Opinion ID: 2639449
Heading Depth: 2
Heading Rank: 3

Heading: Constitutionality of Lease Preference

Text: [¶ 35] Given our conclusion that the school lands in Wyoming are subject to a statutory trust, we must address the parameters of that fiduciary obligation. Riedel and the State, citing Lassen and Ervien, argue that there is a fiduciary obligation to maximize revenues from the trust lands, and Riedel argues that the right-to-renew statute depresses the market for leasing school lands. Those cases, however, were interpreting the 1912 Arizona-New Mexico Enabling Act, which does include a express federal trust and is very different from the Wyoming Act of Admission. The Branson decision informs us that, even if there is a federal trust, it does not necessarily carry with it a common law duty to maximize revenue from the trust corpus and the state may define the fiduciary duty within the bounds of the federal trust. Branson Sch. Dist., 161 F.3d at 638-39. Since we hold that the land trust in Wyoming is a creature of statute, we agree with the Association that the statutes incorporate all of the trustee's duties, and that such arrangement is authorized by the Act of Admission and the Constitution's express authorization to lease the lands under such regulations as the legislature shall prescribe. It is not necessary, and indeed would be inappropriate, to look to other states or common law trust principles to define the state's fiduciary obligations with regard to the school land's statutory trust. [¶ 36] The current version of the preferential right to renew was enacted in 1997 in the same legislative act as the declaration of trust. We construe statutes in accord with the ordinary and obvious meaning of their language to determine the legislature's intent. Thunderbasin Land & Livestock v. Laramie Cty., 5 P.3d 774, 779 (Wyo.2000). If the language is sufficiently clear, we need not resort to other rules of construction. Id. [¶ 37] We will discuss each of Riedel's constitutional objections. He first claims that the preferential right to renew violates Wyoming's fiduciary trust obligation to receive fair market value for agricultural leases of the common school land grants. He distinguishes the earlier cases in which we upheld similar preference laws on the grounds that those cases turned on statutory interpretation and refers us instead to Lassen v. Arizona ex rel. Arizona Highway Dep't. As discussed above, however, at issue in Lassen was the uniquely specific Arizona-New Mexico Enabling Act. And since we conclude that any trust in Wyoming is a creation of Wyoming statute, that trust does not carry with it the duty to maximize revenues found by the Lassen court. Plaintiff's first constitutional challenge therefore fails. [¶ 38] Riedel next argues that the preferential right-to-renew is tantamount to an absolute right of renewal, violating the enabling act's ten-year limit on leasing, and that in depressing lease values it grants privileges to incumbent lease holders over the trust beneficiaries. Riedel's arguments in this regard are speculative, as was his statistical evidence at trial in which he attempted to show that the vast majority of leases are renewed by the incumbent lease holders. He does not nearly approach his heavy burden to clearly and exactly show the unconstitutionality beyond a reasonable doubt. Reiter v. State, 36 P.3d 586, 589 (Wyo.2001). We have ruled that prior preferential right to renew leases are conditional, not absolute. Frolander, 72 Wyo. at 364-65, 264 P.2d at 799; Kerrigan v. Miller, 53 Wyo. 441, 448, 84 P.2d 724, 726 (1938); Mercer v. Thorley, 48 Wyo. 141, 150, 43 P.2d 692, 695 (1935). The current statutory right is even more conditional: the incumbent must re-apply every ten years, must have met prior lease payments, must otherwise maintain eligibility, and most importantly must match any higher bid offered for the same land. The State may still decide to sell the land or not to lease it at all; if it does lease, it does so at the highest rate bid by anyone. We therefore find that the conditional right to renew does not violate the enabling act's prohibition of leases longer than ten years. [¶ 39] Riedel next argues that the preferential right-to-renew statute violates the requirement that the school lands be disposed of by public auction, as required by Wyo. Const, Art. 18, § 1. We agree with the Association and the State that the relevant constitutional provision, requiring that disposal of the lands be at public auction, is clear and unambiguous. To dispose of means to alienate, relinquish, part with, or get rid of. Black's Law Dictionary 471 (6th ed.1990). As with statutes, we interpret the Constitution according to its plain and obvious meaning. Amoco Production Co. v. Hakala, 644 P.2d 785, 789 (Wyo.1982). The framers clearly did not consider a lease to be a sale when they granted to the Board of Land Commissioners the direction, control, leasing and disposal of the state lands. Wyo. Const., Art. 18, § 3. We held in Ross v. Trustees of Univ. of Wyo., 30 Wyo. 433, 443, 222 P. 3, 7 (1924), that the granting of a right-of-way across state lands is not a disposal as contemplated by the Constitution. We conclude likewise that a lease of state lands as authorized by the Constitution is not a disposal of those lands and need not be accomplished by public auction. [¶ 40] Riedel contends that the preferential right to renew violates the constitutional prohibition on granting any privileges to persons who may have settled upon any of the school lands ..., by which the amount to be derived by the sale or other disposition of such lands, shall be diminished directly or indirectly. Wyo. Const., Art. 18, § 5. This argument lacks cogency: the lessees of today are not the original settlers contemplated by the Constitution and, as noted above, the leasing of the lands is not a sale or other disposition of the school lands. [¶ 41] Riedel's final constitutional argument is the one addressed by most of his evidence at trial. Assuming the existence of a trust, and assuming the trust to be governed by common law standards rather than the legislature, he contends that the right to renew depresses the value of agricultural leases and therefore violates the trustees duty to maximize revenue from the trust lands. However, we have concluded that the land trust in Wyoming is created by the legislature and hence the management of that trust and, as specifically authorized by the Constitution, the leasing of the trust lands, are governed by the statutes and not by common law trust principles. Huckfeldt v. State Bd. of Sch. Land Comm'rs, 20 Wyo. 162, 122 P. 94 (Wyo.1912). The legislature will not be presumed to have created the trust and violated it at the same time. [¶ 42] The trial court granted judgment as a matter of law at the close of plaintiff's case. A review of the record shows that judgment was properly granted. Riedel sought to prove through expert testimony that incumbent lease holders in Wyoming almost always prevail when there is a competing lease application, that those leases have a positive permit value when agricultural properties are marketed, and that other states realize more for their leases because they have a variable rather than a single statewide minimum lease rate. Much of his evidence was of a historical nature, and addressed past management practices of the Board without tie-in to the current statute or the lease at issue. To conclude from that evidence that the state is not realizing sufficient income from its trust lands, rising to the level of a breach of fiduciary duty, would be sheer speculation and falls far short of Riedel's considerable burden to prove the statute's unconstitutionality. While there may have been problems with earlier versions of the preferential right to renew statute, the current version requires that the renewing lease holder match any competing bid and therefore approximates market value. Riedel's evidence that many private agricultural sales include a premium for the seller's lease permits, in addition to being substantially impeached, does not necessarily indicate that the lease was undervalued when granted by the Board. It is just as likely that the lease premium recognizes the seller's efforts in obtaining the lease or improvements made to the leasehold.