Yuma Petroleum Co. v. Thompson

731 So. 2d 190, 1999 WL 105306
CourtSupreme Court of Louisiana
DecidedMarch 2, 1999
Docket98-C-1399, 98-C-1410
StatusPublished
Cited by7 cases

This text of 731 So. 2d 190 (Yuma Petroleum Co. v. Thompson) is published on Counsel Stack Legal Research, covering Supreme Court of Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Yuma Petroleum Co. v. Thompson, 731 So. 2d 190, 1999 WL 105306 (La. 1999).

Opinion

731 So.2d 190 (1999)

YUMA PETROLEUM COMPANY
v.
The Honorable Herbert W. THOMPSON, Commissioner of Conservation and Assistant Secretary of Conservation of the State of Louisiana.

Nos. 98-C-1399, 98-C-1410.

Supreme Court of Louisiana.

March 2, 1999.

*191 Winston S. Walker, Crowley, for Respondent in No. 98-C-1399 and Applicant in No. 98-C-1410.

John Y. Pearce, Justin H. Homes, Montgomery, Barnett, Brown, Read, Hammond & Mintz, New Orleans, for Applicant in No. 98-C-1399 and Respondent in No. 98-C-1410.

James B. St.John, Jr., Craig Wyman, Richard M. Lyons, Kyle P. Polozola, New Orleans, for Mid-Continental Oil & Gas of Louisiana (Amicus Curiae).

VICTORY, J.[*]

We granted writs filed by Yuma Petroleum Co. ("Yuma") and the Commissioner of Conservation of the State of Louisiana (the "Commissioner") to consider whether the Commissioner can order Yuma, as the current owner of an oil and gas lease, to pay for remediation of contamination from a pit on their lease or whether the Commissioner must bring in all prior owners of the lease to determine who actually caused the contamination.

FACTS AND PROCEDURAL HISTORY

Yuma acquired an oil, gas and mineral lease in St. Martin Parish from Oil Lift, Inc. ("Oil Lift") by instrument signed November 15, 1990, but effective November 1, 1990. On November 8, 1990, the Louisiana Department of Environmental Quality (the "DEQ") conducted an inspection of the site and discovered unauthorized discharges of oilfield wastes from an improperly closed pit on the lease. As a result, the DEQ issued a compliance order on April 15, 1991, ordering Yuma to cease all discharges, cleanup all materials contaminated as a result of the discharges, prepare and implement a Spill Prevention and Control Plan, and close all pits. The Commissioner also ordered Oil Lift to cease all unauthorized discharges and to file a written report.

Following receipt of the compliance order, Yuma conducted remedial operations on the lease. On July 30, 1993, Yuma requested a public hearing before the Commissioner for the purpose of determining attribution of responsibility between the parties who owned and/or operated the production pit prior to its closure for reimbursement to Yuma for site restoration and remediation costs, past and future.

On October 21, 1993, the Commissioner issued a compliance order to Yuma ordering it to conduct further investigation and to submit a plan to remediate the area.

Yuma disputed the alleged violations and continued to urge the Commissioner to conduct a hearing. By letter dated January 28, 1994, the Commissioner advised Yuma that, although he considered himself to be without authority to grant the relief sought to Yuma, i.e., the allocation of responsibility of all prior lease holders, he recognized Yuma's right to a hearing and suggested that the matter be concluded in the form of a final order if the parties could reach a stipulation as to the facts. *192 After stipulations were entered by the parties, the Commissioner affirmed its prior compliance order, stating that the order was not intended to affect any contractual rights Yuma may have against third parties.

Yuma then filed an action for judicial review with the 19th Judicial District Court seeking to invalidate the Commissioner's compliance orders. The trial court affirmed the decision of the Commissioner by judgment dated April 30, 1996, holding that "Yuma Petroleum Company is the current `owner' and, as such, is responsible for site remediation." Yuma moved for reconsideration or, in the alternative, for issuance of written findings of fact and reasons for judgment on May 10, 1996. By order dated May 28, 1996, the court denied Yuma's motion as untimely. Yuma appealed.

On February 20, 1998, the First Circuit, inter alia, reversed the trial court, holding that the Commissioner prejudiced the rights of Yuma and erred as a matter of law by failing to determine and designate former lease holders as "owners" as defined by La. R.S. 30:3(8) and to allocate the obligation, if any, for remediation between the former owners. Yuma Petroleum Co., v. The Honorable Herbert W. Thompson, Commissioner of Conservation and Assistant Secretary of Conservation of the State of Louisiana, No. 96-CA-1840 (La.App. 1st Cir.2/20/98), 709 So.2d 824. We granted writs filed by Yuma and by the Commissioner.[1]Yuma Petroleum Co. v. The Honorable Herbert W. Thompson, Commissioner of Conservation and Assistant Secretary of Conservation of the State of Louisiana, 98-C-1399, 98-C-1410 (La.7/2/98), 721 So.2d 898.

DISCUSSION

The Commissioner claims that even if Yuma did not cause the contamination on the lease that resulted from improper closure of the pit, he can order Yuma to cleanup the property as the "current owner" of the lease and that the court of appeal erred in requiring him to determine and designate former lease holders as owners responsible for remediation costs. Amicus, the Louisiana Division of the Mid-Continent Oil & Gas Association, argues that the court of appeal's decision overturns long-established authority of the Commissioner to demand that the current operator of record remediate its site and will force the Commissioner to undertake protracted hearings to determine prior operators of record and apportion remediation responsibility. Amicus argues that apportionment of responsibility is a matter of contract law to be handled by the courts. Yuma claims Oil Lift is responsible for the improper closure of the pit and the resultant contamination, that the pit was unusable and abandoned when Yuma acquired the lease, and that Oil Lift is the "responsible party" who the Commissioner must look to for remediation of the site.

In reviewing the Commissioner's decision to order Yuma to remediate the contamination from the improperly closed pit on its lease, we look to La. R.S. 30:12 for the correct standard of review. La. R.S. 30:12 grants the district court the authority to reverse or modify the decision of the Commissioner if substantial rights of the appellants are prejudiced because *193 the Commissioner's findings 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 of law; (5) arbitrary or capricious, or characterized by abuse of discretion or clearly unwarranted exercise of discretion; or (6) manifestly erroneous in view of the reliable, probative and substantial evidence in the record. La. R.S. 30:12 B(5). We have stated that "the Commissioner's findings of fact are entitled to great weight by a reviewing court and, unless manifestly erroneous or clearly wrong, should not be reversed." Hunt Oil Co. v. Batchelor, 93-3144 (La.10/17/94), 644 So.2d 191, 200 (citing Save Ourselves, Inc. v. Louisiana Environmental Control Comm., 452 So.2d 1152 (La.1984)). "Furthermore, in reviewing the conclusions and exercises of agency discretion by the Commissioner, the reviewing court must apply the arbitrariness test, and the party challenging the Commissioner's decision must make a clear showing that the administrative action was arbitrary and capricious." Id.

The jurisdiction and authority of the Commissioner are set out in La. R.S. 30:4. Under La. R.S. 30:4(A), "[t]he commissioner has jurisdiction and authority over all persons and property necessary to enforce effectively the provisions of the Chapter and all other laws relating to the conservation of oil or gas." In furtherance of that jurisdiction, La. R.S. 30:4(C) provides, in pertinent part:

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Bluebook (online)
731 So. 2d 190, 1999 WL 105306, Counsel Stack Legal Research, https://law.counselstack.com/opinion/yuma-petroleum-co-v-thompson-la-1999.