Carbon Cnty. Res. Council v. Mont. Bd. of Oil & Gas Conservation, DA 15–0613

• Court: United States State Supreme Court of Montana
• Citation: 385 Mont. 51,380 P.3d 798,2016 MT 240
• Docket Number: DA 15–0613
• Parties: Carbon County Resource Council, a Montana Non-profit public benefit corporation, and Northern Plains Resource Council, Montana Non-profit, public benefit corporation, Plaintiffs and Appellants, v. Montana Board of Oil and Gas Conservation, Defendant and Appellee.
• Decision Date: 27 September 2016

385 Mont. 51
380 P.3d 798
2016 MT 240

Carbon County Resource Council, a Montana Non-profit public benefit corporation, and Northern Plains Resource Council, Montana Non-profit, public benefit corporation, Plaintiffs and Appellants,
v.
Montana Board of Oil and Gas Conservation, Defendant and Appellee.

DA 15–0613

Supreme Court of Montana.

Submitted on Briefs: June 15, 2016
Decided: September 27, 2016

For Appellants: Jack R. Tuholske, Tuholske Law Office, P.C., Missoula, Montana, Amanda R. Knuteson, Knuteson Law Office PLLC, Bozeman, Montana

For Appellee: Robert Stutz, James M. Scheier, Assistant Attorneys General, Helena, Montana

For Amicus Curiae Montana Petroleum Association: Colby L. Branch, Jeffery J. Oven, Shalise C. Zobell, Crowley Fleck PLLP, Billings, Montana

Justice Beth Baker delivered the Opinion of the Court.

380 P.3d 800

385 Mont. 52

¶1 Carbon County Resource Council and Northern Plains Resource Council (collectively Resource Councils) oppose hydraulic fracturing at the Hunt Creek 1–H well, an exploratory gas well in Carbon County, Montana. Resource Councils challenged the Montana Board of Oil and Gas Conservation's (the Board) approval of well stimulation activities at the site, claiming that they were denied a meaningful opportunity to participate in the process. The Thirteenth Judicial District Court held that Resource Councils' concerns were speculative and therefore not ripe for judgment. We disagree and hold that Resource Councils' claims are ripe for judicial review. We conclude that the Board did not violate their right to participate in its consideration of the permit issued in this case. We thus find it unnecessary to decide whether the Board's “48–hour notice” rule may be unconstitutional in other circumstances.

PROCEDURAL AND FACTUAL BACKGROUND

¶2 The Montana Constitution guarantees citizens a “reasonable opportunity” to participate in government operations. Mont. Const. art. II, § 8. In executing this constitutional mandate, agencies are obligated to “develop procedures for permitting and encouraging the public to participate in agency decisions that are of significant interest to the public.” Section 2–3–103, MCA. As a quasi-judicial state agency

385 Mont. 53

administratively attached to the Department of Natural Resources and Conservation, the Board is required to ensure public participation in its decision-making procedural processes. Sections 2–3–103, 2–4–201, 2–15–3303, MCA.

¶3 The Board's procedural rules require oil and gas well operators to file an application for a permit to drill with the Board. Admin. R. M. 36.22.601(1). If the proposed well is outside of an existing oil and gas field delineated by the Board, the operator must publish notice of its intent to drill and file proof of publication with the Board. Admin. R. M. 36.22.601(1). The application for a permit to drill must be set for notice and public hearing if an interested person demands an opportunity to be heard pursuant to the procedures provided for under the relevant Administrative Rules. Admin. R. M. 36.22.601(4). Following a hearing, the Board may either grant or deny the permit. Admin. R. M. 36.22.601(5). If the Board grants the permit, it may impose “such conditions” as it finds “proper and necessary.” Admin. R. M. 36.22.601(5)(a).

¶4 Well completion activities such as “hydraulic fracturing, acidizing, or other chemical stimulation ... are considered permitted activities under the drilling permit for that well only if the processes, anticipated volumes, and types of materials planned for use are expressly described in the permit application for that well.” Admin. R. M. 36.22.608(1).¹Admin. R. M. 36.22.608(2) (the Rule) provides that for exploratory wells—like the well at issue here—the well operator must notify the Board of its “intent to stimulate or chemically treat a well ... prior to commencing such activities.” The well operator must describe the “fracturing, acidizing, or other chemical treatment” in the notice, and the operator must give the Board notice “at least 48 hours before commencement of well stimulation activities.” Admin. R. M. 36.22.608(2)(a). A well operator is required to disclose the amount and type of materials used in its well stimulation activities, Admin. R. M. 36.22.1015, and comply with safety and well control requirements if it engages in hydraulic fracturing, Admin. R. M. 36.22.1106.

380 P.3d 801

¶5 In October 2013, Energy Corporation of America (Energy Corp.)

385 Mont. 54

announced that it planned to develop oil and gas leases in the Beartooth Mountains. Energy Corp. then filed an application with the Board for a permit to drill an exploratory oil and gas well in Carbon County known as the Hunt Creek 1–H well (Hunt Creek Well). Energy Corp.'s application did not describe any well completion activities pursuant to Admin. R. M. 36.22.608(1). Resource Councils, which are affiliated grassroots conservation and agriculture groups, objected to the permit. Despite procedural problems with Resource Councils' objection, the Board held a hearing on Energy Corp.'s drilling permit application in February 2014. Nine local residents and an expert testified on behalf of Resource Councils. The residents presented their concerns with the permit application, the environmental assessment's adequacy, and the potential environmental impacts of hydraulic fracturing at the Hunt Creek Well. The expert, an environmental geologist, testified and submitted a report highlighting the risks associated with the proposed drilling plan as well as risks associated with hydraulic fracturing at the site.

¶6 During the hearing, the Board noted that Energy Corp. proposed drilling an exploratory well to evaluate the site's potential for development. The Board emphasized that Energy Corp.'s application did not propose hydraulic fracturing and that there was no indication from the application that hydraulic fracturing was planned in the future. At the close of the hearing, the Board approved the permit with the condition that Energy Corp. comply with certain water standards should it propose hydraulic fracturing at the Hunt Creek Well in the future. The Board's order approving the permit reiterated that Energy Corp. did not propose hydraulic fracturing at the Hunt Creek Well.

¶7 On July 7, 2014, Energy Corp. submitted a sundry notice to the Board pursuant to the Rule. In its notice, Energy Corp. indicated that it intended to “stimulate” or “chemically treat” the Hunt Creek Well and “perform a diagnostic fracture injection test” (diagnostic test) on the well. The notice provided a detailed description of the planned work and stated that the well would be shut in once “25–30 barrels [had] been pumped into the formation.” Pursuant to the Rule, the Board approved Energy Corp.'s notice and allowed it to perform the diagnostic test without engaging in any additional review or public process.

¶8 After the hearing, but prior to Energy Corp.'s submitting notice pursuant to the Rule, Resource Councils challenged the Board's permitting process for the Hunt Creek Well. Resource Councils claimed, in part, that the Board's application of the Rule violated their constitutional right to meaningfully participate in government

385 Mont. 55

decisions. On the parties' cross-motions for summary judgment, the District Court held that because hydraulic fracturing had not occurred at the Hunt Creek Well, Resource Councils' constitutional challenge was not ripe for judgment.² Resource Councils appeal.

STANDARDS OF REVIEW

¶9 We review summary judgment rulings de novo. Reichert v. State , 2012 MT 111, ¶ 18, 365 Mont. 92, 278 P.3d 455. Issues of justiciability—such as standing, mootness, ripeness, and political question—are questions of law that we also review de novo. Reichert , ¶ 20. Our review of constitutional questions is plenary. Williams v. Bd. of Cnty. Comm'rs , 2013 MT 243, ¶ 23, 371 Mont. 356, 308 P.3d 88.

DISCUSSION

¶10 1. Whether the District Court erred in concluding that Resource Councils' challenge was not ripe.

¶11 Relying on Reichert, the District Court first concluded that Resource Councils' right to participate claim would be ripe only if Energy Corp. had expanded its drilling permit to include hydraulic fracturing without public input. The court found that Energy Corp.'s diagnostic test did not meet the

380 P.3d 802

definition of hydraulic fracturing under Admin. R. M. 36.22.302(28). Thus, the court concluded that Resource Councils' assertion that hydraulic fracturing had occurred at the Hunt Creek Well was “speculation unsupported by any specific facts.” The District Court concluded therefore that Resource Councils' right to participate claim was unripe for judgment.

¶12 It is well-established that “the judicial power of Montana's courts is limited to ‘justiciable controversies.’ ” Reichert , ¶ 53 (quoting Plan Helena, Inc. v. Helena Reg'l Airport Auth. Bd. , 2010 MT 26, ¶ 6, 355 Mont. 142, 226 P.3d 567 ). A justiciable controversy is, in...