Nilsen v. Ports of Call Oil Co.

• Decision Date: 17 December 1985
• Docket Number: 57716,Nos. 57886,s. 57886
• Citation: 1985 OK 104,711 P.2d 98
• Parties: Carl A. NILSEN, Appellant, v. PORTS OF CALL OIL COMPANY, a corporation, Appellee. Taft MILFORD, Petitioner, v. Hamp BAKER, Chairman; Norma Eagleton, Member; and Bill Dawson, Member; all Commissioners of the Corporation Commission of the State of Oklahoma, Respondents.
• Court: Oklahoma Supreme Court

Page 98

711 P.2d 98

1985 OK 104

Carl A. NILSEN, Appellant, v. PORTS OF CALL OIL COMPANY, a corporation, Appellee.

Taft MILFORD, Petitioner, v. Hamp BAKER, Chairman; Norma Eagleton, Member; and Bill

Dawson, Member; all Commissioners of the

Corporation Commission of the State of

Oklahoma, Respondents.

Nos. 57886, 57716.

Supreme Court of Oklahoma.

Dec. 17, 1985.

Mahaffey, Gore & Brickell by Gregory L. Mahaffey and Richard J. Gore, Oklahoma City, for appellant Carl A. Nilsen.

Charles Nesbitt, Oklahoma City, for appellee Ports of Call Oil Co.

Bay, Hamilton, Lees, Spears & Verity by G.L. Jidge Verity, Oklahoma City, for petitioner Taft Milford.

Alice S. Mitchell, Conservation Atty., and Gretchen Hoover, Asst. Conservation Atty., Oklahoma City, for respondent Corp. Comn.

Richard K. Goodwin & Associates by Richard K. Goodwin, Oklahoma City, for respondents Doyle Snow, Emil Larson and Sitco, Inc.

McAfee & Taft by Judson S. Woodruff and Joseph H. Bocock, Oklahoma City, for amicus curiae Cap Corp.

LAVENDER, Justice:

On March 18, 1980, the Corporation Commission entered Order No. 165975, on application of Ports of Call Oil Co., pooling the various common sources of supply within Ports of Call commenced a well on Section 14, referred to as the Tomcat # 14-1, within the 180 days allowed by the Commission order. The Tomcat # 14-1, borehole was subsequently lost after a series of blowouts caused by very high pressure gas deposits encountered in Ports of Call's drilling operations. The initial borehole was plugged and a second borehole commenced. This borehole was also lost after sustaining damage caused by blowouts. Ports of Call then initiated the drilling of a third borehole. All parties agree that the second and third holes were initiated after the expiration of the 180 days provided in Order No. 165975.

the 640 acre drilling and spacing unit comprised of Section 14, Township 10 N., Range 13 W., Caddo County, Oklahoma. Under this order the applicant, Ports of Call, was directed to begin the drilling of the unit well within 180 days of the date of the order. In the event this provision was not complied with, the order, by its own terms, would become null and void. Order No. 165975 also contained provisions under which those holding working interests in the unit could elect to participate in the unit well or receive compensation for their working interests.

At this point it appears that various parties who had elected not to participate in the initial well began to challenge Ports of Call's right to proceed in the drilling of the subsequent boreholes, as they had been commenced after expiration of the time provided by the initial pooling order. The first attack was presented in the form of an application for pooling order covering Section 14 filed with the Commission by Helmerich & Payne, Inc. ¹

Next, Ports of Call filed an application for clarification of Order No. 165975 and subsequently moved that this application be consolidated with Helmerich & Payne's request for a pooling order.

The second attack on Ports of Call's continuing operations in Section 14 was commenced in the District Court of Caddo County. In this suit, Carl A. Nilsen sought to quiet title to various mineral leases within the NW/4 of Section 14 which Nilsen had acquired on June 5, 1981.

Several months later, Taft Milford, another holder of mineral interests in Section 14, filed an application for assumption of original jurisdiction and petition for writ of prohibition and motion for immediate stay in this Court, seeking to block the Commission's consideration of Ports of Call's application for clarification of Order No. 165975. This matter was designated cause No. 57,716. As the question of the Commission's jurisdiction to entertain Ports of Call's application had been raised in the Commission but not yet ruled on, this Court declined to issue an order staying the proceedings.

The Commission heard argument on the question of jurisdiction. Subsequently, the Commission entered Order No. 203625. In this order the Commission found that it did have jurisdiction of the subject matter of Ports of Calls' application under the power to repeal, amend, modify or supplement Commission orders granted by the Legislature in 52 O.S. 1981 § 112. However, the Commission ruled that it did not have jurisdiction to determine whether Ports of Call's operations in Section 14 had constituted a continuous drilling operation. The Commission stated that this was a matter to be decided by the district court in the pending quiet title action.

Two days after the entry of Order No. 203625, Ports of Call filed a supplemental pleading in cause No. 57,716, requesting the issuance of a writ of mandamus directing the Commission to address the issues raised in its initial application.

Two days following the Commission hearing on Ports of Call's application, the District Court of Caddo County heard arguments on demurrers which had been presented by Ports of Call to Nilsen's action on the ground that the district court lacked jurisdiction to entertain a collateral attack on a Commission order. Two weeks later the district court sustained Ports of Call's demurrers, citing Woods Petroleum This Court, by subsequent order, consolidated causes 57,716 and 57,886 for consideration, and has also stayed the Commission from hearing an application for an order vacating Order No. 165975. ³ The question which the parties to this matter seek to have resolved is whether Ports of Call's operations in Section 14 constitute a continuous drilling operation under the pooling order issued by the Commission. The problem here lies in finding a forum to make this determination. Both the Commission and the district court have declined to assume jurisdiction regarding this question.

Corp. v. Sledge, ² as determining that the court lacked jurisdiction over the matter. Nilsen, in cause No. 57,886, appealed this order of the district court, which had dismissed his action without leave to refile.

In ruling on Ports of Call's special demurrer to its jurisdiction, the district court relied on the case of Woods Petroleum Corp. v. Sledge. ⁴ In Woods this Court addressed a case in which a unit operator, unhappy with the result it had obtained in the Commission regarding the rights of other interest owners in the unit to participate in increased density wells, had attempted to attack that result through the vehicle of a quiet title action in district court. We stated that the operator's proper remedy would have been to appeal the Commission order allowing participation in the increased density wells. We then found that the blatant attempt to circumvent the result of the Commission's rulings constituted a prohibited collateral attack ⁵ upon those rulings, and thus, that the question posed to the district court was beyond its authority to entertain. In such cases the court's authority extends only to the question of whether the order under attack is void. ⁶

Woods does not imply that the district court lacked jurisdiction to proceed in a quiet title action merely because such an action would call for determination of the legal effect of a Commission order. ⁷ The district court clearly has jurisdiction to adjudicate the legal effect (as distinguished from the continuing effectiveness) of a Commission order or of an order of a court of competent jurisdiction upon title to land. ⁸ What the district court may not do is entertain a collateral attack upon such an order under the guise of an action to quiet title, as was the case in Woods.

The question for which the parties to this matter seek resolution, however, may not be categorized as a simple determination of the effect of a final order upon the title to the mineral interests involved. The question sought to be presented is whether Ports of Call's operations had been in compliance with Order No. 165975, or, if they had not, whether the Order had ceased, by its own terms, to be of force and effect.

The parties arguing in support of the request for a writ of prohibition to preclude the Commission from answering this question cite the case of Southern Union Production In the case of Cabot Carbon Co. v. Phillips Petroleum Co., ¹⁰ we specifically recognized the power of the Commission to clarify its previous orders under the authority of 52 O.S. 1951 § 112. ¹¹ In making this ruling we distinguished between the power granted to clarify, or "supplement," previous orders, the exercise of which does not effect a change in the prior order or in the rights accrued under that order, and the powers granted to repeal, amend or modify a previous order. The power to effect a change in a previous order, we have held, ¹² requires a showing before the Commission of a change in conditions or knowledge of conditions necessitating the repeal, amendment or modification. Failure to make such a showing renders an attempt to modify a prior order subject to the prohibition on collateral attacks set forth by the Legislature in 52 O.S. 1981 § 111. ¹³

                Company v. Corporation Commission, 9 as supporting their position.  They argue that Southern Union stands for the proposition that the Commission may not determine the effect of actions by parties to a pooling order upon the viability of that order.  These parties read Southern Union overbroadly.  In Southern Union the parties had requested a determination of whether the completion of the unit well as a dry hole and the subsequent abandonment by the unit operator had terminated the effectiveness of the pooling order under which operations had been conducted.  The Commission entered an order in which it found the prior pooling order had terminated.  However, the Commission went further and attempted to state in this order that the parties were "now in the same position they would be if such order had not been entered."   We found that this amounted to an attempt to determine the legal effect of the termination of the prior pooling

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