In a recent Arizona Court of Appeals decision, the Court upheld the Arizona Department of Environmental Quality’s (“ADEQ” or “Agency”) decision to approve a permit amendment to Arizona Minerals, Inc.’s (“AMI”) aquifer protection permit (“APP”) and denied the appeal of non-profit Patagonia Area Resource Alliance (“PARA”).
In Patagonia Area Res. All. v. Arizona Dep't of Env't Quality, 564 P.3d 296, 299 (Ariz. Ct. App. 2025), the Court was tasked with interpreting A.R.S.§ 49-244 to determine whether the statute requires a mine to install a groundwater monitoring well at the point of compliance to determine whether effluent meets Arizona’s water quality standards. The Court determined that the statute does not require mines to install a monitoring well at the point of compliance. Instead, mines can determine compliance with other Agency approved methods.
This decision is noteworthy for two reasons. First, it upholds the Agency’s position and approval of AMI’s amended permit in the face of a challenge by an environmental non-profit. Second, this decision provides important clarification to discharging facilities subject to the APP statutes and permits.
Background of Patagonia
AMI is a Nevada mining company that has been working on a mining project known as the Hermosa Project in Santa Cruz County, Arizona. AMI received approval by ADEQ for an APP in 2018, under which AMI constructed a lined storage facility for the consolidation for historic tailings; an underdrain collection pond; and a water treatment plant for treatment of underdrain seepage, storm runoff, and mine-influenced water. Following ADEQ’s approval of AMI’s initial permit, AMI determined that to provide safe passage for people and equipment, it needed to add a second water treatment plant to dewater rock units. AMI then applied to ADEQ for amendments to its APP permit, which were granted on August 4, 2021. PARA appealed ADEQ’s approval of the amended APP permit to the Water Quality Appeals Board, resulting in a hearing before an Administrative Law Judge, who affirmed ADEQ’s grant of the amended permit in June 2022.
PARA then appealed the Administrative Law Judge’s finding to the Superior Court of Arizona on August 12, 2022. PARA argued that ADEQ misinterpreted A.R.S. § 49-244 by granting a permit which required no monitoring well be drilled in the Harshaw Creek aquifer. Specifically, PARA argued that a monitoring well must be drilled at the point of compliance to determine that the discharged water meets water quality standards.
The statute defines the “point of compliance” as “the point at which compliance must be determined for either the aquifer water quality standards or, if an aquifer water quality standard is exceeded at the time the aquifer protection permit is issued, the requirement that there be no further degradation of the aquifer . . . [and] [t]he point of compliance shall be a vertical plane downgradient of the facility that extends through the uppermost aquifers underlying that facility.”
ADEQ refuted PARA’s argument that the statute requires monitoring wells to be drilled at the point of compliance, noting that the statute does not include a requirement for drilling a well, and arguing that the Agency is allowed to determine compliance with water quality standards by other means.
ADEQ further explained that when a facility is determining compliance at the point of discharge, this is a “more stringent location” and is more conservative “because it does not allow for any dilution of pollutants upstream of the point of compliance.” The Superior Court affirmed the Administrative Law Judge’s Final Order in favor of ADEQ.
Patagonia’s Appeal
PARA appealed the Superior Court’s affirmation to the Court of Appeals in Arizona, arguing that the Superior Court abused its discretion by finding that the Agency’s grant of AMI’s amended permit was in accordance with Arizona law.
The Appeals Court interpreted A.R.S. § 49-244 de novo to answer the question of whether the statute required AMI to drill a monitoring well at the point of compliance. It noted that the term “determine” as used in the statute (“the point at which compliance must be determined”) is not defined in Arizona water quality laws. Therefore, the Appeals Court looked to the American Heritage Dictionary definition, “[t]o establish or ascertain definitely, as after consideration, investigation, or calculation” and to its prior interpretation of the term, “as synonymous with ‘finds.’”
The Court reasoned AMI was only required to confirm “through investigation and calculation” that groundwater at the point of compliance met the water quality standards. ADEQ’s “comprehensive regulatory scheme” at the second treatment plant—including requiring record keeping, maintenance schedules, contingency plans in case of a spill, assessments of environmental conditions, monitoring controls, and the requirement that AMI measure the discharged water as it is discharged, upstream of the point of compliance—were key indicators that ADEQ’s reasoning was sound.
The decision clarifies that mines in Arizona can determine whether effluent meets aquifer ground water quality standards at a point of compliance without drilling a groundwater monitoring well at that location.
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About the Author
Samantha Catalano is an associate attorney at Gallagher & Kennedy, licensed in both Arizona and New Mexico. She focuses her practice primarily in the regulatory areas of civil litigation, environmental and natural resources, and oil and gas law, successfully handling motions and trial preparation, and appearing before regulatory bodies such as the Oil Conservation Division (“OCD”) and in rulemaking hearings before the New Mexico Environmental Improvement Board.