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July 1, 1983


Review of a decision of the Court of Appeals. Reversing Louis J. Ceci, J. Shirley S. Abrahamson, J. (minority OPINION(S)ing). Justice Nathan S. Heffernan joins in this Dissent.

The opinion of the court was delivered by: Ceci

This is a review of a decision of the court of appeals, Noranda Exploration, Inc. v. Ostrom, 107 Wis. 2d 205, 320 N.W.2d 530 (Ct App. 1982), which reversed a judgment of the circuit court of Oneida county, HONORABLE TIMOTHY L. VOCKE, presiding, declaring sec. 107.15, Stats., unconstitutional. Because we conclude that the provisions of sec. 107.15, requiring public disclosure constitute an unconstitutional "taking" without just compensation, we hold those portions of sec. 107.15 unconstitutional and, therefore, we reverse.

The plaintiff, Noranda Exploration, Inc. (Noranda), is engaged in the business of mineral exploration. Noranda began exploring in Wisconsin in 1972. Companies such as Noranda typically go through several stages in the process of mineral exploration. After examining data in the public records, the explorer will make aerial electromagnetic studies, looking for subsurface anomalies. The explorer must then acquire land position in the area where it has determined that magnetic anomalies exist, by obtaining leases for the property from the landowners. The explorer then does ground surveys to eliminate cultural anomalies. Finally, the explorer drills one or more exploration holes toward the anomalies that have been located by the ground men. These exploration holes yield detailed geologic information about the location, size, and quality of mineral deposits. This final phase of exploration is at the center of the controversy in the case before us. From 1972 to October 31, 1979, Noranda drilled 192 exploratory holes in Wisconsin. During this time, Noranda spent $3,763,478 in Wisconsin. Approximately one-third of this amount was attributable to the actual drilling of holes. During the same period of time, Noranda expended $1,833,143 exploring for minerals on private property leased from Consolidated Papers, Inc. in Oneida county.

In 1977, the Wisconsin legislature enacted sec. 107.15, Stats., *fn1 which requires metallic mineral explorers who are licensed pursuant to sec. 144.832(2), *fn2 to disclose certain geologic data acquired in the course of exploring for minerals within the state and to provide samples of certain materials obtained during exploration. Section 107.15, also provides that the exploration data and samples submitted to the state geologist shall be kept confidential until December 31 of the third year following the date of submission. Section 107.15(4) (f).

Noranda commenced this action in the circuit court on July 2, 1979. In its complaint, Noranda alleged that it had vested title to the information obtained during the course of the exploration activities, that the information was of extreme value to Noranda, and that the value of the information would be substantially reduced if it were disclosed to other persons. The complaint alleged that, in its effect, sec. 107.15, Stats., constitutes a taking of Noranda's property without just compensation, *fn3 violates its rights to procedural due process and equal protection, and constitutes an impairment of contract rights. Noranda asked the court to declare sec. 107.15 unconstitutional and to issue a temporary restraining order against the enforcement of the provisions of secs. 107.15 and 144.832(5). *fn4 The trial court issued a temporary restraining order and, following a hearing, granted Noranda's motion for a temporary injunction.

The statutory scheme involved is somewhat complex. The purpose of sec. 107.15, Stats. (1977), is stated in sub. (1):

". . . The purpose of this section is to further the public interest in informed decision-making by appropriate state agencies, including the office of the state geologist, which are responsible for mineral, geologic and other earth-related sciences by ensuring that those agencies have as much geological information as possible where such information is relevant to their functions and at the same time protecting proprietary rights in such information."

Section 107.15(2), Stats., is the definitional section. *fn5 Section 107.15(4), provides that a licensee shall provide the state geologist with certain geologic data, including:

" noninterpretive lithologic description *fn6 of all portions of core samples and, of all drill cuttings if any noninterpretive lithologic descriptions of drill cuttings are prepared, excluding mention of metalliferous minerals found in the samples and cuttings." Section 107.15(4) (a) (7), Stats. (1977).

This data is to be submitted to the state geologist on or before July 1 of the year following each year in which soil, rock, core or drill cutting samples are obtained by the licensee. Section 107.15(4) (a).

In addition, sec. 107.15(4) (b), Stats. (1977), provides that the explorer may be required to submit core samples to the state geologist:

"The state geologist may require that designated representative and reasonable quantities of soil, rock, core or drill cutting samples obtained by a licensee during exploration be retained by the licensee and released to the state geologist for purposes of geologic study. The state geologist shall designate the samples and the quantities to be retained by the licensee and shall notify the licensee by December 31 of the year in which a report under par. (a) is submitted. The licensee shall release the samples no later than July 1 of the year following the year in which an exploration lease for the site where the samples were obtained has expired, but release shall be no later than 10 years after the commencement of drilling at the site."

Section 107.15(4) (f), Stats., provides for the confidentiality until December 31 of the third year following the date of submission of the exploration data and samples submitted under (4) (a) or (b). Thus, the exploration data will not be released to the public for at least three and one-half years, and core samples might be kept confidential for as many as thirteen and one-half years. Section 107.15(6) (c), imposes penalties upon those who knowingly or wilfully violate its confidentiality requirements, but it permits the state geologist to provide the department of natural resources and the department of revenue with the confidential information. Both the department of natural resources and the department of revenue are required to establish procedures to maintain the confidentiality of the information they receive.

Following the six-day trial which took place in January and February of 1980, the trial court declared sec. 107.15, Stats., to be unconstitutional and ordered that the defendants be permanently enjoined from enforcing the statute.

The trial court concluded that, beyond a reasonable doubt, the statute deprived Noranda of its property without due process of law and impaired Noranda's contract obligations to property owners whose land Noranda was exploring.

The trial court made several findings. It found that the information obtained by the process of exploration had value to the explorer and to the landowner from whom the explorer obtains a lease and that the person doing the exploring expects to have a proprietary right in the information obtained. The court found that the intrinsic value of the core sample extends indefinitely, and the period of exploration may legitimately be longer than thirteen and one-half years. It also found that even though a reading of a truly nondescriptive lithologic log would only indicate that a particular area's environment was favorable for minerals, it was clear that the value of the information to the company acquiring it would dissipate upon the disclosure of the information to competitors. The court found that the state had other means of obtaining the information which it felt was necessary to protect the public health and welfare and that the information required under sec. 107.15, Stats., was not necessary to protect the health, safety, and welfare of the public.

The trial court noted that the burden of proof is on the party who attacks the constitutionality of a statute and that to prevail, the plaintiff must show that there is no rational relationship between the law and a legitimate government interest. Nevertheless, the court concluded:

"ased upon the testimony, beyond any reasonable doubt it has been shown that the operation of s. 107.15 Wis. Stats. is, in fact, a taking of property and that the State acquires, seizes, takes into possession, gains and assumes ownership of the property ...

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