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154364 - Grass Lk Improvement Bd v Dept Environmental Quality

Grass Lake Improvement Board,
Douglas R. Kelly
(Appeal from Ct of Appeals)
(Ingham – Collette, W.)
Department of Environmental Quality,
Daniel P. Bock


The Grass Lake Improvement Board (Board) filed an application with the Michigan Department of Environmental Quality (DEQ) seeking a permit to use an "augmentation well" to pump water into Grass Lake to increase its water level. The DEQ denied the application. The Board filed a petition seeking review of the DEQ’s decision in a contested case before an administrative law judge (ALJ). The pivotal issue in the contested case was whether the Board’s proposed augmentation well would "enlarge" Grass Lake pursuant to MCL 324.30102(1) of the Natural Resources and Environmental Protection Act. The Board argued that raising the water level by constructing an augmentation well did not constitute an enlargement of Grass Lake. The DEQ responded that adding water to a lake to increase its volume and surface area is the definition of "enlarge." The DEQ acknowledged that its interpretation of MCL 324.30102(1) was contrary to its own rules, see Mich Admin Code, R 281.811(1)(e), but, nevertheless, argued that when an administrative rule conflicts with the plain meaning of a statute, it must abide by the statute. The ALJ ruled in the Board’s favor, leading the Board to seek recovery of its attorney fees on the basis that the DEQ’s legal position was "devoid of arguable legal merit" under MCL 24.323(1). The ALJ denied the request for attorney fees, finding that the DEQ’s legal position had at least some arguable legal merit. On judicial review, the circuit court reversed, but, in a published opinion, the Court of Appeals reversed the circuit court and reinstated the ALJ’s decision. The Supreme Court has directed oral argument on the Board’s application for leave to appeal.