Pompeys Pillar Historical Ass'n v. Montana Department of Environmental Quality

No. 02-341
IN THE SUPREME COURT OF THE STATE OF MONTANA
2002 MT 352POMPEYS PILLAR HISTORICAL ASSOCIATION,
Petitioner and Appellant,
v.
MONTANA DEPARTMENT OF ENVIRONMENTAL
QUALITY, and UNITED HARVEST, LLC,
Respondents and Respondents.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Dorothy McCarter, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Gerald J. Neely, Attorney at Law, Billings, Montana
For Respondents:
Norman J. Mullen, Special Assistant Attorney General, Helena, Montana
(Department of Environmental Quality)
J. Daniel Hoven, Sara B. Stanton, Browning, Kaleczyc, Berry & Hoven, P.C.,
Helena, Montana (United Harvest, LLC)
Submitted on Briefs: September 19, 2002
Decided: December 30, 2002
Filed:
__________________________________________
Clerk
Justice Jim Regnier delivered the Opinion of the Court.
¶1 In the summer of 2000, Respondent United Harvest sought to
construct a high speed grain loading terminal east of Billings,
Montana, near Pompeys Pillar National Monument. United Harvest
obtained an air quality permit from Respondent Department of
Environmental Quality (“DEQ”) to build the facility. Appellant Pompeys
Pillar Historical Association (“Association”) commenced administrative review proceedings
in an effort to overturn the issuance of the permit. Ultimately, the Board of Environmental
Review (“Board”) affirmed DEQ’s issuance of the permit.
¶2 The Association subsequently petitioned the First Judicial
District Court, Lewis and Clark County, to review the Board’s
decision. The District Court dismissed the Association’s petition
for lack of subject matter jurisdiction. The Association appeals
from the District Court’s order of dismissal. We affirm.
¶3 The sole issue on appeal is whether the District Court erred
when it dismissed the Association’s petition for review for lack of
subject matter jurisdiction.
BACKGROUND
¶4 Pompeys Pillar is a national historic monument located
approximately twenty-eight miles east of Billings, Montana. The
Association is a non-profit organization which provides educational
and administrative services to support the monument’s preservation.
¶5 Several years ago, United Harvest purchased land adjacent to
Pompeys Pillar. United Harvest sought to construct a high speed
grain loading terminal, consisting of silos, grain conveyors, grain
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elevators, truck scales, and a railroad loop track on this land.
United Harvest intended to build this facility approximately one
half to three-quarters of a mile from Pompeys Pillar.
¶6 Toward this end, United Harvest filed an application with DEQ
for an air quality permit in August of 2000. In evaluating whether
to issue the permit, DEQ conducted an initial and supplemental
environmental assessment. The assessment evaluated the proposed
facility’s impact on the surrounding environment. DEQ concluded:
(1) that the facility would not detrimentally impact the
surrounding environment, more specifically the local air quality;
and (2) that it was not necessary to issue an environmental impact
statement. Therefore, on September 29, 2000, DEQ issued an air
quality permit to United Harvest.
¶7 In mid October 2000, the Association appealed the issuance of
the permit to an administrative law judge. The appeal sought to
overturn the issuance of the permit on the grounds that DEQ erred
in its preparation of the environmental assessment. DEQ and United
Harvest filed a motion to dismiss the administrative contested case
hearing. The motion argued that the administrative law judge
lacked jurisdiction to entertain the challenge and, instead,
insisted that the Association should file the appeal in the
appropriate district court. The administrative law judge denied
the motion.
¶8 On June 28, 2001, the administrative law judge concluded that
DEQ “acted arbitrarily and capriciously . . . by issuing a permit
without conducting an [environmental impact statement].”
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Therefore, the judge recommended that the matter be remanded to DEQ
for it to conduct the necessary evaluation. Notably, the findings
did not address issues of air quality, but, instead, addressed the
adequacy of the environmental assessment.
¶9 On July 12, 2001, United Harvest and DEQ filed exceptions to
the administrative law judge’s findings with the Board of
Environmental Review. On August 9, 2001, the Board declined to
implement the administrative law judge’s recommendation and,
instead, ordered DEQ to prepare a supplemental environmental
assessment “addressing noise impacts . . . and the historic and
cultural significance of the site.” On October 24, 2001, following
DEQ’s submission of a supplemental environmental assessment, the
Board concluded that DEQ did not act arbitrarily, capriciously, or
unlawfully in conducting the relevant evaluations. Therefore, the
Board affirmed DEQ’s decision to issue the air quality permit.
¶10 On November 26, 2001, the Association petitioned the District
Court to review the Board’s decision. On February 14, 2002, DEQ
moved the District Court to dismiss the Association’s petition on
the grounds that the District Court lacked subject matter
jurisdiction over the case. Paralleling the argument it presented
to the administrative law judge, DEQ maintained that the challenge
presented to the administrative arbiters did not contain any air
quality issues. DEQ contended that the administrative proceedings
addressed environmental assessment issues only, which fall within
the province of the Montana Environmental Policy Act (“MEPA”).
According to DEQ, MEPA does not provide for administrative review
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of challenges to MEPA compliance. DEQ argued that challenges to
MEPA compliance must be brought in district court. Therefore, as
the administrative law judge and Board did not have jurisdiction to
preside over the Association’s appeal, DEQ asserted that the
District Court lacked jurisdiction to review the administrative
proceedings.
¶11 Following a hearing on the matter, the District Court issued
its Decision and Order on April 18, 2002. Pursuant to the
rationale offered by DEQ, the District Court dismissed the
Association’s petition for review for lack of subject matter
jurisdiction. On May 28, 2002, the Association filed a notice of
appeal from the District Court’s order of dismissal.
STANDARD OF REVIEW
¶12 A district court’s determination that it lacks jurisdiction is
a conclusion of law. Threlkeld v. Colorado, 2000 MT 369, ¶ 7, 303
Mont. 432, ¶ 7, 16 P.3d 359, ¶ 7. We review a district court’s
conclusions of law to determine whether the court’s interpretation
of the law is correct. Carbon County v. Union Reserve Coal Co.,
Inc. (1995), 271 Mont. 459, 469, 898 P.2d 680, 686.
DISCUSSION
¶13 Did the District Court err when it dismissed the Association’s petition for review for
lack of subject matter jurisdiction?
¶14 The Association maintains that § 75-2-211, MCA, authorizes an
adversely affected party to appeal the approval or denial of an air quality
permit to the Board of Environmental Review. Since the Association contends that it was
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entitled to an administrative contested case proceeding, it argues that it was subsequently
entitled to judicial review of the administrative decision, pursuant to § 2-4-702, MCA.
¶15 According to the Montana Administrative Procedure Act
(“MAPA”), an administrative agency must afford all parties a trial-
type hearing in a “contested case.” See §§ 2-4-601, -612, MCA.
MAPA provides that a “contested case” is “a proceeding before an
agency in which a determination of legal rights, duties, or
privileges of a party is required by law to be made after an
opportunity for hearing.” Section 2-4-102(4), MCA. District
courts maintain jurisdiction to review such contested case
proceedings. See §§ 2-4-701-702, MCA. Therefore, for purposes of
this case, the critical inquiry is whether the Association was
entitled by law to raise its specific challenge to the issuance of
the air quality permit in a contested case proceeding.
¶16 The Clean Air Act of Montana, found at Title 75, Chapter 2,
Parts 1-4, MCA, governs the issuance of air quality permits.
Section 75-2-111(2), MCA, provides that “[t]he board [of
environmental review] shall . . . hold hearings relating to any
aspect of or matter in the administration of this chapter at a
place designated by the board.” “This chapter,” referenced in §
75-2-111(2), MCA, refers to the Clean Air Act of Montana and the
Asbestos Control Act, not MEPA. Further, § 75-2-211(10), MCA,
provides:
When [DEQ] approves or denies the application for a
permit under this section, a person who is jointly or
severally adversely affected by [DEQ’s] decision may
request a hearing before the board [of environmental
review]. . . . The contested case provisions of the
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Montana Administrative Procedure Act, Title 2, chapter 4,
part 6, apply to a hearing before the board [of
environmental review] under this subsection.
Clearly, had the Association challenged DEQ’s decision in regard to
issues of air quality, it would have been entitled to pursue
contested case proceedings. However, it did not do so.
¶17 The Legislature enacted MEPA to prevent or eliminate
environmental damage as well as protect the right to use and enjoy
private property free from undue governmental regulation. See §
75-1-102, MCA. MEPA requires that state agencies conduct
environmental reviews when state action will significantly affect
the quality of the human environment. Rule 17.4.607, ARM.
“Environmental review” means any environmental assessment,
environmental impact statement, or other written analysis conducted
by a state agency to examine the impact of a proposed action on the
quality of the human and physical environment. Section 75-1-
220(4), MCA. State action encompasses a state agency’s issuance of
a lease, permit, license, certificate, or other entitlement for use
or permission to act. Rule 17.4.603(1), ARM. Therefore, United
Harvest’s application for an air quality permit implicated state
action and, thus, required DEQ to conduct an environmental review
prior to its issuance.
¶18 Notably, the environmental review process is governed by MEPA
and its corresponding administrative rules, not the Clean Air Act
of Montana. As stated in the District Court’s order of dismissal,
“The environmental assessment . . ., although conducted
contemporaneously with the air quality review for the air quality
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permit, was not part of the air quality permit process itself . . .
.” As for the requisite environmental review process, Rule
17.4.607, ARM, provides:
In order to determine the level of environmental review
for each proposed action that is necessary to comply with
75-1-201, MCA, the agency shall apply the following
criteria:
(1) The agency shall prepare an [environmental
impact statement] as follows:
(a) whenever an [environmental assessment] indicates
that an [environmental impact statement] is necessary; or
(b) whenever, based on the criteria in ARM 17.4.608,
the proposed action is a major action of state government
significantly affecting the quality of the human
environment.
Therefore, the environmental assessment acts, in part, as an
initial evaluation to determine whether an agency must prepare an
environmental impact statement. Rule 17.4.607(2)(c), ARM.
¶19 Here, DEQ conducted an environmental assessment in
contemplation of the proposed facility’s impact on the surrounding
environment. Upon completion of the environmental assessment, DEQ
deemed it unnecessary to issue an environmental impact statement.
It is the issues surrounding the environmental assessment that the
Association sought to challenge through contested case proceedings,
i.e., the sufficiency of the environmental assessment and the
decision not to issue an environmental impact statement. In fact,
the Association requested the following relief from the District
Court: “The Court is requested to remand the case under
instructions to order [DEQ] to conduct an Environmental Impact
Statement concerning the planned project of United Harvest . . . .”
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Further, on appeal, the Association admits that it sought to
challenge primarily “the sufficiency of [the] Environmental
Assessment” throughout the administrative proceedings. Therefore,
as the environmental review process is governed by MEPA, we must
look to the appellate procedures contained therein to determine
whether the Association was entitled to administrative review of
the issues presented.
¶20 Section 75-1-201(3), MCA (1999), provides:
(a) In any action challenging or seeking review of
an agency’s decision that . . . [an environmental impact
statement] is not required or that the statement is
inadequate, the burden of proof is on the person
challenging the decision. Except as provided in
subsection (3)(b), in a challenge to the adequacy of a
statement, a court may not consider any issue or evidence
that was not first presented to the agency for the
agency’s consideration prior to the agency’s decision. A
court may not set aside the agency’s decision unless it
finds that there is clear and convincing evidence that
the decision was arbitrary or capricious or not in
compliance with the law.
(b) When new, material, and significant evidence is
presented to the district court that had not previously
been presented to the agency for its consideration, the
district court shall remand the new evidence back to the
agency for the agency’s consideration and an opportunity
to modify its findings of fact and administrative
decision before the district court considers the evidence
within the administrative record under review. . . . The
district court shall review the agency’s findings and
decision to determine whether they are supported by
substantial, credible evidence within the administrative
record under review. [Emphasis added.]
Ironically, the Legislature amended this provision in 2001 to add,
in part, the following language: “A challenge to an agency action
under this part may only be brought against a final agency action
and may only be brought in district court or in federal court,
whichever is appropriate.” Section 75-1-201(6)(a), MCA. One of
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the representatives indicated that this provision was added to
clarify the review process. Nevertheless, both parties agree that
the 1999 version of the statute applies to the case at bar.
¶21 Section 75-1-201(3), MCA (1999), clearly envisions challenges
to MEPA compliance before a “court” or “district court.” MEPA does
not contain a corollary to § 75-2-211(10), MCA, the contested case
provision in the Clean Air Act of Montana. Had the Association
simply challenged air quality issues, it would have been entitled
to administrative proceedings. However, the Association admits
that its challenge contemplated only those issues which pertained
to the environmental assessment. Since MEPA governs environmental
review, and since MEPA requires a party to bring a compliance
challenge before a “court” or “district court,” the administrative
law judge and Board did not have jurisdiction to hear the
Association’s challenge. As such, the District Court did not have
jurisdiction to review the Board’s determination. Consequently,
the District Court did not err when it dismissed the Association’s
petition for review for lack of subject matter jurisdiction.
¶22 Affirmed.
/S/ JIM REGNIER
We Concur:
/S/ KARLA M. GRAY
/S/ PATRICIA COTTER
/S/ JIM RICE
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Justice Terry N. Trieweiler concurs.
¶23 Based on the arguments presented by the parties, I concur
with the majority Opinion. However, in doing so, I do not express
any opinion about the adequacy of the procedural due process
provided for in the Montana Environmental Policy Act for
challenging decisions made by the Department of Environmental
Quality. Furthermore, I assume that because there was no time
limit within which to commence a direct action pursuant to § 75-1-
201(3), MCA (1999), that a direct action in district court can
still be filed by Pompeys Pillar Historical Association challenging
the adequacy of the environmental assessment prepared by the DEQ
and that the merits of the Association's claims, as well as the
adequacy of the due process afforded, can ultimately be resolved in
that manner.
¶24 For these reasons, I concur with the majority Opinion.
/S/ TERRY N. TRIEWEILER
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