The State Oil and Gas Board of Alabama

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The State Oil and Gas Board of Alabama

 

The State Oil and Gas Board of Alabama is currently composed of three members: James “Jim” Griggs, Charles “Ward” Pearson, and Barnett Lawley.  The State Oil and Gas Board webiste information for them is at: http://www.gsa.state.al.us/ogb/board.html

Dr. Barry H. “Nick” Tew, Jr., is the State Geologist of Alabama and the Supervisor of the State Oil and Gas Board.  S. Marvin Rogers is the attorney for the Board.   The address and the phone number for the main office of the Board are:

 

State Oil and Gas Board of Alabama

Post Office Box 869999
Tuscaloosa, AL 35486-6999
205-349-2852

 

Overnight deliveries to the Board should be addressed to:

State Oil and Gas Board of Alabama

420 Hackberry Lane
Tuscaloosa, Alabama 35401

 

The Board normally meets in its offices in Tuscaloosa, Alabama on the University of Alabama campus. From time to time, however, the Board will meet in other cities, such as Mobile.   The Board has promulgated its own administrative regulations as set forth in the State Oil and Gas Board of Alabama Administrative Code. Copies of the Administrative Code are sold through the Board’s Tuscaloosa office, and are available online at:

 

http://www.gsa.state.al.us/documents/misc_ogb/goldbook.pdf

 

The Alabama oil and gas statutes give the Board jurisdiction and authority over persons and property in Alabama, as necessary to enforce the legislative mandates set forth in those statutes.  (Ala. Code § 9-17-6(a) (Supp. 1990).)    The first significant attack on a Board action occurred in four consolidated cases reported in State Oil and Gas Board of Ala. v. Seaman Paper Co., 235 So.2d 860 (1970),  and arising out of disputes over the second enlargement of the Citronelle Unit in Mobile County, Alabama.  The plaintiffs in the Seaman case filed bills in equity in the Circuit Court of Mobile County challenging the Board’s orders approving the second enlargement of the Citronelle Unit. The trial court set aside the Board orders, and the Board appealed the matter to the Supreme Court of Alabama.

The plaintiffs in the Seaman case launched a broad attack on just about every aspect of the Board’s approval of the second enlargement. The Seaman decision comments on the powers of the Board, the procedure of the Board, evidentiary practice before the Board, and the procedure for appealing Board orders.

Seaman established that the secretary of the Board could prove the publication of notice of the Board’s meeting by making the following statement on the record of the Board: “Mr. Chairman, the meeting has been properly advertised according to law.” The Board has changed its regulation regarding proof of notice of publication since Seaman. See State Oil and Gas Board of Ala. Admin. Code §400-7-1-.11.

The Seaman plaintiffs contended that the Board’s order was invalid because the Board itself was not properly constituted at all times during the hearing. The plaintiffs based their attack upon the quorum statute for the Board, which establishes the quorum for the Board at two members and requires two affirmative votes for the promulgation of any order. Ala. Code § 9-17-3 (1975).  In the hearings involved in the Seaman case, two board members were present at all times, but apparently the same two members were never present at the same time. The court held that: “the transcripts of all the proceedings held by the Board are available at all times for any new member or any absent member to read concerning the evidence presented at any hearing.” Seaman, 235 So.2d at 875. Thus, changing faces at the Board table does not destroy the Board’s jurisdiction to enter an order following a hearing, so long as at least two board members vote in favor of the order.

Most of the evidence that is presented to the Board is opinion testimony. The very nature of oil and gas exploration and production precludes eye witness testimony, because the geological formations holding the oil and gas are far below the surface of the earth. Therefore, experts interpret various facts and express their opinions as to what happens below the surface of the earth. In the Seaman case, the plaintiffs challenged the Board's order on the grounds that it was unsupported by facts and was supported only by opinions. The court recognized that “testimony in a case of this kind can only come from experts.” Seaman, 235 So.2d at 876.  The court noted, incidentally, that the plaintiffs did not challenge the qualifications of the opposing experts to testify regarding oil and gas. This serves as a reminder that you should challenge an expert witnesses’ qualifications if you plan to attack a Board order on the grounds that it is supported solely by an unqualified opinion. Absent that challenge, the court is unlikely to be sympathetic to your appeal.

The Seaman plaintiffs asserted that the Board’s order and the agreements for the second enlargement of the Citronelle Unit violated state and federal antitrust laws. At trial court and at the Board, the plaintiffs did not raise that argument. The Seaman decision held that the antitrust question could not be raised for the first time on appeal. With respect to antitrust, note that Section 9-17-13(e) of the Code of Alabama (Supp. 1990) purports to exempt pooling agreements from state antitrust violations.

 A number of aspects of appellate review of Board decisions arose in the Seaman case. First, the plaintiffs attacked one of the Board orders on the grounds that it was not rendered within thirty days of the conclusion of the hearing. In support of the attack, the plaintiffs relied upon the following statute now codified as Section 9-17-7(f):

Any interested person shall have the right to have the board call a hearing for the purpose of taking action in respect to any matter within the jurisdiction of the board by making a request therefor in writing. Upon the receipt of any such request, the board promptly shall call a hearing thereon and, after such hearing and with all convenient speed and in any event within 30 days after the conclusion of such hearing, shall take such action with regard to the subject matter thereof as it may deem appropriate.

 

Three Board hearings were involved in the Seaman case: an initial hearing on October 15, 1965, a hearing on December 17, 1965, and a final hearing on March 18, 1966. At the conclusion of the October 15, 1965, hearing the Board did not order a continuance of the hearing. Instead the Chairman of the Board essentially said that the Board would take the matter under advisement. Furthermore, the Board did not enter a ruling within thirty days of the October 15, 1965, hearing. On December 17, 1965, the Board continued its proceedings on the petition at issue and announced that its proceedings were a “continuation of the hearing.” Seaman, 235 So 2d at 864. The Board entered an order at the December 17, 1965, meeting on the petition first heard on October 15. On March 18, 1966, the entire record from the October 15 and December 17 hearings on the petition at issue was introduced into the hearing record. The Board’s order involved in the Seaman case was then entered within thirty days from March 18, 1966. The court rejected the plaintiffs’ contention that the order entered at the December 17, 1965, meeting was void.

Even where the Board takes a matter “under advisement,” there is a procedure for avoiding the thirty day limit of Section 9-17-7(f).  If the Board enters a continuance order within thirty days of the conclusion of the hearing and notifies the parties of that order, the matter will continued and will not fall victim to the thirty day rule.  In the case of Roberts v. State Oil & Gas Bd. of State of Ala., 441 So. 2d 909, 912 (Ala. Civ. App. 1983), the court held:

In addition, certain other rules of the Board allow the Board to continue a hearing without new notice if it is done at that hearing. In this case, the Board provided new notice to the parties that a third hearing would be held.

 

 Section 9-17-15 of the Code of Alabama (Rep.Vol. 1987) sets forth the procedure for appealing a Board order. First, the appeal lies in the circuit court of any county where the aggrieved parties' property is located.  Section 9-17-15 does not address what happens if a Board order might be the subject of simultaneous, separate appeals in two separate circuit courts by aggrieved parties owning land affected by the order situated in separate counties.  The one-suit pending statute, Ala. Code §6-5-440 (1975) would prevent two separate circuit court appeals of the same Board order if no appellant was named in both appeals.

The appeal, if it is to be made, must be instituted within thirty days from the date of entry of the Board action. The appeal is instituted by filing a complaint in the circuit court of proper venue.

 The scope of review is limited to determining:

         (1)        Whether the rule, regulation or order is constitutional;

         (2)        Whether the rule, regulation or order was without or in excess of jurisdiction;

         (3)        Whether the rule, regulation or order was procured by fraud;

         (4)        Whether the rule, regulation or order is reasonable; and

         (5)        Whether the rule, regulation or order is unsupported by the evidence.

Ala. Code § 9-17-15 (Rep.Vol.); State Oil and Gas Board of Ala. v. Seaman Paper Co., 235 So.2d 860 (1970).

Following a decree by the Circuit Court of Mobile County in the Seaman case, the matter was appealed to the Alabama Supreme Court. In reviewing the matter, the Alabama Supreme Court did not afford the trial court decree any presumption of correctness, and instead reviewed the matter as if the appeal from the Board order had been directly appealed to Alabama Supreme Court. The court wrote:

Our inquiry has been limited to a determination of whether the tendencies of the evidence and reasonable inferences to be drawn therefrom support the orders of the Board in that the issues presented by the bills filed by Appellees were for a decision by an administrative body, a body of experts whose business calls for such decisions in its ordinary course.

 

Seaman, 235 So.2d at 876

In Roberts v. State Oil and Gas Bd., 441 So.2d 909, 912 (Ala.Civ.App.1983), the Court of Civil Appeals of Alabama stated that “orders of the Board are presumed to be prima facie correct.”

  In Mize v. Exxon Corp., 640 F.2d 637 (5th Cir.1981), the Fifth Circuit Court of Appeals held that aggrieved parties cannot collaterally attack orders of the Board. One of the contested issues in the Mize case was whether or not the Mizes’ mineral estate lay within the productive limits of the Little Escambia Creek and Fannie Church fields in Escambia County, Alabama. The Mizes were claiming that Exxon was permitting their property to be drained by wells in those two fields. Prior to the filing of the lawsuit, the Board had entered orders determining that the Mize’s mineral estate was outside the productive limits of the Little Escambia Creek and Fannie Church fields. In order to prove drainage by wells in either of those fields, the Mizes would have had to disprove the Board’s order finding that the Mize’s property lay outside the productive limits of those fields. In holding that the Mizes could not do that, the Fifth Circuit wrote: “orders by administrative agencies frequently are subject to limited judicial review and generally are not subject to collateral attack. The Mizes attempt to pursue such an attack, we conclude that they may not do so.” Mize, 640 F.2d at 640.

  The Board must afford the due process of law to all parties before the Board. U.S. Const. Amend. XIV.  The due process requirements for the Board are: “an opportunity to be heard; to be represented by counsel; to have fair procedures; and to know on what evidence an order is based along with the opportunity to confront that evidence.” Roberts v. State Oil and Gas Bd., 441 So.2d at 912.

Appellate courts apply a more lenient standard of review to Board proceedings than those courts would apply to trials held in the judicial courts. Id.

In the Hatter’s Pond Unitization case, State Oil and Gas Bd. of Ala. v. Anderson, 510 So.2d 250 (Ala. Civ. App. 1987), cert. denied, 484 U.S. 955 (1987),  prehearing discovery requests were at issue.  Some of the participants in the unitization hearings had requested the Board to require Getty to produce certain documents through the Board's subpoena power. The Board denied the discovery requests, but on appeal to the Circuit Court of Mobile County, the Circuit Court directed the Board on remand to allow “procedural due process as pertains to discovery.” Id. at 510 So.2d 256.  On appeal, the Alabama Court of Civil Appeals considered whether or not participants in proceedings before the Board have a constitutional right to pretrial discovery. The appellants had argued to the court that the holding in the case of Dawson v. Cole, 485 So.2d 1164 (Ala. Civ. App. 1986) denied prehearing discovery in administrative proceedings.  In that case, the Court of Civil Appeals wrote “it has been generally recognized that there is no basic constitutional right to prehearing discovery in administrative hearings.”   Id. at 1168.  The court distinguished the appellants’ reading of Dawson by holding that procedural due process must be measured on a case by case basis. Upon review of the record in the Hatter’s Pond proceedings, the court concluded that no one was denied procedural due process.

 Also at issue in the Hatter’s Pond Unitization case was the assertion that the Board's order approving the unit agreement was unreasonable. The appellants contended that the Board order failed to meet the statutory requirements of Section 9-17-83, Code of Alabama (Rep. Vol 1987). The Circuit Court upheld the Board’s order with respect to the productivity factor in the participation formula, but found that the Board’s definition of the productivity factor was not supported by the evidence. The Circuit Court then remanded the matter to the Board to consider whether or not certain tracts should be included within the unit boundaries.

On appeal, the Alabama Court of Civil Appeals applied the standard of Section 9-17-15 of the Code of Alabama (Rep. Vol. 1987) to its review. In that regard, the court sought to determine whether or not the Board’s order was reasonable and supported by the evidence (since there were no allegations that the Board was without jurisdiction), that the Board acted in excess of its jurisdiction, that the Board order was unconstitutional, or that the Board order was procured by fraud. The appellate court further looked to Rule 400-1-12-.23 of the State Oil and Gas Board of Alabama Administrative Code and Section 9-17-7(f) of the Code of Alabama (1975) to determine the Board’s flexibility to issue the relief requested in a petition. The court specifically found that the Board is not bound to grant the specific relief requested in a petition and may amend a petition or take other appropriate action. State Oiland Gas Bd. of Ala. v. Anderson, 510 So.2d 250 (Ala. Civ. App. 1987), cert. denied, 484 U.S. 955 (1987).

In the Hatter’s Pond case, the Court of Civil Appeals court cited its earlier decision of Roberts v. State Oil & Gas Board, 441 So. 2d 909 (Ala. Civ. App. 1983), where it held that the Board’s orders are presumed to be prima facie correct and should be affirmed where evidence was offered supporting the order. Citing State Oil & Gas Board of Ala. v. Seaman Paper Co., 235 So. 2d 860 (1970), the Anderson court held that there need not be substantial evidence in support of the order so long as there is some evidence supporting the order. Furthermore, the Anderson court held that the appellate court cannot substitute its judgment for that of the Board regarding factual findings. Based upon this standard of review, Anderson held that the Board’s decision regarding the measurement of the productivity factor was reasonable and that there was some evidence to support the Board's holding. The court noted:

[I]t was within the province of the Board to define productivity in a manner not specifically proposed by the hearing participants. So long as the formula was reasonable and supported by the evidence, we may not substitute our judgment for that of the Board.

 

Anderson, 510 So.2d at 255. (Citations omitted).

In Anderson, the Court of Civil Appeals also reversed the trial court's directive to the Board to reconsider whether or not certain tracts should be included in the unit boundaries. The Court of Civil Appeals was not willing to second guess the Board’s decision after it found that there was some evidence to support the Board’s decision.

Copyright 2011 by Edward G, Hawkins. All rights reserved.