BTU WESTERN RESOURCES, INC.; SCHOOL CREEK COAL RESOURCES, LLC; and PEABODY POWDER RIVER MINING, LLC, Appellants (Defendants),
BERENERGY CORPORATION, Appellee (Plaintiff). BERENERGY CORPORATION, Appellant (Plaintiff),
BTU WESTERN RESOURCES, INC.; SCHOOL CREEK COAL RESOURCES, LLC; and PEABODY POWDER RIVER MINING, LLC, Appellees (Defendants).
from the District Court of Campbell County The Honorable
Thomas W. Rumpke, Judge
Representing BTU Western Resources, Inc.; School Creek Coal
Resources, LLC; and Peabody Powder River Mining, LLC: Patrick
R. Day, Thomas L. Sansonetti, Matt J. Micheli, and Jeffrey S.
Pope, Holland & Hart LLP, Cheyenne, Wyoming. Argument by
Representing Berenergy Corporation: Darin B. Scheer and Keith
Burron, Crowley Fleck PLLP, Cheyenne, Wyoming; Peter C.
Forbes, Carver Schwarz McNab Kamper & Forbes, LLC,
Denver, Colorado. Argument by Mr. Forbes.
DAVIS, C.J., and FOX, KAUTZ, GRAY, and BURKE (RET.), JJ.
This dispute, over priority of rights between mineral
developers in Wyoming's Powder River Basin, is before the
Court a second time. Berenergy owns rights to both federal
and private oil and gas. Peabody holds federal coal leases,
and these minerals overlap. Berenergy Corp. v. BTU
Western Resources, Inc., 2018 WY 2, ¶¶ 38-42,
408 P.3d 396, 404 (Wyo. 2018) (Berenergy I). In
Berenergy I, we determined the United States
Department of Interior, Bureau of Land Management (BLM) was a
necessary party to the proceedings dealing with competing
federal leases. We remanded Berenergy I to the
district court to determine whether the BLM could be joined
as a party and, if it could not, instructed the case be
dismissed. Id. ¶ 43, 408 P.3d at 405.
A petition for rehearing was filed alleging the private oil
and gas lease (Thornburg lease) was not appealed or decided
in Berenergy I. The Thornburg lease-like
Berenergy's federal oil and gas leases-overlaps
Peabody's federal coal lease. We declined to amend our
opinion, finding that issues related to the Thornburg lease
were not appealed. In doing so, we did not limit the district
court's authority to consider the Thornburg lease issues
on remand if it found it appropriate to do so.
On remand, the district court held that it did not have
subject matter jurisdiction "as to the lands underlying
the Thornburg lease absent the presence of the BLM . . . [and
was] limited to construing the leases affecting the lands
underlying the Thornburg lease." The district court
applied the "law of the case" in deciding that a
form of the accommodation doctrine governs to resolve the
parties' dispute on the overlapping minerals. It declined
to rule on what accommodation would be required because of
its finding on jurisdiction. Both parties appeal. We reverse,
in part, and affirm, in part.
We address the following issues:
I. Is the BLM's participation necessary to resolve the
Thornburg lease dispute?
II. Does law of the case doctrine require the district court
to apply its original judgment of accommodation?
Most of the facts underlying this case are set forth in
Berenergy I, ¶¶ 5-12, 408 P.3d at 397-99
and, except for those pertinent to this appeal, are not
Berenergy and Peabody develop minerals in Wyoming's
Powder River Basin. Berenergy produces oil from both federal
and private oil and gas leases. The private lease known as
the Thornburg lease is the subject of this appeal. Peabody
mines coal pursuant to its separate federal leases. It plans
to extract coal by strip mining areas subject to
Berenergy's oil and gas leases, including the Thornburg
lease. Peabody's process requires removing top soil,
blasting, and excavating the subsurface. Peabody cannot blast
within 500 feet of an engineered structure, including an oil
well. The parties cannot simultaneously conduct their
operations. See Berenergy I, ¶ 12, 408 P.3d at
Proceedings in District Court
Berenergy filed its lawsuit seeking a declaration of the
parties' relative rights to develop the minerals subject
to their leases. The district court granted in part and
denied in part the parties' cross-motions for summary
judgment concerning questions of which legal principles
should govern their conflict. The district court held the
dispute would be resolved under the accommodation doctrine
and that its ruling on the relative rights of the parties
under their conflicting federal mineral leases would apply
equally to the Thornburg lease. A bench trial followed. After
trial, the district court ruled on a number of issues. Those
decisions relevant to this appeal are: (1) Berenergy must, at
appropriate times, cease production and cap its wells below
the projected coal seam allowing Peabody to mine through
these areas; (2) Peabody must compensate Berenergy for losses
in production on a per well basis; and (3) Peabody must
escrow monies to cover Berenergy's costs for waterflood
production of its oil leases using an off-site
In Berenergy I, we considered cross-appeals of the
district court's ruling regarding the federal leases.
Berenergy I, ¶ 14, 408 P.3d at 399. We
concluded that we could not reach the substance of those
appeals because the BLM was a necessary party to be joined
under Rule 19 of the Wyoming Rules of Civil Procedure.
Id. ¶¶ 37-43, 408 P.3d at 403-05. We
remanded the case "for an evaluation of whether a
federal agency may participate in this suit" and
directed the district court to dismiss the case if the BLM
could not be joined. Id. ¶ 43, 408 P.3d at 405.
for Rehearing Berenergy I
Peabody petitioned for rehearing of Berenergy I
arguing that Berenergy had not appealed the district
court's decision regarding the private Thornburg lease
and, as a result, that portion of the case should not be
subject to the dismissal requirements of Berenergy
I. In response, Berenergy asserted that the Thornburg
lease was appealed and the entire case-including the
Thornburg issue-should be dismissed. In our order on
rehearing, we held that "the issues related to the
Thornburg lease were not presented to the Court" on
appeal and said: "Given the circumstances, this Court
finds it inappropriate to amend [Berenergy I] to
address issues related to the Thornburg lease. In so ruling,
this Court does not limit the district court's authority
to consider the Thornburg lease issues, if the district court
finds such consideration appropriate."
Court's Decision on Remand
On remand, the district court held, "This Court further
concludes that it lacks subject matter jurisdiction to grant
the relief previously granted to Peabody as to the lands
underlying the Thornburg lease absent the presence of the
BLM. Instead, the Court is limited to construing the leases .
. . ." The district court then found that the law of the
case applied, meaning its earlier decision (that the
accommodation doctrine controlled the order and operation of
development with respect to the Thornburg lease) had not been
appealed and the decision remained in effect. The district
court did not decide what a suitable accommodation would be,
concluding instead that the decision on what constitutes a
suitable accommodation rested with the BLM.
Peabody contends that the district court: (1) can fully
resolve the Thornburg lease dispute without the BLM's
participation; and (2) the district court should not have
reopened the final judgment on the Thornburg lease dispute.
In the alternative, Peabody contends, if the Thornburg lease
dispute is reopened, the district court should enforce
Peabody's right to mine through the Thornburg lease
pursuant to the Coal Lands Act, 30 U.S.C. §§ 83-85,
as opposed to the accommodation doctrine. Berenergy argues
that the district court correctly held: (1) that our decision
in Berenergy I deprived it of subject matter
jurisdiction to ...