Wyoming Supreme Court Justices Disagree: Were Tax Assessments of Minerals Constitutional?

As noted in a prior blog post, Wyoming’s Supreme Court Justices agree most of the time. In fact, in 2016 more than 95% of the Court’s orders and opinions were unanimous. This post highlights a recent disagreement between the members of the Wyoming Supreme Court in the case of Anadarko Land Corp. f/k/a Union Pacific Land Resources Corp., and Three Sisters, LLC v. Family Tree Corporation, 2017 WY 24, 389 P.3d 1218 (Wyo. 2017) concerning a 1911 tax assessment that changed--or did it--the ownership of minerals in 2017.

This case features the appeal of a district court decision upholding the validity of a 1911 Laramie County tax assessment against minerals owned by Anadarko Land Corporation’s (“Anadarko”) predecessor-in-interest1. Anadarko’s predecessor, the Union Pacific Railroad, acquired the mineral interests at issue in a Patent issued by the United States in 1901. In 1911, Laramie County assessed taxes on these unproduced minerals. Anadarko’s predecessor did not pay the assessed taxes, and Laramie County put the mineral interests up for bid at a tax sale. When no bids were made for the mineral interests, Laramie County acquired the minerals and then, by a tax deed in 1919, sold the mineral interests to Iowa Land & Livestock Company. At this point, two divergent chains of title emerged. One chain derived from Anadarko’s predecessor and the other from the Laramie County tax sale

Continue reading
  1195 Hits
1195 Hits

Wyoming Wolves De-Listed Under the Endangered Species Act

On March 3, 2017, the D.C. Circuit reinstated the rule promulgated by the United States Fish and Wildlife Service (“FWS”) in 2012 to remove the Northern Rocky Mountain gray wolf in Wyoming from the endangered species list under the Endangered Species Act (“ESA”). Defenders of Wildlife v. Zinke, --F.3d.--, 2017 WL 836089 (D.C. Cir. Mar. 3, 2017).  The FWS has been trying to turn over the management of the wolves in Wyoming to the state since 2008, but has faced several reversals at the hands of the courts.  This decision reverses a 2014 ruling of the U.S. District Court, District of Columbia that vacated the FWS 2012 rule delisting the gray wolf.

Although the D.C. District Court agreed with the FWS finding that the species had recovered and did not overturn FWS’ determination that the gray wolf is not endangered or threatened within a significant portion of its range, it found fault with the state plan to guarantee the required baseline wolf population.  The District Court denied the delisting of the gray wolf because FWS did not require Wyoming to meet a specific numeric buffer above the baseline population but instead relied upon representations in a “non-binding” Addendum to its wolf management plan.  On appeal the D.C. Circuit disagreed, and held that nothing in the ESA demands that level of certainty.  The Court stated that:

[FWS’] decision to delist in the absence of legal certainty is compatible with the ESA’s requirement for monitoring of the species after delisting ‘for at least five years' and its emergency provisions authorizing the [FWS] to take immediate action to ensure the delisted species does not become threatened or endangered again.

Continue reading
  1054 Hits
1054 Hits

Wyoming Legislature Rejects Attempts to Penalize Wind Energy Industry

In a state that has been described as having “world class wind,” a boast hard to ignore during a winter that featured days upon days of wind gusts reaching 80 mph at times, wind energy has struggled to find a secure toehold due to the vice-like grip traditional extractive mineral industries have on the energy sector in Wyoming.  That may be changing, however.

This year, bills were proposed in both the Wyoming House and Senate that sought to limit the ability of wind producers to market their product within the State.  Luckily (or not, depending on your point of view), each bill failed in committee before being introduced on the floor of either house.  House Bill 127 sought to increase the tax on wind energy from $1.00/megawatt hour to $5.00/megawatt hour.  This bill was defeated by a 7-2 vote by the House Revenue Committee on January 23, 2017.  In the Senate, Senate File 71 proposed that utility companies that use wind or solar power would incur a penalty of $10.00/kilowatt hour starting in 2019.  After widespread public opposition to this bill reached the desks of the Senate, it died in committee.  So, while Wyoming is the only state in the U.S. to tax wind1, and while wind producers still face a more difficult permitting process before the Industrial Siting Council than their traditional extractive mineral counterparts, the State legislature prevented two significant roadblocks to future development from being erected.

Continue reading
  1132 Hits
1132 Hits

2016 Wyoming Energy Plan – Doubling Down on Coal

In the face of a radically altered economic and energy picture for Wyoming, Governor Matt Mead released an updated energy strategy for the State on March 14, 2016. Titled “Leading the Charge: Wyoming’s Action Plan for Energy, Environment, and Economy,” the plan is an update of a similar report issued by the State in 2013, the first of its kind in the nation. The State is facing significant budget challenges from the loss of royalty income, severance taxes, and jobs from low oil and gas prices and the even more dramatic decline of coal mine revenue as key coal mining companies in the State seek bankruptcy protection. Approximately 60% of State government revenues come from mineral development.

Gov. Mead proposes to meet the budget challenges by addressing the backbone of the State’s economy – energy development. The 2013 report set forth 45 initiatives, 28 of which have been completed, and the 2016 strategy adds several new priorities. Emphasizing his commitment to the coal industry, the Governor summed up his approach as “a doubling down on coal and a very good start on renewables.” Specifically, the energy plan includes:

• A “carbon innovation” effort for the development of “clean coal” technologies by building on the success of the Integrated Test Center, a public-private partnership with the XPRIZE, to develop and test new technologies for the capture of CO2 emissions.
• Harnessing Wyoming’s Class 5-7 wind energy resources with a new Wind Energy Manufacturing Initiative, led by the Wyoming Business Council. The goal would be to attract wind turbine manufacturing to the State.
• Hosting a symposium to explore how to turn the devastation caused to Wyoming forests by the Pine Beetle on its head by integrating biomass energy into the State’s overall energy plan.
• Forming a National Environmental Policy Act Team to work with federal agencies to expedite the NEPA process to work more collaboratively with BLM in land use planning and combatting invasive species on public land.
• Identifying and working to reduce areas of duplication in State and Federal regulations.
• In light of coal company bankruptcies and self-bonding the State had permitted earlier, Wyoming must urgently address coal mine reclamation liabilities. The energy strategy accordingly calls for an examination of the adequacy of reclamation formulas, reviewing reclamation goals and definitions, and analyzing the self-bonding program.
• Diversifying the State’s economy by increasing the emphasis on international exports including coal, oil and gas (LNG), uranium and other resources.
• The strategy also addresses rulemaking proposals, including baseline groundwater testing before oil and gas drilling, setback requirements, a review of flaring rules, and mitigation banking and additional efforts for the protection of Greater sage-grouse.

Gov. Mead hopes that this year’s plan will continue to allow the State to be proactive in planning its future energy development, which will in turn create additional economic and business opportunities for both new and existing industries. The Governor asked for $500,000 to implement the energy strategy in the 2017-2018 budget, which was rejected by the Legislature, so it remains to be seen how much of the plan he will be able to implement.

The full text of Wyoming’s Action Plan can be found here: http://governor.wyo.gov/media/news-releases/2016-news-releases/governormeadannouncesupdatedenergystrategy.

  1691 Hits
1691 Hits

New 500 Foot Wyoming Drilling Setback and Notification Rules To Go into Effect on June 28, 2015

On April 14, 2015, the Wyoming Oil and Gas Conservation Commission unanimously approved several changes to its drilling regulations, which will go into effect on June 28, 2015 (i.e. 75 days after approval). The Commission increased the minimum distance between drilling operations and homes or other occupied structures from 350 feet to 500 feet. The rule places the obligation on operators to distance themselves further from such structures if possible, stating that “[i]t is preferable that Production Facilities are located at a greater distance from Occupied Structure(s) where technically feasible.”

The updated regulations also require operators working within 1,000 feet of any such structures to provide at least 30 days notice to surface owners and to submit mitigation plans describing how the operators plan “to mitigate reasonably foreseeable impacts” of noise, light, dust, orientation of the drilling pad and traffic from the production facilities. Additionally, the setback distance will now be measured from the outermost edge of the production facilities instead of the wellhead, as was done previously.

The increase to a 500 foot setback brings Wyoming in line with other oil and gas producing states such as North Dakota and Colorado, which both require a 500 foot setback (subject to various exceptions). The rule is a compromise for both landowner advocates and industry groups. Landowner advocates, such as the Powder River Basin Resource Council, initially requested an increase to 1,320 feet, while industry groups, such as the Petroleum Association of Wyoming, requested that the 500 foot setback be measured from the wellhead, and not from the edge of the production facilities (i.e. the wellpad). While Wyoming Governor Matt Mead has acknowledged that the new setback rule will not satisfy everyone, he has publicly supported the compromise as an improvement, as it increases the setback distance and provides for notification to the surface owners for the first time in Wyoming.

Chapter 3, Section 47 of the Wyoming Oil and Gas Conservation Commission Rules, filed on June 3, 2015, sets forth the new rule and is available at http://soswy.state.wy.us/Rules/RULES/9860.pdf.

  2093 Hits
2093 Hits

Wyoming State Geological Survey Developing Next Generation of Oil and Gas Map of Wyoming

Despite the fact that the U.S. Bureau of Land Management lease sale covering lands in Wyoming conducted on May 5, 2015, brought in a paltry $688,000, which is the lowest total since August 2009, the Wyoming State Geological Survey (“WSGS”) has begun the process of developing the next generation of the Oil and Gas Map of Wyoming.

The Oil and Gas Map of Wyoming is one of the most popular products published by the WSGS. No wonder, as Wyoming currently ranks fifth in the production of natural gas and eighth in oil production. The current version of the map, which can be downloaded from the WSGS website or purchased in a large printed format, contains information including: boundaries of producing and abandoned oil fields in Wyoming; producing formations; field designations; refinery and gas plant locations and capacities; pipeline sizes, operators and locations; basin locations; extent of shale-bearing rocks; and railroad locations.

For the next generation of the map, in addition to updating the information described above, the WSGS plans create an online version of the map, which will allow users to display and interact with various layers of the information contained in the map. More information about the Oil and Gas Map and the other projects of the WSGS can be found online at http://www.wsgs.wyo.gov/.

  2256 Hits
2256 Hits

The Wyoming Historical Society . . .

The Wyoming Historical Society published an interesting piece by Wyoming reporter Dustin Bleizeffer on the history of coalbed methane development in Wyoming, “Coalbed Methane: Boom, Bust and Hard Lessons.” The article covers the boom of the early years of 2000’s and the current bust that has left companies bankrupt and the State addressing the abandoned infrastructure from the development. It is an interesting piece of recent oil and gas history describing how individuals and companies, litigation and government policies shape development on the ground. The article may raise some questions: What should or could have been done smarter? What lessons were learned by the regulators, the public and the industry? Will any lessons learned change management of the next resource boom?

Here is a link to the article:  http://www.wyohistory.org/essays/coalbed-methane-boom-bust-and-hard-lessons

  2189 Hits
2189 Hits