Chostner v. Colorado Water Quality Control Comm’n

Chostner v. Colorado Water Quality Control Comm’n, 327 P.3d 290 (Colo. App. 2013), cert. denied No. 13SC678, 2014 WL 1669160 (Colo. Apr. 28, 2014) (holding that the Colorado Water Quality Control Commission’s approval of the Water Quality Control Division’s conditional section 401 certification provided reasonable assurance that the proposed Southern Delivery System will not violate applicable quality standards).

This appeal arose from a decision of the Water Quality Control Division (“Division”) to conditionally certify a municipal water project, the Southern Delivery System (“SDS”), pursuant to section 401 of the Clean Water Act (“Section 401”). The District Attorney for the Tenth Judicial District, along with the Rocky Mountain Environment and Labor Coalition (collectively “Coalition”) appealed the section 401 certification to the Colorado Water Quality Control Commission (“Commission”), which affirmed the Division’s ruling. The Coalition appealed the decision to the district court, which reversed. The Commission, along with Colorado Springs Utilities (“Colorado Springs”) appealed the district court’s judgment.

The SDS is a pipeline project spanning over fifty miles, designed to transport water from the Pueblo Reservoir into El Paso County. The project involved constructing two new reservoirs and modifying an existing ditch. Parties in the case expected the SDS to impact the Arkansas River and Fountain Creek, along with potential long-term impacts to groundwater. The SDS involved federal contracts with the Bureau of Reclamation (“Bureau”), triggering a National Environmental Policy Act (“NEPA”) environmental review. The Bureau conducted water quality analyses, sought public comment, imposed mitigation measures, and required the development of adaptive management practices. As part of the review, the Bureau considered seven alternative plans, including six “action” plans and one “no action” alternative. The “no action” plan presented the most likely future action absent a major project such as the SDS. After reviewing the alternatives, the Bureau identified the SDS as the preferred project because it would cause the least amount of environmental damage.

Construction of the SDS required Colorado Springs to obtain multiple permits. For one of these required permits, Colorado Springs requested the Army Corps of Engineers grant it a dredge and fill permit. In order to obtain this permit, Colorado Springs needed state certification under Section 401. This certification constituted the state’s assertion that Colorado Springs would avoid violating federal water quality standards during construction. The Division reviewed the application over a year-long process. The Division conducted anti-degradation reviews of stream segments, considered mitigation requirements, and analyzed the Bureau’s impact statement, along with various agencies’ mitigation plans. The Division then conditionally certificated the SDS under Section 401. The Division made the certification contingent upon

(1) the development of an adaptive management program, (2) all conditions “placed on the SDS . . . by other applicable regulatory agencies,” (3) flow maintenance plans to minimize water quality impacts due to potential reduced flows in the Arkansas River, and (4) the installation of groundwater monitoring wells both up and downstream of the new Williams Creek Reservoirs.

Following the conditional certification, the Corps of Engineers issued the dredge and fill permit.

The Commission affirmed the Division’s 401 certification upon administrative appeal. The district court then heard the Coalition’s appeal: it adopted the Coalition’s proposed order, reversed the Commission’s order, and found the Division’s 401 certification arbitrary and capricious. The district court held that (i) the Division failed to properly notify the public; (ii) the Division failed to conduct relevant anti-degradation reviews; (iii) the Division used arbitrary and capricious methodologies in making its determinations; (iv) the Division’s certification would allow for impermissible degradation because it failed to establish total maximum daily loads (“TMDL”); and (v) the Division failed to assess the impact of population growth on water quality.

On appeal, the Colorado Court of Appeals (“Court”) reviewed the district court’s findings under the arbitrary and capricious standard. The Court first held that because the District Attorney’s office asserted the same arguments as the Coalition, and the Coalition had standing, the Court did not need to address whether the District Attorney had standing. Next, the Court held that the district court applied the incorrect standard of review insofar as it made credibility determinations based on information not contained in the administrative record.

As to the issue of the public notice requirements, the regulations required the Division to notify the public of its preliminary anti-degradation findings, its draft certification determination, and the final anti-degradation and certification determinations. The regulations also required the Division to place notices in its Water Quality Information Bulletin. On appeal, the dispute centered on whether the Division should have identified the Wildhorse Creek, the Lower Arkansas Segment 1b, and the Middle Arkansas Segments 2 and 3 in the Division’s public notices. The Court held that Wildhorse Creek and the Lower Arkansas Segment 1b were both classified as “use-protected,” and so were not subject to the notice requirements. The Court further held that the district court’s reasoning was erroneous with regard to the Middle Arkansas Segments 2 and 3. The Court found that the Coalition did not preserve its argument concerning these segments because the Coalition did not raise it before the Commission. Finally, despite any deficiencies in the public notice, the Coalition did not demonstrate prejudice related to the deficiencies. The Court concluded that the record contained evidence to support the Commission’s finding that public notice was sufficient.

Next, the Court addressed the evidence supporting the Division’s anti-degradation determinations and the methodologies of the anti-degradation analyses. The Court found that the testimony regarding the anti-degradation determinations provided sufficient evidence, and that the anti-degradation reviews were sufficient, notwithstanding their oral nature. The evidence in the record demonstrated that the Division reviewed proper materials in its findings regarding water quality impacts. Finally, the Court found that the Division’s qualitative analyses were all that the regulations required. As such, the Court determined that the district court erred in finding that the Division failed to conduct proper anti-degradation reviews.

The Court then addressed the district court’s finding that federal regulations required the Division to establish TMDLs prior to issuing a 401 certification. When a permit seeks permission to discharge pollutants into source waters, federal regulations require TMDLs. Section 401 certifications, however, are distinct from such pollution discharge permits. The regulations did not require the Division to develop a TMDL prior to certification because the Division’s certification of the SDS under Section 401 did not include a point source discharge pollution permit. Therefore, the district court erred when it concluded that federal regulations required a TMDL.

Lastly, the Court addressed whether the Division had an obligation to consider future population growth and its impact on water quality. The Court found nothing in the Commission’s regulations that required such consideration, and, moreover, the Coalition presented no evidence that the SDS would cause population growth. Therefore, the Court adopted the Division’s findings, and reversed the district court’s conclusion on this issue.

Accordingly, the Court reversed the district court’s judgment.

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