State v. Black Hills Power, Inc., a South Dakota corporation

IN THE SUPREME COURT, STATE OF WYOMING
2015 WY 99
APRIL TERM, A.D. 2015
August 3, 2015
THE STATE OF WYOMING,
Appellant
(Intervenor-Plaintiff),
v.
S-14-0268
BLACK HILLS POWER, INC., a South
Dakota corporation,
Appellee
(Defendant).
W.R.A.P 11 Certification from the
United States District Court, District of Wyoming
The Honorable Scott W. Skavdahl, Judge
Representing Appellant:
Peter K. Michael, Wyoming Attorney General; Martin L. Hardsocg, Deputy
Attorney General;* Ryan T. Schelhaas, Senior Assistant Attorney General; Jared
S. Crecelius, Senior Assistant Attorney General; and Megan L. Nicholas, Senior
Assistant Attorney General. Argument by Ms. Nicholas.
Representing Appellee:
Stuart R. Day and Scott P. Klosterman of Williams, Porter, Day & Neville, P.C.,
Casper, Wyoming; Thomas G. Fritz, Steven J. Oberg, and Catherine M. Sabers of
Lynn, Jackson, Shultz & Lebrun, Rapid City, South Dakota. Argument by Ms.
Sabers.
Before BURKE, C.J., and HILL, KITE, DAVIS, and FOX, JJ.
* Order allowing withdrawal of counsel Martin L. Hardsocg filed March 13, 2015.
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 any typographical or other formal errors so that correction may be
made before final publication in the permanent volume.
DAVIS, Justice.
[¶1] The United States District Court for the District of Wyoming certified three
questions concerning the State of Wyoming’s ability to recover expenses incurred in
suppressing a wildfire near Newcastle, Wyoming from the party whose alleged
negligence created the need for those services.
CERTIFIED QUESTIONS
[¶2] 1. Can the State of Wyoming recover its fire suppression and/or emergency
services costs from a party whose negligence created the need for the emergency
services? 1
2. If the State of Wyoming cannot generally recover its fire suppression
and/or emergency services costs from a party whose negligence created the need for the
services, can the State of Wyoming nonetheless recover the costs of its services where
portions of the lands protected by the fire suppression effort were State lands?
3. If the State of Wyoming can recover the costs of its services where portions
of the lands protected by the fire suppression effort were State lands, is the State’s
recovery limited in any way, such as to a pro rata share of those costs based on the State’s
percentage of the total acres affected by the fire?
FACTS
[¶3] The federal district court’s certification order contains a statement of facts relevant
to the questions certified. Although our review and ultimate resolution of the questions
do not require application of the facts, we set forth that portion of the order to provide
context:
(b) Statement of Relevant Facts
1. On June 29, 2012, a wildfire was ignited near
Newcastle, Weston County, Wyoming. The fire, referred to
as the “Oil Creek Fire,” originated in an area with a
concentrated number of nearby State parcels and grew to a
point that it could not be contained with the resources of the
local Fire District in Weston County.
2. For qualified “emergency fires,” as defined by
Wyo. Stat. § 36-1-401(a)(ii), the costs of suppressing the fires
are covered by the State of Wyoming through its Emergency
1
These questions do not concern the State’s right to recover damages to its land, timber, or structures.
1
Fire Suppression Account, created by § 36-1-402 and
administered by the State Forester under § 36-1-403. As a
participating county pursuant to the provisions of § 36-1-404,
Weston County requested that the State pay for the costs of
suppressing the Oil Creek Fire from the State’s Emergency
Fire Suppression Account. The State Forester approved the
request.
3. The Oil Creek Fire allegedly consumed more than
61,000 acres, damaging approximately 9,857 acres of lands
owned and managed by the State of Wyoming.
4. The State allegedly incurred approximately
$5,213,000 in suppression costs for the Oil Creek Fire, which
it has paid or will pay from the State’s Emergency Fire
Suppression Account.
(c) Nature of Controversy
On April 12, 2013, a group of private landowners
(“Landowners”) filed this action [in Federal Court] against
Defendant, Black Hills Power (“BHP”), alleging BHP was
negligent in its inspection, operation, and maintenance of a
69kV transmission line, which ignited the Oil Creek Fire and
resulted in damages to the Landowners. . . . BHP disputes
liability and denies the nature and extent of the Landowners’
alleged damages. On June 3, 2014, the State of Wyoming
filed a motion to intervene, which was granted on July 1,
2014. The State’s Complaint was subsequently filed.
In its Complaint, the State also alleges BHP was
negligent in its inspection, maintenance and operation of the
69kV transmission line. The State seeks recovery for
damages to State-owned property as well as for suppression
costs associated with the Oil Creek Fire, including both costs
incurred in the protection of its own property and through
payment obligations to Weston County from the State’s
Emergency Fire Suppression Account. The State’s
Complaint does not delineate between the amount of fire
suppression costs incurred in the protection of State land
versus those fire suppression costs incurred in protection of
lands owned by other parties.
Defendant moved to dismiss the State’s claim for
recovery of fire suppression costs arguing, because recovery
of such costs by a governmental entity is not recognized at
common law, the State cannot make a viable claim for
2
recovery of fire suppression costs in the absence of a specific
state statute authorizing recovery. In response, the State
argues, even if the “public services doctrine” was recognized
in Wyoming, an exception to the doctrine applies where the
government incurs expenses to protect its own property.
STANDARD OF REVIEW
[¶4] Pursuant to W.R.A.P. 11.01, we may answer a question of law that may be
determinative of a cause pending in the certifying court for which there appears to be no
controlling precedent from this Court. Preston v. Marathon Oil Co., 2012 WY 66, ¶ 4,
277 P.3d 81, 83 (Wyo. 2012). Certified questions are queries of law that are reviewed de
novo. Id.; State v. Mares, 2014 WY 126, ¶ 10, 335 P.3d 487, 493 (Wyo. 2014).
DISCUSSION
General Rule
[¶5] The general common law rule adopted by other jurisdictions, which has been
called the free public services doctrine, provides that absent specific statutory
authorization, a governmental entity cannot recover the costs of providing public services
from a tortfeasor whose conduct caused the need for such services. 2 See Dist. of
Columbia v. Air Florida, Inc., 750 F.2d 1077, 1080 (D.C. Cir. 1984); City of Flagstaff v.
Atchison, Topeka & Santa Fe Ry. Co., 719 F.2d 322, 323-24 (9th Cir. 1983); Walker
Cnty. v. Tri-State Crematory, 643 S.E.2d 324, 327 (Ga. Ct. App. 2007). The raison
d'être for the rule is that a governmental entity providing certain essential services for the
public can more fairly absorb and pass the costs for those services on to its citizenry as a
whole through taxation. Dist. of Columbia, 750 F.2d at 1080; City of Flagstaff, 719 F.2d
at 323-24; City of Bridgeton v. B. P. Oil, Inc., 369 A.2d 49, 54 (N.J. Super. 1976).
[¶6] A seminal case is City of Flagstaff, 719 F.2d at 323, in which the Ninth Circuit
Court of Appeals held that “the cost of public services for protection from fire or safety
hazards is to be borne by the public as a whole, not assessed against the tortfeasor whose
negligence creates the need for the service.” See also Dep’t of Natural Res. v. Wisconsin
Power & Light Co., 321 N.W.2d 286, 288 (Wis. 1982) (“Any liability for the cost of
extinguishing the instant fire must be imposed by statute, for there is no common law
liability permitting a governmental entity to charge an electric utility for fire suppression
expenses.”). It went on to explain that the
2
The rule is also referred to as the municipal cost recovery rule when applied to cities. See City of
Chicago v. Beretta U.S.A. Corp., 821 N.E.2d 1099, 1143-44 (Ill. 2004); City of Philadelphia v. Beretta
U.S.A., Corp., 126 F. Supp. 2d 882, 894 (E.D. Pa. 2000).
3
governmental entities themselves currently bear the cost in
question, and they have taken no action to shift it elsewhere.
If the government has chosen to bear the cost for reasons of
economic efficiency, or even as a subsidy to the citizens and
their business, the decision implicates fiscal policy; the
legislature and its public deliberative processes, rather than
the court, is the appropriate forum to address such fiscal
concerns.
City of Flagstaff, 719 F.2d at 324; see also City of Chicago, 821 N.E.2d at 1144-45.
[¶7] A year later, a similar result was reached in District of Columbia v. Air Florida,
750 F.2d at 1079. In that case, the District of Columbia brought a negligence action
against an airline seeking to recoup costs associated with rescue and recovery efforts
incurred due to a plane crash. Id. The District of Columbia Circuit Court of Appeals
affirmed the district court’s dismissal of the action based upon the free public services
doctrine. In so doing, the court explained:
Where emergency services are provided by the government
and the costs are spread by taxes, the tortfeasor does not
anticipate a demand for reimbursement. Although settled
expectations must sometimes be disregarded when new tort
doctrines are needed to remedy an inequitable allocation of
risks and costs, where a generally fair system for spreading
the costs of accidents is already in effect—as it is here
through assessing taxpayers the expense of emergency
services—we do not find the argument for judicial adjustment
of liabilities to be compelling.
We are especially reluctant to reallocate risks where a
governmental entity is the injured party. It is critically
important to recognize that the government’s decision to
provide tax-supported services is a legislative policy
determination. It is not the place of the courts to modify such
decisions. Furthermore, it is within the power of the
government to protect itself from extraordinary emergency
expenses by passing statutes or regulations that permit
recovery from negligent parties.
Id. at 1080; see also Cnty. of Erie, New York v. Colgan Air, Inc., 711 F.3d 147, 150-51
(2d Cir. 2013); Walker Cnty., 643 S.E.2d at 327.
4
[¶8] We are convinced that the reasons for the common law’s free public services
doctrine as articulated in City of Flagstaff, District of Columbia and similar cases are
sound.3 Accordingly, like many other jurisdictions, we adopt the free public services
doctrine. Absent a legislative grant of authority, the State of Wyoming may not generally
recover its fire suppression and/or emergency service costs from a party whose
negligence created the need for the services.
[¶9] Turning then to whether there is any statutory authority that would allow the State
to recover the fire suppression and/or emergency service costs incurred in suppressing the
Oil Creek Fire from BHP, or prohibit it from doing so, we must examine the statutes
which create an emergency fire suppression account, which in turn allows the State to
come to the aid of counties whose resources are insufficient to suppress a fire. Guided by
our rules of statutory interpretation, see Aland v. Mead, 2014 WY 83, ¶ 11, 327 P.3d 752,
758-59 (Wyo. 2014), we find that Wyo. Stat. Ann. §§ 36-1-401 through 404 (LexisNexis
2015) do not provide any hint that the legislature intended to alter the general common
law rule and shift costs to the party whose negligence created the need for the fire
suppression and/or emergency services.
[¶10] Wyo. Stat. Ann. § 36-1-401 defines essential terms used in the statutes
establishing the emergency fire suppression program. The next section, § 36-1-402,
creates the emergency fire suppression account. It sets forth the funding and investing
structure, which relies upon legislative appropriations, assessments from participating
counties, and investment income. Wyo. Stat. Ann. § 36-1-403 establishes the state
forester’s powers and duties in relation to the emergency fire suppression account. And
lastly, § 36-1-404 outlines how a county desiring to participate in the emergency fire
suppression account goes about doing so. Plainly absent from these statutes is language
evidencing legislative intent that the State may recover fire suppression or emergency
service costs from a negligent party, or that it cannot do so if the State incurred the
expenses to protect its own property.
[¶11] By way of comparison, the legislature has statutorily authorized recovery of fire
suppression costs in cases involving railroads. In Title 37 (Public Utilities), Chapter 9
(Railroads), the clear language evidences the legislature’s intent that fire suppression
costs for fires started by railroads is to be borne by the operating railroad:
3
See, e.g., Cnty. of Erie, New York, 711 F.3d at 150-51; Walker Cnty., 643 S.E.2d at 327; City of
Chicago, 821 N.E.2d at 1144; United States v. Rocky Mtn. Power, No. 2:11-CV-00227, 2011 WL
3423383, at *3 (D. Utah Aug. 4, 2011); Matter of Oil Spill by Amoco Cadiz Off Coast of France on Mar.
16, 1978, 954 F.2d 1279, 1310-11 (7th Cir. 1992); Koch v. Consolidated Edison Co. of N.Y., 468 N.E.2d
1, 8 (N.Y. 1984); Dep’t of Natural Res., 321 N.W.2d at 288; Town of Freetown v. New Bedford
Wholesale Tire, Inc., 423 N.E.2d 997, 997-98 (Mass. 1981); City of Bridgeton, 369 A.2d at 54; Allenton
Volunteer Fire Dep’t v. Soo Line R. Co., 372 F. Supp. 422, 423 (E.D. Wis. 1974).
5
(a) Every railroad corporation operating its line of road, or
any part of it, within this state, shall be liable for all damages
by fire resulting from or caused by operating any such line of
road together with suppression costs, established by the
department of transportation, and any damages and costs in
any court of competent jurisdiction.
(b) Any damage and suppression cost may be recovered by
the party damaged if an action is brought by the party injured
within one (1) year next after said damages shall have been
inflicted or caused. An injured party who recovers more than
has been last offered in writing by the railroad under this
section may be awarded reasonable attorney fees and other
costs incurred in seeking recovery under this section if it is
determined that the railroad acted unreasonably and without
cause.
Wyo. Stat. Ann. § 37-9-303 (LexisNexis 2015) (emphasis added).
[¶12] The fact that the Wyoming legislature has enacted statutes allowing recovery of
fire suppression costs for fires caused by railroads, by expressio unius est exclusio
alterius, indicates that it normally expects the governmental entities to cover their
expenses through taxes and fees. Because the statutes relating to the emergency fire
suppression program do not include any provision to institute suit or recover fire
suppression costs from an allegedly negligent party, the State’s tort claim to generally
recover all costs associated with suppressing the Oil Creek Fire is barred by the free
public services doctrine.
[¶13] The answer to the first certified question is, therefore, no.
Exception to the General Rule
[¶14] As with most rules, there is an exception to the free public services doctrine
“where the government incurs expenses to protect its own property.” City of Flagstaff,
719 F.2d at 324 (emphasis added); see also Dist. of Columbia, 750 F.2d at 1080; United
States v. Denver & Rio Grande W. R.R. Co., 547 F.2d 1101, 1105 (10th Cir. 1977);
United States v. Morehart, 449 F.2d 1283 (9th Cir. 1971); Chesapeake & O. Ry. Co. v.
United States, 139 F.2d 632, 633 (4th Cir. 1944); United States v. Chesapeake & O. Ry.
Co., 130 F.2d 308, 310 (4th Cir. 1942); Restatement (First & Second) of Torts § 919
(1979, updated 2015). As the authorities just cited indicate that, like private property
owners, the government can recover expenses reasonably incurred to protect its own
property.
6
[¶15] Thus, even though the State of Wyoming cannot generally recover its fire
suppression and/or emergency services costs from a party whose negligence created the
need for the services, it may be able to recover the costs of its service where portions of
the lands protected by the fire suppression effort were State lands. Whether it can
recover here, and to what extent, is the subject of the third certified question.
[¶16] Accordingly, the answer to the second certified question is yes.
Amount of Recovery for Costs Incurred in Protecting State Lands
[¶17] The third question certified asks if the State of Wyoming can recover the costs of
its services where portions of the lands protected by the fire suppression effort were State
lands, whether the State’s recovery is limited in any way. The narrow answer is not as a
matter of law. We point out that when real property has been damaged or destroyed by a
wrongful act, the desired objective is to ascertain as accurately as possible the amount of
money that will fairly and adequately compensate the owner for the loss. See Goforth v.
Fifield, 2015 WY 82, ¶ 37, __ P.3d __, __ (Wyo. June 11, 2015); see also Denver & Rio
Grande W. R.R. Co., 547 F.2d at 1105 (“[T]he fundamental principle of damages is to
restore the injured party, as nearly as possible, to the position he would have been in had
it not been for the wrong of the other party.”). “This would include the cost of
suppression of the fire.” Id. at 1105; see Chesapeake & O. Ry. Co., 130 F.2d at 310
(“The principle of liability for foreseeable consequences, upon which this rule is based,
certainly permits the recovery of damages in the form of expenditures incurred in
attempting to save property.”); Restatement (First & Second) of Torts § 919.
[¶18] Beyond that, we find that the question raises issues of fact that will have to be
resolved by the federal district court. See Cross v. Berg Lumber Co., 7 P.3d 922, 928
(Wyo. 2000) (“Damages are findings of ultimate fact.”); Chesapeake & O. Ry. Co., 130
F.2d at 310 (“The fire was rapidly approaching the property of the plaintiff and whether
or not the plaintiff was justified in the steps it took to extinguish the fire was a question to
be passed upon by a jury.”).
[¶19] The question posed and the briefs and arguments of the parties suggest a number
of unknowns. We have no way of knowing whether the State would have been obligated
to expend the funds it did fighting the Oil Creek Fire by the terms of its fire suppression
agreement with Weston County, whether or not State property had been threatened.
Those contracts and evidence as to how the fire suppression fund is administered are not
before us on this certified question. We would expect BHP to argue that if the State had
the obligation to fight the fire regardless of whether State land was threatened, it did not
actually incur the expenses to protect its property, but rather to fulfill its obligations to
Weston County.
7
[¶20] Whether or not that is an issue, we cannot hope to ascertain on a certified question
whether the State had to expend all of the funds it did to protect State property because it
had to fight the fire on adjacent private property to protect its own lands. We conjecture
that the question of whether the costs of fighting the fire on State lands can be
apportioned from the overall costs incurred will be the subject of testimony by dueling
experts in fire suppression, and if so, the trier of fact will have to evaluate that testimony.
[¶21] While the third certified question predominantly raises questions of fact, we are
able to find that the State’s recovery is not limited in any way as a matter of law.
CONCLUSION
[¶22] The answer to the first certified question is no. The State cannot generally recover
its fire suppression and/or emergency service costs from a party whose negligence
created the need for the emergency services because of the free public services doctrine.
[¶23] The answer to the second certified question is yes. While the free public services
doctrine does not permit the State to generally recover its fire suppression and/or
emergency services costs from a party whose negligence created the need for the
services, there is an exception to the general rule which will allow the State to recover the
costs of its service where portions of the lands protected by the fire suppression effort
were State lands.
[¶24] The limited answer to the legal aspect of the third question certified is not as a
matter of law. The bulk of the question is factually loaded and cannot be answered
because it raises questions of fact that will need to be decided by the trier of fact.
8