Grace v. Oil Conservation Commission of New Mexico

• Decision Date: 31 January 1975
• Docket Number: No. 9821,9821
• Citation: 87 N.M. 205,531 P.2d 939,1975 NMSC 1
• Parties: Michael P. GRACE, II, and Corinne Grace, Petitioners-Appellants, v. OIL CONSERVATION COMMISSION OF NEW MEXICO, Respondent-Appellee, and Cities Service Oil Company, and the City of Carlsbad, Intervenors-Appellees.
• Court: New Mexico Supreme Court

Page 939

531 P.2d 939

87 N.M. 205

Michael P. GRACE, II, and Corinne Grace, Petitioners-Appellants, v. OIL CONSERVATION COMMISSION OF NEW MEXICO, Respondent-Appellee, and Cities Service Oil Company, and the City of Carlsbad,

Intervenors-Appellees.

No. 9821.

Supreme Court of New Mexico.

Jan. 31, 1975.

Marchiondo & Berry, Mary C. Walters, Albuquerque, Ferrill H. Rogers, Oklahoma City, Okl., for petitioners-appellants

Losee & Carson, Artesia, David L. Norvell, Atty. Gen., William F. Carr, Sp. Asst. Atty. Gen., Jason Kellahin, Santa Fe, for appellees.

OPINION

STEPHENSON, Justice.

Appellants (the Graces) petitioned the district court for review of Oil Conservation Commission (the Commission) Order No. R--1670--L (the Order) which was entered on June 30, 1972, pursuant to § 65--3--22(b), N.M.S.A.1953. The district court affirmed the Commission. We affirm the district court.

The Order dealt with the South-Carlsbad Morrow Gas Pool (the Pool) in Eddy County. The Commission made eighty-six findings of fact from which it appears the pool is a relatively new one with little production history. The Commission's findings deal with all of the foundationary matters required to be found as prerequisite to a valid proration order under our leading case on this subject, Continental Oil Co. v. Oil Conservation Com'n, 70 N.M. 310, 373 P.2d 809 (1962). Complete and detailed findings were made on the subject of marketing facilities, production capacities, market demand, drainage and counter-drainage, correlative rights and waste. No assertion is made that the findings do not support the conclusions.

Based upon the findings, the Commission ordered the pool to be prorated effective September 1, 1972. Certain rules and regulations of the Commission were made applicable to the pool. The allowable production was provided to be allocated on a monthly basis by first deducting the total allowable assigned to marginal wells and allocating the remaining allowable among the non-marginal wells in the proportion that each well's acreage factor bore to the total of the acreage factors for all non-marginal wells in the pool.

The Graces filed an application for rehearing as provided by § 65--3--22(a), N.M.S.A.1953 asserting that, based upon the record, the Commission did not have jurisdiction to institute gas prorationing in the pool, and that the Commission improperly included acreage within the horizontal limits of the pool which has wells thereon not in communication with, or in the same common source of supply as the other wells in the area.

The motion for rehearing was denied by the Commission's failure to act thereon within ten days. § 65--3--22(a).

The Graces then petitioned the district court for review of the order. The grounds stated in the application for rehearing defined and limited the issues which could be reviewed on appeal to the district court. § 65--3--22(b), N.M.S.A.1953. In its amended form, the petition asserted that there was no substantial evidence to support the Commission's jurisdictional findings that waste, as defined by § 65--3--3, N.M.S.A.1953, is occurring or will occur in the pool unless production therefrom is restricted pursuant to § 65--3--13(c), N.M.S.A.1953. It further claimed that the order contained no basic conclusions of fact required to support an order designed to protect the Graces' correlative rights and that it deprived them of their property without due process of law.

During the proceedings in district court, Cities Service Oil Company was granted leave to intervene as a respondent and the City of Carlsbad was granted leave to intervene as a petitioner. Ultimately, the district court, after recounting the proceedings before the Commission and summarizing the Commission's findings and actions, found, inter alia, that the Commission did not act fraudulently, arbitrarily or capriciously in issuing the order; that the transcript of the proceedings before the Commission contained substantial evidence to support its findings; that the Commission did not exceed its authority in issuing the order, and that the order was not erroneous, invalid, improper or discriminatory. Judgment was entered and the Graces appeal.

The district court reviewed the record of the administrative hearing and concluded of the administrative hearing and concluded as a matter of law that the Commission's order was substantially supported by the evidence and by applicable law. We make the same review of the Commission's action as did not district court. El Paso Natural Gas Co. v. Oil Conservation Com'n, 76 N.M. 268, 414 P.2d 496 (1966).

Most of the arguments advanced by the Graces center upon the adequacy of the record to support the Commission's action. That resolves itself into a question of whether or not the findings of fact are supported by substantial evidence, there being no claim that the findings do not support the conclusions of law or that the conclusions of law do not support the order. 'Substantial evidence' means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Rinker v. State Corporation Commission, 84 N.M. 622, 506 P.2d 783 (1973). In resolving those arguments of the appellant, we will not weigh the evidence. By definition, the inquiry is whether, on the record, the administrative body could reasonably make the findings. See 4 Davis, Administrative Law Treatise, § 29.01 (1958).

Moreover, in considering these issues, we will give special weight and credence to the experience, technical competence and specialized knowledge of the Commission. Cf., McDaniel v. New Mexico Board of Medical Examiners, 86 N.M. 447, 525 P.2d 374 (1974); § 4--32--22, subd. A., N.M.S.A.1953.

The Graces assert that the Commission did not have 'jurisdiction' to institute gas prorationing in the pool based upon the record before it. There are frequent references to 'jurisdiction' in the Graces' briefs and some of their argument is addressed to the jurisdictional issue.

There is not a shred of a jurisdictional question here. A lack of jurisdiction means an entire lack of power to hear or determine the case and the absence of authority over the subject matter or the parties. 20 Am.Jur.2d, 'Courts' § 87 (1965).

As we said in Elwess v. Elwess, 73 N.M. 400, 404, 389 P.2d 7, 9 (1964):

'The word 'jurisdiction' is a term of large and comprehensive import. It includes jurisdiction over the subject matter, over the parties, and power or authority to decide the particular matters presented, * * *.'

Certainly the Commission had jurisdiction of the subject matter--conservation of oil and gas--and it had authority to decide the matters presented. See § 65--3--5, N.M.S.A.1953. No question is raised concerning lack of jurisdiction over the parties.

'The authority to decide a cause at all, and not the decision rendered therein, is what makes up jurisdiction; * * *.' State v. Patten, 41 N.M. 395, 399, 69 P.2d 931, 933 (1937).

See Houston Fire and Casualty Insurance Co. v. Falls, 67 N.M. 189, 354 P.2d 127 (1960).

The substance of appellant's argument is that the order was arbitrary, unreasonable, unlawful and capricious, because (a) in the first instance there was lack of substantial evidence that the wells were producing from the same pool; (b) the Commission failed to determine the amount of recoverable gas under each producer's tract or in the pool, and (c) the Order entered by the Commission deprives each producer of the opportunity to produce his fair share of the reserves in a quantity proportionate to the reserves in the pool.

These alleged shortcomings are said to be 'jurisdictional.' For the reasons mentioned, they are not. Rather, they are what Justice Carmody characterized n Continental Oil Co. v. Oil Conservation Com'n, supra, as 'foundationary matters.' By this he meant 'basic conclusions of fact' which were held to be a prerequisite, together with support in the record, to sustain orders made by the Commission.

This court has in the past improperly phrased certain issues as jurisdictional. For example, in Sims v. Mechem, 72 N.M. 186, 382 P.2d 183 (1963) we held that the failure to find that a pooling order would prevent waste was 'jurisdictional,' and the case was incorrectly decided on that basis. Actually, the failure to find that the order would prevent waste in Sims was no more jurisdictional than would be a failure to find negligence in a negligence case. Both are matters of proof of an issue that has nothing to do with jurisdiction.

The words 'jurisdiction' and 'jurisdictional' are occasionally loosely used in Continental Oil (70 N.M. at 321, 373 P.2d at 816). We understand that case to mean only that certain 'basic conclusions of fact' must have been found as facts and supported by the record, and 'are necessary requisites to the validity of an order' prorating production. El Paso Natural Gas Co. v. Oil Conservation Com'n, 76 N.M. 268, 414 P.2d 496 (1966).

We will consider the appellant's position upon the true issue presented, which is whether the findings in the order, which clearly comply with the mandate of Continental Oil, supra, are supported by substantial evidence in the record, devoid of any jurisdictional overtones.

Appellants first contend there is not sufficient evidence that the pool is truly a pool. They assert that it was not shown that there is subsurface communication between the wells or that they draw from a common source of supply. This argument is without substance. The record shows that the Morrow member of the Pennsylvania formation is non-homogenous, consisting of separate stringers varying in thickness and not continuous across the pool with a number of producing zones. The formation is characterized by thickening and thinning and discontinuity over short distances. There was evidence that, although there was no one pay zone common to every well in the pool, nevertheless, there was no one well producing from a zone wholly isolated from every other...