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In a 5-2 decision issued today, the Wisconsin Supreme Court held that the Wisconsin Department of Natural Resources (“WDNR”) need not first promulgate rules identifying the identification and quantity of “hazardous substances” subject to the Wisconsin Spills Law prior to enforcing the law against landowners and dischargers of substances the agency determines to be “hazardous substances” in its discretion.

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The decision provides enormous discretion to the agency to determine what it believes to be subject to the Spills Law. The Spills Law requires dischargers of “hazardous substances” (or property owners where discharges have occurred) to notify the agency and to undertake efforts to restore the environment to the extent practicable. The WDNR has promulgated a series of administrative rules implementing the Spills Law, including defining certain specific administrative and other codified exemptions.

The case specifically involved the WDNR’s efforts to regulate PFAS substances under the Spills Law, given PFAS are a broad category including thousands of chemical compounds and mixtures. The case was initially brought by Wisconsin Manufacturers &amp; Commerce (“WMC”), the state’s largest business advocacy association, and a former dry cleaner located in Oconomowoc.

In the process of selling its business, the dry cleaner applied for coverage pursuant to Wisconsin’s Voluntary Party Liability Exemption (“VPLE”) program. The VPLE program allows a property owner to clean up her property of hazardous substances subject to the Wisconsin Spills Law and obtain a Certificate of Completion (“COC”), which runs with the land and protects both current and subsequent owners from further cleanup obligations, absent a new spill or release. Two days after the application, the WDNR issued guidance indicating it would only issue partial COCs, excepting out PFAS compounds from broad COCs moving forward under the VPLE program.

The WMC and the dry cleaner sued and the circuit court, and a majority of the court of appeals concluded that the WDNR’s determination that PFAS compounds were subject to the Spills Law was an invalid, unpromulgated rule. The WDNR petitioned the Supreme Court for review.

The Court reasoned that the statutory definition of “hazardous substances” in the state’s Spills Law “is broad and open-ended in that it potentially applies to ‘any substance or combination of substances’”; provided that, due to its quantity, location or characteristics  it: (1) ‘may cause or significantly contribute to an increase in mortality or an increase in serious irreversible or incapacitating reversible illness;’ or (2) ‘may pose a substantial present or potential hazard to human health or the environment.’”  The Court concluded that the statute could apply to any compound or material (including those not generally considered to be hazardous, such as milk or beer) so long as the material meets one of the two predicate criteria listed above.

The Court also concluded that the statute does not compel the agency to define these compounds and conditions by rule. The Court observed that the statute specified instances where rulemaking was directed by the Legislature to implement the law, but the statute does not specifically compel the agency to undertake rulemaking to define the materials and regulatory thresholds of such materials that trigger the Spills Law.

The WMC and the dry cleaner argued that the regulated community was woefully without guidance as to when or how it is to comply with the law given the statute’s vague terms.

The Court also concluded that the WDNR was not compelled by provisions of the Administrative Procedures Act in Chapter 227 of the Statutes to promulgate certain statewide decisions involving PFAS as administrative rules, such as its determination that PFAS are “hazardous substances” subject to the Spills Law and excepted from broad VPLE COCs. The Court concluded that the first action was nothing more than unenforceable “guidance” which does not have the force and effect of law. The second, the Court determined, fell squarely within the discretion afforded the agency in applying the VPLE program.

The beginning of Justice Rebecca Bradley’s dissent, joined in by Justice Ziegler, sums up the view of many in the regulated community in Wisconsin: “This case is about whether the People are entitled to know what the law requires of them before the government can subject them to the regulatory wringer. The majority leaves the People at the mercy of unelected bureaucrats empowered not only to enforce the rules, but to make them. Americans have lived under this unconstitutional arrangement for decades, but now, the majority says, the bureaucrats can impose rules and penalties on the governed without advance notice, oversight, or deliberation. In doing so, the majority violates three first principles fundamental to preserving the rule of law—and liberty.”

<strong>Our Regulatory Team at Michael Best is here to help advise you on the impacts of this decision on your project or property. If you have questions about how this ruling may affect your business, please contact your Michael Best attorney or a member of our team listed on this alert.</strong>

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Wisconsin Supreme Court Upholds Broad DNR Discretion Under Spills Law in PFAS Case

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