Wis. Mfr. & Com., Inc. v. Wis. Dep't of Nat. Res.

411 Wis. 2d 462

Wisconsin Manufacturers and Commerce, Inc. and Leather Rich, Inc., Plaintiffs-Respondents,

v.Wisconsin Department of Natural Resources, Wisconsin Natural Resources Board and Preston Cole, Defendants-Appellants.^†

Court of Appeals

No. 2022AP718. Submitted on briefs June 13, 2023.—Decided March 6, 2024.

2024 WI App 18

(Also reported in 5 N.W.3d 903.)

APPEAL from an order of the circuit court for Waukesha County: MICHAEL O. BOHREN, Judge. Affirmed.

On behalf of the defendants-appellants, the cause was submitted on the briefs of Gabe Johnson-Karp, assistant attorney general, and Joshua L. Kaul, attorney general.

On behalf of the plaintiffs-respondents, the cause was submitted on the brief of Lucas T. Vebber, Anthony F. LoCoco, and Luke N. Berg of Wisconsin Institute for Law & Liberty, Inc., Milwaukee; Scott E. Rosenow of WMC Litigation Center, Madison; and Delanie M. Breuer and Joshua Taggatz of Reinhart, Boerner & Van Deuren SC, Milwaukee.

A non-party brief was filed by Robert D. Lee and Jorge Roman-Romero of Midwest Environmental Advocates, Inc., Madison.

Before Neubauer, Grogan and Lazar, JJ.

¶ 1. GROGAN, J. The Wisconsin Department of Natural Resources, the Wisconsin Natural Resources Board (the "Board"), and Preston Cole (collectively the "DNR" unless otherwise noted) appeal from the circuit court order granting Wisconsin Manufacturers and Commerce, Inc. ("WMC")¹ and Leather Rich, Inc.'s ("LRI") (collectively "Respondents" unless otherwise noted) summary judgment motion and denying the DNR's motion seeking dismissal of the Board and Respondents' Wis. Stat. § 806.04 (2021–22)² claims for lack of jurisdiction and for failure to state a claim pursuant to Wis. Stat. § 802.06(2)(a)3 and 6, respectively. On appeal, the DNR asserts that the circuit court erred in granting Respondents' summary judgment motion and in denying its motion to dismiss because: (1) Respondents' "unpromulgated rule" claims fail to state cognizable claims and were beyond the circuit court's jurisdiction; (2) the Spills Law³ does not require the DNR to promulgate a list of qualifying emerging contaminants or their respective concentrations⁴ before the statutes apply to those substances; (3) the DNR's "interim decision"⁵ that it would not issue broad Certificates of Compliance ("COCs") under the Voluntary Party Liability Exemption ("VPLE")⁶ program did not require rulemaking and is moot; and (4) the Board should have been dismissed from the suit.⁷ For the reasons that follow, we conclude the circuit court did not err in granting Respondents' summary judgment motion and therefore affirm.

I. BACKGROUND

¶ 2. LRI is a small, family-owned dry cleaning business located in Waukesha County that has been in operation for approximately forty-three years. In Spring 2018, LRI became aware that its property was potentially contaminated with certain Volatile Organic Compounds ("VOCs") common to dry cleaning facility locations. In compliance with the Spills Law,⁸ LRI notified the DNR of the VOCs, and a remediation case was opened. LRI hired an environmental consultant to investigate the property, and the investigation occurred from March to September 2018. Following the investigation, the consultant drafted an investigation report and recommended that LRI remediate the VOCs found in the groundwater on its property. LRI believed "the VOC remediation would be relatively straight forward" and applied to enter the DNR's VPLE program—an environmental cleanup program in which the party entering the program submits an investigation plan and completes an investigation report and proposed remediation plan—in January 2019. See Wis. Stat. § 292.15.

¶ 3. The DNR reviews and approves each stage of the VPLE program, and once the DNR approves the final cleanup, the voluntary party receives a COC that provides the participating party with certain liability exemptions. See Wis. Stat. § 292.15(2)(a)3. As relevant here, the DNR may issue two types of COCs: (1) broad COCs that provide complete liability exemption; and (2) partial COCs that grant a liability exemption only for certain substances or areas of the property that were satisfactorily remediated. See § 292.15(2)(a)3, 292.15(2)(am)1m. It is often advantageous for a property owner to participate in the VPLE program and receive a COC upon remediation completion because this liability protection encourages the sale and redevelopment of the property that had, or was once perceived to have had, contamination.

¶ 4. The DNR approved and recorded LRI's VPLE program application in February 2019. LRI worked toward full remediation of its location for nearly three years, and during that time it worked closely with an environmental consultant who put together numerous reports detailing the planned scope of work for remediating the VOCs located on site.

¶ 5. Around the time LRI applied and the DNR accepted LRI into the VPLE program, the DNR issued an "interim decision" via a post on its website that announced that the DNR considered "emerging contaminants" as falling within the definition of hazardous substances under the Spills Law. Wisconsin Stat. § 292.01(5) defines a "[h]azardous substance" as:

[A]ny substance or combination of substances including any waste of a solid, semisolid, liquid or gaseous form which may cause or significantly contribute to an increase in mortality or an increase in serious irreversible or incapacitating reversible illness or which may pose a substantial present or potential hazard to human health or the environment because of its quantity, concentration or physical, chemical or infectious characteristics. This term includes, but is not limited to, substances which are toxic, corrosive, flammable, irritants, strong sensitizers or explosives as determined by the department.

The interim decision identified "concerns over emerging contaminants, particularly per- and polyfluoroalkyl substances ('PFAS') chemicals in Wisconsin and nationally [that] have prompted the DNR to evaluate the potential for historical discharges of PFAS and other emerging contaminants at properties enrolled in the VPLE program that are pursuing a COC." (Em- phasis added.) The interim decision also explained the circumstances in which the DNR would offer a COC to VPLE participants:

The interim decision is to offer a voluntary party a COC for the individual hazardous substances that are investigated after all the VPLE requirements have been met. DNR will not issue a COC that covers all potential hazardous substances, including substances that were not investigated but could be discovered in the future. The agency has the legal authority to offer this interim approach under Wis. Stat. § 292.15(2)(am).

(Emphases added.)

¶ 6. As part of its announcement regarding this policy change—wherein it would definitively not issue the broad COC—the DNR sent letters to VPLE program participants "to remind [them] to assess emerging contaminants and their potential impacts as early in the cleanup process as possible[.]" LRI received its letter in August 2020. Although this change required VPLE participants to test for emerging contaminants, the DNR neither explained nor provided a comprehensive list identifying the substances that constitute an emerging contaminant or a concentration or other numeric standard establishing when an emerging contaminant falls within the definition of a hazardous substance. The interim decision also clarified that the DNR would no longer issue the COC providing for broad liability protection and that it would issue only the COC granting partial liability protection "for the individual hazardous substances that are investigated after all the VPLE requirements have been met."

¶ 7. In March 2020, almost two years after LRI's remediation case began, the DNR notified LRI that it had not approved LRI's plan to remediate VOCs because PEAS have been historically linked to dry clean- ing operations, which meant that LRI—a dry cleaning business—was a potential source of PFAS (emerging contaminants). LRI then tested its groundwater for two PFAS compounds, and its environmental consultant created an additional report and sent it to the DNR.

¶ 8. In October 2020, the DNR provided conditional approval for LRI's site investigation with the conditions that it test "several additional soil samples for PFAS" and '"that both individual and combined exceedances' for PFAS be identified." The DNR would not approve LRI's VOC remediation unless and until LRI complied with the additional PFAS requirements. However, the DNR did not provide LRI with any specific PFAS compounds it was required to test, nor did it provide the levels at which the PFAS would be considered hazardous, triggering the Spills Law. After a three-year attempt—including seven environmental reports and a significant monetary investment—LRI notified the DNR of its withdrawal from the VPLE program.

¶ 9. In February 2021, Respondents filed a Complaint alleging that the DNR's policies regarding emerging contaminants and their corresponding concentrations as hazardous substances, along with the interim decision that limited the scope of COC liability protection it would issue, constituted unlawfully adopted rules that were invalid and unenforceable because the DNR did not comply with Wis. Stat. ch. 227's rule-promulgation procedures. They also asserted that the DNR must promulgate rules before PFAS and emerging contaminants are covered under the Spills Law. The DNR filed a motion to dismiss Respondents' Wis. Stat. § 806.04 claim that sought a declaration that the DNR was required to promulgate a list of hazard- ous substances and corresponding concentrations and further sought dismissal of the Board as a party in this matter. The parties thereafter filed cross-motions for summary judgment.

¶ 10. The circuit court held a hearing on the summary judgment and dismissal motions in December 2021, and in April 2022, it issued an oral ruling granting summary judgment in favor...