Court Opinion

ID: 2765416
Source: CourtListenerOpinion
Date Created: 2014-12-30 19:02:14.493922+00
Date Added: 2024-06-11T11:27:24.241133
License: Public Domain

NOTICE: NOT FOR PUBLICATION.
      UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION DOES NOT CREATE
             LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.

                                       IN THE
                ARIZONA COURT OF APPEALS
                                   DIVISION ONE

  THE TOWN OF FLORENCE, a political subdivision of the State of Arizona;
  SWVP-GTIS MR, LLC, a Delaware limited liability company; PULTE HOME
       CORPORATION, a Michigan corporation, Plaintiffs/Appellants,

                                           v.

ARIZONA DEPARTMENT OF ENVIRONMENTAL QUALITY, an agency of the
 State of Arizona; HENRY DARWIN, in his official capacity as Director of the
     Arizona Department of Environmental Quality, Defendants/Appellees,

        CURIS RESOURCES (ARIZONA), INC., a Nevada Corporation,
                         Intervenor/Appellee.

                                No. 1 CA-CV 13-0476
                                 FILED 12-30-2014

              Appeal from the Superior Court in Maricopa County
                             No. CV2012-014309
                  The Honorable Arthur T. Anderson, Judge

                                     AFFIRMED
                                      COUNSEL

Florence Town Attorney, Florence
By James E. Mannato
Counsel for Plaintiff/Appellant Florence

Jennings, Haug & Cunningham, LLP, Phoenix
By Larry J. Crown, Ronnie P. Hawks, Christopher R. Stovall, Janis L. Bladine,
and Russell R. Yurk
Counsel for Plaintiff/Appellant SWVP-GTIS MR

Pulte Home Corporation, Scottsdale
By D. Christopher Ward
Counsel for Plaintiff/Appellant Pulte Home

Arizona Attorney General’s Office, Phoenix
By John T. Hestand
Counsel for Defendants/Appellees ADEQ/Darwin

Osborn Maledon, P.A., Phoenix
By Colin F. Campbell, Thomas L. Hudson, and Shane Ham
Co-Counsel for Defendant/Intervenor/Appellee Curis Resources

Gallagher & Kennedy, P.A., Phoenix
By D. Lee Decker, Bradley J. Glass
Co-Counsel for Defendant/Intervenor/Appellee Curis Resources

                           MEMORANDUM DECISION

Presiding Judge Peter B. Swann delivered the decision of the Court, in which Judge
Kenton D. Jones and Judge Michael J. Brown joined.

S W A N N, Judge:

¶1            The Arizona Department of Environmental Quality (“ADEQ”)
issued an administrative regulation authorizing it to accept and approve
applications for a temporary individual aquifer protection permit. Plaintiffs
challenged the regulation in the superior court, contending that administrative
authorization of temporary permits exceeded the authority granted ADEQ by the
relevant statutes. On a motion to dismiss, the trial court determined that no statute
prohibited the issuance of temporary permits, and that ADEQ was entitled to

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                         FLORENCE et al. v. STATE et al.
                             Decision of the Court

deference in its interpretation of the statutory scheme enabling it to issue the
regulation. We affirm.

                     FACTS AND PROCEDURAL HISTORY

¶2            ADEQ issued Arizona Administrative Code (“A.A.C.”) R18-9-A210
(“A210”) via final administrative rulemaking procedures. A210 permits ADEQ to
issue a temporary individual aquifer protection permit (“APP”) to an applicant for
up to two years. The temporary APP allows ADEQ to regulate activities, such as
mining, that may impact aquifer water quality by authorizing an applicant to
operate a pilot project. The intent of the regulation is that the pilot project produce
data necessary for an applicant to apply for a full-scale project and permanent
APP. See A.A.C. R18-9-A210(A)(1).

¶3            For the past two years, Curis Resources Arizona (“Curis”) has been
attempting to build a permanent in-situ-leaching copper mine in the Florence area.
In-situ-leach mining will require an acidic substance to be injected into the ground
near an aquifer that supplies drinking water to Florence residents. Plaintiffs are
concerned that the aquifer will become contaminated by the mining process,
posing a threat to public health. The proposed mine site is also surrounded by
planned residential communities and Plaintiffs are concerned that operation of the
mine will cause the value of these properties to decrease.

¶4           Curis applied for a temporary APP to establish a pilot project, which
would yield the information necessary for it to obtain approval for a permanent
APP.1 ADEQ approved the application and issued a temporary APP pursuant to
A210.

¶5           Plaintiffs commenced an action seeking an injunction to prevent
Curis from developing a pilot project pursuant to the temporary APP. In their
complaint, Plaintiffs alleged that ADEQ exceeded its statutory rulemaking
authority when it issued A210, and that ADEQ improperly issued that specific
permit to Curis. Meanwhile, Plaintiffs also pursued an administrative appeal
before the Water Quality Appeals Board, asserting the same as-applied challenge
they made in their complaint—that ADEQ unlawfully issued the permit to Curis.

1      Curis began its efforts to operate a copper mine in Florence by attempting
to amend the Town of Florence’s General Plan to allow mining on privately held
land. The Town Council rejected that effort. Curis also sought a permanent APP
from ADEQ to allow commercial operation of the mine, but an ADEQ review
revealed several shortcomings with the proposed plan. Curis is now attempting
to build a pilot project to yield the information necessary to respond to ADEQ’s
concerns with its initial proposed plan.

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                         FLORENCE et al. v. STATE et al.
                             Decision of the Court

Curis intervened in the civil action and filed a motion to dismiss, which the court
granted. The court dismissed the entire complaint, and declined to address the as-
applied challenge due to the then-pending administrative appeal. The court held
that ADEQ had the authority to issue the regulation, agreeing with Curis and
ADEQ that “A.R.S. § 49-230(A)(4) cannot be read in isolation as constituting an
‘Enabling Act’ for the entire statutory scheme that authorized the APP program.”
The trial court also found that to the extent the statutory scheme was less than
clear, ADEQ’s interpretation was entitled to deference. It further noted that
“ADEQ addressed this very issue and listed the authority relied on during [A210]
rulemaking, in particular A.R.S. § 49-242(A). The legislature has amended § 49-
242 three times since then without disturbing [A210], leading to the presumption
that ADEQ’s interpretation is correct.” Plaintiffs appeal.

                            STANDARD OF REVIEW

¶6            We review the dismissal of a complaint under Arizona Rule of Civil
Procedure 12(b)(6) de novo. Coleman v. City of Mesa, 230 Ariz. 352, 355, ¶ 7, 284 P.3d
863, 866 (2012).

                                   DISCUSSION

I.     PLAINTIFFS DID NOT PRESENT A COGNIZABLE CAUSE OF ACTION.

       A.     Facial Challenge

¶7             Plaintiffs contend that Arizona Revised Statutes (“A.R.S.”) section
49-203(A)(4) constitutes an “Enabling Act” for the entire scheme authorizing the
APP program. The statute provides that “[t]he director shall . . . [a]dopt, by rule,
an aquifer protection permit program . . . . The permit program shall be as
prescribed by article 3 of this chapter.” A.R.S. § 49-203(A)(4) (2014). Plaintiffs
assert that this language mandates that temporary APPs be subject to the same
statutory requirements in Article 3 as permanent APPs. The argument is logical
as far as it goes, but Plaintiffs fail to identify any specific manner in which the
temporary APPs actually conflict with Article 3. Rather, they make sweeping
generalizations regarding ADEQ’s use of A210 as a tool to exceed its authority and
circumvent Article 3’s requirements.

¶8            “A party attacking the validity of an administrative regulation has a
heavy burden. On review, this court will test an administrative regulation by the
same standards that apply to a statute and will indulge all rational presumptions
in favor of the validity of the administrative action.” Watahomigie v. Ariz. Bd. of
Water Quality Appeals, 181 Ariz. 20, 24-25, 887 P.2d 550, 554-55 (App. 1994)
(citations omitted).

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                          FLORENCE et al. v. STATE et al.
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¶9            Under Article 3, “[t]he director shall prescribe by rule requirements
for issuing, denying, suspending or modifying individual permits, including
requirements for . . . permit applications and . . . shall prescribe conditions and
requirements for individual permits.” A.R.S. § 49-242(A). Temporary APPs and
permanent APPs are both individual permits, and nothing in Article 3 prevents
the director from issuing both types. By delegating to the director the broad
authority to define the substantive APP requirements, we take the legislature to
have intended to allow the director flexibility to approve APPs in stages.

¶10            The trial court reasoned that A.R.S. § 49-203(A)(4) cannot be read in
isolation as constituting a limiting “enabling act” because there are other statutory
schemes that authorize the program. See, e.g., A.R.S. § 49-104(A)(1) (“The
department shall . . . [f]ormulate policies, plans and programs to implement this
title to protect the environment.”); id. § 49-203(A)(5) (“The director shall . . .
[a]dopt, by rule, the permit program for underground injection control described
in the safe drinking water act.”). And Plaintiffs acknowledged that “compliance
with all of Article 3 for issuing an individual APP is impossible as Article 3
encompasses statutes that have no bearing on individual APPs.” Therefore, the
trial court held that “[t]o the extent that the statutory scheme is less than clear . . .
ADEQ’s interpretation of its authority to establish rules for issuing individual
APPs is entitled to deference.” We agree. “In circumstances like these, in which
the legislature has not spoken definitively to the issue at hand, ‘considerable
weight should be accorded to an executive department’s construction of a
statutory scheme it is entrusted to administer.’” Ariz. Water Co. v. Ariz. Dep’t of
Water Res., 208 Ariz. 147, 154, ¶ 30, 91 P.3d 990, 997 (2004) (quoting Chevron, U.S.A.,
Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844 (1984).

¶11           The legislature has amended A.R.S. § 49-242(A) three times since
ADEQ issued A210 in 2001. None of these amendments affected A210, and we
presume that had the regulation exceeded ADEQ’s statutory authority, the
legislature would have clarified the statute to address the issue. See Yavapai-Apache
Nation v. Fabritz-Whitney, 227 Ariz. 499, 505-06, ¶ 30, 260 P.3d 299, 305-06 (App.
2011) (because the legislature had amended provisions of a statutory scheme and
the language of a certain section remained consistent, the court inferred that the
agency’s interpretation of that section was correct). And although administrative
interpretation of statutes is not binding on the court, the court will accept an
administrative body’s interpretation when there is “[a]cquiescence in meaning
over long periods of time” so long as the interpretation is not “manifestly
erroneous.” See Long v. Dick, 87 Ariz. 25, 29, 347 P.2d 581, 584 (1959); Ariz. Water
Co., 208 Ariz. at 154-55, ¶ 30, 91 P.3d at 997-98. For these reasons, we hold that
A210 constitutes a valid exercise of ADEQ’s rulemaking authority.

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                         FLORENCE et al. v. STATE et al.
                             Decision of the Court

¶12           The only colorable facial challenge Plaintiffs assert is that ADEQ
violates A.R.S § 49-208 by holding the period for public comment after a temporary
APP has already been issued. See A.A.C. R18-9-A210(D)(1). Plaintiffs argue that
because the public comment period does not occur until after a temporary APP
has been issued, there cannot be meaningful public participation in the matter. But
A.R.S. § 49-208(A) provides that “[t]he director, by rule, shall prescribe procedures
to assure adequate public participation in proceedings of the department under
this chapter.” To that end, A210 provides that the director may amend or revoke
the approved APP after consideration of the public comments. See A.A.C. R18-9-
A210(D)(3). And by its terms, the permit only becomes effective upon completion
of the public participation requirements. Taken together, we conclude that these
procedures and safeguards assure adequate public participation under the statute.

       B.     As-applied Challenges

¶13             In their complaint, Plaintiffs alleged that ADEQ had not “made the
findings required by [A.R.S.] § 49-251(A), concerning the ‘temporary APP’ issued
to Curis.”       Plaintiffs contend on appeal that ADEQ “promulgated and
administered” A210 in a manner that violated state law. They also argue that A210
is invalid as interpreted and applied by ADEQ, in part because it contravenes a set
of mining guidelines used to protect groundwater supplies called “BADCT.”
These arguments are separate from and not relevant to the facial challenge
Plaintiffs assert, and therefore were not properly presented to the trial court. Such
claims are properly brought through the administrative review process, not in an
action for declaratory judgment.2 The trial court properly dismissed Plaintiffs’
complaint because Plaintiffs failed to pursue available administrative remedies
regarding these as-applied challenges before seeking judicial review.

¶14             “The doctrine of exhaustion of administrative remedies usually
applies when a statute establishes an administrative review procedure and
‘determines when judicial review is available.’” Sw. Soil Remediation, Inc. v. City of
Tucson, 201 Ariz. 438, 442, ¶ 12, 36 P.3d 1208, 1212 (App. 2001) (quoting Original
Apartment Movers, Inc. v. Waddell, 179 Ariz. 419, 420, 880 P.2d 639, 640 (App. 1993)).
“‘Where a board is specifically empowered to act by the Legislature, the board
should act before recourse is had to the courts as judicial review is withheld until
the administrative process has run its course.” Sw. Soil Remediation, Inc., 201 Ariz.
at 442, ¶ 12, 36 P.3d at 1212 (quotation omitted).

2      Plaintiffs were involved in an administrative hearing at the Water Quality
Appeals Board that lasted over 30 days where they raised every as-applied
challenge. The Board ultimately issued a 155-page decision on the matter and
addressed each issue.

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                         FLORENCE et al. v. STATE et al.
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¶15           Similarly, “[t]he primary jurisdiction doctrine . . . determines who
should initially determine a case.” Id. at 442, ¶ 13, 36 P.3d at 1212 (quotation
omitted). And “[i]f a case raises issues of fact not within the conventional
experience of judges[,] . . . agencies created by [the legislature] for regulating the
subject matter should not be passed over, because administrative agencies exercise
expertise and are more experienced in specialized areas.” Id. (quotation omitted).
Both of these doctrines require a party to pursue available administrative remedies
before seeking judicial review. Id. at 442, ¶ 14, 36 P.3d at 1212.

¶16           In 1986, the legislature enacted Title 49 of the Arizona Revised
Statutes, which created ADEQ as part of the Environmental Quality Act. Title 49,
Chapter 2, Article 7 established the Water Quality Appeals Board to hear appeals

       from any grant, denial, modification or revocation of any individual
       permit issued under this chapter, from any issuance, denial or
       revocation of a determination pursuant to § 49-241, subsections B
       and C . . . by any person who is adversely affected by the action . . .
       and who has exercised any right to comment on the action . . . .

A.R.S. § 49-323(A) (emphasis added). The legislature specifically designated the
Water Quality Appeals Board as the appropriate body to hear appeals of all issues
relating to the grant of an individual permit issued under Chapter 2—including
all APPs.

¶17             Under the related doctrines of exhaustion of administrative
remedies and primary jurisdiction, the courts are required to withhold judicial
review until the administrative process has run its course. Additionally, the
statute itself provides that only “[f]inal decisions of the board are subject to appeal
to superior court.” A.R.S. § 49-323(B); see also Watahomigie, 181 Ariz. at 23, 887 P.2d
at 553 (“Once ADEQ made its decision to issue the [aquifer protection] permit . . .
any person adversely affected by that decision had a right to appeal the issuance
of such permit to the [Water Quality Appeals] Board.”). Because Plaintiffs had an
opportunity to litigate their claim in the proper forum and had not exhausted their
administrative remedies before the Board, the superior court properly declined to
consider these as-applied challenges.

II.    THE COURT DID NOT CONSIDER MATTERS OUTSIDE THE
       PLEADINGS.

¶18           Plaintiffs contend that “[f]or the court to have considered anything
other than the factual allegations of the complaint was error.” Plaintiffs allege that
the court improperly ventured beyond the pleadings when it noted in its ruling
that ADEQ “listed the authority relied on during [A210] rulemaking, in particular
A.R.S. § 49-242(A).” They further contend that the court considered matters

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                         FLORENCE et al. v. STATE et al.
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outside the complaint when it reasoned that ADEQ’s interpretation “was [not]
absurd or contrary to the statutory scheme it seeks to effectuate.”

¶19           “A complaint’s exhibits, or public records regarding matters referenced
in a complaint, are not ‘outside the pleading,’ and courts may consider such
documents without converting a Rule 12(b)(6) motion into a summary judgment
motion.” Coleman, 230 Ariz. at 356, ¶ 9, 284 P.3d at 867 (emphasis added). In their
complaint, Plaintiffs alleged that “[t]he legislative record does not include any
testimony or other materials contemplating the ability of ADEQ to issue a
temporary APP. . . . The language of the statute and the legislative history do not
support the use of a ‘temporary individual permit.’” Because Plaintiffs repeatedly
referenced the plain language and legislative history of A.R.S. §§ 49-241 to -252,
we cannot find fault with the court’s decision to review those authorities in
deciding the motion to dismiss.

III.   THE COURT PROPERLY ASSUMED THE TRUTH OF THE FACTUAL
       ALLEGATIONS.

¶20           Plaintiffs finally argue that the trial court erred by not assuming the
truth of factual allegations in the complaint. The only example Plaintiffs give of a
factual allegation that the trial court did not accept as true is their allegation that
A210 was “invalid as interpreted and applied by ADEQ.” This “factual allegation”
is a mere legal conclusion, much like the allegations that ADEQ issued the permit
“without and contrary to statutory authority through an unauthorized process”;
“[A210] is invalid because it . . . actually violates the limits on ADEQ’s statutory
authority to regulate this area”; and “[t]he rule contained in [A210] aggressively
expands the unlawful purposes for which an unauthorized ‘temporary APP’ can
be issued” to include a purpose “far beyond the scope and authority of [A.R.S. §
49-251].”

¶21             “In considering the propriety of [a] motion to dismiss . . . we assume
plaintiffs’ allegations are true.” Chamberlain v. Mathis, 151 Ariz. 551, 554, 729 P.2d
905, 908 (1986). “Although we assume plaintiff’s well-pled factual allegations are
true, ‘mere conclusory statements are insufficient.’” Rogers v. Bd. of Regents of Univ.
of Ariz., 233 Ariz. 262, 269, ¶ 27, 311 P.3d 1075, 1082 (App. 2013) (quoting Cullen v.
Auto-Owners Ins. Co., 218 Ariz. 417, ¶ 7, 189 P.3d 344, 346 (2008)). “[W]e do not
accept as true allegations consisting of conclusions of law, inferences or deductions
that are not necessarily implied by well-pleaded facts, unreasonable inferences or
unsupported conclusions from such facts, or legal conclusions alleged as facts.”
Jeter v. Mayo Clinic Ariz., 211 Ariz. 386, 389, ¶ 4, 121 P.3d 1256, 1259 (App. 2005).
Therefore, to the extent possible, the trial court assumed the truth of the factual
allegations in the complaint.

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                        FLORENCE et al. v. STATE et al.
                            Decision of the Court

IV.   THE FACTUAL RECORD WAS SUFFICIENT.

¶22            The only issue properly before the trial court was whether ADEQ
exceeded its statutory authority in promulgating A210. This is purely a question
of law. The trial court’s consideration of the complaint, the law, and the statute
itself was sufficient context to determine that ADEQ acted within its statutory
grant of authority when issuing A210. No additional factual record was required
for the court to make this determination.

                                CONCLUSION

¶23          For the reasons set forth above, we affirm.

                                     :ama

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