The Michigan Supreme Court has dismissed as moot an application for leave to appeal brought by the Friends of the Crystal River (Friends) to appeal a decision of the Michigan Court of Appeals that allowed the construction of a golf course at the Homestead Resort near Glen Arbor, Michigan. The court vacated the opinions of both the Michigan Court of Appeals and the trial court, declaring them moot in light of a Sixth Circuit Court of Appeals decision in related federal litigation (Friends of the Crystal River v. Environmental Protection Agency, 35 F.3d 1073 (6th Cir. 1994)), holding that the United States Army Corps of Engineers (COE) had exclusive authority to grant or deny the wetland permit for the golf course.
After protracted administrative proceedings, Kuras Properties (Kuras) obtained a permit under the Wetland Protection Act (currently codified at Part 303 of the Natural Resources and Environmental Protection Act (NREPA) (Wetland Act), to enable it to fill some of the wetland area on its Homestead Resort property for the development of a golf course. Friends appealed the decision to issue the permit to the Ingham County Circuit Court, arguing that the golf course project would violate the Wetland Act and the Michigan Environmental Protection Act (MEPA). The circuit court affirmed the decision of the Michigan Department of Natural Resources (MDNR) to issue the Wetland Act permit and Friends appealed that decision to the Michigan Court of Appeals. After the court of appeals upheld the trial court's ruling, Friends appealed that decision to the Michigan Supreme Court.
Initially, the United States Environmental Protection Agency (EPA) also opposed the issuance of the Wetland Act permit to Kuras. Although EPA had delegated authority to MDNR (now the Michigan Department of Environmental Quality) to issue permits under the Wetland Act that also serve as authorizations to dredge and fill wetlands pursuant to the federal Clean Water Act (CWA), EPA retained the authority to object to or "veto" a Wetland Act permit. Under the CWA, if a state does not amend a wetland permit to respond to EPA's objections within 90 days of the objections, permitting authority for that permit is transferred to the COE.
At the request of Governor John Engler, EPA later reconsidered, and eventually withdrew, its objections to the Wetland Act permit. In so doing, EPA intended to restore the authority to issue the Wetland Act permit to MDNR. Friends also appealed EPA's decision to withdraw its objections to the permit in federal court. The federal court litigation proceeded separately from the lawsuit Friends filed in state court.
In the Michigan Court of Appeals, Friends first challenged the trial court's ruling regarding the Wetlands Act. The Wetlands Act provides that a permit may be issued for an activity affecting wetlands only if it "is in the public interest" and the permit "is necessary to realize the benefits derived from the activity. The benefits must be weighed against the reasonably foreseeable detriments and the availability of feasible and prudent alternatives." The court of appeals held that Kuras met its burden of showing that there were no feasible and prudent alternatives to the proposed project because Kuras had shown that an 18-hole golf course adjacent to the Homestead Resort was required for the resort to remain competitive with similar resorts in the area and there were no other feasible and prudent locations for such a golf course adjacent to the resort. The court also found that the project would benefit the public by stabilizing year-round employment levels and increasing tourism. Kuras also sufficiently proved that an unacceptable disruption would not result to the aquatic resources because, among other things, Kuras incorporated over 90 changes to its golf course design suggested by MDNR, the plan would result in the destruction of only 3.68 acres of wetland while 6.63 acres of new wetland would be developed and 84 acres of existing wetland would be preserved, and MDNR incorporated adequate provisions to protect the aquatic resources in Kuras' permit.
Friends also claimed that the proposed project would violate the Wetlands Act's requirement that the project be "otherwise lawful" because Kuras had not yet received a permit under the Water Resources Commission Act (WRC Act), or a federal permit from the COE and because the project would result in "unlawful" violations of the WRC Act by degrading the quality of the Crystal River. The court of appeals held that the Wetlands Act does not require an applicant for a wetland permit for a project to obtain all other permits for that project before seeking a wetland permit. Moreover, the court held that there was no proof that the Kuras project would have any adverse ecological effects on the Crystal River. Therefore, the court of appeals held that with respect to the Wetlands Act, the circuit court did not err in finding that a permit could be granted.
Friends' MEPA argument in the court of appeals was based on the statute's requirement that a court in a MEPA lawsuit determine whether a proposed action challenged in the lawsuit would result in an "impairment or destruction" of any natural resources and, if so, deny approval of the project if a feasible and prudent alternative to the project exists. The court of appeals affirmed the trial court's determination that Friends had failed to show that an impairment or destruction would result for the same reasons as set forth above concerning the same issue under the Wetlands Act. Because Friends' did not meet its burden of proof on this issue, the court of appeals held, there was no reason for the circuit court to determine whether feasible and prudent alternatives to the Kuras project existed. Therefore, the court of appeals held, MEPA did not prevent Kuras from obtaining the permit to build the proposed golf course.
The court of appeals, therefore, affirmed the trial court's findings of fact and conclusions of law and held that neither the Wetlands Act nor MEPA preclude the construction of the proposed golf course, Friends then filed an application for leave to appeal this decision to the Michigan Supreme Court.
After the Michigan Court of Appeals rendered its decision, the federal litigation concluded when the Sixth Circuit ruled that when MDNR failed to amend the permit to respond to EPA's objections within 90 days, the authority to issue or deny the permit was irrevocably transferred to the COE. Therefore, the Sixth Circuit held that EPA's subsequent withdrawal of its objections could not restore permitting authority to MDNR and thus MDNR did not have authority to issue a wetland permit for the Kuras project.
In light of the Sixth Circuit's decision, the Michigan Supreme Court denied Friends' application for leave to appeal the Michigan Court of Appeals decision, ruling that all of the state court litigation was moot because the sole authority to approve a wetland permit for the Homestead Resort project resided with the COE. The supreme court, therefore, ruled that because MDNR no longer had the authority to approve or disapprove the wetland permit, all prior state judicial and administrative decisions in this matter were "of no precedential force and effect in any future applications for dredge and fill permits."
Friends of the Crystal River v. Kuras Properties, No. 107283 (Mich. Mar. 31, 1998).
This article was prepared by S. Lee Johnson, a partner in our Environmental Department, and previously appeared in the June, 1998 edition of the Michigan Environmental Compliance Update, a monthly newsletter prepared by the Environmental Department and published by M. Lee Smith Publishers.