This opinion is subject to revision before final

publication in the Pacific Reporter

2018 UT 22

IN THE

SUPREME COURT OF THE STATE OF UTAH

J.P. FURLONG COMPANY,

Petitioner,

v.

BOARD OF OIL, GAS AND MINING and the

DEPARTMENT OF NATURAL RESOURCES,

Respondents.

No. 20150620

Filed June 5, 2018

On Petition for Review of Administrative Agency Action

Utah Board of Oil, Gas and Mining

Docket No. 2015-013

Cause No. 139-130

Attorneys:

Anthony T. Hunter, Wichita, KS, for petitioner

Sean D. Reyes, Att’y Gen., Michael S. Johnson, Meg Osswald,

Asst. Att’ys Gen., Salt Lake City, for respondents

JUSTICE PEARCE authored the opinion of the Court

in which CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE,

JUSTICE HIMONAS, and JUSTICE PETERSEN joined.

JUSTICE PEARCE, opinion of the Court:

INTRODUCTION

¶ 1 J.P. Furlong Company (Furlong) owns a mineral lease.

Furlong challenges the Board of Oil, Gas, and Mining’s (Board) 

decision to impose a joint operating agreement (JOA)1 on its 

_____________________________________________________________

1 We use “JOA” to refer to the joint operating agreement the 

operator—EP Energy E&P Company, L.P. (EPE)—proposed and the 

(continued . . .)
FURLONG v. BD. OF OIL, GAS, AND MINING

Opinion of the Court

2

relationship with the party operating a drilling unit that includes 

Furlong’s lease. Furlong primarily complains that the Board 

accepted, without change, the JOA the operator proposed. Furlong 

also assails the Board’s refusal to make any of the changes to the JOA 

that Furlong wanted.

¶ 2 The JOA is materially the same agreement that governs 

other interests in the project and is based on a widely accepted form 

agreement. Furlong nevertheless challenges the Board’s decision, 

arguing that there was not substantial evidence to support it, and 

that the Board erroneously applied the law to arrive at its conclusion

that the JOA was just and reasonable. We see no merit in either of 

these contentions and affirm.

BACKGROUND

¶ 3 Utah law allows the Board to “establish[] . . . drilling units 

for a pool.” UTAH CODE § 40-6-6(1). A “pool” is “an underground 

reservoir containing a common accumulation of oil or gas or both.” 

Id. § 40-6-2(19). And drilling units are “defined as an area from 

which the oil or gas may be efficiently and economically produced 

through one well located in the center of the unit.” 1 SUMMERS OIL 

AND GAS § 5:1 (3d ed. 2017).

¶ 4 Utah also allows for voluntary and compulsory pooling. 

Pooling “bring[s] together . . . separately owned interests for the 

common development and operation of a drilling unit.” UTAH CODE 

§ 40-6-2(20). Voluntary pooling occurs when “[t]wo or more owners 

within a drilling unit . . . bring together their interests for the 

development and operation of the drilling unit.” Id. § 40-6-6.5(1). In 

the absence of such a voluntary agreement, “the board may enter an 

order pooling all interests in the drilling unit for the development 

and operation of the drilling unit.” Id. § 40-6-6.5(2)(a). This is, as the 

name suggests, compulsory pooling. See 1A SUMMERS OIL AND GAS 

§ 6:4 (distinguishing between voluntary and compulsory pooling).

¶ 5 In the course of pooling their interests, parties often enter 

into a joint operating agreement. 4 SUMMERS OIL AND GAS § 48:1.

A joint operating agreement . . . is a contract typical to 

the oil and gas industry whose function is to designate 

an operator, describe the scope of the operator’s 

authority, provide for the allocation of costs and 

_____________________________________________________________

Board ultimately adopted. We will use “joint operating agreement” 

to refer to joint operating agreements generally.
Cite as: 2018 UT 22

Opinion of the Court

3

production among the parties to the agreement, and 

provide for recourse among the parties if one or more 

default in their obligations.

Id.

¶ 6 The drilling unit here is split into several tracts of land. EP 

Energy E&P Company, L.P. (EPE) and Furlong, among other parties, 

have an interest in Tract 6 of the drilling unit. Tract 6 represents 

11.59 percent2 of the drilling unit. 89.48 percent of Tract 6 is under 

lease to EPE. 2.08 percent of Tract 6 is under lease to Furlong and 

another company, KKREP, in equal proportion. Therefore, Furlong 

has an interest in only 1.04 percent of Tract 6, and just 0.12 percent of 

the drilling unit.

¶ 7 All but three working interest owners3 voluntarily pooled

their interests and signed a joint operating agreement with EPE. 

Furlong is one of the three holdouts.4

¶ 8 Furlong and EPE negotiated in hopes of agreeing to 

voluntarily pool their interests. EPE sent Furlong a proposed joint 

operating agreement which Furlong returned with suggested

changes. EPE accepted one change, rejected others, and asked for 

explanation on the rest. Furlong explained the rationale behind its 

edits.

¶ 9 At that point, EPE ceased negotiations, stating that the 

parties had “reached an impasse as to mutually agreeable [joint 

operating agreement] terms.” EPE also informed Furlong that it had 

filed a Request for Agency Action before the Board and that it would 

seek to force pool all of the interests in the drilling unit. EPE left 

open the option of further negotiation “[s]hould Furlong be willing 

to reconsider its position” on changes to the JOA.

_____________________________________________________________

2 For readability, the percentages are rounded.

3 A “[w]orking [i]nterest is an interest in [oil or gas] by virtue of a 

lease, operating agreement, fee title or otherwise, including a carried 

interest, the owner of which is primarily obligated to pay, either in 

cash or out of production or otherwise, a portion of the [u]nit 

[e]xpense . . . .” 5 SUMMERS OIL AND GAS § 67:12.

4 The other two are Argo Energy and Dusty Sanderson, who 

together own 0.1 percent of the working interest in the drilling unit.
FURLONG v. BD. OF OIL, GAS, AND MINING

Opinion of the Court

4

¶ 10 The Board conducted a hearing.5 EPE asked the Board to 

force pool the remaining three interests—including Furlong’s6—and 

to impose the JOA on the interest holders.

¶ 11 The JOA the Board adopted was “materially the same form 

as the [joint operating agreement] signed by the other participating 

working interest owners in Section 2, including Furlong’s 

co-lessee . . . .” It is also “materially identical” to joint operating 

agreements EPE has used since 2011. EPE has agreed to these same 

terms when it is an interest holder and not an operator. In other 

words, the Board accepted evidence that EPE had agreed to terms 

like those in the JOA when it stood in Furlong’s shoes.

¶ 12 An EPE employee testified that the adopted JOA was “a 

standard industry form supplied by the American Association of 

Professional Landmen [AAPL], Form 610.” Furlong did not dispute 

that EPE used the model form to craft the JOA. Indeed, it conceded

that the Board “could [look] at the AAPL” to identify terms to 

include in a joint operating agreement.

_____________________________________________________________

5 EPE also asked the Board to declare Furlong a non-consenting 

owner and impose a risk compensation penalty of 300 percent. The 

Board held that Furlong was not a non-consenting owner, and 

therefore did not have to pay the risk compensation penalty.

That decision is not before us on appeal. But the decision had 

positive implications for Furlong. As we explained in Bennion v. ANR 

Production Co.,

The [order imposing a non-consent penalty] . . . 

allow[s] Bennion to receive a royalty from the time of 

first production. Before he can receive a working 

interest share of production, however, the new order 

requires Bennion to pay his share of 100 percent of the 

costs of surface equipment beyond the wellhead, 100 

percent of the operating costs, and 175 percent of the 

costs of drilling, completing, and equipping the well.

819 P.2d 343, 345 (Utah 1991). Just as in Bennion, Furlong was facing 

the possibility of having to pay more than its share of the costs to

receive its share of the profits. The Board’s decision freed Furlong 

from that fate.

6 “The Board grant[ed] EPE and Furlong’s request to force pool 

Furlong’s interest.” Both parties wanted Furlong’s interest force 

pooled and this decision is not before us on appeal.
Cite as: 2018 UT 22

Opinion of the Court

5

¶ 13 Nevertheless, Furlong argued that any joint operating 

agreement the Board imposed should differ from the standard form 

in several ways. First, Furlong did not want the JOA to be recorded 

and publicly available. Furlong explained that it did not “want [the 

JOA] out there for all the public to read.”

¶ 14 Second, Furlong requested a change to a section involving 

“[i]nterests of the parties.” Prior to the Board action, EPE had 

approved one of Furlong’s changes to this section, but refused to add 

an “acknowledgment from [EPE] that it agrees and will perform the 

accounting for the [lease] and any burdens that may be created in the 

future . . . .” During the hearing, an EPE employee explained that

EPE wanted each party to bear their own burdens, which is the 

system the model form imposes.

¶ 15 Third, Furlong proposed to amend the language “in no 

event shall [Operator] have any liability as Operator to the other 

parties for losses sustained or liabilities incurred except such as may 

result from gross negligence or willful misconduct.” Furlong wanted 

this section to read “in no event shall [Operator] have any liability as 

Operator to the other parties for losses sustained or liabilities 

incurred except such as may result from gross negligence or willful 

misconduct or from breach of the provisions of this agreement.” Furlong 

explained that it added this language because “[a]ll parties, 

including operators, should be held to the performance of their 

contractual promises.” EPE argued that it would not want to “accept 

broader liabilities than what is industry standard reflected in the 

model form [joint operating agreement].” Furthermore, EPE asserted 

that “there are already remedies for breach of contract claims in the 

JOA . . . .”

¶ 16 Fourth, Furlong proposed a change to the provision:

“Operator shall not undertake any single project reasonably 

estimated to require an expenditure in excess of [$75,000].” That 

section also excepted several categories of expenses. Furlong

requested that EPE strike the exceptions and add language 

providing that “Operator shall not undertake any single project 

reasonably estimated to require an expenditure in excess of [$75,000] 

without first delivering to NonOperators a supplemental [authorization for 

expenditure].” Furlong explained that it “want[ed] to be protected 

from excess expenditures.” EPE pointed to the model form, stating 

that “[it] is not willing to provide Furlong or any other co-owner . . . 

or non-operator with protections over and above what is provided in 

the model form for excess expenditures.”
FURLONG v. BD. OF OIL, GAS, AND MINING

Opinion of the Court

6

¶ 17 Fifth, Furlong argued for two changes to the 

“[e]xpenditures and [l]iability of [p]arties” section. Furlong 

requested that the Board delete the provision that allowed the 

“Operator . . . the right from time to time to demand and receive 

from one or more of the other parties payment in advance of their 

respective shares . . . .” EPE claimed that its company policy was to 

have these “cash calls” built into the operating agreements because 

they protect “the operator and the other non-operators in the well 

from a party that fails to pay or slow pays their proportionate share 

of expenses.” EPE argued that cash call provisions were widely 

accepted in the industry and played an especially important role 

“with non-operators like Furlong who have no track record with 

[EPE] for paying their bills timely.” Furlong responded that it has 

had negative experiences with cash calls because operators have 

taken money, but not drilled. Then, according to Furlong, the 

operator waits years to return the funds and when it does, it returns 

them without interest. Furlong also wanted another portion of the 

JOA deleted that involved cash calls. Both sides essentially repeated 

their prior cash call arguments with respect to that provision.

¶ 18 Sixth, Furlong wanted to extend the statute of limitations 

for certain contract claims. EPE argued that this was “excessive.”

¶ 19 Seventh, Furlong argued for the addition of language 

restricting EPE’s ability to use affiliated companies. Specifically, 

Furlong wanted to add language—“[n]otwithstanding provisions to 

the [c]ontrary”—that affiliates “may be used for goods and services 

as long as their rates are consistent with the average commercial rate 

prevailing in the area as evidenced by current bids.” Furlong 

explained that “[it] ha[d] no issue with use of affiliates for the 

provision of goods and services but it want[ed] their charges to be 

fair which a bid process would support.” EPE testified that the 

existing language tracked standard industry language on the topic.

¶ 20 After the hearing, the Board found “under the facts of this 

case, the terms of the EPE propos[ed] [JOA] are just and reasonable.” 

The Board further explained that:

The [AAPL] model-form-based JOA proposed by EPE 

is similar to other [joint operating agreements]

previously adopted by this Board in prior compulsory 

pooling matters. The Board also notes that [joint 

operating agreement] terms materially the same as 

those proposed by EPE in this matter have been agreed 

upon and are presently in effect between other 

consenting owners within the subject drilling unit. 
Cite as: 2018 UT 22

Opinion of the Court

7

Although [joint operating agreements] substantially 

similar to this form of operating agreement were 

previously deemed just and reasonable in prior 

matters, the Board analyzed the JOA proposed by EPE 

anew for purposes of making its determination in the 

present case. The Board’s analysis included 

consideration of testimony given by the parties’ 

witnesses regarding Furlong’s proposed edits and 

amendments to certain provisions of the JOA as 

proposed by EPE. While legitimate disagreement can 

exist about the provisions at issue, and while the 

parties’ differing proposed terms might be reasonable 

under certain circumstances, on balance, the Board 

finds that under the facts of this case, the terms of the 

EPE proposal are just and reasonable and adopts them 

for purposes of this matter.

¶ 21 Furlong appeals.

ISSUES AND STANDARDS OF REVIEW

¶ 22 Furlong challenges the Board’s decision to adopt EPE’s 

proposed JOA and raises two main arguments.

¶ 23 First, Furlong argues that the Board’s order is not 

supported by substantial evidence. Under Utah Code section 

63G-4-403(4)(g), we can grant relief if “the agency action is based 

upon a determination of fact, made or implied by the agency, that is 

not supported by substantial evidence when viewed in light of the 

whole record before the court.” As the language suggests, we 

“review[] the agency’s determination of fact for a lack of substantial 

evidence.” Murray v. Utah Labor Comm’n, 2013 UT 38, ¶ 19, 308 P.3d 

461. We “examin[e] the whole record to determine whether ‘a 

reasonable mind might accept as adequate the evidence supporting 

the decision.’” Oliver v. Utah Labor Comm’n, 2017 UT 39, ¶ 13, --- P.3d 

--- (citation omitted).

¶ 24 Second, Furlong argues that “[t]he Board erroneously 

applied Utah law when it failed to ‘balance the interests of 

competing parties . . . .’” (Citation omitted). The Board’s 

“interpretation of [the relevant statutes] is a question of law, which 

we review for correctness.” Rueda v. Utah Labor Comm’n, 2017 UT 58, 

¶ 18, --- P.3d --- (citation omitted).
FURLONG v. BD. OF OIL, GAS, AND MINING

Opinion of the Court

8

ANALYSIS

¶ 25 Furlong primarily argues that the Board’s adoption of 

EPE’s proposed JOA does not have substantial evidentiary support. 

To prevail on this claim, Furlong must show that he “has been 

substantially prejudiced” by an agency action “that is not supported 

by substantial evidence when viewed in light of the whole record 

before the court . . . .” UTAH CODE § 63G-4-403(4).

A decision is supported by substantial evidence if there 

is a quantum and quality of relevant evidence that is 

adequate to convince a reasonable mind to support a 

conclusion. In conducting a substantial evidence 

review, we do not reweigh the evidence and 

independently choose which inferences we find to be 

the most reasonable. Instead, we defer to [an 

administrative agency’s] findings because when 

reasonably conflicting views arise, it is the [agency’s] 

province to draw inferences and resolve these conflicts.

Provo City v. Utah Labor Comm’n, 2015 UT 32, ¶ 8, 345 P.3d 1242 

(alterations in original) (internal quotation marks omitted) (citations 

omitted). And here, we review the Board’s conclusion that the JOA 

was “just and reasonable” for substantial evidence. UTAH CODE § 40-

6-6.5(2)(b); Id. § 63G-4-403(4).7

¶ 26 Furlong has several grievances with the Board, but the 

general thrust of its arguments centers on Furlong’s contention that 

the Board did not specifically indicate why it rejected each 

individual change Furlong requested. Furlong argues that this 

effectively hides the fact that EPE presented no evidence to the 

Board that would have allowed the Board to properly prefer EPE’s 

terms to those Furlong requested.

¶ 27 Furlong has something of a point. The Board did not walk 

through the changes Furlong requested item by item and articulate 

why it favored EPE’s proposal in each individual instance. But 

recognizing that the Board could have crafted an order that better 

explained the Board’s reasoning does not translate into a basis for 

concluding that the Board lacked substantial evidence for its decision 

that the JOA it imposed was just and reasonable.

_____________________________________________________________

7 This standard hails from the statute’s mandate that any joint 

operating agreement the Board imposes be “just and reasonable.” 

UTAH CODE § 40-6-6.5(2)(b).
Cite as: 2018 UT 22

Opinion of the Court

9

¶ 28 In McElhaney v. City of Moab, we discussed the type of 

findings a substantial evidence standard of review implies in an 

administrative setting. 2017 UT 65, ¶ 41, --- P.3d ---. In that case, the 

Moab City Council, sitting as a land use authority, denied a 

conditional use permit but failed to provide a decision that 

contained any written findings of fact. Id. ¶¶ 6, 7, 41. We “recognized 

that without sufficiently detailed findings that ‘disclose the steps by 

which’ an administrative agency reaches its ultimate factual 

conclusions, ‘this Court cannot perform its duty of reviewing the [ ] 

order in accordance with established legal principles and of 

protecting the parties and the public from arbitrary and capricious

administrative action.’” Id. ¶ 36 (alteration in original) (citation 

omitted).

¶ 29 We ultimately concluded that the Moab City Council had 

failed to produce an acceptable order and remanded. Id. ¶¶ 41–42. 

We noted that the City Council had made absolutely no findings to 

support its decision, and the basis for the decision was entirely 

unclear. Id. ¶ 39. Indeed, the disparate statements of the individual 

council members at the hearing were the only information the 

McElhaneys had to explain why the City Council denied their 

conditional use permit. Id. ¶ 7.

¶ 30 In contrast to the decision before us in McElhaney, the 

Board’s order informed Furlong of the basis of its decision. The order 

recited that “[t]he [AAPL] model-form-based JOA proposed by EPE 

is similar to other [joint operating agreements] previously adopted 

by this Board in prior compulsory pooling matters.” The Board also 

reasoned that “[joint operating agreement] terms materially the same 

as those proposed by EPE in this matter have been agreed upon and 

are presently in effect between other consenting owners within the

subject drilling unit.” These are “sufficiently detailed findings” such 

that Furlong knew why the Board ruled the way it did. Id. ¶ 36. 

Unlike in McElhaney, the Board gave Furlong notice of what it would 

need to challenge on appeal. And, these findings allowed us to 

perform our duty of ensuring that there was substantial record 

evidence to support the Board’s decision.8 See id.

_____________________________________________________________

8 This is not to suggest that the Board’s order was perfect or even 

laudable. It could have done a better job of reciting the facts that led 

the Board to conclude that “the terms of the EPE proposal are just 

and reasonable.” But the order gave Furlong notice of the rationale 

behind the Board’s decision. And the Board outlined its findings 

(continued . . .)
FURLONG v. BD. OF OIL, GAS, AND MINING

Opinion of the Court

10

¶ 31 And substantively, the Board heard substantial evidence to 

support the conclusion that the JOA was just and reasonable. The 

terms the Board declined to modify were based on the model AAPL 

form. Furlong’s own witness testified that, when developing a joint 

operating agreement, the model form was one source to consult. The 

Board had approved similar joint operating agreements before. And 

the record before the Board included evidence that every other 

consenting owner in this drilling pool adopted a materially identical 

joint operating agreement.

¶ 32 Moreover, EPE introduced the testimony of Michael John 

Wachler—an EPE employee who participated in JOA negotiations.

Wachler had negotiated over sixty joint operating agreements in the 

Uintah Basin. Wachler addressed Furlong’s proposed changes and, 

as detailed above, explained EPE’s reasons for rejecting each of 

Furlong’s proposals.9

_____________________________________________________________

with sufficient precision that we could have a meaningful discussion 

on appeal about what occurred below and whether record evidence 

supported the Board’s decision. 

In large degree, three factors salvage the Board’s order. First, 

Furlong’s proposed changes to the JOA presented the Board with a 

relatively simple and straightforward case that could be resolved 

with a relatively simple and straightforward analysis. Second, the 

statute authorizes the Board to choose between operating 

agreements the parties present. See infra ¶ 36. This permitted the

Board to skate by with a less detailed analysis because it only needed 

to explain the basis for its conclusion that the option it chose was just 

and reasonable. Finally, the Board’s analysis applies equally to each 

of Furlong’s challenges. This allowed the Board to issue an order that 

lumped all the challenges together. Although the Board’s order

clears the substantial evidence bar in this instance, a more 

complicated case or one with more varied challenges could present a 

horse of a different color.

9 Furlong argues that Walcher was not credible because in 

Walcher’s experience a non-operator had never asked for different 

terms. But that does not completely discount his testimony 

concerning EPE’s reasons for rejecting Furlong’s suggested changes. 

And we are not in the business of reweighing credible evidence 

when conducting a substantial evidence review. See Provo City, 2015 

UT 32, ¶ 8 (“In conducting a substantial evidence review, we do not 

(continued . . .)
Cite as: 2018 UT 22

Opinion of the Court

11

¶ 33 Although we can sympathize with Furlong’s desire to get 

more explanation from the Board, we cannot conclude that the 

Board’s decision lacked substantial evidentiary support. Nor can we 

conclude that the Board imposed a JOA that was unjust or

unreasonable when the record confirmed that it was based upon the 

industry accepted model form and was materially the same 

agreement that the other non-operators in the drilling pool

voluntarily agreed to.

¶ 34 In the course of arguing that there was a lack of substantial 

evidence, Furlong advances a number of policy arguments. For 

example, Furlong argues that “[j]udicial approval of” a process 

where “the Board regularly adopts the ‘industry standard’ model 

without alteration” “will undermine the public interest under Utah 

Code [section] 40-6-1, which is to promote development, protect the 

correlative rights of owners, and benefit the general public.” This is 

an interesting argument, and Furlong might be right.10 But we 

cannot use interesting policy arguments as a springboard into 

modifying the statute’s substantial evidence standard. Our review is 

limited to ensuring that substantial evidence supported the Board’s 

decision. Any argument that the Board should be more open to 

departure from the standard industry form should be made to the 

legislature.

¶ 35 Simply stated, the record does not permit us to conclude 

that the Board lacked substantial evidence for its conclusion. The 

JOA it imposed was based on the model agreement and is materially 

the same one that the other lease holders in the pooling unit agreed 

to use. The Board could properly conclude that it was neither unjust 

nor unreasonable to allow EPE to treat all members of the drilling 

unit similarly and to require Furlong—which owns 0.12 percent—to 

abide by an agreement that was materially the same as the others.

¶ 36 Furlong next argues that the Board erroneously applied the 

law when the Board failed to balance Furlong’s interests with those 

_____________________________________________________________

reweigh the evidence and independently choose which inferences 

we find to be the most reasonable.” (citation omitted)).

10 Then again, it might not. Furlong provides us with no evidence 

to support the assertion that the Board’s reliance on the model 

agreement stifles innovation.
FURLONG v. BD. OF OIL, GAS, AND MINING

Opinion of the Court

12

of EPE.11 The pertinent law states “[i]n the absence of a written 

agreement for pooling, the board may enter an order pooling all 

interest in the drilling unit . . . .” UTAH CODE § 40-6-6.5(2)(a). The 

statute gives the Board leeway to determine what the order should 

contain and invests the Board with considerable discretion to decide 

what terms it includes in that order. The Board can adopt terms from 

an agreement that “is in effect between the consenting owners,” or 

from those “submitted by any party to the proceeding,” or even 

those it submits on its own motion. Id. § 40-6-6.5(2)(c). The Board’s 

discretion is bounded by the requirement that the order be “just and 

reasonable.” Id. § 40-6-6.5(2)(b).

¶ 37 Furlong argues that the Board erroneously interpreted the 

law because it did not balance what Furlong wanted with what EPE 

wanted. As an initial matter, nothing in the statute expressly requires 

the Board to balance the parties’ interests when deciding the form of 

a joint operating agreement. See id. § 40-6-6.5(2). Finding nothing of 

help in the statute, Furlong extracts support for its proposition from 

Harken Southwest Corp. v. Board of Oil, Gas, & Mining, 920 P.2d 1176 

(Utah 1996). In Harken, we said that:

[S]pacing orders must “be made upon terms and 

conditions that are just and reasonable.” [UTAH CODE]

§ 40-6-6(5)(a). Thus, spacing orders are dependent not 

only on a variety of factual determinations, but also on 

the need to balance the competing interests of affected 

parties and on the general requirement that they be 

reasonable.

920 P.2d at 1179.12

_____________________________________________________________

11 Utah Code section 63G-4-403(4)(d) authorizes a challenge of a 

formal adjudicative proceeding where a party claims the “agency 

has erroneously interpreted or applied the law . . . .”

12 Furlong also resorts to the statute’s declaration of public 

interest, arguing that the Board’s adoption of this JOA did not “fully 

protect[]” its interest by failing to balance the competing 

considerations. That policy statement reads:

It is declared to be in the public interest to foster, 

encourage, and promote the development, production, 

and utilization of natural resources of oil and gas in the 

state of Utah in such a manner as will prevent waste; to 

authorize and to provide for the operation and 

(continued . . .)
Cite as: 2018 UT 22

Opinion of the Court

13

¶ 38 Furlong relies on this language to argue that “[t]he Board 

was required to balance the interests of the parties.” But Furlong 

misreads Harken. When we stated that spacing orders are partly 

“dependent . . . on the need to balance the competing interests,” we 

did not articulate a new test. Id. Indeed, in Harken, we ultimately 

relied on the existing statutory requirement; spacing orders—like the 

pooling orders at issue here—must be “just and reasonable.” UTAH 

CODE §§ 40-6-6(5)(a), 40-6-6.5(2)(b).

¶ 39 In other words, Harken stands for the unremarkable 

proposition that to be just and reasonable, in some cases the Board 

may have to “balance the competing interests of affected parties.” 

920 P.2d at 1179. But this does not conjure a test different from that 

found in the statute or impose an obligation on the Board to ensure 

that the parties’ interests are in perfect equipoise. The Board 

understood its mandate—any joint operating agreement needed to 

_____________________________________________________________

development of oil and gas properties in such a 

manner that a greater ultimate recovery of oil and gas 

may be obtained and that the correlative rights of all 

owners may be fully protected; to provide exclusive 

state authority over oil and gas exploration and 

development as regulated under the provisions of this 

chapter; to encourage, authorize, and provide for 

voluntary agreements for cycling, recycling, pressure 

maintenance, and secondary recovery operations in 

order that the greatest possible economic recovery of 

oil and gas may be obtained within the state to the end 

that the land owners, the royalty owners, the 

producers, and the general public may realize and 

enjoy the greatest possible good from these vital 

natural resources.

UTAH CODE § 40-6-1. The general statement of policy—to the extent it 

even supports Furlong’s position—does not override the statutory 

test that the joint operating agreement be just and reasonable. “While 

some statutes have a policy section and some have a preamble, the 

effect to be given these provisions is the same: they provide 

guidance to the reader as to how the act should be enforced and 

interpreted, but they are not a substantive part of the statute.” Price 

Dev. Co., L.P. v. Orem City, 2000 UT 26, ¶ 23, 995 P.2d 1237. In other 

words, the statement of policy might, in some circumstances,

influence our interpretation, but it does not rewrite subsequent 

sections of the code.
FURLONG v. BD. OF OIL, GAS, AND MINING

Opinion of the Court

14

be just and reasonable.13 That is the statutory requirement and 

Furlong’s argument that the Board erroneously applied the law falls 

wide of the mark.

CONCLUSION

¶ 40 We can understand Furlong’s desire for more explanation 

in the Board’s order. We cannot, however, transform that 

understanding into a conclusion that the Board failed to follow its 

statutory mandate. The Board correctly applied the law and 

rendered a decision supported by substantial evidence. That is what 

the statute required. We affirm.

_____________________________________________________________

13 Furlong also argues under Utah Code section 63G-4-403(4)(e) 

that the Board “failed to follow prescribed procedure . . . .” Furlong 

claims the Board “arbitrarily” ignored “Furlong’s reasonable 

requests for amended terms” and “abused its discretion [by 

imposing] EPE’s proposed JOA contract . . . word-for-word 

against . . . Furlong without analyzing the particular facts of the 

case.” This is nothing more than Furlong’s substantial evidence 

argument dressed in another cloak. The Board did not ignore 

Furlong’s requested changes; it denied them. Substantial evidence 

supports the denial and the statute ends our inquiry there.