The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL


Opinion No. 6733

September 30, 1992

ENVIRONMENTAL PROTECTION:

Grant to a person who may be liable for the environmental cleanup of a site

The Environmental Response Act authorizes the Department of Natural Resources to expend monies from the Environmental Response Fund as part of a division of the environmental cleanup costs between the department and a person who may be liable for the cleanup of contamination at that site. The Act does not authorize the department to provide the funds directly to such person(s) for the environmental cleanup for their control or expenditure as part of a cleanup effort.

Honorable Ralph Ostling

State Representative

The Capitol

Lansing, MI 48933

You have asked a question which may be phrased as follows:

Does the Environmental Response Act authorize the Department of Natural Resources to expend monies from the Environmental Response Fund as part of a division of the environmental cleanup costs between the department and a person who may be liable for the cleanup of contamination at that site?

The Environmental Response Act (Act), 1982 PA 307, MCL 299.601 et seq; MSA 13.32(1) et seq, as amended by 1990 PA 233 and 1990 PA 234, established an Environmental Response Fund (Fund), in sections 9 and 10(3) of the Act, to be used for the cleanup of toxic sites. The establishment of the Fund made the state eligible to receive matching federal funds under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), 42 USC 9601 et seq. Monies in the Fund may be used to pay for response activities required by the Act. Section 10(1) of the Act. Pursuant to section 12 of the Act, as added by 1990 PA 233, certain persons may be held liable for the costs of a cleanup (response activity) of a contaminated site.

The Department of Natural Resources (DNR) is a department within the executive branch of state government created by the Legislature in the Executive Organization Act of 1965, section 250 et seq, MCL 16.350 et seq; MSA 3.29(250) et seq. As a creation of the Legislature, it has only such powers, express or by necessary implication, as are conferred by the Legislature. Coffman v State Bd of Examiners in Optometry, 331 Mich 582, 590; 50 NW2d 322 (1951). A review of all of the provisions of the Act, including the most recent amendments, is, therefore, appropriate to ascertain the Legislature's intent and the extent of such statutory authority. Metropolitan Council No 23, AFSCME v Oakland County Prosecutor, 409 Mich 299, 317-318; 294 NW2d 578 (1980).

The intent of the Legislature as to the expenditure of funds under the Act is clearly declared in section 1(e) and 1(k) thereof, as added by 1990 PA 234:

1(e) ... [T]he responsibility for the cost of response activities pertaining to a release or threat of the release and repairing injury, destruction, or loss to natural resources caused by a release or threat of release should not be placed upon the public except when funds cannot be collected from, or a response activity cannot be undertaken by, a person liable under this act, in conjunction with an appropriate contribution, if applicable, from a fund administered by the orphan share administration. (1)

1(k) That prior to spending any money to undertake remedial action at a site, the department should assure a private or public funding source, or a combination of funding sources, that is sufficient to assure that the response activities at the site proceed without interruptions caused by insufficient financial resources until the site meets or exceeds the standards established by the department for that site. [ Emphasis added.]

Pursuant to the foregoing, the DNR is authorized to use public funds when funds cannot be collected from, or a response activity undertaken by, a person who may be liable under the Act. The department is also expressly authorized to expend funds to undertake remedial action at a contaminated site utilizing a combination of public and private funds where necessary to assure sufficient financial resources for uninterrupted cleanup.

Morever, section 14b(1) of the Act states, in pertinent part, that the Director of the DNR and the Attorney General may enter into consent orders which "provide, as determined appropriate by the director and the attorney general, for implementation by a person or any group of persons liable under section 12 of any portion of response activity at the facility." (Emphasis added.) Of course, even absent a consent order, the DNR may undertake to perform a portion of the cleanup activity and seek recovery for the cost of the response activity performed from a person or persons who may be liable under the Act. Sections 12c and 16a of the Act, as added by 1990 PA 233.

House Legislative Analysis, HB 5878 and SB 1020, October 17, 1990, makes clear that the Legislature was aware at the time of the enactment of 1990 PA 234, adding section 1(e) and 1(k), that "the department [DNR] often enters into a consent agreement with the responsible party in which it shares some of the costs for cleanup in order to expedite cleanup of the site. Thus, it can take several years, even decades, for a site to be cleaned up, and the taxpayers of the state are often stuck with at least part of the cleanup costs for the sites." (Emphasis added.)

Therefore, pursuant to the foregoing provisions of the Environmental Response Act, the DNR is expressly authorized to use the Environmental Response Fund to pay for a portion of the cost of the cleanup activity at a contaminated site pursuant to the provisions of a consent order or where it determines that a person who may be liable under the Act cannot be held wholly liable for, or is unable to undertake all, of the response activity for financial or other reasons.

The question remains, however, whether monies from the Fund can be given directly to a person who may be liable for the environmental cleanup for his/her control or expenditure as part of a cleanup effort.

1990 PA 233 added section 10f to the Act which is the only section of the Act, as amended, which expressly discusses payments from the Fund to a person who may be liable under the Act. That section authorizes the DNR to issue an administrative order to require a person "that may be liable" under the Act to undertake a response activity to abate conditions that may present an imminent and substantial danger to public health, safety and welfare. Subsection 10f(5) further provides, in pertinent part, as follows:

A person to whom an administrative order was issued under this section and who complied with the terms of the order who believes that the order was arbitrary and capricious or unlawful may petition the department, within 60 days after completion of the required action, for reimbursement from the fund for the reasonable costs of the action plus interest.... A failure by the department either to grant or deny all or any part of a petition within 120 days of receipt shall constitute a denial of that part of the petition which shall be reviewable as final agency action in the court of claims. To obtain reimbursement, the petitioner shall establish by a preponderance of the evidence that the petitioner is not liable under section 12 or that the action ordered was arbitrary and capricious or unlawful, and in either instance that costs for which the petitioner seeks reimbursement are reasonable in light of the action required by and undertaken pursuant to the relevant order. [ Emphasis added.]

Pursuant to the foregoing, the Legislature has specifically provided that a person who complies with the administrative order for a cleanup may be reimbursed by the department from the Fund for the reasonable cost of complying with the order only if that person establishes that he/she was not a person liable under the Act or that the action ordered was arbitrary and capricious or unlawful. This reimbursement provision applies only to administrative orders issued under section 10f. There is no comparable language in the Act authorizing any direct payment or reimbursement under other circumstances to persons who may be liable under the Act.

Section 15a(1) of the Act, as added by 1990 PA 234, is also instructive. That provision authorizes the DNR to make grants available to persons who may be adversely affected by hazardous substances from toxic sites. However, the Legislature provided in section 15a(2) that persons who may be liable for the cleanup of the site "shall not be eligible for [these] grants." (Emphasis added.) While these grants are not from the Environmental Response Fund, this language is still indicative of the overall legislative intent.

Thus, a reading of these provisions of the Act, in light of the legislative intent expressed in sections 1(e) and 1(k), discussed supra, and in the absence of any other express language covering the subject, compels the conclusion that, once the DNR has determined that a person may be liable under section 12 of the act, payments from the Fund to that person are not authorized unless the person establishes he/she is not liable or in the other very limited circumstances provided for under section 10f(5) of the Act. (2)

It is my opinion, therefore, that the Environmental Response Act authorizes the Department of Natural Resources to expend monies from the Environmental Response Fund as part of a division of the environmental cleanup costs between the department and a person who may be liable for the cleanup of contamination at that site. It is my further opinion that the Act does not authorize the department to provide the funds directly to such person(s) for the environmental cleanup for their control or expenditure as part of a cleanup effort. The Legislature may, if it so chooses, amend the Act to authorize direct grants to persons who may be liable for the environmental cleanup of sites and to set forth the criteria for making the grants.

Frank J. Kelley

Attorney General

(1 The orphan share administration (OSA) is established within the Department of Management and Budget by the Act, section 11g(21), as added by 1990 PA 233) The OSA is empowered by the Act, section 11g(20), to make loans to certain small businesses to assist them to make the requisite cleanups once rules establishing the loan program are promulgated. To date, the rules have not been promulgated.

(2 It should be noted that in 1986 the Congress amended CERCLA, through enactment of the Superfund Amendments and Reauthorization Act, to expressly permit federal reimbursement of "parties to the agreement from the [Super]Fund with interest, for certain costs of [environmental cleanup] actions ).. that the parties have agreed to perform." 42 USC 9622(b)(1). Thus, when the Congress acted to generally authorize grants of public funds to responsible persons for the environmental cleanup of sites, it did so by express statutory language. There is no similar language in the Environmental Response Act.