Cite as 2018 Ark. 397 SUPREME COURT OF ARKANSAS No. CV-18-223
Opinion Delivered: December 20, 2018 ARKANSAS OIL & GAS COMMISSION; LAWRENCE BENGAL, IN HIS OFFICIAL CAPACITY AS DIRECTOR OF THE ARKANSAS OIL & GAS APPEAL FROM THE PULASKI COMMISSION; W. FRANK MORLEDGE, COUNTY CIRCUIT COURT, SIXTH MIKE DAVIS, LEE DAWKINS, JERRY DIVISION LANGLEY, JIM PHILLIPS, CHRIS [NO. 60CV-17-3961] WEISER, TIMOTHY SMITH, CHARLES WOHLFORD, AND THOMAS HONORABLE TIMOTHY DAVIS FOX, MCWILLIAMS, IN THEIR OFFICIAL JUDGE CAPACITIES AS COMMISSIONERS OF THE ARKANSAS OIL & GAS COMMISSION; AND SWN PRODUCTION (ARKANSAS), LLC APPELLANTS/CROSS-APPELLEES
V.
J.R. HURD; SARA SMITH HURD; PATRICIA HURD MCGREGOR; VICTORIA HURD GOEBEL; DAVID W. KILLAM; ADRIAN KATHLEEN KILLAM; TRACY LEIGH KILLAM-DILEO; HURD ENTERPRISES, LTD.; AND KILLAM OIL REVERSED AND REMANDED ON CO., LTD. DIRECT APPEAL AND ON CROSS- APPELLEES/CROSS-APPELLANTS APPEAL.
ROBIN F. WYNNE, Associate Justice Appellants Arkansas Oil and Gas Commission (AOGC); Lawrence Bengal, in his
official capacity as director of the AOGC; the AOGC commissioners1 in their official
capacities (collectively, the AOGC); and separate appellant SWN Production (Arkansas),
LLC (SWN), appeal from an order of the Pulaski County Circuit Court (1) dismissing with
prejudice, based on sovereign immunity, this administrative appeal from final orders of the
AOGC; (2) declaring the adjudicatory provisions of the Arkansas Administrative Procedure
Act (APA) unconstitutional; (3) declaring the AOGC orders at issue void ab initio; and (4)
dismissing the petition for review. The petitioners before the circuit court (appellees/cross-
appellants, hereinafter referred to as appellees)2 cross-appealed. We reverse the circuit
court’s dismissal order in its entirety and remand for further proceedings pursuant to the
APA.
I. Background
Appellees are the owners/lessors and lessees of mineral interests in Sections 25 and
36, Township 9 North, Range 11 West, Cleburne County, Arkansas. The mineral
interests at issue, which lie in the Moorefield Shale Formation (below the Fayetteville Shale
Formation), are integrated into SWN’s drilling units by virtue of integration orders issued
by the AOGC in March 2017. SWN subsequently filed supplemental applications with
1 The AOGC Commissioners are W. Frank Morledge, Mike Davis, Lee Dawkins, Jerry Langley, Jim Phillips, Chris Weiser, Timothy Smith, Charles Wohlford, and Thomas McWilliams. 2 The petitioners are J.R. Hurd, Sara Smith Hurd, Patricia Hurd McGregor, Victoria Hurd Goebel, David W. Killam, Adrian Kathleen Killam, Tracy Leigh Killam-Dileo, Hurd Enterprises, Ltd., and Killam Oil Co., Ltd.
2 the AOGC seeking a determination of “the reasonable royalty rate consistent with royalty
negotiated for depth-limited leases below the base of the Fayetteville Shale formation, made
at arm’s length in the [same] general area.” In essence, SWN argued that the oil and gas
leases between the mineral owners and Hurd Enterprises and Killam Oil were “self-dealing,
non-arm’s length” transactions and that the 25 percent royalty rate was “grossly excessive.”
Appellees objected to the supplemental application and contended, among other things,
that the AOGC did not have the authority to disregard the royalty rate in an existing lease
when the lessee elects to go non-consent. After a public hearing, the AOGC ordered that
“[t]he leasehold royalty payable to the parties . . . by the Consenting Parties during the
recoupment period shall not exceed 1/7th.” Thus, the AOGC reduced the royalty rate
agreed to by Hurd Enterprises and Killam Oil and the mineral owners.
On July 28, 2017, appellees filed a petition for review in the Pulaski County Circuit
Court pursuant to the APA, Arkansas Code Annotated section 25-15-212 (Repl. 2014),
and the Arkansas Oil and Gas Conservation Act, Arkansas Code Annotated section 15-72-
110 (Repl. 2009). They alleged that the AOGC lacks statutory authority to (1) disregard
the royalty rate in an existing lease when a lessee is forcibly integrated into a drilling unit
and then elects to go non-consent; (2) single out in its orders “leases negotiated at non-
arms-length between affiliated parties”; or, (3) by virtue of the language of the supplemental
orders, authorize SWN as the operator to make the practical determination of which leases
in the unit were “negotiated at non-arms-length between affiliated parties.” Among other
claims, appellees alleged that the AOGC’s actions were ultra vires. Pursuant to Arkansas
3 Code Annotated section 25-15-212(g), appellees requested that the circuit court set a
briefing schedule and hear oral argument; ultimately, appellees sought to have the
supplemental orders regarding royalty rates vacated and reversed.
On January 18, 2018, this court issued a decision concerning the doctrine of
sovereign immunity in Board of Trustees of the University of Arkansas v. Andrews, 2018 Ark.
12, 535 S.W.3d 616. On January 21, 2018, the AOGC filed a motion to dismiss the
petition for review for lack of subject-matter jurisdiction. The AOGC argued that, under
Andrews, it has sovereign immunity from suit in this matter and that the action should be
dismissed. Appellees filed a response the following day, on which a hearing was scheduled,
arguing that the complaint stated a valid claim for an ultra vires and illegal act that was not
subject to the sovereign immunity doctrine. At the hearing, the circuit court considered
the parties’ arguments regarding sovereign immunity as set out in the motion to dismiss
and response, allowed the parties to make any further arguments for the record, and
announced its decision to grant the AOGC’s motion to dismiss and declare the orders that
were the subject of the petition for review void ab initio and of no force and effect. In its
February 12, 2018 order, the circuit court wrote:
On January 22, 2018, came on for hearing the motion to dismiss of separate Respondents, the Arkansas Oil & Gas Commission, Lawrence Bengal, W. Frank Morledge, Mike Davis, Lee Dawkins, Jerry Langley, Jim Phillips, Chris Weiser, Timothy Smith, Charles Wohlford and Thomas McWilliams (“Agency Respondents”) and the response of the petitioners, J.R. Hurd, Sara Smith Hurd, Patricia Hurd McGregor, Victoria Hurd Goebel, David W. Killam, Adrian Kathleen Killam, Tracy Leigh Killam-Dileo, Hurd Enterprises, Ltd., and Killam Oil Co., Ltd.
4 (“Petitioners”), and from the pleadings and the arguments of the parties, the Court hereby finds and concludes as follows:
1. On January 22, 2018, the Agency Respondents filed a Motion to Dismiss based upon the recent decision of the Arkansas Supreme Court in the case of Board of Trustees of the University of Arkansas v. Andrews, Supreme Court Case Number CV - 17-168 issued on January 18, 2018. Petitioners responded to the motion the same day.
2. The Andrews case did not specifically address the interaction of Article 2, Section 13 of the Arkansas Constitution about whether the State had waived sovereign immunity, or to what extent sovereign immunity and Article 2, Section 13 might work together.
3. In this administrative appeal the Court has seen nothing that the State has done that would constitute a fact-based waiver of sovereign immunity. As soon as reasonably possible after the Supreme Court announced a sea change in the parameters of sovereign immunity, the Agency Respondents brought the issue of sovereign immunity to the Court’s attention and addressed it in a motion to dismiss. In the event that was something left open in the Andrews case, it is not open in this case.
4. Both Article 2, Section 13 of the Arkansas Constitution and the due process clause of the United States Constitution require both a procedural and a substantive remedy for every alleged injury, wrong, or taking.
5. This matter is not an original action. It is an administrative appeal under the adjudicatory provisions of the Arkansas Administrative Procedures Act. The adjudicatory provisions are not the entire act. The specific statutes are Ark. Code Ann. §§ 25-15-206, 207, 208, 209, 210, 212, 213, and 214. Those statutes together create a specific, seamless adjudicatory framework that has always satisfied the procedural and substantive requirements of due process because there was an administrative provision, and then there was an opportunity to appeal. By statute, the appeal of an agency decision was to circuit court for any party who felt aggrieved by an agency’s administrative action. The General Assembly, in the Administrative Procedures Act, specifically legislated in A.C.A. § 25-15-2 14 that any appeal of an agency decision must go to circuit court.
5 6. The Court is not aware of any statutory authority allowing any administrative appeals to be heard by the Arkansas State Claims Commission. Ark. Code Ann. § 19-10-204(b)(2)(A) does give the Claims Commission jurisdiction over claims which are barred by the doctrine of sovereign immunity from being litigated in a court of general jurisdiction. But as previously noted, the present matter is not an original claim; it is an administrative appeal that is part of a seamless process set up by the General Assembly.
7. To the extent that the Arkansas Supreme Court’s decision in Andrews is applicable to administrative appeals under the Arkansas Administrative Procedures Act, the adjudicatory provisions of the Arkansas Administrative Procedures Act are now violative of Article 2, Section 13 of the Arkansas Constitution and violative of the due process clause of the United States Constitution until such time as the General Assembly can meet and amend the APA to be in conformity with both the Andrews case, Article 2, Section 13, and the due process clause.
8. The Defendants’ Motion to Dismiss is granted with prejudice, and this case is dismissed. Ark. Code Ann. §§ 25-15-206, 207, 208, 209, 210, 212, 213, and 214 that are the adjudicatory provisions of the Arkansas Administrative Procedures Act are declared to be unconstitutional as written under the Andrews case because of the Arkansas Supreme Court’s decision in Andrews. This means that the orders that are the subject of the petition for review are void ab initio. They are null and void as if they had never been entered.
9. Petitioners’ petition for review also alleged jurisdiction under Ark. Code Ann. § 15-72-110. Petitioners have also argued that the Andrews case noted that “acting illegally” is an exception to sovereign immunity and that the whole issue on appeal is that the Agency Respondents were without statutory authority to rule as they did, making the orders appealed from ultra vires. They further argue that the Arkansas Supreme Court in Andrews did not overrule that exception. To that extent, the Court grants the Agency Respondents’ Motion to Dismiss that they were not acting illegally, that they were not acting ultra vires, based upon the pleadings that the Court read. The Court makes a fact-based determination that there is no indication in the appeal record that the Agency Respondents were acting ultra vires, illegally, or without authority of law. The Court declines each of the Petitioners’ individual arguments to the extent that the Court hasn’t granted any of them. Dobson v. Oil and Gas Commission case, 218 Ark. 160, 235 S.W.2d 33 (1950), cited by the Petitioners, has been overruled by implication with the Andrews case.
6 10. Petitioners also argued in their petition for review and in their response to Respondents’ motion to dismiss that their property rights are affected by the orders that are the subject of the petition for review. Petitioners cite Article 2, Section 13, as a further ground for their petition for review and as an exception to the Court’s reading of the holding in Andrews. The Court agrees that property rights are involved. However, without the Supreme Court specifically addressing the interplay of sovereign immunity and Article 2, Section 13, as a trial judge, the Court concludes based on its reading of Andrews that if the sovereign immunity clause of the constitution and Article 2, Section 13 are read together, the Article 2, Section 13 applies to everything and everybody unless the matter is a party against the State of Arkansas and then the sovereign immunity clause means the State of Arkansas cannot be brought into court.
11. Based on Andrews and the lack of a right of review of Respondents’ orders, the Court concludes that there is a clear violation of both procedural and substantive due process.
12. The Court is not making a decision about the factual elements of the parties’ arguments, other than the Agency Respondents’ actions were not ultra vires. If the case is remanded and the Court has jurisdiction, the Court will allow the parties to make further arguments on other issues raised.
13. This leaves the parties to those contracts at issue in the order back talking to each other and puts the Arkansas Oil and Gas Commission out of adjudicatory business until something is resolved by the Arkansas Supreme Court, or the General Assembly addresses the issue.
14. The Court’s oral ruling and the bases therefor are incorporated herein.
15. SWN Production (Arkansas), LLC is made a party respondent herein.
IT IS THEREFORE ORDERED that the Agency Respondents’ motion to dismiss is granted with prejudice, that the orders that are the subject of the petition for review of J.R. Hurd, Sara Smith Hurd, Patricia Hurd McGregor, Victoria Hurd Goebel, David W. Killam, Adrian Kathleen Killam, Tracy Leigh Killam-Dileo, Hurd Enterprises, Ltd., and Killam Oil Co., Ltd., are void ab initio and of no force and effect, and that Petitioners’ petition for review is dismissed.
7 From this order, the AOGC and SWN filed notices of appeal, and appellees filed a notice
of cross-appeal.
II. Direct Appeal
On appeal, the AOGC argues that the circuit court correctly held that the petition
for review was barred by sovereign immunity but erred by invalidating the APA’s
adjudicatory provisions and AOGC’s orders. The AOGC contends that after holding that
the petition was barred by sovereign immunity, the circuit court lacked jurisdiction to do
anything but dismiss the petition. Further, the AOGC argues that even if the circuit
court’s sovereign-immunity analysis was incorrect, the court’s award of substantive relief
must still be reversed because the circuit court’s basis for declaring provisions of the APA
unconstitutional and voiding AOGC’s administrative orders would no longer exist. In its
brief, separate appellant SWN argues that judicial review of state administrative actions is
not barred by the Andrews decision for several reasons, and that even if the circuit court’s
sovereign-immunity ruling is affirmed, the substantive rulings of the circuit court must be
reversed. Appellees respond by arguing that judicial review of an agency action under the
APA is not unconstitutional; judicial review of an agency action alleged to be ultra vires is
not unconstitutional; and the AOGC exceeded its authority, i.e., acted in an ultra vires
manner. Accordingly, all parties agree that the circuit court’s order should be reversed
insofar as it declared the adjudicatory portions of the APA unconstitutional.
8 We begin our analysis with article 5, section 20 of the Arkansas Constitution,
which provides: “The State of Arkansas shall never be made defendant in any of her
courts.” Sovereign immunity is jurisdictional immunity from suit, and jurisdiction must be
determined entirely from the pleadings. Bd. of Trustees of Univ. of Ark. v. Andrews, 2018
Ark. 12, at 5, 535 S.W.3d 616, 619. A suit against the State is barred by the sovereign-
immunity doctrine if a judgment for the plaintiff will operate to control the action of the
State or subject it to liability. Id.
In Andrews, this court held that that the General Assembly cannot waive the State’s
immunity pursuant to article 5, section 20. The plaintiff had filed a claim against the
college for failing to compensate him for overtime in violation of the Arkansas Minimum
Wage Act. This court examined the history of sovereign immunity in the Arkansas
Constitution and our precedent, and we concluded that the General Assembly cannot
waive the State’s immunity pursuant to article 5, section 20. Id. at 11–12, 535 S.W.3d at
623. This court recognized that some cases had previously stated that a claim of sovereign
immunity may be surmounted “when an act of the legislature has created a specific waiver
of sovereign immunity,” and overruled any cases conflicting with the holding in Andrews.
Id. Since Andrews, this court has cautioned that the opinion should not be read too
broadly. Ark. Cmty. Corr. v. Barnes, 2018 Ark. 122, at 3, 542 S.W.3d 841, 843 (“We
emphasize here, as in Andrews, that the only issue before this court is whether the General
Assembly’s choice to abrogate sovereign immunity in the AWBA is prohibited by the
9 constitution.”); Ark. Dep’t of Veterans Affairs v. Mallett, 2018 Ark. 217, at 2 n.2, 549 S.W.3d
351, 352 n.2 (“We caution that Andrews should not be interpreted too broadly.”).
Now, the question before this court is whether article 5, section 20 of the Arkansas
Constitution prohibits suit against the AOGC in the context of an appeal to circuit court
under the APA, i.e., whether sovereign immunity prohibits suits seeking judicial review of
agency adjudications. Relying on Andrews, the circuit court concluded that it does. We
generally review a circuit court’s decision on a motion to dismiss by treating the facts
alleged in the complaint as true and by viewing them in the light most favorable to the
plaintiff. Andrews, 2018 Ark. 12, at 4, 535 S.W.3d at 619. When the circuit court is
presented with documents outside the pleadings, we treat the case as an appeal from a
summary judgment and view the evidence in the light most favorable to the party opposing
the motion. Id. However, when the issues on appeal do not involve factual questions but
rather the application of a legal doctrine, we simply determine whether the moving party is
entitled to judgment as a matter of law. Id.
Pursuant to the APA, “[i]n cases of adjudication, any person . . . who considers
himself or herself injured in his or her person, business, or property by final agency action
shall be entitled to judicial review of the action under this subchapter.” Ark. Code Ann. §
25-15-212(a). “‘Adjudication’ means an agency process for the formulation of an order.”
Ark. Code Ann. § 25-15-202(1)(A). Section 25-15-212 further provides in pertinent part as
follows:
10 (g) The review shall be conducted by the court without a jury and shall be confined to the record, except that in cases of alleged irregularities in procedure before the agency not shown in the record, testimony may be taken before the court. The court shall, upon request, hear oral argument and receive written briefs.
(h) The court may affirm the decision of the agency or remand the case for further proceedings. It may reverse or modify the decision if the substantial rights of the petitioner have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:
(1) In violation of constitutional or statutory provisions; (2) In excess of the agency’s statutory authority; (3) Made upon unlawful procedure; (4) Affected by other error or law; (5) Not supported by substantial evidence of record; or (6) Arbitrary, capricious, or characterized by abuse of discretion.
Ark. Code Ann. § 25-15-212(g), (h). Appellees also cited in their petition for review
Arkansas Code Annotated section 15-72-110 regarding appellate procedures for
proceedings brought under the Arkansas Oil and Gas Conservation Act. Section 15-72-
110, titled “Appellate procedures,” provides in pertinent part:
In all proceedings brought under authority of this act, of any oil or gas conservation statute of this state, or of any rule, regulation, or order issued thereunder and in all proceedings instituted for the purpose of contesting the validity of any provision of the act, of any oil or gas conservation statute, or of any rule, regulation, or order issued thereunder, appeals may be taken in accordance with the general laws of the State of Arkansas relating to appeals.
The present case is distinguishable from Andrews and other recent cases concerning
sovereign immunity because it concerns an appeal of an agency adjudication. The AOGC
is a named defendant, but its role in the proceeding is that of a tribunal or a quasi-judicial
decision-maker rather than a real party in interest. It is akin to a trial court in an appellate
11 proceeding; it has no vested interest in the outcome of the appeal other than whether its
decision is upheld. The subject of the adjudication—the amount of royalty to be paid by
SWN to the appellees—does not affect the State’s coffers or control its actions. See Duit
Constr. Co., Inc. v. Ark. State Claims Comm’n, 2015 Ark. 462, at 5, 476 S.W.3d 791, 795 (“In
determining whether the doctrine of sovereign immunity applies, the court must decide if a
judgment for the plaintiff will operate to control the action of the State or subject it to
liability.”). Appellees sought judicial review of the AOGC’s final agency action; they
alleged no additional claims against the AOGC or any other state actor. Under these
circumstances, sovereign immunity is not implicated because the AOGC is not “made a
defendant” as contemplated by article 5, section 20, of the Arkansas Constitution. There
is no need to address “exceptions” to sovereign immunity because the doctrine simply does
not apply in this case. We acknowledge the AOGC’s argument that the circuit court
reviewed the administrative record and made a “fact-based determination” that the AOGC
was not acting ultra vires, illegally, or without authority of law. However, we find the
circuit court’s order to be ambiguous such that remand is necessary to ensure that
appellees’ arguments—which are based in statutory interpretation—are considered.
Because the circuit court erred in concluding that the doctrine of sovereign
immunity barred its consideration of the petition for review of the AOGC orders, it
follows that the rulings declaring the adjudicatory provision of the APA unconstitutional
and the AOGC’s orders void ab initio must also be reversed. Accordingly, we reverse the
12 circuit court’s order in its entirety and remand for further proceedings pursuant to the
APA.3
III. Cross-Appeal
On cross-appeal, appellees/cross-appellants argue that the AOGC exceeded its
authority. Essentially, their argument is that none of the statutes cited by the AOGC
actually provide a sufficient basis for the AOGC’s asserted jurisdiction over the royalty
SWN must pay the royalty owners. Alternatively, they argue that this court should remand
for full consideration of whether the AOGC exceeded its authority. We agree with the
alternative argument, and for the reasons outlined above, remand to the circuit court for
consideration of the petition for review in accordance with the APA.
IV. Conclusion
Reversed and remanded on direct appeal and on cross-appeal.
HART, J., concurs.
WOOD and WOMACK, JJ., concur in part and dissent in part.
BAKER, J., dissents.
3 Because this appeal comes to us on the grant of a motion to dismiss based on the doctrine of sovereign immunity and the circuit court has not considered the petition for review on its merits, we believe it prudent to remand for consideration by the circuit court in the first instance as contemplated by the APA.
13 JOSEPHINE LINKER HART, Justice, concurring. I concur. I agree with the
majority’s conclusion that the role of the Arkansas Oil and Gas Commission in this case
was that of a quasi-judicial forum; the commission was not “made defendant” within the
meaning of art. 5, § 20 of the Arkansas Constitution. I write separately because Justice
Baker’s dissent raises issues that demand action from this court. The untenability of our
current sovereign immunity jurisprudence, demonstrated by cases like the one currently
before us, is lost neither on the parties to this case nor on the rest of the Arkansas legal
community. The fallout from Board of Trustees of the University of Arkansas v. Andrews, 2018
Ark. 12, 535 S.W.3d 616 has manifested in all forms of state court litigation related to
government affairs, with litigants from both the public and private spheres clamoring to
either weaponize or escape from Andrews and its undefined limitations, and our law is
suffering because of it. This court must “wipe the slate” on sovereign immunity, in lieu of
continuing this tired and awkward endeavor to develop our jurisprudence within Andrews
and its progeny. See, e.g., Walther v. FLIS Enters., Inc., 2018 Ark. 12, 535 S.E.3d 616
(sovereign immunity is an affirmative defense that must be raised in a responsive pleading)
and Arkansas Dep’t of Veterans Affairs v. Mallett, 2018 Ark. 217, 549 S.W.3d 351 (without
overruling FLIS, failure to raise sovereign immunity as affirmative defense in responsive
pleading simply does not matter).
We cannot keep doing this. The Andrews decision was improvident for its profound
lack of any actual constitutional analysis. See Arkansas Community Correction v. Barnes, 2018
Ark. 122, 542 S.W.3d 841 (Hart, J., dissenting). The notion that the drafters of our constitution intended to allow our state government to assert sovereign immunity against
the citizens of Arkansas in cases like Andrews and Barnes, where the government is accused
of acting illegally and unconstitutionally, is simply wrong. Furthermore, the failure by the
majority in Andrews to define the majority opinion’s limitations, especially when the dissent
so desperately endeavored to point out the majority opinion’s dangerous implications, has
made this situation far worse. It is time for this court to simply acknowledge as much, so
we can move forward.
RHONDA K. WOOD, Justice, concurring and dissenting. I concur with the result
on direct appeal. Sovereign immunity is not applicable in a petition for review from an
agency decision. For the following reasons, however, I must respectfully dissent from the
majority’s decision to remand the cross-appeal.
The cross-appeal concerns an issue of statutory interpretation that was fully briefed
to the circuit court and on appeal. The circuit court ruled on the issue, albeit without
explanation. And on appeal, the parties unanimously entreat this court to rule on the
merits without remanding.1 Procedurally, remanding the cross-appeal here accomplishes no
more than eliciting a more detailed legal interpretation that we will ultimately afford no
deference. E.g., Dep’t of Ark. State Police v. Keech Law Firm, P.A., 2017 Ark. 143, at 2, 516
S.W.3d 265, 267; State v. Thomas, 2014 Ark. 362, at 4, 439 S.W.3d 690, 692 (explaining
that we give no deference to the circuit court’s statutory interpretation). In practicality,
1 As noted by the majority, appellees alternatively argue that should the court fail to address the merits, they would prefer remand over an outright ruling against them.
15 however, the majority’s decision unnecessarily delays resolution, which undoubtedly
induces continued financial strain on every party involved. Because we are more than
capable of interpreting the law at this stage in the case, I respectfully dissent from the
majority’s decision not to do so.
The majority opinion implies that the circuit court only made a factual
determination, not a legal one. But the opposite is true. Although the circuit court
factually reviewed the administrative record, as the majority cites, it did not decide any facts.
The order expressly stated that it “is not making a decision about the factual elements of
the parties’ arguments, other than the Agency Respondents’ actions were not ultra vires.”
But the ultra-vires issue is purely a matter of statutory interpretation. There are simply no
factual issues at play.
The circuit court plainly and repeatedly stated it was denying the appellees’ legal
argument in their petition for review. The court concluded, both on the record and in its
order, that the AOGC did not act “ultra vires, illegally, or without authority of law.” The
parties agree that there are no material facts in dispute. They also agree that the appellees’
petition for review sought only a legal determination regarding the scope of the AOGC’s
statutory authority. After appellees specifically requested that the circuit court rule on the
ultra-vires issue, the court stated in its written order,
Petitioners have also argued that the Andrews case noted that “acting illegally” is an exception to sovereign immunity and that the whole issue on appeal is that the Agency Respondents were without statutory authority to rule as they did, making the orders appealed from ultra vires. . . . To that extent, the Court grants the
16 Agency Respondents’ Motion to Dismiss that they were not acting illegally, that they were not acting ultra vires, based upon the pleadings that the court read.
(Emphasis added.) Finally, the circuit court’s order “declines each of the Petitioners’
individual arguments to the extent the Court hasn’t granted any of them.” This resulted in
a final order. By granting the State’s motion to dismiss as to the merits of the petitioners’
underlying claim, the circuit court issued a final ruling on the matter of law that was the
only issue in the matter.
Despite all of this, the majority finds “the circuit court’s order to be ambiguous such
that a remand is necessary to ensure that appellees’ arguments—which are based on
statutory interpretation—are considered.” Yet, it is unclear what will be accomplished on
remand. The issue was briefed below, the circuit court is not required to hold a hearing,
and the court is not required to make specific findings on a matter of statutory
interpretation. In fact, the circuit court could conceivably enter a one-sentence order on
remand, simply stating again that the AOGC did not act “ultra vires, illegally, or without
authority of law.”
The issue on cross-appeal is purely a matter of statutory interpretation, which is
ultimately for this court to decide. See Brock v. Townsell, 2009 Ark. 224, at 9, 309 S.W.3d
179, 185. While remand may afford the circuit court an opportunity to clarify any
ambiguities in its order and consider its interpretation further, such clarification and
interpretation becomes immediately inconsequential in the subsequent appeal. Id.
17 (explaining that we review issues of statutory construction de novo and are not bound by
the circuit court’s legal interpretation).
For the sake of judicial economy, I dissent.
WOMACK, J., joins in this opinion.
KAREN R. BAKER, Justice, dissenting. Because I cannot agree that the circuit court
erred in its application of the precedent established in Board of Trustees of Univ. of Arkansas
v. Andrews, 2018 Ark. 12, 535 S.W.3d 616, I dissent from the majority opinion. Although
the majority distinguishes this appeal from Andrews and holds that sovereign immunity
does not apply, this analysis contradicts Andrews. Here, the majority explains:
The present case is distinguishable from Andrews and other recent cases concerning sovereign immunity because it concerns an appeal of an agency adjudication. The AOGC is a named defendant, but its role in the proceeding is that of a tribunal or a quasi-judicial decision-maker rather than a real party in interest. It is akin to a trial court in an appellate proceeding; it has no vested interest in the outcome of the appeal other than whether its decision is upheld. The subject of the adjudication–the amount of royalty to be paid by SWN to the appellees–does not affect the State’s coffers or control its actions. See Duit Constr. Co., Inc. v. Ark. State Claims Comm’n, 2015 Ark. 462, at 5, 476 S.W.3d 791, 795 (“In determining whether the doctrine of sovereign immunity applies, the court must decide if a judgment for the plaintiff will operate to control the action of the State or subject it to liability.”). Appellees sought judicial review of the AOGC’s final agency action; they alleged no additional claims against the AOGC or any other state actor. Under these circumstances, sovereign immunity is not implicated because the AOGC is not “made a defendant” as contemplated by article 5, section 20, of the Arkansas Constitution. There is no need to address “exceptions” to sovereign immunity because the doctrine simply does not apply in this case.
This analysis contradicts Andrews for several reasons. First, in Andrews the court
held,
18 [W]e interpret the constitutional provision, “The State of Arkansas shall never be made a defendant in any of her courts,” precisely as it reads. The drafters of our current constitution removed language from the 1868 constitution that provided the General Assembly with statutory authority to waive sovereign immunity and instead used the word “never.” See Ark. Const. of 1868, art. 5, § 45; Ark. Const. art. 5, § 20. The people of the state of Arkansas approved this change when ratifying the current constitution.
Andrews, 2018 Ark. 12, at 10–11, 535 S.W.3d at 622.
Stated differently, in Andrews, the court held that “never means never,” therefore
this suit is barred based on the broad language in Andrews.
Second, despite the majority holding that the sovereign immunity “doctrine simply
does not apply in this case”—this is also inapposite of Andrews because Andrews did not
identify exceptions, exemptions or the like. Again, the State may never be sued.
Third, the majority’s position that sovereign immunity does not apply because the
suit “does not affect the State’s coffers or control its actions,” is misplaced as well. As I
explained in my dissent in Andrews, “Absent from our constitution is any language limiting
sovereign immunity to money judgments.” Andrews, 2018 Ark. 12, at 14, 535 S.W.3d at
624 (Baker, J., dissenting). Therefore, this does not support the majority’s position that
sovereign immunity “simply does not apply in this case.”
Finally, the majority’s opinion is inconsistent with Andrews because actions by the
State are at issue in this case. Although the majority explains that—“the AOGC is a named
defendant, but its role in the proceeding is that of a tribunal or a quasi-judicial decision-
maker rather than a real party in interest”—and that “it has no vested interest in the
outcome of the appeal other than whether its decision is upheld,” this is not the standard
19 under Andrews. Andrews held that the State may never be made a defendant in any of her
own courts. Accordingly, despite the majority’s attempt to narrow Andrews, the broad
language of Andrews includes the actions alleged in this case. Here, Hurd alleges that the
AOGC’s actions were beyond the AOGC’s authority as a State board and acted in an ultra
vires manner. Therefore, State conduct is at issue, and Andrews bars suit.
Accordingly, I dissent.
Leslie Rutledge, Att’y Gen., by: Lee Rudofsky, Solicitor Gen.; Jennifer L. Merritt, Sr.
Ass’t Att’y Gen.; Monty V. Baugh, Ass’t Att’y Gen.; and Kesia Morrison, Ass’t Att’y Gen., for
State appellant/cross-appellee.
PPGMR Law, PLLC, by: G. Alan Perkins and Kimberly D. Logue, for SWN Production
(Arkansas), LLC, appellant/cross-appellee.
Friday, Eldredge & Clark, LLP, by: William A. Waddell, Jr., Robert S. Shafer, and Joshua
C. Ashley; and Morgan Law Firm, P.A., by: M. Edward Morgan, for appellees/cross-appellants.