Could Wyoming's Environmental Quality Council use the Environmental Quality Act to require that all coalbed natural gas produced water actually be put to beneficial agricultural use, as a way to limit how much water gets discharged?

Plain-English summary

Coalbed natural gas (CBNG) wells in the Powder River Basin produced large volumes of water as a byproduct of gas extraction. Wyoming DEQ rules at the time allowed that produced water to be discharged to the surface so long as it met basic quality standards and was actually used for stock or wildlife watering or other agricultural purposes. A petition for rulemaking, filed in late 2005 and revised in early 2006, asked the Environmental Quality Council (EQC) to amend the rule and limit discharges to only the volume that agricultural users would in fact consume. The petitioners' argument was that excess produced water, even if it met quality standards, was being "flushed down Wyoming's watersheds" and should be controlled directly as a quantity matter.

Governor Freudenthal asked the AG whether the Environmental Quality Act (EQA) gave the EQC and DEQ authority to do that. AG Patrick Crank said no. The EQA defined "pollution" in terms of harm to physical, chemical, or biological properties of water, harm to public health, harm to legitimate beneficial uses, harm to livestock, wildlife, or aquatic life, or degradation of water for its intended use. That definition runs through quality, not standalone quantity. The EQA's declared purpose was to "prevent, reduce and eliminate pollution" and "preserve and enhance" the air and water of Wyoming, again rooted in pollution control, not quantity allocation.

DEQ had historically interpreted the EQA to allow regulation of water quantity only insofar as quantity affected quality, for example when stream flow conditions affected dilution and therefore the effluent limits in a discharge permit. The agency's longstanding interpretation got deference from the courts under Loberg v. State. The petitioners' approach, by contrast, would have required the EQC to consider "how much the cows or antelope will actually drink" and to limit discharge volumes accordingly, which the AG read as a pure water-quantity rule untethered to quality.

The opinion also walked through the federal cases the petitioners cited. PUD No. 1 v. Washington Dept. of Ecology, Alameda Water, Riverside Irrigation, Northern Plains Resource Council, Quivira Mining, and Earth Sciences each addressed different sections of the Clean Water Act, mostly about permit certification, dredge and fill permits, or whether a particular discharge required an NPDES permit at all. None held that a state environmental statute like Wyoming's EQA gave authority to regulate water quantity for agricultural use independent of water quality. The AG concluded that the EQC had jurisdiction to adopt rules on environmental issues authorized by the EQA, but did not have statutory authority to issue rules regulating water quantity in the absence of a recognized water quality concern.

Currency note

This opinion was issued in 2006. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Coalbed natural gas wells produce water with the gas. In the Powder River Basin in Wyoming and Montana, that water historically has been discharged to surface drainages under permits issued by the Wyoming Pollutant Discharge Elimination System (WYPDES) under Wyo. Stat. Ann. § 35-11-302(a)(v), Wyoming's delegated portion of the federal Clean Water Act program at 33 U.S.C. § 1342(b). The DEQ's Water Quality Division Rules, Chapter 2, Appendix H, allowed the discharge of produced water that met effluent limits and was actually put to use for wildlife or livestock watering or other agricultural purposes during periods of discharge.

The EQA's pollution-control engine ran on definitions in Wyo. Stat. Ann. § 35-11-103(c)(i), which framed "pollution" in terms of contamination or alteration of water properties, change in temperature, taste, color, turbidity, or odor, discharge of acids, toxins, chemicals, or wastes, and harm to legitimate beneficial uses or to livestock, wildlife, or aquatic life. The Act's declared purpose at § 35-11-102 was likewise about pollution: to enable the state to prevent, reduce, and eliminate pollution and to preserve and enhance air, water, and land. WQD Rules expressed the agricultural-use protection as a quality standard: surface waters with the natural water quality potential for agricultural use "shall be maintained at a quality which allows continued use of such waters for agricultural purposes."

The federal background also worked through quality. EPA's 1976 effluent guidelines for onshore oil and gas extraction created a "beneficial use" subcategory, defined in terms of produced water of "good enough quality" actually being put to agricultural use. In 1979, EPA renamed that category "use in agriculture or wildlife propagation" to avoid confusion with western water law's "beneficial use," and codified the definition at 40 C.F.R. § 435.51(c). DEQ had specifically incorporated parts of this federal scheme by reference into its WQD Rules.

Common questions

Q: What is "produced water" from coalbed natural gas operations?
A: It's groundwater that comes to the surface during gas extraction. To produce gas from a coal seam, operators reduce pressure by pumping out the water, which then has to be managed at the surface, often by discharge under a WYPDES permit.

Q: What did the rulemaking petition want the EQC to do?
A: The petition asked the EQC to limit CBNG discharges to only the volume that agricultural users would actually use, regardless of whether the water met quality standards. Its complaint was that operators were discharging large volumes of clean-enough water that ran past stock and ended up in the watershed without serving an agricultural purpose.

Q: Why did the AG conclude the EQC could not adopt that rule?
A: The opinion read the EQA as a pollution-control statute. Its definition of "pollution" and its declared purpose both ran through water quality and harm to uses, not standalone water quantity. DEQ already considered quantity when quantity affected quality, but a rule limiting discharge volume tied to actual agricultural consumption was a quantity-allocation rule, which the AG concluded was not within the agency's grant.

Q: Did the federal cases the petition cited change the answer?
A: No. PUD No. 1 and Alameda Water dealt with state certification authority under § 1341 and dredge-and-fill permits under § 1344, both of which have explicit statutory hooks broader than the NPDES program Wyoming was administering. Northern Plains, Quivira, and Earth Sciences were about whether particular discharges needed NPDES permits at all, not about whether quantity could be regulated independently of quality.

Q: Could DEQ still consider how much water was being discharged when setting effluent limits?
A: Yes. The AG specifically noted that DEQ used discharge volumes to determine dilution and set effluent limits, and that this had always been part of regulating water quality. What the EQA did not authorize was a freestanding quantity rule severed from quality.

Q: Who has authority over water quantity in Wyoming?
A: Water quantity in the prior-appropriation sense lives with the State Engineer's office, the State Board of Control, and Wyoming water-rights statutes. The EQA and DEQ regulate quality. The opinion noted that as of the time it was written, even WQD Rules expressly disclaimed any authority to require maintenance of a particular stream flow.

Citations and references

Wyoming statutes:
- Wyo. Stat. Ann. § 35-11-102
- Wyo. Stat. Ann. § 35-11-103(c)(i)
- Wyo. Stat. Ann. § 35-11-302(a)(v)

Federal statutes and regulations:
- 33 U.S.C. § 1341
- 33 U.S.C. § 1342
- 33 U.S.C. § 1344
- 40 C.F.R. § 435.50
- 40 C.F.R. § 435.51(c)

Wyoming cases:
- State v. Curtis, 2002 WY 120, 51 P.3d 867
- Basin Elec. Power Co-op. v. Bowen, 979 P.2d 503 (Wyo. 1999)
- Loberg v. State, 2004 WY 48, 88 P.3d 1045
- Diamond B Servs., Inc. v. Rohde, 2005 WY 130, 120 P.3d 1031

Federal cases:
- PUD No. 1 v. Washington Dept. of Ecology, 511 U.S. 700 (1994)
- Alameda Water and Sanitation Dist. v. Reilly, 930 F. Supp. 486 (D. Colo. 1996)
- Riverside Irrigation Dist. v. Andrews, 758 F.2d 508 (10th Cir. 1985)
- Northern Plains Resource Council v. Fidelity Exploration and Dev. Co., 325 F.3d 1155 (9th Cir. 2003)
- Quivira Mining Co. v. EPA, 765 F.2d 126 (10th Cir. 1985)
- United States v. Earth Sciences, Inc., 599 F.2d 368 (10th Cir. 1979)

Source

• Landing page: https://ag.wyo.gov/formal-opinions
• Original PDF: https://drive.google.com/file/d/0B-uookG6TajHcF9yWUJQZHltVWc/view?resourcekey=0-nl4J8n3kefQoG50Gd4ncAA

Original opinion text

Office of the Attorney General
Administration
123 State Capitol
Cheyenne, Wyoming 82002
307-777-7841 Telephone
307-777-6869 Fax

Governor Dave Freudenthal
Attorney General Patrick J. Crank
Chief Deputy Attorney General Elizabeth C. Gagen

FORMAL OPINION NO. 2006-001
April 12, 2006

Honorable Dave Freudenthal
Governor
State Capitol
Cheyenne, Wyoming 82002

Dear Governor Freudenthal:

Question: Does the Wyoming Environmental Quality Act (EQA) grant authority to regulate water quantity to ensure that all produced water from coalbed natural gas (CBNG) production is at all times actually used for wildlife or livestock watering or other agricultural uses.

Brief Answer: No. The EQA allows regulation of the quantity of water if the quantity has an unacceptable effect on the quality of the water.

DISCUSSION

A petition for rulemaking was filed on December 7, 2005, and a subsequent request by letter for revision was filed on March 3, 2006, with the Wyoming Environmental Quality Council (EQC). It proposes to amend Department of Environmental Quality (DEQ) Water Quality Division Rules (WQD Rules), Chapter 2, Appendix H and add Appendix I to regulate the quantity of surface discharge of produced water from all CBNG production. The existing WQD Rules provide that all produced water meeting basic quality criteria is suitable for use by stock and wildlife and may be discharged to the surface if actually put to such use during periods of discharge. The petition would revise the rule and limit the quantity of produced water discharges to only that amount of water which can be demonstrated to have actually been put to "beneficial use." Petition, Exhibit 1. In other words, it seeks to have the EQC limit the quantity of water which may be discharged from CBNG production to that which is actually "called upon" by agricultural users, regardless of whether the quality of the water which is being discharged meets applicable standards for existing uses.

Petitioners are not using the term "beneficial use" in the same way that DEQ has interpreted or applied it. Instead, they are using the term "beneficial use" to denominate water quantity and an asserted right to only have as much quantity discharged as will actually be used: "The goal of this petition is to amend the regulatory language so that water discharged for 'beneficial use' is truly used, and not simply flushed down Wyoming's watersheds." Petition at 3-4. The Petition wants the EQC to dictate to DEQ that it must consider "how much the cows or antelope will actually drink." Petition at 8. The Petition is clear that it wants DEQ to consider "the impacts to land and water that [are the] result of quantity, rather than quality." Petition at 9 (emphasis added). The EQA does not authorize such an action.

The primary objective in interpreting statutory language is to ascertain the Legislature's intent and give it effect. State v. Curtis, 2002 WY 120, ¶ 8, 51 P.3d 867, 869 (Wyo. 2002). The intent of the Legislature is to be ascertained, if possible, by the language used, viewed in light of the objects and purposes to be accomplished. Basin Elec. Power Co-op. v. Bowen, 979 P.2d 503, 508 (Wyo. 1999). A reading of the EQA shows a legislative intent to require DEQ to regulate water quantity if it is directly tied to unacceptable water quality.

The purposes of the EQA are specifically set out in statute:

Whereas pollution of the air, water and land of this state will impair domestic, agricultural, industrial, recreational and other beneficial uses; it is hereby declared to be the policy and purpose of this act to enable the state to prevent, reduce and eliminate pollution; to preserve, and enhance, the air, water and reclaim the land of Wyoming; to plan the development, use, reclamation, preservation and enhancement of the air, land and water resources of the state[.]

Wyo. Stat. Ann. § 35-11-102 (emphasis added).

As used in the EQA, the term "pollution" means as applied to water quality:

contamination or alteration of the physical, chemical, or biological properties of any waters of the state, including change in temperature, taste, color, turbidity or odor of the waters or any discharge of any acid, or toxic material, chemical or chemical compound, whether it be liquid, gaseous, solid, radioactive or other substance, including wastes, into any waters of the state which creates a nuisance or renders any waters harmful, detrimental or injurious to public health, safety or welfare, to domestic, commercial, industrial, agricultural, recreational or other legitimate beneficial uses, or to livestock, wildlife or aquatic life, or which degrades the water for its intended use, or adversely affects the environment[.]

Wyo. Stat. Ann. § 35-11-103(c)(i) (emphasis added).

DEQ has historically interpreted the EQA to allow regulation of water quantity only to the extent it is directly tied to water quality. The applicable classifications of waters which are set out in Chapter 1 of the WQD Rules protect agricultural use, among others, but do so in terms of water quality, not water quantity. The WQD Rules provide: "Wyoming surface waters that have the natural water quality potential for use as an agricultural water supply shall be maintained at a quality which allows continued use of such waters for agricultural purposes." WQD Rules, Chapter 1, Section 20 (emphasis added). The waters cannot be degraded "to such an extent to cause a measurable decrease in crop or livestock production." Id.

WQD Rules also describe technology-based effluent limitations in terms of water quality for permitted discharges from oil and gas production:

The produced water discharged into surface waters of the state shall have use in agriculture or wildlife propagation. The produced water shall be of good enough quality to be used for wildlife or livestock watering or other agricultural uses and actually be put to such use during periods of discharge.

WQD Rules, Chapter 2, Appendix H(a)(i).

The WQD Rules also have additional permit conditions for coalbed natural gas production facilities:

Where discharge water is accessible to livestock and/or wildlife; meets the effluent limitations as specified in this appendix; and meets the criteria for the protection of livestock and wildlife as specified in Wyoming Water Quality Rules and Regulations Chapter 1, Wyoming Surface Water Quality Standards, the discharge will be considered in compliance with the requirements of Appendix H(a)(i) of these regulations.

WQD Rules, Chapter 2, Appendix H(d)(i).

DEQ has specifically incorporated parts of the federal regulatory scheme implementing the Clean Water Act for discharge permits issued. WQD Rules, Chapter 2, Section I(b). One of the federal rules specifically incorporated is 40 C.F.R. § 435.51(c). In 1976, EPA published regulations to establish effluent guidelines for onshore oil and gas extraction industries, and split that segment into subcategories: onshore, coastal, beneficial use, and stripper. The term "beneficial use" was defined as "the produced water is of good enough quality to be used for livestock watering or other agricultural uses and is being put to such uses." 41 Fed. Reg. 44942 (October 13, 1976).

In 1979, EPA, as part of the regulations establishing final effluent guidelines, modified the nomenclature of "beneficial use" to avoid confusion with that term as used in western water law. It stated: "The term 'beneficial use' has a long history of use in the western United States which is unconnected with its meaning in these regulations." 44 Fed. Reg. 22069, 22075 (April 13, 1979). That category of use is now denominated by the term "use in agriculture or wildlife propagation." 40 C.F.R. § 435.50. The term now has a specialized definition: "the produced water is of good enough quality to be used for wildlife or livestock watering or other agricultural uses and that the produced water is actually put to such use during periods of discharge." 40 C.F.R. § 435.51(c) (emphasis added).

If a statute is capable of more than one meaning, then administrative interpretation or application of the statute is deferred to when that interpretation will aid in determining the legislative intent of the statute. Loberg v. State, 2004 WY 48, ¶ 9, 88 P.3d 1045, 1049 (Wyo. 2004). The EQA, WQD Rules and the federal regulations which DEQ has specifically incorporated into state rules discuss the protection of agricultural use in terms of quality, and those interpretations are entitled to deference.

Contrary to Petitioners' assertions, however, neither the EQA nor the DEQ draws an "artificial line" between regulating water quantity and regulating water quality. The purpose of the EQA is clearly to protect water quality. A declared purpose of the EQA is "to enable the state to prevent, reduce and eliminate pollution." Wyo. Stat. Ann. § 35-11-102. Therefore, the EQA also provides the authority to regulate water quantity to the extent the quantity is tied to water quality.

DEQ has interpreted the EQA to give DEQ the authority to consider water quantity when establishing water quality limits. Permit applicants are required to submit information on the amount of water they expect to discharge. DEQ uses that information to determine effluent limits, based on the amount of water to be discharged and the dilution which is likely to occur from discharging that water into a waterway. DEQ makes this kind of determination using stream flow conditions, but it does not require the maintenance of any particular stream flow. This interpretation is exemplified by Section 11 of Chapter 1 Rules. The rule provides that for times when stream flows are less than low flow conditions, DEQ may, after consulting with the Wyoming Game and Fish Department and the affected discharger, require permittees to institute operational modifications to insure the protection of aquatic life. This rule then goes on to say: "This section should not be interpreted as requiring the maintenance of any particular stream flow." WQD Rules, Chapter 1, § 11. This WQD Rule highlights that DEQ takes water quantity into account when regulating water quality, but that it does not have the authority to require any particular stream flow.

Petitioners want the regulation of water quantity for agricultural use, regardless of the quality of the water. There is no such authority set out in the EQA. "An agency is wholly without power to modify, dilute or change in any way the statutory provisions from which it derives its authority." Diamond B Servs., Inc. v. Rohde, 2005 WY 130, ¶ 60, 120 P.3d 1031, 1048 (Wyo. 2005). This requirement applies both to express and implied authority:

An administrative rule or regulation which is not expressly or impliedly authorized by statute is without force or effect if it adds to, changes, modifies, or conflicts with an existing statute. An agency's "implied powers are only those derived by necessary implication from express statutory authority granted to the agency."

Id. (internal citations omitted).

There is no express authority, nor is there any implied authority, in the EQA for regulation of water quantity in the absence of a direct tie to water quality. Petitioners are seeking to have a state environmental protection agency assume responsibility for regulating water quantity unrelated to water quality. The EQA does not grant the authority to do so.

Petitioners refer to several federal cases to support their assertion that the Clean Water Act does not draw a line between water quantity and water quality. The cases about what the Clean Water Act allows do not pertain to what the EQA allows. PUD No. 1 v. Washington Dept. of Ecology, 511 U.S. 700 (1994), involved 33 U.S.C. § 1341 of the Clean Water Act, a section which gives authority to states to deny certification for projects requiring a federal license or permit. Here, Wyoming's authority derives from 33 U.S.C. § 1342(b) of the Clean Water Act, allowing states to establish their own pollutant elimination discharge system in lieu of the EPA's National Pollutant Discharge Elimination System (NPDES) permit system, and from Wyo. Stat. Ann. § 35-11-302(a)(v), establishing the Wyoming Pollutant Discharge Elimination System (WYPDES) permit program. In PUD No. 1, Washington had denied certification because of a reduced stream flow which could damage fish. The Court relied upon the language in 33 U.S.C. § 1341(d), providing that a certification requires assurance that any applicant will comply with effluent limitations and with "any other appropriate requirement of State law set forth in such certification." Id. at 707-708. The Court noted that 33 U.S.C. § 1341(d) expands a state's authority to impose conditions on the certification of a project. Id. at 711. PUD No. 1 therefore does not apply to the question whether the EQA grants the authority to regulate the quantity of water needed for agricultural uses regardless of the quality of the water.

Petitioners also rely on Alameda Water and Sanitation Dist. v. Reilly, 930 F. Supp. 486, 491 (D. Colo. 1996), to support their contention that the EQA allows regulation of downstream effects of changes in water quantity, regardless of the quality of the water. Once again, an entirely different section of the Clean Water Act was being addressed, that is, 33 U.S.C. § 1344 concerning dredge and fill permits. There, the EPA had vetoed issuance of a permit to be issued by the Secretary of the Army. The permit would have allowed the disposal of dredge and fill material into a river to allow construction of a dam. The Clean Water Act specifically allows the EPA to veto a permit proposed to be issued by the Secretary of the Army if the EPA determines that disposing of dredge and fill material "will have an adverse effect on municipal water supplies, shellfish beds and fishery areas wildlife, or recreational areas." 33 U.S.C. § 1344(c). This power to consider other effects not related to water quality is specific to 33 U.S.C. § 1344. The question in Riverside Irrigation Dist. v. Andrews, 758 F.2d 508 (10th Cir. 1985), also involved interpretation of 33 U.S.C. § 1344. The question was whether the Secretary of the Army could deny a general permit under 33 U.S.C. § 1344(e) of the Clean Water Act. The Court held that the denial of the general dredge and fill material permit was lawful, based on the fact that 33 U.S.C. § 1344 focuses not only on water quality, but rather on all effects on the aquatic environment caused by replacing water with fill material. Id. at 512. Once again, these cases concerned an entirely different section of the Clean Water Act, one which sets out different criteria concerning water quantity determinations for dredge and fill permits than for permits issued under 33 U.S.C. § 1342(b) of the Clean Water Act and under Wyo. Stat. Ann. § 35-11-302(a)(v). The cases are inapplicable to agency authority under Wyoming's EQA to regulate water quantity in the absence of a tie to water quality.

Petitioners do refer to three cases which involve NPDES permits issued under 33 U.S.C. § 1342(a), the section of the Clean Water Act providing for discharge permits issued by EPA. However, none of these cases addresses the question of regulating water quantity for agricultural use in the absence of any problem with water quality. Petitioners cite Northern Plains Resource Council v. Fidelity Exploration and Dev. Co., 325 F.3d 1155 (9th Cir. 2003), to argue that the CBNG water is a "pollutant" under the Clean Water Act. The issue in that case was not whether CBNG water quantity could be regulated, but rather whether discharges of the water required the issuance of an NPDES permit. The Court held that a permit was required because discharges of CBNG water altered the quality of the water into which the discharge was occurring. Id. at 1162. Petitioners also rely on Quivira Mining Co. v. EPA, 765 F.2d 126 (10th Cir. 1985), to assert that quantity should be regulated. The question in Quivira was whether an NPDES permit was required for discharges into an arroyo and creek. The Court held that they were subject to an NPDES permit, because the arroyo and creek were "waters of the United States" under the Clean Water Act. Id. at 129. The question addressed by the Court in United States v. Earth Sciences, Inc., 599 F.2d 368 (10th Cir. 1979), another case cited by Petitioners for the proposition that water quantity can be regulated in the absence of a direct effect on water quality, was whether discharges from mining activity were a point source requiring the issuance of an NPDES permit. Id. at 373. None of these cases applies to the issue of authority under the EQA to regulate water quantity which is not directly tied to an unacceptable effect on water quality. More importantly, none of these cases interprets Wyoming statutes concerning regulation of water quality and quantity.

CONCLUSION

The EQA does not provide authority for the EQC or DEQ to regulate water quantity to ensure that all produced water from oil and gas production is at all times actually used for wildlife or livestock watering or other agricultural uses. If the quantity of the water is causing unacceptable water quality or has the potential to cause unacceptable water quality, then the EQA gives DEQ the authority to regulate water quantity. The EQC has jurisdiction to adopt rules concerning environmental issues that are authorized by the EQA. The EQC does not have statutory authority to issue rules regulating water quantity in the absence of some water quality concern recognized in the EQA.

Patrick J. Crank
Attorney General