Northern Cheyenne Tribe v. Mont. Dep't Of Envtl. Quality

• Decision Date: 18 May 2010
• Docket Number: No. DA 09-0131.,DA 09-0131.
• Parties: NORTHERN CHEYENNE TRIBE, a federally recognized Indian tribe, Tongue River Water Users' Association, and Northern Plains Resource Council, Inc., Plaintiff-Intervenor and Appellants,v.MONTANA DEPARTMENT OF ENVIRONMENTAL QUALITY; Richard Opper, in his official capacity as Director of the Montana Department of Environmental Quality; and Fidelity Exploration & Production Company, Defendants and Appellees.
• Court: Montana Supreme Court

356 Mont. 296

234 P.3d 51

2010 MT 111

NORTHERN CHEYENNE TRIBE, a federally recognized Indian tribe, Tongue River Water Users' Association, and Northern Plains Resource Council, Inc., Plaintiff-Intervenor and Appellants,v.MONTANA DEPARTMENT OF ENVIRONMENTAL QUALITY; Richard Opper, in his official capacity as Director of the Montana Department of Environmental Quality; and Fidelity Exploration & Production Company, Defendants and Appellees.

No. DA 09-0131.

Supreme Court of Montana.

Argued Jan. 13, 2010.

Submitted Jan. 14, 2010.

Decided May 18, 2010.

For Appellants: Brenda Lindlief-Hall, Reynolds, Motl and Sherwood, PLLP, Helena, Montana (Tongue River), Jack R. Tuholske (argued), Tuholske Law Office, Missoula, Montana (Northern Plains), James L. Vogel, Vogel & Wald, PLLC, Hardin, Montana (Northern Cheyenne), John B. Arum and Brian C. Gruber (argued), Ziontz, Chestnut, Varnell, Berley & Slonim, Seattle, Washington (Northern Cheyenne).

For Appellees: Claudia L. Massman (argued), Special Assistant Attorney General, Helena, Montana (DEQ), Jon Metropoulos (argued) and Dana L. Hupp, Gough, Shanahan, Johnson & Waterman, PLLP, Helena, Montana (Fidelity).

Justice BRIAN MORRIS delivered the Opinion of the Court.

¶ 1 Northern Cheyenne Tribe (Tribe), a federally recognized Indian tribe, Tongue River Water Users' Association (TRWUA), and Northern Plains Resource Council, Inc. (NPRC) (collectively Appellants), appeal the order of the Twenty-Second Judicial District Court, Big Horn County, granting summary judgment to the Montana Department of Environmental Quality (DEQ), Richard Opper, Director of DEQ, and Fidelity Exploration & Production Company (Fidelity). We reverse and remand.

¶ 2 We review the following dispositive issue on appeal:

¶ 3 Whether DEQ violated the Clean Water Act or the Montana Water Quality Act by issuing discharge permits to Fidelity without imposing pre-discharge treatment standards?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 4 Appellants live and work along the Tongue River in southeastern Montana. The Tongue River rises in Wyoming and flows north through Big Horn and Rosebud counties to its confluence with the Yellowstone River. The Tribe holds reserved water rights on the Tongue River and uses this water for irrigation, stockwater, recreation, and cultural uses. Members of TRWUA and NPRC rely on the high quality waters of the Tongue River for irrigation, domestic use, and stockwater. Fidelity extracts Coal Bed Methane (CBM), a form of natural gas, for commercial sale near the Tongue River. Large underground coal seams permeate this part of Montana.

¶ 5 The pressure of groundwater in these underground coal seams traps CBM. Fidelity draws groundwater from the subterranean coal seams in order to extract CBM. CBM extraction releases significant amounts of groundwater to the surface of the earth. Fidelity must dispose of the groundwater drawn to the surface. CBM producers dispose of the groundwater in a variety of ways. Fidelity discharges the groundwater at issue into the Tongue River.

¶ 6 The groundwater associated with CBM extraction contains a naturally high saline content. The highly saline groundwater may degrade the quality of the receiving surface waterway. Surface waters degraded by CBM discharge water, in turn, may have an adverse affect on irrigated agriculture and aquatic life. In fact, federal law defines the discharge water associated with CBM extraction as a “pollutant” under the Clean Water Act (CWA). Northern Plains Resource Council v. Fidelity Exploration & Dev. Co., 325 F.3d 1155, 1160 (9th Cir.2003).

¶ 7 This designation as a “pollutant” requires a CBM producer to obtain a National Pollutant Discharge Elimination System (NPDES) permit in order to release the water into receiving waters. Northern Plains Resource Council, 325 F.3d at 1160; 33 U.S.C. § 1342 (§ 402). NPDES permits impose conditions and limitations on the discharge of pollutants. The Environmental Protection Agency (EPA) administers NPDES permits unless a state has enacted its own enforcement program, in which case EPA's Administrator (the Administrator) must have approved the state's program. 33 U.S.C. §§ 1341, 1342 (§§ 401, 402). Montana has chosen to administer its own permit program. Section 75-5-402, MCA; Mont. Admin. Rule 17.30.101. DEQ administers the Montana Pollutant Discharge Elimination System (MPDES) permitting program. Section 75-5-211, MCA; Admin. R.M. 17.30.1201.

¶ 8 Fidelity began discharging untreated CBM water into the Tongue River without a permit in August 1998. Northern Plains Resource Council, 325 F.3d at 1158-59. DEQ authorized the discharge without a permit pursuant to § 75-5-401(1)(b), MCA, between august 1998 and when DEq issued Fidelity a permit in June 2000. Section 75-5-401(1)(b), MCA, allows unpermitted discharge to surface waters if the discharge does not alter the ambient water quality. EPA notified DEQ in 1998 that § 75-5-401(1)(b), MCA, conflicts with the CWA, and that DEQ must follow NPDES permitting requirements for Fidelity's discharge. Northern Plains Resource Council, 325 F.3d at 1159. DEQ resisted EPA's attempt to revoke the exemption under § 75-5-401(1)(b), MCA, and continued to allow Fidelity to discharge into the Tongue River.

¶ 9 Fidelity filed for MPDES permits in January 1999 despite DEQ's advisement. Northern Plains Resource Council, 325 F.3d at 1159. NPRC filed an action in federal district court in June 2000 in which it challenged Fidelity's lack of compliance with the NPDES permitting requirements. DEQ altered its position and issued Fidelity an MPDES permit for the discharge of CBM water into the Tongue River. DEQ issued the permit to Fidelity in 2000 shortly after NPRC had filed its action. Northern Plains Resource Council, 325 F.3d at 1159. The permit allowed Fidelity to discharge untreated CBM water into the Tongue River. Fidelity applied to renew this permit in 2004 in conjunction with its application for a second permit.

¶ 10 DEQ issued Fidelity its second MPDES permit in 2006 along with the renewed permit for the original discharge. The second permit required Fidelity to treat a portion of its CBM discharge water and “blend” this treated wastewater with untreated wastewater before discharging it into the Tongue River. DEQ measures the salinity levels of CBM discharge water by its electric conductivity (EC) and its sodium absorption ratio (SAR). Admin. R.M. 17.30.602(9) and (27). DEQ imposes conditions on MPDES permits based upon EC and SAR measurements. DEQ imposed effluent limitations on Fidelity's MPDES permits in the form of water quality standards.

¶ 11 DEQ's water quality standards impose discharge rate restrictions based upon EC and SAR calculations. Water quality standards look to the change in ambient water quality in the receiving waterway to ascertain acceptable levels of pollutant discharge under the CWA. EPA v. Cal. ex rel. State Water Resources Control Bd., 426 U.S. 200, 202, 96 S.Ct. 2022, 2023-24, 48 L.Ed.2d 578 (1976). These water quality standards guide polluter performance based upon “tolerable effects” of pollutant discharge. EPA, 426 U.S. at 202, 96 S.Ct. at 2023. In other words water quality standards allow producers to discharge pollutants into a waterway up to a tolerable level. DEQ opted to impose these water quality discharge rate restrictions rather than to impose uniform pre-discharge treatment standards.

¶ 12 Pre-discharge treatment standards-often referred to as technology-based effluent limitations-focus on “preventable causes” and treatment of pollutants before discharge into a receiving waterway. EPA, 426 U.S. at 202, 96 S.Ct. at 2024. Producers treat wastewater before discharging it into a receiving waterway under pre-discharge treatment standards. Pre-discharge treatment standards seek to minimize effluent discharge through specified levels of treatment. This pre-discharge treatment system makes it “unnecessary to work backward from an overpolluted body of water to determine which point sources are responsible.” EPA, 426 U.S. at 204, 96 S.Ct. at 2024.

¶ 13 The Montana Board of Environmental Review (BER) promulgates rules related to water quality standards and industry-wide effluent limitations. Section 75-5-201, MCA; § 75-5-305, MCA. BER created a Water Quality Standard in 2003 specifically to control and limit CBM discharge water's saline characteristics and its negative impacts on Montana's waters and water users.

¶ 14 BER promulgated a narrative “nonsignificance” threshold for EC and SAR during the 2003 rulemaking process. DEQ considered the discharge nonsignificant under this narrative standard if the EC and SAR did not have a “measurable effect” on existing uses in the receiving waterway and there was no “measurable change” in aquatic life in the receiving waterway. Admin. R.M. 17.30.760(6) (2003). These rules exempted the MPDES permit from nondegradation review, though otherwise required by Federal and Montana law, if the EC and SAR fell below the nonsignificance threshold. See 40 C.F.R. § 131.12(a)(2); § 75-5-303, MCA; Admin. R.M. 17.30.701 et seq.

¶ 15 DEQ evaluated both of Fidelity's MPDES permit applications under the 2003 rule that classified the discharge as nonsignificant thereby avoiding nondegradation review. DEQ finally approved both of Fidelity's MPDES permits in 2006. BER was in the process of revising its 2003 rule at the time. BER declined entreaties to adopt pre-discharge treatment standards for CBM. BER concluded that pre-discharge treatment standards would not be “technologically, economically, and environmentally feasible, as required by § 75-5-305(1), MCA.” BER's 2006 revisions of the nonsignificance rule instead designated EC and SAR as “harmful parameters.” BER classified EC and SAR as harmful parameters to implement Montana's nondegradation policy to protect Montana's “high quality” waters. The Montana Water Quality Act (WQA) designates the Tongue River a “high quality” waterway. Section 75-5-103(13), MCA....