Capstone Oilfield Disposal of Arkansas, Inc. v. Pope County

408 S.W.3d 65, 2012 Ark. App. 231, 2012 WL 1110075, 2012 Ark. App. LEXIS 344
CourtCourt of Appeals of Arkansas
DecidedApril 4, 2012
DocketNo. CA 11-1087
StatusPublished
Cited by4 cases

This text of 408 S.W.3d 65 (Capstone Oilfield Disposal of Arkansas, Inc. v. Pope County) is published on Counsel Stack Legal Research, covering Court of Appeals of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Capstone Oilfield Disposal of Arkansas, Inc. v. Pope County, 408 S.W.3d 65, 2012 Ark. App. 231, 2012 WL 1110075, 2012 Ark. App. LEXIS 344 (Ark. Ct. App. 2012).

Opinion

ROBERT J. GLADWIN, Judge.

| ^Appellant Capstone Oilfield Disposal of Arkansas, Inc. (“Capstone”), appeals the August 9, 2011 decision of the Pope County Circuit Court that reversed the decision of the Arkansas Oil and Gas Commission (“AOGC”) to grant Capstone a permit to operate a Class II UIC commercial disposal well. Capstone asserts that the circuit court erred because (1) appellees’ argument was not properly raised before the AOGC; (2) this was a matter of internal procedure, and the AOGC was entitled to adopt its own procedural rules free from supervision by the courts; and (3) the AOGC’s interpretation of its own regulations was reasonable and should have been upheld. We affirm the circuit court’s reversal of the AOGC’s decision.

Capstone filed an application for the issuance of a permit to operate a Class II UIC commercial disposal well on August 5, 2009. Written objections to Capstone’s application |2were made a part of the record at an October 28, 2009 hearing. One citizen of Pope County, Connie Aday, wrote to the AOGC requesting that it deny Capstone’s permit because Capstone had not demonstrated its ability or assurance to meet its financial obligations. Specifically, Ms. Aday stated that her concerns were that she raised chickens and cattle and wanted to know how payment would be made in the event she needed to file a claim against Capstone. Dustin Hampton, a member of the Pope County Quorum Court and a citizen of Pope County, appeared before the AOGC and expressed his concerns over Capstone’s history of financial irresponsibility. Mr. Hampton presented evidence that Capstone had received multiple violations from the Arkansas Department of Environmental Quality and the AOGC in which it was sanctioned, and he wanted to make certain there was an adequate bond posted in the event that Capstone’s August 5, 2009 permit application was granted. Mr. Hampton made it clear that Capstone was irresponsible in its actions and “has had to have its feet held to the fire on every little detail of its business.” Capstone’s August 5, 2009 application was denied following the October 28, 2009 hearing in an order dated November 12, 2009.

Capstone filed its second application for the issuance of a permit on or about November 12, 2009, and it is undisputed that evidence of financial assurance was not filed with that application as required by AOGC Rules H-l and Rule B-2. Objections were again received to the application, and on November 30, 2009, the AOGC denied Capstone’s November 12, 2009 application, in part, because “financial assurance in the amount of $50,000.00 has not been filed.” Capstone requested that the denial of its November 12, 2009 application be heard by the full AOGC, and a hearing was held on December 9, 2009. | ^Evidence from the October 28, 2009 hearing, including Ms. Aday’s and Mr. Hampton’s objections, was incorporated into and made a part of the December 9, 2009 hearing. It is undisputed that financial assurance had not been filed prior to the December 9, 2009 hearing.

The AOGC made a motion to continue the hearing until a further date, and a final hearing on Capstone’s November 12, 2009 application occurred on February 23, 2010. It is undisputed that financial assurance had not been filed at this point. At that hearing, everything from the December 9, 2009 hearing was incorporated into and made a part of the February 23, 2010 hearing, specifically including the objections of Ms. Aday and Mr. Hampton. Following the February 23, 2010 hearing, the AOGC approved Capstone’s permit application on March 18, 2010. It is undisputed that at the time the permit application was granted, more than sixty days had passed since the November 12, 2009 permit application was first filed and that Capstone still had not posted its financial assurance.

Appellee, Pope County, Arkansas, subsequently filed its petition for review in the Circuit Court of Pope County, Arkansas, pursuant to the Arkansas Administrative Procedures Act, Arkansas Code Annotated section 25-15-212 (Repl.2002). Other ap-pellees filed their own petitions for review, and following the filing of a joint motion to consolidate, the circuit court entered its order consolidating the cases herein. Ap-pellee, Pope County, Arkansas, filed its motion for summary judgment, asserting the AOGC erred by issuing Capstone its permit without having first submitted financial assurance, as required by Rules H-l and Rule B-2. Following a review of the parties’ briefs and arguments of counsel at a hearing on March 11, 2011, the circuit court found that the AOGC failed to comply with its own rules and reversed |4the AOGC’s order granting Capstone its permit. Capstone eventually provided the required financial assurance in the form of a $50,000 irrevocable letter of credit by letter dated March 29, 2010. Based on the undisputed facts, Capstone submitted the required financial assurance 137 days after filing its application, 119 days after it was advised its application would be deemed denied if not cured within sixty days, and over thirty days after the adjudicative hearing on its application.

After considering the briefs and arguments of the parties, the circuit judge entered a final order on August 9, 2011, finding that the AOGC’s approval of Capstone’s application “was in violation of the AOGC’s own regulations, because too much time had passed without Capstone providing proof of financial assurance.” Capstone filed a notice of appeal to this court, and further filed a motion to stay enforcement of the circuit court’s order pending the outcome of this appeal, on August 12, 2011. On August 18, 2011, the circuit court entered its order granting Capstone’s motion and staying enforcement of its order pending the outcome of this appeal.

Our review is directed not toward the circuit court but toward the decision of the administrative agency. Walls v. Ark. Oil & Gas Comm’n, 2012 Ark. App. 110, 390 S.W.3d 88. Judicial review of an administrative agency’s decision is limited because the agency is better equipped by specialization, insight through experience, and more flexible procedures than courts, to determine and analyze the legal issues affecting it. Id. The Administrative Procedures Act provides that a court may reverse or modify an agency’s order when the agency’s findings, inferences, conclusions, or decisions are 1) in violation of constitutional or ^statutory provisions; 2) in excess of the agency’s statutory authority; 3) made upon unlawful procedure; 4) affected by other error or law; 5) not supported by substantial evidence of record; or 6) arbitrary, capricious, or characterized by an abuse of discretion. Ark. Code Ann. § 25-15-212(h) (Repl.2002). We adhere to these standards of review in analyzing the following arguments.

At the adjudicative hearing before an administrative agency, the party seeking an order, here, the applicant for a commercial disposal well permit, has the burden of proof. Ark.Code Ann. § 25-15-213(4) (Repl.2002). Our supreme court has held that in order to meet that burden to establish a lack of substantial evidence, an appellant must demonstrate that the proof before the administrative board was so nearly undisputed that fair-minded persons could not reach its conclusions. Landmark Novelties, Inc. v. Ark. State Bd. of Pharmacy, 2010 Ark. 40, 358 S.W.3d 890. The question on review is not whether the testimony would have supported a contrary finding but whether it supports the finding that was made. Id.

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408 S.W.3d 65, 2012 Ark. App. 231, 2012 WL 1110075, 2012 Ark. App. LEXIS 344, Counsel Stack Legal Research, https://law.counselstack.com/opinion/capstone-oilfield-disposal-of-arkansas-inc-v-pope-county-arkctapp-2012.