Living Rivers v. U.S. Oil Sands, Inc. , 2014 Utah LEXIS 85 ( 2014 )

This opinion is subject to revision before final
publication in the Pacific Reporter.
2014 UT 25IN THE
SUPREME COURT OF THE STATE OF UTAH
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LIVING RIVERS,
Petitioner and Cross-Respondent,
v.
US OIL SANDS, INC.,
Respondent and Cross-Petitioner,
and
UTAH DIVISION OF WATER QUALITY,
Respondent and Cross-Petitioner.
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No. 20121009
Filed June 24, 2014
———————
On Petition for Review of a Decision of the Division of Water
Quality
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Attorneys:
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
———————
JUSTICE LEE authored the opinion of the Court, in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE NEHRING,
JUSTICE DURHAM, and JUSTICE PARRISH joined.
———————
JUSTICE LEE, opinion of the Court:
¶1 This case is before us on petition for review of an adminis-
trative determination of the Utah Board of Water Quality (BWQ).
The BWQ decision before us here upheld the issuance of a dis-
charge permit to US Oil Sands, Inc., for its tar sands bitumen-
LIVING RIVERS v. DWQ
Opinion of the Court
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 according-
ly became final and immune from collateral attack. The 2008 deci-
sion was reaffirmed by the Executive Secretary in 2011, in re-
sponse to a US Oil Sands filing identifying a number of changes to
the 2008 project plan. The 2011 decision was challenged adminis-
tratively 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’ argu-
ments are addressed to the legal and factual basis for the Execu-
tive Secretary’s 2008 decision granting US Oil Sands’ original dis-
charge permit. Yet there was no timely challenge to the 2008 deci-
sion, so the original permit was final and not subject to further
challenge on its merits. For that reason we lack jurisdiction to con-
sider the merits of Living Rivers’ petition, and we dismiss the case
on that basis.
I
¶3 US 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 US Oil Sands to secure various permits, in-
cluding a discharge permit from the DWQ, UTAH CODE § 19-5-107,
and an operating permit issued by the Division of Oil, Gas & Min-
ing (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 ex-
tensive 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
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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 US Oil Sands applied for such a permit by rule from the
DWQ in 2008. As part of its application, it presented evidence re-
garding 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 ap-
plied the de minimis standard from rule 317-6-6.2.A(25) in con-
junction 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 sub-
stances that would be used were “generally non-toxic” and would
for the most part “be recovered and recycled in the extraction pro-
cess.” Second, he found that the extraction would be done in
1 UTAH ADMIN. CODE r. 317-6-6.2.A (stating that “the following
facilities are considered to be permitted by rule and are not re-
quired to obtain a discharge permit under R317-6-6.1 or comply
with R317-6-6.3 through R317-6-6.7, R317-6-6.9 through R317-6-
6.11, R317-6-6.13, R317-6-6.16, R317-6-6.17 and R317-6-6.18,” and
listing facilities that are eligible for a permit-by-rule, including
those with a “de minimis actual or potential effect on ground wa-
ter quality”).
2 The evidence before the Secretary in 2008 was a U.S. Geological
Survey hydrology and climate data report; well log records from
the DOGM, twenty-five exploratory holes drilled near the mine, a
“water rights review” of the project area, laboratory analysis of
samples taken from the site, and the Secretary’s personal visit to
the site.
3 See UTAH ADMIN. CODE r. 317-6-1.19 (2011) (defining ground
water as “subsurface water in the zone of saturation including
perched ground water”).
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LIVING RIVERS v. DWQ
Opinion of the Court
tanks, and not in impoundments or process water ponds, and that
most of the water would be recovered and recycled. Third, he de-
termined that the excess material produced would not be free
draining, would have a low moisture content, and would not con-
tain 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, how-
ever, that directed US 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, US Oil Sands would no
longer have permit-by-rule status. There were no challenges to the
2008 permit-by-rule decision.
¶9 In 2011, US 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 origi-
nal 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 inter-
vened 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 US Oil Sands be
stripped of its permit-by-rule designation and required to comply
with the full range of regulatory requirements to obtain a dis-
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Cite as: 2014 UT 25Opinion of the Court
charge permit. The Secretary moved to dismiss the request for re-
view as untimely.
¶11 The ALJ recognized that Living Rivers’ challenge was “not
really . . . about the [2011] proposed modifications” but was in-
stead “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 de-
cision implicated matters resolved in 2008, and thus reviewed
those matters as they were “relevant to the 2011 modification de-
cision.” 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 Secre-
tary’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 subsequent-
ly 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 US Oil Sands and reaffirmed by the BWQ
on several grounds. Its principal arguments are directed at chal-
lenging the regulatory definition of “ground water” applied in the
issuance of the US Oil Sands discharge permit, see UTAH ADMIN.
CODE r. 317-6-1.19 (2011), and at questioning the Secretary’s find-
ing that there was no ground water present at the site in question.
¶14 In response, the DWQ and US Oil Sands defend the issu-
ance 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. US
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LIVING RIVERS v. DWQ
Opinion of the Court
Oil Sands joins in the DWQ suggestion of mootness. It also asserts
a cross petition, arguing that Living Rivers’ challenge to the per-
mit is untimely. The premise of the cross petition is the notion that
the substance of Living Rivers’ petition is a challenge to the Secre-
tary’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 re-
spondents style both of their affirmative arguments—the sugges-
tion 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 Living Rivers should be barred from reliti-
gating issues presented before us in this petition, the respondents
are advocating for a decision in their favor under the doctrine of
issue preclusion. They are asserting, specifically, that Living Riv-
ers’ challenges to the DWQ discharge permit were matters litigat-
ed fully and resolved finally by the DOGM in granting the request
for an operating permit and affirmed by the Board of Oil, Gas &
Mining (BOGM).4
¶17 This is not an argument addressed to our jurisdiction or
implicating the doctrine of mootness. A decision giving preclusive
effect to decisions in parallel proceedings involving US Oil Sands’
operating permit would not render “the relief requested” by Liv-
ing Rivers here “impossible” to implement or of “no legal effect.”
4 “Collateral estoppel, otherwise known as issue preclusion,
prevents parties or their privies from relitigating facts and issues
in the second suit that were fully litigated in the first suit.” Moss v.
Parr Waddoups Brown Gee & Loveless, 2012 UT 42, ¶ 23, 285 P.3d
1157 (emphasis and internal quotation marks omitted). Issue pre-
clusion applies when four elements are satisfied: “(i) the party
against whom issue preclusion is asserted was a party to or in
privity with a party to the prior adjudication; (ii) the issue decided
in the prior adjudication was identical to the one presented in the
instant action; (iii) the issue in the first action was completely, ful-
ly, and fairly litigated; and (iv) the first suit resulted in a final
judgment on the merits.” Id. (internal quotation marks omitted).
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Utah Transit Auth. v. Local 382 of the Amalgamated Transit Union,
2012 UT 75, ¶ 14, 289 P.3d 582 (internal quotation marks omitted).
It would simply direct a merits-based determination in favor of
respondents. We therefore decline to address this threshold ques-
tion, at least for now, because it is a matter addressed to the merits
and not to our jurisdiction.
¶18 The timeliness of the Living Rivers’ petition, on the other
hand, is a question of jurisdictional significance. See Perez v. S. Jor-
dan City, 2013 UT 1, ¶ 10, 296 P.3d 715 (“[T]he requirement of a
timely appeal is jurisdictional.”). To preserve the right to chal-
lenge an agency decision, an interested party must file a request
for review within thirty days. UTAH CODE § 63G-4-301(1)(a). If no
such request is filed, the agency action is final and conclusive and
may not be subject to collateral attack. Id.; see also UTAH ADMIN.
CODE r. 317-9-2(2) (2011) (“All initial orders . . . shall become final
if not contested within 30 days after the date issued. . . . Failure to
timely contest an initial order or notice of violation waives any
right of administrative contest, reconsideration, review or judicial
appeal.”); Union Pac. R.R. Co. v. Utah State Tax Comm’n, 2000 UT
40, ¶ 24, 999 P.2d 17 (holding that an agency order that was not
challenged until 150 days after the order was entered was final
and not subject to attack).
¶19 The 2008 permit by rule was approved by final agency ac-
tion on March 4. No challenge was filed—by Living Rivers or by
any other party—within the statutory thirty-day deadline. As a
result, the 2008 permit by rule became conclusive and final—
insulated from collateral attack—as of April 3.
¶20 Living Rivers seeks to avoid this problem by styling its pe-
tition herein as a challenge to the 2011 modification determination
by the Executive Secretary. And because the ALJ upheld the Sec-
retary’s 2011 modification determination in a manner reaffirming
the basis for the 2008 permit by rule, Living Rivers insists that its
petition was timely, as it was filed within thirty days of the Secre-
tary’s decision on February 15, 2011.
¶21 We disagree. The jurisdictional question presented is a
matter dictated by the substance of Living Rivers’ petition for re-
view. If the substance of the petition is a collateral attack on the
2008 permit by rule, then it matters not whether Living Rivers has
formally sought to tie its challenge to the 2011 modification deci-
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LIVING RIVERS v. DWQ
Opinion of the Court
sion. And in fact the substance of the Living Rivers’ petition is di-
rected to the 2008 permit-by-rule determination of the Secretary.
We dismiss the petition as untimely on that basis.
¶22 In granting the permit by rule in 2008, the Secretary made
several determinations that are center stage in this case. First, he
decided, at least implicitly, that the de minimis effects exception
to the permitting process—as well as the administrative code’s
definition of ground water—applied to the decision before him.
Second, after reviewing the evidence presented, the Secretary
made factual findings as to the amount of water at the site and its
connection (or lack thereof) to other ground water, regional aqui-
fers, etc. He also made further findings of fact—as to the waste
that would be discharged from U.S. Oil Sands’ proposed facility,
and as to its propensity to pollute waters of the state. Finally, the
Secretary made the mixed determination that US Oil Sands met
the standards for the de minimis exception and was eligible for a
permit by rule.
¶23 In 2011, the question presented to the Secretary was a much
more limited one. It was whether the proposed modifications to
the project would undermine the previous determination that the
facility presented only a de minimis risk to ground water. In re-
solving that question, the Secretary concluded that the modifica-
tions did not affect the 2008 determination of a de minimis effect.
And in so doing the Secretary accepted the validity of the legal,
factual, and mixed determinations that he made in 2008. Without
reconsidering those determinations, the Secretary simply decided
that they were not affected by any of the modifications proposed
in 2011.
¶24 Living Rivers’ petition is addressed to the initial 2008 per-
mitting decision and not to the limited questions resolved in 2011.
Throughout its briefs and in oral argument before our court, Liv-
ing Rivers seeks to challenge the administrative definition of
“ground water” and the existence of a “de minimis” exception to
the permitting requirements. It also seeks to challenge the factual
determination of a lack of ground water at the US Oil Sands site.
But again, the decision to apply these administrative standards
was made at the time of the initial permitting decision in 2008, as
was the finding regarding ground water.
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¶25 The decision in 2011—the matter properly before us in this
case—was different. It concerned only the question whether pro-
posed modifications to the US Oil Sands facility were significant
enough to alter the determinations leading to the permit-by-rule
decision in 2008. Living Rivers would be entitled to revisit those
questions on this petition for review. But it has failed to do so. Be-
cause it has instead addressed only issues presented and resolved
in 2008, in a decision that was unchallenged and thus immune
from collateral attack, we deem its current petition untimely. And
we accordingly vacate the portions of the administrative decisions
below that are addressed to broader questions that were conclu-
sively resolved in 2008, as those questions were not properly pre-
sented to the ALJ or BWQ and accordingly should not have been
decided.
¶26 In so holding, we underscore the significance of time limits
on administrative petitions for review. Such time limits are not
just arbitrary cutoffs. They are important markers, establishing the
point at which a party to an administrative proceeding may move
forward in reliance on the finality of an agency decision. This case
is a prime illustration of this point. When US Oil Sands’ discharge
permit became final in 2008, it was entitled to move forward with
its development plans in reliance on the conclusive finality of the
Secretary’s decision and on the law’s bar on collateral attacks. Liv-
ing Rivers’ petition would reopen and upset that reliance interest.
Our law forecloses that move and renders this petition untimely.
¶27 For these reasons we dismiss the petition and vacate the
administrative decisions below addressing Living Rivers’ argu-
ments challenging the 2008 permit-by-rule decision. And on that
basis we decline to reach either the issue preclusion argument
pressed by the DWQ or the substantive issues raised by Living
Rivers.
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