Black Diamond Energy of Delaware, Inc.

11/27/24 9:29 am

CLERK

IN THE UNITED STATES BANKRUPTCY COURT Cou □

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

In re: : Case No. 22-21448-GLT

: Chapter 11

BLACK DIAMOND ENERGY OF :

DELAWARE, INC., :

Debtor. :

BLACK DIAMOND ENERGY OF :

DELAWARE, INC., :

Movant, : Related to Dkt. Nos. 154, 176

Vv. :

WYOMING OIL AND GAS :

CONSERVATION COMMISSION, :

Respondent. :

Donald R. Calaiaro, Esq. Stephanie A. Sneesby, Esq.

David Z. Valencik, Esq. Brian Marvel, Esq.

Calaiaro Valencik Wyoming Attorney General’s Office

Pittsburgh, PA Casper, WY

Attorneys for the Debtor Attorneys for the Commission

MEMORANDUM OPINION

Hours after Black Diamond Energy of Delaware, Inc. (“Debtor”) commenced this

case, the Wyoming Oil and Gas Conservation Commission (the “Commission’”) sealed its oil and

gas wells due to the Debtor’s noncompliance with the Commission’s prepetition orders. A year

later, the Debtor moved to enforce the automatic stay and recover damages (“Motion”)! after the

Commission re-sealed wells that the Debtor continued to operate with impunity. The Commission

objected, asserting that its actions were excepted from the stay under section 362(b)(4) of the

1 Amended Expedited Motion to Enforce the Automatic Stay and Request for Sanctions, Dkt. No. 154.

Bankruptcy Code2 as an exercise of its police and regulatory powers.3 Layers of complexity aside,

the dispute boils down to this: the Debtor argues that the Commission seeks to extract monetary

penalties arising from a tax dispute; the Commission contends that it is enforcing coercive

measures, including the provision of a bond, to ensure the Debtor’s future compliance with its

rules and orders. For the reasons below, the Court will deny the Motion.

I. BACKGROUND

The Debtor produces oil and gas from thirteen wells leased from the United States

Department of Energy in Sublette County, Wyoming.4 Eric Koval is the principal of the Debtor

and a similarly named non-debtor entity.5 The Commission is the state regulatory body for the oil

and gas industry,6 vested with the jurisdiction and authority “necessary to effectuate the purposes

and intent” of the Oil and Gas Conservation Act (“Act”).7 It manages the production of these

resources to prevent waste and environmental damage, protect “correlative rights,”8 and collect

assessments on the production and sale of oil and gas.9 The parties agree that Commission staff

2 Unless expressly stated otherwise, all references to “Bankruptcy Code” or to specific sections shall be to the

Bankruptcy Reform Act of 1978, as amended by the Bankruptcy Abuse Prevention and Consumer Protection

Act of 2005 (“BAPCPA”), Pub. L. No. 109-8, 119 Stat. 23, 11 U.S.C. § 101, et seq. All references to

“Bankruptcy Rule” shall be to the Federal Rules of Bankruptcy Procedure.

3 Wyoming Oil & Gas Conservation Commission’s Objection to Debtor’s Amended Expedited Motion for

Order to Enforce Automatic Stay and Request for Sanctions, Dkt. No. 176.

4 Amended Expedited Motion to Enforce the Automatic Stay and Request for Sanctions, Dkt. No. 154 at ¶¶ 5-

7.

5 Declaration of Eric Koval, Dkt. No. 376 at ¶ 2.

6 Declaration of Joe Scott, Dkt. No. 368 at ¶ 4.

7 See Wyo. Stat. Ann. § 30-5-104.

8 Essentially, “correlative rights” are the opportunity of property owners to produce an equitable share from

an underground reservoir of oil or gas beneath multiple properties. See Wyo. Stat. Ann. § 30-5-101(a)(iii),

(ix).

9 See Kerr-McGee Corp. v. Wyoming Oil & Gas Conservation Comm’n, 903 P.2d 537, 541-42 (Wyo. 1995);

Union Pac. Res. Co. v. Texaco, Inc., 882 P.2d 212, 223 (Wyo. 1994) (observing that the Act provides a

“comprehensive regulatory program which prevents the waste of Wyoming’s oil and gas resources and

protects the correlative rights of property owners.”).

physically “sealed” the Debtor’s wells post-petition, and then re-sealed them one year later while

fully aware of this bankruptcy. While the salient facts are undisputed and the issues appear

straightforward, this matter is deceptively convoluted.

This Motion was initially submitted on the pleadings, but the Debtor later requested

an evidentiary hearing after both sides began filing supplemental exhibits.10 Ultimately, five

witnesses offered declarations in lieu of direct testimony and appeared for cross-examination: Mr.

Koval;11 Joseph Breznai (the Debtor’s former Chief Operating Officer);12 Peter Dochinez (the

holder of a lien on the Debtor’s assets);13 Patrick Amole (the Commission’s Deputy Supervisor);14

and Joe Scott (the Commission’s Natural Resources Supervisor).15 Neither Mr. Breznai nor Mr.

Dochinez provided relevant testimony.16 Similarly, only a fraction of the 64 exhibits admitted into

evidence were referenced during testimony.17

The record amply establishes a history of bad blood between the Debtor and the

Commission dating back more than a decade. By 2020, the Debtor and a related entity, Black

Diamond Energy, Inc. (sometimes called Black Diamond Energy of Wyoming) lost the right to

operate non-federal wells in Wyoming.18 The Commission found that they did not comply with

10 See Response to Order Setting Status Conference, Dkt. No. 216 at ¶¶ 5-10.

11 See Declaration of Eric Koval, Dkt. No. 376.

12 Declaration of Joseph Breznai, Dkt. No. 374 at ¶ 4.

13 Declaration of Peter Dochinez, Dkt. No. 375 at ¶ 3

14 Declaration of Patrick Amole, Dkt. No. 369 at ¶ 2.

15 Declaration of Joe Scott, Dkt. No. 368 at ¶ 2.

16 The Court notes, however, that Mr. Breznai’s testimony regarding a 2017 hearing before the Commission

was materially inconsistent with the transcript of that hearing. Cf. Transcript of April 24, 2024 Hearing, Dkt.

No. 392 at 12:11-24 with Exhibit 10 at 10-12. Therefore, even if his testimony was relevant, it is not credible.

17 Unless otherwise noted, the Court has not reviewed or considered any exhibit not specifically identified by

the parties.

18 See Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 26:17-29:5; Declaration of Joe Scott, Dkt. No.

368 at ¶¶ 20-22; Proposed Stipulated Facts, Dkt. No. 249-1 at ¶ 2.

applicable rules and through separate proceedings ordered their state wells to be permanently

“plugged” with cement.19 This resulted in the forfeiture of their bonds ($274,000 in 2014 and

another $75,000 in 2017) to plug the “orphaned” wells.20 Believing that the bonds far exceeded

the actual plugging costs,21 the Debtor unsuccessfully sought an accounting from the Commission

and pursued litigation to recover the bonded funds.22

Meanwhile, as an oil and gas operator in Wyoming, the Debtor was required to

report its production, sales, and corresponding conservation tax liability to the Commission semi-

annually and pay any amount due.23 For the first half of 2020, the Debtor submitted its tax form

several months late and reported production, but no sales.24 Its submission for the second half of

2020 was also months late, but this time reported sales with a conservation tax of roughly $53

due.25 But rather than pay the tax, the Debtor expressly demanded an offset on the tax form:

Black Diamond Energy of Delaware, Inc. had $181,670 Converted

on October 19, 2011 by the State of Wyoming, determined in Court

Order CV-2017-074 of October 16, 2018. To date the State of

Wyoming and its Attorney General has refused to give an

accounting for these monies unlawfully taken. Under advice from

counsel, the balance with 7% interest thereon due [Black Diamond]

19 Id.; see also Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 51:1-5 (explaining that “plugging” renders

a well permanently operable).

20 Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 26:17-29:5.

21 See Exhibit 20.

22 See Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 28:16-29:17; Declaration of Joseph Breznai, Dkt.

No. 374 at ¶ 10; see also Black Diamond Energy of Delaware, Inc. v. Wyoming Oil & Gas Conservation

Comm’n, No. 2018-0011, 2019 WL 13130212, at *1 (Wyo.Dist. Mar. 11, 2019) and Black Diamond Energy

of Delaware, Inc. v. Wyoming Oil and Gas Conservation Comm’n, No. 2017-0074, 2019 WL 13130213, at

*1 (Wyo.Dist. Mar. 11, 2019), aff’d, Black Diamond Energy of Delaware, Inc. v. Wyoming Oil & Gas

Conservation Comm’n, 2020 WY 45, 460 P.3d 740 (Wyo. 2020).

23 See Wyo. Stat. Ann. § 30-5-116(b); see also Exhibit 2 at 2 (citing Oil & Gas Conservation Comm'n Rules,

Ch. 3, §§ 13, 41); Exhibit 6 at 2.

24 Exhibit 2 at 2-3; Exhibit 6 at 2.

25 Exhibit 2 at 3.

from the State of Wyoming SHALL be used as offset in paying fee’s

(sic), taxes and this conservation tax.26

Consequently, the Debtor’s “improper[]” reporting and failure to pay taxes prompted the

Commission to schedule a contested hearing and threaten punitive action for the alleged violations

of the Commission’s rules.27

Prior to the hearing, the Debtor amended its tax form and paid the tax under

protest.28 The Commission staff then discovered inconsistencies in the information the Debtor

reported to the Commission, the Bureau of Land Management (“BLM”), Sublette County, and the

Wyoming Department of Revenue.29 Unable to verify the accuracy of the Debtor’s 2020 tax

forms, the discrepancies were presented at the April 2021 contested hearing to help establish the

Debtor violated the Commission’s rules.30 Following the hearing, the Commission entered an

order (“Order 205-2021”) that required the Debtor to: (1) pay a $5,000 fine for its rule violations;

(2) “post a surety bond or other guaranty in the amount of $25,000, as security for its future

compliance with the Commission’s Rules and orders”; and (3) provide accurate production and

sales reports, update its tax forms, and pay any taxes due.31

The Debtor appealed Order 205-2021 in the District Court of the State of

Wyoming, County of Natrona, 7th Judicial District (“State Court”), but it was affirmed in January

2022.32 The State Court’s decision is notable in three respects. First, while acknowledging the

Debtor’s statutory right to dispute conservation taxes, the State Court found the Debtor went about

26 Id.

27 Id.

28 Id. at 4.

29 Id.; Exhibit 6 at 3.

30 Id.

31 Exhibit 2 at 6-7; Proposed Stipulated Facts, Dkt. No. 249-1 at ¶ 4 (emphasis added).

32 Exhibit 5; Proposed Stipulated Facts, Dkt. No. 249-1 at ¶ 6.

it the wrong way and in the wrong forum.33 Second, it concluded that the unsubstantiated offset

claim was irrelevant to whether the Debtor timely filed the proper paperwork and paid conservation

taxes.34 Third, the State Court determined the Commission did not exceed its statutory authority

or act capriciously by requiring the Debtor to post a compliance bond.35

In April 2022, the Commission ordered the Debtor to show cause why its wells

should not be sealed due to its failure to comply with Order 205-2021.36 Mr. Scott also contacted

Mr. Koval to emphasize the need for the Debtor to pay the fine and post the required bond before

the hearing.37 Neither occurred and no one appeared on behalf of the Debtor.38 Curiously, Mr.

Koval testified that he did not attend the show cause hearing “[b]ecause it was an enforcement of

an order that we were already in compliance with.”39 On July 21, 2022, the Commission entered

an order (“Order 459-2022”) authorizing staff to seal the Debtor’s wells and imposing a monthly

$5,000 fine to compel compliance with Order 205-2021.40

On July 25, 2022, Mr. Scott emailed Mr. Koval a copy of Order 459-2022 and

informed him that Commission staff would be sealing the Debtor’s wells the next day.41 Before

that could occur, the Debtor filed a chapter 11 petition on July 26, 2022, commencing this case in

the Western District of Pennsylvania.42 The Commission did not receive notice of the bankruptcy

33 Exhibit 6 at 9-10.

34 Id. at 10.

35 Id. at 11-12 (citing Wyo. Stat. Ann. § 30-5-104(d)(i)(D)).

36 Proposed Stipulated Facts, Dkt. No. 249-1 at ¶ 7.

37 Id. at ¶ 8; Exhibit 4 at 3; Declaration of Joe Scott, Dkt. No. 368 at ¶¶ 25-26.

38 Proposed Stipulated Facts, Dkt. No. 249-1 at ¶ 9; Exhibit 4 at 4.

39 Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 34:14-21.

40 Exhibit 4 at 5.

41 Exhibit 21.

42 Proposed Stipulated Facts, Dkt. No. 249-1 at ¶ 11.

filing until August 1, 2022,43 so staff, including Mr. Amole, proceeded to physically seal the

Debtor’s wells as planned.44 BLM representatives were present and aware of the Commission’s

actions.45

Mr. Amole explained that a “seal” is like an anti-tamper device and does not prevent

production.46 A well is “sealed” by placing a thin metal band with a warning label and unique

identification number through the valve.47 The label expressly states:

******* WARNING *******

This equipment has been sealed by order of the Wyoming Oil and

Gas Conservation Commission.

Removal of this seal, operation of this equipment or removal of this

equipment may result in monetary penalties and/or criminal

prosecution.48

Ideally, the seal will be damaged or severed if the valve is opened,49 but variation in wellhead

construction may not permit a tamper-evident placement.50 Indeed, Mr. Amole testified that it was

apparent that some of the Debtor’s wells could produce without removing or damaging the seals.51

43 Exhibit 7; Declaration of Joe Scott, Dkt. No. 368 at ¶ 29. The Court recognizes that the Debtor asserts the

Commission had notice prior to August 1, 2022. Mr. Koval testified that he left after-hours voicemails with

the Commission the night before and the evening after the petition was filed. Transcript of April 24, 2024

Hearing, Dkt. No. 392 at 17:1-15. Even if true, the Court finds no convincing proof that the Commission

was aware of the bankruptcy petition when its staff installed the seals. As a practical matter, however, the

exact date is irrelevant to the outcome of this case.

44 Declaration of Patrick Amole, Dkt. No. 369 at ¶¶ 8-9.

45 Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 57:1-13.

46 Id. at 46:3-15.

47 Declaration of Patrick Amole, Dkt. No. 369 at ¶ 8.

48 See Exhibit 15 (emphasis added).

49 Declaration of Patrick Amole, Dkt. No. 369 at ¶ 8.

50 Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 49:22-50:4, 58:4-15.

51 Declaration of Patrick Amole, Dkt. No. 369 at ¶ 10.

But according to Mr. Scott, even if a well can produce, a Commission order sealing the well renders

any operation of the equipment impermissible.52

The next day, July 27, 2022, the Commission scheduled a September show cause

hearing due to the Debtor’s failure to pay severance and ad valorem taxes.53 Ironically, the

threatened consequence was the sealing of the Debtor’s wells, which seemingly reflects the

initiation of a new proceeding rather than a continuation of one.54 The Commission ultimately

continued the tax enforcement hearing generally, albeit three weeks after receiving notice of the

Debtor’s bankruptcy.55

The Debtor did not seek to enforce the automatic stay at this time. The reason

seems clear: there was no pressing concern or injury because the Debtor’s wells kept producing.56

Mr. Koval admits as much, though it is unclear how the seals were neutralized.57 He testified that

he did not remove or direct the removal of any seals, and “knows” (without any firsthand

knowledge) that none were encountered when production resumed.58 Regardless, it was apparent

from Mr. Koval’s evasive and combative testimony that the Debtor intentionally defied Order 459-

2022 and ignored the seals:

Atty. Marvel: And in Mr. Scott’s declaration, he states that on

July 21st, 2022 there was an order issued by the

Commission sealing the wells, do you have any

basis to disagree with that and that date?

52 Declaration of Joe Scott, Dkt. No. 368 at ¶ 34.

53 Proposed Stipulated Facts, Dkt. No. 249-1 at ¶ 10.

54 Id.

55 Id. at 12.

56 Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 37:7-21.

57 Id.

58 Id. at 16:2-25, 33:21-24, 37:4-7, 41:1-11; see also id. at 52:24-53:12 (Mr. Amole testifying that Randall

Neilson told him that he did not remove any seals when he opened the wells). Given the remote location of

the wells, it is implausible that an unknown third-party removed unsealed wells. Id. at 68:25-69:23.

Mr. Koval: I don’t.

Atty. Marvel: And so, you would agree with me, at least in

respect to this, that on July 21st, 2022, you and

your company were under an obligation not to

produce by the order, is that correct?

Mr. Koval: Again, we claimed offset. You were holding our

bonding money.

Atty. Marvel: Not my—sir, not my question. My question is, on

July 21st, 2022, you were aware that you could not

produce your wells by Commission order, correct?

Mr. Koval: Incorrect. Incorrect.

Atty. Marvel: So, what you’re going to say—

Mr. Koval: I declared that we were in compliance, and always

have been in compliance with the Wyoming State

Lands and Investments, with Wyoming Oil & Gas

Conservation Commission, with the BLM, and we

have never ever been out of compliance. We, quite

frankly, have been railroaded here, from 2017

forward, from the Wyoming Oil & Gas

Conservation Commission and prior, going back

to 2011, by the Wyoming State Lands and

Investments.59

In fact, Mr. Koval vehemently insisted that the Commission’s rules were inapplicable to federal

wells and that the Commission lacked the authority to require a compliance bond from the

Debtor.60

The Debtor defiantly reported its production to the Commission despite operating

in contravention of the seals and Order 459-2022.61 Surprisingly, the Commission did not

59 Id. at 36:6-37:3 (emphasis added).

60 Id. at 32:5-14; 33:4-20.

61 Declaration of Joe Scott, Dkt. No. 368 at ¶¶ 32-33.

notice.62 In fact, the Commission only “discovered” the Debtor’s continued operations when it

was brought to Mr. Amole’s attention by BLM representatives nearly a year later.63

On June 9, 2023, the Wyoming Attorney General’s office wrote to Mr. Koval to

inform him that they were aware of the Debtor’s intentional violation of Order 459-2022 (the

“June Letter”).64 They stated that the Commission would be re-sealing the wells within ten days

and warned that the unauthorized removal of seals would subject those involved to civil

penalties.65 The June Letter also explained that the Commission would remove the seals if the

Debtor “achieves compliance” with Orders 459-2022 and 205-2021, but did not expound further.66

On June 14, 2023, an inspector replaced two missing seals, but muddy conditions

prevented access to most of the other wells.67 A follow-up inspection occurred on July 5, 2023.68

Although no other seal replacements were necessary, Commission staff observed an unreported

oil spill.69 Based on his experience, Mr. Scott estimated the spill to be three-times the

Commission’s spill reporting threshold.70 The Commission later learned of another spill occurring

in May 2023 that was more than ten-times the Commission’s reporting threshold, yet it was only

reported to the BLM.71 Mr. Koval unconvincingly testified that he was unaware that such spills

62 Id.; Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 73:23-74. The oversight reportedly occurred

because the Commission’s reporting system is old and not designed to flag disobedient producers. Id.

63 Declaration of Patrick Amole, Dkt. No. 369 at ¶ 10.

64 Exhibit 8.

65 Id.

66 Id.

67 Declaration of Patrick Amole, Dkt. No. 369 at ¶ 13; Transcript of April 24, 2024 Hearing, Dkt. No. 392 at

73:23-74:5

68 Declaration of Patrick Amole, Dkt. No. 369 at ¶ 14.

69 Declaration of Joe Scott, Dkt. No. 368 at ¶ 15; Declaration of Patrick Amole, Dkt. No. 369 at ¶ 14.

70 Declaration of Joe Scott, Dkt. No. 368 at ¶¶ 15-16.

71 Id. at ¶ 18; see Exhibit 19.

had to be reported to the Commission.72 Reporting aside, Mr. Scott concedes that the Debtor’s

clean-up was likely sufficient and that there are no immediate environmental concerns.73

The Debtor filed the Motion shortly after the two wells were re-sealed.74 It

theorized that the Commission violated the automatic stay by sealing 13 wells post-petition (an

oblique reference to the 2022 sealing) and sending the June Letter.75 The Debtor characterized

these acts as efforts to collect “fines and penalties.”76 In contrast, the Commission asserted that

its actions, including the seals, fines, and bonding requirement, were meant to compel the Debtor’s

compliance with its rules and discourage future violations.77 As a result, the Commission argued

that its conduct was an exempt exercise of its police and regulatory powers under section

362(b)(4).78

During the evidentiary hearing, Mr. Scott insisted that the bonding requirement

imposed on the Debtor is not in service of the Commission’s pecuniary interests.79 He explained

that the compliance bond is not even a debt, but a prerequisite to operate wells in Wyoming.80

According to Mr. Scott, its purpose is to deter an operator such as the Debtor from violating the

Commission’s rules by ensuring they have something to lose.81 The compliance bond guards

72 Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 18:14-17.

73 Id. at 62:21-25, 65:19-23.

74 Proposed Stipulated Facts, Dkt. No. 249-1 at ¶ 14.

75 Amended Expedited Motion to Enforce the Automatic Stay and Request for Sanctions, Dkt. No. 154 at ¶ 28.

76 Id. at ¶¶ 27-28, 34.

77 Wyoming Oil & Gas Commission’s Objection to Debtor’s Amended Expedited Motion for Order to Enforce

Automatic Stay and Request for Sanctions, Dkt. No. 176 at 16.

78 Id. at 20.

79 Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 66:4-10; see Declaration of Joe Scott, Dkt. No. 368 at

¶ 9.

80 Declaration of Joe Scott, Dkt. No. 368 at ¶ 10.

81 Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 60:1-8; see Declaration of Joe Scott, Dkt. No. 368 at

¶ 8.

against all potential rule violations, ranging from operational issues to environmental protection.82

While not meant to secure unpaid taxes, Mr. Scott “suppose[d]” that “technically” the Commission

could forfeit a bond for that reason after notice and hearing in accordance with the regulations.83

In any event, he emphasized that without bonding authority, the Commission is left without the

means to compel compliance with its rules, undermining its statutory mission.84 Mr. Scott did not

address the fines during his testimony.

When asked why the Debtor was permitted to operate without a bond between 2017

and 2021, Mr. Scott attributed it to the Debtor’s lack of state wells.85 Although it is a rare

occurrence, a producer may continue to operate federal wells in Wyoming after its state wells have

been orphaned provided it complies with the Commission’s rules.86 Once the Debtor committed

a “blatant violation” in 2020, and “essentially wrote that [it] was refusing to comply with the act,”

the Commission deemed a compliance bond necessary.87

As previewed above, Mr. Koval’s testimony can be fairly characterized as

revisionist in almost every respect. For example, he maintains that the Debtor has always complied

with the Commission’s rules and that this is merely a dispute over a $53 tax.88 Mr. Koval excuses

any seeming defiance by opining (without basis) that the Commission lacks authority over federal

82 Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 60:9-24; see Declaration of Joe Scott, Dkt. No. 368 at

¶ 11.

83 Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 64:24-65:18, 75:15-19.

84 Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 64:12-23; see Declaration of Joe Scott, Dkt. No. 368

at ¶ 12.

85 Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 72:2-18.

86 Id.

87 Id. at 71:21-72:1.

88 Id. at 36:16-24, 41:23-42:7.

wells and, in any event, already holds more than $25,000 in bonds.89 Indeed, he demands the

return of the bonds with interest.90

Mr. Koval declared that the Commission’s seals cost the Debtor an entire

production cycle and that it continues to suffer damage for each day the wells cannot operate.91

Still, he did not quantify that amount in his declaration and was not permitted to do so during the

hearing.92

At the end of the hearing, the Court took the matter under advisement and directed

the parties to file supplemental briefing. Both did so timely.93 The matter is now ripe for

determination.

II. JURISDICTION

This Court has authority to exercise jurisdiction over the subject matter and the

parties under 28 U.S.C. §§ 157(a), 1334, and the Order of Reference entered by the United States

89 Id. at 32:5-14, 33:4-9, 35:2-24.

90 Id. at 35:2-5.

91 Declaration of Eric Koval, Dkt. No. 376 at ¶¶ 19-21.

92 Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 22:11-26:15 (ruling that Mr. Koval’s failure to

articulate damages in detail rendered further testimony beyond the scope of direct examination). Allegedly,

the Debtor mistakenly believed that the Court would conduct a separate evidentiary hearing on damages.

Because the Motion was originally submitted on the pleadings, the Debtor’s proposed order contemplated

that the Motion would be granted and an evidentiary hearing on damages scheduled. See Dkt. No. 154-2 at

2. Contrary to the Debtor’s assertions, the Motion itself made no such request. See Black Diamond Energy

of Delaware’s Post-Trial Brief in Support of Motion to Enforce Automatic Stay, Dkt. No. 414 at 9 (stating

without citation that “BDED requested in its Motion a separate hearing on damages.”). Regardless, the need

for a separate hearing was obviated once the Court scheduled the Motion for an evidentiary hearing. Put

simply, the Debtor requested and received an evidentiary hearing. The scheduling order did not reserve any

issue for a later date, see Order (A) Setting Discovery Deadlines and Other Related Dates and (B) Setting

Evidentiary Hearing Date, Dkt. No. 221, and, needless to say, the Debtor cannot do so unilaterally. While it

is sometimes efficient to bifurcate the trial of liability and damages, the Court would not have done so here

because the Commission was required to travel from Wyoming. Accordingly, it was incumbent on both

parties to present their entire case at the hearing.

93 See Respondent Wyoming Oil & Gas Conservation Commission’s Supplemental Briefing, Dkt. No. 411;

Black Diamond Energy of Delaware’s Post-Trial Brief in Support of Motion to Enforce Automatic Stay, Dkt.

No. 414.

District Court for the Western District of Pennsylvania on October 16, 1984. This is a core

proceeding under 28 U.S.C. § 157(b)(2)(A).

III. DISCUSSION

A. The Automatic Stay

As recognized by the United States Court of Appeals for the Third Circuit, “[t]he

automatic stay is one of the fundamental debtor protections supplied by the Bankruptcy Code.”94

The automatic stay is a series of statutory injunctions codified in section 362(a) which arise

automatically—that is, without a formal order—upon the commencement of a bankruptcy case.95

In general, these injunctions are broad96 and collectively bar acts to “obtain property of the debtor

or property of the bankruptcy estate.”97 “It is designed to effect an immediate freeze of the status

quo”98 to, among other things, “halt all collection efforts in order to allow the debtor time to

reorganize.”99

Three provisions of section 362(a) are implicated here. First, section 362(a)(1) bars

“the commencement or continuation . . . of a judicial, administrative, or other action or proceeding

against the debtor . . . to recover a [prepetition] claim.”100 Next, section 362(a)(3) stays “any act

to obtain possession of property of the estate or of property from the estate or to exercise control

over property of the estate.”101 “Property of the estate,” of course, broadly encompasses “all legal

94 Univ. Med. Ctr. v. Sullivan (In re Univ. Med. Ctr.), 973 F.2d 1065, 1074 (3d Cir. 1992) (citing Cuffee v. Atl.

Bus. & Cmty. Dev. Corp. (In re Atl. Bus. & Cmty. Dev. Corp.), 901 F.2d 325, 327 (3d Cir. 1990)).

95 11 U.S.C. § 362(a)(1)-(8).

96 ACandS, Inc. v. Travelers Cas. & Sur. Co., 435 F.3d 252, 259 (3d Cir. 2006).

97 Wingard v. Altoona Reg. Health Sys. (In re Wingard), 382 B.R. 892, 899 (Bankr. W.D. Pa. 2008).

98 Hillis Motors, Inc. v. Hawaii Auto. Dealers' Ass'n, 997 F.2d 581, 585 (9th Cir. 1993).

99 True Health Diagnostics LLC v. Azar (In re THG Holdings LLC), 604 B.R. 154, 160 (Bankr. D. Del. 2019).

100 11 U.S.C. § 362(a)(1).

101 11 U.S.C. § 362(a)(3).

or equitable interests of the debtor in property as of the commencement of the case.”102 Finally,

section 362(a)(6) prohibits “any act to collect, assess, or recover a [prepetition] claim against the

debtor.”103

Generally, the automatic stay applies to “all entities,”104 including “governmental

units.”105 So when the government is acting as a creditor, it is subject to the same limitations as

applicable to other creditors.106 Yet Congress “return[ed] . . . with one hand some of what was

taken away by the other.”107 As explained by the United States Court of Appeals for the Third

Circuit:

Congress recognized . . . that the stay provision was particularly

vulnerable to abuse by debtors improperly seeking refuge under the

stay in an effort to frustrate necessary governmental functions. To

combat the risk that the bankruptcy court would become a sanctuary

for . . . wrongdoers, among others, Congress enacted the police and

regulatory power exception to the automatic stay.108

To help ensure “the automatic stay in bankruptcy is a shield and not a sword designed to afford a

party with a litigation advantage”109 section 362(b)(4) excepts from the stay

the commencement or continuation of an action or proceeding by a

governmental unit . . . to enforce such governmental unit’s or

organization’s police and regulatory power, including the

102 11 U.S.C. § 541(a)(1); see also United States v. Whiting Pools, Inc., 462 U.S. 198, 204-05, 103 S.Ct. 2309,

2313, 76 L.Ed.2d 515 (1983) (“The House and Senate Reports on the Bankruptcy Code indicate that §

541(a)(1)’s scope is broad.”); Westmoreland Human Opportunities, Inc. v. Walsh, 246 F.3d 233, 241 (3d Cir.

2001) (“§ 541(a)’s legislative history demonstrates that the language of this provision was intended to sweep

broadly ....”).

103 11 U.S.C. § 362(a)(6).

104 11 U.S.C. § 362(a).

105 11 U.S.C. § 101(15). Sovereign immunity is expressly abrogated as to governmental units with respect to

section 362. See 11 U.S.C. § 106(a)(1).

106 See In re Univ. Med. Ctr., 973 F.2d at 1074; In re THG Holdings LLC, 604 B.R. at 160.

107 Penn Terra Ltd. v. Dep’t of Env’t Res., Com. of Pa., 733 F.2d 267, 272 (3d Cir. 1984).

108 United States v. Nicolet, Inc., 857 F.2d 202, 207 (3d Cir. 1988).

109 Cnty. of Allegheny v. The Cracked Egg, LLC (In re The Cracked Egg, LLC), 624 B.R. 84, 88–89 (Bankr.

W.D. Pa. 2021).

enforcement of a judgment other than a money judgment, obtained

in an action or proceeding by the governmental unit to enforce such

governmental unit's or organization’s police or regulatory power.110

Basically, this provision embodies an awareness that debtors must generally abide by applicable

laws111 and that some laws “merit[] a higher priority than the debtor’s rights to a ‘cease fire.’”112

To determine whether a governmental act falls within the police and regulatory

power exception, the Third Circuit applies “two ‘related, and somewhat overlapping’ tests.”113

The first “asks whether the government primarily seeks to protect a pecuniary governmental

interest in the debtor’s property, as opposed to protecting the public safety and health.”114 The

second considers “whether the government is effectuating public policy rather than adjudicating

private rights.”115 Only actions whose “primary purpose is to ‘promote public safety and welfare

or to effectuate public policy’” are excepted from the stay.116 As such, the court must “get to the

heart of the reasoning behind the government’s actions [and] avoid relying on unsupported

statements of intent.”117

110 11 U.S.C. § 362(b)(4) (emphasis added). The police power exception was previously codified in sections

362(b)(4) and (5) before being consolidated into a single subsection in 1998. See, e.g., In re Bankr. Appeal

of Allegheny Health, Educ. & Rsch. Found., 252 B.R. 309, 323 (W.D. Pa. 1999). Since this change was not

material, courts agree that the pre-1998 cases remain good law. See In re Iezzi, 504 B.R. 777, 784 n.7 (Bankr.

E.D. Pa. 2014).

111 In re The Cracked Egg, LLC, 624 B.R. at 88 (citing 28 U.S.C. § 959(b), which provides that “a debtor in

possession, shall manage and operate the property in his possession as such trustee, receiver or manager

according to the requirements of the valid laws of the State in which such property is situated, in the same

manner that the owner or possessor thereof would be bound to do if in possession thereof.”).

112 United States v. Nicolet, Inc., 857 F.2d at 207.

113 In re Nortel Networks, Inc., 669 F.3d 128, 139 (3d Cir. 2011) (quoting Lockyer v. Mirant Corp., 398 F.3d

1098, 1108 (9th Cir. 2005)).

114 Id. at 139-40.

115 Id. at 140.

116 Id.; see also Al Stewart v. Holland Acquisitions, Inc., No. 2:15-CV-01094, 2021 WL 1037617, at *2 (W.D.

Pa. Mar. 18, 2021) (quoting id.)

117 In re THG Holdings LLC, 604 B.R. at 161; see also In re Nortel Networks, Inc., 669 F.3d at 140 (“Instead of

making a broad generally applicable pronouncement as to how the police power exception should be

interpreted, we must look to the purpose of the proceeding at issue.”).

Ultimately, a corporate debtor118 “injured by any willful violation of a stay . . . shall

recover actual damages, including costs and attorneys’ fees.”119 A stay violation is “willful” if the

creditor commits an intentional act that violates the stay with knowledge that a bankruptcy petition

has been filed.120 No specific intent to violate the stay is required.121 To recover damages under

section 362(k), a debtor must establish three elements by a preponderance of the evidence: (1) a

stay violation occurred; (2) the act giving rise to the violation was willful; and (3) the violation

caused injury.122 Although an act excepted from the automatic stay is by definition not a stay

violation, the government logically must have the initial burden to show section 362(b)(4)

applies.123 Naturally, to the extent that the Debtor challenges the government’s showing, it must

do so with compelling evidence to carry its ultimate burden to show a stay violation.

B. Analysis

The Debtor alleges four violations of the automatic stay: (1) the July 2022 sealing

of the wells; (2) the July and August 2022 orders scheduling and then continuing a severance tax

118 In re Atl. Bus. & Cmty. Corp., 901 F.2d at 329; Roberts v. Vara (In re Roberts), No. 21-20618-JAD, 2024

WL 2050561, at *11 n.11 (Bankr. W.D. Pa. May 8, 2024); AUA Private Equity Partners, LLC v. Kind

Operations, Inc. (In re Pa Co-Man, Inc.), 654 B.R. 92, 96 (Bankr. W.D. Pa. 2023); Prithvi Catalytic, Inc. v.

Microsoft Corp. (In re Prithvi Catalytic, Inc.), 571 B.R. 105, 143 n. 220 (Bankr. W.D. Pa. 2017); Böhm v.

Howard (In re Howard), 428 B.R. 335, 338 (Bankr. W.D. Pa. 2010), aff'd, No. 2:10CV962, 2011 WL 578777

(W.D. Pa. Feb. 9, 2011).

119 11 U.S.C. § 362(k)(1). This provision was previously codified as section 362(h) but re-codified in 2005 as

section 362(k)(1) as part of BAPCPA. Because the provisions are identical, prior caselaw regarding section

362(h) is remains relevant to the application of section 362(k)(1). Wingard v. Altoona Reg. Health Sys. (In

re Wingard), 382 B.R. 892, 900 n.5 (Bankr. W.D. Pa. 2008).

120 Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. Gen. Motors Corp., 337 F.3d 314, 320 n.8 (3d Cir. 2003);

In re Univ. Med. Ctr., 973 F.2d at 1088.

121 In re Atl. Bus. & Cmty. Corp., 901 F.2d at 329 (quoting Goichman v. Bloom (In re Bloom), 875 F.2d 224,

227 (9th Cir. 1989)).

122 See In re Prithvi Catalytic, Inc., 571 B.R. at 143; In re Wingard, 382 B.R. at 900.

123 As the Debtor notes, the caselaw is curiously silent on which party bears the burden of proving the police

and regulatory power exception applies. See Black Diamond Energy of Delaware’s Post-Trial Brief in

Support of Motion to Enforce the Automatic Stay, Dkt. No. 414 at 6-7. Despite the Court’s request, the

Commission did not brief the issue. The Court’s own research suggests the point is typically moot since

governmental units have an incentive to vigorously defend their conduct.

enforcement hearing; (3) the June Letter; and (4) the June 2023 re-sealing of the wells. The

Commission contends all these acts fall within the police and regulatory powers exception to the

stay. The Commission qualifies as a “governmental unit” for purposes of section 362(b)(4)124 and

“exercises the police power of the State of Wyoming when it issues its orders.”125 Still, the Debtor

argues the Commission only furthered a “pecuniary purpose since the underlying basis of the

orders [was] the collection and reporting of taxes.”126 In the Court’s view, however, both parties

paint with too broad a brush. This dispute is layered, requiring a nuanced analysis of each

governmental act and its objective.

From the outset, the alleged stay violations based on the tax enforcement orders can

be quickly disposed of because the Debtor neither established a willful violation nor a related

injury. Although the Commission was clearly pursuing its pecuniary interest in unpaid taxes, the

record reflects that it was unaware of the Debtor’s bankruptcy when the enforcement hearing was

first noticed. The Commission then remedied this technical stay violation, though weeks later, by

continuing the tax enforcement hearing generally. In other words, everything worked out as it

should since the hearing did not take place. But even assuming the Commission’s three-week

delay was itself willful, the Debtor has not shown it was harmed.

The remaining alleged violations relate to the post-petition sealing (and re-sealing)

of oil and gas wells in which the estate has a property interest generally protected by the automatic

stay.127 All stem from the same root: Order 205-2021. The seals were authorized by Order 459-

2022 and affixed post-petition because the Debtor violated Order 205-2021. And for its part, the

124 See 11 U.S.C. § 101(27).

125 Union Pac. Res. Co. v. Texaco, Inc., 882 P.2d at 223.

126 Black Diamond Energy of Delaware’s Post-Trial Brief in Support of Motion to Enforce the Automatic Stay,

Dkt. No. 414 at 7.

127 See 11 U.S.C. § 541(a).

June Letter reiterates that the wells will remain sealed until that occurs. Therefore, if the purpose

of the seals was to enforce Order 205-2021, then the Court must discern what it required and why.

There are two outstanding components of Order 205-2021: a $5,000 fine and the

requirement to post a $25,000 bond.128 Notably, the Commission has never sought to enforce them

separately, though they are analytically distinct and must be seen as such. That said, the seals are

justified so long as at least one of the unsatisfied requirements of Order 205-2021 has a primarily

non-pecuniary purpose.

Turning first to the $5,000 fine, the Court finds that the Commission has not shown

that the enforcement of this piece of Order 205-2021 is excepted from the stay. The Commission

levied this fine because the Debtor’s tax reporting and payments were untimely.129 Relying on

United States v. Sugarhouse Realty, Inc., the Commission asserts that the assessment of “fines

constitute[s] a ‘regulatory action in the purest sense.’”130 True enough, but the exception only

extends to “efforts to fix a penalty,” not collect one.131 Section 362(b)(4) expressly forbids the

“enforcement” of a money judgment.132 In Penn Terra Ltd. v. Dep’t of Env’t Res., Com. of Pa.,

the Third Circuit explained that section 362(b) distinguishes the “entry of a money judgment” from

“attempts to seize property . . . in order to satisfy that judgment.”133 While all civil penalties

128 See Exhibit 2 at 6. The Commission seemingly concedes that the Debtor has corrected its reporting and

payment deficiencies as required by Order 205-2021. See Transcript of April 24, 2024 Hearing, Dkt. No.

392 at 62:4-10.

129 Exhibit 2 at ¶ 9.

130 Respondent Wyoming Oil & Gas Conservation Commission’s Supplemental Briefing, Dkt. No. 411 at ¶¶ 17-

18 (quoting United States v. Sugarhouse Realty, Inc., 162 B.R. 113, 115 (E.D. Pa. 1993)).

131 New Jersey v. W.R. Grace & Co. (In re W.R. Grace & Co.), 412 B.R. 657, 664 (D. Del. 2009) (emphasis

added); see United States v. Nicolet, Inc., 857 F.2d at 208-09; Penn Terra Ltd. v. Dep’t of Env’t Res., Com.

of Pa., 733 F.2d at 273; U.S. v. LTV Steel Co., Inc., 269 B.R. 576 (W.D. Pa. 2001); United States v.

Sugarhouse Realty, Inc., 162 B.R. at 116-17.

132 See 11 U.S.C. § 362(b)(4).

133 Penn Terra Ltd. v. Dep’t of Env’t Res., Com. of Pa., 733 F.2d at 275.

provide some deterrent effect, the $5,000 fine is basically a liquidated damage for a past wrong—

a prototypical money judgment.134 Therefore, seeking “compliance” with this part of Order 205-

2021 really is an impermissible attempt to collect a prepetition debt.135

In comparison, the $25,000 bond requirement is a much different animal. The

bond’s stated purpose is to provide “security for [the Debtor’s] future compliance with the

Commission’s Rules and orders.”136 Recall that the Commission not only found that the Debtor’s

tax reporting was repeatedly untimely, inaccurate, and unaccompanied by payments, but that the

Debtor refused to pay without an offset.137 Confronted with chronic, willful rule violations, the

Commission concluded that the Debtor needed some skin in the game and the State Court affirmed

the decision as well-supported by substantial evidence.138 Therefore, the bonding requirement

facially advances the Commission’s non-pecuniary interest in the enforcement of its rules and

orders.

Nevertheless, the Debtor urges the Court to find a primarily pecuniary purpose by

focusing on the rules whose compliance the bond was meant to compel. In its view, this dispute

is limited to the reporting and payment of tax obligations because those are the rules the Debtor

violated.139 Frankly, this might have been a better argument in July 2022 than it is on this record.

Since the petition date, the Debtor has defied the Commission and its rules by removing seals,

returning its wells to production, and failing to report two separate oil spills.140 To top it off, Mr.

134 See id. at 277.

135 The Commission did not file a proof of claim for the $5,000 fine and the time to do so has now passed.

136 Exhibit 2 at 6.

137 Id. at 5-6.

138 See Exhibit 5; Exhibit 6 at 8-9.

139 See WY Oil & Gas Conservation Comm’n Rules, Ch. 3, §§ 41(a), (c).

140 See Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 37:7-21, 73:23-74:5; Declaration of Patrick Amole,

Dkt. No. 369 at ¶¶ 13-14; Declaration of Joe Scott, Dkt. No. 368 at ¶¶ 15-16.

Koval baselessly contends the Debtor need not comply with the Commission and its rules.141 The

Debtor and Mr. Koval also had prior incidents of non-compliance with the Commission’s rules

that resulted in the forfeiture of the bonds that started this dispute.142 And, of course, the Debtor

did not merely flout some technical tax rule, but thumbed its nose at the Commission over a prior

grievance. So it is disingenuous to suggest the Commission’s enforcement interest against the

Debtor must be narrow when the Debtor’s non-compliance has been much broader. The Court is

unpersuaded that a compliance bond’s purpose should be second guessed when the government’s

jurisdiction is comprehensive and serves ongoing public policy interests. Put simply, the Court

declines to view the Commission as a mere tax collector.

Still, the Debtor doubles-down, rejecting the notion that the Commission has the

authority to require a compliance bond under these circumstances.143 The Debtor explains the

“flaw” in the Commission’s interpretation of the Act as follows:

[T]he plain language . . . only allows for a surety bond or other

guaranty to be required as a condition or to secure performance in

relation to a rule or order regarding (i) plugging a dry or abandoned

well, or (ii) repairing a well causing waste. If the drafters intended

a general authority to allow a bond for any compliance with rules

and order, then it would have separately delineated that authority.

To the extent [the Commission] has any independent bonding

authority, it is limited only to compliance related to plugging a dry

or abandoned well, or repairing a well causing waste.144

This, however, is a gross misrepresentation of the statute. The Act actually provides:

141 See Transcript of April 24, 2024 Hearing, Dkt. No. 392 at 32:5-14; 33:4-20. Significantly, the Debtor’s

briefing has not endorsed this position as its own. The Debtor has not come forward with any authority

describing the impact of federal jurisdiction on the Commission’s authority to regulate federally-leased wells

in Wyoming.

142 See id. at 26:17-29:5; Declaration of Joe Scott, Dkt. No. 368 at ¶¶ 20-22; Proposed Stipulated Facts, Dkt.

No. 249-1 at ¶ 2.

143 See Black Diamond Energy of Delaware’s Post-Trial Brief in Support of Motion to Enforce the Automatic

Stay, Dkt. No. 414 at 7-8.

144 Id. at 8 (citing Wy. Stat. Ann. § 30-5-104(d)(i)(D)) (emphasis added).

The commission has the authority . . . [t]o require . . . [t]he furnishing

of a surety bond or other guaranty, conditioned for or securing the

performance of the duty to plug each dry or abandoned well or the

repair of wells causing waste and compliance with the rules and

orders of the commission.145

Based on the position of the conjunctive “and,” a surety bond plainly secures “the performance of

[well duties] and compliance with the rules and orders of the commission.”146 The Debtor’s “plain

language” reading so materially deviates from the statutory text towards a desired outcome that it

does not seem to be a mistake. Regardless, the drafters expressly granted the Commission

authority to require a bond as “security for . . . future compliance with the Commission’s Rules

and orders.”147

Undaunted, the Debtor asserts that the Commission has not pointed to any statutory

authority that would permit it to require additional surety for wells under federal jurisdiction. Not

so,148 but this argument would seem foreclosed by the Rooker-Feldman doctrine.149 It bars an

145 Wy. Stat. Ann. § 30-5-104(d)(i)(D) (emphasis added).

146 Id.

147 Exhibit 2 at 6.

148 The Commission cites section 30-5-118 of the Act, which provides in relevant part:

[T]his act shall apply to all lands in the state of Wyoming lawfully subject to its

police powers; provided, it shall apply to lands of the United States or to lands

subject to the jurisdiction of the United States only to the extent that control and

supervision of conservation of oil and gas by the United States on its lands shall

fail to effect the intent and purposes of this act and otherwise shall apply to such

lands to such extent as an officer of the United States having jurisdiction, or his

duly authorized representative, shall approve any of the provisions of this act or

the order or orders of the commission which affects such lands . . .

Wyo. Stat. Ann. § 30-5-118. At the very least, this provision establishes that the Act applies to federal wells

in Wyoming under some circumstances. If an operator of federal wells must comply with the Act, it logically

follows that the Commission must have the authority to enforce it. Therefore, the Court finds that the burden

shifted to the Debtor to refute the Act’s applicability here. To be clear, this necessitated something more

compelling than Mr. Koval’s bare denials.

149 The doctrine takes its name from the only two cases in which the Supreme Court has applied it to defeat

federal subject-matter jurisdiction: Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S. Ct. 149, 68 L. Ed. 362

(1923), and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S. Ct. 1303, 75 L. Ed. 2d

206 (1983).

inferior federal court from “from exercising jurisdiction over cases brought by ‘state-court losers’

challenging ‘state-court judgments rendered before the district court proceedings commenced.’”150

Here, the Debtor unsuccessfully appealed Order 205-2021 to the State Court, which expressly held

“[t]he Commission did not exceed its statutory authority when it issued a bond in this case.”151 It

is not this Court’s place to reject those findings now.152

Taking a step back, the compliance bond is not a debt, but a prerequisite to the

Debtor operating oil and gas wells in Wyoming. It does not matter that it was seemingly imposed

here as a sanction rather than mandated from the start. The fundamental purpose of the compliance

bond is to ensure the Debtor follows all the Commission’s rules and orders going forward, not just

the tax rules. There is no question these rules effectuate important public policy interests by

ensuring oil and gas operators produce these resources safely and equitably, and without waste or

environmental damage.153 And the compliance bond’s future focus distinguishes it from a money

judgment.154 In essence, it is the cost of admission and the inability to operate wells is the natural

consequence of choosing not to provide the surety. From this perspective, the Debtor’s attempt to

use the stay to avoid supplying a compliance bond seems more a sword than a shield.155

Finally, the Court observes that no evidence shows that the Commission holds any

remaining funds from the forfeited bonds to which the Debtor would be entitled. As such, the

150 Lance v. Dennis, 546 U.S. 459, 460, 126 S. Ct. 1198, 1199, 163 L. Ed. 2d 1059 (2006) (quoting Exxon Mobil

Corp. v. Saudi Basic Industries Corp., 544 U.S. 280, 284, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005)).

151 Exhibit 6 at 12.

152 See Great W. Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 166 (3d Cir. 2010) (quoting

Exxon Mobil, 544 U.S. at 284).

153 See generally Wyo. Stat. Ann. § 30-5-104.

154 See Penn Terra Ltd. v. Dep’t of Env’t Res., Com. of Pa., 733 F.2d at 277 (“it is unlikely that any action which

seeks to prevent culpable conduct in futuro will, in normal course, manifest itself as an action for a money

judgment, or one to enforce a money judgment.”).

155 See In re The Cracked Egg, LLC, 624 B.R. at 88–89.

Debtor has not established that it satisfied the compliance bond requirement of Order 205-2021

before the Commission sealed the wells. !*°

For all these reasons, the Court finds that the sealing of the Debtor’s wells to compel

the provision of the compliance bond required by Order 205-2021 was an excepted exercise of the

Commission’s police and regulatory powers.'°’ As a result, the Debtor has not established a

violation of the automatic stay.

IV. CONCLUSION

Based on the foregoing, the Motion must be denied. This opinion constitutes the

Court’s findings of fact and conclusions of law in accordance with Fed. R. Bankr. P. 7052. The

Court will issue a separate order consistent with this opinion.

ENTERED at Pittsburgh, Pennsylvania.

yi sjb

Dated: November 27, 2024 GREGORY L. TADDONIO

CHIEF UNITED STATES BANKRUPTCY JUDGE

Case administrator to mail to:

Debtor

156 The Court notes this because Mr. Koval made this point during his testimony even if the Debtor did not

clearly adopt this position.

157 The parties have not mentioned the monthly fines imposed by Order 459-2022. The Court presumes this is

because there is no evidence that the Commission tried to collect them. In any event, the assessment of the

fines by itself does not violate the stay. See In re W.R. Grace & Co., 412 B.R. at 664.

24