Belle Fourche Pipeline Co. v. State

766 P.2d 537, 105 Oil & Gas Rep. 423, 1988 Wyo. LEXIS 175, 1988 WL 134406
CourtWyoming Supreme Court
DecidedDecember 16, 1988
Docket86-144
StatusPublished
Cited by40 cases

This text of 766 P.2d 537 (Belle Fourche Pipeline Co. v. State) is published on Counsel Stack Legal Research, covering Wyoming Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Belle Fourche Pipeline Co. v. State, 766 P.2d 537, 105 Oil & Gas Rep. 423, 1988 Wyo. LEXIS 175, 1988 WL 134406 (Wyo. 1988).

Opinion

THOMAS, Justice.

The problem that must be solved in this appeal is whether a long-term lessee of land or the holder of a right-of-way easement is a “surface landowner” or “surface owner,” alluded to in §§ 35-ll-406(b)(xii) and 35-11-416, W.S.1977, and entitled to the protection of the statutory provisions requiring consent of a “surface landowner” and the posting of a bond to protect the “surface owner or owners.” Collateral questions are presented with respect to whether an administrative agency is required to consider questions raised concerning the validity of its rules in the context of a contested case hearing, and whether the Wyoming Department of Environmental Quality, Land Quality Division Rules and Regulations, Ch. IV, § 3.k. (1985) [hereinafter Ch. IV, § 3.k.] (relating to a requirement that mining operations be conducted in order to minimize disruption of any services provided by facilities within the permit area) is lawful. The Environmental Quality Council (EQC) granted a coal mine permit in response to the application of Thunder Basin Coal Company without affording Belle Fourche Pipeline Company and Eighty-Eight Oil Company the protection afforded by §§ 35-ll-406(b)(xii) and 35-11-416, W.S.1977. It held that the applicant had met its burden of proof in demonstrating that the application was in compliance with applicable state laws and that it was appropriate to invoke Ch. IV, § 3.k. Belle Fourche Pipeline Company and Eighty-Eight Oil Company appealed the decision of the Environmental Quality Council to the district court which certified the case to this court in accordance with our rules of appellate procedure. We affirm the decision of the Environmental Quality Council.

Belle Fourche Pipeline Company (Belle Fourche) and Eighty-Eight Oil Company (Eighty-Eight) state the issues in this way:

“I. Whether the Environmental Quality Council erred in finding that neither Appellant is entitled to the protections of §§ 35-ll-406(b)(xii) and 35-11-416?
“II. Whether the Environmental Quality Council erred in finding that Appellee Thunder Basin Coal Company has met its burden of proof in that its application is in compliance with all applicable state laws?
“HI. Whether the Environmental Quality Council erred in failing to find Chapter IV Section 3.k. of the Land Quality Division rules invalid, either of itself or as applied in this matter?
“IV. Whether the Environmental Quality Council erred in failing to respond to Appellant’s contention that said rule, either of itself or as applied, is invalid.”

Thunder Basin Coal Company (Thunder Basin) frames the issues as follows:

“I. Whether the Environmental Quality Council correctly determined that the interests held by Appellants did not qualify them as ‘surface landowners’ under W.S. § 35-ll-406(b)(xii) or as a ‘surface landowners’ under W.S. § 35-11-416.
“II. Whether the Land Quality Division Rules and Regulations, Chapter IV, Sec. 3.k. are unlawful.
“HI. Whether the surface owner consent statute, if construed to apply to appellants, is unconstitutional because it is preempted by federal law and violates the guarantees of Equal Protection.”

The State of Wyoming, on behalf of the EQC, articulates these issues:

“1. Are a lessee of land and the holder of an easement surface landowners or surface owners within the meaning of W.S. 35-ll-406(b)(xii) and 35-11-416?
“2. Is DEQ Land Quality Rule IV(3)(k) unlawful?
“3. Is it necessary to remand an administrative agency order for failure by the agency to make findings concerning a legal issue when that issue is before the Supreme Court on appeal?”

*540 We will address whether either a long-term lessee of the surface or the holder of a right-of-way easement comes within the terms "surface landowner” or “surface owner” as used in §§ 35-ll-406(b)(xii) and 35-11-416, W.S.1977; whether the EQC was required to consider the validity of its rules in the context of a contested case hearing; and, if so, whether Ch. IV, § 3.k. is lawful. The resolution of these questions is dispositive of this case and, for that reason, it is not necessary to address the questions posed in Issue II urged by Belle Fourche and Eighty-Eight and Issue III presented by Thunder Basin.

On November 1, 1967, Atlantic Richfield Company (ARCO) obtained Federal Coal Lease No. W-3446, which granted ARCO the right to mine coal by surface mining methods. That lease covered the coal in Section 21, Township 46 North, Range 70 West, 6th P.M., in Campbell County, Wyoming, as well as other lands. Robert Deaver and Freda Dunlap owned the surface estate in Section 21, and, on May 1, 1970, they leased a portion of that section to Black Hills Oil Marketers, Inc., for a term of ninety-nine years. That lease was assigned to Eighty-Eight, which operates a truck receiving station for oil on the property. The station is equipped with a tank, pumps, meters, valves, piping, ladders, and other equipment, and annually it receives approximately 10,000 barrels of oil from producing wells in the area which are outside the subject property.

In November of 1970, Robert Deaver and Freda Dunlap granted to Belle Fourche a right-of-way for oil and gas pipelines across portions of Section 21. In February of 1971, they granted a second right-of-way to Belle Fourche for oil and gas pipelines. Belle Fourche constructed, and continues to operate, two common carrier oil pipelines, which serve Eighty-Eight’s truck receiving station and are situated in part within Section 21.

On November 3, 1976, ARCO acquired the surface of Section 21 pursuant to a warranty deed from Robert and Evelyn Deaver. The record does not disclose whether Freda Dunlap still held an interest in the surface of Section 21, but the record seems to assume that ARCO acquired complete ownership to the surface subject to “all rights of way, easements, exceptions, reservations and any and all instruments of record as of the date of this Warranty Deed, the provisions of which instruments touch and concern, or pertain to, the lands conveyed hereby.” There is no question that Eighty-Eight and Belle Fourche had recorded the lease and the easements and that the acquisition by ARCO of the surface estate was subject to those interests.

ARCO applied to the Department of Environmental Quality (DEQ) for a permit to mine Section 21. The DEQ then issued to ARCO a Permit to Mine and a License to Mine, No. 483, effective March 16, 1979. That permit authorized ARCO to begin mining operations in what was designated as the Coal Creek Mine within the designated permit area for a period of five years. The permit accorded with the interim program adopted by the State of Wyoming pursuant to the Federal Surface Mining Control and Reclamation Act, 30 U.S.C. §§ 1201-1328 (1977) (SMCRA). ARCO began construction of the Coal Creek Mine in the permit area in 1979, and actual production of coal commenced in 1982.

In the meantime, in December of 1980, ARCO filed an application for modification of its existing interim permit for the Coal Creek Mine.

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Bluebook (online)
766 P.2d 537, 105 Oil & Gas Rep. 423, 1988 Wyo. LEXIS 175, 1988 WL 134406, Counsel Stack Legal Research, https://law.counselstack.com/opinion/belle-fourche-pipeline-co-v-state-wyo-1988.