Wyo. Dep't of Envtl. Quality v. Wyo. Outdoor Council

• Decision Date: 19 October 2012
• Docket Number: S–12–0003.,Nos. S–12–0002,s. S–12–0002
• Parties: The WYOMING DEPARTMENT OF ENVIRONMENTAL QUALITY, Appellant (Respondent), and Yates Petroleum Corporation and Marathon Oil Company, Appellants (Petitioners), v. WYOMING OUTDOOR COUNCIL, Appellee (Cross–Petitioner). Yates Petroleum Corporation and Marathon Oil Company, Appellants (Petitioners), v. Wyoming Outdoor Council, Appellee (Cross–Petitioner) and The Wyoming Department of Environmental Quality, Appellee (Respondent).
• Court: Wyoming Supreme Court

286 P.3d 1045

2012 WY 135

The WYOMING DEPARTMENT OF ENVIRONMENTAL QUALITY, Appellant (Respondent),

and

Yates Petroleum Corporation and Marathon Oil Company, Appellants (Petitioners),

v.WYOMING OUTDOOR COUNCIL, Appellee (Cross–Petitioner).

Yates Petroleum Corporation and Marathon Oil Company, Appellants (Petitioners),

v.Wyoming Outdoor Council, Appellee (Cross–Petitioner)andThe Wyoming Department of Environmental Quality, Appellee (Respondent).

Nos. S–12–0002, S–12–0003.

Supreme Court of Wyoming.

Oct. 19, 2012.

Representing Wyoming Department of Environmental Quality: Gregory A. Phillips, Attorney General; Jay A. Jerde, Deputy Attorney General; Michael Barrash, Senior Assistant Attorney General; Christopher M. Brown, Senior Assistant Attorney General. Argument by Mr. Barrash and Mr. Jerde.

Representing Yates Petroleum and Marathon Oil Company: Eric L. Hiser and Matthew Joy, Jorden Bischoff & Hiser, PLC, Scottsdale, Arizona. Argument by Mr. Joy.

Representing Wyoming Outdoor Council: Steve Jones, Jones and Maxon Law Office, Jackson, Wyoming.

Before KITE, C.J., and GOLDEN,^*HILL, VOIGT, and BURKE, JJ.

BURKE, Justice.

[¶ 1] This appeal involves the issuance by the Wyoming Department of Environmental Quality (DEQ) of two general permits for the discharge of produced water from coal bed methane operations in northeastern Wyoming. Yates Petroleum Corporation and Marathon Oil Company (Yates and Marathon) appealed the DEQ's decision to the Environmental Quality Council (EQC), challenging certain conditions of the two general permits. The Wyoming Outdoor Council (WOC) also sought EQC review of the DEQ's decision to issue the general permits.

[¶ 2] WOC claimed that general permits were rules, and had to be promulgated through the rulemaking procedures set forth in the Wyoming Administrative Procedure Act. The EQC rejected WOC's claim, and WOC sought judicial review of that decision. The district court reversed the EQC, determining that DEQ was required to promulgate the general permits as rules. Because DEQ had not followed the statutory rulemaking procedures, the district court ruled that the general permits were void. We will reverse the district court's decision on this issue.

[¶ 3] The district court also rejected the argument by Yates and Marathon that WOC was not entitled to seek EQC review of the DEQ's decision to issue the general permits, but was limited to judicial review. The district court ruled that the Wyoming Environmental Quality Act did allow WOC to seek administrative review by the EQC. Yates and Marathon appealed. We will affirm the district court's decision on this issue.

ISSUES

[¶ 4] The parties present a variety of statements of the issues on appeal. We think the issues are appropriately stated as follows:

1. Whether DEQ must employ the statutory rulemaking procedures for the issuance of general permits.

2. Whether WOC was entitled to administrative review by the EQC of DEQ's decision to issue the general permits.

FACTS

[¶ 5] The pertinent facts are relatively simple and not in dispute. In 2006, DEQ issued two general permits governing the discharge of produced water from coal bed methane operations, one permit for discharges into the Pumpkin Creek watershed and one for discharges into the Willow Creek watershed. Both creeks are ephemeral tributaries to the Powder River in northeastern Wyoming. Yates and Marathon filed a notice of appeal challenging certain conditions set forth in these general permits, and seeking a hearing before the EQC. WOC also filed a petition for review of the DEQ's decision to issue the general permits. The EQC and the parties engaged in various hearings and other proceedings with regard to the general permits, but only two issues are raised in this appeal.

[¶ 6] First, WOC filed a motion for summary judgment claiming that DEQ lacked statutory authority to issue the general permits. WOC claimed further that, even if the agency had such authority, general permits were rules of general applicability that could be promulgated only pursuant to the rulemaking procedures set forth in the Wyoming Administrative Procedure Act. The EQC denied WOC's summary judgment motion, and proceeded to a hearing on the parties' appeals. WOC appealed to the district court, claiming that the EQC had erred in ruling that general permits need not be promulgated as administrative rules. The district court agreed with WOC, ruling that general permits must be promulgated as rules, and because DEQ had not followed the statutory rulemaking procedures in issuing the Pumpkin Creek and Willow Creek general permits, the permits were void. DEQ appealed the district court's decision, and Yates and Marathon joined in that appeal, which is before this Court under Docket No. S–12–0002.

[¶ 7] Second, Yates and Marathon asserted before the district court that, under the provisions of the Wyoming Environmental Quality Act, WOC was not entitled to seek review of the general permits before the EQC. Yates and Marathon contended that WOC was required to take its appeal directly to the district court. The district court ruled against Yates and Marathon on this issue, and they appealed. This issue is before us under Docket No. S–12–0003. The two cases have been consolidated for purposes of oral argument and decision.

STANDARD OF REVIEW

[¶ 8] Judicial review of administrative agency decisions is governed by Wyo. Stat. Ann. § 16–3–114(c) (LexisNexis 2011). However, the issues now before us involve only interpretation of the relevant statutes. Accordingly, the only question under this statute is whether DEQ's actions were “[i]n excess of statutory jurisdiction, authority or limitations or lacking statutory right.” Id., § 16–3–114(c)(ii)(C). Statutory interpretation raises questions of law, which we review de novo. Sinclair Oil Corp. v. Wyo. Dep't of Revenue, 2010 WY 122, ¶ 7, 238 P.3d 568, 570 (Wyo.2010).

DISCUSSION

[¶ 9] The Wyoming Environmental Quality Act prohibits “the discharge of any pollution or wastes into the waters of the state,” unless such discharge is “authorized by a permit issued pursuant to the provisions of this act.” Wyo. Stat. Ann. § 35–11–301(a)(i). The act directs the agency to establish “[s]tandards for the issuance of permits.” Wyo. Stat. Ann. § 35–11–302(a)(v). Those standards were established and, in 1975, were approved by the federal Environmental Protection Agency (EPA). 40 Fed.Reg. 13026 (March 24, 1975).

[¶ 10] After the Wyoming program was approved, DEQ began issuing individual permits for discharges into the waters of the state. An individual permit, in simplified terms, is one applied for by a person, corporation, or other entity who proposes to make a specific discharge of pollutants into a designated body of water. DEQ reviews the application and issues the permit if the proposed discharge complies with established water quality standards. An individual permit, when issued, authorizes the named permit holder to make the specified discharge into the designated waters.

[¶ 11] In 1977, the EPA promulgated regulations allowing for the issuance of general permits as an alternative to individual permits. 42 Fed.Reg. 6841, 6846–53 (Feb. 4, 1977). As later explained by the federal EPA, general permits are meant to cover “discharges of wastewater which result from substantially similar operations, are of the same type wastes, require similar monitoring, and are more appropriately controlled under a general permit rather than by individual permits.” 56 Fed.Reg. 52030 (Oct. 17, 1991). General permits were conceived as a “means of coping” with the administrative burden of issuing a large number of individual permits. Natural Resources Defense Council, Inc. v. Costle, 568 F.2d 1369, 1381 (D.C.Cir.1977).

[¶ 12] In 1991, DEQ promulgated new regulations establishing a general permit system. Those regulations are now found in Chapter 2 of the Wyoming Water Quality Rules and Regulations (“WWQR & R”). As stated there, a general permit may be issued “to cover a category of discharges ... within a geographic area” that “(A) Involve the same or substantially similar types of operations; (B) Discharge the same types of pollution or wastes; (C) Require the same effluent limitations or operating conditions; (D) Require the same or similar monitoring; and (E) In the opinion of the administrator, are more appropriately controlled under a general permit than under individual permits.” Id., ch. 2, § 4(a)(iii).

[¶ 13] The EPA approved the new Wyoming regulations, 56 Fed.Reg. 52030 (Oct. 17, 1991), and DEQ began the process of implementing a general permit system. The first general permits were written to apply to produced water discharges from coal bed methane operations. Because of the “density of the development” in the coal bed methane industry, DEQ foresaw that it could receive applications for up to “900 coal-bed methane [individual] permits.” DEQ believed there were “efficiencies to be gained by putting together a general permitting program where a lot of the discharges are similar in nature, similar in quality, and if we break it down into a watershed extent, ... it's a good way to approach the permitting.”

[¶ 14] DEQ issued the Pumpkin Creek and Willow Creek general permits following the procedures set forth in the new regulations governing general permits. These regulations are meant to allow interested parties and the public to participate in the development of such permits. They require public notice of any proposed general permit, allow public comment on the draft permit, require DEQ to respond to such comments, allow any interested person to request a public meeting regarding the proposed permit, and provide that any interested person may request a hearing before the EQC to contest the issuance, denial, or modification of a general permit. Under these regulations, general permits are issued as licenses, and need not be promulgated under the rulemaking procedures set forth in the Wyoming...