Cameron v. Corporation Commission

• Decision Date: 12 April 1966
• Docket Number: No. 40879,40879
• Citation: 414 P.2d 266,1966 OK 75
• Parties: A. A. CAMERON, Plaintiff in Error, v. The CORPORATION COMMISSION of the State of Oklahoma, and Champlin Oil and Refining Company, Defendants in Error.
• Court: Oklahoma Supreme Court

Page 266

414 P.2d 266

1966 OK 75

A. A. CAMERON, Plaintiff in Error, v.The CORPORATION COMMISSION of the State of Oklahoma, and Champlin Oil and Refining Company, Defendants in Error.

No. 40879.

Supreme Court of Oklahoma.

April 12, 1966.

Rehearing Denied May 17, 1966.

Syllabus by the Court

1.The Corporation Commission is without authority to entertain or grant an application to vacate, amend or modify a spacing and well drilling unit established by a former order of the Commission which has become final, in the absence of a showing of a substantial change of knowledge of conditions existing in the area since the former order was made or other change of factual situations specified in the statutes.

2.The Corporation Commission has a wide discretion in the performance of its statutory duties and this court may not substitute its judgment on disputed questions of fact for that of the Commission, unless the findings of the Commission are not supported by the law and substantial evidence.

3.The determination whether there is 'substantial evidence' to support an order made by Corporation Commission does not require that the evidence be weighed, but only that the evidence tending to support the order be considered to determine whether it implies a quality of proof which induces the conviction that the order was proper or furnishes a substantial basis of facts from which the issue tendered could be reasonably resolved.

Appeal from the Corporation Commission of the State of Oklahoma.

Application by A. A. Cameron to delete the Rowe Zone source of supply underlying his leasehold from previous orders of the Corporation Commission establishing drilling and spacing units for such Zone.The Applicant appeals from an order of the Commission denying the application.Affirmed.

Hal D. Leaming, James L. Burton, of Smith, Leaming & Swan, Oklahoma City, for plaintiff in error.

Ferrill H. Rogers, Oklahoma City, for defendant in errorCorporation Commission of Oklahoma.

T. Murray Robinson, William N. Christian, of Robinson, Robertson & Barnes, Oklahoma City, for defendant in errorChamplin Oil & Refining Co.

DAVISON, Justice.

A. A. Cameron(herein referred to as Applicant) is the owner and operator of the oil and gas leasehold estate covering the SE 1/4 of the NW 1/4 of Sec. 4, Township 2 North, Range 2 West, Stephens County, Oklahoma.Applicant appeals from an order of the Corporation Commission denying his application (filed June 19, 1963) to delete this land from the purview of certain orders of the Commission, and particularly from OrderNo. 48309 made March 20, 1962, which extended previous orders to include Applicant's leasehold and the area to the east thereof in the east half of said Section 4.

The first of these Orders (No. 32611) was made May 29, 1956, and covered areas east of Section 4, in Sections 2and3.It declared the Rowe Zone, found between the approximate depths of 7000 feet and 7600 feet and composed of a series of thin sands that were productive, constituted a separate common source of supply of oil and gas, and established 20 acre drilling and spacing units.As drilling of wells progressed the Commission extended its initial order by later orders to cover lands further west, and by OrderNo. 48309, supra, included Applicant's leasehold as the most western area thereof.This order was not appealed and became final.

OrderNo. 48309 was made upon application of Champlin Oil & Refining Co.The order designated the south 20 acres (S 1/2 SE NW 1/4) of Applicant's leasehold as a drilling and spacing unit for production from the Rowe Zone.Champlin owns oil and gas leases on lands east of Applicant's lease, including the east and west 20 acre unit (S 1/2 SW 1/4 NE 1/4) immediately east of Applicant's unit above described.The Rowe Zone (approximately 7000 to 7600 feet) consists of three productive sands or intervals.In the testimony they were referred to in the order of their descending levels within the Zone as the, First or Upper Rowe, Main or Middle Rowe, and Hervey.

The basis for the application to delete Applicant's 40 acre leasehold from the Commission's Order was that the Rowe Zone underlying such land was a separate common source of supply because a vertical fault or barrier separated it from the Rowe Zone beneath the lands to the east thereof.The application was referred to a trial examiner for hearing and report to the Commission.The trial examiner's report set forth a resume of the evidence presented for and against the application, and recommended the application be granted.

Champlin filed exceptions to the report and the matter was argued to the Commission.The Commission refused to adopt the Examiner's recommendation and denied the application, stating it had heard argument, examined the Examiner's report and transcript of the proceedings before him, and that the exceptions should be sustained.The Commission found:

'That the evidence of applicant tending to establish that the Rowe sand under the SE NW of Section 4--2N--8W, Stephens County, Oklahoma, is a separate common source of supply from the Rowe sand underlying the balance of the spaced Rowe sand area is inconclusive and insufficient to overturn the presumption which arose out of the order establishing the Rowe sand as a single common source of supply throughout the spaced area, and to hold such area underlain by a separate common source of supply in the Rowe sand would give the applicant a producing advantage over the other owners of Rowe sand production throughout the balance of the spaced area, * * *'

In its order the Commission stated that the zone corresponding to the Rowe Zone found in wells to the east of said Section 4'between the approximate depths of 7,000 feet and 7,600 feet be and the same is hereby again determined to be a single common source of supply of oil and gas underlying the area covered by' the previous orders, including the land leased to Applicant.

Applicant urges that the order of the Commission violates his constitutional rights (14th Amendment of the Constitution of the United States) in that it deprives him of valuable property rights and equal protection of the law, and further that the order is not sustained by substantial and competent evidence, and is contrary to law, Applicant relies on Article 9, Section 20, of the Constitution of Oklahoma, governing this court's review of orders of the Commission that are appealed to this court.Appellant relies on these provisions (as stated in his brief)'to invoke this Court's examination of the Record to determine if the Commission based its finding that the Rowe Zone is a single source of supply on competent and substantial evidence.'

Applicant does not point out in what specific respect his constitutional rights have been violated.From the above quoted excerpt from his brief it is apparent that he is asking this court to review the record to determine whether or not the order is sustained by competent and substantial evidence.The Commission was proceeding under authority of 52 O.S.1961, Sec. 81 et seq., providing for conservation of the natural resources of oil and gas.Its authority to so proceed has been repeatedly upheld as a proper exercise of the police power of the State.Patterson v. Stanolind Oil & Gas Co., 182 Okl. 155, 77 P.2d 83;305 U.S. 376, 59 S.Ct. 259, 83 L.Ed. 231, andLayton v. Pan American Petroleum Corporation, Okl., 383 P.2d 624.

As a part of his argument the Applicant appears to assume that the Commission's order was based almost entirely upon the 'presumption' that arose from its prior orders that the Rowe Zone was a common source of supply.This is not correct.The order recites that the Commission heard arguments and exmined the Examiner's report and transcript of the proceedings before the Examiner.

This is an application to modify a prior order of the Commission by deleting or separating a portion of a productive zone from the effect of such prior order.

In Hester v. Sinclair Oil and Gas Company, Okl., 351 P.2d 751, a prior order provided for 40 acre spacing and an applicant sought to modify the order to establish 80 acre spacing.The Commission granted the application in part.In reviewing such action on the ground of lack of evidence to support the same, this court referred to the prior existing order and stated (p. 755):

'We must assume, until that order is modified by another one--Supported by substantial evidence--that it was so supported.The previous order remains in force and effect until it is properly amended, modified or vacated; and, the burden was upon the party applying for a new and different pattern of well spacing, to produce evidence to support such a change.'

And in Wood Oil Co. v. Corporation Commission, 205 Okl. 534, 239 P.2d 1021, we said:

'The Corporation Commission is without authority to entertain or grant an application to vacate, amend or modify a spacing and well drilling unit established by a former order of the Commission, which has become final, in the absence of a showing of a substantial change of condition in the area, since the former order was made or other change of factual situations specified in the statutes.'

See alsoApplication of Continental Oil Company, Okl., 376 P.2d 330.

In addition to the general information heretofore related, it was shown that Applicant had drilled two wells on his south 20 acre spacing.These were the Rankin 1A, located in the east 10 acres of such spacing, and the Rankin 3, located in the west 10 acres of such spacing.The Rankin 1A (east well) was completed in 1952, and was drilled through the First Rowe and Middle Rowe sands, but did not penetrate into the Hervey (bo...