright’s Detroit office. She can be reached at 313-223-3674 or firstname.lastname@example.org and her firm bio can be accessed, here.
 PFAS refers to a group of per- and polyfluoroalkyl substances that have been widely used in firefighting foams, coatings, certain metalworking operations and numerous other commercial and consumer applications.
 See MCL 324.20120a(5)(a).
 These are GSI standards for groundwater discharging to a drinking water source. For discharges to a non-drinking water source, the criteria are slightly less strict at 12 ppt for PFOS and 170 ppt for PFOA.