J.P. Furlong Co. v. Bd. of Oil, Gas & Mining, 2018 UT 22

J.P. Furlong (Furlong) owns a small working interest (0.12% of the drilling unit) in a pooled drilling unit where EP Energy E&P (EPE) is the operator. EPE holds the vast majority of Tract 6 and proposed a joint operating agreement (JOA) based on the AAPL model form.
Most working interest owners voluntarily signed materially identical JOAs; Furlong (one of three holdouts) refused and proposed numerous edits (confidentiality/recording, operator liability, authorization for expenditures, cash-call terms, statute of limitations, affiliate pricing safeguards, etc.).
EPE filed for compulsory pooling and sought imposition of its proposed JOA; the Board forced pooling and adopted EPE’s JOA unchanged, finding it "just and reasonable." The Board declined a requested risk-penalty because Furlong was not a non-consenting owner.
The Board’s decision relied on: (1) the JOA’s basis in the widely used AAPL model; (2) prior Board approvals of similar JOAs; (3) testimony that other consenting owners in the unit had materially identical JOAs; and (4) witness testimony from an EPE negotiator explaining why Furlong’s edits were rejected.
Furlong appealed, arguing (1) the Board’s order lacked substantial evidentiary support because it did not explain rejection of each proposed change, and (2) the Board misapplied the law by failing to balance competing party interests when imposing the JOA.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Board’s adoption of EPE’s proposed JOA is supported by substantial evidence	Furlong: Board failed to state reasoned findings for rejecting each requested change; record lacks evidence to prefer EPE’s terms	Board/EPE: JOA is industry-standard (AAPL form), other owners accepted materially identical terms, and EPE witness explained rejections; Board may defer to industry form	Court: Substantial evidence supports adoption—model form, prior approvals, unit-wide consistency, and testimony suffice
Whether Board misapplied law by failing to balance parties’ competing interests when imposing the JOA	Furlong: Statute and precedents require balancing affected parties’ interests; Board should have weighed Furlong’s protections	Board/EPE: Statute gives Board discretion to adopt terms from consenting owners or parties; requirement is that the order be "just and reasonable," not perfect parity	Court: No legal error—Harken does not create a separate balancing test; Board acted within statutory discretion and met the "just and reasonable" standard

Provo City v. Utah Labor Comm’n, 345 P.3d 1242 (Utah 2015) (definition and review scope for substantial-evidence standard in administrative review)
Harken Southwest Corp. v. Board of Oil, Gas & Mining, 920 P.2d 1176 (Utah 1996) (spacing/pooling orders must be just and reasonable; may require balancing interests)
Bennion v. ANR Production Co., 819 P.2d 343 (Utah 1991) (effects of non-consent penalty on cost and royalty allocation)
Price Dev. Co., L.P. v. Orem City, 995 P.2d 1237 (Utah 2000) (policy provisions/preambles guide statutory interpretation but do not override text)