HomeMy WebLinkAbout1990-02-06; City Council; 10473; AUTHORIZING REPRESENTATIVES TO PARTICIPATE IN THE FEDERAL SURPLUS PROPERTY PROGRAM*
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AB# /< f72 ? AUTHORIZING REPRESENTATIVES TO DEPT, CITY 1 MTG.- 2-4-90
CITY D E PT. FIR SURPLUS PROPERTY PROGRAM
TO PARTICIPATE IN THE FEDERAL
RECOMMENDED ACTION:
Council adopt Resolution No. +-/f , authorizing five employees of th of Carlsbad to represent the City in the Federal Surplus Property Program
ITEM EXPLANATION:
The State of California, Department of General Services, is the adminit agency for the Federal Surplus Property Program in California. The pur& the program is to enable certain public and non-profit agencies to a federal surplus property at a reduced cost.
The City of Carlsbad has been enrolled in this program in the past. This is in response to a request to update our eligibility.
FISCAL IMPACT:
None. There is no cost to be in the program. Potential savings over 1:
items on open market.
EXHIBITS:
1. Resolution No. qd -/f authorizing representatives in Federal S
2. Eligibility Renewal Application Property Program.
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90-18 RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBJ
CALIFORNIA, NAMING REPRESENTATIVES TO PARTICIPATE IN
FEDERAL SURPLUS PROPEKIY PROGRAM
WHEREAS, the State of California, Department of General Services
administers the Federal Surplus Property Program: and
WHEREAS, local governmental agencies can save money by obtainii
equipment and supplies through this program.
NOW, THEREFORE, BE IT RESOLVED, that the employees listed a
Eligibility Renewal Application are authorized representatives of the Ci
Carlsbad.
PASSED, APPROVED AND ADOPTED at a regular meeting of the Ci
Council held on the 6th day of February .1990 by the
following vote, to wit:
AYES: Council Members Lewis, Kulchin, Pettine, Mamaux and Larson
NOES: None
ABSENT: None
ATTEST:
CLAUDEA. LEWIS, Mayor
Lldex?L /-6?&L.-&z- ALETHA L. RAUTENKRANZ, CIW CLERK
(SEAL)
SASP Form 201-A r* State of California w
‘Dept. of General Services
‘6 State Agency for Surplus Property 2325 Xoorc Avenue
Fullerton, CA 92633 (714) 992-0900 3734 d2/& 2 -,
ELJGIBILITY RENEWAL APPLICATION FEDERAL SURPLUS PROPERm PROGRAM
Hame of organization City of Carlsbad Telephone 43 4 - 7 803
Address 1200 Elm Avenue City CarTsbad County San Dieqo Zip 92008
Organization is a:
PUBLIC AGEXCI~ NoHPROFiTAGIp(cT__ - A. Conservation - J. Private Education - B. Economic Development I(. Rirate Realth - C. Education - D. Parks & Recreation - H. bless Prwram - E. Public Health F. Public Safety
IXG- 2 or more listed N~I categories J-K-L+ A. Other (includes
L. Older Americans Act for Sr.Citt. -
Number of mitea
Enrollment or number of clients LKMd
- library/rmseums) - I. Homeless Program
RESOLUTION
”BE IT RESOLVED by the Governing Board, OR by the Chief Administrative Officer of tho=
organizations which do not hare a governing board, and hereby ordered that tha official(s)
and/or wployeds) whose name(s), title(s). and signature(s) are listed below ahall be and is (are) hereby authorized aa our representative(s1 to acquire federal sorplw property
fra the California State Agency for Surplus Property under the Terms and Conditiom listed on the reverse side of this form.”
NAME-(Print or type) TITLE
Ruth Fletcher
James Thompson
Ral ph Anderson
David Bradstreet Parks & Rec. Director
Brian Watson
PASSED AND ADOPTED this
by tho following rote: The City of Carlsbad
Ayes: 5 : Woes: o : Absentr o .
I,
full, true, and correct copy of a resolution adopted by the Board at a regular mting thereof held at its regular place of meeting at the date and by the rote above stated, which
resolution is on file in the office of the Board.
kletha L. Rautenkranz 9 city clerk , Clerk of the hveroing hrd of
The City of Carlsbad do hereby certify that the foregoing is a
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AUIRORIZm this day of 19-e by:
Nam of Chief Admloistrativa Officer
ISimed)
Title
FOR STATE AGENCY USE
Application approved: Application disapproved:
Ccmnents or additional information:
Signed: Date
(Tit le )
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TERMS AND COFJDITlONS
(A) THE DONEE CERTIFIES THAE
(1) 11 is B publicagency; ora nonprofit inslitution or oaganizalion,cxcmpt fromtaxationunder Section 501 of the Internal Revenue Code of 193
mcaning of Section 203(j) of the Federal Propcrty and Administrative Scrvkcs Act of 1949, as amended. and the regulations ofthe Adrninirtnto
Scrvica.
(2) If a public agency. the property is needed and will be uxd by the recipient for carryingout or promoting for the residcntsof a given political area
public purposes, or. if a nonprofit tax-exempt instjtution or organization, the property is needed for and will be used by the recipient for educatioi
hcalt h purposes, including research for such purpose, or for programsfor older individuals. The property is not being acquired for any other use or pu.
sale or other distribution; or for permanent use outside the state, except with prior approval of the state agensy.
(3) Funds arc availabk to pay all costs and charges incident to donation.
(4) This transacticjn shall be subject to the nondiscrimination regulations governing the donation of surplus personal property issued under Title V
Rights Act of 196% Title VI. Section 606. of the Federal Property and Administrative Services Act of 1949.a~ amended. Section 504 of the Rehabilit
1973. as amended. Title IX of the Education Amendments of 1972, as amended. and Section 303 of the Age Discrimination ASL of 1975.
(8) THE DONEE AGREES TO THE FOLLOWING FEDERAL CONDITIONS:
(1) All items of property shall be placed in use for thepurpox(s)for which acquired within one year of receipt and shall be continued in use for sucl
for one year from the date the property was placed in use. In the event the property is not so placed in use. or continued in ux. thedonee shall immed the stateagcncyand, at thedonee's expense. return such property to thestate agency, or otherwise make the property available for transfer or other dir rtate agency. provided the property is still usable as determined by the state agency.
(2) Such special handling or usc limitations as are imposed by General Services Administration (GSA) on any item(s) of property listed hereor
(3) In the event the property is not so used or handled as required by (BK I) and (2). title and right to the possession of such property shall at the op
revert to the United States of America and upon demand the donee shall release such property to such perron as GSA or its daigme shall direct.
(c') THE DONEE ACREES TO'THE FOLLOWING CONDITIONS IMPOSED BY THE STATE AGENCY, APPLICABLE TO ITEMS W17 ACQlllSl TION COSTOF55.000 OR MORE AND PASSENGER MOTOR VEHICLES, REGARDLESS OF ACQUISITION COST, EXCEPl
50 FEET OR MORE IN LENGTH AND AIRCRAFT:
(I) 'The property shall be uxd only for the purpose(s) for which acquired and for no other purposc(s)
(2) Thcrc shall bc a period of restriction which will expire after such property has been used for the purpose(s) for which acquired for a period 0:
from the date the property is placed in use. except for such items of major equipment. listed hereon, on which thc state agency designates a furthl
restriction.
(3) In the event thc property is not so used as required by (C)(I) and (2) and federal rcstrictions(B)( I) and (2) haveexpired then titleand right to thc
of such property shall at the option ofthe state agency revert to the State of California and the donee shall release such property to such person as the! shall dimct.
[Dl THE DONEE AGREES TO THE FOLLOWING TERMS, RESERVATIONS. AND RESTRICTIONS:
(I) From the date it receives the property listed hereon and through the pcriod(s) of time the conditions imposed by (B) and (C) above remain i
donce shall not sell. trade, lease, lend. bail, cannibalize, encumber. or otherwise dispose of such property. or remove it permanently. for Use outsii
without thc prior approval of GSA under (B) or the state agency under (C). The proceeds from any sale. trade, lease, loan, bailment. encumbran
disposal of the propcrty,whensuchactionisauthorizcd by GSAorby thestatcagcncy.shall beremitted promptly.by thedonee toGSAorthestatcag
caw may be.
(2) In the event any of the property listed hereon is sold, traded, leased, loaned, bailed. cannibalized, encumbered, or otherwise disposed of by the I
the date it rcccivcs the propcrty through the pcriod(s) of time the conditions imposed by (B) and (C) remain ineffect, without the prior approval of 1 rtatc agcncy.thedonce.artheoptionofGSA orthcstateagency,shall pay to GSAorthestatcagency.as thecasemay be, the procecdsofthcdisposa
market value or the fair rental valuc of the propcrty 81 the time of such disposal, as dctcrniincd by GSA or the slalc agtncy.
(3) If at any timc,from thcdatc it rcccivcsthc property throughthe pcriod(s)olrimcthccclnditions imposed hy(B)and(C) rcmainincffeCt,an)-oft
listed hcrcun i? no longcr suitable. usable. or further needed by the doncc for the purposc(s) for whichacquircd. the doneeshall promptly notify the st irndshall.asdircctcd hythcstatcapcncy, return the propertyto Ihestatcagency. relcase the propcrtytoanotherdonecoranothcrstatcagency oradel
agcncy of the tlnilcd Statcs. sell. or othcrwike dispose of the property. The proceeds from any sale shall bK remitted promptly by fire donee to the st
(4) Tlic donee shall niakc reports tu the stair agcnc-y on the use, condition. and location of the property listed hereon. and on other pertinent rnattci
required from time to time by the state agency.
(5) At the option of the state agency. the doncc may abrogate the conditions set forth in (C)and the terms. reservations.and restrictions pertinent th by payment of an amount as determined by the state agency.
(E) THE DONEE AGREES TO THE FOLLOWING CONDITIONS, APPLICABLE TO ALL ITEMS OF PROPERTY LISTED HEREON:
(I) The propcrty acquired by the donee is on an "as is," "whcre is" basis, without warranty of any kind.
(2) Whcrcadoncecarricsinsuranccagainsf damagestoor lossofpropertydue to fireor otherhazardsand whcrelossofordamage todonatedprc
uncxpircd tcrrns. conditions. reservations. or restrictions occurs, the stateagency will beentitled to reimbursement from the donceout of the insurancl of an amount equal to the unamortized portion of the fair value of the damaged or destroyed donated items.
(F) TERMS AND COND1710NS APPLICABLE TOTHE DONATION OF AIRCRAFT AND VESSELS (50 FEETOR MORE IN LENGTH] AN ACQUISITION COST OF 55.000 OR MORE, REGARDLESS OF THE PURPOSE FOR WHICH ACQUIRED:
The donation shall be subject to the terms. conditions, reservations. and restrictions set forth in the Conditional Transfer, Document execu authorized donee rcprescntative.
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INI"ED STATES OF AMERICA
BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
Transwestern Pipeline Company 1 1
V. 1 1
Corinne Grace 1
Docket No. GP89-42-000
MOTION OF CORINNE GRACE TO STRIKE, OR IN THE ALT"A"WE$ TO ANSWER THE ANSWER OF
TRA"PIPELINEC0MPANY
Pursuant to Rules 212 and 213 of the Commission's Rules of Practice and
Procedure,L' Mrs. Corinne Grace ("Mrs. Grace") hereby moves to strike the impennissi-
ble and untimely answer of Transwestern Pipeline Company ('Transwestern") in the
captioned proceeding.
Transwestern's answer is untimely, and Transwestern's allegations that it was not
served with Mrs. Grace's intervention and protest are incorrect. Moreover, the
Commission's Rules of Practice and Procedure do not permit answers to protests.
Finally, Transwestern's answer seeks to revise the legal theory underlying its petition.
Therefore, if Mrs. Grace's motion to strike is not granted, Mrs. Grace seeks
leave to answer Transwestern's answer, to the extent it argues new points not pre-
viously raised. In support of the relief sought, Mrs. Grace respectfully submits as
follows:
LJ 18 C.F.R. 88 385.212 and 385.213 (1988)
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L MOTIONTOSTRIKE
As Transwestern acknowledges, its answer was filed eleven days late. Trans-
western alleges that the deadlline for answers should be waived in this instance because
(i) it was not served with Mrs. Grace’s motion to intervene and protest, and (6) it
received the motion to intervene and protest of OXY USA Inc. (“OXY”) only some-
time after it had been received, because of a restructuring of Transwestern’s law
department. The second prong of the excuse does not constitute good cause, and the
first prong of the excuse is untrue.
Mrs. Grace served copies of her motion to intervene and protest on Trans-
western’s legal representatives designated on the Commission’s service list,;’ and
identified on Transwestern’s petition. These legal representatives are not identified on
Transwestern’s answer. Apparently, the law department restructuring Transwestern
mentions in its answer (Answer, at 1) has resulted in a substitution of counsel in this
case.
However, inasmuch as the substitution was (and is) not reflected on the service
list, Mrs. Grace sewed the appropriate persons. Possibly, as with the OXY protest,
Transwestern personnel failed to properly forward Mrs. Grace’s protest to the appro-
priate legal representatives. Counsel for Transwestern did not undertake to contact
counsel for Mrs. Grace to verify service.
L‘ A copy of the Commission’s service list generated August 23, 1989, is attached.
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In addition, Transwestern's answer is not permitted under the Commission's
'Rules of Practice and Procedure, which do not permit answers to protestsl Plainly,
Transwestern's answer does not challenge the interest or party status of either Mrs.
Grace or OXY, and thus cannot be said to answer the motions to intervene of either
Mrs. Grace or OXY. The sole purpose of the answer is to respond to the merits of
the positions advocated by Mrs. Grace and Oxy in their respective protests.
Transwestern offers nlo justification for answering Mrs. Grace's protest; it simply
lumps Mrs. Grace's protest together with OXY'S protest, which it finds it may answer
because OXY includes a prayer for relief, which Transwestern characterizes as a
motion. The Commission should reject this thinly-veiled attempt to circumvent the
Rules of Practice and Procedure.
When a party files a protest under Rule 211 to a petition to reopen, it is
evident that the party opposes the relief sought in the petition. This does not, in and
of itself, give rise to a right to answer. The fact that OXY included a prayer for relie
entirely consistent with its protest did not transform its protest into a motion, and doe:
not give rise to a right to answer.
For the foregoing reasons, Transwestern's answer should be stricken.
- 3/ See 18 C.F.R. 8 385.213(a)(2): "An answer may not be made to a protest. . . .I' -
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IL ANSWER
A. Transwestern's "Answer" In Fact Amends Its
Petition; Therefore, An Answer By Mrs. Grace
Is Appropriate.
Transwestern's reasons for filing its impermissible and untimely answer become
evident from even a casual scan.
Transwestern's answer is in fact an amended petition masquerading as an
answer. Transwestern provides an entirely new recitation of the facts giving rise to the
petition. In addition, Transwestern now suggests, for the first time, that it sought only
a reopening of the continuing stripper well determination rather than an order
reopening a vacating the determination. ComDare Transwestern's petition, at 8,
which seeks both reopening and vacation of the determination, and Transwestern's
answer, at 5 and 14, which quotes and relies on the requirements for reopening on1y.i'
Further, Transwestern's petition asserted that Mrs. Grace's 1985 application for
continuing stripper well qualification contained a misstatement of material fact, thus
justmg reopening. Now, for the first time, in its answer, by contrast, Transwestern
asserts that Mrs. Grace's application contained both a misstatement of fact and an
omission of fact. Curiously, Transwestern refers to the same "fact" in both instances,
suggesting that a misstatement of fact implicitly omits the purportedly true "fact."
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under the Commission's Regulations for reopening a well category determination.
As discussed more fully below, Transwestern has failed to satisfy the standards
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ComDare Transwestern's petition, at 2, with Transwestern's answer, at 5, 8-9. More-
over, in its answer Transwestern argues for the first time (and erroneously) that the
New Mexico statute defining the term "reservoir" is not consistent with the definition
contained in the NGPA, and that Transwestern's contrived inconsistency can somehow
invalidate the final action which Transwestern seeks to disturb so tardily. & Trans-
western answer, at 10-11.
For the foregoing reasons, it is obvious that Transwestern's "answer" is not an
answer under Rule 213, but in fact an amendment to its petition, and a rather
substantial amendment at that. Unless Transwestern's answer is stricken, Mrs. Grace
should be permitted a further opportunity to respond.
B. Mrs. Grace's Continuing Qualification
Application Was Accurate When Submitted
And Remains Accurate Today
The controversy here concerns Mrs. Grace's February 14, 1985 application for
continuing stripper well qualification for the City of Carlsbad No. 1 Well, under Sectio
108 of the Natural Gas Policy Act of 19785' and Section 271.805 of the Commission's
Regulations/ Mer Mrs. Grace performed certain "recognized enhanced recovery
techniques," as defined in Section 271.803(a), the production level from the City of
Carlsbad well exceeded the permissible stripper well level, and the Oil Conservation
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15 U.S.C. 0 3318 (1982)
18 C.F.R. 9 271.805 (1988)
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Division of the State of New Mexico Department of Energy and Minerals (“the New
Mexico Commissiontt) and this Commission determined that the City of Carlsbad well
met the requirements for continuing stripper well qualification.
As explained in Mrs. Grace’s Motion To Intervene And Protest, Mrs. Grace’s
1985 application contained all data and information necessary for the jurisdictional
agency to determine that the City of Carlsbad No. 1 Well qualified for continued
stripper well status. & Motion To InteIvene And Protest, at 9-13. Transwestern’s
Answer mischaracterizes Mrs. Grace’s arguments and the cited authority, and should
not be accorded any weight.
Transwestern’s answer, at 7, states that Mrs. Grace’s protest argued that even if
the 1985 application contained a misstatement, the New Mexico Commission and this
Commission did not rely on the misstatement. Mrs. Grace made no such argument.
On page twelve of Mrs. Grace’s Motion To Intervene And Protest, Mrs. Grace
indicates that New Mexico independently evaluated the data concerning City of
Carlsbad No. 1, and concluded that the well qualified for continued stripper status.
There is no suggestion that the data submitted by Mrs. Grace were in error.
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The Commission found in Mob@ and ANRY that final well determinations
would be disturbed only where factual errors were made that could have been avoided
if the applicants had thoroughly investigated their files, accurately conducted tests and
measurements, or correctly interpreted applicable regulations. Mobil, 34 FERC at
61,359. Transwestern’s characterization of the Mobil and ANR holdings (Transwestern
Answer at 6) is too limited. Transwestern has not shown that Mrs. Grace’s continued
stripper well application contained any inaccurate statements, was incomplete or
misconstrued the applicable regulations. Transwestern bases its challenge to the final
determination of the City of Carlsbad No. 1 on its own belated, self-serving analysis of
the data in the application. There are no new facts.
The Transcontinental Gas Pipe Line proceeding referred to by Transwestern
(Answer at 6) provides further support for Mrs. Grace’s position. Although the
Commission initially issued an ordes’ reopening its determination that the C&K Marin
Production Company No. A-3 well qualified under Section 107(c)(l) of the NGPA,E’
the Commission ultimatelv found, in an order not cited by Transwestern, that the well
21 Mobil Oil Exploration and Producing Southeast Inc., 34 FERC Q 61,211 (1986).
- e’ ANR Pipeline Company v. Conoco Inc., 40 FERC ll 61,278 (1987), reh’g denied,
43 FERC ll 61,061 (1988), aff‘d sub nom., ANR Pipeline Co. v. FERC, 870 F.2d 717
(D.C. Cir. 1989).
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E‘ 15 U.S.C. 6 3317(c)(1)
45 FERC 7 61,018 (1988)
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- did qualifv. Transcontinental Gas Pipe Line Cornoration, 46 FERC ll 61,263 (1989).
The Commission found that the evidence which appeared to contradict the accuracy oi
the original determination was incorrect, deferring to the conclusion of the Minerals
Management Service, "the jurisdictional agency responsible for making such determina-
tions." 46 FERC at 61,774.
By comparison, Transwestern's allegation with respect to City of Carlsbad No. 1
lacks any meaningful factual support. Transwestern's argument is supported solely by
its contention that Mrs. Grace was incorrect in her characterization of the recognized
enhanced recovery work. Transwestern Answer, at 10-1 1. Transwestern's argument
does not dispute the facts. Instead, Transwestern disputes Mrs. Grace's, New Mexico's
and this Commission's analysis and findings with respect to those facts. As such,
Transwestern's position cannot form the basis for a petition to reopen.
Transwestern's argument (at 7) that "[tlhe Commission has issued reopening
orders where well category determinations were based on incomplete or inaccurate
data, miscalculations, neghgent omission, errors or untrue statements" is irrelevant to
- this proceeding. Thus, the cases cited by Transwestern (Answer at 7) are similarly
irrelevant. In Northwest Central Pipeline Comoration, 27 FERC ll 61,196 (1984), the
Commission vacated four Section 108 well determinations based upon a finding that th
operator's applications mistakenly stated all of the calendar days in the ninety-day
production period constituted production days, when in fact the subject wells were shu
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in by certain line valves under the control of the purchasing pipeline during the ninety-
day production period. Upon learning of the shut-in, the producer agreed to withdraw
its Section 108 applications.
In Railroad Commission of TexasBhell Oil ComDanv, 23 FERC ll 61,331 (1983):
the operator petitioned to reopen and vacate four well category determinations under
NGPA Section 108; based upon inadvertent clerical errors -- with respect to three of
the wells, production data were incorrectly referenced with the wells’ lease identificatioj
numbers; with respect to the fourth well, the application reflected only the operator’s
share of production, not total wellbore production. In State of Ohio/Resource Explora
tion, Inc., 15 FERC ll 61,224 (1981) the Commission vacated five Section 108 well
determinations following disclosure that production from the five wells had been imper
missibly averaged to calculate the production rate.
Northwest Central, Shell Oil and Resource Exploration do not support the
outcome urged by Transwestern. Each of these cases concerns questions of objectively
ascertainable fact. Transwestern’s challenge to the City of Carlsbad Section 108
determination, by contrast, rests on the New Mexico Commission’s intemretation and
analvsis of facts, in reaching the determination that the well did not penetrate a “new
reservoir,’’ as defined in the NGPA. The cases cited by Transwestern do not address
such a situation.
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In summary, neither Transwestern's petition nor its answer create the appear-
ance of a misstatement of fact.
C. Mrs. Grace Did Not Omit A Material Fact In Her Application For Continuing Stripper Well Qualification.
Transwestern argues in its answer that Mrs. Grace "omitted" a "material fact"
from her 1985 continuing qualification application, by allegedly "failing" to "disclose"
that the City of Carlsbad well was completed into a "new reservoir." However, Mrs.
Grace's application did not omit or misstate any facts. Transwestern's contention that
Mrs. Grace omitted a material fact from the 1985 application is nothing more than a
restatement of the flawed "misstatement" argument discussed above.
More significantly, Transwestern suggests for the first time in its answer that the
New Mexico statute upon which the New Mexico Commission relied in finding that the
City of Carlsbad well qualified for continuing stripper classification is "inconsistent'' witl
the NGPA Transwestern Answer, at 11. However, the statutory provision quoted by
Transwestern contradicts Transwestern's argument. Section 70-2-33, N.M.S.A. 1978
Comp., defines a "pool" as an "underground reservoir," and states that the terms are
synonymous. The definition in the New Mexico statute, as applied in this case, is
entirely consistent with the NGPA definition of "reservoir."
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Transwestern argues that because of pressure differentials between the previous
completion locations and the new completion locations, this Commission and the New
Mexico Commission were and are compelled to find that the new completion location
is completed in a new reservoir. However, as the jurisdictional agency and courts haw
found since 1975, and as Mrs. Grace has pointed out repeatedly (and as Transwestern
is well aware), the Carlsbad-Morrow Formation is a single-pressure-system formation,
interrupted by a number of stringers. See Mrs. Grace’s Motion To Intervene And
Protest, at 14-16. The affidavits attached to Mrs. Grace’s petition bear this out. The
geological facts, the findings of the New Mexico Commission, and the review and
approval of this Commission under the NGPA Section 503 procedures were and are
well-supported and entirely consistent with both the applicable definition in the NGPA
and the New Mexico statute.
Transwestern (Answer, at 7-8) quotes from Colorado Oil and Gas Conservation
Commission, 28 FERC ll 61,247 (1984), apparently to support the proposition that the
FERC rubber-stamps all determinations forwarded from jurisdictional agencies under
Section 503. Transwestern’s suggestion is erroneous. This Commission reviews the
records developed by the jurisdictional agency pursuant to established doctrines of
appellate review, and remands and reverses determinations where it makes the
necessary findings under the statute. This Commission does not rely on the jurisdic-
tional agency to the extent of abdicating its review function, as Transwestern suggests.
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As the Commission stated in the portion of its discussion in Colorado Oil and Gas
Consemation Commission that immediately precedes the portion quoted by Trans-
western,
The 45-day review period provided for in 0 275.202(a) is not a "waiting"
period, but a review period, during which the Commission Staff analwes
the determinations received from the jurisdictional agency to ensure that
the applications complv with the NGPA and the Commission's regulations
28 FERC at 61,468 (emphasis added). Thus, the portion of the Commission's order
quoted on page eight of Transwestern's Answer does not mean, as Transwestern
suggests, that the Commission was too busy to analyze New Mexico's determination
that City of Carlsbad No. 1 qualified as a continuing stripper well.
Transwestern is presently seeking a buydown under the sales contract with Mrs.
Grace, and has apparently adopted a strategy geared toward extending the pendency 0:
its petition to reopen through supplementation in the hope of generating pressure on
Mrs. Grace to settle. This Commission should not permit a party to use the reopening
procedures in this manner.
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WHEREFORE, for the foregoing reasons, Mrs. Grace moves to strike Trans-
western’s answer, or in the alternative, for leave to answer Transwestern’s answer.
Respectfully submitted,
Ernest L Padilla
Padilla & Snyder
Post Office Box 2523
Santa Fe, New Mexico 87504
Gary W. Davis
Crowe & Dunleavy
1800 Mid-American Tower
20 North Broadway
Oklahoma City, Oklahoma 73102
/ /- . /- A By: <c<Tb~ /b L ’’/~~,~~
Carroll L. Gilliam 1’
Kevin M. Sweeney
Frank H. Markle
Grove, Jaskiewicz, Gilliam and Cobert
1730 M Street, N.W.
Suite 501
Washington, D.C. 20036
(202) 296-2900
Attorneys for
CORINNE GRACE
August 31, 1989
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CERTIFICATE OF SERVICE
I hereby cemfy that I have this day served the foregoing document upon eacl
person designated on the official service list compiled by the Secretary in this proceedin€
Dated at Washington, D.C., this 31st day of August, 1989.
fl&%.& /
Kevin M. Sweeney
Grove, Jaskiewicz, Gilliam
and Cobert
1730 M Street, N.W.
Suite 501 Washington, D.C. 20036
(202) 296-2900
m m I.
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
) Transwestern Pipeline Company )
) V. ) Docket NO. GP89-42-000
1 Corinne Grace 1
1
ANSWER OF TRANSWESTERN PIPELINE COMPANY
TO MOTIONS TO STRIKE OF CORINNE GRACE AND OXY USA INC.
Pursuant to Rule 213 of the Rules of Practice and Procedurt
of the Federal Energy Regulatory Commission (Commission), 18
C.F.R. S 385.213, Transwestern Pipeline Company (Transwestern)
hereby files its response to the Motions to Strike of Corinne
Grace (Grace) and OXY USA Inc. (OXY) in Docket No. GP89-42-000.
I. PROCEDURAL BACKGROUND
On May 22, 1989, Transwestern filed a petition to reopen a
well category determination made by the Oil Conservation Divisi
of the State of New Mexico (Petition). On July 27, 1989, Grace
and OXY, both working interest owners in the subject well, file
motions to intervene and protests in the proceeding. In
addition, OXY requested that the Commission summarily dismiss
Transwestern's May 22, 1989 Petition. On August 22, 1989,
e w
1
Transwestern responded to the request for summary dismissal .A/
Thereafter, Grace and OXY filed Motions to Strike Transwestern'z
August 22, 1989 Answer.- 2/
In purported support of their Motions to Strike, Grace and
OXY, collectively, argue that Transwestern was served with a COI
of Grace's July 27, 1989 Motion to Intervene and Protest, and
that the pleading filed by OXY on July 27, 1989 did not warrant
response by Transwestern. Grace also argues that Transwestern':
August 22, 1989 pleading substantially amends its May 22, 1989
Petition filed in the instant docket..?'
As is more fully developed below, Transwestern's August 22
1989 pleading was an answer to a motion for summary disposition
the filing of which is permitted by Rule 213 of the Commission'
Rules of Practice and Procedure. Moreover, for the reasons set
- 1/ Transwestern's August 22, 1989 Answer was filed 11 days ou of time. Transwestern did not receive service of Grace's motio and did not become aware of its filing until August 14, 1989, a
is more fully discussed herein at pages 3-4. In addition, the recent reorganization of the Transwestern Legal Department
2/ Grace filed its Motion to Strike on August 31, 1989. OXY 'Tiled several days later, on September 6, 1989.
- 3/ In her Motion to Strike, Grace cites as new support for he position Transcontinental Gas Pipe Line Corporation, 46 F.E.R.C
7 61,263 (1989). Yet, a cursory review of th e Commission's decision in Transcontinental reveals that it lends further support to Transwestern, not Grace. Although the Commission determined in Transcontinental (after reopening the subject we1 category determination) that the well qualified for the well category originally designated, it did so only after the state agency disclosed to the Commission that it was aware of the contradictory factual data submitted by the petitioner with it: application, and had relied on certain data, and disregarded other data, in making its well category determination. - Id. a1
resulted in the delayed transmission of OXY'S motion.
61,773-74.
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I
forth in the affidavits attached hereto, Transwestern believes
good cause exists for the filing of its August 22, 1989 pleading
out of time. Finally, and most importantly, Transwestern's May
22, 1989 and August 22, 1989 pleadings advance consistent legal
and factual premises, both of which provide ample justification
for the reopening and vacation of the well category determinatio
in question.
11. DISCUSSION
A. Transwestern's August 22, 1989 Filing Was Proper In All Respects.
1. Transwestern Did Not Receive Grace's July
27, 1989 Motion To Intervene and Protest.
In its Motion to Strike, Grace asserts that the persons
designated to receive service on behalf of Transwestern in this
proceeding were served with Grace's July 27, 1989 Motion to
Intervene and Protest, and that Transwestern's statement to the
contrary is "untrue". Grace Motion at 2. Transwestern does not
dispute that Grace deposited its pleading in the mail for servic
to the parties designated on the service list compiled by the
Secretary of the Commissison in this proceeding. However, as
evidenced in the attached affidavits, the persons designated to
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receive service on behalf of Transwestern did not receive Grace'
July 27, 1989 pleading.&'
-
It was not until August 14, 1989, after the expiration of
the 15-day response period provided under the Commission's
procedural rules, that Transwestern became aware of Grace's
July 27, 1989 filing. Because Transwestern's inability to
respond within the 15-day time period was due solely to the fact
that it did not receive Grace's filing, Transwestern believes
good cause exists for the acceptance of its August 22, 1989
pleading out of time.
2. OXY Is July 27, 1989 Request For Extraordinary Relief Gave Rise To A Right To Respond
OXY, in its July 27, 1989 filing, moved for the summary
dismissal of Transwestern's petition.?'
suggest that OXY'S request for extraordinary relief in the form
of summary dismissal procedurally does not permit a response frc
Transwestern. Yet, their argument is inconsistent with the
- 4/ The service list compiled by the Secretary of the Commissic in this proceeding designates both Cheryl M. Foley and Jane E. Wilson as the appropriate Transwestern representatives for the receipt of service. Cheryl M. FQhy is no longer associated wi' Transwestern. Upon her absence, however, Senior Counsel Rockfo
G. Meyer was charged with reviewing all incoming mail addressed
to Ms. Foley. As is reflected in the affidavit which accompanil Transwestern's answer, Mr. Meyer has stated under oath that at
Protest. In addition, Jane E. Wilson has stated under oath tha she was not served with a copy of Grace's Motion to Intervene a Protest (see - attached affidavit).
5/ See OXY Protest at 7 ("For the reasons set forth above, Ox Eerebyrotests Transwestern's Petition and requests same be summarily dismissed. I( )
Both Grace and OXY
time did he receive a copy of Grace's Motion to Intervene and
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procedural rights accorded to parties under the Commission's
Rules of Practice and Procedure. A request for summary
disposition is a request for affirmative, and extraordinary
relief. Rule 213 of the Commission's procedural rules permit th
filing of answers to such motions.d/
- 6/ 18 C.F.R. 5 385.213. In denying a motion to strike an answer to a motion for dismissal, the Commission in North Carolina Municipal Power Agency No. 1, 40 F.E.R.C. 7-38
(1987) stated: "Rule 213 does not bar answers to motions for dismissal. Furthermore, we feel that it is in the public interest to permit [the North Carolina Municipal Power Agency] t raise all salient issues at the pleadings stage of these proceedings." - Id. at 61,404.
OXY argues that its request for summary dismissal is of no
moment, and that because it was included as part of its protest, did not permit Transwestern to respond. However, it is well- settled that the contents of a pleading prevail over its title.
, Lee v. United States, 501 F.2d 494, 500 (8th Cir. 1974 =Y ("We ook to the 'essence ot [the petitioner's] complaint and dc so without controlling reference to the label or title of his pleadings....f") (quoting Booker v. State of Arkansas, 380 F.2d
240, 242 (1967); Public Service RY Co. v. Herde, 229 F 902 (191E ("[T]he form of an action and th e rights and li abilities of parties are not controlled by the title of the suit. They are determined by the disclosures of the pleadings. And so the character in which a party sues or is sued is determined from tk body of the pleading and not from the caption of the suit.") Reviewing entities are obligated to look beyond the labels attached to pleadings by their drafters.
Even in situations in which the Commission's procedural rules prohibit the filing of responsive pleadings, the Commissic has permitted the filing of such pleadings where the regulatory decision-making process would benefit by doing so. See Bucke e Pipe Line Company, L.P., 45 F.E.R.C. 1 61,046 (1988)TWd
' Buckeye's pleading technically constitutes a prohibited answer, and ATAIs limited reply also exceeds the scope of pleadings allowed by our rules, we will consider both pleadings. Good
cause exists for permitting consideration of these pleadings. They help explicate issues that are important to this proceedinc and that may have an impact on the course of the Commission's regulatory oversight of other . . . proceedings. Further, ATA
will not be prejudiced because it has responded. ATA's motion
strike will be denied.") - Id. at 61,160.
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B. Transwestern's August 22, 1989 Pleading Does Not Reflect Shifts In Position
Grace asserts that Transwestern's May 22, 1989 and August
22, 1989 filings contain inconsistent prayers for relief, and
that Transwestern raises legal theories in its August 22, 1989
Answer not reflected in its May 22, 1989 petition.l/ A review 0
the documents at issue reveals the inadequacy of Grace's
contentions.
1. Transwestern Has Sought Consistent Commission Re1 i ef
Contrary to Grace's assertion, Transwestern has not sought
to amend its prayer for relief in any manner.
page of Transwestern's August 22, 1989 pleading cited by Grace
(in support of her allegation that Transwestern's August 22, 198
pleading requests that the Commission grant relief different the
Surprisingly, the
that requested by Transwestern in its May 22, 1909 Petition)
contains the following language:
WHEREFORE, Transwestern respectfully requests that the Commission . . . grant the relief
souqht by Transwestern in its Petition to Reopen Well Category Determination fix ed May
- 7/ "reformulate[d] the legal theories and factual allegations behi! its initial Petition."
muster support for its allegation. Its entire discussion on th
OXY, too, alleges in its Motion that Transwestern has
OXY, however, does not even attempt to
issue Consists of the lone conclusory statement quoted above,
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22, 1989 in Docket No. GP89-42-000.8' [Emphasis added. ]
In tying its August 22, 1989 request for relief directly to its
Petition, Transwestern could not have prayed for more
"consistent" relief.
2. Transwestern's August 22, 1989 Pleading Does
Not Reflect New Legal Theories.
Grace argues that Transwestern for the first time on August
22, 1989 raised the following two legal theories in support of
the reopening of the well category determination in dispute: (1
that Grace's 1985 application for continuing stripper well
qualification contained an omission of material fact, and (2)
that the state and federal regulatory schemes are not consistent
Neither prong of Grace's argument has merit.
In its August 22, 1989 filing, Transwestern demonstrated
that Grace omitted from her application for continued stripper
well classification a material fact that would have, if dis-
closed, prevented her statement -- that the drilling activity
commenced to increase the well's production did not result in tk
perforation of a new reservoir -- from being misleading. Specif
ically, Transwestern noted that the material fact omitted by
Grace was that her use of the term "reservoir" was based on
- 8/ Transwestern's August 22, 1989 Answer at 4.
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a pooling order of the State of New Mexico.
sistent with the arguments raised in Transwestern's Petition:
As an explanation for [Grace's] statement that the same reservoir was perforated in 1985 the producer
agencies] that a New Mexico Oil Conservation Commission prorationing order is dispositive of the pricing dispute.?/
Similarly, Transwestern's presentation, in its August 22,
This is fully con-
has represented to Transwestern [not the reviewing
1989 filing, that the New Mexico State Conservation order is
inconsistent with federal statutes and regulations follows
directly from language found in Transwestern's May 22, 1989
Petition:
Transwestern's position is that a producer cannot look to an order emanating (from] a state
conservation proceeding to make a well
Federal Energy Regulatory Commission regulations, not a state prorationing order, must be consulted to determine whether Corinne Grace recompleted the City of Carlsbad #l .E/
determination for purposes of NGPA pricingl The
As demonstrated above, the arguments advanced by Grace are
nothing more than an improper attempt to safeguard its continued
collection of the higher Section 108 price.- 11/
- 9/
- 10/ - Id. at 6.
11/ As set forth in Transwestern's Petition at 7-8, Grace's Gilure to correctly state the material facts in applying for continued Section 108 well category status has resulted in
overpayments to Grace in the approximate amount of $4,461,992.8
Transwestern's Petition at 4.
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111. CONCLUSION
WHEREFORE, Transwestern respectfully requests that the
Commission deny, in their entirety, the "Motion of Corinne Grace
to Strike, or in the Alternative, to Answer the Answer of Trans-
western Pipeline Company" filed August 31, 1989, and the "Motion
of OXY USA Inc. to Strike Answer of Transwestern Pipeline
Company" filed September 6, 1989 in Docket No. GP89-42-000.
Respectfully submitted,
TRANSWESTERN PIPELINE COMPANY
By :
Akin, Gump, Strauss, Hauer & Feld
1333 New Hampshire Avenue, N.W. Washington, D.C. 20036
(202) 887-4000
Of counsel:
Sherrie N. Rutherford Senior Counsel Arden S. Moran Attorney Ray J. Alvarez
Transwestern Pipeline Company
P. 0. Box 1188
Houston, TX 77251-1188
September 15, 1989
Attorney
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UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY cOMMlSSI6N
BEFORE THE
AFFIDAVIT
TRANSWESTERN PIPELINE COMPANY S Docket No. GP89-42-000
STATE OF TEXAS
COUNTY OF HARRIS
SS
Rackford G. Meyer, being first duly sworn, on oath, state that he is Senior Counsel of Transwestern Pipeline Compan
( lICompany1* ) .
Rockford G. Meyer further states that during th reorganization of the Company's Legal Department that accompanie Cheryl Foleyls departure from the Company, he was to review (an is to continue to review) all incoming documents addressed t Cheryl Foley at the Company's offices, and that he did not receiv a copy of the "Protest and Motion to Intervene of Corinne Grace t Petition to Reopen Well Category Determination'* which was file with the Federal Energy Regulatory Commission by Corinne Grace c
July 27, 1989.
<-<
SUBSCRIBED and SWORN to before me, the undersigned Notary Publ: this 11th day of September, 1989.
Notary Public in and fo:
the State of Texas
My commission expires: -
0 *
UNITED STATES OF AMERICA
BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
AFFIDAVIT
TRANSWESTERN PIPELINE COMPANY § Docket No. GP89-42-000
STATE OF TEXAS
COUNTY OF HARRIS ss
Jane Wilson, being first duly sworn, on oath, states that SI- is an attorney in the Legal Department of Transwestern Pipelir Company, and is the same Jane Wilson who caused a copy c Transwestern Pipeline Company's "Petition to Reopen Well Categoi Determinationg1 in the! above-entitled proceeding to be served upc Corinne Grace.
Jane Wilson further states that she was an individuz designated for service on July 27, 1989 in the above-entitlG proceeding and that she did not receive a copy of the IIProtest a1 Motion to Intervene of Corinne Grace to Petition to Reopen We: Category DeterminationI1 which was filed with the Federal Enerc
Regulatory Cammissiari by Corinne Grace on July 27, 1989.
.. TLu 4&%c/
Jane Wilson
SUBSCRIBED and SWORN to before me, the undersigned Notary Pub1 this 11th day of September, 1989. E w GkY r %-
Notary Public in and for the State of Texas
My commission expires:
* m
CERTIFICATE OF SERVICE
I hereby certify that I have on this 15th day of September,
1989, served the foregoing document upon each person designated
on the official service list compiled by the Secretary of the
Federal Energy Regulatory Commission in this proceeding.
Dated this 15th day of September, 1989 in Washington, D.C.
AKIN, GUMP, STRAUSS, HAUER f FELD
1333 New Hampshire Avenue, N.W. Washington, D.C. 20036
(202) 887-4000
w m
UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION
.$
1 Transwestern Pipeline Company 1 1 Docket No. GP89-42-00( V. 1 1
Corinne Grace 1 1
ANSWER OF TRANSWESTERN PIPELINE COMPANY TO MOTIONS OF CORINNE GRACE
AND OXY USA INC.
Pursuant to Rule 213 of the Rules of Practice and Procedu
of the Federal Energy Regulatory Commission (v*FERCtl or
llCommissiongt), 18 C.F.R. § 385.213, Transwestern Pipeline Comp
( lrTranswestern'l) hereby files its response to the motions file
by Corinne Grace (IlGraceIl) and Oxy USA Inca (IrOxyl1) in the aba
docketed pr0ceeding.u
I.
PROCEDURAL BACKGROUND
On October 21, 1983, Grace, the operator of the City of
Carlsbad No. 1 gas well located in the Morrow Formation, Eddy
lJ Grace's pleading, entitled IIProtest and Motion to Intervc of Corinne Grace ts Petition to Reopen Well Category Determinationll was filed July 27, 1989. Oxy's pleading, also
filed July 27, 1989, although similarly entitled (i.e., llProtc and Motion to Intervene of Oxy USA, Inca1'), included a motion
extraordinary relief -- the summary dismissal of Transwestern
May 22, 1989 Petition to Reopen Well Category Determination. Transwestern recognizes that the 15-day time period allowed fc answers to motions under the Commission's rules has elapsed, : good cause exists to permit Transwestern to respond out of til
Transwestern was not served with Grace's motion, and did not
become aware of its filing until August 14, 1989. In additio
the recent reorganization of the Transwestern legal departmen
e resulted in the delayed transmission of Oxy's July 27, 1989 motion. In light of the failure of service and the request f extraordinary relief in the form of summary dismissal, Transwestern believes that acceptance of its late-filed answe in the public interest and necessary and appropriate in the
administration of the Natural Gas Policy Act of 1978.
@ w
A County, New Mexico, filed with the Oil Conservation Division o!
the State of New Mexico Department of Energy and Minerals ("thc
New Mexico Agencyn1) an application for stripper well
classification of the City of Carlsbad No. 1 well under Sectio
108 of the Natural Gas Policy Act of 1978 (NGPA). Because the
New Mexico Agency determined that production from the well had
declined to below the statutory limit of 60 Mcf per production
day, it approved Grace's application for Section 108 status fc
the well.
Subsequent to the Section 108 determination, Grace comer,
efforts to increase production from the City of Carlsbad No. 1
well.
60 Mcf per production day, Grace filed an application with the
New Mexico Agency requesting that the well continue to receive
the Section 108 price. In her application, Grace represented
the New Mexico Agency that the improved production from the WE
was the result of a "recognized enhanced recovery technique1@ i
that term is used in Section 108(b)(2) of the NGPA. Grace stz
that the actions performed to increase production from the Cit
of Carlsbad No. 1 well did not perforate a reservoir differeni
from the reservoir being produced at the time the Section 108
status was granted originally, thereby making the continuatior
the Section 108 classification permissible.
The New Mexico Agency approved Grace's application on
Although such efforts resulted in production in excess
October 28, 1985, and thereafter transmitted the determinatioi
the FERC for review. Under the NGPA, the state agency's
determination becomes final unless the FERC reverses or remanc
the determination within 45 days of receipt. Because the
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b Commission did not reverse or remand the October 28, 1985
determination of the New Mexico Agency within the statutory ti!
period, it became final ont December 3, 1985.
On May 22, 1989, Transwestern filed a petition in the abo
referenced proceeding in which it requested the Commission to
reopen and vacate its 1985 SeGtion 108 stripper well
classification of the City of Carlsbad No. 1 gas well, and
determine that the well qualified instead for the Section 104
price. In support of its petition, Transwestern made a two-pz
demonstration. First, Transwestern demonstrated that Grace's
1985 application for continued Section 108 status contained a
misstatement of material fact (i.e., that the activity commenc
to increase production from the well was confined to the same
reservoir from which the well produced at the time of the
original Section 108 determination). Second, Transwestern
demonstrated that the grant of continued Section 108 status b:
the New Mexico Agency and the FERC was made in reliance on
Grace's material misstatement that the drilling activity
commenced by Grace to increase production did not result in t
penetration of a new reservoir. Specifically, Transwestern
explained that what Grace characterized in her application fo
continued Section 108 wellhead price ceiling category
determination as an enhanced recovery technique not involving
perforation of a new reservoir was, in fact, a well recomplet
which involved the perforation of a reservoir separate and
distinct from the reservoir being produced when the initial N
Section 108 determination was made.
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Both Grace and Oxy moved to intervene in the proceeding an
protested Transwestern's petition to reopen the well category
determination. In addition, Oxy requested the Commission to
summarily dismiss Transwestern's petition. In large part, the
arguments made by Grace and Oxy in their motions are the same.
Collectively, they make the following three allegations: (1)
that Transwestern has not met the statutory requirements for tl
reopening of the well category determination; (2) that the New
Mexico Agency's determination that the entire Morrow Formation
in which the City of Carlsbad No. 1 well is located, was one It(
poolt1 should dictate a finding that Grace's production actions
did not result in the penetration of more than one Itreservoirtt
that term is defined under the federal regulations a; and (3)
that Transwestern's petition to reopen the well category
determination is tardy and nothing more than a Itnegotiating
ployt1 which should be casually dismissed by the FERC. As is m
fully set forth below, none of the arguments made by Grace and
Oxy has merit.
I1 . DISCUSSION
A. Transwestern Ha s F'ullv Satisfied The Statutory R eauiremen For ReoDeninu - F inal Well Cateuorv Determinations.
The protestants contend that Grace made no misstatement c
material fact in her application for continued stripper well
status of the City of Carlsbad No. 1 well. They further argue
that even if she had made a misstatement of material fact, thc
2/ This argument is made by Grace only.
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New Mexico Agency did not rely on it in granting continued
Section 108 status. Neither argument is persuasive.
All that is required 'under the NGPA to reopen a well
category determination is the appearance that (1) the FERC or
state jurisdictional state agency relied on an untrue statemen
of material fact in making the determination, or (2) a stateme
of material fact was omitted that, if made, would have prevent
the statements reflected in the application from being
mis1eading.u
reopening of the well determination under either prong.
The evidence in the instant docket supports the
1. Grace Made An Untrue Statement Of Material Fact That Was Relied UDon In Makinu The Section 108 Determination.
The statement in Grace's 1985 enhanced recovery applicatj
that "the new perforations are within the same reservoir as tk
well was producing from prior to the commencement of remedial
3J The grounds for reopening a well category determination i set out in 18 C.F.R. 5 275.205 as follows:
Procedure for reopening determinations.
(a) Grounds. At any time subsequent to the time a determination becomes final pursuant to this
subpart, the Commission, on its own motion, or in response to a petition filed by any person
determination, may reopen the determination if it appears that:
aggrieved or adversely affected by the
(1) In making the determination, the Commission or the jurisdictional agency relied on any untrue statement of material fact; or
(2) There was omitted a statement of
material fact necessary in order to make the statements made not misleading, in light of the circumstances under which they were made to the jurisdictional agency or the Commission.
-5-
e - work activitiesf1 is untrue. The factual data which demonstrate
that a new reservoir was perforated is set forth in detail in
Attachment 2 to Transwestern's May 22, 1989 Petition.
Grace and Oxy rely on the Commission's decisions in Mobil
Oil ExDloration and Producinu Southeast Inc. and ANR Pipeline
CornDan& as support for their assertion that no material fact!
in Grace's application were misrepresented or omitted. Neithe:
decision is apposite to the case at hand. The Commission fount
in Mobil and m, that information which becomes available
subsequent to a final well determination is not a sufficient
basis upon which to seek reopening of the determination where
well category determination application is correct and complet
at the time the determination is made. In the instant case, t
application filed by Grace for continued Section 108 status wa
incorrect and incomplete at the time of the determination,
thereby warranting the reopening of the determination. The
Commission's finding in Transcontinental Gas Phe Line Conmany
45 F.E.R.C. 7 61,018 (1988) is analoyous to the situation
presented in this proceeding. In Transcontinental, the
Commission found that the producer's application may have
contained an untrue statement of material fact regarding the
depth of the well in question, and held that the potential unt
statement was one of material fact which constituted good caw
to reopen the well category determination.
a u Mobil Oil Emloration and Producina Southeast Inc ., 34 F.E.R.C. '1 61,211 (1986) (**Mobill*); ANR P' LD e line ComDanv v.
Conoco Inc., 40 F.E.R.C. 7 61,278 (1987), yeh I q den ieq, 43
F.E.R.C. q 61,061 (1988), aff'd sub nom. ANR Pipel ine Cornpan:
v. F.E.R.C., 870 F.2d 717 (D.C. Cir. 1989) (ttmtt).
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The Commission has issued reopening orders where well
category determinations were based on incomplete or inaccurate
data, miscalculations, negligent omission, errors and untrue
statements. See Mobil; Northwest Central PiPeline CorD., 27
FERC lJ 61,196 (1984); Railroad Commission of Texas, Section 10:
NGPA Determinations, 23 FERC 7 61,331 (1983); State of Ohio,
Section 108 NGPA Determinations, 15 FERC 7 61,224 (1981). The
Commission in these cases not only noted that the factual err0
made that required reopening could have been avoided had the
applicable regulations been correctly interpreted, but also
recognized that compliance with the regulations is within the
control of the applicant. a, e.a., Mobil.
Grace and Oxy pursue their argument by asserting that eve
if Grace made an untrue statement in her application for
continued Section 108 status, the New Mexico Agency did not re
on the untrue statement in making its determination. What Gra
and Oxy fail to recognize, however, is that Section 503(d) of
NGPA (15 U.S.C. 5 3413(d)) calls for the reopening of well
category determinations where there is reliance by either the
federal or state jurisdictional agency. Thus, to suggest that
the absence of reliance by the New Mexico Agency (assuming foi
the sake of argument only that there was no state reliance) b;
reopening of the determination is without merit.
In Colorado Oil and Gas Conservation Commission, 28 F.E.1
1 61,247 (1984), Geo Dyne, a gatherer-reseller protested the
reopening of five well category determinations arguing that t:
record in the well determination proceeding contained no show
of reliance. There, the existence of a payback provision in
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gas purchase contract amendment between the producer and
gatherer-reseller, (evidence that the well did not qualify as
production enhancement gas) was omitted from the production
enhancement application. In rejecting Geo Dyne's argument, thc
Commission stressed that in its review process, it necessarily
relies on the statements made in the applications before it:
Due to the large volume of applications, the Commission cannot conduct a de novo review of each
determination, but must merely review the jurisdictional agency's record to ensure that substantial evidence in the record supports the determination, that the Commission's public files contain no information contradicting that contained in the application, and that the requirements of the Commission's regulations are met. This type of review is clearly what the NGPA contemplates. See NGPA section 503 (b) (1) and (2). It is inherent in such review procedures that the
Commission must rely on the statements contained in the amlications. [Emphasis added.]
In short, the nature of the review process performed by the FE
is such that the Commission, of necessity, relied upon the unt
statement made in Grace's application for continued stripper CI
classification of the City of Carlsbad No. 1 well.
2. Grace Omitted A Material Fact That Would Have Prevented Her Statements From Beinq Misleadinq.
Even assuming, arsuendo, that the continuation of Sectioi
108 status was not made in reliance on Grace's untrue statemei
that the drilling activity commenced to increase the well's
production did not result in the perforation of a new reseno
the well category determination can and should be properly
reopened on the basis that Grace omitted a material fact in hl
application that would have, if disclosed, prevented her
statements from being misleading. Specifically, Grace omitte
-8-
m - from her application a statement of material fact necessary to
make her 'kame resewsir" statement net misleading -- the fact
that her use of the term f*keservoirff was different from the
meaning accorded to the term under Commission regulations. To
prevent misleading the jurisdictional reviewing entities, Gracr
should have represented that a separate reservoir (as defined :
the FERC regulations) had been perforated, or explained that h
use of the term "reservoirff was based on a pooling order of th
State of New Mexico not consistent with the meaning of the ter
under federal regulations.
defining enhanced recovery flatly states:
The applicable federal reyulation
... Any drilling activity which results in production from another reservoir does not qualify as a recognized enhanced recovery technique.
18 C.F.R. S 271.803(a). The disclosure of an additional mater
fact by Grace would have precluded the finding of enhanced
recovery status (and therefore Section 108 status) .w Her
failure to disclose such information makes the reopening of th
Section 108 determination proper.
u Contrary to Grace's assertion that Barnhart ComDanv, 47
F.E.R.C. q 61,016 (1989) supports the position that a produce] does not misstate a material fact when it relies on the
pronouncements of a jurisdictional agency, Barnhart actually concerned the possible omission of a material fact (informatic
regarding an application to pool two fields) from a Section 102(c) well category application. The Commission held that because the order pooling the wells was issued after the well category determination was made, the determination was approvc and allowed to become final. Barnhart is therefore
distinguishable from the instant case because the New Mexico pooling order preceded Grace's application.
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B, The Federal Reemlatory Scheme Is Preeminent In NGPA Prick Matters.
In simple terms, the question presented is whether federa
or state statutes should prevail in determining a well categor
classification for the purpose of pricing under the NGPA. Gra
argues that the New Mexico Agency's finding that the Morrow
Formation, in which the City of Carlsbad No. 1 well is located
is one gas ttp~olll is consistent with the use of the term
llreservoirll under the NGPA, and that the State pooling order c
properly serve as support for Grace's claim that the 1985
production actions were "enhanced recovery" rather than well
recompletion, thereby justifying the continuation of the Secti
108 price. Yet, a review of the term Itreservoirl9 reflected in
the NGPA and the definition of llpoollt found in the New Mexico
statutes reveals that they are not consistent.
The NGPA has a precise, clear definition of "reservoirtt i
Section 2 (6) :
Reservoir -- The term 19reservoirt9 means any producible natural accumulation of natural gas, crude oil, or both, confined --
(A) by impermeable rock or water barriers and characterized by a single natural pressure system; or
(B) by lithologic or structural barriers which prevent pressure communication.
As was shown in Transwestern's Petition, Attachment 2, Exhibit
the dramatic increase in pressure readings before and after th
so-called enhanced recovery operations was a clear indicatian
that the reservoir perforated in 1985 was one that was separat
and distinct from the reservoir from which the well was produc
prior thereto. Also, the well logs show complete separation o
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- - the two reservoirs by shale (Petition, Attachment 2, Exhibit D)
And finally, the gas quality tests performed over time by
Transwestern and appended 'to the Petition as Attachment 3, shol
distinct change in the composition of the gas following
recompletion.
By contrast, the New Mexico definition of "pool" reads:
vl[P]oolfl means an underground reservoir containing a common accumulation of crude petroleum oil or natural gas or both. Each zone of a general structure, which zone is completely separate from any other zone in the structure, is covered by the word pool as used in the Oil and Gas Act. Pool is synonymous with 8*common source of supply1* and with *'common reservoir." Section 70-2-33, N.M.S.A.
1978 Comp.
The use of the word llzonell in the New Mexico statute appears t
be synonymous with the use of the term I'resenroir" under the N
(i.e., an individual accumulation isolated from other individu
accumulations). In effect, the New Mexico definition states
that a pool consists of multiple accumulations/reservoirs.
Thus, the term *tpooltt as employed by the New Mexico Agency is
more encompassing than the term "reservoir1* under the NGPA. ;
Williams and Meyers, Manual of Oil and Gas Terms (Matthew Benc
6th ed. 1984).
It is apparent that the State of New Mexico designated tt
Morrow Formation as one pool merely for administrative
convenience. m Petition, Attachments 4 and 5. In a well
determination for NGPA pricing purposes, however, the
Commission's regulations must necessarily take precedence. It
well-established that the regulation of matters relating to tl
sale of natural gas in interstate commerce is entrusted to thc
Commission. Exxon CorD. v. Eaqerton, 462 U.S. 176, 184-185
.
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m w
(1983): Marvland v. Louisiana, 451 U.S. 725, 747-48 (1981).
There is no questioning of the Commission's authority to reope
and vacate a well category determination under the NGPA. The
decisions of state agencies, whatever they may be, are not
controlling:
[Tlhere is no room for the exercise of any local
power to obstruct or prevent the lawful
functioning of the federal agency entrusted with the federal power of regulation. The federal power to regulate the commerce in natural gas
course, the dominant power.
derives directly from the constitution and is, of
State CorD. Commission of Kansas v. FPC, 206 F.2d 690, 705 (81
Cir. 1953), cert. denied, 346 U.S. 922, reh'a denied, 347 U.S
1022 (1954).
Orders emanating from state conservation proceedings can1
be used as a basis for NGPA pricing when such orders are
inconsistent with federal statutes and regulations. State
Cornoration Commission of the State of Kansas, 42 F.E.R.C. 1
61,352 (1988); Kansas CorDoration Commission, 25 F.E.R.C. q
61,354 (1983). To suggest that the State of New Mexico's
determination that the Morrow Formation is one pool should
preempt the application of the term I'reservoir9' under the NGP
contrary to the well-established preeminence of the federal
regulatory scheme.
C. Them ee-Year Interval Between The 1985 Well Detenninat
And Transwestern's Instant Petition To ReoDen Is Due Sol To The MisreDresentation Of Fact Made Bv Grace. And Cam Be Attributed To Undue Tardiness Or MisDlaced Motives Or
Part Of Transwestern.
Both Grace and Oxy suggest that Transwestern should be
barred from seeking the reopening of the well category
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v - determination. In support of their argument, they contend tha
Transwestern was unduly tardy in seeking relief, and that
Transwestern's only real motive in filing its petition was to
influence ongoing contract reformation negotiations. Glaring1
absent from the motions of Grace and Oxy is factual support fo
such contentions. None exists. Pipeline companies are not
required or expected to conduct a reservoir engineering study
whenever they are faced with a producer's well category
determination application. To undertake such efforts on a
regular basis would be an extremely costly and time-consuming
task. It was only after Transwestern conducted a reservoir
engineering study in late March 1989, in conjunction with a tz
or pay claim made by Grace, that Transwestern discovered that
Grace's purported IOenhanced recoveryt1 procedures were, in facl
well recompletion requiring the Section 104 price, not the
continuation of the Section 108 price.
The three-and-one-half year interval between the well
category determination and Transwestern's petition for reopen
of that determination was the result solely of the misstateme
of material fact made by Grace in her 1985 application.
Transwestern's l1rnotivel1 in pursuing the reopening is nothing
than an attempt to satisfy its obligation to its customers.
Transwestern were to remain silent in the face of Grace's
improper attempt to collect the higher Section 108 price,
Transwestern's customers would be made to unnecessarily bear
increased costs. The Commission's statutory mandate to act i
the public interest requires that Transwestern's customers no
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penalized for Grace's failure to correctly state the material
facts in applying for continued Section 108 well category stat
111.
CONCLUSION
WHEREFORE, Transwestern respectfully requests that the
Commission deny Oxy's motion for summary dismissal, and grant
relief sought by Transwestern in its Petition to Reopen Well
Category Determination filed May 22, 1989 in Docket No. GP89-4
000. The reopening of the 1985 Section 108 stripper well
classification of the City of Carlsbad No. 1 gas well is in tk
public interest, and necessary and appropriate in the
administration of the NGPA.
Respectfully submitted,
Sherrie N. Rutherford Senior Counsel Arden S. Moran Attorney Ray J. Alvarez Attorney Transwestern Pipeline Company P. 0. Box 1188 Houston, Texas 77251-1188
By:
1333 New Hampshire Avenue, N.W. Washington, D.C. 20036
(202) 887-4000
Attorneys for Transwestern Pipeline Company
August 22, 1989
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CERTIFICATE OF SERVICE
I hereby certify that I have on this 22nd day of August,
1989, served the foregoing document upon each person designated
on the official service list compiled by the Secretary of the
Federal Energy Regulatory Commission in this proceeding.
Dated this 22nd day of August, 1989 in Washington, D.C.
AKIN, GUKP, STRAWS, HAUER & FELD
Washington, D.C. 20036
1333 New Hampshire Avenue, N.W.
(202) 887-4000