Ostby v. Board of Oil & Gas Conservation , 374 Mont. 472 ( 2014 )

April 22 2014
DA 13-0750
IN THE SUPREME COURT OF THE STATE OF MONTANA
2014 MT 105ANNE DEBOVOISE OSTBY
ANDREW JAMES OSTBY,
Petitioners and Appellants,
v.
BOARD OF OIL AND GAS CONSERVATION
OF THE STATE OF MONTANA,
Respondent and Appellee.
APPEAL FROM: District Court of the Fifteenth Judicial District,
In and For the County of Sheridan, Cause No. DV 46-2012-9
Honorable David Cybulski, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
Anne Debevoise Ostby, Attorney at Law, Dagmar, Montana
For Appellee:
Robert Stutz, Assistant Attorney General, Montana Board of Oil and Gas
Conservation, Helena, Montana
Submitted on Briefs: March 26, 2014
Decided: April 22, 2014
Filed:
__________________________________________
Clerk
Chief Justice Mike McGrath delivered the Opinion of the Court.
¶1 Anne and Andrew Ostby appeal from the District Court’s order of September 10,
2013, dismissing their petition for judicial review. We reverse.
PROCEDURAL AND FACTUAL BACKGROUND
¶2 The Legislature established the Montana Board of Oil and Gas Conservation with
broad authority to issue permits to drill for oil and gas and to regulate those activities.
Section 82-11-111, MCA; Montana Wildlife Federation v. Montana Board of Oil & Gas
Conservation, 2012 MT 128, ¶ 6, 365 Mont. 232, 280 P.3d 877. In December 2011 the
Board published notice of its intent to “establish special statewide temporary spacing units
for wells drilled to the Bakken/Three Forks Pool,” including parts of Sheridan, Roosevelt
and Richland Counties in Montana. The Board may establish spacing units after notice and
hearing, § 82-11-201, MCA. The Ostbys appeared at the meeting at which the Board
considered the spacing unit proposal, and objected that they had received insufficient notice
and that the Board had not followed proper procedures. The Board proceeded to consider
and adopt the spacing unit proposal. On March 2, 2012, the Board issued a written order
adopting the spacing unit.
¶3 In April 2012 the Ostbys filed in District Court a “Petition for Judicial Review of
Order Adopted by the Board of Oil and Gas Conservation.” The Petition stated that it was
filed “pursuant to sections 82-11-144 and 2-4-702, MCA.” The Petition alleged that the
Board’s adoption of the spacing order was in excess of its statutory authority, and that it was
arbitrary and an abuse of discretion. The Petition requested that the District Court hold the
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Board’s action unlawful, set aside the Board’s order, and grant such other relief as may seem
proper.
¶4 The Board moved to dismiss the Petition and on September 10, 2013, the District
Court entered a brief “Order Granting Motion to Dismiss.” The District Court’s stated
rationale for dismissing Ostbys’ proceeding was that the “sole remedy for a person aggrieved
by an order of the MBOGC is a challenge under Section 82-11-144, MCA.” Ostbys appeal.
STANDARD OF REVIEW
¶5 This Court reviews a decision on a motion to dismiss de novo, to determine whether it
is correct. Hartsoe v. Tucker, 2013 MT 256, ¶ 6, 371 Mont. 539, 309 P.3d 39; Grizzly
Security v. The Armored Group, 2011 MT 128, ¶ 12, 360 Mont. 517, 255 P.3d 143.
DISCUSSION
¶6 The issue on appeal is whether the District Court properly granted the Board’s motion
to dismiss Ostby’s petition.
¶7 A district court considering a motion to dismiss an action should construe the
complaint in the light most favorable to the plaintiff, deeming all factual allegations as true,
and dismissal is warranted only if plaintiff is not entitled to relief under any set of facts.
Missoula YWCA v. Bard, 1999 MT 177, ¶ 3, 295 Mont. 260, 983 P.2d 933; Hauschulz v.
Michael Law Firm, 2001 MT 160, ¶¶ 7-8, 306 Mont. 102, 30 P.3d 357; Meagher v.
Butte-Silver Bow County, 2007 MT 129, ¶ 13, 337 Mont. 339, 160 P.3d 552.
¶8 The only rationale the District Court gave for granting the motion to dismiss was that
the “sole remedy for a person aggrieved by an order of the MBOGC is a challenge under
Section 82-11-144, MCA.” That statute provides that a person adversely affected by an
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order of the Board may obtain court review and may seek relief by a suit for injunction
against the Board. In Montana Wildlife Federation the Federation challenged permits issued
by the Board on the ground that the Board’s environmental assessments were inadequate
under the Montana Environmental Policy Act, § 75-1-101, et seq., MCA. The Federation
contended that since its challenge was based upon MEPA, judicial review was limited to the
Board’s administrative record and that it was improper to consider other evidence regarding
the Board’s action. This Court held that § 82-11-144, MCA, is the more specific statute and
that it governs review of Board actions. Therefore, the district court was not limited to the
Board’s administrative record and could receive additional evidence when conducting a
review of the Board’s decisions. Montana Wildlife Federation, ¶ 29.
¶9 Ostbys seek to distinguish Montana Wildlife Federation on the ground that they
invoked the Montana Administrative Procedure Act (§ 2-4-101, et seq., MCA) and not
MEPA in their petition for judicial review. A judicial review proceeding under MAPA, is
generally confined to the agency’s record, § 2-4-704, MCA. Ostbys contend that they are
entitled to limited judicial review under MAPA, citing § 82-11-141, MCA. That statute
provides that “[u]nless otherwise provided, the Montana Administrative Procedure Act
applies” to proceedings involving the Board. (Emphasis added.) Ostbys contend that unless
MAPA governs judicial review of Board actions, § 82-11-141, MCA, will be “superfluous.”
¶10 Section 82-11-141, MCA, carries the important caveat that MAPA applies to Board
proceedings “unless otherwise provided.” It is clear that § 82-11-144, MCA, provides
otherwise as to “court review” of actions of the Board. In Montana Wildlife Federation this
Court determined that § 82-11-144, MCA, is a specific statute governing court review of
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Board actions, and that it should be applied instead of provisions generally applicable to a
broad array of State activities. Montana Wildlife Federation, ¶ 29. In addition, MAPA itself
specifically provides that its judicial review provisions do not “limit use of or the scope of
judicial review available under other means of review, redress, relief or trial de novo
provided by statute.” Section 2-4-702(1)(a), MCA.
¶11 We conclude that a proceeding seeking judicial review of an order of the Board of Oil
and Gas Conservation must proceed as a de novo review in district court and not as a judicial
review under MAPA. Sections 2-4-702(1) and 82-11-144, MCA; Montana Wildlife
Federation, ¶ 29.
¶12 While § 82-11-144, MCA, governs the Ostbys’ challenge to the Board’s action, that
does not determine whether the District Court properly dismissed their action. We conclude
that the District Court erred in dismissing the action. Even though Ostbys argue that they are
entitled to MAPA judicial review limited to the administrative record, they also clearly cited
and relied upon § 82-11-144, MCA, as a legal basis for their petition. As noted, their
petition was expressly filed “pursuant to” § 82-11-144, MCA. The Petition alleged, in
language closely following that statute, that the Board failed to follow proper procedure and
that its adoption of the spacing order was in excess of its statutory authority. The Petition
alleged, also closely following the statute, that the Board’s action was unwarranted by facts
in the record, and that it was arbitrary and an abuse of discretion. The Petition alleged, again
closely following that statute, that the Board’s action interfered with Ostbys’ contractual
mineral interests, and requested that the District Court hold unlawful and set aside the
Board’s Order, and grant such other relief as may seem proper.
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¶13 These allegations, coupled with the Ostbys’ express reliance upon § 82-11-144, MCA,
should have been sufficient to save their Petition from dismissal by the District Court on the
ground that they had not pursued their “sole remedy” of proceeding under that very statute.
The District Court could have allowed the action to proceed under § 82-11-144, MCA, as
pled in the Petition. To the extent that the Ostbys incorrectly relied upon MAPA judicial
review, the District Court could have stricken the claim for judicial review under MAPA or it
could have allowed Ostbys an opportunity to file an amended Petition. Outright dismissal of
the Petition, however, was not warranted.
¶14 The District Court should have allowed the Ostbys to proceed with their claims under
§ 82-11-144, MCA. The District Court’s order dismissing the action is reversed and this
matter is remanded for further proceedings.
/S/ MIKE McGRATH
We Concur:
/S/ LAURIE McKINNON
/S/ MICHAEL E WHEAT
/S/ PATRICIA COTTER
/S/ JIM RICE
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