McCabe Pet. Corp. v. Ease. and Right-of-Way

• Decision Date: 26 March 2004
• Docket Number: No. 03-452.,03-452.
• Citation: McCabe Pet. Corp. v. Ease. and Right-of-Way, 2004 MT 73, 87 P.3d 479, 320 Mont. 384 (Mont. 2004)
• Parties: McCABE PETROLEUM CORPORATION, Plaintiff, v. EASEMENT AND RIGHT-OF-WAY ACROSS TOWNSHIP 12 NORTH, RANGE 23 EAST, PMM Sections 16-19, Fergus County, Montana, N Bar Ranch, LLC, and Unknown Owners, Defendants.
• Court: Montana Supreme Court

87 P.3d 479

2004 MT 73

320 Mont. 384

McCABE PETROLEUM CORPORATION, Plaintiff, v.EASEMENT AND RIGHT-OF-WAY ACROSS TOWNSHIP EAST, PMM Sections 16-19, Fergus County, Montana, N Bar Ranch, LLC, and Unknown Owners, Defendants.

No. 03-452.

Supreme Court of Montana.

Submitted on Briefs October 30, 2003.

Decided March 26, 2004.

For Plaintiff: Chris Mangen, Jr.; Crowley, Haughey, Hanson, Toole & Dietrich, Billings, Montana.

For Defendants: Barry O'Connell; Moore, O'Connell & Refling, Bozeman, Montana.

Chief Justice KARLA M. GRAYdelivered the Opinion of the Court.

¶ 1 McCabe Petroleum Corporation filed an action in the United States District Court for the District of Montana seeking to condemn an access easement and right-of-way across lands owned by N Bar Ranch, LLC.Pursuant to Rule 44, M.R.App.P., the United States District Court certified two questions of Montana law to us, which we restate as follows:

¶ 2 1.Is exploration and development of a federal oil and gas lease a "mine" which constitutes a "public use" under § 70-30-102(33), MCA?

¶ 3 2.Does § 82-2-201, MCA, grant the owner of a federal oil and gas lease power as the owner of a "mining claim" to condemn a right-of-way across land of another for access to explore and develop the oil and gas lease?

¶ 4 Our answer to the first certified question is "no" and, for reasons which will become apparent, we do not address the second question.

BACKGROUND

¶ 5 McCabe holds United States oil and gas leases covering lands in Fergus County, Montana.N Bar Ranch owns property adjacent to the land covered by McCabe's leases.In its federal court action, McCabe seeks to condemn an easement and right-of-way over the property owned by N Bar Ranch to allow it access to drill and operate oil wells.

¶ 6 N Bar Ranch moved to dismiss McCabe's condemnation action on the basis that the complaint fails to state a claim upon which relief can be granted under Rule 12(b)(6), FED.R.CIV.P. N Bar Ranch contended McCabe's proposed activities are not a "public use" within the meaning of § 70-30-102(33), MCA, and that § 82-2-201, MCA, does not grant McCabe the power of eminent domain.Following briefing, the United States District Court certified the above-restated questions to this Court and we accepted them for response.

DISCUSSION

¶ 7 Is exploration and development of a federal oil and gas lease a "mine" which constitutes a "public use" under § 70-30-102(33), MCA?

¶ 8 Eminent domain is the right of the state to take private property for public use.Section 70-30-101, MCA.Private individuals and corporations, like state agencies, have no inherent power of eminent domain, and their authority to condemn must derive from legislative grant.Montana Talc Co. v. Cyprus Mines Corp.(1987), 229 Mont. 491, 495, 748 P.2d 444, 447.

¶ 9 The general public uses for which the Montana Legislature has granted the power of eminent domain are enumerated in § 70-30-102, MCA, a statute first enacted in 1877.McCabe argues that an access road to explore and develop landlocked federal oil and gas leases is a "public use" for which the power of eminent domain may be exercised under § 70-30-102(33), MCA, which provides that "roads, tunnels, and dumping places for working mines, mills, or smelters for the reduction of ores" are a public use.McCabe asserts that potential oil wells are "mines" under the above statute.It relies on Montana Talc for its substantive argument and also for its contention that the public uses delineated in § 70-30-102, MCA, should be interpreted broadly.We turn first to the latter contention.

¶ 10 In the 1987Montana Talc decision, 229 Mont. at 498, 748 P.2d at 448, the Court stated it was not aware of any Montana judicial decision declaring that the public uses set forth in § 70-30-102, MCA, are to be strictly construed.While the Court technically may have been correct about the "strictly construed" language, prior authority on the subject apparently was overlooked.

¶ 11We addressed the appropriate interpretation of statutory public uses in State v. Aitchison(1934), 96 Mont. 335, 30 P.2d 805.In that case, the plaintiffs seeking to exercise the power of eminent domain conceded—based on existing case law—that authority to condemn must be "expressly given or necessarily implied."They sought to proceed on the "necessarily implied" theory.Aitchison,96 Mont. at 337-38, 30 P.2d at 806(citation omitted).

¶ 12 In discussing eminent domain powers, we cited to authorities stating clearly that the eminent domain power being against common right, it cannot be implied or inferred from vague or doubtful language, and that the right to exercise that power does not exist when made out only by argument or inference.Aitchison,96 Mont. at 339, 30 P.2d at 807.We also observed that all prior cases had held against extending the right of eminent domain under a theory that the power had been granted by implication.Aitchison,96 Mont. at 340, 30 P.2d at 807(citations omitted).Thus, while not using the "strictly construed" language, it is clear that case law prior to Montana Talc took a narrow approach to interpreting the statutorily-delineated public uses.

¶ 13The Montana Talc Court went on to reference § 1-2-103, MCA, to the effect that statutes are to be liberally construed and, in addition, that "[n]o interpretation is required when the plain meaning can be derived from the words of the statute."Montana Talc,229 Mont. at 498, 748 P.2d at 449.It is difficult to mesh the Montana Talc Court's use of both the "liberal construction" and "plain meaning" terminology.Because of subsequent case law, however, it is unnecessary to attempt to do so.

¶ 14 In City of Bozeman v. Vaniman(1994), 264 Mont. 76, 869 P.2d 790, we again addressed the power of eminent domain.There, a unanimous Court stated clearly and without equivocation that "[t]he legislature's grant of the eminent domain power ... must be strictly construed."Vaniman,264 Mont. at 79, 869 P.2d at 792(citation omitted).Because private real property ownership is a fundamental right under the Montana Constitution, "any statute which allows [the taking of] a person's property must be given its plain interpretation, favoring the person's fundamental rights."Vaniman,264 Mont. at 79, 869 P.2d at 792.Thus, while not involving a "public use" issue, Vaniman is this Court's latest and clearest statement regarding the interpretation of the power of eminent domain.We conclude, therefore, that fundamental real property rights require that "public uses" for which the power of eminent domain are granted must be interpreted pursuant to the plain language set forth by the Legislature and cannot be implied.

¶ 15 McCabe's first substantive argument is that Montana Talc is controlling authority for its proposition that potential oil wells are "mines."We disagree.

¶ 16 In Montana Talc,we addressed whether the power of eminent domain could be used to condemn land for an open pit talc mine.We determined that, under § 70-30-102(15),MCA(1985), an open-pit excavation necessary to "backslope" the mining of an ore body is an authorized public use.SeeMontana Talc,229 Mont. at 496, 748 P.2d at 447.Section 70-30-102(15),MCA(1985), is now recodified in substantially similar language in § 70-30-102(44), MCA, which provides in pertinent part that authorized public uses are "projects to mine and extract ores, metals, or minerals owned by the condemnor located beneath or upon the surface of property where the title to the surface vests in others."

¶ 17 In Montana Talc, the company seeking condemnation was the owner of the body of talc ore and sought to open-pit mine that ore; to do so, it was necessary for the company to "backslope" the mine over land owned by Cypress Minerals Corporation.The Court merely applied the statute to the facts before it, and concluded that, "[f]or the purpose of mining that ore body, Montana Talc therefore has the power of eminent domain."Montana Talc,229 Mont. at 496, 748 P.2d at 447.

¶ 18 In the present case, McCabe does not rely on § 70-30-102(44), MCA.Thus, in addition to the facts that Montana Talc did not involve oil and gas leases or wells and did not hold that oil and gas exploration is "mining" under Montana's eminent domain statutes, the entire basis of the Montana Talc analysis was a different subsection of § 70-30-102, MCA, than is now at issue.That subsection is not applicable here.For those reasons, Montana Talc is neither controlling nor particularly relevant here.

¶ 19 McCabe also relies on this Court's statements in Mid-Northern Oil Co. v. Walker(1922), 65 Mont. 414, 427, 211 P. 353, 356, andRice Oil Co. v. Toole County(1930), 86 Mont. 427, 431, 284 P. 145, 146, respectively, that "oil is a mineral, and ... an oil well is a mine[,]" and "[o]il is a mineral and the process of extracting it from the rocks is mining."According to McCabe, these statements support its contention that a mine, as the term is used in § 70-30-102(33), MCA, includes an oil well and, as a result, it is authorized to proceed to condemn a road needed to develop oil wells pursuant to its federal leases across N Bar Ranch's property.McCabe's reliance on Mid-Northern and Rice is misplaced.

¶ 20 In Mid-Northern, an oil company sought an injunction restraining the state board of equalization from enforcing an annual license tax against it.Mid-Northern,65 Mont. at 420-21, 211 P. at 354.Rice involved an action to recover a portion of an oil well net proceeds tax paid to Toole County.Rice,86 Mont. at 430, 284 P. at 145.Thus, in both cases, our characterizations of an oil well as a mine were made within the context of tax litigation, not eminent domain statutes which expressly enumerate the public uses for which condemnation proceedings can be maintained.Definitions from other sources are not readily imported into the eminent domain arena.SeeRichter v. Rose,1998 MT 165 ¶¶ 18-20, 289 Mont. 379, ¶¶...