McGowan v. Mississippi State Oil & Gas Bd., 07-CA-59604

• Decision Date: 24 June 1992
• Docket Number: No. 07-CA-59604,07-CA-59604
• Citation: McGowan v. Mississippi State Oil & Gas Bd., 604 So.2d 312 (Miss. 1992)
• Parties: John W. McGOWAN v. MISSISSIPPI STATE OIL & GAS BOARD.
• Court: Mississippi Supreme Court

Page 312

604 So.2d 312

John W. McGOWAN v.MISSISSIPPI STATE OIL & GAS BOARD.

No. 07-CA-59604.

Supreme Court of Mississippi.

June 24, 1992.

Rehearing Denied Aug. 12, 1992.

David K. McGowan, Jackson, for appellant.

Michael C. Moore, Atty. Gen., Tim Waycaster, Sp. Asst. Atty. Gen., Jackson, for appellee.

Before ROY NOBLE LEE, C.J., and ROBERTSON and McRAE, JJ.

ROBERTSON, Justice, for the Court:

I.

Today's appellant challenges the State Oil and Gas Board's denial of permission that he operate salt water disposal wells without a device known as a packer.En route he presents fundamental questions of law and policy in our regulatory state.We consider these with care for at their core they challenge the efficacy of what we have known for near half a century.

We find in the end the Board has been charged by law to enforce two competing public policies--the prevention of waste and the control of environmental hazards.The Board has not favored us with minimally adequate findings on these points, much less an explanation how it has evaluated and balanced the competing interests and decided which should rule the day.

We vacate and remand.

II.

John W. McGowan("McGowan") is in the oil business.Like others, he has, over the years, struggled with the problem of salt water disposal.The Mississippi State Oil & Gas Board("the Board") has taken the position that salt water disposal wells must be equipped with a packer, ostensibly to better protect underground sources of drinking water ("USDW").McGowan's wells contain no packer, and he has of late sought regulatory approval of his "packerless" engineering design and methodology for disposal by subsurface injection.

As McGowan sees it, producing oil wells over time yield increasingly greater percentages of salt water and increasingly smaller percentages of oil, and this progression becomes geometrically pronounced as the well approaches the end of its economic life.In his view, the increasing cost of disposing of this salt water vis-a-vis the decreasing oil revenues eventually causes wells to be abandoned.McGowan's "packerless" salt water disposal design allows him to dispose of huge volumes of salt water more economically.Using this design, McGowan says he has purchased and now operates 130 producing wells in four states--wells which, in his view, would otherwise have had to be abandoned.He sees the benefits of his design as substantial production we would otherwise do without, considerable revenue for thousands of working interest and royalty owners, as well as the state through severance taxes.He argues the continued lives of these wells provide a source of employment for hundreds of people.More globally, McGowan trumpets a technology offering hope for a declining industry.

In 1984, McGowan obtained from the Board provisional permits to operate several of his salt water disposal wells without a packer.¹ In December of 1986, he applied for a new permit for two such wells in the Heidelberg Field in Jasper County, again with packerless exceptions, citing his record under the 1984 permits.He presented his case at the Board's regular January, 1987, meeting.Before acting on the application, the Board, on January 26, 1987, ordered McGowan to appear at its February meeting to show cause why the packerless permits for three other salt water disposal wells should not be revoked or modified.SeeMiss.Code Ann. Sec. 25-43-13(Supp.1990).During the course of the hearings that followed, McGowan filed new applications for packerless permits in the Cranfield and LaGrange Fields in Adams County, proposed conforming amendments to his existing permits, and asked that packerless completions be authorized under the then-pending amendments to Statewide Rule 63.All of these matters were ultimately consolidated and heard by the Board over a period of several months.

At the hearings, McGowan offered extensive proof regarding the productivity and efficiency and safety of his packerless design, and, as well, his air pressure testing methodology.Witnesses in opposition--produced by Board staff, rather than third parties--addressed environmental concerns only.These witnesses did not concede the superiority of McGowan's design, but questioned primarily the Board's ability to test McGowan's wells and monitor environmental safety.

In the end, the Board entered a series of orders rejecting McGowan's packerless processes.On July 22, 1987, the Board acted as follows:

(a)OrderNo. 279-87, denied "by majority vote"McGowan's Petition for Authority to Recomplete, Work Over and Operate the Mrs. L.H. Eddy HeidelbergNo. 1 Well for Salt Water Disposal.

(b)OrderNo. 280-87, denied "by majority vote"McGowan's Petition for Authority to Recomplete, Work Over and Operate the Mrs. L.H. Eddy EstateNo. 1 Well for Salt Water Disposal.

(c)OrderNo. 281-87, granted "by majority vote" the Board's Motion to Consider the Revocation, Modification or Reissuing of Board OrderNo. 473-84 for the West Segment South Unit 1-14-2 Salt Water Disposal well in Tinsley Field, Yazoo County, Mississippi, "to require a packer to be placed in the referenced well...."

(d)OrderNo. 282-87, granted "by majority vote" the Board's Motion to Consider the Revocation, Modification or Reissuing of Board OrderNo. 616-84 for the Pickens Field--Yazoo CountySWDW No. 1 Salt Water Disposal Well in Pickens Field, Yazoo County, Mississippi, "to require a packer to be placed in the referenced well...."

(e)OrderNo. 283-87, granted "by majority vote" the Board's Motion to Consider the Revocation, Modification or Reissuing of Board OrderNo. 617-84 for the Pickens Field--Madison CountySWDW No. 1 Salt Water Disposal Well in Pickens Field, "to require a packer to be placed in the referenced well...."

(f)OrderNo. 284-87, denied "by majority vote"McGowan's Petition for Authority to Work Over and Operate the Ella G. LeesSWDW No. 32 Well Without a Packer, Cranfield Field.

Then, on December 16, 1987, the Board entered these further orders:

(g)OrderNo. 511-87, deniedMcGowan's Petition for Authority to Amend OrderNo. 213-85, which authorized packerless injection with certain restrictions and requirements in O.L. WilsonNo. 6 Well, LaGrange Field.

(h)OrderNo. 512-87, deniedMcGowan's Petition for Authority to Amend OrderNo. 230-85, which authorized packerless injection with certain restrictions and requirements in O.L. WilsonNo. 2 Well, LaGrange Field.

(i)OrderNo. 513-87, denied "by majority vote"McGowan's Petition for Authority to Operate Without a Packer the O.L. WilsonNo. 1 Well, LaGrange Field.

(j)OrderNo. 514-87, denied "by majority vote"McGowan's Petition for Authority to Operate Without a Packer the O.L. WilsonNo. 8 Well, LaGrange Field.

McGowan timely sought judicial review of each of these orders (and others not technically before us in the present proceeding) in the Circuit Court for the First Judicial District of Hinds County, Mississippi, in matters designated by seven separate docket numbers, but ultimately consolidated for hearing.In due course, the Circuit Court considered McGowan's application and, noting the Board orders appealed from were made on three-to-two votes, held in the end it should

accord to this agency a presumption of regularity and integrity and that [this] presumption has not been overcome by facts evident in this record.This Court is therefore duty-bound to adhere to the substantial evidence rule with regard to the central issue in these proceedings, whether the Board should permit further packerless completions at this time.

The Circuit Court then denied McGowan's application with respect to each of the orders noted above, but stayed the effectiveness of its ruling pending appeal to this Court.

III.

McGowan challenges the institutional processes of the State Oil and Gas Board.His complaint is that the Board was both his adversary and his judge.He struggles mightily to convince uswe should strike this familiar feature of the administrative landscape, on grounds it offends due process, the right to which is secured to him by Art. 3, Sec. 14 of the Mississippi Constitution of 1890, and ultimately by the Fourteenth Amendment to the Constitution of the United States.McGowan argues the idea implicit in the substantial evidence rule, one familiar expression of limited judicial review of agency action, is that an independent arbiter has found the facts and has applied the law.

We do not take the point lightly, for it is premised upon that ancient first principle of justice, that no man shall serve as judge of his own cause.Dr. Bonham's Case, 8 Co. 114a, 118a, 77 Eng.Rep. 646, 652(1610);In re Murchison, 349 U.S. 133, 136, 75 S.Ct. 623, 625, 99 L.Ed. 942, 946(1955).Beyond its natural appeal, we find the principle a part of our jurisprudence in a variety of contexts.See, e.g., Bell v. City of Bay St. Louis, 467 So.2d 657, 662(Miss.1985);Danner v. Mid-State Paving Co., 252 Miss. 776, 786, 173 So.2d 608, 613(1965), quoted inChisolm v. State, 529 So.2d 635, 640(Miss.1988).

A few basics.Administrative agencies are ambiguous creatures born of necessity mired in the tension between public policy and personal claims of right.²They pursue pragmatically the public interest balancing the utilitarian (and expertly divined) calculus of aggregate net benefit against the individual's claim to fair opportunity and process.³They address pressing questions of political economy and science where there are seldom easy answers and almost never only two points of view.Our administrators also regulate and facilitate individual enterprise without which the public interest will surely suffer.⁴ Here, as well, "the life of the law has not been logic; it has been experience."⁵ And so we have shaped political structures that do not always resemble courts and committed to them processes not at all like the traditional adjudicatory process.⁶

McGowan's point is not...