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

MIKE COX, ATTORNEY GENERAL

NATURAL RESOURCES AND ENVIRONMENTAL PROTECTION ACT:

DEPARTMENT OF ENVIRONMENTAL QUALITY:

ADMINISTRATIVE RULES AND REGULATIONS:

ADMINISTRATIVE PROCEDURES ACT:

Legal effect of the Department of Environmental Quality's operational memoranda

The operational memoranda developed by the Michigan Department of Environmental Quality to provide direction to staff, guidance to the regulated community, and consistency when enforcing the Natural Resources and Environmental Protection Act, MCL 324.101 et seq, are not "rules" requiring promulgation under the procedures provided for in the Administrative Procedures Act, MCL 24.201 et seq. Accordingly, they do not have the force and effect of law and are not legally binding on the public or the regulated community.

The Michigan Department of Environmental Quality may not use the failure to comply with its operational memoranda, procedures, guidance documents, and written correspondence as a basis for suspending or revoking a qualified consultant's or certified professional's certification, because none of these carry the force and effect of law. An order issued under MCL 324.21319a to abate an imminent risk to the public health, safety, welfare, or the environment is legally enforceable and may serve as a basis for revoking such certification.

The administrative rules governing revocation of certifications for qualified consultants and certified professionals found in Part 215 of the Natural Resources and Environmental Protection Act, MCL 324.21501 et seq, may incorporate the requirements of Parts 211 or 213 to effectuate the Legislature's declared intent in Part 215 to promote compliance with Parts 211 and 213.

Opinion No. 7223

December 22, 2008

Honorable Valde Garcia
State Senator
The Capitol
Lansing, MI 48909

You have asked several questions concerning the Michigan Department of Environmental Quality's practice of using what are commonly known as operational memoranda when enforcing Michigan's environmental laws, particularly concerning underground storage tanks, and concerning the validity of various rules promulgated pursuant to Part 215 of the Natural Resources and Environmental Protection Act, MCL 324.21501 et seq.

The Michigan Department of Environmental Quality (MDEQ) uses operational memoranda in several program areas to provide guidance to both staff and the regulated community and to enhance consistency when enforcing the requirements of the Natural Resources and Environmental Protection Act (NREPA), MCL 324.101 et seq. Operational memoranda are utilized by several divisions within the MDEQ, including the Remediation and Redevelopment Division, whose duties include enforcing both Part 201 of the NREPA, MCL 324.20101 et seq, and Part 213 of the NREPA, MCL 324.21301 et seq. Part 201 sets forth the clean-up requirements for sites of environmental contamination and Part 213 sets forth the requirements for addressing releases from underground storage tanks.

Parts 211, MCL 324.21101 et seq, and 215 of the NREPA also address underground storage tanks. Part 211 and its corresponding administrative rules set forth the requirements that apply to designing, constructing, installing, and maintaining underground storage tanks. Part 215, among other things, establishes the procedures for qualifying those who may serve as "underground storage tank qualified consultants" and for certifying those who seek employment as underground storage tank professionals. Under Part 213, response activities, other than initial response activities under MCL 324.21307, may only be undertaken by a qualified consultant. Under Part 215, a qualified consultant must employ at least one certified professional. See 1998-2000 AACS, R 324.21504(3).

Within this statutory framework, your first three questions ask if operational memoranda or draft operational memoranda issued by the MDEQ have the same legal force and effect as promulgated administrative rules, and, if not, whether operational memoranda and draft operational memoranda have any binding legal effect on state employees, the public, and the regulated community. Your questions center around the use of operational memoranda as tools for regulating leaking underground storage tanks.

A rule promulgated in accordance with the Administrative Procedures Act (APA), MCL 24.201 et seq, has the force of law and is binding on state agencies that enforce the rule and the public at large. Town & Country Lanes, Inc v Liquor Control Comm, 179 Mich App 649, 658; 446 NW2d 335 (1989). Documents created by state agencies to help explain or interpret their statutory authority that are used for internal purposes or are available to the public for informational purposes only are not rules and cannot be enforced.

The APA includes a definition of the term "rule," which also provides that certain agency memoranda or interpretive statements fall outside the definition:

"Rule" means an agency regulation, statement, standard, policy, ruling, or instruction of general applicability that implements or applies law enforced or administered by the agency, or that prescribes the organization, procedure, or practice of the agency, including the amendment, suspension, or rescission of the law enforced or administered by the agency. Rule does not include any of the following:

* * *

(g) An intergovernmental, interagency, or intra-agency memorandum, directive, or communication that does not affect the rights of, or procedures and practices available to, the public.

(h) A form with instructions, an interpretive statement, a guideline, an informational pamphlet, or other material that in itself does not have the force and effect of law but is merely explanatory. [MCL 24.207(g) and (h); emphasis added.]

The MDEQ has advised this office of its view that operational memoranda are only intended to be interpretive and are, therefore, not regarded by the agency as rules within the meaning of the APA. Moreover, a review of the MDEQ's operational memoranda reveals that they are generally written as guidance to facilitate implementation of NREPA and do not by their terms impose any mandatory requirements.1  But "'[t]he label an agency gives to a directive is not determinative of whether it is a rule or a guideline under the APA.'" Kent County Aeronautics Bd v Dep’t of State Police, 239 Mich App 563, 582; 609 NW2d 593 (2000) (citation omitted), aff’d Bryne v Michigan, 463 Mich 652; 624 NW2d 906 (2001). Instead, the focus is on the action taken by the agency "to see whether the policy being implemented has the effect of being a rule." Id.

In Kent County Aeronautics Bd, the policies under review were the "Equivalent Site Criteria" developed by the Michigan State Police in connection with the process by which local units could suggest construction sites for radio towers to be used in a public safety communication system as alternatives to those planned by the State Police. Under the applicable statute, the State Police was required to notify the local unit of the site selected for a tower and if the site's placement violated local zoning ordinances, the local unit could then suggest an alternative site or grant a special use permit. The criteria came into play when the county refused to grant a special use permit for land the State Police had chosen as a tower site. The Court rejected the county's argument that the criteria were a "rule" that could only be enforced if promulgated in accordance with the APA, explaining that the criteria were "simply an intergovernmental communication that does not affect the rights of the public." Id., 239 Mich App at 583. Even though the criteria necessarily limited the scope of the county's ability to choose an alternate site, the Court reasoned that the criteria were intended to guide the local unit "by way of explanation [concerning] what will constitute an equivalent site." Id.

In addition, the Court determined that public rights were not impacted by the criteria because the public did not have a right to propose an alternate site – that right exclusively belonged to the local unit. According to the Court, the criteria were not rules because they did not have the force and effect of law, they did not require "compliance with any stipulations or requirements," they did not impose sanctions for failing to propose an equivalent, alternative site, and they were "analogous to agency correspondences or bound manuals that set forth guidelines for operation." Id., at 583-584.

Similarly, in Faircloth v Family Independence Agency, 232 Mich App 391, 396; 591 NW2d 314 (1998), the Court held that an agency policy developed "for determining [a person's] eligibility" for state disability assistance was not a "rule" as defined in the APA. The fact that persons would be impacted by the policy was not enough to make it a rule:

[W]here an agency policy interprets or explains a statute or rule, the agency need not promulgate it as a rule even if it has a substantial effect on the rights of a class of people because an interpretive statement is not, by definition, a rule under the APA. [232 Mich App at 404.]

Moreover, the fact that the policy merely explained the statute and did not itself have the force or effect of law militated against it being a rule: "[D]efendants' policy does not constitute a rule because it does not have the force and effect of law, but rather merely explains the statutory provision." Id., at 405.

Thus, to the extent the MDEQ's operational memoranda are merely explanatory in nature – intended to provide information that will facilitate understanding of the minimum requirements of Parts 201 and 213 of the NREPA, provide guidance to the MDEQ staff in evaluating clean-up methods, and provide guidance to qualified consultants and certified professionals concerning the sufficiency of their corrective action plans – they are legitimate tools for educating staff and the public regarding statutory requirements. To the extent the operational memoranda accurately reflect the relevant statutory requirements, the MDEQ staff can rely upon them to guide their enforcement efforts to achieve compliance with those statutory requirements.2 Under these circumstances, the MDEQ does not enforce the operational memoranda themselves but rather the underlying statutory obligations. On the other hand, to the extent any guidance offered in an operational memorandum were to substantively deviate from the applicable statutory requirements, the guidance would be invalid.

It is my opinion, therefore, in answer to your first three questions, that the operational memoranda developed by the Michigan Department of Environmental Quality to provide direction to staff, guidance to the regulated community, and consistency when enforcing the Natural Resources and Environmental Protection Act, MCL 324.101 et seq, are not "rules" requiring promulgation under the procedures provided for in the Administrative Procedures Act, MCL 24.201 et seq. Accordingly, they do not have the force and effect of law and are not legally binding on the public or the regulated community.

Your fourth question asks whether the MDEQ may use the failure to comply with its operational memoranda, procedures, guidance documents, orders, and written correspondence as a basis for suspending or revoking a qualified consultant or certified professional's certification.

The MDEQ's regulation of qualified consultants and certified professionals is provided for in Part 215 of NREPA, MCL 324.21501 et seq, which includes a specific grant of authority to promulgate necessary rules. MCL 324.21544. R 324.21514 sets forth the grounds on which the certification of a qualified consultant or certified professional may be revoked. The part of the rule relevant to your inquiry is subsection (3), which provides that revocation may occur if a qualified consultant or certified professional violates Part 213 or Part 215 of the NREPA and the failure also (1) meets the definition of "other causes" in the rules or (2) constitutes a fraudulent practice under Part 213 or Part 215: 3

If a qualified consultant or certified professional performs an improper act or fails to perform a requirement specified in parts 213 or 215 of the act when obligated to do so and the act or failure to act constitutes a fraudulent practice as set forth in part 213 or part 215 of the act or meets the definition of "other causes" as defined in R 324.21501(h), . . . then the department shall provide a written notice of intent to revoke to the qualified consultant or certified professional stating its findings, and shall inform the qualified consultant or certified professional of the opportunity to voluntarily discontinue a certification pursuant to subsection (6) of this rule. [R 324.21514(3).]

The term "other cause" is defined by R 324.21501(h) to include numerous acts that may be cited by the MDEQ as grounds for revocation:

(h) "Other cause" under sections 21542 and 21543 of the act, for which the department may suspend or revoke a qualified consultant or certified professional certification, means and includes, but is not limited to, the acts set forth in sections 21324 and 21548 of the act and all of the following acts:

* * *

(iv) Failure to comply with parts 213 and 215 of the act and written directives issued by the department in conformance with parts 211, 213, and 215 of the act, including, but not limited to, any of the following:

(A) Operational and informational memoranda.

(B) Procedures.

(C) Guidance documents.

(D) Orders.

(E) Written correspondence from department staff requesting information about a facility or site. [Emphasis added.]

Subsection (h)(iv) of R 324.21501 identifies the failure to comply with operational memoranda, procedures, guidance documents, and written correspondence as a basis for revoking certification. However, as discussed above, operational memoranda, procedures, guidance documents, and written correspondence are not themselves legally binding and do not have the force and effect of law. They may not, therefore, serve as an independent basis for revoking a qualified consultant or certified professional certification, and R 324.21501(h)(iv)(A), (B), (C), and (E) is unenforceable to the extent it purports to accomplish that result.

Consistent with this proposition, the MDEQ has informed this office that it does not use the failure to comply with operational memoranda as a basis for revoking a qualified consultant or certified professional certification. Moreover, as explained above, to the extent operational memoranda accurately reflect the applicable statutory requirements, the MDEQ may direct its staff's enforcement efforts toward achieving compliance with those statutory requirements and base certification revocation on the failure to meet them. Under these circumstances, revocation is not based on any failure to comply with the operational memoranda, but on the failure to comply with the underlying statutory obligations.4

It is also important to clarify, however, that an order issued under Part 213 would have the force and effect of law and it could be a basis for revocation of a qualified consultant or certified professional certification. Under Section 21319a of Part 213, MCL 324.21319a, the MDEQ is expressly authorized to issue an order to abate an imminent risk to public health, safety, or welfare, or the environment. Unlike an operational memorandum, such an order is not a guidance document but an order specifically authorized by law.

It is my opinion, therefore, in answer to your fourth question, that the MDEQ may not use the failure to comply with its operational memoranda, procedures, guidance documents, and written correspondence as a basis for suspending or revoking a qualified consultant's or certified professional's certification, because none of these carry the force and effect of law. An order issued under MCL 324.21319a to abate an imminent risk to the public health, safety, welfare, or the environment, however, is legally enforceable and may serve as a basis for revoking such certification.

Your final question includes two parts. You ask whether: 1) the MDEQ may promulgate rules under Part 215 that apply to Parts 211 and 213 of the NREPA or whether Part 215 rulemaking authority is specifically limited to only that part; and 2) whether, under MCL 324.21106, the MDEQ may promulgate rules under another part of the NREPA and apply those rules to Part 211. Your request does not identify any specific Part 215 rule at issue and staff inquiries have not identified any Part 215 rule that is applied by the MDEQ in enforcing Parts 211 and 213 of the NREPA. It will therefore be assumed for purposes of this opinion that your questions refer to those Part 215 rules, such as Rule 324.21514(3) discussed earlier, that reference or incorporate provisions of Parts 211 and 213.

In Dykstra v Dep't of Natural Resources, 198 Mich App 482, 484; 499 NW2d 367 (1993), the Court identified a three-part test for determining the validity of rules: "(1) whether the rule is within the subject matter of the enabling statute; (2) whether it complies with the legislative intent underlying the enabling statute; and (3) whether it is arbitrary or capricious." At issue in the Dykstra case was a rule promulgated pursuant to the Farmland and Open Space Preservation Act (Act) that governed when landowners could terminate an agreement to refrain from developing their land. The Act allowed a landowner to apply to the local governing body to request that a development rights agreement be terminated, but it also provided that the local government body "shall approve or reject an application 'based upon, and consistent with, rules promulgated by the state land use agency.'" Id., at 486. Pursuant to the Act, the Michigan Department of Natural Resources (MDNR) had promulgated Rule 43, which set forth the factors local governing units should consider in granting or rejecting a landowner's application. Various landowners whose applications were denied sued to invalidate the rule.

Applying the three-part test, the Court first found that the Act concerned agreements not to develop certain types of land and that a rule addressing the circumstances under which those agreements could be terminated early was clearly within the subject matter of the Act. Id., at 485-486. Secondly, recognizing that in the Act the Legislature had specified that applications should be approved or rejected based on the grounds established by the MDNR evidencing a legislative intent to provide "a statewide solution to potential statewide problems," the Court concluded that the rule also complied with the legislative intent underlying the enabling statute. Id., at 489.

Analyzing the third prong of the test, the Court determined that the rule was not arbitrary or capricious. According to the Court, "[a] rule is arbitrary if it was 'fixed or arrived at through an exercise of will or by caprice, without consideration or adjustment with reference to principles, circumstances, or significance.'" Id., at 490, quoting Binsfield v Dep't of Natural Resources, 173 Mich App 779, 786; 434 NW2d 245 (1988). And a rule is capricious if it is "'apt to change suddenly [or is] freakish, or whimsical.'" Id. Finding that the rule was rationally related to the Legislature's intent and therefore not arbitrary or capricious, the Court held the rule was valid.

Your question therefore requires considering whether the Part 215 rules that reference or incorporate requirements of Part 211 and 213, including Rule 324.21514(3) that authorizes revocation of a qualified consultant or certified professional's certification for violating a requirement of Part 213 or 215, satisfy Dykstra's three-part test. First, these rules fall within the subject matter of Part 215. Section 21545 of Part 215 mandates that the "department shall promulgate rules to implement this part." MCL 324.21545. And the express legislative objective of Part 215 is to promote compliance with Parts 211 and 213:

The objectives of this part are to address certain problems associated with releases from petroleum underground storage tank systems, to promote compliance with parts 211 and 213, and to fund environmental and consumer protection programs necessary to protect public health, safety, or welfare or the environment due to the sale, use, or release of refined petroleum products. [MCL 324.21504; emphasis added.]

Additionally, the broadly stated purpose of Part 215 is to protect against the adverse impacts to human health, the environment, and the economy from underground storage tanks – the same subject matter regulated by Parts 211 and 213:

The legislature finds that underground storage tanks are a significant cause of contamination of the natural resources, water resources and groundwater in this state. It is hereby declared to be the purpose of this part and the authority created by this part to preserve and protect the water resources of the state and to prevent, abate, or control the pollution of water resources and groundwater, to protect and preserve the public health, safety, and welfare, to assist in the financing of repair and replacement of petroleum underground storage tanks and to improve property damaged by any petroleum releases from those tanks, to preserve jobs and employment opportunities or improve the economic welfare of the people of the state. [MCL 324.21505.]

Parts 211 and 213 comprehensively regulate the installation and operation of underground storage tanks and the clean-up of contamination of releases from underground storage tank systems. By its express terms, Part 215 was clearly enacted to further these goals. Consequently, any rule promulgated pursuant to Part 215 that incorporates the requirements of Parts 211 and 213 would be within the subject matter of that statute and would pass the first part of the Dykstra test.

For these same reasons, these rules meet the second part of the Dykstra test – requiring a determination that the rules comply with the legislative intent underlying the enabling statute. The Legislature specifically stated that "promot[ing] compliance with parts 211 and 213" is the primary objective of Part 215. MCL 324.21504. Part 215 was thus intended to ensure compliance with Parts 211 and 213 and the legislative grant of authority to promulgate rules to implement Part 215 demonstrates an intent that the Part 215 rules may incorporate the requirements of Parts 211 and 213.

Finally, a rule promulgated pursuant to Part 215 would not be arbitrary or capricious because it incorporated the requirements of Parts 211 and 213. The Legislature twice stated its clear intent that Part 215 was enacted to promote compliance with Parts 211 and 213, and, therefore, the rule's incorporation of the requirements of those parts is rationally related to that legislative intent.

It is my opinion, therefore, in answer to your fifth question, that the administrative rules governing revocation of certifications for qualified consultants and certified professionals found in Part 215 of the Natural Resources and Environmental Protection Act, MCL 324.21501 et seq, may incorporate the requirements of Parts 211 or 213 to effectuate the Legislature's declared intent in Part 215 to promote compliance with Parts 211 and 213.

MIKE COX
Attorney General

1 In your request, you refer to a February 2006 draft operational memorandum concerning soil gas and indoor air.  It should be noted that this document has been revised as of June 2008 and the revised draft memorandum does not appear to set forth mandatory requirements but instead provides guidance on what the agency will deem acceptable response activities under Parts 201 and 213.

2
It is beyond the scope of this opinion and, accordingly, it does not address the effect of instructions provided to staff that govern the performance of an employee's job duties, the failure to comply with which can result in disciplinary action against the employee.

3
The Part 215 rules provide other independent grounds for revocation or suspension of the qualified consultant (QC) or certified professional (CP) certifications that are unrelated to the questions you have posed.  Those grounds include:  (a) the failure to maintain or meet the requirements for certification (R 324.21514(1) and R 324.21514(2)); (b) the submittal of information to MDEQ that the QC or CP knows to be false or misleading (R 324.21514(3)); and (c) a determination by the MDEQ that the public health, safety, or welfare is endangered.

4 See By Lo Oil Co v Dep't of Treasury, 267 Mich App 19, 46; 703 NW2d 822 (2005) (upholding the trial court's determination that the Legislature, as opposed to the policy adopted by the agency, established the criterion to qualify for the applicable discount and explaining that the fact that the department’s revenue bulletin was not a promulgated rule was irrelevant, since the requirements of the bulletin were in fact the requirements of the underlying act).