Opinion
Court of Appeals No. 21CA1781
02-02-2023
Vranesh and Raisch, LLP, Gabriel Racz, Rachel L. Bolt, Boulder, Colorado, for Plaintiff-Appellant Philip J. Weiser, Attorney General, Carrie Noteboom, First Assistant Attorney General, Stefanie Neale, Assistant Attorney General, Denver, Colorado, for Defendant-Appellee
Vranesh and Raisch, LLP, Gabriel Racz, Rachel L. Bolt, Boulder, Colorado, for Plaintiff-Appellant
Philip J. Weiser, Attorney General, Carrie Noteboom, First Assistant Attorney General, Stefanie Neale, Assistant Attorney General, Denver, Colorado, for Defendant-Appellee
Opinion by JUDGE JOHNSON
¶ 1 The Water Quality Control Division (Division) within the Colorado Department of Public Health and Environment (Department) administers the Colorado Water Quality Control Act (the Act). The Act provides for judicial review of agency determinations. Depending on the type of agency action, a party may seek an adjudicatory hearing under section 25-8-403, C.R.S. 2022, governed by the State Administrative Procedure Act (the APA). For certain agency actions, seeking such a hearing under the Act is not a prerequisite before the party can seek judicial review under section 25-8-404, C.R.S. 2022. But we conclude that for agency actions concerning general permits issued under section 25-8-503.5, C.R.S. 2022, the party must first request and have an adjudicatory hearing governed by the APA as a prerequisite to seeking judicial review under section 25-8-404.
¶ 2 Plaintiff, the Colorado Stormwater Council (Council), did not request an adjudicatory hearing following the Division's issuance of the general stormwater discharge permit at issue here. Instead, the Council filed a complaint for judicial review in the district court. Because we conclude that the Council did not exhaust its administrative remedies before it sought judicial review, we affirm the district court's dismissal of the complaint.
I. Background
¶ 3 The Council is a nonprofit organization of public entities with storm drainage systems that comprise what are known as non-standard MS4s, which are municipal separate storm sewer systems. Non-standard MS4s are regulated under the federal Clean Water Act, see 33 U.S.C. § 1342(b) ; Colorado's Act, see §§ 25-8-101 to - 905, C.R.S. 2022; and regulations promulgated by the Colorado Water Quality Control Commission (Commission), see Dep't of Pub. Health & Env't Reg. 61.1(1), 5 Code Colo. Regs. 1002-61 (Commission Regulation 61). The Department, through the Division, administers the permits for non-standard MS4s as part of a program known as the Colorado Discharge Permit System.
¶ 4 The permit issued by the Division governs the discharge of pollutants in stormwater from non-standard MS4s. Non-standard MS4s are publicly owned stormwater systems located in urbanized areas but not owned by a city or county. Non-standard MS4s can include systems at public entities such as large educational institutions, hospitals, or prison complexes that have infrastructure that collect and convey stormwater runoff to surface waters and serve over 1,000 residents or individuals. See Commission Regulation 61.2(100). The provisions governing general permits are in section 25-8-503.5.
¶ 5 Under the Colorado Discharge Permit System, the Division issues two types of discharge permits: individual permits and general permits. Individual permits are issued to individual entities and authorize discharges from specific facilities. Commission Regulation 61.2(35). General permits authorize categories of discharges, such as operation of a storm sewer system, and then allow dischargers to apply for coverage under terms required for those activities. Commission Regulations 61.8, 61.9(2)(b)(iii).
¶ 6 For the first time in 2008, the Division issued MS4s their own general permit (2008 General Permit). In June 2019, the Division published a draft renewal and fact sheet that proposed permit terms and changes to the 2008 General Permit. The proposed changes were based on stakeholder input; the Division's experience with MS4 permitting; compliance; and enforcement since 2008; changes in stormwater treatment and technology; and changes made since 2008 in other Colorado and federal MS4 permits, regulations and guidance.
¶ 7 The Division held an extensive public comment period for the proposed permit (from June 2019 through September 2019), revised the proposed permit, and then held a second comment period (from March 2020 through August 2020). Both comment periods went well beyond the required thirty days. See Commission Regulation 61.5(2)(d). After the close of the second public comment period, in November 2020, the Council submitted a cost-benefit analysis of the second draft permit for the Division's consideration. This cost-benefit analysis was authorized by section 25-8-503.5(1)(d).
¶ 8 In April 2021, the Division issued its final general renewal permit for non-standard MS4s, as well as its final fact sheet, which included the Division's rationale for the permit and its responses to the comments it received on both permit drafts. The fact sheet included the Division's assessment of the Council's cost-benefit analysis, explaining why the Division had only provided limited revisions to the permit's terms.
¶ 9 In May 2021, the Council filed a complaint for judicial review in the district court challenging several terms of the permit. The Council alleged in its complaint that the non-standard permit "(i) contain[ed] a series of new requirements and prescriptions for [the Council] members that will dramatically increase costs without proportionally improving stormwater quality, (ii) violat[ed] [the Council]’s due process rights in myriad ways, and (iii) disregard[ed] applicable requirements for issuance of stormwater permits."
¶ 10 The Council also filed in the district court a petition for stay, alleging that the "non-standard MS4s would suffer irreparable and serious injury without a corresponding public benefit if they were forced to implement the Non-Standard Permit."
¶ 11 The Division moved to dismiss the complaint under C.R.C.P. 12(b)(1) and C.R.C.P. 12(b)(5).
¶ 12 The district court dismissed the Council's complaint under C.R.C.P. 12(b)(1) for lack of subject matter jurisdiction, finding that the General Assembly had created an administrative appeal process for general permits issued by the Division and that the Council was required to pursue that remedy before seeking judicial review. The court then denied the Council's petition for stay of the permit as moot. The permit went into effect November 1, 2021.
¶ 13 The Council appeals the dismissal of its complaint and the denial of its petition for stay.
II. Standard of Review
¶ 14 When, as here, there are no disputed issues of fact, we review de novo a district court's dismissal for lack of subject matter jurisdiction under C.R.C.P. 12(b)(1). Peabody Sage Creek Mining, LLC v. Colo. Dep't of Pub. Health & Env't , 2020 COA 127, ¶ 9, 484 P.3d 730. We also review de novo a court's jurisdiction to review an agency action. Id.
¶ 15 To the extent our analysis requires us to interpret the Act or the APA, statutory interpretation is a question of law that we review de novo. Finney v. People , 2014 CO 38, ¶ 12, 325 P.3d 1044. When interpreting statutes, we give effect to the General Assembly's intent. See People v. Disher , 224 P.3d 254, 256 (Colo. 2010). To determine that intent, we first look to the statute's language and give words their plain and ordinary meaning. See Roup v. Com. Rsch., LLC , 2015 CO 38, ¶ 8, 349 P.3d 273. We read and consider the statute as a whole to give consistent, harmonious, and sensible effect to all of its parts, and we presume that the General Assembly intended the entire statute to be effective. See People v. Buerge , 240 P.3d 363, 367 (Colo. App. 2009). If the statute's language is clear and unambiguous, we look no further. See People v. Jenkins , 2013 COA 76, ¶ 12, 305 P.3d 420. "Statutory language is unambiguous if it is susceptible of only one reasonable interpretation." Montezuma Valley Irrigation Co. v. Bd. of Cnty. Comm'rs , 2020 COA 161, ¶ 20, 486 P.3d 428.
III. Analysis
¶ 16 The Council contends that the district court erred by dismissing its complaint for lack of subject matter jurisdiction. We disagree.
¶ 17 "The doctrine of administrative exhaustion requires a party to pursue available statutory administrative remedies before obtaining judicial review of a claim." Thomas v. Fed. Deposit Ins. Corp. , 255 P.3d 1073, 1077 (Colo. 2011) ; see also State v. Golden's Concrete Co. , 962 P.2d 919, 923 (Colo. 1998). If a party fails to satisfy the exhaustion requirement, the district court lacks subject matter jurisdiction to hear the matter. Thomas , 255 P.3d at 1077 ; see also Golden's Concrete Co. , 962 P.2d at 923.
¶ 18 This doctrine was created to promote important policy interests, such as (1) allowing agencies with subject matter expertise in a particular field to develop the necessary factual record upon which the agency and subsequent reviewing courts may base their decisions; (2) preventing the interruption and fragmentation of the administrative process; (3) giving the agency the opportunity to correct its own errors; and (4) conserving judicial resources by ensuring that courts intervene only if the administrative process fails to provide adequate remedies. See City & Cnty. of Denver v. United Air Lines, Inc. , 8 P.3d 1206, 1212–13 (Colo. 2000).
¶ 19 The exhaustion requirement, however, has limited exceptions, such as when it is "clear beyond a reasonable doubt that further administrative review by the agency would be futile because the agency will not provide the relief requested," and "when the matters in controversy are matters of law that the agency lacks the authority or capacity to determine, such as constitutional issues." Id. at 1213 (citation omitted).
¶ 20 The Council contends that it was not required to seek a hearing under section 24-4-105, C.R.S. 2022, of the APA because under section 25-8-403 of the Act, a request for a hearing or reconsideration is not required before seeking judicial review.
¶ 21 Section 25-8-403 generally governs hearing, rehearing, and reconsideration requests for final decisions of the Division or the Commission, as applicable. That provision states, in relevant part:
During the time permitted for seeking judicial review of any final order or determination of the commission or division, any party directly affected by such order or determination may apply to the commission or division, as appropriate, for a hearing or rehearing with respect to, or reconsideration of, such order or determination. The determination by the commission or division of whether to grant or deny the application for a hearing, rehearing, or reconsideration shall be made within ten days after receipt by the commission or division of such application.
"[T]he time permitted for seeking judicial review of any final order or determination," id. , is "within thirty days after said rule, order, or determination has become final," § 25-8-404(3).
¶ 22 The Council relies on Colorado Water Quality Control Commission v. Town of Frederick , 641 P.2d 958, 965 (Colo. 1982), and Peabody Sage Creek Mining , ¶ 20, to support its contentions that a request for a hearing under 25-8-403 is discretionary.
¶ 23 Frederick , 641 P.2d at 960, dealt with a decision involving the Commission's approval of a wastewater treatment plant. The plaintiffs—residents who lived in a nearby subdivision and who opposed the location of the treatment plant—sought reconsideration of the Commission's decision under section 25-8-403. Id. A division of the court of appeals had held that the time to seek judicial review was thirty days from when reconsideration was denied, but the supreme court disagreed and concluded that "[t]he Water Quality Act does not require that a request for reconsideration be filed before a party seeks judicial review." Id. at 965.
¶ 24 Peabody Sage Creek Mining , ¶ 20 n.3, noted that a permit issued to an owner of an inactive mine would have been a final agency order "[i]f [appellant] had not availed itself of the reconsideration process" in section 25-8-403 because "the water division's decision on permitting" was final under section 25-8-404, citing Frederick , 641 P.2d at 965. The division in Peabody Sage Creek Mining concluded that because the mine owner requested reconsideration under section 25-8-403 and the specific division in the Department granted the owner's request for a hearing, the final order was no longer final until after the hearing process governed by the APA. Peabody Sage Creek Mining , ¶ 22.
¶ 25 The Council relies on footnote 3 in Peabody Sage Creek Mining to argue that, because the Council "chose not to pursue additional administrative review, the non-standard permit remained a final agency action and was subject to judicial review." The Council also contends that, because reconsideration is not required under Frederick , it did not need to avail itself of section 25-8-403 and instead timely sought judicial review under section 25-8-404(3).
¶ 26 At first blush, the Council's argument appears to have merit. But it does not take into consideration section 25-8-503.5, which governs the type of general permit the Division issued to the Council.
¶ 27 In 2013, the General Assembly adopted provisions concerning general permits in section 25-8-503.5. Ch. 385, sec. 1, § 25-8-503.5, 2013 Colo. Sess. Laws 2251. As part of those provisions, the General Assembly created a distinct administrative appeal process regarding general permits issued by the Division in section 25-8-503.5(3). That provision says that "[a] party may appeal a general permit issued under section 25-8-502(1)(b)(I)(G) pursuant to the appeals process set forth in section 24-4-105, C.R.S." § 25-8-503.5(3). Section 24-4-105 governs the manner in which adjudicatory hearings before a hearing officer or an administrative law judge must be conducted under the APA. See § 24-4-105(2)(a) ("In any such proceeding in which an opportunity for agency adjudicatory hearing is required under the state constitution or by this or any other statute, the parties are entitled to a hearing and decision in conformity with this section.").
We recognize, as the district court did, that the referenced section 25-8-502(1)(b)(I)(G) in section 25-8-503.5(3), C.R.S. 2022, no longer exists. When the General Assembly added section 25-8-503.5 in 2013, it did not update the cross-reference to cite section 25-8-502(1.1)(f), C.R.S. 2022, which specifically refers to "municipal separate storm sewer systems" and MS4 general permits. The district court properly considered the reference to section 25-8-502(1)(b)(I)(G) to be a typographical error by the General Assembly. See In re Marriage of Roosa , 89 P.3d 524, 528 (Colo. App. 2004) (the reference in a statute to one section, where another section was plainly intended, was subject to correction by the court); see also People v. Madden , 87 P.3d 153, 159 (Colo. App. 2003) (the reference in a statute to a nonexistent section is merely a typographical error that may be corrected by the court, thereby allowing a logical reading of the statute), rev'd on other grounds , 111 P.3d 452 (Colo. 2005). We agree with the district court. And the Council does not dispute that its general permit as a non-standard MS4 is subject to the provisions contained in section 25-8-503.5. It simply disputes the interpretation of the appeal process contained in that section.
¶ 28 But the Council contends that it was not required to pursue an administrative hearing because the language in section 25-8-503.5(3) is permissive rather than mandatory.
¶ 29 Where a statute or ordinance uses the word "may" to refer to an administrative appeal process, Colorado courts have consistently imposed an exhaustion requirement. For instance, in Egle v. City & County of Denver , 93 P.3d 609, 612–13 (Colo. App. 2004), a division of this court held that the plaintiffs were required to exhaust administrative remedies before filing a complaint in district court concerning a decision of the Denver Department of Zoning. The language at issue in Egle came from the Denver City Charter and the Denver Revised Municipal Code. The relevant City Charter provision said that "[a]ppeals to the board of adjustment may be taken by any person aggrieved ... by any decision of an administrative officer. Such appeal shall be taken within a reasonable time, as provided by the rules of the board." Id. at 612 (emphasis added) (quoting Denver City Charter B1.19-3 (2004)). And the relevant municipal code provision said that "[a]ny person aggrieved ... may appeal to the board of adjustment from an order or decision of the department." Id. (emphasis added) (quoting Denver Rev. Mun. Code 53-39 (2004)). The Egle division concluded that the plaintiffs were required to exhaust administrative remedies in the city charter and municipal code before seeking relief in the district court and therefore upheld the dismissal of their complaint.
¶ 30 In Colorado Department of Public Health & Environment v. Bethell , 60 P.3d 779, 783 (Colo. App. 2002), the owner of an oil and gas brine waste disposal facility had not complied with a regulation of the Department concerning financial assurance for closure of a waste disposal site. The Department served the owner with a compliance order that went into effect upon receipt unless noted otherwise or within thirty days from issuance of the order. Id. The Department's regulation states that "the respondent may file a notice of appeal." Dep't of Pub. Health & Env't Reg. 1.9.3(A), 6 Code Colo. Regs. 1007-2 (emphasis added); see Bethell , 60 P.3d at 783. When the owner did not request an appeal and did not comply with the compliance order, the Department filed a regulatory action in district court seeking enforcement. The supreme court concluded that the exhaustion doctrine applies in equal force to defenses as it does to claims, and thus it upheld the district court's ruling that disallowed the owner from maintaining certain defenses because he failed to establish that any exception to the exhaustion doctrine applied. Bethell , 60 P.3d at 784.
¶ 31 Nonetheless, the Council argues that Egle and Bethell are inapposite to this situation because its complaint sought judicial review, whereas the plaintiffs in Egle filed a complaint for mandamus and the Department in Bethell filed a regulatory action against the oil and gas owner. But the Division argues, and we agree, that Egle and Bethell reflect Colorado's strict adherence to the exhaustion of administrative remedies doctrine regardless of the type of relief the party seeks in district court, absent a showing that an exception to that doctrine applies. See, e.g. , Moss v. Members of Colo. Wildlife Comm'n , 250 P.3d 739 (Colo. App. 2010) (upholding exhaustion requirement to a complaint seeking, among other things, injunctive relief); see also United Air Lines, Inc. , 8 P.3d at 1213 ("The requirement that a party exhaust administrative remedies applies with equal force when the party seeks declaratory relief."). But see Golden's Concrete Co. , 962 P.2d at 925 (generally a person does not need to exhaust administrative remedies to file a claim under 42 U.S.C. § 1983 ).
¶ 32 We conclude that the use of the word "may" in section 25-8-503.5(3) created an avenue by which the Council could seek an administrative appeal by requesting a hearing under section 24-4-105, but that the statute's permissive language did not eliminate the Council's obligation to exhaust that administrative remedy before filing its complaint for judicial review in the district court. Therefore, we agree with the district court that by referring to section 24-4-105 in section 25-8-503.5(3), the General Assembly mandated an administrative hearing for parties challenging general permits issued by the Division before seeking judicial review. We reach this conclusion for six additional reasons.
¶ 33 First, Frederick and Peabody Sage Creek Mining are inapposite to this situation because both cases dealt with provisions of the Act that did not direct parties to a hearing under section 24-4-105. At the time Frederick was decided, the Commission's final order was governed by section 25-8-704, C.R.S. 1973. Frederick , 641 P.2d at 959. The 1973 law did not reference section 24-4-105 but simply set forth the standards by which the Commission shall issue a "sewage treatment works." § 25-8-704, C.R.S. 1973. Peabody Sage Creek Mining dealt with the issuance of an individual permit under section 25-8-502, C.R.S. 2022, and that provision also does not reference section 24-4-105. Thus, the parties in Frederick (at the time the case was decided) and Peabody Sage Creek Mining could directly seek judicial review under section 25-8-404, or, as the mine owner did, discretionarily request reconsideration and a hearing under section 25-8-403. Peabody Sage Creek Mining , ¶ 22. Neither case dealt with the provision in section 25-8-503.5 applicable to the permit at issue here. See also Ricchio v. Colo. Sec. Comm'r , 2022 COA 35, ¶ 18, 512 P.3d 1058 (A "general provision" covers a "larger area of the law," whereas a "specific provision" acts as an exception to the general rule "carving out a special niche from the general rules to accommodate a specific circumstance.") (quoting Martin v. People , 27 P.3d 846, 852 (Colo. 2001) )).
Section 25-8-704, C.R.S. 1973, is now codified in section 25-8-702, C.R.S. 2022. See Ch. 324, sec. 1, § 25-8-702, 1981 Colo. Sess. Laws 1336-37. The current version of the statute refers to a Commission hearing that is subject to the provisions of section 24-4-105, C.R.S. 2022, and then identifies the Commission's determination as final for purposes of judicial review under section 24-4-106, C.R.S. 2022.
¶ 34 Second, "[w]e presume that the General Assembly has knowledge of existing statutes and relevant judicial decisions when it enacts legislation." Jordan v. Safeco Ins. Co. of Am., Inc. , 2013 COA 47, ¶ 28, 348 P.3d 443. We must, therefore, presume that the General Assembly was aware of Egle and Bethell —indeed, that it was aware of the extensive body of case law on the exhaustion of administrative remedies doctrine generally—and that it intended to create a mandatory hearing requirement subject to section 24-4-105 for the holder of a general permit issued under section 25-8-503.5(3).
¶ 35 Third, when interpreting statutes, the court assumes that the drafters intended to give each word or phrase meaning, see Cath. Health Initiatives Colo. v. City of Pueblo, Dep't of Fin. , 207 P.3d 812, 821 (Colo. 2009), and the court must not interpret statutes in a manner that renders words or phrases superfluous, see Ford Motor Co. v. Walker , 2022 CO 32, ¶ 18, 517 P.3d 653. If we interpret the reference to "the appeals process set forth in section 24-4-105" in section 25-8-503.5(3) to be permissive—as the Council asks us to do—the General Assembly's mention of section 24-4-105 in section 25-8-503.5(3) would be rendered superfluous. This is because, as we just discussed, a person already has a discretionary right to a hearing under the Act in section 25-8-403. Therefore, the General Assembly did not need to add a hearing requirement referring to section 24-4-105 in section 25-8-503.5(3) unless it intended to make that hearing mandatory and a prerequisite to seeking judicial review.
¶ 36 Fourth, simply because an extensive administrative record was compiled during the permitting process, we cannot, as the Council invites us to do, ignore the hearing requirement in section 25-8-503.5. Instead, this policy argument must be directed to the General Assembly, who may amend or alter the hearing requirement for general permits. See Dep't of Transp. v. City of Idaho Springs , 192 P.3d 490, 494 (Colo. App. 2008) ("If a statute gives rise to undesirable results, the legislature must determine the remedy. Courts may not rewrite statutes to improve them.") (citations omitted).
¶ 37 Fifth, sections 25-8-403 and 25-8-404 are relevant to our interpretation of section 25-8-503.5(3) but only to explain what occurs after the mandatory adjudicatory hearing. Those statutory provisions were not yet applicable to this case because the Council had not requested a hearing under section 24-4-105, as required by section 25-8-503.5(3). Although, as we already discussed, Peabody Sage Creek Mining dealt with a different type of agency action under the Act, the case explains the next steps in the administrative appeal process under the Act after a hearing is conducted under section 24-4-105. Following the adjudicatory hearing held in that case, the parties filed exceptions with the agency, the Executive Director of the Department issued a final agency order, and the owner could have sought judicial review within thirty days under section 25-8-404. Peabody Sage Creek Mining , ¶¶ 23, 25, 33 ; see also § 24-4-105(14)(a)(II) (requiring that exceptions be filed with the agency within thirty days after service of the initial decision issued by the hearing officer or administrative law judge); § 24-4-105(14)(c) (noting that failure to file exceptions with the agency results in a waiver of judicial review).
¶ 38 Finally, although we are not bound by an agency's interpretation of its own Act, we give the agency's interpretation considerable weight, and we will defer to it if reasonable. See Specialty Rests. Corp. v. Nelson , 231 P.3d 393, 397 (Colo. 2010). Here, in addition to section 25-8-503.5(3), the Commission's regulations instruct how an entity may challenge a general permit's terms by requesting from the Division an administrative hearing. Commission Regulation 61.7(a) and (b) provide that any person "affected or aggrieved by the Division's final determination[ ] may demand an adjudicatory hearing within thirty (30) days of the issuance of the final permit determination," which "shall be conducted pursuant to the requirements of sections 24-4-105 and 25-8-401, et seq, C.R.S." Commission Regulation 21 states that the "Division shall provide the opportunity for a formal public adjudicatory hearing" for "[a]djudications of discharge permits issued pursuant to section 25-8-501 through 504, C.R.S." Dep't of Pub. Health & Env't Reg. 21.4(A)(3), 5 Code Colo. Regs. 1002-21.
The Council contends that section 25-8-503.5(3) does not contain a deadline to notify the discharger seeking coverage under the general permit when to request a hearing. But the agency delineated the deadline in the Commission rules. And the Council does not raise any argument that the Commission lacked authority to engage in rulemaking or that those rules conflict with or are contrary to statute. See Marshall v. Civ. Serv. Comm'n , 2016 COA 156, ¶ 12, 401 P.3d 96 ("[W]hen an agency exercises rulemaking authority, ‘[a] rule may not modify or contravene an existing statute, and any rule that is inconsistent with or contrary to a statute is void.’ ") (quoting Colo. Consumer Health Initiative v. Colo. Bd. of Health , 240 P.3d 525, 528 (Colo. App. 2010) )).
¶ 39 And the permit issued by the Division in April 2021 notified the parties that impacted entities could request an adjudicatory hearing within thirty days and that failure to do so would constitute consent to those conditions. Specifically, the permit said, "Should the applicant choose to contest any of the pollutant restrictions, prohibitions, and reduction requirements monitoring requirements or other conditions contained herein, the applicant must comply with Section 24-4-104 CRS and the Colorado Discharge Permit System Regulations." (Emphasis added.)
¶ 40 In sum, the plain language of section 25-8-503.5(3) of the Act and the agency's implementing regulations required the Council to seek an adjudicatory hearing under section 24-4-105 before filing suit in district court. Because the Council did not request an adjudicatory hearing or establish, either in the district court or on appeal, that an exception to the exhaustion requirement applies, we conclude that the district court properly dismissed the Council's complaint for lack of subject matter jurisdiction.
Given our conclusion that the district court properly dismissed the Council's complaint, we need not address the Council's contention that the district court also improperly denied the motion for stay as moot.
IV. Conclusion
¶ 41 The judgment is affirmed.
JUDGE NAVARRO and JUDGE WELLING concur.