Aug. 25, 2023 | This Week in Government: PFAS Rules Violated APA

State rules setting limits on PFAS in drinking water were issued without a proper regulatory impact statement, a 2-1 Court of Appeals ruled this week, deeming the rules invalid.

In 3M Company v. EGLE (COA Docket No. 36407), Judge Christopher Murray and Judge Michael Gadola ruled in a published decision the new PFAS standards promulgated by the Department of Environment, Great Lakes and Energy did not properly address costs businesses and other groups would incur in complying with the rules, a violation of the Administrative Procedures Act.

Although EGLE issued a regulatory impact statement with the rules, it did not address costs related to groundwater cleanup, which the rules would affect.

Last year, Court of Claims Judge Brock Swartzle also granted 3M’s request to deem the rules invalid, but immediately stayed the decision, allowing for an appeal to take place (See Gongwer Michigan Report, Nov. 17, 2022).

The rules went through a lengthy process, including receiving approval from the Environmental Rules Review Committee, that was designed to bring in more industry oversight during the rules process. They took effect Aug. 3, 2020.

EGLE argued it was not required to estimate the costs to businesses that would necessarily occur under Part 201 of the Natural Resources and Environmental Protection Act because it lacked the necessary information to make an estimate. It also argued that the agency only needed an impact statement as it related to the proposed rule, which dealt with drinking water, and not on the groundwater cleanup that could be required because of the new rule.

The majority on the Court of Appeals disagreed, with Murray writing the opinion.

“Whenever EGLE sets drinking water standards, it is also setting groundwater cleanup criterion,” he wrote. “Despite this, EGLE refrained from providing compliance cost estimates for the new groundwater cleanup criterion in the RIS it prepared for the new drinking water standards, arguing that because MCL 24.245(3)(n) only requires it to estimate costs of the proposed rule, it only needed to provide a cost estimate for businesses and other groups to comply with the drinking-water rule; it did not need to provide an estimate of the costs that businesses and other groups might incur as a result of the groundwater-cleanup provisions found in Part 201 of NREPA.”

Because EGLE did not address groundwater cleanup costs, the rules are invalid, Murray wrote.

In a statement, Hugh McDiarmid Jr., spokesperson for EGLE, said the agency respectfully disagreed with the decision. He did not directly answer if the agency would appeal to the Supreme Court, though he did say: “Michigan will continue to aggressively work to protect the water we all rely on.”

“It is disappointing that 3M, one of the major chemical manufacturing companies responsible for bringing PFAS to market, continues to push back on efforts that protect residents from toxic products,” McDiarmid said.

In dissent from the majority, Judge Allie Greenleaf Maldonado disagreed that state law required EGLE to address the costs created by a “ripple effect” of the promulgated rules.

“I agree that a ripple effect of Part 201 of the NREPA is that whenever EGLE sets drinking water standards it is also setting groundwater cleanup criterion. I also agree that EGLE, nevertheless, did not provide estimates of compliance costs with the new groundwater cleanup criterion in the RIS it prepared for the new drinking water standards,” she wrote. “However, because MCL 24.245(3)(n) only requires EGLE to estimate costs of the proposed rule, and the proposed rule was the drinking-water rule, I believe EGLE only needed to provide an estimate of the costs for businesses and other groups to comply with the drinking-water rule; it did not need to provide an estimate of the costs that businesses and other groups might incur as a result of the ground water cleanup provisions found in Part 201 of NREPA.”

For the 2022-23 school year, 83.1% of students attended a school district that requested and received a waiver to start before Labor Day, a chart released Tuesday by the Senate Fiscal Agency showed.

The SFA chart uses data from the Department of Education, which receives and grants waivers for schools to start before Labor Day.

Although 83.1% of local education agency students are in a school district with a waiver, 80.5% of those districts have the waivers, SFA said. In total, 437 school districts requested waivers and 106 did not.

School districts and intermediate school districts with the waiver include Kalamazoo RESA, Ingham ISD, the Detroit Public Schools Community District, Oakland Schools, and Washtenaw ISD. Several districts in the Upper Peninsula and Northern Michigan do not have waivers, but the map shows some do.

The data bears out what several education groups and lawmakers have said on removing the requirement in state law that schools start after Labor Day. Supporters of the change say most schools already request and receive waivers, and the law simply requires more paperwork.

HB 4671 cleared the House Education Committee but is still awaiting action by the full House.

School groups and districts generally are supportive of the legislation, but tourism groups are opposed.

John McNamara, the Michigan Restaurant and Lodging Association vice president for government affairs, told House members in June that for the tourism industry, July and August are vital for making money, especially for Northern Michigan.

He suggested the bill stipulate that schools operate on a Tuesday-Wednesday-Thursday schedule during the month of August if they choose to start school prior to Labor Day.

Despite the request, the bill was reported unanimously to the House floor without amendment earlier this summer. The House did not act before going on break.

DELTA TOWNSHIP – Sen. Sarah Anthony again said on Tuesday that she believed the latest budget process was transparent, despite many earmarked projects and specific grant items not being included until late in the process before its final passage.

When asked about the sharp uptick in earmarks in the final budget compared to what was reported by subcommittees while at an event outlining Lansing-area budget highlights to local officials, Anthony (D-Lansing), who chairs the Senate Appropriations Committee, defended lawmakers’ work.

“We baked in more transparency than what we’ve ever had in the past,” Anthony said.

Anthony added that more can be done, but the final product was the result of numerous conversations between members and stakeholders in their respective communities. She said the budget process takes time.

“There were decisions that needed to be made, whether we were going to continue to invest in the things that quite honestly don’t serve real people, or actually listen to our constituents,” Anthony said. “This is what this budget looks like. It’s a reflection of thousands of conservations that manifested into real dollars into every corner of the state.”

Millions of dollars in projects were added after the subcommittee process. A recent analysis from the Citizens Research Council said almost 65% of General Fund earmarks in the 2023-24 omnibus budget for state departments and agencies were added at the end of the budget process and weren’t publicly revealed until hours before the House and Senate voted to send the bill to Gov. Gretchen Whitmer (See Gongwer Michigan Report, Aug. 18, 2023).

Anthony and others said boilerplate language in the budget requires departments disbursing more than $750 million in earmarks for projects to post information to a website and include the legislative sponsor. That website, however, does not have to be active until Sept. 30, 2024.

Lawmakers have until Jan. 2024 to submit a letter on their sponsorship. State departments must post the information online by the Sept. 30, 2024, deadline.

Democrats previously said many projects target larger cities across the state, which they contend have been neglected in past budget cycles (See Gongwer Michigan Report, June 28, 2023).

Anthony previously said the funding of specific projects, rather than setting up funds for a competitive grant process, allowed the Legislature to direct money to organizations with a proven track record.

Republicans criticized the grant process used by the Democrats as being wasteful, questioning the need for several projects.

Anthony said she was not keen on the idea of having many, if any, more significant supplemental appropriations packages come up before the end of the year.

“We did so much work in this first budget, I don’t anticipate many robust supplementals between now and the next budget,” Anthony said. “My perspective is always that supplementals are designed to be few and far between.”

Lt. Gov. Garlin Gilchrist II was separately asked about whether the Legislature might adjourn sine die before the end of the year to enable legislation that was not granted immediate effect in the Senate to take effect.

He was also asked how long the Department of Treasury may need to implement HB 4001 (PA 4 of 2023), a bill that includes provisions to lower retirement taxes and expand the Earned Income Tax Credit.

Gilchrist said it is less important to focus on the beginning and end of the legislative calendar.

“I think what we’ve demonstrated this year thus far in this sort of first half of the year, that we can get a hell of a lot done by working together, by working efficiently and working intelligently,” Gilchrist said. “I think you’ll see that same attitude this fall. Whenever sine die does happen– and that is not an executive decision. … I think we will look back on 2023 as certainly the most productive legislative year in a generation.”

The annual Kids Count report released Wednesday showed there were benefits that came with the influx of pandemic dollars, but warned for many problems related to poverty will likely worsen as those dollars dwindle away.

The child poverty rated declined by 15% and fell in 76 counties from 2016 to 2021, and the young adult poverty rate declined by nearly 25% and fell in 75 counties, but this was largely thanks to the federal and state spending in response to the pandemic.

“The temporary expansion of safety net programs and direct cash assistance provided to kids and their families in 2020 and 2021 certainly played a part in these declines. In what was an extremely A time, we know that outcomes would have been much worse without the unprecedented levels of investment that we saw,” Anne Kuhnen, Kids Count in Michigan Policy Director at the Michigan League for Public Policy, said in a statement. “Now, our state leaders need to look at the evidence and take action to make the pandemic-era programs that were successful permanent. We don’t need to wait for another crisis to expand the Child Tax Credit; increase food and rental assistance; or invest in education, child care, and health care.”

The 2023 Kids Count in Michigan Data Book looked at statewide and county data and trends to highlight key issues and provide recommendations. There are currently 2.15 million children in Michigan, making up 21% of the state’s population. The report found that 17% live in non-metro areas, 5% live in unsafe neighborhoods, and 11% live in high-poverty areas.

The MLPP pointed to recent actions taken by the Legislature that have gone a long way in helping children. The Earned Income Tax Credit was expanded from 6% to 30% of the federal credit and the MLPP said this would benefit nearly half of the state’s children and is expected to lift 16,000 children out of poverty because the expansion allows families to keep more money.

Other key measures the MLPP referenced included the $160 million in the fiscal year 2023-24 for free breakfast and lunch to all students and the expansion of the Elliott-Larsen Civil Rights Act to include sexual orientation and gender identity or expression.

Additionally, nearly 1.8 million children have benefited from the advance Child Tax Credit that was part of the American Rescue Plan Act in 2021.

To continue expanding on the successes of the past few years, the MLPP suggested that legislators find ways to close the gender gap, saying that full-time working mothers lose an estimated $17,000 yearly due to the pay gap. Another suggestion for lawmakers was to invest in robust and equitable data systems and collecting more data as the child population grows more diverse.

Even though 11% of the children’s population live in high-poverty areas, 18% of Michigan’s children live in poverty. Breaking down the 377,000 children living below the poverty line, 45% of those children are white. Another 32% are Black, 14% are two or more races, 12% are Hispanic or Latino, and 2% are Asian.

The MLPP is also advocating for the preservation of federal Temporary Assistance for Needy Families dollars for direct cash assistance, increased benefit levels and the elimination of restrictive eligibility rules. In 2021, the MLPP said only 6% of TANF dollars have been allocated to the Family Independence Program.

Fully funded child care is also a must for the MLPP. It estimates that it would require a state investment of more than $3.5 billion, but child care providers continue to struggle with a livable wage and parents continue to struggle with the high costs.

The state should also adopt a state-level Child Tax Credit that is fully refundable, the MLPP said. One in four children are currently left out of the full Child Tax Credit because their parents’ earnings are too low. A Michigan Child Tax Credit could address those families that are left behind at the federal level.

The report also looked at the current state of Pre-K-12 education. For three- and four-year-olds, 130,000 of them are not in school. Of that group, 64.8% are white, 17.6% are Black, 8.8% are Hispanic or Latino, 8% are two or more races, and 2.4% are Asian.

For students in school, 63 counties saw declines of reading proficiency among third-grade students. And for those exiting school, 19% of students were found to be not graduating on time.

To address the continuing problems in education, the MLPP said the state should make sure all 4-year-olds can attend pre-K. Gov. Gretchen Whitmer during her State of the State address vowed to make universal preschool a reality and has continually stated she would do so since.

The state should also preserve its School Aid Fund dollars to support K-12 education. The MLPP said diverting dollars from K-12 to universities and community colleges is harmful to public schools.

The report also recommended a weighted funding formula that focuses on the concentration of poverty as well as students who have disabilities and students who are learning English. It cited the Education Trust-Midwest’s findings that low-income students and English language learners were being underfunded by $5.1 billion annually.

In Michigan, 97.4% of the children’s population has health insurance, leaving a total of 69,000 children currently without it. Michigan saw a 19% increase in children insured by Medicaid or MiChild from 2019 to 2022.

There was also a decrease from 14.2% to 12.8% of Michiganders living in poverty without benefits. The increase in temporary food assistance kept 133,000 residents out of poverty.

However, physical and mental health of children continues to decline, heightened especially by the pandemic.

More than one in four households with children reported missing, skipping, or delaying the preventative check-ups during the first year of the pandemic, the report said, in part due to irregular schedules and stay-at-home orders.

The MLPP said that more than one in three high school students experienced poor mental health during the pandemic. More than half of LGBTQ youth reported experiencing stress, anxiety, or depression most or all of the time. Child and teen homicide also jumped upwards during the pandemic. During the first year, there was an increase of 49% in homicide deaths. Nearly three in four child homicides in 2020 were caused by firearms.

To better address the health and safety of children, the MLPP suggested multi-year Medicaid coverage for children under age six, which they said would benefit about 368,000 children. It also recommended providing a full year of Medicaid postpartum coverage regardless of immigration status.

In Sept. 2021, the state dedicated $11.6 million of federal Coronavirus Relief Fund dollars to help youth in foster care. The report said students in foster care tend to graduate on-time at a rate lower than the average, with only 41% of them graduating on-time.

After-school and summer learning programs and dedicated staff can ensure the youth in foster care are not falling through the cracks, the report said.

There are fewer than 1 million adults aged 18-24 living in Michigan. At least 21.5% of them live in poverty and 48% of them have enrolled in or have completed college. Though this group was hit hard by the pandemic, the MLPP said spending on them helped this age group create a more stable foundation.

About 195,000 young workers benefited from the American Rescue Plan Act’s temporary expansion of EITC to include those without children. The combination of federal and state credits came out to an average total credit of $875 in tax year 2021.

The MLPP recommended Michigan’s EITC be expanded to include workers aged 19-24 without children as well as those over 65 without children and immigrants who pay taxes and work but lack a social security number. Permanently lowering the age limit of the Michigan Reconnect program was also recommended.

A survey of retailers showed activity in the sector dropping off during July to its lowest level since late 2022 while also reporting that more than half of business owners remained confident in a rebound during the coming months.

On Wednesday, the Michigan Retailers Association released its monthly Retail Index survey, which showed 43% of retailers saying they saw increased sales in July compared to June, with 38 % reporting a decrease and 19% having flat sales.

This put the group’s Retail Index score for the month at 45. This was down from 56.0 reported in June as well as the lowest since the 41.2 score reported for Dec. 2022 (See Gongwer Michigan Report, Jan. 23, 2023).

The 100-point Index provides a snapshot of the state’s overall retail industry, with values above 50 generally being an indication of positive activity. The higher the number, the stronger the activity.

William Hallan, president and CEO for the MRA, in a statement described the past year as being a volatile one consisting of “rollercoaster sales” that have bounced up and down.

He added that the decline for the month occurred during a time of traditionally strong tourism-related sales, urging people to make local purchases. For state officials he had a further suggestion.

“A dip in the Retail Index below the 50-point threshold ought to serve as a cautionary signal, suggesting potential economic imbalance,” Hallan said. “The Legislature and Governor would be wise to acknowledge these unfavorable trends within the retail economy and consider ways to ease the burdens on small businesses.”

Even with the drop of retail activity in July, 55% of those surveyed still said they expect improving sales over the coming three months, with 17%  saying they expect a decline and the remaining 28% anticipating flat sales.

This three-month outlook among those surveyed resulted in a 70.9 Retail Index rating, up from 70.8 recorded last month.