[Federal Register Volume 68, Number 4 (Tuesday, January 7, 2003)]
[Notices]
[Pages 772-775]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-285]


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ENVIRONMENTAL PROTECTION AGENCY

[FRL-7436-4]


Preliminary Findings of Informal Review of State of Michigan's 
Approved Clean Water Act Section 404 Permit Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice and request for comments.

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SUMMARY: This document announces EPA's preliminary finding that, at 
this time, formal program withdrawal proceedings should not be 
initiated for Michigan's approved Clean Water Act section 404 permit 
program.

DATES: Comments on this document must be received in writing by March 
10, 2003.

ADDRESSES: Written comments on today's notice may be submitted to Jo 
Lynn Traub, Director, Water Division, Attn: Michigan Section 404 
Program Review, U.S. Environmental Protection Agency, 77 West Jackson 
Boulevard, Chicago, Illinois 60604. As an alternative, EPA will accept 
comments electronically. Comments should be sent to the following 
Internet Email Address: [email protected].

FOR FURTHER INFORMATION CONTACT: Sue Elston, Watersheds and Wetlands 
Branch, at the EPA address noted above or by telephone at (312) 886-
6115. The Report containing EPA's preliminary findings is available via 
the Internet at the following location: http://www.epa.gov/region5/
water/wshednps/pdf/mi--404--program--review.pdf. In addition, a hard 
copy of the information supporting today's notice is available for 
review at EPA Region 5, 77 West

[[Page 773]]

Jackson Boulevard, 16th Floor, Chicago, Illinois; Library of Michigan, 
702 Kalamazoo Street, Lansing, Michigan; Olson Library, Northern 
Michigan University, 1401 Presque Isle Avenue, Marquette, Michigan; 
Otsego County Library, 700 S. Otsego Avenue, Gaylord, Michigan; and at 
Brandner Library, Schoolcraft College, 18600 Haggerty Road, Livonia, 
Michigan. To arrange for access to the docket materials in Chicago, 
call (312) 886-6115, in Lansing call (517) 373-9489, in Marquette call 
(906) 227-2117, in Gaylord call (989) 732-5841, and in Livonia call 
(734) 462-4440.

SUPPLEMENTARY INFORMATION: On October 16, 1984, EPA approved the 
regulatory permitting program that the State of Michigan had submitted 
pursuant to the requirements and guidelines contained in subsections 
404(g) and 404(h) of the Clean Water Act. 33 U.S.C. 1344(g) and (h). 
(See 49 FR 38947, October 2, 1984.) In that notice of approval, EPA 
noted that the Administrator was required to approve a program 
submitted by a state pursuant to subsection 404(g) of the CWA unless 
that program does not meet the requirements of subsection 404(h) of the 
CWA, and EPA then stated that it had determined that the program 
submitted by the State of Michigan met those statutory requirements. 
The components of the approved program are stated at 40 CFR 233.70 . 
When EPA initially approved the program, Michigan did not have 
authority to carry out the program in Indian lands. EPA now concludes, 
as set forth more fully in the Report, that Michigan remains without 
authorization to carry out the program in Indian lands, which EPA 
defines to be the same as Indian Country as defined by statute (18 
U.S.C. 1151).
    The Michigan state agency authorized in 1984 to administer the 
approved section 404 program was the Department of Natural Resources. 
Later, the State of Michigan reorganized its agencies and transferred 
authority to administer the approved section 404 program to the 
Department of Environmental Quality (MDEQ). EPA approved this transfer 
on November 14, 1997 (62 FR 61173, November 14, 1997). The State of 
Michigan was the first state in the nation, and currently is one of 
only two states, to be authorized to administer a CWA section 404 
permit program within its borders.
    Recently EPA decided to perform an informal review of Michigan's 
approved section 404 program and the program's administration by MDEQ. 
EPA so decided, among other reasons, because since 1984 there have been 
a number of changes to the relevant federal and state statutes and 
regulations, and because a body of State of Michigan judicial and 
administrative opinions relevant to permitting under the section 404 
program had developed. In addition, in recent years EPA has received a 
number of comments and complaints about Michigan's administration of 
the approved section 404 program. Among these was the February 1997 
submission by the Michigan Environmental Council and the Lone Tree 
Council which requested that EPA either ensure reform of Michigan's 
section 404 program or withdraw approval of the section 404 program. 
EPA responded that it was treating the February 1997 request as a 
petition to withdraw, and committed to performing an informal review of 
that petition's allegations, as provided for by 40 CFR 233.53(c)(1). 
See documents published at 62 FR 14846, March 28, 1997, and 62 FR 
61173, 61174, November 14, 1997. The federal regulations allow EPA to 
conduct an informal review of allegations made in a petition to 
withdraw a section 404 program approval, 40 CFR 233.53(c).
    In deciding to informally review Michigan's section 404 program, 
however, EPA decided to comprehensively review all aspects of 
Michigan's administration of the section 404 program--both with respect 
to permit processing and permit decision making and with respect to 
enforcement of the provisions of CWA section 404 and section 404 
permits issued by MDEQ--and to comprehensively review the adequacy of 
Michigan's current legal authorities which establish and embody 
Michigan's section 404 program. Thus, EPA did not limit itself to 
reviewing the few matters of concern mentioned in the petition 
submitted by the Michigan Environmental Council and the Lone Tree 
Council.
    The Regional Administrator of Region 5, EPA, informed the Director 
of MDEQ of the commencement of the section 404 program review in a 
letter of January 22, 1998.
    To perform its program review, EPA requested that the State of 
Michigan provide an updated program description (40 CFR 233.11); a new 
Attorney General's Statement confirming that state laws and regulations 
provide adequate authority to administer the section 404 program and 
addressing the other subjects mentioned at 40 CFR 233.12; and a 
compilation of all current, relevant Michigan laws and regulations. The 
State of Michigan submitted these materials to EPA in June 1999, and 
submitted new and updated information to EPA between June 1999 and the 
date of this Notice.
    As well as reviewing and analyzing the documents submitted by the 
State of Michigan, during its program review EPA reviewed hundreds of 
permitting files, enforcement files, and citizen complaint files that 
MDEQ generated between 1995 and 1999, visiting all thirteen MDEQ 
district offices and the central MDEQ office in Lansing, Michigan. EPA 
also conducted numerous interviews of MDEQ personnel in the field and 
central offices. Additionally, EPA reviewed most of MDEQ's written 
decisions issued in contested permitting cases between January 1994 and 
early 1999. The contested case decisions represent final agency action 
by MDEQ in matters involving individual permits processed under the 
approved state program. Also as part of its program review, EPA 
consulted with offices of the U.S. Fish and Wildlife Service and the 
U.S. Army Corps of Engineers which interact with MDEQ during its 
administration of the program. Finally, during January and May of 1999 
EPA held four availability sessions to receive comments from interested 
persons.
    EPA now has completed its review and analysis of all materials. EPA 
has preliminarily concluded that the review findings do not warrant a 
recommendation to the Administrator to initiate formal program 
withdrawal proceedings, but do warrant corrective action on the State's 
part. In arriving at this conclusion, EPA analyzed whether the 
circumstances for program withdrawal which are set forth at 40 CFR 
233.53(b) exist and, with respect to those areas of concern to EPA, 
whether the State of Michigan has indicated its willingness to take 
timely corrective actions to address EPA's concerns. In performing the 
program review, EPA also reviewed the criteria for initial section 404 
program approval which are set forth in subsection 404(h) of the CWA.
    EPA has found both deficiencies and strengths in Michigan's legal 
authorities establishing the approved section 404 program and in the 
program's administration by MDEQ. These strengths, deficiencies, and 
proposed corrective actions are identified in the document titled 
Results of the U.S. Environmental Protection Agency Region 5 Review of 
Michigan Department of Environmental Quality's Section 404 Program, and 
other documents that are contained in the public docket that supports 
this Notice. To address the deficiencies, EPA will be requesting that 
the State of Michigan perform certain corrective actions; EPA already 
has consulted with the State of Michigan about the nature of those

[[Page 774]]

corrective actions. The corrective actions that EPA has identified to 
date are described in general terms elsewhere in this Notice and 
supporting documents, although those corrective actions may be modified 
based on future experience and the specifics of the corrective actions 
must still be defined and finalized. EPA expects that certain 
corrective actions may be implemented through regulatory action by 
MDEQ, but that other corrective actions will require action by the 
Michigan legislature. EPA and the State of Michigan also have agreed on 
a tentative schedule for implementing the identified corrective 
actions, although we expect that modifications to this schedule likely 
will occur in the future. If adequate corrective actions are not taken 
by the State of Michigan in a timely manner, EPA will reconsider 
whether formal withdrawal proceedings, as outlined in subsection 404(i) 
of the CWA and 40 CFR 233.53(c), should be commenced. A summary of the 
most significant findings of the program review follows.
    Through its review of the State of Michigan's legal authorities, 
EPA has determined that the State's laws and regulations are, for the 
most part, consistent with section 404 of the Clean Water Act, but has 
identified deficiencies in a few specific areas, resulting in a 
preliminary conclusion by EPA that the State does not have legal 
authority fully consistent with section 404 of the Clean Water Act and 
the State's implementation of the section 404 program is not entirely 
consistent with the requirements of 40 CFR part 233.
    The scope of regulatory jurisdiction granted to MDEQ by Michigan 
law is one area of concern for EPA. In many Michigan counties MDEQ has 
no jurisdiction over a non-contiguous wetland even if that wetland is 
ecologically significant or large (unless MDEQ has individually 
determined that the wetland has essential natural resource value). EPA 
acknowledges that the extent of federal CWA jurisdiction over isolated 
wetlands recently was limited by the United States Supreme Court 
decision in Solid Waste Agency of Northern Cook County v. U.S. Army 
Corps of Engineers, 121 S.Ct. 675 (2001) (SWANCC), but the precise CWA 
jurisdictional limitation resulting from SWANCC remains unclear. For 
that reason EPA remains concerned that Michigan's jurisdiction over 
non-contiguous wetlands is narrower than is federal CWA jurisdiction 
over isolated wetlands, even post-SWANCC. The State is proposing 
completion of a statewide wetland inventory, which upon completion in 
each county, will authorize MDEQ to assert jurisdiction over all non-
contiguous wetlands in that county which are larger than five acres.
    Another area of concern is that Michigan law appears to exempt a 
wider range of activities than does the CWA under subsection 404(f) of 
the CWA, including exemptions for discharges occurring as part of 
certain agricultural activities, discharges related to drain creation 
and improvement, and discharges associated with iron and copper mining 
tailings basins. The State has agreed to seek statutory amendments and 
the promulgation of administrative rules to address these issues.
    EPA's examination of Michigan law included review of MDEQ's 
authorities and procedures for issuing permits. MDEQ issues section 404 
and State permits for activities in waters of the United States under 
two different state statutes: Part 301 and Part 303 of the Natural 
Resources and Environmental Protection Act. EPA has several concerns 
with regard to MDEQ's permitting authority. The first concern is that 
MDEQ may not have clear authority to require all permit conditions 
required under federal law, and may not have clear authority to revoke 
and modify issued permits in all situations provided for by federal 
law. The State has agreed to promulgation of administrative rules to 
resolve these concerns. EPA also considered the Michigan statutory 
provision which directs that a permit under Part 303 shall issue within 
90 days of a triggering event, and found this provision does not pose 
an impediment to MDEQ's proper implementation of the section 404 
program.
    Michigan law also fails to require that MDEQ incorporate the 
section 404(b)(1) guidelines (or state environmental criteria which are 
equivalent to the section 404(b)(1) guidelines) into its permit 
decision making processes. The criteria in the section 404(b)(1) 
guidelines as to which MDEQ-issued permits are not explicitly required 
to meet include application of a proper feasible and prudent 
alternatives analysis, application of the correct water dependency 
test, a bar on issuing permits which will jeopardize federally 
threatened or endangered species or their critical habitats, and a bar 
on issuing permits which will result in significant degradation of 
waters of the United States. The State has already promulgated 
administrative rules that address many of these concerns, and has 
agreed to promulgate rules to address the remaining issues.
    EPA's review of contested case decisions issued over the years by 
MDEQ's Office of Administrative Hearings found that final agency 
decisions frequently have failed to interpret and apply Michigan law in 
a manner that is consistent with the federal requirements for 
administering a section 404 program; the result has been the issuance 
of permits--which constitute section 404 permits--for activities which 
have not been subjected to proper analyses for water dependency, 
satisfaction of the section 404(b)(1) guidelines, and other federal 
criteria, thereby undermining the State's ability to administer a 
program which meets the terms of section 404(h) of the CWA. For these 
reasons, EPA has found that certain changes must be made to some 
Michigan statutory provisions and administrative rules in order to make 
them more clearly consistent with federal law. MDEQ has acknowledged 
EPA's concerns and has proposed what appear to be effective corrective 
actions to resolve these concerns. Some of these corrective actions 
already have been taken by MDEQ, while others are proposed for the 
future.
    With regard to MDEQ's administration of the section 404 program, 
the program review found that, in general, MDEQ is doing a good job. 
MDEQ is operating its regulatory program in a manner consistent with 
the State Program Regulations found at 40 CFR part 233. The majority of 
permit files which EPA reviewed were found to contain the necessary 
documentation supporting the permit decision. The State's general 
permit program was found to be consistent with the federal requirements 
for general permits. MDEQ's permit application process was found to be 
consistent with the requirements in the federal regulations. MDEQ is 
including appropriate conditions in its permits to ensure compliance 
with the section 404(b)(1) guidelines and applicable water quality 
standards, and the duration of permits issued is consistent with 
federal requirements.
    This program review did, however, identify several problems with 
MDEQ's administration of its section 404 permit program. The program 
review identified a need for MDEQ, USFWS and EPA to develop a procedure 
regarding how the agencies will coordinate when a potential project may 
have some effect on a federally threatened or endangered species or 
critical habitat.
    The EPA has identified the need for MDEQ to modify its public 
notice procedures to make them consistent with 40 CFR 233.32. EPA found 
that MDEQ public notice procedures do not ensure that interested 
members of the public always have sufficient

[[Page 775]]

opportunity to submit comments in response to public notices nor do the 
state's public notice procedures include providing public notices by 
mail to all interested parties, as required by the regulations. In 
order to partially address this concern, the state has implemented an 
internet based public notice system that makes all public notices 
available on the MDEQ website. EPA and MDEQ will be discussing 
additional corrective actions that need to be taken to ensure that all 
interested persons receive timely public notices of projects requiring 
CWA section 404 permits.
    As part of our review of MDEQ's enforcement efforts, citizen 
complaint files were reviewed in all of the MDEQ district offices. 
Based on the annual reports prepared by MDEQ, an average of 800 citizen 
complaints are investigated each year. The program review found that 
district offices make a concerted effort to address complaints. 
Generally, the review found complaints were routinely followed with 
site inspections, which usually were made within two weeks of receipt 
of the complaint.
    An opportunity for public participation in the State's enforcement 
process is required by federal law, and MDEQ has agreed to implement 
procedures to comply with the requirements of 40 CFR 233.41(e)(2).
    This review concludes that MDEQ has maintained a satisfactory 
enforcement program. MDEQ has designed the enforcement program to 
identify un-permitted activities and initiates enforcement responses in 
a timely manner. Overall, Michigan's enforcement program achieves 
appropriate injunctive relief through wetlands restoration and wetland 
mitigation and obtains adequate penalties. The review of MDEQ's use of 
administrative consent agreements found that the agreements effectively 
resolved the violations at issue and resulted in additional 
environmental restoration and conservation of wetland.
    Although there is no legal requirement that EPA receive public 
comment regarding the preliminary determinations of its informal review 
of Michigan's section 404 program, EPA has decided to accept such 
public comments for a period of sixty (60) days from the publication 
date of this notice. EPA seeks public comment on its preliminary 
determination that formal withdrawal proceedings not be commenced, as 
well as EPA's detailed findings regarding MDEQ's administration of the 
permitting and enforcement program and the adequacy of Michigan's legal 
authorities. If public comments received by EPA indicate significant 
public interest in the holding of a public hearing, EPA may decide to 
hold such a hearing.

    Dated: December 18, 2002.
Bharat Mathur,
Acting Regional Administrator, Region 5.
[FR Doc. 03-285 Filed 1-6-03; 8:45 am]
BILLING CODE 6560-50-P