Forest Oil Corp. v. Corporation Com'n of Oklahoma

LAVENDER, Justice,

dissenting:

The court in its opinion in this matter held that pursuant to OCC-OGR 2-105(d), underage of gas accumulated when the purchaser fails to take from an unallocated gas well may be applied to adjust the overage produced. Upon further study, including a more thorough examination of the record, I now believe that this court was in error in so holding. I therefore, would grant appellees’ petitions for rehearing and would affirm Corporation Commission Order No. 335027.

Rule 2-105(d) is a rule under the general heading of OCC-OGR 2-100 Oil and Gas Production From Oil Pools. The rule applies to underage accumulated from oil wells, not gas wells. The Commission’s technical advisor testified to this fact.

Q. Do you believe that 2-105(D) allows for the accumulation of underage in a gas well to be applied to future overages?
A. Underage under unallocated gas wells are not carried forward.1

Further, the technical advisor testified that the Commission’s long standing policy has never allowed for underage to be accumulated or carried forward from an unallocated gas pool under this rule or any other rule.

Q. Mr. Fair, has that been a consistent policy at the Commission that underage for unallocated gas wells is not carried forward or accumulated?
A. Yes.
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Q. Is there any rule that you are aware of that applies to accumulating underage in unallocated gas wells?
A. In unallocated gas wells, no.2

The United States Supreme Court in Udall v. Tallman,3 stated:

When faced with a problem of statutory construction, this Court shows great deference to the interpretation given the statute by the officers or agency charged with its administration. ‘[W]e need not find that its construction is the only reasonable one, or even that it is the result we would have reached had the question arisen in the first instance in judicial proceedings.’
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When the construction of an administrative regulation rather than a statute is in issue, deference is even more clearly in order. ‘Since this involves an interpretation of an administrative regulation a court must necessarily look to the administrative construction of the regulation if the meaning of the words used is in doubt.... The ultimate criterion is the administrative interpretation, which becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation.’

(citations omitted).4

In the present case, the common source of supply is a gas pool, not an oil pool. *790Rule 2-331, not 2-105(d), governs production from unallocated gas wells. However, OCC’s technical manager did testify that some rules for unallocated gas wells have been used interchangeably with the rules for oil wells. For instance 2-331, in the rule itself cross references to 2-110.5 This court therefore determined that as some rules are applied interchangeably to unallocated gas wells, this would hold true for 2-105(d) as well. Yet, in Toxic Waste Impact Group v. Leavitt,6 we ruled that “[a] court should not substitute its own judgment for that of an agency, particularly in the area of expertise which the agency supervises.”

In the present case, the record is void of any evidence that this particular rule has ever been used for unallocated gas wells. Forest Oil presents testimony from its witness that in his opinion the rule should be so applied, however, this is only argument, it is not evidence. The witness cannot cite to one instance where the rule as he suggests has been so applied. Moreover, in 1988, Forest Oil met with the Corporation staff and their position then as now was that the rule did not apply.7 Given that, and the unrefuted testimony of OCC’s technical department manager, I fail to see the support for the view of the majority that the “testimony elicited from Corporation Commission employees ... is unpersuasive.”8

In reaching its decision the majority opinion emphasized the fact that the word “take” appears in the first sentence of rule 2 — 105(d). It then noted that this term is generally associated with gas production and the term “run” with oil production. If that be true, the opinion seemed to overlook the second sentence of rule 2-105(d) which states that “[ujnderages may be accumulated until they are balanced by equal runs in excess of current allowables.”

Precedent requires that the proper construction of a statute is that which gives full effect to and harmonizes all provisions of the statute.9 The Court “must not be guided by a single sentence or member of a sentence, but must look to the provisions of the whole law and to its object and policy.”10 The majority states in its opinion that Corporation Commission rules have the force and effect of law.11 I submit therefore, that by not giving effect to the rule in its entirety, the majority erred in failing to follow well established rules of construction.

Finally, in its opinion, this court took judicial notice of OCC-OGR 2-111, a new rule allowing for twenty-five percent (25%) underage from an unallocated gas well to be carried forward for one year. In reviewing the record, I no longer believe that rule 2-111 supports this court’s decision; the new rule was clearly a substantive change from its former state. Moreover, application of this new rule was superfluous in that the record itself substantiated the fact that 2-105(d) had no relevance to the present set of facts. However, as the court chose to rely on this new rule, it should also be bound to take judicial notice of OCC’s reasoning for making the change.12 In discussing the adoption of the new rules, the OCC in Order No. 337475 beginning with the first full paragraph on page 3 states unequivically that:

*791Under the current rules, unallocated gas wells do not accrue underage when they do not produce the maximum permitted rate of production. However, the proposal [rule 2-111] would permit such wells to use a portion of the underage toward future production under certain circumstances....

(emphasis added).

I would grant rehearing and sustain the OCC’s holding in Order No. 335027 that overage for the 1987 Belcher Unit to offset the earlier underage of production should not be excused.

I am authorized to state that Chief Justice OPALA and Justice SIMMS join in the views herein expressed.

.Record at 1730-31.

. Record at 1731.

. 380 U.S. 1, 85 S.Ct. 792, 13 L.Ed.2d 616 (1965).

. Id. at 16-17, 85 S.Ct. at 801.

. Record at 1734.

. 755 P.2d 626, 630 (Okla.1988).

. Record at 1701.

. 61 OBJ 1765, 1771 (1990).

. Seal v. Corporation Com., 725 P.2d 278, 289 (Okla.1986).

. Kelly v. Robinson, 479 U.S. 36, 43, 107 S.Ct. 353, 358, 93 L.Ed.2d 216 (1986) (citations omitted).

. Ashland Oil Co. v. Corporation Comm’n, 595 P.2d 423, 426 (Okla.1979).

. In the amendment to its original opinion the majority complains that in doing so I am "supplementing" the record. With all due respect Rule 2-111 was neither briefed nor raised by either party when the court first considered this case. Certainly, however, it was within the court's prerogative to take judicial notice of a proposed rule. Likewise, on rehearing it is not "supplementing the record" for this court to take judicial notice of published proceedings issued by the Commission.