451 P.3d 493 (Mont. 2019), DA 18-0110, Montana Environmental Information Center v. Montana Department of Environmental Quality

• Docket Nº: DA 18-0110
• Citation: 451 P.3d 493, 397 Mont. 161, 2019 MT 213
• Opinion Judge: Mike McGrath, Chief Justice
• Party Name: MONTANA ENVIRONMENTAL INFORMATION CENTER and Sierra Club, Plaintiffs and Appellees, v. Montana DEPARTMENT OF ENVIRONMENTAL QUALITY, Defendant and Appellant, and Western Energy Company, Defendant, Intervenor, and Appellant.
• Attorney: For Appellant Montana Department of Environmental Quality: Kirsten H. Bowers (argued), Edward Hayes, Special Assistant Attorneys General, Montana Department of Environmental Quality, Helena, Montana For Appellant Western Energy Company: John C. Martin (argued), Kyle A. Gray, Holland & Hart LLP, J...
• Judge Panel: We Concur: JAMES JEREMIAH SHEA, J., INGRID GUSTAFSON, J., BETH BAKER, J., LAURIE McKINNON, J., DIRK M. SANDEFUR, J., JIM RICE, J.
• Case Date: September 10, 2019
• Court: Supreme Court of Montana

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451 P.3d 493 (Mont. 2019)

397 Mont. 161, 2019 MT 213

MONTANA ENVIRONMENTAL INFORMATION CENTER and Sierra Club, Plaintiffs and Appellees,

v.

Montana DEPARTMENT OF ENVIRONMENTAL QUALITY, Defendant and Appellant,

and

Western Energy Company, Defendant, Intervenor, and Appellant.

No. DA 18-0110

Supreme Court of Montana

September 10, 2019

Argued: March 13, 2019

Submitted: March 19, 2019

Rehearing Denied: November 19, 2019

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[Copyrighted Material Omitted]

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APPEAL FROM: District Court of the First Judicial District, In and For the County of Lewis and Clark, Cause No. CDV 2012-1075, Honorable Kathy Seeley, Presiding Judge

For Appellant Montana Department of Environmental Quality: Kirsten H. Bowers (argued), Edward Hayes, Special Assistant Attorneys General, Montana Department of Environmental Quality, Helena, Montana

For Appellant Western Energy Company: John C. Martin (argued), Kyle A. Gray, Holland & Hart LLP, Jackson, Wyoming, William W. Mercer, Victoria A. Marquis, Holland & Hart LLP, Billings, Montana

For Appellees: Shiloh Hernandez (argued), Matthew Bishop, Laura King, Western Environmental Law Center, Helena, Montana

For Amicus Treasure State Resource Association of Montana, Montana Petroleum Association, Montana Coal Council, Montana Mining Association, The Montana Association of Oil, Gas, and Coal Counties, and Rosebud County: Steven T. Wade, W. John Tietz, M. Christy S. McCann, Browning, Kaleczyc, Berry & Hoven, P.C., Helena, Montana

For Amicus Trout Unlimited: Laura S. Ziemer, Patrick Byorth, Meg K. Casey, Montana Trout Unlimited, Bozeman, Montana, Katherine K. O’Brien, Jenny K. Harbine, Earthjustice, Bozeman, Montana

For Amicus Clark Fork Coalition: Andrew Gorder (argued), Clark Fork Coalition, Missoula, Montana, Katherin K. O’Brien, Jenny K. Harbine, Earthjustice, Bozeman, Montana

OPINION

Mike McGrath, Chief Justice

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[397 Mont. 168][¶1] On September 14, 2012, the Montana Department of Environmental Quality (DEQ) issued Western Energy Company (Western Energy) a Montana Pollutant Discharge Elimination System Permit (MPDES) MT0023965 (2012 Permit), renewing its 1999 MPDES Permit (1999 Permit), to discharge pollutants from the Rosebud Mine adjacent to Colstrip, Montana, into Montana waters tributary to the Yellowstone River. Appellees, the Montana Environmental Information Center (MEIC) and the Sierra Club, filed suit arguing, inter alia, that DEQ’s permit renewal violated both the [397 Mont. 169] Montana Water Quality Act (WQA) and federal Clean Water Act (CWA). DEQ modified the 2012 Permit in 2014. DEQ and Western Energy presently appeal from a First Judicial District Memorandum and Order on Judicial Review granting summary judgment to MEIC and the Sierra Club and invalidating DEQ’s issuance of Western Energy’s final modified MPDES Permit MT0023965 (Modified Permit), effective in modified form September 8, 2014. We reverse and remand for a hearing on the factual allegations.

[¶2] This Court consolidates and restates the issues on appeal as follows: 1. Whether DEQ’s permitting decision exempting receiving waters with ephemeral characteristics from the water quality standards set forth in Admin. R. M. 17.30.629 is: (a) unlawful; or (b) arbitrary and capricious.

a. Whether DEQ unlawfully interpreted the term "ephemeral" pursuant to Admin. R. M. 17.30.637(4) and reclassified state waters such that DEQ exceeded its authority under the Water Quality Act.

b. Whether DEQ applied its interpretation of Admin. R. M. 17.30.637(4) during the permitting process to arbitrarily and capriciously establish water quality standards for East Fork Armells Creek.

2. Whether the Modified Permit’s representative monitoring protocol for precipitation-driven discharges at the Mine’s outfalls in alkaline mine drainage and coal preparation areas is unlawful or arbitrary and capricious.

FACTUAL AND PROCEDURAL BACKGROUND

The Rosebud Mine

[¶3] The Rosebud Mine (Mine) is a 25,600-acre¹ surface sub-bituminous coal mine owned by Western Energy, a subsidiary of Westmoreland Coal Company, adjacent to Colstrip, Montana. The Mine sits in the uplands area of the East Fork Armells Creek and Rosebud Creek drainages, which flow into the Yellowstone River. The 2012 Permit states that the Mine includes approximately 17,276 acres disturbed by mining, requires around 400 acres of surface disturbance each year, and is segregated into Areas A, B, C, D, and E. These designations include areas where coal is actively mined, areas where coal is washed [397 Mont. 170] and prepared for shipment, and areas in various stages of reclamation.

[¶4] In areas of active mining, topsoil and overburden are removed, exposing the Rosebud coal seam, which is located roughly 100 feet below the surface. Western Energy

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mines the coal seam using four draglines. An active mining area includes groundwater infiltration into the pit left by the extracted coal, storm water that collects in the pit, and storm water run-off over active mining areas. Pits require de-watering through pumping or siphoning. Mine drainage from active mining areas and drainage from coal preparation and storage areas carry suspended solids. Discharges² of suspended solids entrained in water impacted by the Mine are the primary pollutants associated with the Mine.

[¶5] To minimize discharges of pollution from the Mine into surrounding waters in excess of effluent limitations established by state and federal law, Western Energy collects and treats water impacted by its coal mining processes in storage ponds. The ponds provide time for suspended solids to settle, such that discharges comply with applicable effluent limitations. The storage ponds are designed to hold the volume of run-off equivalent to that from a ten-year, twenty-four-hour-storm event during active mining operations. Storm events exceeding design capacity cause overflow or unscheduled discharges from the storage ponds and require monitoring. Additionally, accumulation of residual storm water and other mine drainage in excess of design capacity cause unscheduled discharges from storage ponds.

[¶6] To reclaim an actively-mined area, overburden is placed in the empty pit where coal was previously removed. The replaced overburden is graded to approximate the original land contour and scarified to relieve compaction. Soil is redistributed and revegetated for reclamation. Storage ponds are further reclaimed as suspended solids settle and water is discharged in compliance with water quality effluent limitations.

[¶7] Outfalls³ are associated with each storage pond. Throughout the mining process, outfalls must be monitored. The Mine has 151 [397 Mont. 171] permitted outfalls. However, discharges from outfalls in reclamation areas are monitored subject to different standards than discharges from outfalls associated with active mine drainage and coal preparation areas. A DEQ-approved Sediment Control Plan governs the monitoring of outfalls in reclamation areas consistent with federal regulations. Under the Modified Permit, sixty-nine of the Mine’s 151 outfalls are in reclamation areas, monitored subject to the Sediment Control Plan.

[¶8] The Mine discharges water from its outfalls into East Fork Armells Creek, West Fork Armells Creek, Lee Coulee, Stocker Creek, Black Hank Creek, Donley Creek, Pony Creek, Cow Creek, and Spring Creek, each considered state waters.^[4] West Fork Armells Creek, Stocker Creek, Black Hank Creek, and Donley Creek are tributaries of East Fork Armells Creek, which is tributary to the Yellowstone River. Lee Coulee, Spring Creek, Cow Creek, and Pony Creek are tributaries of Rosebud Creek, which is tributary to the Tongue River, which then flows into the Yellowstone River. All receiving waters are classified as C-3 waters, subject to water quality standards set forth in Admin. R. M. 17.30.629.

Procedural Background

[¶9] On April 14, 2004, Western Energy applied to DEQ for renewal of its 1999 Permit, due to expire on September 30, 2004. MPDES permits expire every five years. DEQ automatically continued the terms and conditions of the 1999 Permit until a new permit could be issued. See Admin. R. M. 17.30.1313. From September 2004 until September 2012, Western Energy continued to mine coal under the terms of its 1999 Permit.

[¶10] On August 24, 2010, DEQ issued a proposed draft permit and accompanying fact sheet for public comment. Western Energy and MEIC submitted comments. The Department subsequently requested and received updated application materials from

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Western Energy. On May 14, 2012, DEQ issued a revised draft permit and accompanying fact sheet for public comment. Western Energy and MEIC again submitted comments.

[¶11] On September 14, 2012, DEQ renewed Western Energy’s 1999 Permit. The 2012 Permit exempted receiving waters with ephemeral characteristics from the water quality standards applicable to C-3 waters. The 2012 Permit also allowed Western Energy to [397 Mont. 172] representatively monitor precipitation-driven discharges at the Mine’s outfalls in alkaline mine drainage and coal preparation areas. Finally, the 2012 Permit acknowledged that the upper and lower reaches of East Fork Armells Creek were impaired and had no established total maximum daily load (TMDL) budget. DEQ stated it could issue the 2012 Permit before it established a TMDL budget because the 2012 Permit was not new and did not permit "increased discharges" of pollution into an impaired stream. See Friends of the Wild Swan v. United States EPA, 74 Fed.Appx. 718, 724 (9th Cir. 2003). On December 21, 2012, MEIC filed its complaint in District Court seeking a declaratory judgment invalidating the 2012 Permit.

[¶12] Western...