Nat'l Parks Conservation Ass'n v. N. Dakota Dep't of Envtl. Quality

• Decision Date: 29 June 2020
• Docket Number: No. 20190095,20190095
• Citation: 945 N.W.2d 318
• Parties: NATIONAL PARKS CONSERVATION ASSOCIATION, Appellant and Environmental Law & Policy Center, and Dakota Resource Council, Respondents v. NORTH DAKOTA DEPARTMENT OF ENVIRONMENTAL QUALITY and Meridian Energy Group, Inc., Appellees
• Court: North Dakota Supreme Court

945 N.W.2d 318

NATIONAL PARKS CONSERVATION ASSOCIATION, AppellantandEnvironmental Law & Policy Center, and Dakota Resource Council, Respondents

v.NORTH DAKOTA DEPARTMENT OF ENVIRONMENTAL QUALITY and Meridian Energy Group, Inc., Appellees

No. 20190095

Supreme Court of North Dakota.

Filed June 29, 2020

JJ W. England (argued) and Derrick L. Braaten (on brief), Bismarck, ND, for appellant.

Margaret I. Olson, Assistant Attorney General, Bismarck, ND, for appellee North Dakota Department of Environmental Quality.

Lawrence Bender, Bismarck, ND, for appellee Meridian Energy Group, Inc.

Jensen, Chief Justice.

[¶1] National Parks Conservation Association ("NPCA") appeals from a judgment affirming a final permit decision by the North Dakota Department of Environmental Quality, formerly the Department of Health Environmental Health Section¹ , to issue Meridian Energy Group, Inc. an air quality permit to construct a refinery. We conclude the Department did not act arbitrarily, capriciously, or unreasonably in issuing the permit. We affirm.

I

[¶2] In October 2016, Meridian submitted its initial application and supporting documentation to the Department for a permit to construct the Davis Refinery, as required under North Dakota's air pollution control rules implementing the federal Clean Air Act. In April 2017, Meridian submitted a revised application with supporting documentation, replacing the original application and incorporating design changes.

[¶3] In May 2017, after completing its initial review, the Department sent Meridian a letter identifying concerns with certain emissions information and requiring Meridian to submit additional information before the Department would proceed with its review. Meridian provided additional information, and the Department resumed its review of the revised permit application.

[¶4] On November 30, 2017, the Department issued a draft permit, finding a complete review of the proposed project indicated the facility is expected to comply with the applicable federal and state air pollution rules. The Department explained the basis for its decision to issue the draft permit in its draft Air Quality Effects Analysis. As explained in the Air Quality Impacts Analysis that accompanied its Air Quality Effects Analysis, the Department determined the Davis Refinery would comply with the state and federal ambient air quality standards based on its model emissions. The Department held a comment period on the draft permit from December 8, 2017, to January 26, 2018, which included a public meeting and hearing on January 17, 2018.

[¶5] The Department received over 10,000 comments, with most of the substantive comments coming from NPCA, the National Park Service, and the Environmental Protection Agency. NPCA filed comments with the Department supported by its two experts’ opinions, asserting that Meridian's oil refinery would be a "major source," rather than a "minor source," of air pollution and that the permit does not contain "practically enforceable" emissions limits under the federal Clean Air Act and North Dakota's air pollution control rules implementing the Clean Air Act.

[¶6] After considering public comments and Meridian's responses, the Department's Air Quality Division recommended to the State Health Officer that the Department issue a final permit because the Davis Refinery's emissions are expected to comply with the applicable North Dakota air pollution control rules. The recommendation was primarily based on the Department's responses to comments and its final Air Quality Effects Analysis, which was substantially similar to the draft Air Quality Effects Analysis. The Division also recommended changes to the permit based on the comments. On June 12, 2018, the State Health Officer issued a final permit to Meridian.

[¶7] In July 2018, NPCA appealed to the district court, arguing that the Department had unlawfully issued Meridian a "minor source" air pollution permit, that the permit did not establish practically enforceable limits for air pollutants, and that the Department did not sufficiently respond to its comments. In January 2019, the district court affirmed the Department's decision to issue the final permit. The court concluded the Department had adequately addressed NPCA's concerns, including those specifically relating to the Davis Refinery's emissions of hazardous air pollutants (HAPs) and volatile organic compounds (VOCs). The court held the Department correctly applied the law in issuing the final permit.

II

[¶8] At the outset, NPCA contends the district court erred by applying the "arbitrary and capricious" standard of review to the Department's decision to issue the final permit.

A

[¶9] NPCA's appeal from the Department's final permit decision is governed by N.D.C.C. § 23-01-36, which was enacted in 2007 and is now codified at N.D.C.C. § 23.1-01-11. 2007 N.D. Sess. Laws ch. 280, § 2; see also 2015 N.D. Sess. Laws ch. 192, § 1; 2017 N.D. Sess. Laws ch. 199, § 16; 2019 N.D. Sess. Laws ch. 216, § 1. At the time the Department issued the permit, N.D.C.C. § 23-01-36 stated in part:

An appeal from the issuance, denial, modification, or revocation of a permit issued under chapter 23-20.1, 23-20.3, 23-25, 23-29, or 61-28 may be made by the person who filed the permit application, or by any person who is aggrieved by the permit application decision, provided that person participated in or provided comments during the hearing process for the permit application, modification, or revocation.... Except as provided in this section, an appeal of the final permit determination is governed by sections 28-32-40, 28-32-42, 28-32-43, 28-32-44, 28-32-46, and 28-32-49. The department may substitute final permit conditions and written responses to public comments for findings of fact and conclusions of law. Except for a violation of chapter 23-20.1, 23-20.3, 23-25, 23-29, or 61-28 which occurs after the permit is issued, or any permit condition, rule, order, limitation, or other applicable requirement implementing those chapters which occurs after the permit is issued, any challenge to the department's issuance, modification, or revocation of the permit or permit conditions must be made in the permit hearing process and may not be raised in any collateral or subsequent legal proceeding, and the applicant and any aggrieved person may raise on appeal only issues that were raised to the department in the permit hearing process.

(Emphasis added.) With regard to this appeal, N.D.C.C. §§ 28-32-46 defining the scope of and procedure on appeal from the determination of an agency and 28-32-49 providing the procedure for review in this Court, govern our review of NPCA's appeal of the Department's permit decision. Section 23-01-36 also provides that the final permit conditions and written responses to public comments constitute the Department's findings of fact and conclusions of law.

[¶10] Under N.D.C.C. § 28-32-49, this Court reviews a district court's decision reviewing an administrative agency's decision in the same manner as provided in N.D.C.C. § 28-32-46. Coon v. N.D. Dep't of Health , 2017 ND 215, ¶ 7, 901 N.W.2d 718 ; Voigt v. N.D. Pub. Serv. Comm'n , 2017 ND 76, ¶ 8, 892 N.W.2d 149. Under N.D.C.C. § 28-32-46, we must affirm the agency's decision unless:

1. The order is not in accordance with the law.

2. The order is in violation of the constitutional rights of the appellant.

3. The provisions of this chapter have not been complied with in the proceedings before the agency.

4. The rules or procedure of the agency have not afforded the appellant a fair hearing.

5. The findings of fact made by the agency are not supported by a preponderance of the evidence.

6. The conclusions of law and order of the agency are not supported by its findings of fact.

7. The findings of fact made by the agency do not sufficiently address the evidence presented to the agency by the appellant.

8. The conclusions of law and order of the agency do not sufficiently explain the agency's rationale for not adopting any contrary recommendations by a hearing officer or an administrative law judge.

While we give due respect to the district court's sound reasoning, this Court reviews the agency's decision and the record compiled before the agency. N.D.C.C. § 28-32-49 ; Voigt , at ¶ 8 ; Coon , at ¶ 7.

[¶11] In reviewing an agency's findings of fact, we do not make independent findings or substitute our judgment for the agency's judgment. Voigt , 2017 ND 76, ¶ 9, 892 N.W.2d 149 ; see also Power Fuels, Inc. v. Elkin , 283 N.W.2d 214, 220 (N.D. 1979) ("In construing the ‘preponderance of the evidence’ standard to permit us to apply the weight-of-the-evidence test to the factual findings of an administrative agency, we do not make independent findings of fact or substitute our judgment for that of the agency."). This Court "determine[s] only whether a reasoning mind reasonably could have determined that the factual conclusions reached were proved by the weight of the evidence from the entire record." Power Fuels , at 220. "This standard defers to the [fact-finder's] opportunity to hear the witnesses’ testimony and to judge their credibility[,] and [this Court] will not disturb the agency's findings unless they are against the greater weight of the evidence." Voigt , at ¶ 9 (quoting Johnson v. N.D. Dep't of Transp. , 530 N.W.2d 359, 361 (N.D. 1995) ).

[¶12] Questions of law are fully reviewable on appeal from an agency's decision. Voigt , 2017 ND 76, ¶ 9, 892 N.W.2d 149. This Court has long held, however, that an agency's reasonable interpretation of a regulation is entitled to deference, and an agency's decision in "complex or technical matters" involving agency expertise is entitled to "appreciable deference." Ennis v. N.D. Dep't of Human Servs. , 2012 ND 185, ¶ 7, 820 N.W.2d 714 ; see also Voigt , at ¶ 9 ; Capital Elec. Coop., Inc. v. N.D. Pub. Serv. Comm'n , 2016 ND 73, ¶ 6, 877 N.W.2d 304 ; Indus. Contractors, Inc. v. Workforce Safety & Ins. , 2009 ND 157, ¶...