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Office of State Lands and Investments; Edward L. Grant, In His v. Mule Shoe Ranch

April 19, 2011

OFFICE OF STATE LANDS AND INVESTMENTS; EDWARD L. GRANT, IN HIS OFFICIAL CAPACITY AS DIRECTOR OF THE OFFICE OF STATE LANDS AND INVESTMENTS, APPELLANTS (RESPONDENTS),
v.
MULE SHOE RANCH, INC., APPELLEE (PETITIONER).
MULE SHOE RANCH, INC., APPELLANT (PETITIONER),
v.
OFFICE OF STATE LANDS AND INVESTMENTS; EDWARD L. GRANT, IN HIS OFFICIAL CAPACITY AS DIRECTOR OF THE OFFICE OF STATE LANDS AND INVESTMENTS, APPELLEES (RESPONDENTS).



Appeal from the District Court of Crook County The Honorable Michael N. Deegan, Judge

The opinion of the court was delivered by: Kite, Chief Justice.

Before KITE, C.J., and GOLDEN, HILL, VOIGT, and BURKE, JJ.

NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of typographical or other formal errors so correction may be made before final publication in the permanent volume.

[¶1] Mule Shoe Ranch, Inc. (Mule Shoe) sought to exercise its preferential right to renew a state lease. Two Y Ranch (Two Y) submitted a competing bid at a higher rate. The director of the Office of State Lands and Investments (State Lands Office) issued a decision requiring Mule Shoe to match the higher bid in order to exercise its preferential right. Mule Shoe requested an administrative hearing.

[¶2] The State Lands Office and Mule Shoe filed motions for summary judgment. The Board of Land Commissioners (Board) granted summary judgment to the State Lands Office, agreeing with the director's decision. Mule Shoe filed a petition for review in the district court which reversed the Board's decision and remanded the matter to the Board with instructions to direct the State Lands Office to conduct an economic analysis and make a determination as to whether the competing bid was based on fair market value. The State Lands Office appealed to this Court. Mule Shoe filed a cross-appeal. We reverse the district court's order.

ISSUE

[¶3] We paraphrase the issue the State Lands Office presents in its appeal as follows:

Whether the district court erred in reversing the Board's decision requiring Mule Shoe to meet the highest bid offered in order to exercise its preferential right to renew its lease.

Mule Shoe states the issue as follows:

Whether the state grazing lease statutes place an upper constraint on the amount an existing grazing lessee is required to pay to match a competing bidder under Wyo. Stat. Ann. § 36-5-105(c).

[¶4] We paraphrase the issue Mule Shoe presents in its cross appeal as follows:

Whether the district court erred in remanding the case to the Board for an economic analysis and should instead have entered judgment for Mule Shoe.

The State Lands Office re-states the issue as whether the district court erred in affirming the denial of Mule Shoe's summary judgment motion on the basis that an economic analysis must be performed on Two Y's bid.

FACTS

[¶5] The State of Wyoming owns 5,459.90 acres of land covered by State Lease No. 2-5310. The State leases the land for grazing and agricultural purposes for ten-year terms. Mule Shoe, a family ranching operation, has leased the state land covered by State Lease No. 2-5310 since 1941. On February 1, 2008, the lease was set to expire. Pursuant to Wyo. Stat. Ann. § 36-5-104 (LexisNexis 2009), Mule Shoe, and any other party interested in leasing the land, was required to submit an application to the State Lands Office.

[¶6] On October 30, 2007, the State Lands Office received an application for State Lease No. 2-5310 from Two Y. Two Y offered an annual rental payment of $45,556.00, or $28.00 per animal unit month (AUM). The State Lands Office notified Mule Shoe about the application. On November 30, 2007, Mule Shoe responded with a renewal application for the lease. Mule Shoe offered an annual rental payment of $8,476.67, or $5.21 per AUM.

[¶7] On March 25, 2008, the director of the State Lands Office issued a decision letter addressing the conflicting applications. The director found that Two Y was a qualified applicant, had an actual and necessary use for the land and available forage and had submitted the highest bid. Based upon § 36-5-105(c) (LexisNexis 2007), which gave Mule Shoe, as the holder of the expiring lease, a preferred right to renew the lease, the director conditionally awarded the lease to Mule Shoe for the next ten year term at the rate of Two Y's bid.

[ΒΆ8] On April 4, 2008, Mule Shoe exercised its preferential right by filing a written acceptance and paying the amount of Two Y's bid. Three days later, Mule Shoe filed a notice of appeal of the director's decision, asserting Two Y's $28.00 per AUM bid was not valid because it was not based on fair market value using the formula developed by the Board for the same or similar land use. ...


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