Sinclair Oil Corp. v. WYOMING PSC

• Decision Date: 21 February 2003
• Docket Number: No. 01-228.,01-228.
• Parties: SINCLAIR OIL CORPORATION, Appellant (Petitioner), v. WYOMING PUBLIC SERVICE COMMISSION and Steve Ellenbecker and Kristen N. Lee, in their official capacities as Commissioners, Appellees (Respondents), and Amoco Pipeline Company and Citation Oil and Gas Corporation, Appellees (Applicant and Intervenor Below).
• Court: Wyoming Supreme Court

63 P.3d 887

2003 WY 22

SINCLAIR OIL CORPORATION, Appellant (Petitioner), v. WYOMING PUBLIC SERVICE COMMISSION and Steve Ellenbecker and Kristen N. Lee, in their official capacities as Commissioners, Appellees (Respondents), and Amoco Pipeline Company and Citation Oil and Gas Corporation, Appellees (Applicant and Intervenor Below).

No. 01-228.

Supreme Court of Wyoming.

February 21, 2003.

John A. Sundahl and Brian J. Hanify of Sundahl, Powers, Kapp & Martin, Cheyenne, WY, Representing Appellant. Argument by Mr. Sundahl.

Hoke MacMillan, Attorney General; Michael L. Hubbard, Deputy Attorney General; Harry D. Ivey, Assistant Attorney General; and Nancy E. Vehr, Assistant Attorney General, Representing Appellee Wyoming Public Service Commission. Argument by Mr. Ivey.

Roger C. Fransen and Ian D. Shaw of Hickey, Mackey, Evans & Walker, Cheyenne, WY, Representing Appellee Amoco Pipeline Company. Argument by Mr. Fransen.

Alvin Wiederspahn of Wiederspahn & Reese, P.C., Cheyenne, WY, Representing Appellee Citation Oil & Gas Corp. Argument by Mr. Wiederspahn.

Before HILL, C.J., and GOLDEN, LEHMAN,¹ KITE, and VOIGT, JJ.

LEHMAN, Justice.

[¶ 1] Sinclair Oil Corporation (Sinclair) appeals an order entered by appellee Wyoming Public Service Commission (PSC). After administrative hearing, PSC approved the application of appellee Amoco Pipeline Company (Amoco) seeking authority to abandon its crude oil gathering facilities known as the Little Buffalo Gathering System and to eliminate Little Buffalo Station as a point of origin. Upon our appellate review, we affirm.

ISSUES

[¶ 2] Numerous issues are presented to this court on appeal. Sinclair sets forth the following issues:

1. Is it in accordance with the law for a public utility common carrier to fail to maintain its facilities, then abandon the facilities because they are in disrepair?

2. Did the PSC fail to apply the correct legal standard applicable to abandonments, and was the PSC's determination that Amoco had upheld its evidentiary burden to abandon its facilities supported by substantial evidence?

3. Did the PSC abuse its discretion by failing to apply its own regulations regarding Amoco's unilateral abandonment of the Little Buffalo Basin without prior PSC approval?

4. Was the PSC's determination regarding the public interest supported by substantial evidence, or did the PSC abuse its discretion by limiting the scope of the hearing and precluding the receipt of relevant, admissible evidence regarding the public interest?

5. Did the PSC fail to apply the correct rule of law by refusing to determine whether Citation would operate the abandoned facilities as a public utility without the required certificate of public convenience and necessity?

PSC phrases the issues on appeal as:

1. Whether the PSC followed its own rules and other pertinent law in considering and deciding the issues of this case.

2. Whether substantial evidence exists to support the PSC's factual findings when the evidence is viewed as a whole.

3. Whether the PSC's procedural rulings were in accordance with law.

4. Whether the issue of Citation's status as a public utility was properly before the PSC.

5. Whether the issue of late-filed exhibits was first raised on appeal.

Amoco states the issues before this court as:

1. Does Sinclair have standing to pursue this appeal?

2. Was the [PSC's] decision to grant Amoco's application to abandon made using the proper legal standards and supported by substantial evidence?

3. Was Amoco's attempt to prevent an environmental catastrophe by suspending shipments on its gathering system a basis for the [PSC] to deny Amoco's application to abandon?

4. Did the [PSC's] evidentiary decisions constitute a clear abuse of discretion and, if so, were they prejudicial to Sinclair?

Finally, appellee Citation Oil and Gas Corporation (Citation) enunciates its issues on appeal as:

1. Does Sinclair have standing under the Administrative Procedure Act to bring this appeal?

2. Was the decision of the [PSC] to grant the application of Amoco Pipeline to abandon the Little Buffalo Basin crude oil gathering facilities and to eliminate Little Buffalo Station as a point of origin on Amoco Pipeline's system in conformance with statutory requirements?

3. Did the [PSC] render a proper weighing and balancing of the affected interests impacted by the abandonment such that the public interest was best served by the abandonment of the Little Buffalo Basin gathering facilities?

4. Is the issue of whether Citation, by virtue of acquiring ownership and commencing operation of the abandoned Little Buffalo Basin gathering system, is a public utility properly before this Court? or, in the alternative, does Citation's operation of the abandoned gathering facilities render Citation a public utility?

FACTS AND BACKGROUND

[¶ 3] On August 30, 2000, Amoco filed an application with PSC seeking authority to abandon its crude oil gathering facilities known as Little Buffalo Gathering System and to eliminate Little Buffalo Station as a point of origin. Both Sinclair and Citation were allowed by PSC to intervene and originally opposed Amoco's application.

[¶ 4] On November 16, 2000, Amoco informed PSC operations at the Little Buffalo Gathering System had been suspended for reasons of environmental safety effective October 1, 2000, because a storage tank within the system was in substantial disrepair. On December 14, 2000, Amoco and Citation entered into a stipulated settlement agreement. Sinclair was not a party to this settlement. In the settlement agreement, Amoco and Citation agreed that should Amoco's abandonment application be granted by PSC, Amoco would sell the Little Buffalo Gathering System to Citation. Citation would then have the opportunity to connect to a pipeline other than at Little Buffalo Station on Amoco's Big Horn trunk line (presumably Marathon Oil Company's Red Butte Pipeline) in order to transport the Little Buffalo production and avoid trucking this product for refinement. Amoco and Citation further agreed that crude oil would never be sent through Little Buffalo Station on Amoco's Big Horn trunk line.²

[¶ 5] A public hearing was commenced on December 15, 2000, before PSC. This hearing was ultimately continued and concluded on January 3, 2001. At hearing, Sinclair objected to the terms of the stipulated settlement agreement between Amoco and Citation. PSC issued its final order June 11, 2001. This final order found 1) the gathering lines in the Little Buffalo Gathering System were sufficiently safe and in adequate condition to provide crude oil gathering services, 2) the storage tank used within the system needed to be replaced, 3) Amoco had sufficiently supported its assertion that replacement of the storage tank was not economically feasible, and 4) upon consideration of the public interests, Amoco's application should be granted. After entry of PSC's decision, Citation acquired the Little Buffalo Gathering System and negotiated an interconnect agreement with Marathon Oil Company's Red Butte Pipeline to transport to market the crude oil produced at the Little Buffalo Basin field. Sinclair appealed the decision of PSC to the district court. This matter was then certified for review by this court.

STANDARD OF REVIEW

[¶ 6] Our review of administrative decisions is guided by the standards set forth in Wyo. Stat. Ann. § 16-3-114(c):

(c) To the extent necessary to make a decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. In making the following determinations, the court shall review the whole record or those parts of it cited by a party and due account shall be taken of the rule of prejudicial error. The reviewing court shall:

(i) Compel agency action unlawfully withheld or unreasonably delayed; and

(ii) Hold unlawful and set aside agency action, findings and conclusions found to be:

(A) Arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law;

(B) Contrary to constitutional right, power, privilege or immunity;

(C) In excess of statutory jurisdiction, authority or limitations or lacking statutory right;

(D) Without observance of procedure required by law; or

(E) Unsupported by substantial evidence in a case reviewed on the record of an agency hearing provided by statute.

See Newman v. State ex rel. Workers' Safety & Compensation Div., 2002 WY 91, ¶ 9, 49 P.3d 163,

¶ 9 (Wyo.2002) and McTiernan v. Scott, 2001 WY 87, ¶ 11, 31 P.3d 749, ¶ 11 (Wyo.2001).

[¶ 7] We further enunciated in Powder River Coal Co. v. State Bd. of Equalization, 2002 WY 5, ¶ 5, 38 P.3d 423, ¶ 5 (Wyo. 2002):

When we review cases certified pursuant to W.R.A.P. 12.09(b), we apply the appellate standards which are applicable to the court of the first instance. State by and through Wyoming Department of Revenue v. Buggy Bath Unlimited, Inc., 2001 WY 27, ¶ 5, 18 P.3d 1182,

¶ 5 (Wyo.2001); see also Union Telephone Company, Inc. v. Wyoming Public Service Commission, 907 P.2d 340, 341-42 (Wyo.1995). Judicial review of administrative decisions is governed by Wyo. Stat. Ann. § 16-3-114(c) (LexisNexis 2001). Buggy Bath Unlimited, Inc., ¶ 5; W.R.A.P. 12.09(a); Everheart v. S & L Industrial, 957 P.2d 847, 851 (Wyo.1998).

In addition, in Powder River Coal Co., at ¶ 6 (citing Chevron U.S.A., Inc. v. State, 918 P.2d 980, 983 (Wyo.1996) and State by and through Dep't of Rev. v. Buggy Bath Unlimited, Inc., 2001 WY 27, ¶ 6, 18 P.3d 1182,

¶ 6 (Wyo.2001)), we noted when this court reviews questions of law posed in an administrative context, this court must conduct a de novo review. We affirm an agency's conclusions of law when they are in accordance with the law. However, when the agency has failed to properly invoke and apply the correct rule of law, we correct the agency's error. Id. See also State ex rel. Workers' Safety &...