Opinion ID: 2523351
Heading Depth: 1
Heading Rank: 5

Heading: Lack of Reporting

Text: [¶ 19] The reporting provision of the WRPA states in pertinent part as follows: § 30-5-305. Collection; reporting and remittance of royalties. . . . . (b) Whenever payment is made for oil or gas production to an interest owner, all of the following information shall be included and labeled on the check stub or on an attachment to the form of payment, unless the information is otherwise provided on a regular monthly basis: (i) The lease, property or well name or any lease, property or well identification number used to identify the lease property or well; (ii) The month and year during which sales occurred for which payment is being made; (iii) The total number of barrels of oil or thousands of cubic feet of gas sold; (iv) The price per barrel of oil or the price per thousand cubic feet of gas; (v) The total amount of state severance, ad valorem and other production taxes; (vi) An itemized list of any other deductions or adjustments; (vii) The net value of total sales after deductions; (viii) The owner's interest in sales from the lease, property, or well expressed as a decimal; (ix) The owner's share of the total value of sales prior to any deductions; (x) The owner's share of the sales value less deductions; and (xi) An address where additional information pertaining to the owner's interest in production may be obtained and questions answered. If information is requested by certified mail, an answer must be mailed by certified mail within thirty (30) days of receipt of the request. [¶ 20] The penalty for failing to report as required in the above provision is set out in § 30-5-303(c) as follows: Any person who fails to provide royalty information as provided in W.S. 30-5-305(b) is liable to the affected royalty, overriding royalty or other nonworking interest owner in the amount of one hundred dollars ($100.00) per month that complete reporting is not provided to the interest owner. [¶ 21] The district court concluded that the plain language of the WRPA did not require CMS to report when the funds were being held in escrow. The district court reasoned: This makes perfect sense, because one who is uncertain regarding whom to pay or how much to pay can hardly be expected to report accurately. [¶ 22] The district court continued: Each party presented expert testimony at trial in an attempt to prove its central contention. [Ms. Morris] attempted to portray herself as an innocent interest holder whose royalties were unlawfully withheld by [CMS], who was also in violation of the Act's reporting requirements. [CMS] attempted to portray itself as a diligent lessee more than willing to pay the royalties, but confused as to the identity of the interest holder and therefore justified in withholding payment. Neither position is entirely accurate. Much of the testimony at trial concerned blow-by-blow descriptions of the cause and effect of various problems with [Ms. Morris's] title. In the court's eye, however, much of that testimony was superfluous. As the statute makes clear, producers of oil and gas must timely pay royalties to interest holders. If for any reason the making of timely payments is not feasible, producers must escrow the royalties in question while the problembe it whom to pay or how much to payis sorted out. In the matter at bar, there can be no question that with respect to the majority of wells [CMS] knew whom to payits own title opinions indicated that much. In the majority of instances the question was with respect to the amount to be paid. The uncontroverted evidence was that on the vast majority of producing wells, [CMS] knew that [Ms. Morris] had at least some interest. Similarly, in those instances where a genuine question regarding the identity of the interest holder arose, [CMS] should have immediately escrowed the funds in question.... [I]t is manifest that while the wells were producing, [CMS] should have been paying someone; the Act and later Supreme Court interpretations make clear that if the identity of the royalty interest holder is an issue the funds should be escrowed immediately. (Emphasis in original) The district court concluded as a matter of law that CMS violated the WRPA by failing to submit the required reports for twenty-nine months; accordingly, the court imposed a penalty of $2,900. [¶ 23] Both parties appealed the district court's conclusion. Ms. Morris asserts the district court erred in finding CMS properly reported production while CMS contends the district court correctly found that it fully and accurately reported but erred in awarding reporting penalties. Neither of these assertions makes sense in light of the district court's conclusion. The district court did not conclude that CMS properly reported; rather, the district court concluded that CMS failed to properly report for twenty-nine months. Neither party challenges the district court's finding that CMS failed to report during the specified time period, or argues that this finding was not supported by the record. [¶ 24] Ms. Morris challenges the manner in which the district court applied the reporting penalty. Ms. Morris asserts that § 30-5-303(b) requires producers to submit a report for each well and failing to do so are subject to a $100 penalty per month per well. The district court concluded the statute required a producer to submit a complete report each month to the interest holder and the failure to do so would result in a penalty of $100 for each month complete reporting did not occur. In reaching this result, the district court concluded the language of the statute was clear and unambiguous; § 30-5-305 provided for reporting by lease, property or well name, meaning a producer complied by sending the interest owner one report per month detailing production on all wells on a particular lease in which the owner had an interest; and to construe § 30-5-303(c) as Ms. Morris asserted would require adding words the legislature omitted as follows: Any person who fails to provide royalty information as provided in W.S. 30-5-305(b) is liable to the affected royalty, overriding royalty or other nonworking interest owner in the amount of one hundred dollars ($100.00) per well per month that complete reporting is not provided to the interest owner. [¶ 25] Applying the usual rules of statutory construction, the district court declined to construe the WRPA as requiring one report per well per month. The district court likewise rejected Ms. Morris's claim that the $100 penalty should be compounded each month no report was submitted, concluding instead that the provision means what it says: a producer who fails to submit a complete monthly report is liable to the interest owner in the amount of $100 per month. [¶ 26] Our review of statutory provisions is governed by the following standards: The paramount consideration is to determine the legislature's intent, which must be ascertained initially and primarily from the words used in the statute. We look first to the plain and ordinary meaning of the words to determine if the statute is ambiguous. A statute is clear and unambiguous if its wording is such that reasonable persons are able to agree on its meaning with consistency and predictability. Conversely, a statute is ambiguous if it is found to be vague or uncertain and subject to varying interpretations. If we determine that a statute is clear and unambiguous, we give effect to the plain language of the statute. Kennedy Oil v. Dep't of Revenue, 2008 WY 154, ¶ 10, 205 P.3d 999, 1003 (Wyo.2008) (citations omitted). Ultimately, whether a statute is ambiguous is a matter of law to be determined by the court. Id. [¶ 27] Looking at the language of § 30-5-305(b) as set out in paragraph 19 above, the clear intent of the legislature was that interest owners would receive all of the information identified in subparagraphs (i) through (xi) on a regular monthly basis. The provision does not require the information to be provided on a per well basis but instead authorizes the information to be provided by lease, property or well. For example, § 30-5-305(b)(viii) requires the report to include the owner's interest in sales from the lease, property, or well.... The legislature's further intent was that anyone who failed to provide the information required in § 30-5-305(b) would be liable to the interest owner in the amount of $100 for each month that a complete report was not provided. [¶ 28] Given the clear language of § 30-5-303(c), we agree with the district court's conclusion that the legislature did not intend to impose the $100 per month penalty for each well; had that been its intent, it would have said so. As this Court has said, the omission of words from a statute is considered to be an intentional act by the legislature and we will not read words into a statute when the legislature has chosen not to include them. Kennedy, ¶ 14, 205 P.3d at 1004. When statutory words are clear and unambiguous, a court risks an impermissible substitution of its own views, or those of others, for the intent of the legislature if any effort is made to interpret or construe statutes on any basis other than the language invoked by the legislature. Id. The district court correctly determined that CMS was liable to Ms. Morris in the amount of $100 for each month that it failed to submit a complete report. [¶ 29] Ms. Morris also contends the district court erred in concluding that the $100 per month reporting penalty was not cumulative. By calculating the $100 per month penalty per well and then adding the penalty for each preceding month to the next month, Ms. Morris has asserted throughout these proceedings that CMS owed her $2,208,500. We conclude that the district court correctly determined from the plain language of the statute that the legislature intended to impose a maximum penalty of $100 for each month complete reporting did not occur. Nothing in the statutory language suggests otherwise. [¶ 30] CMS asserts in its cross appeal that the district court erred in awarding reporting penalties under the WRPA. CMS contends that Ms. Morris presented no evidence showing the specific months when it failed to report and the district court made no finding in that regard. Given the lack of evidence and findings, CMS asserts, the reporting penalties awarded were based upon speculation. [¶ 31] Contrary to CMS's assertions, Ms. Morris presented evidence that CMS did not submit reports for numerous wells in which she asserted a royalty interest. Additionally, her expert witness identified thirty-three wells in which she had an interest but received no report. On the basis of the evidence, the district court found that CMS should have submitted reports beginning in November 1999, which is six months after the start of production in April, 1999 and continuing from that point forward through March 2002.... Concluding that CMS failed to report for that twenty-nine month period, the district court ordered CMS to pay $2,900 in reporting penalties. [¶ 32] The evidence presented at trial supports the district court's determination that CMS failed to submit complete monthly reports from July of 2000 through March of 2002. However, we are puzzled by the district court's finding that CMS was required to report beginning in November of 1999. Section 30-5-301 requires payment within six months after the first day of the month following the first day of sale. Section 30-5-305(b) requires reporting on a regular monthly basis once payment commences. The first sale was in December of 1999. Therefore, it appears the first payment-and the first report-was due six months after January 1, 2000, that is, July of 2000. On remand, the district court should consider this issue and determine the proper penalty.