Michael H. Perry, Fraser Trebilcock Davis and Dunlap P.C.
On July 2, 2013, Governor Snyder signed Senate Bill 163 into law as 2013 Public Act 98 (“PA 98” or “Act”). The Act significantly amends Parts 301 (inland lakes and streams) and 303 (wetlands) of Michigan’s Natural Resources and Environmental Protection Act, MCL 324.101, et seq. PA 98 states that it is immediately effective. The United States Environmental Protection Agency (EPA”) may have a contrary view in light of the State of Michigan’s failure to obtain the EPA’s prior approval of PA 98. This article briefly describes the history of Michigan’s wetland protection program and the events of the past 15 years that led to the adoption of PA 98. 
Michigan’s Wetlands Protection Program
The Goemaere-Anderson Wetland Protection Act (“GAWPA”) became effective on October 1, 1980. It prohibited certain activities within a wetland unless expressly allowed by the statute or a permit obtained from the then Michigan Department of Natural Resources (“MDNR”). The GAWPA allowed certain uses in a wetland without a permit such as the grazing of animals, farming, horticulture, silviculture, lumbering and ranching activities, including plowing, irrigation, irrigation ditching, minor drainage, the construction and maintenance of farm or stock ponds, the maintenance, operation or improvement of a drain (including the straightening, widening or deepening of an existing private agricultural drain or that portion of a drain established pursuant to Michigan’s drain code or a drain constructed pursuant to other provisions of the Act), the construction or maintenance of farm roads, forest roads, drainage necessary for the production and harvesting of agricultural products, maintenance or improvement of public streets, highways or roads within the public right-of-way, and other uses beyond this article’s scope.
In 1983, the MDNR and EPA entered into a memorandum agreement pursuant to which the MDNR was authorized to administer section 404 of the federal Clean Water Act, 33 USC §1344. In 1984, the United States Army Corps of Engineers (“COE”) entered into a similar memorandum agreement with the MDNR. As a condition of receiving this authority, Michigan had to administer the Wetlands Protection Program insofar as it pertained to the waters of the United States and the wetlands adjacent thereto in a manner consistent with federal law.
Federal Wetlands Jurisdiction
The EPA and COE have jurisdiction over waters of the United States, including the wetlands adjacent to those waters. These waters include, among others, the Great Lakes and all other waters connected thereto. Federal regulations define adjacent wetlands as those which border, are contiguous to, or neighboring the waters of the United States. There has been a substantial amount of litigation regarding the nature, scope and extent of the “waters of the United States.” The law on this issue has remained unsettled following the decision in Rapanos v United States, 547 US 715 (2006). After Rapanos the EPA issued a multi-page guidance document on the identification of waters protected by the Clean Water Act. The EPA uses the guidance to oversee and implement programs under the Clean Water Act and the COE uses the guidance to implement section 404 of the Clean Water Act. This jurisdictional issue is at the heart of PA 98.
EPA’s Informal Review of Michigan’s Wetland Protection Program
In 1997, the Michigan Environmental Council and the Lone Tree Council claimed that Michigan was not properly administering section 404 and requested the EPA to require Michigan to reform its section 404 program or withdraw the EPA’s approval of it. The EPA treated this request as a petition to withdraw approval of the program as provided for by 40 CFR 233.53(c)(1).
In January, 2003, the EPA preliminarily decided not to institute formal program withdrawal proceedings and instead recommended how Michigan should reform its wetland protection program. The EPA’s final report in 2008 said that it would not begin withdrawal proceedings even though the EPA found deficiencies in Michigan law such as Michigan’s exemptions for farming and other activities which were broader in scope than the exemptions for ongoing and established activities in the federal regulations and the exemptions for discharges associated with drainage or other activities that allow a wetland to be changed from one exempted use to another. Michigan also exempted activities designed to bring a wetland into farming and other uses. The EPA also said that Michigan’s exemption for drainage permits contained in Parts 301 and 303 were less stringent than the federal regulations. The EPA said that Michigan needed to amend Part 303 to comport with federal law and the Michigan Department of Environmental Quality (“MDEQ”) agreed at that time to propose the federally requested amendments.
MDEQ’s Wetlands Program Summary in March of 2009
Governor Granholm’s 2010 budget proposed to eliminate funding for the wetlands protection program and turn it over to the EPA. The MDEQ’s response in March of 2009 was a “wetland program question & answer document.” The MDEQ’s March 2009 response included, among other things, a finding that the federal government lacked jurisdiction over, and therefore would not protect, the following “Michigan Wetlands”:
- More than 930,000 acres of isolated wetlands that were not physically connected to lakes or streams. This amounted to 17 percent of Michigan’s wetlands.
- Wetlands adjacent to streams that were not “relatively permanent.” The MDEQ determined that 36 percent of Michigan’s streams are “intermittent or ephemeral” but did not have an estimate as to the number of acres of wetlands that would be left unregulated.
- Wetlands adjacent to but not directly abutting relatively permanent streams. The Department lacked an estimate of the number of acres in this and the next category.
- Wetlands adjacent to 26,384 isolated lakes and ponds in Michigan.
Rather than repeal Part 303 in 2009, the Michigan Legislature created the Wetland Advisory Council (“WAC”). The WAC was to evaluate and make recommendations on, among other things, the adoption of legislation to make Michigan’s program consistent with the requirements of section 404 of the Clean Water Act. WAC was to submit its final report by August 15, 2012.
The WAC met 17 times between January 15, 2010 and August 7, 2012, and issued its final report on August 15, 2012. The WAC members unanimously believed that Michigan should retain its approved section 404 program and assumed that the legislative changes necessary to do so could be adopted. WAC’s final report noted that the MDEQ and/or the WAC had addressed 19 of the 22 issues that EPA identified in its 2008 report. The remaining three issues pertained to permitting exemptions for utilities, drains and agriculture practices under the Michigan program. WAC’s report states, among other things, that the “US EPA has made it clear these amendments are necessary for the state to retain its approved section 404 program status.” The WAC’s membership was unable to reach a consensus on the amendments and did not make any recommendations on statutory language.
WAC’s report noted that in April 2012, Representative Jim Stamas had agreed to sponsor legislation to make Michigan compliant with the EPA’s requirements for the section 404 program. On September 12, 2012, Representative Stamas introduced House Bill 5897 but the bill did not get out of the House Committee on Natural Resources.
EPA’s Recommended Legislative Changes
In April of 2011, the EPA summarized the legislative changes that Michigan needed to make its section 404 wetlands program consistent with federal law:
- Federal law exempted ongoing and established farming, silviculture or ranching operations but did not exempt activities that bring an area into farming, silviculture or ranching. Michigan’s exemption did not require farming or other operations to be established or ongoing.
- Michigan law exempted drainage necessary for commercial farming. Federal law did not.
- Michigan exempted drainage ditch maintenance, operation or improvement including the straightening, widening or deepening of a drain. Federal law exempted only maintenance of drainage ditches, and did not exempt the construction of drainage ditches.
- Michigan exempted the operation and improvement of agricultural drains, including straightening, widening or deepening, while federal law did not.
- Michigan exempted road maintenance and improvement from a permitting requirement. Federal law exempted only activities that did not change the character, scope or size of the original right of way.
The 2013 Legislative Process
On February 6, 2013 State Senator Michael Green introduced Senate Bill 163 to amend Parts 13, 301, 303 and 325 of NREPA. The bill’s sponsor and its other advocates said that the adoption of SB 163 was necessary to allow Michigan to retain its section 404 program. On May 22, 2013 the Senate passed SB 163 and sent it to the House of Representatives. The House Committee on Natural Resources held two hearings on the bill. The House passed it on June 13, 2013, and gave the bill immediate effect. On July 2, 2013, the Governor signed the bill.
Federal regulations required Michigan to keep the EPA Regional Administrator fully informed of any proposed changes to the state’s statutory authority. If the Regional Administrator determines that a proposed revision is substantial, he or she must publish and circulate notice to interested persons, must provide an opportunity for a public hearing, and must consult with the COE, among others.. The Regional Administrator has the authority to approve or disapprove substantial revisions in the wetlands program and must publish notice of the decision in the Federal Register. “Substantial revisions” include but are not limited to revisions that affect the area of jurisdiction, scope of activities regulated, and criteria for the review of permits. PA 98 affects the area of jurisdiction, the scope of activities regulated and criteria for the review of permits. To date, EPA has not completed a formal administrative review of PA 98. However, the EPA has repeatedly informed Michigan officials about its views of the legislation.
EPA’s May 31, 2013 “Advice”
On May 31, 2013, EPA Region 5 sent an email to certain MDEQ personnel regarding SB 163. The email observed that SB 163 had corrected a “number of deficiencies” in the current law, noting specifically that SB 163 would make the farming and drain maintenance exemptions consistent with the federal program. However, the EPA said that the bill introduced 22 “new inconsistencies” with federal law, regulation, guidance or case law. These inconsistencies included, among other things, exemptions for the maintenance of agricultural drains in their as-built condition as of July 1, 2014, exemptions for extension of culverts, livestock access (to the extent not limited to ongoing operations) , the side casting of drain spoil materials, maintenance or repair of utility lines and installation of utility lines, placement of biological residues in a wetland, the use of a “mitigation credit” and other inconsistencies with the compensatory mitigation rules. Last but not least, the EPA’s email said:
- Section 30321(5)’s definition of “contiguous” is inconsistent with the federal use of that term within the context of the definition of “adjacent” in the section 404 guidelines. The EPA asserted that the new definition of “not contiguous” impermissibly narrowed the broad definition of contiguous found in Michigan Administrative Rule 281.921(1)(b) and stated that this new definition is also inconsistent with federal law because it could be interpreted to exclude “adjacent” waters and wetlands section 404 protects;
- The exclusion of an agricultural drain from the definition of “contiguous” is inconsistent with federal law and guidance.
The Michigan House Natural Resources Committee held a hearing regarding Senate Bill 163 on June 4, 2013. The MDEQ’s representative who spoke during the hearing did not mention the EPA’s May 31, 2013 email. No vote on the bill was taken that day. Another hearing was scheduled for June 6, 2013.
On June 5, 2013, representatives of the Tip of the Mitt Watershed Council and the Michigan Environmental Council sent a copy of the EPA’s May 31, 2013 email to each member of the House of Representatives. The Councils’ joint transmittal message said that if SB 163 as passed by the Senate is enacted into law, “the environmental community will repetition the EPA to revoke Michigan’s authority to implement the program.”
On June 6, 2013 the House Natural Resources Committee voted to recommend passage of the bill and sent it to the House. No member of that Committee said anything about the substance of the EPA’s email.
June 12, 2013 Amendment to SB 163
On the floor of the House, an amendment to SB 163 was offered and adopted. This amendment to the bill, entitled “enacting section 2,” states:
Part 303 of the Natural Resources and Environmental Protection Act, 1994 PA 451, MCL 324.30301 to 324.30327, is repealed effective 160 days after the effective date, as published in the federal register, of an order by the administrator of the United States Environmental Protection Agency under 40 CFR 233.53(c)(8)(vi) withdrawing approval of the state program under 33 USC 1344(g) and (h). (emphasis added)
MDEQ and EPA Meeting
The MDEQ Director met with EPA Region 5 officials during the week of June 24 at Region 5’s headquarters in Chicago. Apparently during that meeting EPA’s personnel expressed their concerns with SB 163. The author believes that the MDEQ Director endeavored to persuade the EPA that SB 163 provided the requisite consistency with federal law while at the same time providing clarity to Michigan property owners. The author understands that Region 5’s personnel did not express approval of SB 163.
2013 PA 98
The following summarizes the agricultural and drain-related sections in PA 98 that significantly change Michigan law insofar as it applies to both the “waters and wetlands of the United States” and “Michigan Wetlands.”
Part 301 (Inland Lakes and Streams)
PA 98 eliminates the exemption for a permit for the construction of a private agricultural drain. The new maintenance exemption applies only to activities that maintain the location, depth and bottom width of a drain as constructed or modified before July 1, 2014.
PA 98 eliminated the exemption for the “improvement” of all drains and allows an exemption only for the maintenance of a drain that was either legally established and constructed before January 1, 1973 pursuant to the drain code or was constructed or modified under a permit issued under Part 301. PA 98 defines “maintenance of a drain” to mean the “physical preservation of the location, depth and bottom width of a drain and appurtenant structures of the drain as constructed or modified before July 1, 2014.” New section 30103(1)(g)(i-viii) specifies a number of “best management practices” that one must follow when performing drain maintenance.
New section 30103(3) defines an agricultural drain as “a human-made conveyance of water that meets all of the following requirements: does not have a continuous flow, flows primarily as a result of precipitation-induced surface runoff or groundwater drained through subsurface drainage systems, serves agricultural production,” and was either constructed before January 1, 1973 or was constructed in compliance with Part 301.
New subsection 30103(11) provides that by December 31, 2013, the MDEQ must develop and maintain a general permit for legally established drains. Subpart (b) thereof allows a drain commissioner or drainage board to submit an application for an authorization under the general permit on a county-wide basis. Subpart (d) of this new section requires a drain commissioner or drainage board to submit an annual report to the MDEQ regarding the performance of the generally permitted drain activities.
Last but not least, new section 30101A states:
For the purposes of this part, the powers, duties, functions, and responsibilities exercised by the department because of federal approval of Michigan’s permit program under section 404(G) and (H) of the Federal Water Pollution Control Act, 33 USC 1344, apply only to “navigable waters” and “waters of the United States” as defined under section 502(7) of the Federal Water Pollution Control Act, 33 USC 1362, and further refined by federally promulgated rules and court decisions that have the full effect and force of federal law. Determining whether additional regulation is necessary to protect Michigan waters beyond the scope of federal law is the sole responsibility of the Michigan Legislature based on its determination of what is in the best interest of the citizens of this state.
Query whether this section means that Parts 301 and 303 apply only to “waters of the United States” thereby eliminating the regulation of “Michigan Wetlands,” the waters and adjacent wetlands described in the MDEQ’s March, 2009 report? Will this statement of legislative intent persuade the EPA to approve revision of Michigan’s wetlands program in accordance with 40 CFR 233.16? Will it dissuade the US EPA from initiating formal program withdrawal proceedings? Time will tell.
PA 98 complied with and exceeded the EPA’s requests to amend Michigan law. As of October 1, 2013, section 30305(e) as now amended restricts the permit exemptions for farming, horticulture, silviculture, lumbering and ranching activities to those that occur on an established ongoing operation. Activities that bring into farming, ranching, horticulture or silviculture uses an area not previously in any of those uses, or that convert one use to another, are not now part of an established ongoing operation and therefore will not be exempt from Part 303’s permit requirements. Minor drainage now expressly excludes drainage to convert from one wetland use to another and does not include the construction of a canal, ditch, dike, or other waterway or structure that drains or otherwise significantly modifies a stream, lake or wetland. PA 98 does not exempt the Michigan Wetlands from any of these new provisions.
New subsection 30305(h)(iii) prohibits any change in the dimensions of an agricultural drain as they exist by July 1, 2014. It also does not allow for any modification of an agricultural drain which results in additional wetland drainage or conversion of a wetland to a use to which it was not previously subject. New subsection 30305(I) contains a similar provision for other drains. The Michigan Wetlands are not exempt.
Both before and after the adoption of PA 98, section 30311 included a number of subsections pertaining to the criteria applicable to the issuance of a Part 303 permit. Subsections (2)(b), (4) and (5) included provisions pertaining to the availability of a “feasible and prudent alternative” to the proposed activity. Before the adoption of PA 98, subpart 5 provided that if it is otherwise a feasible and prudent alternative, an area not presently owned by the permit applicant which could be reasonably obtained, utilized, expanded or managed to fulfill the basic purpose of the proposed activity may be considered.
PA 98 amended subsection 5’s “unowned area” provision by substituting “a property” for “an area” and added a rebuttable presumption that alternatives located on property not presently owned by the permit applicant are not feasible and prudent if all of these factors are present: The activity involves filling or dredging from a wetland as described in section 30304(a) or (b), the activity will affect no more than two acres of wetland, the activity pertains to the construction or expansion of a single family home and attendant features, the construction or expansion of a barn or other farm building, or the expansion of a small business facility and the activity is not covered by a general permit.
Also, new subsection 6 within section 30311 provides that consideration of a feasible and prudent alternative regarding the size of a proposed structure shall be based on the footprint of that structure rather than its square footage. New subsection 7 provides that the choice of and extent of the proposed activity within the proposed structure must not be considered in determining the feasible and prudent alternatives. Whether these additions to section 30311 will enhance a permit applicant’s chances to obtain a permit or will encumber the opportunity to do so remains to be seen.
PA 98 amends MCL 324.30311d’s “wetland mitigation” requirements. Subsection 5 now requires that when setting the “mitigation ratio,” the MDEQ must consider the method of compensatory mitigation, the likelihood of success, differences between the functions lost at the impacted site and the functions expected to be produced by the mitigation project, temporary losses of aquatic resource functions, the difficulty of restoring or establishing the aquatic resource type and functions, and the distance between the affected aquatic resource and the mitigation site.
Section 30311d also includes a new subsection 6 that provides for protection and restoration of an impacted agricultural property subject to a “conservation easement.” Alternatively, a permit applicant may satisfy its mitigation requirements by making a payment to a “stewardship fund” which new subsection 7 authorizes the MDEQ to establish. Money deposited into that fund may be used to develop mitigation for impacted sites or as an alternative to the financial assurance required under subpart 4. New subsection 8 requires MDEQ to submit proposed administrative rules on mitigation within one year after the effective date of the Act and defines or describes the objects or tasks for those rules. New subsection 9 requires MDEQ to submit revised administrative rules to encourage the development of wetland mitigation banks within one year of the effective date of the Act and contains requirements for those rules.
Section 30312(6) requires the MDEQ to develop by October 1, 2013 a general permit for the alteration of wetlands for blueberry farming, and contains the permit’s criteria, including, among other things, that the wetland must be restored when farming activities cease, the wetland must be placed under a conservation easement until the wetland is restored after farming activities cease, one may not convert the wetland to a “non-wetland,” and no roads, ditches, reservoirs, pump houses and related support facilities for shipping, storage, packaging, parking and other similar purposes are allowed unless they come within another exemption in section 30305.
Section 30312d requires the MDEQ to develop a blueberry assistance program to provide wetland delineation and pre-application services and assistance.
“Contiguous” and Agricultural Drains
New section 30321(5) defines “contiguous” by stating that a wetland is not contiguous if there is no direct physical contact and no surface water or inter-flowing groundwater connection to a body of water such as the Great Lakes, Lake St. Clair, an inland lake, a pond, river, or stream. This section requires the MDEQ to respond to a request for a determination whether a wetland is contiguous within 30 days after an on-site evaluation. Subsection 6 says that the MDEQ shall not consider an agricultural drain in determining whether a wetland is “contiguous.” Subsection 7 states that a drainage structure such as a culvert, ditch or channel is not in and of itself a wetland. The EPA’s May 31, 2013 email stated that subsections 5 and 6 were clearly inconsistent with federal law.
Implications For Michigan’s Wetlands Program
It is anticipated that one or more groups or organizations active in the environmental community will ask EPA Region 5 to begin proceedings to withdraw Michigan’s section 404 program. The EPA may initiate a withdrawal proceeding whether or not it receives a petition asking it to do so. If the EPA withdraws Michigan’s section 404 program, PA 98 will repeal Part 303. The Michigan Wetlands described in the MDEQ’s March 2009 report would then become unregulated, and the EPA and the COE would regulate wetlands adjacent to the waters of the United States.
In the interim, it is anticipated that EPA Region 5 will notify the MDEQ Director that PA 98 is not immediately effective because the EPA’s administrative process applicable to its review of the revision of Michigan’s statutory scheme has not yet occurred. If that happens, query whether the lack of PA 98’s immediate effect will only apply to the “federal wetlands.”
As of the publication of this article, Lansing was replete with rampant speculation about whether the EPA would give the Michigan Legislature one last chance to “fix” Part 303 or whether the EPA would proceed as described above. The House and Senate return to action on September 10, 2013. It remains to be seen whether the EPA will refrain from taking any action before then.
During the time that one or more of the above activities occur, Michigan farmers and drain contractors, among others, face continued uncertainty and confusion as to whether their activities are exempt from or subject to PA 98’s new permitting requirements.
 The Act also amends portions of Part 13 (permits) and 325 (Great Lakes submerged lands). These amendments are outside the scope of this article.
 See generally, 40 CFR §233.16(d), the federal rule that governs the procedures for EPA’s review of revisions of a state wetlands program. See also, p. 7, infra.
 Disclosure and Disclaimer: The author represented parties involved in the legislative process which culminated in the enactment of PA 98. This representation included, among other things, appearing before the Senate and House Natural Resource Committees and advocating against the adoption of the legislation. This article intends to present an objective report about the process which resulted in the adoption of PA 98 and the possible implications thereof. Any opinions which may appear herein are solely the author’s and are not endorsed by the Michigan State Bar, the Environmental Law Section and any of its other members.
 MCL 281.705(a)-(d).
 40 CFR §328.3(c).
 E.O. 12866_OWCWPRIN2040-ZA11 Final Guidance_20120217.
 62 FR 14846, March 28, 1997 and 62 FR 61173-61174, November 14, 1997.
 68 Fed. Reg. 772 (January 7, 2003).
 2009 PA 120, effective November 6, 2009.
 MCL 324.30329(8)(c).
 MCL 324.30329(9)(a) and (e), respectively.
 The WAC’s meeting minutes and agendas are available on the MDEQ website.
 WAC’s final report, Introduction, p. 1. It may be found at www.Michigan.gov/…/WAC-FinalReport_2012_Part1_395219_7
 WAC’s final report, p. 4.
 See generally, www.michiganlegislature.gov, House Bill 5897.
 MCL 324.30305(2)(e).
 MCL 324.30305(j).
 MCL 324.30305(h)(i-iii).
 MCL 324.30305(k).
 40 CFR §233.16(a).
 40 CFR §233.16(d)(3).
 June 5, 2013 letter to Michigan House of Representatives.
 SB 163 also includes changes to Part 13 (permits) and other matters in Part 325 (Great Lakes Submerged Lands) which are beyond this article’s scope.
 New section 30305(8) is the identical provision in Part 303.
 New section 30328 is the identical section in Part 303.
 Section 30305(I), pp. 20-21.
 MCL 324.30311(5)(A-D). The multiple negatives appear in the amended statute as written.
 ELS member Brad Sysol will write an article for the fall issue of this Journal regarding Koontz v St. Johns Water Management District in which the Supreme Court held that the standards in Nollan v City of Tigard, 512 US 374 (1994) and Dolan v California Coastal Commission, 483 US 825 (1987) regarding the constitutionality of conditions imposed upon the issuance of land use permits, also apply when the government denies a permit and demands the payment of money as a condition for the receipt of the permit. Koontz clearly has implications for Michigan’s new wetland mitigation requirements.
 2013 PA 98, enactment section 2. See, p. 9, supra.
 Seegenerally, 40 CFR §233.16.