Title: Rissler & McMurry Co. v. State

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Rissler & McMurry Co. v. State1996 WY 80917 P.2d 1157Case Number: 95-239Decided: 06/05/1996Supreme Court of Wyoming
RISSLER & McMURRY CO., a Wyoming corporation,

Appellant 
(Plaintiff),

v.

The 
STATE of Wyoming,

 Appellee (Defendant).

 

Appeal 
from the District Court, Natrona County

 

John 
R. Hursh and Donald J. Rissler of Central Wyoming Law Associates, P.C., 
Riverton, for Appellant.

William 
U. Hill, Attorney General, and Larry M. Donovan, Senior Assistant Attorney 
General, for Appellee.

John 
A. Sundahl and Kay Lynn Bestol of Sundahl, Powers, Kapp & Martin, Cheyenne, 
for Amicus Curiae Wyoming Contractors Association.

Daniel 
Heilig of Wyoming Outdoor Council, Lander, Wyoming; and Edward B. Zukoski of 
Land & Water Fund of the Rockies, Boulder, Colorado, for Amicus Curiae 
Wyoming Outdoor Council.

Before 
GOLDEN, C.J., and THOMAS, MACY and LEHMAN, JJ., and W. THOMAS SULLINS, District 
Judge.

MACY, 
Justice.

[¶1]      Appellant Rissler 
& McMurry Co. appeals from the order which dismissed its complaint against 
Appellee State of Wyoming. Rissler was seeking a judgment for its alleged 
takings claims and its damages.

[¶2]      We 
affirm.

ISSUE

[¶3]      Rissler presents 
a single issue for our review:

The 
trial court erred in dismissing the plaintiff's separate temporary and permanent 
takings claims on the premise that both claims were premature under the 
provisions of W.S. 35-11-1001(b).

 

FACTS

[¶4]      Rissler entered 
into a ten-year limestone mining lease with the State on July 2, 1989. This 
lease covers a section of state-owned land located on Bessemer Mountain in 
Natrona County. Pursuant to the lease, Rissler agreed to comply with all state 
statutory requirements and valid regulations, which included obtaining a valid 
mining permit.

[¶5]      On December 17, 
1991, Rissler submitted its application for a small mine permit to the 
Department of Environmental Quality as WYO. STAT. § 35-11-405(a) (1994) 
requires, seeking permission to mine a 40-acre parcel located within the mining 
lease area. On March 13, 1992, the Department of Environmental Quality certified 
that the permit application was complete and suitable for publication. Rissler 
published its notice of the pending permit in accordance with the statute. The 
Department of Environmental Quality received numerous written objections during 
the comment period and, therefore, referred the permit application to the 
Environmental Quality Council for a formal hearing and determination under the 
Wyoming Administrative Procedure Act. WYO. STAT. §§ 35-11-406(m)(x) (Supp. 
1995), -112(a)(iv) (1994).

[¶6]      In April of 1992, 
a separate proceeding was held, involving a designation petition which was filed 
for the purpose of having Bessemer Mountain designated as being "rare or 
uncommon." Following the hearing, the Environmental Quality Council determined 
that Bessemer Mountain met the criteria for being "rare or uncommon" and so 
designated it. The Environmental Quality Council then remanded Rissler's permit 
application to the Department of Environmental Quality, directing it to evaluate 
the application in light of the "rare or uncommon" designation. Rissler filed a 
petition for review in the district court, challenging the Environmental Quality 
Council's determination that Bessemer Mountain met the criteria for being "rare 
or uncommon." The district court certified the matter to this Court because of 
the constitutional and procedural questions which were involved and because it 
was in the best interest of justice and economy. Rissler & McMurry v. 
Environmental Quality Council (In re Bessemer Mt.), 856 P.2d 450, 451 (Wyo. 
1993).

[¶7]      Rissler began 
mining operations in late 1992 on ten acres of the leased land as was allowed 
under WYO. STAT. § 35-11-401(e)(vi) (1994). On June 23, 1993, the Department of 
Environmental Quality again certified that the permit application was complete 
and suitable for publication. The permit application, however, was not complete 
because paleontology survey results were not included. The Environmental Quality 
Council dismissed the case without prejudice and remanded the application, 
directing the Department of Environmental Quality to review the findings of a 
Rissler-conducted paleontology survey on the area before certifying the 
application as being complete. The Environmental Quality Council also vacated a 
scheduled August 19-20, 1993, hearing on the matter.

[¶8]      On July 10, 1993, 
the Department of Environmental Quality again certified that the permit 
application was complete and suitable for publication. Numerous objections were 
again lodged against the permit application, and the Department of Environmental 
Quality again forwarded the application to the Environmental Quality Council for 
a formal hearing. Pursuant to the contested case provisions of the Wyoming 
Administrative Procedure Act, the Environmental Quality Council scheduled a 
hearing on the matter for August 25, 1993. The Environmental Quality Council 
ruled on several motions at that hearing and then set a contested case hearing 
on the permit application for February 22, 1994.

[¶9]      Contemporaneously 
with the July 1993 Department of Environmental Quality and Environmental Quality 
Council actions on the permit application, we reversed the Environmental Quality 
Council's "rare or uncommon" classification of Bessemer Mountain and remanded 
the case, finding that the Environmental Quality Council had not adopted 
appropriate standards in accordance with the Wyoming Administrative Procedure 
Act procedures on rulemaking. See Rissler & McMurry, 856 P.2d 450. As a 
result of this ruling, the Environmental Quality Council promulgated new rules 
in December of 1993 to define the "rare or uncommon" criteria. 

[¶10]   On January 31, 1994, the 
Environmental Quality Council continued the February 22, 1994, hearing on 
Rissler's application for a small mine permit until April of 1994. On February 
10, 1994, Rissler filed its verified notice of claim with the State, and the 
State denied it on February 16, 1994. A hearing on a new petition to designate 
Bessemer Mountain as being "rare or uncommon" was held on February 16, 1994. On 
February 17, 1994, the Environmental Quality Council decided to delay making any 
decision until after the Legislature had adjourned its session. On February 23, 
1994, approximately a month before the hearing was to be held on its 
application, Rissler withdrew its application for a small mine permit. On the 
same day, Rissler filed its verified complaint in the district court, alleging, 
among other things, that the State temporarily and permanently deprived Rissler 
of the benefits of owning its lease without providing just compensation and 
deprived it of its procedural and substantive due process rights.

[¶11]   The State moved to dismiss under 
W.R.C.P. 12(b)(6). After hearing arguments on the matter, the district court 
granted the State's motion on the grounds that Rissler had not exhausted its 
administrative remedies. It is from that order that Rissler makes this 
appeal.

STANDARD 
OF REVIEW

[¶12]   We have often stated the standard 
we apply when we are reviewing a W.R.C.P. 12(b)(6) dismissal:

When 
reviewing a W.R.C.P. 12(b)(6) dismissal, this Court accepts all facts stated in 
the complaint as being true and views them in the light most favorable to the 
plaintiff. We will sustain a W.R.C.P. 12(b)(6) dismissal only when it is certain 
from the face of the complaint that the plaintiff cannot assert any facts which 
would entitle him to relief.

Herrig 
v. Herrig, 844 P.2d 487, 490 (Wyo. 1992) (citation omitted), quoted in Davis v. 
State, 910 P.2d 555, 560 (Wyo. 1996). Although dismissal is a drastic remedy 
which should be granted sparingly, a motion to dismiss "`is the proper method 
for testing the legal sufficiency of the allegations and will be sustained when 
the complaint shows on its face that the plaintiff is not entitled to relief.'" 
Feltner v. Casey Family Program, 902 P.2d 206, 208 (Wyo. 1995) (quoting Mummery 
v. Polk, 770 P.2d 241, 243 (Wyo. 1989)).

DISCUSSION

[¶13]   Rissler contends that the State's 
conduct resulted in a temporary and permanent taking of its limestone mining 
lease and that it did not exhaust its administrative remedies because it would 
have been futile to continue trying to get a hearing on its permit application. 
The district court's ruling focused upon the exhaustion-of-remedies issue. We, 
therefore, will limit the scope of our decision to that issue.

[¶14]   The decision to decline 
jurisdiction because a party has failed to exhaust its administrative remedies 
is vested within the sound discretion of the district court. Glover v. State, 
860 P.2d 1169, 1171 (Wyo. 1993).

"The 
exhaustion doctrine applies where an agency alone has been granted or found to 
possess exclusive jurisdiction over the case. The purpose of the doctrine then 
is to avoid premature interruption of the administrative process where the 
agency has been created to apply a statute in the first instance."

860 P.2d  at 1171-72 (quoting People v. Fremont Energy Corporation, 651 P.2d 802, 811 
(Wyo. 1982)). The reasons for applying the exhaustion doctrine have been well 
noted:

"A 
primary purpose is, of course, the avoidance of premature interruption of the 
administrative process. The agency, like a trial court, is created for the 
purpose of applying a statute in the first instance. Accordingly, it is normally 
desirable to let the agency develop the necessary factual background upon which 
decisions should be based. And since agency decisions are frequently of a 
discretionary nature or frequently require expertise, the agency should be given 
the first chance to exercise that discretion or to apply that expertise. And of 
course it is generally more efficient for the administrative process to go 
forward without interruption than it is to permit the parties to seek aid from 
the courts at various intermediate stages. The very same reasons lie behind 
judicial rules sharply limiting interlocutory appeals."

860 P.2d  at 1172 (quoting McKart v. United States, 395 U.S. 185, 193-94, 89 S. Ct. 1657, 1662-63, 23 L. Ed. 2d 194 (1969)).

[¶15]   When an agency denies an 
application or withholds or delays action on a permit application, statutory 
means exist under which the affected party may petition a court for review of 
the agency's actions. WYO. STAT. § 16-3-114 (1990) provides in pertinent 
part:

(a) 
. . . [A]ny person aggrieved or adversely affected in fact by . . . agency 
action or inaction, or any person affected in fact by a rule adopted by an 
agency, is entitled to judicial review in the district court for the county in 
which the administrative action or inaction was taken, or in which any real 
property affected by the administrative action or inaction is located, or if no 
real property is involved, in the district court for the county in which the 
party aggrieved or adversely affected by the administrative action or inaction 
resides or has its principal place of business. The procedure to be followed in 
the proceeding before the district court shall be in accordance with rules 
heretofore or hereinafter adopted by the Wyoming supreme court.

. 
. . .

(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; . . 
.

In 
addition, the Legislature has established a mechanism for determining whether an 
agency's denial of all or a part of a mining permit, on the basis of a "rare or 
uncommon" designation, rises to the level of being a compensable taking. WYO. 
STAT. § 35-11-1001(b) (1994) provides a remedy for those parties who believe 
that their property has been taken as a result of a permit application being 
denied. It states:

(b) 
Any person having a legal interest in the mineral rights or any person or 
corporation having a producing mine or having made substantial capital 
expenditures and commitments to mine mineral rights with respect to which the 
state has prohibited mining operations because the mining operations or proposed 
mining operations would irreparably harm, destroy or materially impair an area 
that has been designated to be of a unique and irreplaceable historical, 
archeological, scenic or natural value, may petition the district court for the 
district in which the mineral rights are located to determine whether the 
prohibition so restricts the use of the property as to constitute an 
unconstitutional taking without compensation. Upon a determination that a taking 
has occurred the value of the investment in the property or interests condemned 
shall be ascertained and damages shall be assessed as in other condemnation 
proceedings.

Section 
35-11-1001(b).

[¶16]   These statutes require a final 
agency decision to be rendered before an appeal may be initiated or an action 
for an unconstitutional taking may be pursued. Rissler did not proceed pursuant 
to the above provisions. Rissler's application for a small mine permit was never 
denied. Instead, Rissler withdrew its application approximately a month before 
the hearing was to occur and filed its complaint on the same day. By going 
directly to court, Rissler circumvented the statutes designed to provide relief. 
See Cheyenne Airport Board v. Rogers, 707 P.2d 717 (Wyo. 1985), dismissed, 476 U.S. 1110, 106 S. Ct. 1961, 90 L. Ed. 2d 647 (1986).

[¶17]   The trial court cited Williamson 
County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172, 105 S. Ct. 3108, 87 L. Ed. 2d 126 (1985), in concluding that Rissler's takings 
claims were premature. In Williamson County Regional Planning Commission, the 
United States Supreme Court held: 

As 
the Court has made clear in several recent decisions, a claim that the 
application of government regulations effects a taking of a property interest is 
not ripe until the government entity charged with implementing the regulations 
has reached a final decision regarding the application of the regulations to the 
property at issue.

473 U.S.  at 186, 105 S. Ct.  at 3116. The Supreme Court went on to 
explain:

A 
second reason the taking claim is not yet ripe is that respondent did not seek 
compensation through the procedures the State has provided for doing so. The 
Fifth Amendment does not proscribe the taking of property; it proscribes taking 
without just compensation. Nor does the Fifth Amendment require that just 
compensation be paid in advance of, or contemporaneously with, the taking; all 
that is required is that a "`reasonable, certain and adequate provision for 
obtaining compensation'" exist at the time of the taking. Regional Rail 
Reorganization Act Cases, 419 U.S. 102, 124-125, 95 S. Ct. 335, 349, 42 L. Ed. 2d 320 (1974) (quoting Cherokee Nation v. Southern Kansas R. Co., 135 U.S. 641, 
659, 10 S. Ct. 965, 971, 34 L. Ed. 295 (1890)). If the government has provided an 
adequate process for obtaining compensation, and if resort to that process 
"yield[s] just compensation," then the property owner "has no claim against the 
Government" for a taking. [Ruckelshaus v.] Monsanto [Company], 467 U.S. [986,] 
1013, 1018, n. 21, 104 S.Ct. [2862,] 2878, 2881, n. 21[, 81 L. Ed. 2d 815 
(1984)].

473 U.S.  at 194-95, 105 S. Ct.  at 3120-21 (footnote and some citations 
omitted).

[¶18]   The Legislature has charged the 
Environmental Quality Council with the responsibility for approving or denying 
applications for mining permits. WYO. STAT. § 35-11-112(c)(ii) (1994). Until its 
determination has been rendered, the courts do not have jurisdiction under § 
35-11-1001(b) to make a decision on a compensatory taking action or entertain an 
appeal from the denial of an application for a permit under § 16-3-114 and 
W.R.A.P. 12.

[¶19]   Rissler claims that pursuing the 
permit process would have been futile because the "rare or uncommon" 
designation1 as well as the continuances of the 
contested case hearing made it pointless for Rissler to continue. The United 
States Supreme Court has held: "Our cases uniformly reflect an insistence on 
knowing the nature and extent of permitted development before adjudicating the 
constitutionality of the regulations that purport to limit it." MacDonald, 
Sommer & Frates v. Yolo County, 477 U.S. 340, 351, 106 S. Ct. 2561, 2567, 91 L. Ed. 2d 285 (1986).

[¶20]   We agree with the Washington 
Supreme Court's holding:

Once 
exhaustion is raised as a defense, the landowner seeking to establish "futility" 
as an exception to the exhaustion requirement must persuade the court that 
futility excuses exhaustion. This is a substantial burden because of the strong 
public policies favoring the exhaustion doctrine.

Presbytery 
of Seattle v. King County, 114 Wn.2d 320, 787 P.2d 907, 916-17 (en banc), cert. 
denied, 498 U.S. 911, 111 S. Ct. 284, 112 L. Ed. 2d 238 (1990) (footnote omitted). 
The Washington Supreme Court concluded that the landowner's claim was not ripe 
for adjudication because the landowner had not sought development permits and 
that, therefore, it was not possible to know what deprivation of beneficial use 
might result from a wetlands ordinance. 787 P.2d  at 917.

[¶21]   The only evidence which suggests 
that it would have been pointless for Rissler to continue with the permit 
process is Rissler's opinion that it would have been futile. The fact that an 
area receives a "rare or uncommon" designation does not necessarily mean that a 
permit application will be automatically denied. WYO. STAT. § 35-11-406(m)(iv) 
(Supp. 1995) requires that a permit be denied only if the "proposed mining 
operation would irreparably harm, destroy, or materially impair any area that 
has been designated . . . a rare or uncommon area." Since Rissler withdrew its 
permit application, the Environmental Quality Council was never given the 
opportunity to decide whether to approve the application.

[¶22]   Rissler cites various cases in an 
attempt to support its position that it was excused from exhausting its 
administrative remedies under the futility exception. Rissler relies on First 
English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 
California, 482 U.S. 304, 107 S. Ct. 2378, 96 L. Ed. 2d 250 (1987). That case, 
however, does not help Rissler as it stands for the proposition that, when a 
landowner has been denied all use of his property, an ordinance cannot escape 
review on takings grounds simply because the ordinance is later repealed or 
amended. 482 U.S.  at 319-21, 107 S. Ct.  at 2388-89.

[¶23]   Rissler also relies on Lucas v. 
South Carolina Coastal Council, 505 U.S. 1003, 112 S. Ct. 2886, 120 L. Ed. 2d 798 
(1992), in asserting this position. Lucas is likewise not helpful to Rissler. In 
Lucas, the United States Supreme Court refused to apply the 
exhaustion-of-remedies rule only because the South Carolina Supreme Court had 
disposed of the case on its merits rather than on ripeness grounds. The agency 
in question admitted that a permit to build would not and could not have been 
issued. 505 U.S.  at 1012 n. 3, 112 S. Ct.  at 2891 n. 3. Otherwise, the 
exhaustion-of-remedies rule would have been applied. 505 U.S.  at 1011-12, 112 S. Ct.  at 2890-91.

[¶24]   In this case, by contrast, the 
agency never stated that a permit would not or could not be issued. Furthermore, 
Rissler was not unconditionally and permanently deprived of all its value in the 
mining lease. The withdrawal of the permit application prior to the agency's 
final decision made it impossible for such a final, permanent deprivation to 
occur.

[¶25]   We disagree with Rissler's argument 
that the Environmental Quality Council does not have statutory authority to 
continue a hearing. We have recognized that continuances may be requested in the 
administrative hearing context. See State ex rel. Wyoming Workers' Compensation 
Division v. Rivera, 796 P.2d 447, 452 (Wyo. 1990); see also Grams v. 
Environmental Quality Council, 730 P.2d 784, 788 (Wyo. 1986) (reviewing a 
refusal to grant a continuance in a surface-coal-mine-permit case under an 
abuse-of-discretion standard rather than under a lack-of-statutory-authority 
standard).

[¶26]   While we understand Rissler's 
frustration with the bureaucratic hoops which it was required to jump through, 
we cannot sanction its total abandonment of the administrative process. The 
Wyoming Administrative Procedure Act provides appropriate remedies for those 
parties who have been aggrieved by an agency's actions, and a party must exhaust 
those remedies before it pursues alternative forms of relief.

CONCLUSION

[¶27]   Rissler failed to sustain its 
burden of establishing that it was excused by reason of futility from exhausting 
its administrative remedies, and, thus, the district court correctly dismissed 
Rissler's temporary and permanent takings claims as being premature.

[¶28]   Affirmed.

FOOTNOTE

1 
Rissler argues for the first time on appeal that creating a "paleontological" 
category within the definitional rule of "rare or uncommon" made the rule and 
regulation facially invalid. We will not consider issues which are raised for 
the first time on appeal. Hiltz v. Robert W. Horn, P.C., 910 P.2d 566, 572 (Wyo. 
1996).