Amoco Production Co. v. North Dakota Indus. Commission, No. 9934

CourtUnited States State Supreme Court of North Dakota
Writing for the CourtERICKSTAD; SAND, PAULSON and PEDERSON, JJ., and JAMES K. O'KEEFE; O'KEEFE, District Judge, sitting in place of VANDE WALLE
PartiesAMOCO PRODUCTION COMPANY, William C. Lubke and Evelyn G. Lubke, Plaintiffs and Appellants, v. NORTH DAKOTA INDUSTRIAL COMMISSION; and the First National Bank and TrustCompany of Williston, Trustee of Murphy Land Trust, Defendants and Appellees. Civ.
Docket NumberNo. 9934
Decision Date30 June 1981

Page 839

307 N.W.2d 839
AMOCO PRODUCTION COMPANY, William C. Lubke and Evelyn G.
Lubke, Plaintiffs and Appellants,
v.
NORTH DAKOTA INDUSTRIAL COMMISSION; and the First National
Bank and TrustCompany of Williston, Trustee of
Murphy Land Trust, Defendants and Appellees.
Civ. No. 9934.
Supreme Court of North Dakota.
June 30, 1981.

Fleck, Mather, Strutz & Mayer, Bismarck, for plaintiff and appellant Amoco Production Co.; appearance by Jane Fleck Romanov, Bismarck.

Greenwood, Greenwood & Greenwood, Dickinson, for plaintiffs and appellants William C. Lubke and Evelyn G. Lubke; argued by Dann E. Greenwood, Dickinson.

Owen L. Anderson, Asst. Atty. Gen., UND School of Law, Grand Forks, for defendant

Page 840

and appellee North Dakota Industrial Commission.

Reichert, Howe, Hardy, Galloway & Jorgensen, Dickinson, for defendant and appellee First Nat. Bank and Trust Co. of Williston, Trustee of Murphy Land Trust; argued by Albert J. Hardy, Dickinson.

ERICKSTAD, Chief Justice.

The appellants, Amoco Production Company and the Lubkes, appeal from a judgment of the District Court of Burleigh County affirming a spacing order of the North Dakota Industrial Commission. Amoco moved to dismiss the appeal. The Lubkes opposed the motion. We grant the motion of appellant Amoco Production Company to dismiss its appeal and affirm the judgment of the district court affirming the order of the Industrial Commission.

This case first arose from a hearing held July 24, 1979, before the North Dakota Industrial Commission to consider the proper spacing of oil and gas wells for the development of the Rattlesnake Point Field in the Duperow Pool in Dunn County, North Dakota. Prior to this hearing, the Commission had established a temporary 320-acre spacing pattern for the pool. The 320 acres were to consist of two adjacent quarter sections within the same section. At the time Amoco had completed a successful well in the northwest quarter of section 11 of township 145 north, range 96 west, they had the option of selecting either laid-down (north half-south half) or stand-up (east half-west half) spacing. Amoco chose laid down spacing.

The Lubkes have an undivided one-half interest in the north one-half of section 11. Murphy Land Trust owns the mineral interest in the southwest quarter of section 11; the southeast quarter is not in issue. The royalty on production from the Lubke well, the well in the northwest quarter of section 11, was paid to the owners of the mineral interests in the north one-half of section 11.

The Kelling well was subsequently drilled by Amoco in the southeast quarter. This well was a poor producer and testimony was received that it was probably located low on the reservoir structure. The royalty on the production from this well was allocated to the owners of the south half of section 11. After a July 24, 1979, hearing, the Commission determined that the spacing should have been the east one-half and west one-half rather than north one-half and south one-half.

The Commission also ordered:

"(13) That for the purposes of division of production to owners of interests in spacing units established herein, this order shall be effective at 7:00 a. m. on the 1st day of September, 1979."

Amoco and the Lubkes appealed the order to the district court asserting that the Commission erred by spacing section 11 east one-half and west one-half, that there was insufficient notice to the Lubkes, that the Commission was without jurisdiction to change the spacing after such spacing had been established by contract between the owners of the interests, 1 and that the Commission could not provide a date for allocation of production in a spacing order. The district court remanded the Commission's order "for the purpose of making such findings as are necessary with respect to the question of correlative rights, and, in this connection, to give interested parties an opportunity to hear and submit such evidence as may be relevant in connection with that subject." As the proceedings were remanded, the district court did not address whether or not the notice of hearing was adequate.

A hearing on remand was held May 20, 1980, before the Commission. The Lubkes and their counsel were present at the hearings as were Amoco and a representative of the Murphy Trust. More information concerning the shape of the pool was introduced at this hearing. Thereafter, the Commission made the following relevant findings:

"(4) That due to errors in Amoco's exhibit # 1, a structure map contoured on

Page 841

the top of the Duperow Formation, the validity of the exhibit is questionable.

"(5) That the Amoco Production # 1 Kelling, located 3,300 feet from the north line and 660 feet from the east line of Section 11, Township 146 North, Range 96 West, Dunn County, North Dakota, initially produced 26 barrels of oil per day, and through March 1, 1980 had a cumulative production of 16,647 barrels of oil; that the Amoco Production # 1 Lubke, located 2,010 feet from the north line and 660 feet from the west line of Section 11, Township 146 North, Range 96 West, Dunn County, North Dakota, had an initial production of 531 barrels of oil per day, and through March 1, 1980, had a cumulative production of 165,909 barrels of oil; that this indicates that the reservoir characteristics in the area of the Lubke # 1 well, located in the W/2 of Section 11, are far superior to the reservoir characteristics in the area of the Kelling # 1 well, located in the E/2 of Section 11.

"(6) That, assuming radial drainage, the W/2 of said Section 11 will contribute more oil to the total ultimate recovery of the Lubke # 1 well than will the N/2 of the section.

"(7) That in order to protect correlative rights the W/2 of said Section 11 should be designated the spacing unit for the Lubke # 1 well, and the E/2 of said Section 11 should be designated the spacing unit for the Kelling # 1 well."

In addition the Commission affirmed its previous order which ordered the stand-up spacing and set the allocation date.

The Lubkes and Amoco appealed from the second order of the Commission to the district court, asserting that the east half west half spacing of section 11 was contrary to the weight of the evidence and that the Commission could not set an effective date for allocation of production in a spacing order. The district court affirmed the Commission's order, and Amoco and the Lubkes appealed to this court, asserting that the district court erred in affirming the Commission's order in that it was not sustained by substantial and credible evidence and that it was error to set an effective date for allocation of production in such a spacing order.

Before the hearing in our court, Amoco filed a motion to dismiss its appeal; the Lubkes opposed it and it was heard at the same time as the Lubkes' appeal was heard.

I. Motion to Dismiss

The Lubkes opposed the motion contending that they would be prejudiced as they relied upon the brief submitted by Amoco to address the issue of the allocation date. During oral argument, counsel for the Lubkes said he would not oppose Amoco's motion if he were permitted to rely on Amoco's brief. This was agreeable to counsel for the Commission and the Murphy Trust. Accordingly, we grant the motion of Amoco to dismiss its appeal.

II. Standard of Review

The standard of review of the district court in reviewing the orders of the Commission is set out in Section 38-08-14(4) of the North Dakota Century Code. 2 This is a specific statute dealing with appeals from the Industrial Commission. The standard of review found in Chapter 28-32, N.D.C.C., the Administrative Agencies Practice Act, is therefore not applicable in this case. See § 1-02-07, N.D.C.C. 3

Page 842

Thus, the district court shall sustain the orders of the Commission if it "has regularly pursued its authority and its findings and conclusions are sustained by the law and by substantial and credible evidence." § 38-08-14(4), N.D.C.C. The "substantial evidence" test was the test employed in reviewing all administrative agency orders prior to 1977 when the Legislature amended Section 28-32-19 adopting the "preponderance of the evidence" test. Hence, our prior case law applying the substantial evidence rule is applicable. Tenneco Oil Co. v. State Industrial Commission, 131 N.W.2d 722, 724 (N.D.1964).

In Bank of Hamilton v. State Banking Bd., 236 N.W.2d 921 (N.D.1975), a case involving another administrative agency, we said:

"Our review of the factual basis of administrative agency orders is a three-step process: (1) Are the findings of fact supported by substantial evidence? (2) Are the conclusions of law sustained by the findings of fact? (3) Is the agency decision supported by the conclusions of law? (Citations omitted.)

"This court, however, has indicated its reluctance to substitute its own judgment for that of qualified experts in matters entrusted to administrative agencies." 236 N.W.2d at 925.

In Citizens State Bank of Neche v. Bank of Hamilton, 238 N.W.2d 655 (N.D.1976), we said:

"We have defined 'substantial evidence' as 'such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.' (Citations omitted.) '(I)t must be enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact for the jury.' (Citations omitted.) This is something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not...

To continue reading

Request your trial
18 practice notes
  • Sjostrand v. WORKERS COMPENSATION BUREAU, No. 20010271.
    • United States
    • United States State Supreme Court of North Dakota
    • August 15, 2002
    ...from the general standard, the specific statute ordinarily prevails under N.D.C.C. § 1-02-07. Amoco Production Co. v. Industrial Comm'n, 307 N.W.2d 839, 841-42 [¶ 28] Under N.D.C.C. § 65-01-11, a claimant generally "has the burden of proving by a preponderance of the evidence that the claim......
  • Black Hills Trucking, Inc. v. N.D. Indus. Comm'n, No. 20170086
    • United States
    • United States State Supreme Court of North Dakota
    • December 7, 2017
    ...standard of review in appeals from district court involving orders of the Commission. See Amoco Prod. Co. v. North Dakota Indus. Comm'n, 307 N.W.2d 839, 842 (N.D. 1981). The "substantial evidence" test "is something less" than the greater weight of the evidence and the preponderance of the ......
  • Beach Railport, LLC v. Michels, No. 20160457
    • United States
    • United States State Supreme Court of North Dakota
    • October 17, 2017
    ...2017 ND 179, ¶ 8, 899 N.W.2d 267 ; Hanson v. Indus. Comm'n, 466 N.W.2d 587, 590 (N.D. 1991) ; Amoco Prod. Co. v. N.D. Indus. Comm'n, 307 N.W.2d 839, 842 (N.D. 1981). As we have explained, "[t]he ‘substantial evidence’ test ‘is something less' than the greater weight of the evidence and the ......
  • Union Pacific Resources Co. v. Texaco, Inc., Nos. 93-223
    • United States
    • United States State Supreme Court of Wyoming
    • September 30, 1994
    ...rights, the Commission has continuing authority to modify its previous orders. Accord Amoco Production Co. v. North Dakota Indus. Com'n, 307 N.W.2d 839, 843 (N.D.1981) (holding administrative agency has continuing duty and authority to modify orders establishing drilling units when necessar......
  • Request a trial to view additional results
18 cases
  • Sjostrand v. WORKERS COMPENSATION BUREAU, No. 20010271.
    • United States
    • United States State Supreme Court of North Dakota
    • August 15, 2002
    ...from the general standard, the specific statute ordinarily prevails under N.D.C.C. § 1-02-07. Amoco Production Co. v. Industrial Comm'n, 307 N.W.2d 839, 841-42 [¶ 28] Under N.D.C.C. § 65-01-11, a claimant generally "has the burden of proving by a preponderance of the evidence that the claim......
  • Black Hills Trucking, Inc. v. N.D. Indus. Comm'n, No. 20170086
    • United States
    • United States State Supreme Court of North Dakota
    • December 7, 2017
    ...standard of review in appeals from district court involving orders of the Commission. See Amoco Prod. Co. v. North Dakota Indus. Comm'n, 307 N.W.2d 839, 842 (N.D. 1981). The "substantial evidence" test "is something less" than the greater weight of the evidence and the preponderance of the ......
  • Beach Railport, LLC v. Michels, No. 20160457
    • United States
    • United States State Supreme Court of North Dakota
    • October 17, 2017
    ...2017 ND 179, ¶ 8, 899 N.W.2d 267 ; Hanson v. Indus. Comm'n, 466 N.W.2d 587, 590 (N.D. 1991) ; Amoco Prod. Co. v. N.D. Indus. Comm'n, 307 N.W.2d 839, 842 (N.D. 1981). As we have explained, "[t]he ‘substantial evidence’ test ‘is something less' than the greater weight of the evidence and the ......
  • Union Pacific Resources Co. v. Texaco, Inc., Nos. 93-223
    • United States
    • United States State Supreme Court of Wyoming
    • September 30, 1994
    ...rights, the Commission has continuing authority to modify its previous orders. Accord Amoco Production Co. v. North Dakota Indus. Com'n, 307 N.W.2d 839, 843 (N.D.1981) (holding administrative agency has continuing duty and authority to modify orders establishing drilling units when necessar......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT