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A Better Partnership
August 15, 2014

COA affirms Michigan’s first non-ferrous metallic mineral mining permit, answers questions of administrative procedure

Eagle nickel/copper mine in the upper peninsula has just successfully passed another major mile-marker, and perhaps the last one, in its 8-year course of administrative and judicial review.  In National Wildlife Federation v. Department of Environmental Quality, No. 307602, the Court of Appeals affirmed in a per curiam opinion the circuit court’s order affirming the decision of the Department of Environmental Quality’s decision to grant a mining permit to the Kennecott Eagle Minerals Company back in 2010, after holding longest contested case proceeding in DEQ’s history.  In particular, the Court of Appeals rejected appellant Keweenaw Bay Indian Community’s challenge that the proposed location for the mine’s portal, Eagle Rock, was a place of worship, on grounds other than those relied upon by the DEQ and circuit court.  The Court held that Kennecott’s environmental impact assessment (EIA) was not deficient for failing to consider Eagle Rock as a place of worship because Kennecott neither knew, nor should have known, of such traditional cultural uses when it filed its EIA. 
 
In February 2006, Kennecott submitted applications to the DEQ for a nonferrous metallic mining permit and a groundwater discharge permit pursuant to Parts 632 and 31 of the Natural Resources and Environmental Protection Act.  After consolidating the applications for public hearings, the DEQ issued the mining and discharge permits to Kennecott in December 2007.  Per the appellants’ request, the DEQ’s administrative law judge held a 42-day consolidated contested case hearing and, in August 2009, issued a proposal for decision.  The ALJ rejected all challenges except for Keweenaw Bay Indian Community’s claim that the proposed location for the mine’s portal, Eagle Rock, was a place of worship.  On that issue, it concluded that the permit application should include a specific assessment of impacts and that the portal should be moved.  The DEQ’s final decision-maker vacated the order on numerous grounds, including that a stipulation prevented appellants from making issue of Eagle Rock’s religious status and that Mich Admin Code, R 425.202(2)(p), which calls for assessment of mining impacts on “places of worship,” concerned only buildings used for human occupancy.  Appellants sought judicial review in the circuit court, which affirmed the DEQ in all regards. 
 
The Court of Appeals affirmed the circuit court’s conclusion with respect to Eagle Rock, but on other grounds.  MCL 324.63205(2) requires that an application for a permit to engage in the mining of nonferrous metallic minerals include an EIA describing “the natural and humanmade features . . . in the proposed mining area and the affected area that may be impacted by the mining, and the potential impacts on those features from the proposed mining operation.”  Mich Admin Code, R 425.202(2)(p) specifically calls for assessment of mining impacts on “places of worship.”  Assuming, without deciding, that no stipulation prevented litigation of this issue, and that “places of worship” include outdoor locations, the Court nonetheless held that Kennecott Eagle’s EIA was not deficient for failing to consider Eagle Rock as a place of worship because appellants admitted that Kennecott had no knowledge of the traditional cultural uses of that location when it offered its EIA.  The Court further held that Part 632 imposes no obligation on the applicant to modify the EIA when new information comes to light during the application process.
 
The Court of Appeals also rejected appellants’ argument that the ALJ erred in allowing the introduction of new evidence in the contested case proceedings, or otherwise in treating the contested case as an extension of the original process of deciding the permit application rather than as a first stage of appellate review.  The Court concluded that statutory provisions within the NREPA collectively set forth avenues for the DEQ to arrive at a single final decision on a permit through the contested case process, with the circuit court serving as the first appellate recourse.
 
The Court of Appeals also approved of DEQ placing the burden of proof on appellants to prove their objections in the contested case proceedings.  MCL 324.63205(3) establishes that an applicant seeking a mining permit bears the burden of proving that the mining project will satisfy applicable requirements, including that the project will proceed in ways minimizing adverse impacts on the environment, but Mich Admin Code, R 324.64(1) imposes on a party “filing an administrative complaint or petition for a contested case hearing . . . the burden of proof and of moving forward unless otherwise required by law.”  The Court concluded that, although Kennecott retained the status of applicant throughout the proceedings, it also took on the status of responding intervenor in answering appellants’ objections.  Since MCL 324.63205(3) governs applicants, not intervenors or respondents, it does not constitute “other law” supplanting Rule 324.64(1)’s allocation of the burden of proof to the contesting party.
 
The remaining issues involved numerous questions of fact, with some  interpretation of the Part 632 rules and regulations.  With respect to most of the appellants’ other arguments, the Court noted that the circuit court’s task was to review the administrative decision to determine if it was authorized by law and supported by competent, material, and substantial evidence on the whole record.  Const 1963, art 6, § 28; MCL 24.306(1).  The Court of Appeals must only determine whether the lower court applied correct legal principles and whether it misapprehended or grossly misapplied the substantial evidence test to the agency’s factual findings.  Boyd v Civil Serv Comm, 220 Mich App 226, 234; 559 NW2d 342 (1996).  As this latter standard is indistinguishable from the clearly erroneous standard, the Court affirmed the circuit court’s other conclusions because they were consistently based on more than a scintilla of the evidence.
 
Disclaimer:  Warner Norcross & Judd represented the prevailing permittee, Kennecott Eagle Minerals Company.

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