Wildearth Guardians v. N.M. Envtl. Improvement Bd.

542 P.3d 820

2024-NMCA-021

WILDEARTH GUARDIANS, Petitioner-Appellant,

v.NEW MEXICO ENVIRONMENTAL IMPROVEMENT BOARD, Respondent-Appellee,andNew Mexico Environment Department; XTO Energy Inc.; and 3 Bear Delaware Operating -- NM, LLC; Spur Energy Partners LLC, Intervenors-Appellees.

No. A-1-CA-39522

Court of Appeals of New Mexico.

Filing Date: December 4, 2023

APPEAL FROM THE ENVIRONMENTAL IMPROVEMENT BOARD, Phoebe Suina, Board Chair

Daniel L. Timmons, Samantha Ruscavage-Barz, Tim Davis, Santa Fe, NM, for Appellant

Raúl Torrez, Attorney General, Karla J. Soloria, Assistant Attorney General, Emily Bowen, Assistant Attorney General, Santa Fe, NM, for Respondent-Appellee

Lara Katz, Special Assistant Attorney General, Chris Vigil, Assistant General Counsel, Santa Fe, NM, for Appellee New Mexico Environment Department

Montgomery & Andrews, PA, Louis W. Rose, Kari E. Olson, Santa Fe, NM, for Appellee XTO Energy Inc.

Beatty & Wozniak, P.C., James Martin, Santa Fe, NM, Jobediah Rittenhouse, Chris Colclasure, Denver, CO, for Appellee 3 Bear Delaware Operating -- NM, LLC

Holland & Hart LLP, Adam G. Rankin, Santa Fe, NM, Jill H. Van Noord, Boulder, CO, Tina R. Van Bockem, Denver, CO, for Appellee Spur Energy Partners LLC

OPINION

BUSTAMANTE, Judge, retired, Sitting by designation.

{1} We are presented with a technically and legally complex direct appeal challenging the New Mexico Environmental Improvement Board’s (the Board) decision to affirm the New Mexico Environment Department’s (the Department) grant of an air quality permit and three 20.2.72.220 NMAC general construction permit registrations. WildEarth Guardians (WildEarth) argues that (1) 20.2.72.208(D) NMAC’s requirement that a facility’s emissions not "cause or contribute to" a violation of National Ambient Air Quality Standards (NAAQS) does not allow use of a de minimis standard—commonly called a significant impact level (SIL); (2) the air quality permit and registrations at issue were improperly granted because evidence demonstrates they will cause or contribute to a violation of the NAAQS; and (3) the registrations at issue were improperly granted because they are located in nonattainment areas, pursuant to 20.2.79.7(AA) NMAC (6/3/2011). We conclude the use of a SIL is allowable when determining whether a facility causes or contributes to an increase of the NAAQS, pursuant to 20.2.72.208(D) NMAC, the evidence demonstrates the permit and the registration’s emissions do not cause or contribute to an increase of the NAAQS, and the general construction permit registrations are not located in a nonattainment zone. We affirm the grant of the permits, but remand for redaction of paragraphs 102-105 of the Board’s final order.

BACKGROUND

{2} This appeal involves ozone emissions. Ozone causes irritation and inflammation in the respiratory system and tissue damage to vegetation. Ozone is beneficial in the stratosphere because it blocks harmful light radiation, but is harmful when it is present in the lower troposphere, where we live and breathe. Ozone is a secondary pollutant, meaning ozone is not emitted on its own, but rather is formed by the chemical reaction between nitrogen oxide (NOx) emissions and volatile organic compounds (VOCs) in sunlight. This makes it difficult and expensive to calculate ozone quantities and to parse out the source of the NOx and VOCs contributing to them.

{3} The Clean Air Act’s primary tool to combat pollution relies on National Ambient Air Quality Standards (as previously noted, NAAQS). 42 U.S.C. § 7408(a); 42 U.S.C. § 7409(a)(1). NAAQS establish standards for six criteria pollutants, including ozone, which must be met by all the states. 40 C.F.R. pt. 50 (2023). The Clean Air Act is implemented through so-called cooperative federalism—meaning the Federal government sets national standards intended to protect the air, while the states implement those standards. 3 L. of Envtl. Prot. § 29:130 (2023), Westlaw (database updated April 2023). The Clean Air Act is thus administered by the Environmental Protection Agency (the EPA) in coordination with state, local, and tribal governments. Id. New Mexico implements the Clean Air Act through the Air Quality Control Act, NMSA 1978, §§ 74-2-1 to -17 (1967, as amended through 2021),¹ and a preconstruction permitting program. The Air Quality Control Act provides two relevant ways to procure air quality control permits, through general construction permits for individual sources, § 74-2-7, and through registrations of individual sources pursuant to 20.2.72.220 NMAC.

{4} The Department granted revisions to an air quality construction permit (the 3 Bear Permit) to 3 Bear Delaware Operating – NM, LLC (3 Bear), for its Libby Gas Plant (the Libby Plant) in Lea County, New Mexico. The Department also approved three registrations under a 20.2.72.220 NMAC general permit. The registrations were filed under the April 2018 General Construction Permit for Oil and Gas Facilities (the General Permit) by XTO Energy Co. (XTO) for its Corral Canyon 23 and Big Eddy Unit DI 38 facilities, and by Spur Energy Partners LLC (Spur) for its Dorami 2H, 4H and 9H Federal Oil Tank Battery (collectively, the Registrations), all of which are located in Eddy County, New Mexico. WildEarth appealed the Department’s approval of the 3 Bear Permit and the Registrations to the Board. The appeals were consolidated in front of the Board.

{5} Prior to the online hearing on WildEarth’s appeal, each party filed written direct and rebuttal expert technical testimony. The nine expert witnesses elaborated on different aspects of what ozone is and how it forms, measuring ozone through modeling, the cooperative scheme between the Clean Air Act and the Air Quality Control Act, the air quality permitting process, and the specifics of the 3 Bear Permit and the Registrations. The parties then went before the Board for a two-day remote hearing where the experts provided testimony and were cross-examined. The members of the Board were able to ask clarifying questions. The Board also provided the opportunity for public comment. The hearing officer provided a recommendation that the Board affirm the grant of the 3 Bear Permit and the Registrations, and provided the Board a proposed form final order. The Board adopted the hearing officer’s recommendation and the hearing officer’s form of final order verbatim.

{6} The Board’s final order was thirty-five pages. It reviewed ozone formation, the NAAQS, the nonattainment process and how it relates to New Mexico, ozone regulation in New Mexico, and the public comment. It then reviewed the 3 Bear Permit and the Registrations separately.

{7} For the 3 Bear Permit, the Board determined that the Department could use a SIL—significant impact level—when determining whether permits such as the 3 Bear Permit cause or contribute to emissions that would violate the NAAQS. The Board then concluded that any minor source of ozone will always be below the SIL and by definition is not considered to cause or contribute to ozone levels in violation of the NAAQS. Thus, because the 3 Bear Permit involved a minor source, the Board determined it was not arbitrary, capricious, or otherwise contrary to law for the Department to determine the 3 Bear Permit would not cause or contribute to concentrations of pollutant in excess of the NAAQS.

{8} For the Registrations, the Board addressed the nonattainment requirements of the General Permit. The Board concluded that nonattainment is a status designated by the EPA and, to the extent the regulatory definition used in the General Permit conflicted, the formal designation process takes precedence. Based on that conclusion, the Board determined that it was not arbitrary, capricious, or contrary to law to determine the Registrations’ facilities were not located in nonattainment areas.

{9} WildEarth appeals the Board’s decision. See § 74-2-9(A) ("Any person adversely affected by an administrative action taken by the environmental improvement board, the local board, the secretary or the director may appeal to the court of appeals.").

DISCUSSION

{10} We begin by addressing the statutory and regulatory frameworks required of the Clean Air Act and the Air Quality Control Act. We then address WildEarth’s arguments that the Department’s use of SILs is improper and that the effect on the 3 Bear Permit and the Registrations requires reversal because they cause or contribute to a violation of the NAAQS. Finally, we turn to WildEarth’s argument that the Registrations were improperly approved because the data shows facilities were located in a nonattainment area.

I. Standard of Review

[1] {11} Under the Air Quality Control Act, an action of the Board may be set aside by this Court if it is "(1) arbitrary, capricious or an abuse of discretion; (2) not supported by substantial evidence in the record; or (3) otherwise not in accordance with law." Sec- tion 74-2-9(C). "A ruling by an administrative agency is arbitrary and capricious if it is unreasonable or without a rational basis, when viewed in light of the whole record." Rio Grande Chapter of Sierra Club v. N.M. Mining Comm’n, 2003-NMSC-005, ¶ 17, 133 N.M. 97, 61 P.3d 806. When reviewing whether the decision is not supported by substantial evidence under the whole record standard of review, our Supreme Court has instructed that "we look not only at the evidence that is favorable, but also evidence that is unfavorable to the agency’s determination." Fitzhugh v. N.M. Dep’t of Labor, 1996-NMSC-044, ¶ 23, 122 N.M. 173, 922 P.2d 555.

[2–6] {12} "The canons of statutory construction guide our interpretation of administrative regulations." Albuquerque Bernalillo Cnty. Water Util. Auth. v. N.M. Pub. Regul Comm’n, 2010-NMSC-013, ¶ 51, 148 N.M. 21, 229 P.3d 494. We review statutes and regulations de novo to give effect to the intent of the Legislature, looking to the plain language of the statute, and construing the entire statutory scheme as a whole. Lujan Grisham v....