Michigan PFAS Cleanup Threatened by State’s Cost ‘Shell Game’

Michigan regulators are trying to rescue some of the most stringent state standards limiting forever chemicals, after a successful challenge to them by 3M Co.

The state attorney general is crafting an appeal of a state judge’s decision last month to throw out the rules. The notice of appeal, confirmed in court records, was filed last week.

At issue is whether Michigan’s massive chemical and manufacturing sectors are entitled to know how many millions of dollars they might have to pay for cleanup of widely used, long-lasting chemicals found in many consumer and industrial products—an unknown figure that likely reaches into the hundreds of millions of dollars.

The case could raise questions about how thoroughly states must address the indirect costs of novel environmental rules where the cleanup responsibilities aren’t yet known and often decided through future litigation.

Environmental lawyers told Bloomberg Law that the ruling, which requires a more thorough cost calculation in a mandatory “regulatory impact statement,” serves as a warning to state lawmakers and agencies: Rush rulemaking, or hide the ball on costs for businesses, and state courts could strike down new pollution controls Democrats have waited decades to implement.

The Michigan Court of Claims found that when regulators ushered through drinking water standards targeting seven types of PFAS in roughly a year, they violated the state’s Administrative Procedures Act by refusing to calculate costs businesses or the public might have to shoulder for cleaning up groundwater contamination.

Michigan’s Department of Environment, Great Lakes and Energy argued in a 2036-page filing that it didn’t have to calculate cleanup costs because regulatory impact statements don’t require that level of specificity. Plus, they already provided estimates for some costs—the amounts water systems would have to pay to purify and test their supplies.

That dodge amounted to playing a “shell game with the public,” Judge Brock Swartzle wrote in his opinion, which he stayed pending the appeal.

The state failed to deliver on a promise, Swartzle’s ruling said. When companies asked the agency to calculate cleanup costs for two chemicals, the regulators promised to “to address the costs later” when the other five chemicals were covered.

Instead, Swartzle found, regulators did “the exact opposite” and in that later rulemaking refused to calculate cleanup costs for any of the chemicals.

The arguments the state could bring on appeal are unclear since regulators can’t avoid admitting they refused to calculate the cost of cleanup. Agency spokespeople for both the Department of Environment, Great Lakes and Energy and the office of Attorney General Dana Nessel (D) declined to discuss the appeal.

Both 3M and the Michigan Manufacturing Association in statements said they approved of the court’s ruling but declined further comment.

Hundreds of Confirmed Sites

Michigan has 232 confirmed contamination sites for per- and polyfluoroalkyl substances (PFAS). There are thousands of types of these ever-present chemicals, which break down slowly over time. The seven Michigan capped in drinking and ground water are GenX, PFBS, PFHxS, PfHxA, PFNA, PFOS, and PFOA.

Potential cleanup costs for these sites—and any future sites the state discovers—could range from small to enormous. One settlement alone, struck between clothier Wolverine World Wide and two Michigan townships, promised nearly $70 million for cleanup and extension of city water supply to neighborhoods where wells were contaminated with clothing manufacturing chemicals.

In 2020, Nessel sued more than 20 PFAS manufacturers, including 3M and DuPont, and in September she also sued a hardware company that she alleged had contaminated nine sites with PFAS.

The daunting number of sites has spurred lawmakers—especially Democrats—to advocate for tightened rules and more funding for cleanup and enforcement. Dozens of PFAS and other water-pollution regulation measures are introduced by Michigan legislators each session—including at least 27 PFAS-related bills in the 2021-2022 session alone. These include a push to extend restrictions to PFAS in consumer products and food packaging.

These efforts to address pollution could be vulnerable to industry lawsuits focusing on procedural requirements. For example, the Michigan Court of Appeals recently questioned the legality of the state’s permits for massive animal farms, signaling that phosphorus pollution-limiting policies could be struck because regulators didn’t go through the proper rulemaking process.

The same court will now hear the appeal of Swartzle’s ruling.

“It is unfortunate that administrative and legal hurdles are slowing down Michigan’s progress in addressing PFAS,” Kathleen Garvey, staff attorney with the Environmental Law and Policy Center, a group that filed a friend of the court brief in the litigation, said. “PFAS are harmful and ubiquitous, and more needs to be done to protect people.”

‘Obscures Economic Consequences’

The Court of Claims decision favoring 3M left the state with two options—appeal the case or go back to the drawing board and spell out the costs the rule could impose on businesses and taxpayers through a revised regulatory impact statement, or RIS.

Wonky sounding regulatory impact statements help ensure the Michigan Legislature—and voters—know the impact of agency decisions and can hold the agency and lawmakers accountable, said Michael Pattwell, a member of Clark Hill and lawyer representing industry on Michigan regulatory matters.

“The public can readily appreciate the generalized benefit from regulating hazardous substances, but the unintended cost consequences of regulation can be more difficult to understand,” he said in an email. “Thus, when an agency fails to conduct an appropriate RIS, as it must, it obscures the economic consequences of its new standards from the regulated community, the Legislature, and public at large.”

If the agency opts to issue a regulatory impact statement, it could delay the enforcement of contamination controls for months, environmental lawyers told Bloomberg Law. That’s because the court ruling was unclear on whether the agency would have to start the rulemaking process from scratch—a bureaucratic process that took the agency roughly a year the first time—or could limit their fix to issuing a new cost-analysis for cleanup.

‘Smoother Process’

Though the Court of Claims ruling endangered the PFAS standards on a procedural issue, the overall order left environmental groups hopeful that they’ll see more robust regulation in the future.

In the ruling, Swartzle denied 3M’s contention that that Michigan regulators couldn’t institute standards for PFAS and said it was proper to defer to the agency for setting the appropriate contamination limits.

Regulators, however, still would have to provide cost estimates.

Ushering through environmental regulations should soon be a “smoother process” after Michigan Democrats won control of both chambers of the legislature last month, Nick Leonard, executive director of the Great Lakes Environmental Law Center, said.

It’s the first time they’ve controlled the governor’s mansion and both state legislative chambers since the 1980s. Come January, Democrats will be able to pass their preferred legislation and they’ll also control the state’s Environmental Rules Review Committee, which Republicans used in the past to delay or waylay rulemaking.

“At the end of the day, this is what’s most important: that states like Michigan have the authority to go the extra mile when they identify pollution,” he said. “The lesson for the state is, just make sure you’re crossing your T’s and dotting all of your I’s.’”

The case is 3M Co. v. Michigan Dep’t of Env’t, Great Lakes, and Energy, Mich. Ct. Cl., No. 21-000078-MZ, Claim of appeal 12/6/22.