Big Piney Oil & Gas Co. v. Wyoming Oil and Gas Conservation Com'n

• Citation: 715 P.2d 557
• Decision Date: 13 March 1986
• Docket Number: No. 85-251,85-251
• Parties: BIG PINEY OIL & GAS COMPANY, Plaintiff, v. WYOMING OIL AND GAS CONSERVATION COMMISSION and Belnorth, Defendants.
• Court: United States State Supreme Court of Wyoming

Page 557

715 P.2d 557

BIG PINEY OIL & GAS COMPANY, Plaintiff, v. WYOMING OIL AND GAS CONSERVATION COMMISSION and Belnorth, Defendants.

No. 85-251.

Supreme Court of Wyoming.

March 13, 1986.

George M. Porter and Richard L. Williams of Williams, Porter, Day & Neville, P.C., Casper, for plaintiff.

Joe Scott, Sp. Asst. Atty. Gen., Casper, for defendant Wyoming Oil and Gas Conservation Comn.

Thomas F. Reese of Brown, Drew, Apostolos, Massey & Sullivan, Casper, for defendant Belnorth (Belco Development Corp.).

Before THOMAS, C.J., and BROWN, CARDINE, URBIGKIT and MACY, JJ.

MACY, Justice.

This case comes before us on a certification from the district court. We are asked to review an order of the Wyoming Oil and Gas Conservation Commission (Commission) which restricted production from the gas wells of appellant Big Piney Oil & Gas Company (Big Piney) to prevent waste of hydrocarbons from the adjoining Big Piney Mesaverde Unit (Unit).

We affirm the Commission's order.

During the 1950's, the owners of separate leases, including Big Piney, drilled and produced oil and gas from the Mesaverde formation under their several leases in the area designated as the Big Piney field in Sublette County, Wyoming. In the early part of the 1960's, these same lessees determined that it would be advantageous to form a unit for the purpose of conducting secondary recovery operations. During the preunitization negotiations in 1965 and 1966, Big Piney elected not to be included within the Unit. Nevertheless, the Unit was formed by the remaining lessees in 1967. In 1979, appellee Belco Development Corporation (Belco) took over as Unit operator.

The Unit surrounds Big Piney's 160-acre government lease on the north, east, and south, which lease contains five wells. Each of the wells is producing gas from the gas cap in the Mesaverde formation.

Belnorth Petroleum Corporation ¹ filed an application with the Commission alleging in substance:

1. That Big Piney is producing from its wells at a rate which is depleting the gas cap in the Unit;

2. That continued operation of the wells violates the correlative rights of the Unit interest owners; and

3. That continued operation of the wells jeopardizes the secondary recovery program because of the loss of the gas cap, and because Big Piney is producing more than its equitable share from the common pool.

The applicant then prayed that the Commission shut in the production of Big Piney's wells or, in the alternative, force Big Piney into the Unit.

The Commission reviewed the matter at hearings on three separate occasions, at which times the parties introduced evidence for and against the application. On June 21, 1985, the Commission entered an order restricting the production of gas from the Mesaverde formation by Big Piney on its government lease in the Big Piney field. On July 18, 1985, Big Piney filed a petition for judicial review of this matter in the District Court for the Seventh Judicial District. Instead of reviewing the matter, the district court issued an order on November 6, 1985, certifying this case to the Wyoming Supreme Court pursuant to Rule 12.09, W.R.A.P., 1985 Cum.Supp. Big Piney's statement of issues for consideration by this Court is as follows:

1. Does Belnorth (Belco) have standing to bring this action before the Commission?

2. Was Belnorth (Belco) precluded from bringing this action in its own behalf as well as operator of the Big Piney Mesaverde Unit (Unit) by reason of estoppel, waiver, or laches?

3. Was the order entered by the Commission dated June 21, 1985, in Cause No. 3, Order No. 9, Docket No. 193-85, arbitrary, capricious, and an abuse of discretion?

4. Does the Commission have legal authority to restrict the production of only one operator in a pool or must it restrict all operators ratably?

5. Is the order entered by the Commission and the subject of this review contrary to law, unconstitutional, and therefore void?

I

In its first assignment of error, Big Piney contends that Belco had no standing to bring this action before the Commission and, therefore, the application should have been dismissed. In support of its claim Big Piney asserts that although the Commission has the statutory authority to investigate and enforce Wyoming oil and gas laws and regulations, it has no authority to act in a judicial capacity by reviewing complaints filed by other parties.

Big Piney cites no authority in support of its claim. We, however, direct attention to the following statutory provisions. Section 30-5-102(a), W.S.1977 (June 1983 Replacement), provides that "[t]he waste of oil and gas or either of them in the state of Wyoming * * * is hereby prohibited." Section 30-5-111(d), W.S.1977 (June 1983 Replacement), provides in pertinent part:

" * * * In all cases where a complaint is made by the commission, or by the state oil and gas supervisor or by any party that any provision of this act, or any rule, regulation or order of the commission is being violated, notice of the hearing on such complaint shall be served on the parties charged with such violation * * *." (Emphasis added.)

These provisions clearly authorize any party to bring any alleged violation of the act before the Commission by the filing of a complaint. We, therefore, hold that Belnorth (Belco) had standing to file the petition and that the Commission had the authority and the duty to act upon it.

II

Big Piney argues next that the equitable doctrines of estoppel, waiver, and laches, or a combination thereof, should be applied by this Court against Belco and the Commission. In the first instance, it is argued that Belco acquiesced in appellant's production of gas from the gas cap for a period of eighteen years and, therefore, cannot now complain of the production. In the second instance, it is argued that the Commission had a duty to investigate to determine if waste was occurring, that it failed to do so over an eighteen-year period, and that, therefore, it is now restrained from restricting appellant's production under one of the aforementioned doctrines. In support of the latter claim, appellant points to § 30-5-104(b), W.S.1977, 1985 Cum.Supp., which provides: "The commission has authority and it is its duty to make investigations, to determine whether waste exists or is imminent, or whether other facts exist, which justify or require action by it hereunder."

While acknowledging the Commission's statutory duty to investigate, we are not persuaded by appellant's claim.

The equitable doctrine of waiver, either as to Belco or the Commission, was not raised before the Commission and is, therefore, not to be considered for the first time on appeal. Wyoming Bank & Trust Company of Buffalo v. Bonham, Wyo., 606 P.2d 296 (1980).

Equitable estoppel should not be invoked against a government or public agency functioning in its governmental capacity, except in rare and unusual circumstances and may not be invoked where it would serve to defeat the effective operation of a policy adopted to protect the public. 31 C.J.S., Estoppel § 138 (1964). In Edgar v. Stanolind Oil & Gas Co., Tex.Civ.App., 90 S.W.2d 656 (1935), the question was whether or not the conservation laws of the state were being contravened. The court stated:

" * * * That is a matter in which the public is concerned; and private parties cannot by conduct and agreement between themselves, whether by estoppel or otherwise, vitiate the conservation laws, nor obstruct their proper enforcement. And it is immaterial whether the enforcement of such conservation laws is invoked by interested parties or by the state, if a violation thereof is shown. The public interest in the conservation of such natural resources is the matter of paramount concern, and one against which estoppel as between the private property rights of the adjacent leaseholders cannot prevail." (Emphasis added.) 90 S.W.2d at 658.

Then, in Humble Oil & Refining Co. v. Trapp, Tex.Civ.App., 194 S.W.2d 781, 787 (1946), the court stated "It is now settled law that acts or agreements of private parties cannot be binding upon, nor work an estoppel against, the agencies of the State in the enforcement of its conservation laws. [Citation.] Those are matters in which the public interest controls. * * * "

Finally, in the more recent case of Northwest Central Pipeline Corporation v. State Corporation Commission, 237 Kan. 248, 699 P.2d 1002 (1985), the court refused to apply the doctrine of estoppel when the prevention of waste for the benefit of the public was at stake.

Appellant next contends, in an effort to cover all the bases, that if the doctrine of estoppel does not apply, the doctrine of laches does. Laches has been variously defined as such delay in enforcing one's rights that it works to the disadvantage of another. 30A C.J.S., Equity § 112 (1965). Governments and their agencies are generally not barred by laches when enforcing a public or governmental right. 30A C.J.S., Equity § 114 (1965). From these general principles, we find that it matters not whether the doctrine of estoppel or laches, or a combination thereof, would be applicable between Big Piney and Belco; such does not prevent the Commission from fulfilling its duty to prevent waste by restricting Big Piney's gas production. In view of this holding, we find it unnecessary to consider whether the actions or inactions of Belco would have otherwise triggered the application of these equitable doctrines.

III

Appellant's third issue, that the Commission's order is arbitrary, capricious, and an abuse of discretion, is based on the assertion that the Commission failed to consider all of the evidence presented, that its findings of fact do not adequately disclose the grounds upon which the order was granted, and that the order is not supported by substantial evidence.

Section 16-3-110, W.S.1977 (October 1982 Replacement), provides:

"A final decision or order adverse to a party in a contested case shall be in writing...