Living Rivers v. U.S. Oil Sands, Inc.

• Decision Date: 24 June 2014
• Docket Number: No. 20121009.,20121009.
• Citation: 344 P.3d 568,2014 UT 25
• Parties: LIVING RIVERS, Petitioner and Cross–Respondent, v. U.S. OIL SANDS, INC., Respondent and Cross–Petitioner, and Utah Division of Water Quality, Respondent and Cross–Petitioner.
• Court: Utah Supreme Court

344 P.3d 568

2014 UT 25

LIVING RIVERS, Petitioner and Cross–Respondent

v.U.S. OIL SANDS, INC., Respondent and Cross–PetitionerandUtah Division of Water Quality, Respondent and Cross–Petitioner.

No. 20121009.

Supreme Court of Utah.

June 24, 2014.

Rehearing Denied Feb. 13, 2015.

Joro Walker, Charles R. Dubuc, Jr., Salt Lake City, for petitioner and cross-respondent.

A. John Davis, Christopher R. Hogle, M. Benjamin Machlis, Salt Lake City, for respondent and cross-petitioner.

Sean D. Reyes, Att'y Gen., Bridget K. Romano, Utah Solicitor General, Paul M. McConkie, Asst. Att'y Gen., Salt Lake City, for respondent.

Opinion

Justice LEE, opinion of the Court:

¶ 1 This case is before us on petition for review of an administrative determination of the Utah Board of Water Quality (BWQ). The BWQ decision before us here upheld the issuance of a discharge permit to U.S. Oil Sands, Inc., for its tar sands bitumen-extraction project in the Uintah Basin. The original discharge permit was granted by the Utah Division of Water Quality (DWQ) in 2008. The 2008 discharge permit was not challenged within thirty days under Utah Code section 63G–4–301(1)(a) ; it accordingly became final and immune from collateral attack. The 2008 decision was reaffirmed by the Executive Secretary in 2011, in response to a U.S. Oil Sands filing identifying a number of changes to the 2008 project plan. The 2011 decision was challenged administratively by intervenor Living Rivers, an environmental advocacy organization. When the BWQ reviewed the Secretary's decision, it affirmed the issuance of the 2008 permit on its merits. That BWQ decision—the 2011 reaffirmance of the 2008 discharge permit—is the decision before us on petition for review.

¶ 2 We dismiss the petition as untimely. Living Rivers' arguments are addressed to the legal and factual basis for the Executive Secretary's 2008 decision granting U.S. Oil Sands' original discharge permit. Yet there was no timely challenge to the 2008 decision, so the original permit was final and not subject to further challenge on its merits. For that reason we lack jurisdiction to consider the merits of Living Rivers' petition, and we dismiss the case on that basis.

I

¶ 3 U.S. Oil Sands is pursuing a plan to build a bitumen-extraction project in the tar sands of Utah's Uintah Basin. Legally, the project requires U.S. Oil Sands to secure various permits, including a discharge permit from the DWQ, Utah Code § 19–5–107, and an operating permit issued by the Division of Oil, Gas & Mining (DOGM), id. § 40–10–9.5(2).

¶ 4 The DWQ's authority is set forth in the Utah Water Quality Act. The Act makes it unlawful for any person to discharge any pollutant into the “waters of the state” without a permit from the DWQ. Id. § 19–5–107(1)(a). It also affords discretion for the DWQ to promulgate rules regarding the standards for those discharge permits. Id. § 19–5–108(1).

¶ 5 Pursuant to that authority, the DWQ has promulgated extensive rules prescribing the terms and conditions for issuance of a discharge permit. See Utah Admin. Code r. 317–6–6.4. For certain classes of applicants, the DWQ has established a streamlined permit-by-rule permitting process. That process allows certain applicants—including those shown to have a “de minimis actual or potential effect on ground water quality”—to bypass some of the more rigorous regulatory requirements generally imposed on other applicants.¹

¶ 6 U.S. Oil Sands applied for such a permit by rule from the DWQ in 2008. As part of its application, it presented evidence regarding the ground water present at the site and gave a detailed explanation of its proposed operation and of the components of the operation that could potentially impact the ground water. The Executive Secretary of the DWQ, the first-level factfinder within the agency, evaluated all of the factual evidence presented,² applied the de minimis standard from rule 317–6–6.2.A(25) in conjunction with a regulatory definition of ground water,³ and made the mixed determination that this particular facility would not have more than a de minimis impact on ground water quality and was therefore eligible for a permit by rule.

¶ 7 The Secretary found four pieces of evidence particularly relevant in making his determination. First, he found that the substances that would be used were “generally non-toxic” and would for the most part “be recovered and recycled in the extraction process.” Second, he found that the extraction would be done in tanks, and not in impoundments or process water ponds, and that most of the water would be recovered and recycled. Third, he determined that the excess material produced would not be free draining, would have a low moisture content, and would not contain any added constituents not present naturally in the rock. And finally, the Secretary found that there was only a limited amount of shallow, localized ground water at the site that is not part of a regional aquifer system.

¶ 8 The Secretary, considering these factors, concluded that “the proposed mining and bitumen extraction operation should have a de minimis potential effect on ground water quality.” On that basis he determined that the project “qualifie[d] for permit-by-rule status.” The Secretary included a reopen provision, however, that directed U.S. Oil Sands to alert the Secretary “[i]f any of these factors change[d] because of changes in your operation or additional knowledge of site conditions.” If those changes were material enough to change the ultimate conclusion that the effect on ground water would be de minimis, U.S. Oil Sands would no longer have permit-by-rule status. There were no challenges to the 2008 permit-by-rule decision.

¶ 9 In 2011, U.S. Oil Sands informed the DWQ of four changes to its proposed plan in accordance with the reopen provision: (1) technological improvements meant that a chemical that was listed in the original application was now unnecessary and would not be used; (2) the mine would use a different kind of filter to “dewater” the excess material, but the material would still be “within the original estimated range for water content”; (3) instead of two twenty-five-acre storage areas, it would use one thirty-four-acre area and one thirty-six-acre area; and (4) waste would be disposed of in the storage areas instead of an open pit. The Secretary concluded that the changes did not affect the original permit-by-rule determination that the project would have a de minimis effect on ground water quality.

¶ 10 Within thirty days of that decision, Living Rivers intervened as an “aggrieved party,” seeking review of the Secretary's decision by an administrative law judge pursuant to Utah Code section 63G–4–301. Living Rivers asked that U.S. Oil Sands be stripped of its permit-by-rule designation and required to comply with the full range of regulatory requirements to obtain a discharge permit. The Secretary moved to dismiss the request for review as untimely.

¶ 11 The ALJ recognized that Living Rivers' challenge was “not really ... about the [2011] proposed modifications” but was instead “focused on the de minimis potential effect of the project on ground water quality due to the absence of shallow ground water, a central basis for the 2008 decision.” Instead of dismissing the case, however, the ALJ determined that the 2011 modification decision implicated matters resolved in 2008, and thus reviewed those matters as they were “relevant to the 2011 modification decision.” In so doing, the ALJ ultimately recommended to the BWQ that it deny Living Rivers' request and affirm both of the permit-by-rule determinations of the Secretary. Specifically, the ALJ found that there was substantial evidence to support the Secretary's finding that there was no ground water at the site, that the proposed facility did not present a greater than de minimis risk to ground water, and that the Secretary did not erroneously interpret the law. The BWQ approved the ALJ's recommended order in its entirety.

¶ 12 Living Rivers filed a petition for review of agency action with the Utah Court of Appeals under Utah Code sections 63G–4–403(2)(a) and 78A–4–103(2)(a)(1). The court of appeals subsequently certified the petition for consideration in this court. See id. § 78A–4–103(3).

II

¶ 13 On this petition for review, Living Rivers challenges the permit by rule issued to U.S. Oil Sands and reaffirmed by the BWQ on several grounds. Its principal arguments are directed at challenging the regulatory definition of “ground water” applied in the issuance of the U.S. Oil Sands discharge permit, see Utah Admin. Code r. 317–6–1.19 (2011), and at questioning the Secretary's finding that there was no ground water present at the site in question.

¶ 14 In response, the DWQ and U.S. Oil Sands defend the issuance of the permit by rule on its merits. They also raise threshold matters questioning our jurisdiction. DWQ, for its part, has moved to dismiss the petition by a “suggestion of mootness.” The DWQ motion is premised on the assertion that Living Rivers has previously litigated and lost on issues identical to those presented on this petition, in a manner precluding their relitigation here. U.S. Oil Sands joins in the DWQ suggestion of mootness. It also asserts a cross petition, arguing that Living Rivers' challenge to the permit is untimely. The premise of the cross petition is the notion that the substance of Living Rivers' petition is a challenge to the Secretary's 2008 permit-by-rule determination, and the assertion that the 2008 decision is not subject to review because it was never challenged (by Living Rivers or by anyone else).

¶ 15 The threshold question concerns our jurisdiction. The respondents style both of their affirmative arguments—the suggestion of mootness and the timeliness issue—as matters addressed to our jurisdiction. But only one of them is truly jurisdictional. The “suggestion of mootness” is ultimately directed to the merits of the case.

¶ 16 In insisting that...