Adams v. Miss. State Oil & Gas Bd., U.S. Oil & Gas Ass'n, Murphy Oil United States, Inc.

• Decision Date: 12 June 2014
• Docket Number: Nos. 2012–CA–01070–SCT, 2012–CA–00598–COA.,s. 2012–CA–01070–SCT, 2012–CA–00598–COA.
• Citation: 139 So.3d 58
• Court: Mississippi Supreme Court
• Parties: Sherley ADAMS, et al. v. MISSISSIPPI STATE OIL & GAS BOARD, U.S. Oil and Gas Association, Murphy Oil USA, Inc. d/b/a Spur Oil and Gas Corporation, Fina Oil & Chemical Company, Union Pacific Resources, Exxon, Mobil, Amoco Corporation and Marathon Oil Company.

139 So.3d 58

Sherley ADAMS, et al.

v.MISSISSIPPI STATE OIL & GAS BOARD, U.S. Oil and Gas Association, Murphy Oil USA, Inc. d/b/a Spur Oil and Gas Corporation, Fina Oil & Chemical Company, Union Pacific Resources, Exxon, Mobil, Amoco Corporation and Marathon Oil Company.

Nos. 2012–CA–01070–SCT, 2012–CA–00598–COA.

Supreme Court of Mississippi.

Feb. 20, 2014.

Rehearing Denied June 12, 2014.

Stacey L. Sims, Hattiesburg, Stuart H. Smith, Michael G. Stag, Sean S. Cassidy, attorneys for appellants.

Howard O. Leach, Hazlehurst, Jeffery P. Reynolds, Carson Thurman, attorneys for appellees.

EN BANC.

WALLER, Chief Justice, for the Court:

¶ 1. Shirley Adams and other landowners in oil and gas producing regions of the state (Contestants) challenged a petition of the U.S. Oil and Gas Association (Petitioners) that proposed amendments to Statewide Rule 68 ¹ (Disposal of Naturally Occurring Radioactive Materials ² (NORM) Associated With the Exploration and Production of Oil and Gas) which authorized the surface and subsurface landspreading of NORM as additional methods of disposal. The Mississippi Oil and Gas Board (Board) ³ approved the proposed amendments to Rule 68, and its decision was upheld by the Lincoln County Chancery Court. Contestants now appeal to this Court.

¶ 2. After careful consideration, we find Contestants failed to prove that the Board's adoption of amended Rule 68 was arbitrary and capricious or against the weight of the evidence. In addition, we find the Board's decision did not violate federal law or Contestants' constitutional rights; however, the Board violated Mississippi law when it exceeded its statutory authority under Mississippi Code Section 53–1–17 by amending Rule 68 without gaining the approval of the Mississippi Commission on Environmental Quality (Commission). Accordingly, we reverse the decision of the Lincoln County Chancery Court and remand the order approving the amendments to Rule 68 to the Board to seek the approval of the Commission prior to adopting the amendments.

FACTS & PROCEDURAL HISTORY

¶ 3. In 1999, Petitioners introduced proposed amendments to State Oil and Gas Board Rule 68.⁴ The proposed amendments to Rule 68 authorized the surface and subsurface landspreading of NORM under specified conditions. Landspreading is defined by Rule 68 as “an action that involves blending of soil to achieve NORM concentrations that are at or below the release criteria.” Contestants filed their objections by a Notice of Contest. A public hearing was set, and notice was provided to the public as required by statute. The Board then solicited and received the input of the Environmental Protection Agency (EPA), Mississippi Department of Environmental Quality (MDEQ), and Mississippi Department of Health (MDH), with regard to the proposed amendments to Rule 68.

¶ 4. A public hearing commenced before the Board, which included three days of testimony from expert witnesses, a day of oral arguments from each side, and volumes of scientific studies. The Board heard testimony from eight expert witnesses. Petitioners called Carol Berger, a certified health physicist; Frank Edwards, a chemical engineer; and Dr. Tate Thigpen, M.D., a professor of medicine and the director of the division of medical oncology at the University of Mississippi Medical Center. Contestants called William Upchurch, a real estate appraiser; William Kimbrell, a petroleum engineer; Stanley Waligoria, a certified health physicist, and Dr. Thomas Schrager, a toxicologist. Robert Goff also testified on behalf of MDH. All of the experts were subject to voir dire and cross-examination. The Board also heard statements from ten members of the general public.

¶ 5. After deliberations, the Board issued a twenty-seven-page order, stating it found “the overwhelming weight of the credible scientific evidence presented in the hearing ... indicates that the approval of the proposed landspreading amendments to Statewide Rule 68 will cause no demonstrable harm or injury to either the public health of the citizens or the environment.” In adopting the amended Rule 68, the Board revised the proposed amendments from Petitioners.

¶ 6. Contestants eventually appealed to the Lincoln County Chancery Court, arguing that the Board's actions were arbitrary and capricious, were unsupported by substantial evidence, exceeded the authority of the Board and were in violation of Contestants' constitutional rights.⁵ The chancellorfound the actions of the Board in adopting amendments to Rule 68 were not arbitrary or capricious, contrary to the manifest weight of the evidence, or in excess of the Board's statutory authority or jurisdiction. Contestants now appeal, raising five issues:

I. Whether the Board's promulgation of the amendments to Rule 68 was arbitrary and capricious.

II. Whether the Board violated Mississippi law when it failed to prepare an economic-impact statement.

III. Whether the Board exceeded its authority amending Rule 68 without the approval of the Commission.

IV. Whether amended Rule 68 is in contravention of Mississippi Code Section 53–3–3 and federal law.

V. Whether the procedures utilized by the Board in promulgating Rule 68 violated the laws of the State of Mississippi, Federal law, and Contestants' constitutional rights.

DISCUSSION

¶ 7. Our review of an administrative decision of an executive agency is limited and deferential. “When reviewing a chancery or circuit court's decision concerning the action of an administrative agency, this Court determines only whether the order of the agency 1) was supported by substantial evidence, 2) was arbitrary or capricious, 3) was beyond the power of the agency to make, or 4) violated some statutory or constitutional right of the complaining party.” Anadarko Petroleum Corp. v. State Oil & Gas Bd. of Miss., 99 So.3d 109, 111 (Miss.2012), reh'g denied (Nov. 1, 2012) (citing Miss. Sierra Club, Inc. v. Miss. Dep't of Envtl. Quality, 819 So.2d 515, 519 (Miss.2002)). When reviewing an administrative agency's decision on appeal, “there is a rebutable presumption in favor of the action of an administrative agency and the burden of proof is upon one challenging its action.” Ricks v. Miss. State Dep't of Health, 719 So.2d 173, 177 (Miss.1998) (internal quotations omitted). “Additionally, this Court is bound to give due deference to the factual findings of the administrative agency and to the chancellor who adopted the same findings.” Id. (citations omitted).

I. Whether the Board's promulgation of the amendments to Rule 68 was arbitrary and capricious.

¶ 8. In reviewing whether “an agency's action was supported by substantial evidence or was arbitrary or capricious, we must be able to understand why the agency ruled as it did.” Anadarko, 99 So.3d at 111 (citing McGowan v. Miss. State Oil & Gas Bd., 604 So.2d 312, 323 (Miss.1992)). Regarding decisions of the Board, this Court has noted “ ‘[i]t is not for this Court to substitute its opinion for the opinion of the Board where the Board has reached its decision on conflicting evidence and where its conclusions are supported by substantial evidence....’ ” Boyles v. Miss. State Oil & Gas Bd., 794 So.2d 149, 156 (Miss.2001) (quoting Ohio Oil Co. v. Porter, 225 Miss. 55, 82 So.2d 636, 638 (1955)). This Court has defined the arbitrary or capricious standard as follows:

“Arbitrary” means fixed or done capriciously or at pleasure. An act is arbitrary when it is done without adequately determining principle; not done according to reason or judgment, but depending upon the will alone,—absolute in power, tyrannical, despotic, non-rational,—implying either a lack of understanding of or a disregard for the fundamental nature of things.

“Capricious” means freakish, fickle, or arbitrary. An act is capricious when it is done without reason, in a whimsical manner, implying either a lack of understanding of or a disregard for the surrounding facts and settled controlling principles....

Harrison County Bd. of Supervisors v. Carlo Corp., Inc., 833 So.2d 582, 583 (Miss.2002) (quoting McGowan v. Miss. State Oil & Gas Bd., 604 So.2d 312, 322 (Miss.1992)).

¶ 9. Contestants argue the Board's promulgation of amended Rule 68 was arbitrary and capricious because: the Board solicited and then disregarded the opinions of other agencies; the Board's factual findings were contrary to the weight of evidence introduced at the hearing and during the comment period; the release of property on the basis of survey meter readings alone was insufficient, and there was insufficient proof to show that the proposed amendments to the rule would not present a threat to groundwater.

A. The Board solicited and disregarded the opinions of other agencies.

¶ 10. Contestants argue the letters from EPA, MDH, and MDEQ expressed concern and disapproval about aspects of the amendments to Rule 68, and the Board, through its scheduling order, “discarded the written comments ... and required the agencies to put forth a witness.” Contestants see the Board's adoption of amended Rule 68 as ignoring these agencies' opinions; thus, the decision was arbitrary and capricious.

¶ 11. We find the argument of Contestants is without merit. The Board made significant revisions to the proposed amendments to Rule 68 along the lines suggested by various government agencies and with regard to the concerns of the MDH. These revisions include changes to the areas in which landspreading operations can occur in response to the letter from MDEQ and EPA and changes regarding compliance and notice based on the letter from MDH. Therefore, we find Contestants' argument on this point is without merit.

B. The Board's factual findings were contrary to the weight of evidence introduced at the hearing and during the comment period.

¶ 12. Contestants argue that the Board's adoption of amended Rule 68 was not supported by substantial evidence and runs contrary to the weight of the evidence. This Court previously has addressed whether the Board...