Tennessee Enviro. Council v. Water Quality

• Decision Date: 28 September 2007
• Docket Number: No. M2006-01078-COA-R3-CV.,M2006-01078-COA-R3-CV.
• Citation: 250 S.W.3d 44
• Parties: TENNESSEE ENVIRONMENTAL COUNCIL, et al. v. WATER QUALITY CONTROL BOARD, et al.
• Court: Tennessee Court of Appeals

250 S.W.3d 44

TENNESSEE ENVIRONMENTAL COUNCIL, et al. v. WATER QUALITY CONTROL BOARD, et al.

No. M2006-01078-COA-R3-CV.

Court of Appeals of Tennessee, Middle Section, at Nashville.

January 12, 2007 Session.

September 28, 2007.

Published Pursuant to Tenn. R. Ct. App. 11.

Robert E. Cooper, Jr., Attorney General and Reporter; Barry Turner, Deputy Attorney General; Sohnia W. Hong, Senior Counsel; and Phillip R. Hilliard, Assistant Attorney General, for the appellants, Tennessee Water Quality Control Board and the Tennessee Department of Environment & Conservation.

Richard C. Mangelsdorf, Jr., and Edward M. Yarbrough, Nashville, Tennessee, for the appellees, Tennessee Environmental Council, The Nashville Grotto of the National Speleological Society, Inc., and Public Employees for Environmental Responsibility and Tennessee Scenic Rivers Association.

J. Andrew Goddard, Nashville, Tennessee, for the appellee, City of Spencer.

OPINION

FRANK G. CLEMENT, JR., J., delivered the opinion of the court, in which WILLIAM C. KOCH, JR., P.J., M.S., and DONALD HARRIS, SR. J., joined.

This dispute arose in 2002 when environmental groups filed a Petition for Judicial Review under Tenn.Code Ann. § 4-5-322 of the Uniform Administrative Procedures Act seeking to reverse the grant of a wastewater discharge permit to the City of Spencer, Tennessee. The Chancellor issued a temporary injunction and directed the parties to participate in a judicial settlement conference under the supervision of the Third Circuit Court of Davidson County. Thereafter, the parties reached an agreement which was memorialized in an Agreed Final Judgment, wherein the City of Spencer agreed to permanently refrain from wastewater discharge into Dry Fork Creek. Although not a party to the proceeding, the Governor's Office joined in the agreement, agreeing to assist the parties to seek funding for an alternative discharge project. Three years later, the General Assembly enacted Chapter 502 of the 2005 Tennessee Public Acts, wherein $1,600,000 was allocated to the Department of Finance and Administration for the purposes of making a grant to the City of Spencer for sewage treatment facilities. When the funds were withheld because the State Building Commission had not approved the project, the City of Spencer made an oral motion during a status conference on November 22, 2005, requesting that the Chancellor compel the State to disburse the $1,600,000 grant. The court granted the motion and ordered the State to disperse the funds to the City. This appeal followed. We have determined that the ruling of the trial court must be overturned for three reasons. One, we find nothing in the Agreed Judgment that requires the State of Tennessee to provide additional funds to construct a wastewater discharge line. Two, based upon the separation of powers, the court may not usurp the executive authority of the State Building Commission, which must approve the project before the funds may be expended. Three, the $1,600,000 grant was never at issue in the disputed case proceedings before the administrative agency and, therefore, the trial court did not have subject matter jurisdiction over that issue.

The matters at issue arise out of the efforts of the City of Spencer, Tennessee, wanting to upgrade its wastewater treatment facilities. In 2001, the City made a formal application to the Tennessee Department of Environment and Conservation ("Department") for a permit to discharge treated wastewater, including treated sewage effluent, into a small stream known as Dry Fork Creek. Following receipt of the application, the Department prepared a draft permit and placed it on public notice for the permit applicant and the general public to review. After a comment and hearing period in which the public was afforded the opportunity to participate, the Department granted a permit to the City authorizing it to discharge wastewater into Dry Fork Creek. Being dissatisfied with the issuance of the permit, four environmental groups appealed the Department's decision to the Water Quality Control Board ("Board").¹

The environmental groups, the Tennessee Environmental Council, The Nashville Grotto of the National Speleological Society, Inc., Public Employees for Environmental Responsibility, and Tennessee Scenic Rivers Association, presented evidence before the Board in an effort to convince the Board to revoke the grant of the initial permit allowing discharge into Dry Fork Creek. The environmental groups claimed the permit was invalid for a number of reasons including the lack of adequate public participation in the permitting process and the State's failure to consider Dry Fork Creek's status as a Tier II stream, which required heightened protection due to that classification.² Following a hearing, the Board rendered a tie vote on whether to revoke the permit issued by the Department.³ As a consequence of the tie vote by the Board concerning whether to revoke the permit, the presiding Administrative Judge ruled as a matter of law that the City was entitled to receive the permit to discharge wastewater into Dry Fork Creek.

Four environmental groups opposing the discharge of wastewater into Dry Fork Creek filed a petition in February 2002 in the Chancery Court for Davidson County seeking judicial review of the Board's decision under Tenn.Code Ann. § 4-5-322 of the Uniform Administrative Procedures Act ("UAPA"). In their Petition for Judicial Review, the environmental groups requested the Davidson County Chancery Court to set aside the Board's decision to grant the wastewater discharge permit to the City. The petitioners also sought temporary injunctive relief in the petition. Finding the petitioners had presented sufficient evidence to show that more likely than not they would prevail on the merits and that irreparable harm would likely occur if the court did not grant an injunction, the court issued a temporary injunction and additionally directed the parties to participate in a judicial settlement conference.

Pursuant to the directive of the Chancellor, the parties participated in a lengthy judicial settlement conference under the supervision of the Third Circuit Court of Davidson County. After days of negotiations, the parties reached an agreement which was memorialized in an Agreed Final Judgment ("Agreed Judgment") dated April 26, 2002. The Agreed Judgment was signed by representatives of the environmental groups, representatives of the City, and representatives of the State of Tennessee. Thereafter, the Chancellor transferred the case to the Third Circuit Court with instructions for the Circuit Court to supervise the complex settlement the parties had reached.

The complex Agreed Judgment, which is at the center of this appeal, rerouted the discharge from Dry Fork Creek to Lick Branch on a temporary basis and thereafter into the Caney Fork River on a permanent basis. Pursuant to the Agreed Judgment, the City was to construct a wastewater drainage pipe leading into Lick Branch for temporary wastewater discharge and a permanent wastewater discharge pipe leading into the Caney Fork River. In addition to the constructing the discharge pipes, the City would construct a rapid sand filtration system at the sewage discharge plant to more adequately treat the waste discharged in the watershed. The relevant provisions memorialized in the Agreed Judgment provide, in summary:

• the City may apply for a wastewater discharge permit to discharge treated wastewater from the City's sewage treatment plant into Lick Branch for a period of no longer than four years;

• the State, through the Governor's Office, would provide funds to pay for the design and construction of a rapid sand filtration system, up to $140,000, to be located at Spencer's Sewage Treatment Plant;

• upon the Lick Branch wastewater discharge permit becoming final and receipt by the City of the funding from the Governor's Office, the City shall promptly and prior to any discharge from the wastewater treatment plant: (i) construct a rapid sand filtration system, at a cost not in excess of $140,000, to further treat wastewater prior to any discharge in Lick Branch, (ii) construct a discharge pipe to Lick Branch; and (iii) disable the discharge pipe to Dry Fork Creek;

• the City shall diligently pursue full funding with regard to the discharge permit to the Caney Fork River, for which it applied, and if no permit or funding is in place, the City must investigate alternative discharge methods.

Crucial to the current dispute is the funding of the various aspects of the alternative discharge plans. Pursuant to the Agreed Judgment, "The State, through the Governor's Office, will provide funds to pay for the design and construction of a rapid sand filtration system, up to $140,000." In addition, the Tennessee Department of Transportation (TDOT) planned to widen a local highway and, as a result, was required to implement mitigation measures to offset the impact to the streams resulting from the project. TDOT allocated $750,000 in mitigation funds. Of the $750,000, "the State agrees that a portion of this amount, up to $140,000 [in addition to the $140,000 provided by the Governor's Office for the filtration system] will be used to pay the costs to construct Spencer's [temporary] wastewater discharge pipe . . . into Lick Branch. . . ." The remaining $610,000 was allocated for the implementation of environmentally friendly mitigation projects in the Caney Fork watershed, as identified by the Department and the environmental groups.

The 2002 Agreed Judgment provided no funding for construction of a discharge line to carry the wastewater to the river. Instead, the Agreed Judgment provided that the "City will diligently pursue full funding [for a discharge to the Caney Fork River]." After determining that it would need a total of $1,500,000 to construct the discharge line, the City applied for a federal grant from the Economic...