ELR Citation: ELR 20288
No(s). s. 113350, 118031 (Mich. Ct. App. Mar 5, 1991)

The court holds that the lower court erred in ruling that the sale of the stock of a company operating a state-licensed landfill facility required the company to apply for a new license, or to seek approval from the Michigan Department of Natural Resources (DNR), before further importation and disposal of out-of-state waste. The sole stockholder of the company sold his stock to another Michigan corporation, and notified the DNR that he was no longer a shareholder in the operating company, or involved in the operation of the facility. Subsequently, the county health department notified a principal shareholder of the new operator that a new license naming another "responsible person to contact" was required for the continued operation of the facility and issued a cease and desist order pending compliance. The operator brought a successful suit to enjoin enforcement of the order, to which the county health department successfully counterclaimed to require the operator to obtain a new operating license for the landfill because of the sale of the stock and to prevent the landfill from importing and disposing of out-of-state waste. The court first holds that based on the Michigan Solid Waste Management Act (SWMA), the administrative rules promulgated under the Act, and general principles of corporate law, the trial court improperly ruled that the new operator was required to apply for a new license or get the DNR's approval for a transfer of its existing license before further importation and disposal of out-of-state waste could occur at the landfill. The record shows that the prior operator was granted a license by the DNR for its intended operation of the disposal area. However, SWMA §13 does not specifically require an already licensed disposal area to obtain a new license when the stock of the corporation has been transferred. Moreover, because a corporation is a legal entity distinct from its shareholders, even though all of the stock is held by a single individual, the landfill company at all times retained its distinct legal existence apart from its prior and current shareholders. Thus, the landfill continued to be a fully licensed disposal area irrespective of the sale of its stock. The court notes that the SWMA provides county and state officials with considerable authority to oversee and ensure a licensee's compliance with the Act and rules promulgated thereunder. But, the administrative rules are not a factor in deciding whether a new license is required; rather, they relate to whether an existing licensee is in compliance with the Act.

[The lower court opinion is published at 20 ELR 21135.]

Counsel for Plaintiff-Counter-Defendant-Appellant
Robert A. Fineman, Daniel P. Perk
Honigman, Miller, Schwartz & Cohn
2290 First National Bldg., Detroit MI 48226
(313) 256-7800

Counsel for Defendant-Counter-Plaintiff-Appellee
Lawrence R. Ternan, Margaret B. Kiernan
Beier, Howlett
200 E. Long Lake Rd., Ste. 110, Bloomfield Hills MI 48304
(313) 645-9400

Frank J. Kelley, Attorney General; Gay S. Hardy, Solicitor General
Law Bldg., Lansing MI 48913
(517) 373-1110

Before McDONALD, P.J., AND HOOD and REILLY, JJ.