Office of State Lands v. Mule Shoe Ranch Inc.

• Decision Date: 19 April 2011
• Docket Number: S–10–0182.,Nos. S–10–0181,s. S–10–0181
• Citation: 2011 WY 68,252 P.3d 951
• Parties: OFFICE OF STATE LANDS AND INVESTMENTS; Edward L. Grant, in his official capacity as Director of the Office of State Lands and Investments, Appellants (Respondents),v.MULE SHOE RANCH, INC., Appellee (Petitioner).Mule Shoe Ranch, Inc., Appellant (Petitioner),v.Office of State Lands and Investments; Edward L. Grant, in his official capacity as Director of the Office of State Lands and Investments, Appellees (Respondents).
• Court: Wyoming Supreme Court

252 P.3d 951

2011 WY 68

OFFICE OF STATE LANDS AND INVESTMENTS; Edward L. Grant, in his official capacity as Director of the Office of State Lands and Investments, Appellants (Respondents),

v.MULE SHOE RANCH, INC., Appellee (Petitioner).Mule Shoe Ranch, Inc., Appellant (Petitioner),

v.Office of State Lands and Investments; Edward L. Grant, in his official capacity as Director of the Office of State Lands and Investments, Appellees (Respondents).

Nos. S–10–0181

S–10–0182.

Supreme Court of Wyoming.

April 19, 2011.

Representing Appellants in Case No. S–10–0181: Bruce A. Salzburg, Wyoming Attorney General; Michael L. Hubbard, Deputy Attorney General; Bridget Hill, Senior Assistant Attorney General. Argument by Ms. Hill.Representing Appellee in Case No. S–10–0181: David M. Clark of Worrall & Greear, P.C. Worland, Wyoming.Before KITE, C.J., and GOLDEN, HILL, VOIGT, and BURKE, JJ.KITE, Chief Justice.

[¶ 1] Mule Shoe Ranch, Inc. (Mule Shoe) sought to exercise its preferential right to renew a state lease. Two Y Ranch (Two Y) submitted a competing bid at a higher rate. The director of the Office of State Lands and Investments (State Lands Office) issued a decision requiring Mule Shoe to match the higher bid in order to exercise its preferential right. Mule Shoe requested an administrative hearing.

[¶ 2] The State Lands Office and Mule Shoe filed motions for summary judgment. The Board of Land Commissioners (Board) granted summary judgment to the State Lands Office, agreeing with the director's decision. Mule Shoe filed a petition for review in the district court which reversed the Board's decision and remanded the matter to the Board with instructions to direct the State Lands Office to conduct an economic analysis and make a determination as to whether the competing bid was based on fair market value. The State Lands Office appealed to this Court. Mule Shoe filed a cross-appeal. We reverse the district court's order.

ISSUE

[¶ 3] We paraphrase the issue the State Lands Office presents in its appeal as follows:

Whether the district court erred in reversing the Board's decision requiring Mule Shoe to meet the highest bid offered in order to exercise its preferential right to renew its lease.

Mule Shoe states the issue as follows:

Whether the state grazing lease statutes place an upper constraint on the amount an existing grazing lessee is required to pay to match a competing bidder under Wyo. Stat. Ann. § 36–5–105(c).

[¶ 4] We paraphrase the issue Mule Shoe presents in its cross appeal as follows:

Whether the district court erred in remanding the case to the Board for an economic analysis and should instead have entered judgment for Mule Shoe.

The State Lands Office re-states the issue as whether the district court erred in affirming the denial of Mule Shoe's summary judgment motion on the basis that an economic analysis must be performed on Two Y's bid.

FACTS

[¶ 5] The State of Wyoming owns 5,459.90 acres of land covered by State Lease No. 2–5310. The State leases the land for grazing and agricultural purposes for ten-year terms. Mule Shoe, a family ranching operation, has leased the state land covered by State Lease No. 2–5310 since 1941. On February 1, 2008, the lease was set to expire. Pursuant to Wyo. Stat. Ann. § 36–5–104 (LexisNexis 2009), Mule Shoe, and any other party interested in leasing the land, was required to submit an application to the State Lands Office.

[¶ 6] On October 30, 2007, the State Lands Office received an application for State Lease No. 2–5310 from Two Y. Two Y offered an annual rental payment of $45,556.00, or $28.00 per animal unit month (AUM). The State Lands Office notified Mule Shoe about the application. On November 30, 2007, Mule Shoe responded with a renewal application for the lease. Mule Shoe offered an annual rental payment of $8,476.67, or $5.21 per AUM.

[¶ 7] On March 25, 2008, the director of the State Lands Office issued a decision letter addressing the conflicting applications. The director found that Two Y was a qualified applicant, had an actual and necessary use for the land and available forage and had submitted the highest bid. Based upon § 36–5–105(c) (LexisNexis 2007), which gave Mule Shoe, as the holder of the expiring lease, a preferred right to renew the lease, the director conditionally awarded the lease to Mule Shoe for the next ten year term at the rate of Two Y's bid.

[¶ 8] On April 4, 2008, Mule Shoe exercised its preferential right by filing a written acceptance and paying the amount of Two Y's bid. Three days later, Mule Shoe filed a notice of appeal of the director's decision, asserting Two Y's $28.00 per AUM bid was not valid because it was not based on fair market value using the formula developed by the Board for the same or similar land use. The matter was referred to the Office of Administrative Hearings (OAH) for a contested case hearing.

[¶ 9] Both Mule Shoe and the State Lands Office filed motions for summary judgment. Mule Shoe argued Two Y's bid was not a valid, competing bid and was outside the statutory parameters governing the preferential right to renew. The State Lands Office asserted the plain meaning of the leasing statutes and Board rules required Mule Shoe to meet the highest bid.

[¶ 10] After a hearing, the OAH issued recommended factual findings, legal conclusions and an order granting summary judgment for the State Lands Office. The OAH concluded the state leasing statutes required Mule Shoe to meet the highest bid in order to renew the lease. The Board voted unanimously to adopt the recommended findings, conclusions and order. Mule Shoe filed a petition for review in district court, which reversed the Board. The district court concluded the State Lands Office failed to conduct an economic analysis and determine whether the highest bid was based upon fair market value as required by statute. The State Lands Office appealed to this Court.

STANDARD OF REVIEW

[¶ 11] We review an administrative decision as if it came directly from the agency and do not defer to the district court's ruling. Greene v. State ex rel. Wyo. Board of Chiropractic Examiners, 2009 WY 42, ¶ 9, 204 P.3d 285, 290 (Wyo.2009). We review an agency's conclusions of law de novo, and affirm such conclusions only when they are in accordance with the law. Id. While the interpretation of statutes and their implementing regulations is a question of law that we review de novo, it is also settled that we defer to an agency's interpretation of its own rules and regulations unless that interpretation is clearly erroneous or inconsistent with the plain language of the rules. Powder River Basin Resource Council v. Wyo. Dep't of Envtl. Quality, 2010 WY 25, ¶ 6, 226 P.3d 809, 813 (Wyo.2010).

DISCUSSION

[¶ 12] The version of § 36–5–105(c) in effect at the time State Lease No. 2–5310 was expiring and the applicants submitted their bids provided:

An applicant who is the holder of an expiring lease, and has paid the rental when due, and has not violated the provisions of the lease, and is qualified under the provisions of W.S. 36–5–101, shall have a preferred right to renew such lease by meeting the highest bid offered by another qualified applicant who has actual and necessary use for the land and available forage and whose bid is based on the fair market value, using the formula developed by the board pursuant to W.S. 36–5–101(b), for the same or a similar use of land.

(Emphasis added.) ¹

[¶ 13] When interpreting statutory language:

[T]he paramount consideration is to determine the legislature's intent, which must be ascertained initially and primarily from the words used in the statute. We look first to the plain and ordinary meaning of the words to determine if the statute is ambiguous. A statute is clear and unambiguous if its wording is such that reasonable persons are able to agree on its meaning with consistency and predictability. Conversely, a statute is ambiguous if it is found to be vague or uncertain and subject to varying interpretations. If we determine that a statute is clear and unambiguous, we give effect to the plain language of the statute.

Dorr v. Smith, Keller & Associates, 2010 WY 120, ¶ 11, 238 P.3d 549, 552 (Wyo.2010) (citation omitted). We consider all statutory provisions pertaining to the same subject in pari materia. Sorensen v. State Farm Auto. Ins. Co., 2010 WY 101, ¶ 13, 234 P.3d 1233, 1237 (Wyo.2010). Divergent opinions among parties as to the meaning of a statute may be evidence of ambiguity but is not conclusive. Wyo. Med. Center, Inc. v. Wyo. Ins. Guar. Ass'n, 2010 WY 21, ¶ 19, 225 P.3d 1061, 1066 (Wyo.2010). Ultimately, whether a statute is ambiguous is a matter of law to be determined by the court. Id.

[¶ 14] As reflected above in paragraph 12, our inquiry concerns the meaning of the words “by meeting the highest bid offered by another qualified applicant ... whose bid is based on the fair market value, using the formula developed by the board pursuant to W.S. 36–5–101(b).” The State Lands Office argues the director correctly concluded this provision required Mule Shoe to meet Two Y's bid in order to continue leasing the land. The State Lands Office contends the statute clearly required the holder of an expiring lease to meet the highest bid, Two Y's bid was the highest bid; therefore, Mule Shoe had to meet that bid. The State Lands Office further asserts that the Board complied with the statutory requirements for performing an economic analysis and adopting a fair market value formula when it enacted ch. 4, § 6 of its rules. The State Lands Office maintains that while § 36–5–101(b) and the rules enacted pursuant to that provision make it clear the Board must establish a minimum price for leasing state lands, those provisions express no intent that the Board establish a maximum price. The State Lands Office contends this is particularly significant given that prior versions of the statute expressly required rental values to fall within...