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Rivers v. Executive Director of Utah Department of Environmental Quality and Director of Utah Division of Water Quality

Supreme Court of Utah

September 20, 2017

Living Rivers, Petitioner,
v.
Executive Director of the Utah Department of Environmental Quality and the Director of the Utah Division of Water Quality, in their official capacity, the Utah Department of Environmental Quality, the Utah Division of Water Quality, and U.S. Oil Sands Inc., Respondents.

         On Appeal from Final Action of Administrative Agency

          Joro Walker, Charles R. Dubuc, Jr., Salt Lake City, for petitioner.

          Sean D. Reyes, Att'y Gen., Stanford E. Purser, Deputy Solic. Gen., Craig W. Anderson, Paul McConkie, Asst. Att'ys Gen., Salt Lake City, for respondents Utah Department of Environmental Quality and Utah Division of Water Quality

          A. John Davis, Christopher R. Hogle, M. Benjamin Machlis, Salt Lake City, for respondent U.S. Oil Sands Inc.

          Justice Himonas authored the opinion of the Court, in which Chief Justice Durrant, Associate Chief Justice Lee, Justice Durham and Judge Brady joined.

          Having recused himself, Justice Pearce did not participate herein; District Court Judge M. James Brady sat.

          OPINION

          HIMONAS JUSTICE.

         INTRODUCTION

         ¶ 1 Living Rivers appears before this court for a second time to challenge a decision by the Utah Department of Environmental Quality (UDEQ) to issue a "permit by rule" to U.S. Oil Sands Inc. (USOS) for a bitumen-extraction project in the Uintah Basin. UDEQ first permitted this project in 2008, and Living Rivers filed its first challenge to the project in 2011. In reviewing this first challenge, we concluded that Living Rivers' 2011 petition- although framed as a challenge to UDEQ's 2011 decision to allow USOS to expand its project without seeking a discharge permit (a more onerous process than obtaining a permit by rule)-was, in substance, an untimely attack on UDEQ's 2008 permit-by-rule decision. See Living Rivers v. U.S. Oil Sands, Inc., 2014 UT 25, ¶ 21, 344 P.3d 568');">344 P.3d 568 [Living Rivers I]. In particular, we concluded that Living Rivers was trying to attack the 2008 analysis that supported UDEQ's determination that USOS's project qualified for a permit by rule. According to UDEQ's analysis, because the project site was "not a part of the regional acquifer system" it therefore posed only a de minimis risk to groundwater. Id. ¶¶ 7, 24.

         ¶ 2 This time, Living Rivers has asked UDEQ to review yet another proposed modification to USOS's project. Without first assuring himself that Living Rivers had standing to request agency action, UDEQ's Executive Director dismissed Living Rivers' requests for agency action on two grounds: (1) because they were the same sort of untimely attacks on the 2008 groundwater determination that this court rejected in Living Rivers I and (2) because UDEQ's declining to require USOS to renew its permit by rule was not the kind of decision that Living Rivers had a statutory right to challenge.

         ¶ 3 On appeal, Living Rivers attacks the Executive Director's conclusion that it lacks a statutory basis for challenging UDEQ's inaction. But it does not adequately challenge the Executive Director's other basis for dismissing its requests for agency action-his conclusion that Living Rivers' requests for agency action are barred by Living Rivers I.

         ¶ 4 We first discharge our independent obligation to assure ourselves that Living Rivers had standing to file its requests for agency action. Then, despite reservations about the Executive Director's statutory analysis, we conclude that Living Rivers has waived its challenge to UDEQ's decision by failing to argue that the Executive Director erred in concluding that Living Rivers I bars Living Rivers' requests for agency action.

         BACKGROUND

         ¶ 5 This action is the second attempt by Living Rivers to require UDEQ to scrutinize, and potentially curtail, USOS's tar sands mining and processing project in the Uintah Basin on the grounds that it is polluting the waters of the state.

         ¶ 6 The Utah Water Quality Act "makes it unlawful for any person to discharge any pollutant into the 'waters of the state' without a permit . . . ." Living Rivers v. U.S. Oil Sands, Inc., 2014 UT 25, ¶ 4, 344 P.3d 568. UDEQ is charged with administering this Act. To do this, UDEQ has promulgated standards for the issuance of discharge permits. See Utah Code § 19-5-108(1) ("[UDEQ] may make rules . . . for and require the submission of plans, specifications, and other information to [UDEQ] in connection with the issuance of discharge permits.").

         ¶ 7 In 2008-before Living Rivers had any involvement in this matter-USOS applied to UDEQ for a "permit by rule" for its Uintah Basin project. Living Rivers I, 2014 UT 25, ¶¶ 2, 6. The permit-by-rule process is a "streamlined . . . permitting process" that "allows certain applicants-including those [who show that their project will] 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" for discharge permits. Id. ¶ 5 (quoting Utah Admin. Code r. 317-6-6.2.A). In 2008, UDEQ concluded that USOS's project posed a de minimis risk to groundwater quality and therefore qualified for permit-by-rule status. Id. ¶¶ 6-8. As we explained in Living Rivers I, UDEQ based its decision on four factual determinations:

First, . . . that the substances that would be used were 'generally non-toxic' and would for the most part 'be recovered and recycled in the extraction process.' Second, . . . that the extraction would be done in tanks, and not in impoundments or process water ponds, and that most of the water would be recovered and recycled. Third, . . . that the excess material would not be free draining, would have a low moisture content, and would not contain any added constituents not present naturally in the rock. And finally, . . . that there was only a limited amount of shallow, localized ground water at the site that is not part of a regional aquifer system.

Id. ¶ 7.

         ¶ 8 In 2011, USOS informed UDEQ of four changes to its proposed project. After considering these changes, UDEQ concluded that they "did not affect the original permit-by-rule determination and that the project would [continue to] have a de minimis effect on ground water quality." Id. ¶ 9.

         ¶ 9 At this point, Living Rivers mounted its first challenge to USOS's permit by rule. Intervening as an "aggrieved party" under Utah Code section 63G-4-301, Living Rivers asked UDEQ to revoke USOS's permit by rule and require USOS "to comply with the full range of regulatory requirements" necessary to obtain a full-blown discharge permit. Id. ¶ 10. After a lengthy adjudicative proceeding, UDEQ affirmed USOS's permit-by-rule status, in part based on its conclusion that substantial evidence supported the determination that USOS's project "did not present a greater than de minimis risk to ground water." Id. ¶ 11.

         ¶ 10 Living Rivers appealed to this court, and we affirmed but on different grounds. We noted that Living Rivers' challenge to the project's permit by rule, although styled as a challenge to UDEQ's 2011 determination, was in substance an attack on the agency's 2008 determination that the project was isolated from regional aquifers and therefore posed a de minimis risk of contaminating groundwater. We reached this conclusion because Living Rivers' challenge focused entirely on errors that UDEQ had allegedly made during the original permit-by-rule process. See id. ¶¶ 20-25. Thus, instead of addressing the merits of Living Rivers' challenge (as the agency did), we concluded that Living Rivers' challenge was untimely. In order to challenge the agency's 2008 groundwater analysis and determination, we held, Living Rivers needed to have intervened within thirty days of the agency's 2008 permit-by-rule determination. Id. ¶ 19. "Because [Living Rivers] . . . addressed only issues presented and resolved in 2008, in a decision that was unchallenged and thus immune from collateral attack, we [therefore] deem[ed] its [2011] petition untimely." Id. ¶ 25.

         ¶ 11 This brings us to Living Rivers' current challenge to USOS's project. In November 2014, USOS notified the Utah Division of Oil Gas & Mining (DOGM)-which oversees a separate, operating permit that USOS is required to maintain-of planned modifications to its project. A couple of months later, on January 13, 2015, Living Rivers' counsel sent an email to UDEQ asking whether USOS had submitted an application for a discharge permit or to renew its permit-by-rule status. On January 15, 2015, UDEQ responded that it was "aware that U.S. Oil Sands has submitted revisions to its mine permit for DOGM, " but that UDEQ "has not required an application [for a discharge permit or renewed permit by rule] because the ...


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