Mike Hamilton, V Pollution Control Hrgs Bd , 426 P.3d 281 ( 2018 )

Filed
Washington State
Court of Appeals
Division Two
September 5, 2018
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
MIKE HAMILTON; HAMILTON CORNER I, No. 50567-3-II
LLC,
Appellants,
vs. PUBLISHED OPINION
POLLUTION CONTROL HEARINGS
BOARD; WASHINGTON STATE
DEPARTMENT OF ECOLOGY; CITY OF
NAPAVINE,
Respondents.
MAXA, C.J. – This appeal arises out of the Department of Ecology’s (Ecology) approval
in 2012 of the City of Napavine’s (the City) application to change the purpose and place of use
of groundwater rights it had purchased from Betty Hamilton. Mike Hamilton, Betty’s1 nephew,
claims that he also has an ownership interest in the groundwater rights and that Ecology made
errors in processing the application without accounting for his interest.
Hamilton learned of Ecology’s approval of the City’s application for the change of
groundwater rights in 2015. He contacted Ecology and claimed that the application had
mistakenly identified Betty as the sole owner of the groundwater rights and that those rights had
been transferred erroneously to the City. Ecology sent Hamilton a letter dated February 5, 2016
noting that Hamilton had not protested the application despite public notice and had not appealed
1
For purposes of clarity, we refer to Mike Hamilton as Hamilton and to Betty Hamilton as Betty.
We intend no disrespect.
No. 50567-3-II
Ecology’s approval of the application. Therefore, Ecology stated that its decision to approve the
application was final and would not be changed.
Hamilton filed a petition for review of Ecology’s February 2016 letter with the Pollution
Control Hearings Board (the PCHB). The PCHB granted summary judgment in favor of
Ecology, ruling that it lacked jurisdiction to hear Hamilton’s petition because the letter was not
an appealable agency decision. Hamilton then filed a petition for judicial review of the PCHB’s
summary judgment order with the superior court under RCW 34.05.570(3). He also asserted a
claim under RCW 34.05.570(4)(b), asserting that Ecology failed to perform a legally required
duty by not returning the City’s allegedly defective application for correction. The superior
court affirmed the PCHB’s order and denied Hamilton’s RCW 34.05.570(4)(b) claim.
We hold that (1) the PCHB did not err in ruling that it lacked jurisdiction to hear
Hamilton’s appeal because the February 2016 letter was not a reviewable agency decision under
RCW 43.21B.110(1)(d), and (2) the superior court did not err in rejecting Hamilton’s RCW
34.05.570(4)(b) claim that RCW 90.03.270 required Ecology to return the City’s allegedly
defective application because RCW 90.03.270 does not apply after an application is approved.
Accordingly, we affirm the PCHB’s summary judgment dismissal of Hamilton’s petition
for review of the February 2016 letter and affirm the superior court’s dismissal of Hamilton’s
RCW 34.05.570(4)(b) claim regarding Ecology’s decision not to return the City’s allegedly
defective application for correction.
FACTS
In 1954, Ecology issued Certificate of Ground Water Right No. 1726 (GWC 1726) to
Frank and Edith Hamilton. GWC 1726 authorized the use of groundwater from three wells on
specified property for the purpose of irrigation, stock, and domestic supply. The quantity of
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groundwater used was limited to an amount actually beneficially used, not to exceed an annual
quantity of 114 acre-feet of groundwater per year for the irrigation of 57 acres.2
GWC 1726 provided a legal description of the property to which the groundwater right
was appurtenant and the place where the water was put to beneficial use. However, the
construction of Interstate 5 bisected Frank and Edith Hamilton’s property. Hamilton claims that
he and other heirs, operating as Hamilton Corner I LLC, ultimately inherited the property on the
east side of I-5. Hamilton claims that Betty ultimately inherited the property on the west side of
I-5.
In 2003, the City agreed to purchase GWC 1726 from Betty. Hamilton was not involved
with that transaction.
Application for Change of Water Rights
In November 2004, the City filed applications for change/transfer of GWC 1726 with
Ecology. The application sought to change the purpose of use to municipal and the place of use
to the City’s urban growth area. The application also sought to change the point of withdrawal
from wells on Betty’s property to wells on the City’s property. Betty signed the application as
the water right holder and the owner of the existing place of use.
The City’s application included detailed records of the historical use of GWC 1726 on
and around Betty’s property. These records did not show any ownership interest in or any use of
GWC 1726 by Hamilton or Hamilton Corner I LLC.
2
In 1954, Ecology also issued a Certificate of Surface Water Right No. 5605 (SWC 5605) to
Frank Hamilton. The City agreed to purchase SWC 5605 from Betty at the same time that it
agreed to purchase GWC 1726. Hamilton challenged Ecology’s approval of a transfer of SWC
5605. No notice was published regarding SWC 5605. On that basis, Ecology conceded error
below and stated that it would voluntarily rescind the change application for SWC 5605.
Therefore, we do not address SWC 5605.
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The City published notice of the change application for GWC 1726 in The Chronicle, a
Lewis County newspaper, on December 14 and 21, 2007. The notice omitted the township and
range of the legal description of the property to which GWC 1726 was proposed to be
transferred. The notice also erroneously stated that 27 irrigated acres were the subject of the
application rather than 57 acres.
Ecology received five letters from area citizens regarding the application. Hamilton did
not submit any comments on the application.
Ecology determined that the City needed to conduct well testing to determine whether
changing the location of use for GWC 1726 would impair other water rights in the area. As a
result, in April 2008 Ecology issued a preliminary permit authorizing the City to drill a well and
perform well testing with regard to GWC 1726. The preliminary permit allowed the City to
withdraw water until 2011. In April 2010, the City’s engineering consultant notified Ecology
that well testing was complete and transmitted the well testing results. In May 2011, Ecology
sent the City a letter stating that the preliminary permit had expired and had been cancelled.
In March 2012, Ecology prepared a draft decision approving the City’s application, in the
form of a Report of Examination (ROE). Ecology posted the draft ROE on its website for 30
days.
In April 2012, Ecology issued a final ROE approving the change of GWC 1726. The
ROE authorized the City to use a maximum annual quantity of 105 acre-feet of groundwater per
year for municipal water supply purposes. The ROE stated that the City had 30 days to appeal
the order. No appeal of the application approval was filed.
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Ecology’s February 2016 Letter
In November 2015, a paralegal from the Cushman Law Offices sent an email to Ecology
on behalf of Hamilton. The email alleged that the application for a change of GWC 1726
mistakenly identified Betty as the sole owner of the water rights and that the resulting change
had affected water rights that actually were held in common by Hamilton and Betty. But
Hamilton did not file a petition for review of Ecology’s approval of the City’s application.
On February 5, 2016, Ecology sent a letter to the Cushman Law Offices explaining the
process that Ecology had followed in investigating and approving the City’s application. The
letter noted that public notice of the application had been provided as required in RCW
90.03.280, that the draft ROE had been posted on its website, and that a formal appeal could
have been filed within 30 days after the final ROE was issued under chapter 43.21B RCW. The
letter concluded:
When Ecology receives an application, we consider the information submitted by
the applicant as being submitted in good faith. The consultant represented that
Betty Hamilton and Napavine reached an agreement to purchase water rights. They
also submitted information showing the water rights were in good standing. No
conflicting information was presented to Ecology’s attention as a result of the
public notice or the posting of the draft ROEs. No appeals were filed so Ecology’s
decision is final and can no longer be appealed.
90.03.280 and RCW 43.21B provided your client opportunity to bring his concerns
to our attention. Since he did not, Ecology’s decision stands. At this point, your
client’s dispute is a civil matter between your client and Betty Hamilton.
AR at 6.
PCHB Petition for Review
Hamilton filed a petition for review of the February 2016 letter with the PCHB on March
4, 2016.
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Before the PCHB, Ecology filed a summary judgment motion on the issue of jurisdiction.
Ecology argued that the PCHB lacked jurisdiction over Hamilton’s appeal because, among other
reasons, Hamilton sought review of a letter that was not an appealable agency decision.
Hamilton filed a response, which included a cross-motion for summary judgment. He argued
that the City’s application was defective because it contained numerous errors and that he had
not received adequate notice as an alleged co-owner of the water rights at issue.
On July 21, 2016, the PCHB granted Ecology’s motion for summary judgment and
denied Hamilton’s cross-motion for summary judgment. The PCHB ruled that it did not have
jurisdiction to hear the petition for review because the February 2016 letter was not an
appealable decision. The PCHB stated that the appealable decision regarding GWC 1726
occurred in April 2012. Therefore, even if Hamilton’s appeal could be considered as relating to
that appealable decision, it was not timely filed because no appeal was filed within 30 days of
that decision.
Judicial Review in Superior Court
Hamilton filed a petition for review with the superior court on August 18, 2016. He
challenged several actions of the PCHB and Ecology, and sought reversal of the PCHB’s order
granting summary judgment. Hamilton also requested judicial review under RCW
34.05.570(4)(b), which allows a claim for the failure of an agency to perform a legally required
duty. Hamilton asserted that Ecology failed to return the City’s allegedly defective application
for correction as required by RCW 90.03.270.
The superior court ruled that the PCHB had no jurisdiction over Hamilton’s petition for
review because Ecology’s February 2016 letter was not a reviewable decision. Therefore, the
court affirmed the PCHB’s dismissal of the petition. The court also ruled that Hamilton’s RCW
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34.05.570(4)(b) claim was without merit. The court stated, “To the extent that Hamilton alleges
an ownership interest in water rights at issue here, his remedy is to file a quiet title action.”
Clerk’s Papers at 203.
Hamilton appeals the superior court’s rulings affirming the PCHB’s dismissal of his
petition for review and dismissing Hamilton’s RCW 34.05.570(4)(b) claim.
ANALYSIS
A. LEGAL BACKGROUND – CHANGE/TRANSFER OF WATER RIGHTS
Chapter 90.03 RCW regulates the appropriation and beneficial use of surface water.
RCW 90.03.250 through RCW 90.03.340 address applications for permits for the appropriation
of surface water. Chapter 90.44 RCW regulates groundwater, and that chapter was enacted to
extend the surface water statutes to the appropriation and beneficial use of groundwater. RCW
90.44.020. Applications for permits for the appropriation of groundwater are made in the same
form and manner provided in RCW 90.03.250 through RCW 90.03.340. RCW 90.44.060.
A party seeking to appropriate water for beneficial use must apply to Ecology for a
permit before the party can divert surface water or construct a groundwater well. RCW
90.03.250; RCW 90.44.050. The applicant must include the source of the water supply, the
nature and amount of the proposed use, and other details. RCW 90.03.260(1). Applications to
withdraw water by means of a well must provide additional information. RCW 90.44.060.
Applicants must publish notice of the Ecology application in a newspaper of general circulation
in the county in which the water is put to beneficial use once a week for two consecutive weeks.
RCW 90.03.280.
Ecology must investigate the water rights at issue in an application to determine the
extent and validity of the water right, including whether the water right has been perfected and
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how much of it has been put to beneficial use. RCW 90.03.290(1); see R.D. Merrill Co. v.
Pollution Control Hr’gs Bd., 137 Wn.2d 118, 126-27, 969 P.2d 458 (1999). Ecology may issue
a preliminary permit to allow an applicant to make necessary investigations. RCW
90.03.290(2)(a).
If Ecology determines that an application for the appropriation of water has been
perfected according to the statutory requirements, Ecology has a duty to issue a water right
certificate to the applicant. RCW 90.03.330(1). The certificate must be recorded with the
county auditor. RCW 90.03.330(1).
The right to use water that has been put to beneficial use “shall be and remain
appurtenant to the land or place” where the water is used. RCW 90.03.380(1). However, water
rights “may be transferred to another or to others and become appurtenant to any other land or
place of use . . . if such change can be made without detriment or injury to existing rights.”
RCW 90.03.380(1). The point of diversion and purpose of the use also may be changed with the
same qualification. RCW 90.03.380(1).
Before a transfer of or change to water rights can be made, any person having an interest
in the transfer or change must file a written application with Ecology. RCW 90.03.380(1).3 As
with an application to appropriate water, the applicant must publish notice of the application as
required in RCW 90.03.280. RCW 90.03.380(1). Similarly, an application to “change the
manner or place of use of the [ground]water shall be issued only after publication of notice of the
application.” RCW 90.44.100(2).
3
There does not appear to be a provision similar to RCW 90.03.380(1) in chapter 90.44 RCW
providing for the transfer of groundwater rights, and chapter 90.44 RCW does not expressly
incorporate RCW 90.03.380(1) as it does with other provisions of chapter 90.03 RCW.
However, Hamilton does not challenge Ecology’s ability to approve the transfer of groundwater
rights.
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If it appears that a transfer or change of water rights can be made without detriment to
existing rights, Ecology shall issue to the applicant a certificate granting the transfer or change.
RCW 90.03.380(1). The certificate may be filed with the county auditor. RCW 90.03.380(1).
B. PCHB’S JURISDICTION UNDER RCW 43.21B.110(1)(d).
Hamilton argues that the PCHB erred by ruling that it lacked jurisdiction under RCW
43.21B.110(1)(d) over his petition for review of the February 2016 letter. We disagree.
1. Administrative Procedures Act
The Administrative Procedures Act (APA) governs our review of agency decisions,
which includes decisions by the PCHB. RCW 34.05.510; Ctr. for Envtl. Law v. Dep’t of
Ecology, 196 Wn. App. 360, 372-73, 383 P.3d 608 (2016), review denied 187 Wn.2d 1021(2017). We sit in the same position as the superior court and review the record before the PCHB
directly. Ctr. for Envtl. Law, 196 Wn. App. at 373.
Under the APA, we may grant relief from the PCHB’s order based on one of nine reasons
listed in RCW 34.05.570(3), including that the order is (1) unconstitutional, (2) based on an
unlawful procedure or decision-making process, (3) based on an erroneous interpretation or
application of the law, or (4) arbitrary and capricious. RCW 34.05.570(3)(a), (c), (d), (i). The
party challenging the PCHB’s decision has the burden of demonstrating the invalidity of that
decision. RCW 34.05.570(1)(a).
We review the PCHB’s decision to grant a summary judgment motion de novo. Ctr. for
Envtl. Law, 196 Wn. App. at 373. We view all facts and reasonable inferences drawn from those
facts in the light most favorable to the nonmoving party. Id. Summary judgment is appropriate
if there are no genuine issues of material fact, and the moving party is entitled to judgment as a
matter of law. Id.
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2. PCHB Jurisdiction
Under RCW 43.21B.110(1), the PCHB only has jurisdiction to hear and decide petitions
for review regarding certain enumerated “decisions” of Ecology and other environmental
agencies. One category of decisions for which the PCHB has jurisdiction is “the issuance,
modification, or termination of any permit, certificate, or license” by Ecology or any air
authority. RCW 43.21B.110(1)(d). Hamilton relies only on this category.
WAC 508-12-400 also addresses the PCHB’s jurisdiction: “All final written decisions of
the department of ecology pertaining to permits, regulatory orders, and related decisions made
pursuant to this chapter shall be subject to review by the [PCHB] in accordance with chapter
43.21B RCW.”
We review the extent of an agency’s jurisdiction de novo as a matter of law. Landon v.
Home Depot, 191 Wn. App. 635, 640, 365 P.3d 752 (2015).
3. Reviewable Decision
The question here is whether Ecology’s February 2016 letter was a “decision” reviewable
by the PCHB under RCW 43.21B.110(1)(d). The PCHB ruled that it did not have jurisdiction to
hear Hamilton’s petition for review because the February 2016 letter that Hamilton appealed was
not an agency decision.
Three factors support the conclusion that Ecology’s February 2016 letter was not a
reviewable decision. First, under RCW 43.21B.110(1)(d) a reviewable decision is “the issuance,
modification, or termination of any permit, certificate, or license.” But the February 2016 letter
only provided information. The letter merely responded to Hamilton’s inquiry about the case,
explained the process that had been followed, and noted that Hamilton had not appealed the final
decision it had made in 2012 to approve the City’s application. And the letter informed
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Hamilton that Ecology’s 2012 decision was final and no longer could be appealed, and that
“Ecology’s decision stands.” AR at 6. The letter did not issue, modify, or terminate GWC 1726
or any other permit, certificate, or license.
Second, RCW 43.21B.310(4) states that an “appealable decision or order shall be
identified as such and shall contain a conspicuous notice” that it may be appealed within 30 days
of receipt. The February 2016 letter was not identified as a decision and contained no such
appeal language. By contrast, the 2012 ROE contained explicit language identifying Ecology’s
approval of the City’s application as a final decision of the agency and notifying the City of its
right to appeal. Failure to include the RCW 43.21B.310(4) language is not necessarily
dispositive of whether a communication is reviewable under RCW 43.21B.110(1). Klineburger
v. King County Dep’t of Dev. & Envtl. Law Servs. Bldg., 189 Wn. App. 153, 170, 356 P.3d 223(2015). But nothing in the February 2016 letter suggested that it was a decision that would be
subject to PCHB review.
Third, the PCHB previously ruled that a letter to a party providing only information and
clarification was not a reviewable order and that the PCHB did not have jurisdiction to review it.
Steensma v. Dep’t of Ecology, No. 11-053, at 5-8 (Wash. Pollution Control Hr’gs Bd. Sept. 8,
2011) (order granting summary judgment),
http://www.eluho.wa.gov/Global/RenderPDF?source=casedocument&id=166
[https://perma.cc/UK4K-QQ7X]. The PCHB ruled that the letter was not a decision because it
did not purport to make any actual determinations on the extent, validity, or status of water rights
and only provided Ecology’s opinion. Id. at 6-7. The PCHB also noted that the letter did not
contain language indicating that it was an appealable decision as required in RCW
43.21B.310(4). Id. at 7.
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Hamilton relies on WAC 508-12-400, which states that “[a]ll final written decisions” of
Ecology “pertaining to permits” and “related decisions made pursuant to this chapter” are subject
to PCHB review. He claims that the February 2016 letter relates to Ecology’s decision not to
require the City to correct its defective application. But WAC 508-12-400 by its express
language states that certain decisions are subject to review “in accordance with chapter 43.21B
RCW.” As noted above, under RCW 43.21B.110(1)(d) a reviewable decision is “the issuance,
modification, or termination of any permit, certificate, or license.” The fact that a letter pertains
to a permit does not transform that letter into a decision that can be reviewed under RCW
43.21B.110(1)(d).
Hamilton also argues that the PCHB erred by not hearing his petition for review as an as-
applied constitutional challenge. Hamilton cites a decision in which the PCHB acknowledged
jurisdiction for an as-applied constitutional challenge to whether the State agency committed any
procedural errors or complied with applicable laws. Rasmussen v. Puget Sound Clean Air
Agency, No. 12-091, at 9-10 (Wash. Pollution Control Hr’gs Bd. Jan. 14, 2013) (order on
motions) http://www.eluho.wa.gov/Global/RenderPDF?source=casedocument&id=22
[https://perma.cc/5X5W-FMMR]. However, in that case the PCHB’s jurisdiction over the
petition was not contested. Here, as discussed above the PCHB has no jurisdiction over
Hamilton’s petition for review. As a result, the PCHB lacks jurisdiction over all aspects of the
petition, including a constitutional claim.
We hold that the February 2016 letter was not a reviewable decision under RCW
43.21B.110(1)(d) and therefore that the PCHB did not err in concluding that it lacked jurisdiction
to hear Hamilton’s petition for review.
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C. JUDICIAL REVIEW UNDER RCW 34.05.570(4)
Hamilton argues that the superior court erred in rejecting his claim for judicial review
under RCW 34.05.570(4)(b) that Ecology failed to perform a legally required duty by not
returning the City’s application for correction as required under RCW 90.03.270. We disagree. 4
1. Legal Background
RCW 34.05.570(4)(a) allows judicial review of an “agency action” not reviewable as an
agency rule under subsection (2) or as an agency order in adjudicative proceedings under
subsection (3). In addition, RCW 34.05.570(4)(b) specifically states, “A person whose rights are
violated by an agency’s failure to perform a duty that is required by law to be performed may
file a petition for review pursuant to RCW 34.05.514, seeking an order pursuant to this
subsection requiring performance.” (Emphasis added.) RCW 34.05.514(1) provides that
proceedings for review under the APA shall be instituted by filing a petition in superior court.
Relief for a person seeking judicial review under RCW 34.05.570(4)(a) and (b) will be
granted only if the court determines that the action is unconstitutional, outside the agency’s
authority, arbitrary or capricious, or exercised by an unauthorized person. RCW 34.05.570(4)(c).
“The court shall grant relief only if it determines that a person seeking judicial relief has been
substantially prejudiced by the action complained of.” RCW 34.05.570(1)(d).
4
Ecology also argues that (1) the February 2016 letter is not subject to judicial review under
RCW 34.05.570(4) because the letter was not an “agency action” for the same reason that the
letter was not a “decision” under RCW 43.21B.110(1); and (2) Hamilton’s petition for judicial
review under RCW 34.05.570(4)(b) was untimely because his petition was filed more than 30
days after he received the February 2016 letter despite the statutory requirement that he exhaust
his administrative remedies. Because we affirm on other grounds, we do not address these
issues.
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The petitioner bears the burden of showing entitlement to relief under RCW
34.05.570(4)(b). Rios v. Dept. of Labor & Indus., 145 Wn.2d 483, 492, 39 P.3d 961 (2002); see
RCW 34.05.570(1)(a).
2. Ecology’s Failure to Return the City’s Application
Hamilton argues that Ecology failed to perform a legally required duty by not returning
the City’s allegedly defective application for correction as required under RCW 90.03.270 once
it learned that that the application was defective. He claims that the application was defective
because (1) it did not include his signature as a person with an ownership interest in the water
right and the real property involved, (2) Ecology processed the application after the preliminary
permit was cancelled, (3) there were mistakes in the public notice of the application, (4) and
Ecology did not provide him with actual notice of the agency actions affecting his interest in the
water rights. We disagree that Ecology had an obligation under RCW 90.03.270 to return the
City’s application for correction.
Hamilton relies on RCW 90.03.270 to support his claim that Ecology failed to perform a
legally required duty by not returning the City’s application for correction. RCW 90.03.270
states, “If upon examination, the application is found to be defective, it shall be returned to the
applicant for correction or completion.” Hamilton argues that there is no time limit on when
Ecology has this duty; that Ecology must return an application any time it discovers a defect in
the application, even after the application has been approved.
Specific to the signatures required on the application, Hamilton also relies on Ecology’s
internal guidelines. GUID-2040 discusses the signatures needed for a valid application and
states, “If improper signatures are discovered later, then the application will be returned.” AR at
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90. Again, Hamilton argues that this guideline provides no time limit on when the application
will be returned for improper signatures.
No appellate cases have discussed RCW 90.03.270, and whether Ecology can be required
to return an application after it already has been approved is a question of first impression. We
hold that the requirement to return a defective application for correction under RCW 90.03.270
applies only while the application is pending. Once Ecology approves the application, RCW
90.03.270 is inapplicable.
First, RCW 90.03.270 is located in a series of statutes dealing with the application
process. Based on this placement, it is reasonable to conclude that RCW 90.03.270 applies only
if Ecology discovers a defect in the application during the application process. Once approval
has occurred, the application process is over.
Second, once an application is approved there no longer is a pending application that can
be corrected. At that point, correction of the application would have no effect because the
transfer already has taken place.
Third, the entire water rights system would be disrupted if Ecology was required to return
an application for correction and reprocessing years or even decades after a transfer or change
application is approved. A transferee could never fully rely on an approved transfer if the
application was subject to attack indefinitely.
Finally, Hamilton presents no compelling argument or explanation why Ecology’s
obligation under RCW 90.03.270 should extend beyond approval of the application.
Hamilton’s RCW 34.05.570(4)(b) claim is based solely on his claim that RCW 90.03.270
established a legal requirement for Ecology to return the City’s application for correction in
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February 2016. Because RCW 90.03.270 did not apply after Ecology approved the City’s
application in April 2012, we hold that Hamilton’s RCW 34.05.570(4)(b) claim has no merit.
D. ATTORNEY FEES
Hamilton requests an award of attorney fees and costs both for his initial petitions to the
PCHB and the superior court and his appeal to this court under RCW 4.84.350, RCW 64.40.020,
and 42 U.S.C. § 1983. But Hamilton is not entitled to recover attorney fees and costs because he
is not the prevailing party on appeal.
CONCLUSION
We affirm the PCHB’s decision that it lacked jurisdiction to hear the appeal and affirm
the superior court’s order dismissing Hamilton’s RCW 34.05.570(4)(b) claim regarding
Ecology’s decision not to return the City’s allegedly defective application for correction.
MAXA, C.J.
We concur:
JOHANSON, J.
SUTTON, J.
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