Aylward Production Corp. v. State Corp. Commission

176 P.2d 861, 162 Kan. 428, 1947 Kan. LEXIS 321
CourtSupreme Court of Kansas
DecidedJanuary 25, 1947
DocketNo. 36,832
StatusPublished
Cited by11 cases

This text of 176 P.2d 861 (Aylward Production Corp. v. State Corp. Commission) is published on Counsel Stack Legal Research, covering Supreme Court of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Aylward Production Corp. v. State Corp. Commission, 176 P.2d 861, 162 Kan. 428, 1947 Kan. LEXIS 321 (kan 1947).

Opinions

The opinion of the court was delivered by

Smith, J.:

This was an action wherein plaintiffs, by the filing of a petition for review pursuant to statute, sought to have the district court review an order of the state corporation commission which denied the oral application of plaintiffs to amend the general rules and regulations of the commission for the conservation of crude oil, so as to establish a minimum allowable of 25 barrels per day for oil wells in prorated pools in this state on the ground that the commission did not have power to make such an order. Judg[429]*429ment of the district court was in favor of plaintiffs. The defendant has appealed.

The petition for review alleged that under G. S. 1945 Supp. 55-602 to 55-606, inclusive, the defendant was given authority over all matters arising thereunder; that prior to June 28, 1.946, there was in effect an order made by the defendant providing for a minimum well allowable of 20 barrels per day; that at the regular monthly meeting of the commission an oral application was made to the commission asking it to increase this to 25 barrels per day; that plaintiffs appeared in support of the application, and others appeared in opposition to it and maintained that the commission had no authority to establish a daily minimum on wells in any prorated pool in excess of 15 barrels per day; that after hearing the commission held that it did not have authority to fix a state-wide minimum well allowable for oil wells in Kansas, and the application was denied; that a petition for rehearing was filed by plaintiffs and duly denied. The petition for review then alleged that the order denying the application was contrary to law and the evidence submitted at the hearing; that the commission in making the order failed to take into consideration all the powers granted to defendant and the duties imposed on it by the statute; that the commission interpreted the word “waste” as used in the statutes in its- ordinary meaning and disregarded the fact that the meaning of that word was broadened by the provisions of G. S. 1945 Supp. 55-602, to include “economic waste.” The petition then alleged that in order to prevent economic waste within the state in the production of oil it was necessary that a minimum daily allowable for oil wells in Kansas be fixed at 25 barrels per day and alleged that the force of that evidence was recognized by the majority of the commission in the decision holding it had no such authority and that the defendant disregarded the definition of the term “waste” as given in the statutes.

The order attached to this petition for review stated that the question of increasing the minimum well allowable to 25 barrels per day was orally presented to the commission 'at its regular meeting for the purpose, among other things, of determining market demand and making a proration order; that a notice of the hearing was published in the usual form, which, among other things, was as follows:

“You are hereby notified that pursuant to said order the Commission will [430]*430receive evidence to determine whether the rules and regulations for the conservation of crude oil and natural gas, of this Commission should be amended ; and that all persons desiring to be heard should be present at said hearing.”

The order further- stated that the matter of increasing the minimum allowable to 25 barrels per day was properly considered as a part of the market demand and proration hearing; that evidence was received from all desiring to be heard and that pursuant to a ' written memorandum filed the same day the commission concluded as a matter of law it did not have authority to fix a state-wide minimum well allowable for oil wells in the state.

The answer of the defendant commission to this petition for review ‘ admitted that the hearing had been had and the order had been made as alleged; denied that an order had been in effect providing for a state-wide minimum well allowable of 20 barrels per day; denied that the order denying the allegations was based upon evidence and alleged certain statements. of the petition were merely conclusions as to the proper construction of the law. The answer ffirther alleged the only matter before the court for consideration was the correct-, ness or incorrectness of defendant’s interpretation of the powers given it under G. S. 1945 Supp. 55-602 to 55-606, inclusive.

A petition for rehearing called attention to the arguments that had been made at the time of the original hearing. The order denying-' it contained no new matter. The trial court found the decision of the defendant that it did not have power under the provisions of G. S. 1945 Supp. 55-602 to 55-604, to make such an order as asked' in the oral application, was erroneous and the commission had authority to establish a minimum daily allowable for oil wells in Kansas of 25 barrels per day on wells capable of producing that amount. The final judgment was that the decision and order of the commission should be set aside.

The defendant has appealed from that order. The specifications of error are that the district court erred in holding that the commission had authority under G. S. 1935, 55-601 and G. S. 1945 Supp. 55-602 to 55-606, inclusive, to establish a state-wide minimum allowable of 25 barrels per day for oil wells in the state, and in setting aside the order denying the oral application to amend the general rules providing for a minimum allowable of 25 barrels per day for the reason given.

The term “state-wide minimum daily allowable” for oil wells was used throughput the pleadings, in the briefs and in the journal [431]*431entry of judgment. It is clear from the entire record that all parties and the court intendéd that such words should mean “minimum daily allowable of 25 barrels per day in prorated pools.”

The commission has in its rules and regulations given certain words and phrases a meaning peculiar to the administration of the statute. Some of these will be set out here so the readers not familiar with the oil business and its regulations will not be confused. They are as follows:

“Allowable shall mean the amount of oil authorized to be produced by order of the Commission.
“Correlative rights shall mean that each owner or producer in a common source of supply is privileged to produce therefrom only in such manner or amount as not to injure the reservoir to the detriment of others or to take an undue proportion of the oil or gas obtainable therefrom, or to cause undue drainage between developed leases.
“Minimum pool shall mean every oil producing pool located in this state which has an average well size óf less than fifteen barrels per day.
“Minimum well shall mean any well which has a productivity of fifteen barrels or less.
“Productivity 'shall mean the index to the daily productive ability of individual wells and pools as of the date tested, which is established as herein provided for .the purpose of determining relative productive capacities but not actual or continuing productive abilities.

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Cite This Page — Counsel Stack

Bluebook (online)
176 P.2d 861, 162 Kan. 428, 1947 Kan. LEXIS 321, Counsel Stack Legal Research, https://law.counselstack.com/opinion/aylward-production-corp-v-state-corp-commission-kan-1947.