Citizens Awareness Network v. BER

Decision Date26 January 2010
Docket NumberNo. DA 09-0070.,DA 09-0070.
Citation227 P.3d 583,355 Mont. 60,2010 MT 10
PartiesCITIZENS AWARENESS NETWORK, Women's Voices for the Environment, and Clark Fork Coalition, Petitioners and Appellants, v. MONTANA BOARD OF ENVIRONMENTAL REVIEW, Respondent and Appellees, and Montana Department of Environmental Quality and The Thompson River Co-Gen, LLC, Respondent-Intervenors and Appellees.
CourtMontana Supreme Court

COPYRIGHT MATERIAL OMITTED

For Appellants: Matthew O. Clifford, Attorney at Law; San Francisco, California.

For Appellees: David M. Rusoff, Attorney at Law; Helena, Montana, (Department of Environmental Quality); Michael J. Uda, Susanne F. Bessette; Doney Crowley Bloomquist Payne Uda, P.C.; Helena, Montana (Thompson River Power).

Justice W. WILLIAM LEAPHART delivered the Opinion of the Court.

¶ 1 Citizens Awareness Network, Women's Voices for the Environment, and Clark Fork Coalition (collectively, "Conservation Groups") appeal the order of the District Court for the Twentieth Judicial District, Sanders County, denying their motion for summary judgment and upholding the decision of the Montana Board of Environmental Review (BER) that denied the Conservation Groups' motion for leave to amend their administrative pleading in a contested case hearing over the Montana Department of Environmental Quality's (DEQ) issuance of an air quality permit for a coal- and wood waste-fired power plant. We reverse and remand.

¶ 2 The sole issue on appeal is whether the District Court erred in upholding BER's decision denying the Conservation Groups' motion to amend their administrative pleading.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 Thompson River Power LLC (TRP) owns a coal- and wood waste-fired power plant ("Thompson River facility" or "facility") in Thompson Falls, Montana, and pursuant to the Clean Air Act of Montana seeks an air quality permit in order to begin operations. An air quality permit will allow TRP to emit air contaminants from the facility into the atmosphere, but will require TRP to take certain steps to control air pollution. See §§ 75-2-103(3), (9), -211(2) to (3), MCA.

¶ 4 DEQ initially issued an air quality permit to TRP's predecessor, Thompson River Co-Gen (TRC),1 in 2001 to construct and operate the Thompson River facility. TRP constructed the facility, installing a used stoker boiler purchased from R.J. Reynolds Corporation, and began to operate it intermittently from December 2004 to September 2005, primarily for testing purposes. DEQ modified TRP's permit in 2004 and again in 2005. TRP applied for further modification to its permit in early 2006, and DEQ issued a draft permit. In May 2006 DEQ denied issuance of the desired modification because TRP was not capable of complying with emissions limitations in either its existing permit or the proposed modified permit. TRP subsequently submitted another application for modifications to its air quality permit, and DEQ issued a modified permit to TRP on August 21, 2006. The question before the Court involves the issuance of this last modified permit.

¶ 5 On September 3, 2006, the Conservation Groups challenged the modified air quality permit by requesting a contested case hearing with BER within fifteen days of DEQ's decision to issue the permit. On September 19, 2006, the Conservation Groups filed the affidavit required by § 75-2-211(10), MCA, stating their grounds for contesting the permit. In the affidavit, the Conservation Groups alleged various errors in DEQ's issuance of the air quality permit, including allegations that DEQ did not require TRP to comply with the best available control technology (BACT) requirements of 42 U.S.C. § 7475(a)(4) and that DEQ issued the permit without having complete information from TRP about, among other things, the heat input of the facility's second-hand boiler. BER appointed a hearing examiner to conduct prehearing activities, preside over the hearing, and issue proposed findings of fact and conclusions of law.

¶ 6 In response to the Conservation Group's challenge, DEQ sent written discovery to the Conservation Groups on November 22, 2006. Later in November, DEQ filed motions to dismiss a number of the Conservation Groups' claims for failure to state a claim and for lack of subject matter jurisdiction. The hearing examiner eventually denied DEQ's motions to dismiss.

¶ 7 Three months after filing their affidavit, on December 19, 2006, the Conservation Groups sought leave from the hearing examiner to amend their affidavit to add a claim that potential emissions from the Thompson Falls facility would qualify it as a "major stationary source." Classification of the facility as a major stationary source would subject it to additional air pollution controls under prevention of significant deterioration (PSD) regulations. The Conservation Groups argued that leave to amend was proper under Rule 15, M.R. Civ. P., because their motion was not based on an improper motive, but arose from the "same nucleus of facts that gave rise to the original Affidavit"—DEQ's issuance of the air quality permit to TRP.

¶ 8 TRP and DEQ opposed the Conservation Groups' motion, arguing that the thirty-day limit in § 75-2-211(10), MCA, for filing an affidavit in support of a challenge to the issuance of an air quality permit had passed and therefore foreclosed the possibility of subsequent amendments. TRP and DEQ further argued that the Conservation Groups had not provided good cause for their proposed amendments and that the amendments would unnecessarily and inevitably prolong the proceeding, resulting in prejudice.

¶ 9 The hearing examiner, declining to adopt the reasoning of either party, denied the Conservation Groups leave to amend their affidavit on the basis of Rule 15(c), M.R. Civ. P. The hearing examiner reasoned that the Conservation Groups' prior comments in the environmental review and permitting process, their petition for a contested hearing, and their original affidavit did not give notice to DEQ or TRP that the plant should be permitted as a major stationary source. The hearing examiner concluded, somewhat puzzlingly, that the Conservation Groups' proposed amendments did not assert a new claim, but that, nevertheless, the amendments did not relate back because they were based on different facts than those stated in the original affidavit.

¶ 10 Subsequently, the hearing examiner held a contested case hearing at which the parties presented evidence and argument. The hearing examiner then issued findings of fact, conclusions of law, and a proposed order resolving the matter. The Conservation Groups filed objections to the findings of fact, conclusions of law, and proposed order, including an objection to the hearing examiner's denial of their motion to amend their original affidavit. TRP and DEQ opposed the Conservation Groups' exceptions. BER adopted the hearing examiner's ruling in its final order without addressing, and therefore impliedly upholding, the denial of the Conservation Groups' motion to amend. Pursuant to the Montana Administrative Procedures Act (MAPA), § 2-4-702, MCA, the Conservation Groups sought judicial review of BER's decision denying them leave to amend their affidavit.

¶ 11 In the District Court, the Conservation Groups contended that BER's decision was arbitrary, capricious, an abuse of discretion, and otherwise unlawful. DEQ and TRP intervened. The Conservation Groups moved for summary judgment, which DEQ and TRP opposed. The District Court denied summary judgment and affirmed the decision of BER. In reaching its decision, the District Court reviewed the reasoning of the hearing examiner and concluded that the hearing examiner's decision was not arbitrary, capricious, an abuse of discretion, or otherwise unlawful.

¶ 12 The Conservation Groups timely appealed.

STANDARD OF REVIEW

¶ 13 We review a district court's ruling on summary judgment de novo. Signal Perfection, Ltd. v. Rocky Mt. Bank— Billings, 2009 MT 365, ¶ 9, 353 Mont. 237, 224 P.3d 604. When the district court's decision is based on review of an agency action, MAPA governs our review. See Bitterroot River Protective Assn. v. Bitterroot Conserv. Dist., 2008 MT 377, ¶ 18, 346 Mont. 507, 198 P.3d 219. Under MAPA, we will reverse an agency decision if it is based on an incorrect conclusion of law that prejudices the substantial rights of an appellant. Section 2-4-704(2)(a)(iv), MCA; Hearing Aid Inst. v. Rasmussen, 258 Mont. 367, 371-72, 852 P.2d 628 (1993); see also Bitterroot River Protective Assn., ¶ 18 ("No discretion is involved when a tribunal arrives at a conclusion of law—the tribunal either correctly or incorrectly applies the law." (quoting Steer, Inc. v. Dept. of Revenue, 245 Mont. 470, 474, 803 P.2d 601, 603 (1990))). The application of Rule 15(c), M.R. Civ. P., to undisputed facts is a purely legal question subject to de novo review. Garrett v. Fleming, 362 F.3d 692, 695 (10th Cir.2004).2

¶ 14 Justice Cotter, in dissent, objects to our chosen standard of review, raising a number of important points to which we hasten to respond. First, Justice Cotter observes that all parties to the appeal agreed that the standard of review should be abuse of discretion. However, while this is true, ultimately the appropriate standard of review is and should be determined by the Court, rather than by the parties.

¶ 15 Second, Justice Cotter asserts that the Court mistakenly addresses the propriety of relation back under Rule 15(c), M.R. Civ. P., before addressing the propriety of amendment under Rule 15(a), M.R. Civ. P. Under the facts of this case, however, it would be illogical to address the propriety of amendment under Rule 15(a), M.R. Civ. P., before considering relation back under Rule 15(c), M.R. Civ. P. To explain why this is so, we must evaluate the steps of the hearing examiner's argument that were not articulated, but were implicitly necessary.

¶ 16 Under Rule 15(a), M.R. Civ. P....

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