Inexco Oil Co. v. Corporation Commission, 53412

CourtSupreme Court of Oklahoma
Citation628 P.2d 362
Docket NumberNo. 53412,53412
PartiesINEXCO OIL COMPANY, Appellant, v. The CORPORATION COMMISSION of the State of Oklahoma and Delhi Gas Pipeline Corporation, Appellees.
Decision Date21 April 1981


McAfee, Taft, Mark, Bond, Rucks & Woodruff by Stanley L. Cunningham, C. David Stinson, Laurence M. Huffman, Oklahoma City, for appellant, Inexco Oil Co.

Thomas T. Rogers, Oklahoma City, and David B. McCall, Dallas, Tex., for appellee, Delhi Gas Pipeline Corp.

HODGES, Justice.

The only question presented in this appeal from Order No. 149385 entered by the Oklahoma Corporation Commission is whether Delhi Gas Pipeline Corporation (Delhi), appellee, must purchase all the natural gas produced by Inexco Oil Company (Inexco), appellant, from three natural gas wells in Roger Mills County. 1

Inexco owns the gas leases on the three wells and a part of the working interest. It contracted with Delhi to sell its attributable interest in the three wells which are connected to Delhi's pipelines under the terms of the gas purchase agreement. Delhi failed to purchase all of the allowable gas production attributable to Inexco's interest. Inexco filed a complaint with the Commission pursuant to 52 O.S.Supp.1978 § 24.1, 2 alleging that Delhi was a common carrier within the purview of § 24.1, and requesting that the Commission order Delhi to purchase the full allowable produced from the wells.

Delhi responded by asserting that: the Commission lacked jurisdiction; § 24.1 was inapplicable to the facts asserted by Inexco and to situations where a purchaser and seller of gas have entered into a gas purchase agreement; because of market conditions Delhi had been unable to purchase the entire volume of gas attributable to Inexco's interest which did not constitute a refusal to purchase pursuant to § 24.1.

The Commission determined that it would not proceed with a hearing on Inexco's complaints until it determined whether the Commission had jurisdiction under § 24.1. After the question was briefed and argued, the Commission dismissed Inexco's complaint with prejudice after it found:

1) Section 24 prohibits a common carrier from discriminating in favor of any natural gas proffered for sale. The Inexco request, if granted, would result in unlawful discrimination in favor of its wells and against other wells connected to Delhi's pipeline.

2) Delhi is a common gas purchaser, regardless of whether it might also be a common carrier. A common purchaser is required by 52 O.S.1971 § 23 to take ratably from all wells from which it purchases gas and prohibits discrimination between wells. The Commission cannot order Delhi to purchase more gas than necessary to meets its market demand, nor may it order Delhi to take unratably from the three wells.

3) Although 52 O.S.Supp.1978 § 24.1 may be invoked by any person when a common carrier of natural gas refuses to purchase or transport natural gas from a producer, it does not authorize unratable taking or discrimination in derogation of 52 O.S.1971 § 23.

Inexco asserts on appeal that: it was denied due process when the Commission dismissed its complaint with prejudice without conducting a hearing in accordance with 52 O.S.Supp.1978 § 24.1; the Commission exceeded its authority when it found that § 24.1 may not be invoked against a common carrier who is also a common purchaser; and Order No. 149385 is unsupported by any evidence and should be set aside.


Generally, administrative agencies may not deprive a person of his/her constitutionally protected rights without notice and hearing. Where the Legislature has plainly given interested parties the right to a full hearing, it must be shown that the litigants could gain nothing thereby, because none of the material facts are disputed on which the decision could rest. 3 In this instance, however, the question is one of jurisdiction and statutory construction which the parties argued and briefed. After a hearing and consideration of this seminal question, the Commission determined as a matter of statutory construction that § 24.1 was inapplicable to invoke its jurisdiction because Delhi was a common gas purchaser regardless of whether it was a common carrier, and that it lacked the power to grant the relief Inexco sought.


The basis for the enactment of Oklahoma's oil and gas conservation laws is to protect correlative rights. 4 The purpose of the regulatory scheme concerning common carriers and common purchasers of gas is to afford the producers of a common source of supply an equal opportunity to market and transport oil and gas from their wells. 5

A common purchaser of natural gas is defined by 52 O.S.1971 § 23 6 as any person engaged in the purchasing of natural gas. A common carrier is defined by 52 O.S.Supp.1978 § 24.1 7 as any person engaged in the transporting of natural gas. Under the statutory definitions, a corporation simultaneously may be a common purchaser and a common carrier. It was undisputed that Delhi entered into gas purchase agreements with Inexco. The Commission did not resolve the question of whether Delhi was a common carrier under § 24.1 because its status as a common purchaser was dispositive of the issue.

The purpose of § 23 is to protect correlative rights and to afford an owner in a common source of supply an ample opportunity to extract its fair share of gas. 8 The statute specifically prohibits a common purchaser from discriminating in favor of its own production either in price or amount. Inexco, in effect, is seeking a discriminatory ruling in its favor by seeking to enforce the letter of § 24.1, and ignore the intent of the Production and Transportation Act expressed in § 23. It seeks to have the Commission rule that Delhi purchase all the allowable gas from its three wells, while ignoring the rights Delhi may have in the common source of supply.

Legislative enactments concerning the same subject must be reconciled and harmonized so that an intelligent construction is given to each. 9 Sections 23, 24 and 24.1 must be construed together. Section 23 imposes two obligations on a common purchaser: 1) the common purchaser must not discriminate in the purchase of gas, and 2) if the common purchaser is unable to transport all of the gas produced, then it must ratably purchase and transport the gas. The duality of identity which some corporations enjoy, that of common purchaser and common carrier, may not be utilized to thwart the Legislative intent in enacting conservation laws. Otherwise, a common carrier who is also a common purchaser could claim common carrier status and avoid the sanctions of § 23, requiring that it take ratably. The Commission does not have the authority under § 24.1 to compel a common purchaser to purchase all of one producer's allowable.

Appellant makes no allegation in its complaint of any breach under § 23; therefore, the Commission properly denied its request for an evidentiary hearing.



SIMMS, DOOLIN and OPALA, JJ., dissent.

DOOLIN, Justice, dissenting:

The majority opinion approves an action by the Corporation Commission which, at best, can only be described as curious. It decided the merits of a complaint without hearing the evidence or considering a stipulation of facts.

The Corporation Commission announced it intended to determine first if it had jurisdiction to hear the complaints; however, it did much more than satisfy its jurisdictional musings. It said even if it heard the complaint, it would rule against the complainant.

Both parties argue that under definitions contained in 52 O.S.1971 §§ 23 and 24, Delhi might be both a...

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