concurring in part and dissenting in part.
I concur in Part II of the majority opinion; I dissent to Part I of the majority opinion and, as a result, I would not reach the issues discussed in Parts III and IV thereof. I dissent to Part I of the majority opinion for some of the same reasons set forth in my dissent in Rocky Mountain Oil & Gas Ass’n v. Conrad, 405 N.W.2d 279, *138284 (N.D.1987) (Vande Walle, J., dissenting).
Although I would not reach the issue of estoppel, the lack of any rules or regulations governing the valuation of gas for the time in question does, I believe, have significance with regard to the issue of gross value at the well discussed in Part I. Had the interpretation by the Tax Commissioner been consistent, I might agree that the failure to adopt rules and regulations would be insignificant. However, what has happened reflects a total departure by the Tax Commissioner from some 25 years of opposite treatment of this matter by that office. Like Rocky Mountain, this developed as a declaratory-judgment action and, as I noted in my dissent in that case, information concerning the history of the construction and interpretation of the statutes by the Tax Commissioner during those years would be helpful in deciding the issue at hand for it would give us an understanding of the intent of the Legislature in enacting the applicable statutes. As I further noted in dissent:
“Unless there is a reasonable explanation for an abrupt change in interpretation of applicable statutes, changes in taxation policies are more properly matters for legislative determination than for the philosophy of the Tax Commissioner.” Rocky Mountain, supra, at 285 (Vande Walle, J., dissenting).
Furthermore, although I might agree as a general principle with the statement from Securities and Exchange Com. v. Chenery Corp., 332 U.S. 202-203, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995, 2002 (1947), relied upon by the majority opinion to excuse the failure of the Tax Commissioner to promulgate rules and regulations governing the valuation of gas for the time in question, the factual context of that statement was substantially different from the case before us. In Chenery, the issue before the United States Supreme Court involved an order of the Securities and Exchange Commission which refused to approve a proposed amendment to a plan for reorganization of a public-utility holding company which had permitted stock acquired by its officers and directors and controlling stockholders pending the reorganization for the purpose of retaining control of the utility. The reasons the United States Supreme Court enunciated for not requiring a rule or regulation in Chenery are set forth in the majority opinion. It is apparent they do not apply here. These are problems the Tax Commissioner could reasonably foresee, for the contracts had been in existence since 1961, the statute was enacted in 1953, and the gas has been processed at the plant since 1955. Surely there was enough experience with the problem to adopt a rule. As noted by the Court in Chenery, in the sentences immediately preceding those quoted in the majority opinion:
“Since the Commission, unlike a court, does have the ability to make new law prospectively through the exercise of its rulemaking powers, it has less reason to rely upon ad hoc adjudication to formulate new standards of conduct ... The function of filling in the interstices ... should be performed, as much as possible, through this quasi-legislative promulgation of rules to be applied in the future.” 1
Here, unlike Chenery wherein the Court noted that it would refuse to forbid the Securities and Exchange Commission from utilizing the Chenery Corporation action to announce and apply a new standard of conduct because the Commission “had not previously been confronted with the problem of management trading during reorganization,” the matter of valuation of the gas *139was a matter at issue since 1955 when Signal began processing the gas at the Tioga plant. Thus, if the Tax Commissioner was, without a corresponding change in the statute, to so dramatically alter a practice of some 25 years in determining the valuation of the gas for the purpose of the gross-production tax, it would have seemed a most opportune time to do so by exercising the rulemaking authority under Section 28-32-02, N.D.C.C. That section provides, in part:
“Prior to the adoption, amendment, or repeal of any rule, the agency shall adopt a procedure whereby all interested persons are afforded reasonable opportunity to submit data, views, or arguments, orally or in writing. In case of substantive rules, opportunity for oral hearing must be granted if requested.”2 [Emphasis supplied.]
Following the statutory procedure may very well have provided us with a better basis for considering the issue than is provided by the declaratory-judgment procedure.
I also question what will happen if, at some time, the contract price for gas exceeds that achieved by using the “work-back” method. Will the Tax Commissioner apply the lower price? It is apparent that the policies of the Tax Commissioner in this respect may very well affect the contract price of gas. Those contracts may be long-term contracts and it appears that the participants are entitled to knowledge before the fact of the policies of the Tax Department or entitled to a hearing pursuant to Section 28-32-02, N.D.C.C., if those policies are to be changed without a corresponding change in the applicable statutes.
Finally, the majority appears to excuse the inaction of the Tax Commissioner because prior to 1980 “the tax department received ‘virtually no funding’ from the Legislature to staff oil and gas gross production tax field auditors ...” Although I recognize the practicality of that statement insofar as the relationship between the branches of government is concerned, I am dubious that such a situation somehow excuses that inaction with regard to a third party. It seems to me that for these purposes there can be no difference between the Legislative and Executive branches of government and that any failure to adequately fund the audit efforts of the Tax Department cannot be used against a third party.
On the basis of the record before us, I would reverse the declaratory judgment insofar as it appears to approve the Tax Commissioner’s method of determining the fair market value of the gas for purposes of the gross-production tax.
. In a prior case the United States Supreme Court noted that rule-making, the quasi-legislative power, is intended to complete absent but necessary details in the statutes. See United States v. Grimaud, 220 U.S. 506, 31 S.Ct. 480, 55 L.Ed. 563 (1911). That function appears particularly applicable in this instance. Davis, in his Administrative Law Treatise, states that issues other than adjudicative are best developed through notice and comment procedure whether the proceeding is one of rule-making or one of adjudication. 3 K. Davis, Administrative Law Treatise, sec. 14.5 (1980). It appears to me such a procedure is far preferable to the one used here where after some 25 years of acceptance of returns the Tax Commissioner issued an assessment of additional oil and gas production taxes, penalties, and interest.
. The Tax Commissioner has adopted a procedure for public notice and hearing on proposed rules. See Section 81-01.1-03-01, North Dakota Administrative Code.