Boyles v. Mississippi State Oil & Gas Bd., No. 1999-SA-01300-SCT.

• Decision Date: 01 February 2001
• Docket Number: No. 1999-SA-01300-SCT.
• Citation: 794 So.2d 149
• Parties: Sherman BOYLES, et al. v. MISSISSIPPI STATE OIL & GAS BOARD, Murphy Oil USA, Fina Oil & Chemical Company, Vintage Petroleum, Inc., Union Pacific Resources, Exxon, Mobil, Amoco Corporation And Marathon Oil Company, Successor to TXO Production.
• Court: Mississippi Supreme Court

794 So.2d 149

Sherman BOYLES, et al. v. MISSISSIPPI STATE OIL & GAS BOARD, Murphy Oil USA, Fina Oil & Chemical Company, Vintage Petroleum, Inc., Union Pacific Resources, Exxon, Mobil, Amoco Corporation And Marathon Oil Company, Successor to TXO Production.

No. 1999-SA-01300-SCT.

Supreme Court of Mississippi.

February 1, 2001.

Rehearing Denied September 13, 2001.

Stuart H. Smith, James R. Cox, Attorneys for Appellants.

Tim Waycaster, Edwin S. Gault, Jeffery P. Reynolds, P.A., Jackson, Teri D. Gleason, Attorneys for Appellees. Before BANKS, P.J., SMITH and COBB, JJ.

SMITH, Justice, for the Court:

¶ 1. This appeal arises from administrative hearings before the Mississippi State Oil and Gas Board ("the Board"). As a result of those hearings, the Board, acting in its rulemaking capacity, promulgated Oil and Gas Board Statewide Rule No. 69 ( "Rule 69" or "the Rule") regarding control of oilfield Naturally Occurring Radioactive Materials ("NORM"). On May 17, 1996, appellants filed their appeal of the Board's order promulgating Rule 69 to the Chancery Court of the First Judicial District of Hinds County, Mississippi. The appeal was denied by order of the court dated July 1, 1999, from which this appeal follows. Finding that the Board's order promulgating Rule 69 was founded on substantial evidence, was neither arbitrary nor capricious, was within the authority of the Board, and was not a violation of some constitutional or statutory right, we affirm the judgment of the chancery court.

FACTS

¶ 2. Since at least 1962, the Mississippi Department of Health, through various agencies including the Division of Radiological Health, has regulated sources of radiation. In 1995, the Mississippi Legislature passed a number of statutory changes to address the problem of oil field NORM which arises as a byproduct of oil exploration & production. Through these changes, the Legislature made the regulation of NORM the exclusive province of the State Oil and Gas Board:

Notwithstanding any other provision contained in the Laws of the State of Mississippi, the Board shall have exclusive jurisdiction and authority, and it shall be its duty, to make, after notice and hearings as hereinafter provided, such reasonable rules, regulations, standards and orders, and to issue such permits as may be necessary, to regulate the use, management, manufacture, production, ownership, investigation and non-commercial disposal of oilfield exploration and productive wastes in order to prevent, eliminate or reduce waste by pollution to acceptable levels in order to protect the public health, safety and the environment.

Miss.Code Ann § 53-1-17(7) (1999). The Legislature amended the definition of "oilfield exploration and production wastes" to include "naturally occurring radioactive... substance." Miss.Code Ann. § 53-1-3(t)(i) (1999). Rule 69 was promulgated pursuant to the legislative mandate codified at Miss.Code Ann. § 53-1-17(7).

¶ 3. From the end of August through the beginning of September of 1995, the Board provided public notice that a hearing would be conducted to discuss the regulation of NORM. The hearing was postponed and ultimately held April 2-4, 1996. In the interim, the Board conducted exploratory committee meetings to investigate the various concerns surrounding oil field NORM. This rulemaking process consisted mainly of consultations with Carol D. Berger, an expert in the field, and with the Department of Health. Through this process, the Board drafted a proposed rule to address the regulation of NORM.

¶ 4. At the public hearing, the Board received arguments and opinions from representatives of the oil industry as well as from landowners and others with environmental concerns. Representatives of various oil and gas industry organizations and corporations appeared at the hearings and encouraged the Board to adopt a Rule that was less stringent than the one that had been proposed because they believed a less stringent rule would still be fully protective of public health and the environment. Representatives of various landowners and other interested parties appeared before the Board and argued that the Board should adopt a rule more stringent than the one proposed; they believed that Rule 69 as proposed by the Board would not adequately protect the public health and environment. After considering the testimony of a number of experts, the Board passed an order adopting the present form of Rule 69 regulating the handling, dispersion, and other disposition of oil field NORM.

¶ 5. Aggrieved by the chancery court's denial of the relief requested, the appellants appeal to this Court and assign the following issues as error:

I. WHETHER THE PROMULGATION OF RULE 69 WAS ARBITRARY AND CAPRICIOUS BECAUSE IT WOULD CAUSE THE VIOLATION OF FEDERAL LAW, AS SET FORTH IN THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT ("CERCLA"); THE RESOURCE CONSERVATION AND RECOVERY ACT ("RCRA"); AND THE OCCUPATIONAL SAFETY AND HEALTH ACT ("OSHA").

II. WHETHER THE PROMULGATION OF RULE 69 WAS ARBITRARY AND CAPRICIOUS BECAUSE THE ASSUMPTIONS UPON WHICH IT IS BASED ARE INVALID.

III. WHETHER RULE 69 SHOULD BE DECLARED INVALID BECAUSE THE RULEMAKING PROCESS WAS TAINTED BY EX PARTE CONTACTS.

IV. WHETHER DURING THE RULEMAKING PROCESS THAT CULMINATED IN THE PROMULGATION OF RULE 69, APPELLANTS WERE DEPRIVED OF THEIR DUE PROCESS RIGHTS.

V. WHETHER THE PROMULGATION OF RULE 69 WAS PROCEDURALLY DEFECTIVE BECAUSE THE BOARD NEITHER SOUGHT NOR RECEIVED THE APPROVAL OF THE MISSISSIPPI COMMISSION ON ENVIRONMENTAL QUALITY BEFORE PROMULGATING THE RULE.

STANDARD OF REVIEW

¶ 6. This Court has clearly pronounced the appropriate standard for reviewing appeals of administrative agency actions. A reviewing appellate court will not disturb the findings of an administrative agency unless the agency's action (1) was unsupported by substantial evidence, (2) was arbitrary or capricious, (3) was beyond the power of an administrative agency to make, or (4) violated some statutory or constitutional right of the complaining party. Mississippi Employment Sec. Comm'n v. Harris, 672 So.2d 739, 741 (Miss.1996); Mississippi Comm'n on Envtl. Quality v. Chickasaw County Bd. of Supervisors, 621 So.2d 1211, 1215 (Miss. 1993). McGowan v. Mississippi State Oil & Gas Bd., 604 So.2d 312, 317 (Miss.1992). The Court has further stated that "[e]xperience and reflection reveal considerable overlap among these grounds, as none of the four represent a discrete legal compartment, nor is any susceptible of a regimen of mechanical jurisprudence." Id. at 317.

¶ 7. While an appellate court may review pure issues of law de novo, Montalvo v. Mississippi State Bd. of Med. Licensure, 671 So.2d 53, 55 (Miss.1996); McGowan, 604 So.2d at 317, the more typical review of an administrative agency's order requires a determination of whether there is substantial evidence in the record to support the agency's factual findings. That is the exercise this Court now faces. Under such circumstances, it is well settled that this Court looks to see if the agency's decision was supported by substantial evidence, or if it was arbitrary and capricious, beyond the power of the agency, or in violation of some constitutional or statutory right of the complaining party. Montalvo, 671 So.2d at 55-56; Mississippi Bd. of Nursing v. Wilson, 624 So.2d 485, 489 (Miss.1993); Mississippi State Tax Comm'n v. Mississippi-Ala. State Fair, 222 So.2d 664 (Miss.1969). There is a rebuttable presumption in favor of the agency decision, and the burden of proof is on the party challenging that decision. Montalvo, 671 So.2d at 56; Wilson, 624 So.2d at 489. This Court "give[s] due deference to the factual findings of the administrative agency and to the chancellor who adopted the same findings." Montalvo, 671 So.2d at 56 (quoting State Farm Ins. Co. v. Gay, 526 So.2d 534, 535 (Miss. 1988)).

¶ 8. An appeal from an administrative agency is limited. Mainstream Sav. & Loan Ass'n v. Washington Fed. Sav. & Loan Ass'n, 325 So.2d 902, 903 (Miss.1976). Appellate review of an agency decision is limited to the record and the agency's findings. Chickasaw County, 621 So.2d at 1216; Mississippi Employment Sec. Comm'n v. PDN, Inc. 586 So.2d 838, 840 (Miss.1991). The reviewing court cannot substitute its judgment for that of the agency or reweigh the facts of the case. Chickasaw County, 621 So.2d at 1216. A decision supported by substantial evidence will not be overturned; only where the decision is arbitrary and capricious will the courts intervene. Montalvo, 671 So.2d at 56; State Bd. of Psychological Examiners v. Hosford, 508 So.2d 1049, 1054 (Miss. 1987).

ANALYSIS

I.

¶ 9. The appellants first argue that the promulgation of Rule 69 was arbitrary and capricious because it would cause the violation of federal law, as set forth in the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"), the Resource Conservation and Recovery Act ("RCRA"), and the Occupational Safety and Health Act ("OSHA"). Their arguments concerning what they contend to be violations of federal law resulting from the Board's passage of Rule 69 are raised for the first time in these proceedings. While appellants mentioned CERCLA at the hearings before the Board, it was simply in an effort to compare the standards set forth in Rule 69 to those provided in CERCLA. OSHA standards were mentioned in the their briefs filed in support of their appeal of Rule 69 to the chancery court; however, the appellants only argued that warning signs required by Rule 69 are not the same as those required under OSHA.

¶ 10. It is a well-settled proposition that this Court will not review matters on appeal that were not considered by the lower court. One (1) 1979 Ford 15V v. State ex rel. Miss. Bureau of Narcotics, 721 So.2d 631, 637 (Miss.1998)

; Ditto v. Hinds County, 665 So.2d 878, 880 (Miss. 1995). With the exception of the warning signs previously mentioned, the...