The opinion
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-00-00504-CV
Occidental Permian Ltd., Appellant
v.
Railroad Commission of Texas, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT
NO. 99-00484, HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING
Appellant Occidental Permian Ltd. ("Occidental") appeals from the district court's
final judgment affirming an order of appellee Railroad Commission of Texas (the "Commission").
The Commission's order denies Occidental retroactive tax benefits for an expanded enhanced oil
recovery project. We will affirm the district court's judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Occidental (1) is the operator of the Wasson ODC Unit in the Wasson Field in Yoakum
County. The unit is operated as a full-scale carbon dioxide ("CO 2 ") flood, utilizing miscible fluid
displacement. The process, a tertiary miscible flood, displaces oil by injecting CO 2 into the oil
reservoir at pressure levels such that the injected gas and reservoir oil are miscible (capable of being
mixed) and was designed to alternate salt water and CO 2 injection. As such, the Wasson ODC Unit
functioned as an "enhanced oil recovery project." See 16 Tex. Admin. Code § 3.50 (c)(5), (19)(G)
(2001). (2) Enhanced oil recovery techniques are used to recover oil over and above that derived from
primary and secondary methods. See 2 Ernest E. Smith & Jacqueline Lang Weaver, Texas Law of
Oil & Gas § 8.2 (1996). When the unit was initiated in 1984, Occidental planned to ultimately inject
CO 2 volumes equal to fifty percent of the original hydrocarbon pore volume in the reservoir.
However, by 1995 its studies indicated that injecting an additional thirty percent of the original
hydrocarbon pore volume, for a total of eighty percent, would extend the life of the project by at least
ten years. The additional injections would change the character of the project from an "existing
enhanced recovery project" to an "expanded enhanced recovery project." See 16 Tex. Admin. Code
§ 3.50 (c)(6), (7). The proposed change would require Commission approval. Id. § 3.50(c)(7), (g)(1).
The Texas Tax Code imposes a production tax on oil. See Tex. Tax Code. Ann.
§ 202.051 (West 1992) & § 202.052(a) (West Supp. 2001). However, since 1991 (3) oil produced from
an expanded enhanced recovery project has been taxed at a significantly lower rate, provided that
"before the expansion begins, the [C]ommission approves the expansion and designates the area to
be affected by the expansion." Id. § 202.054(b) (West Supp. 2001); see also id. § 202.052(a), (b)
(comparing oil production tax rates). The Commission has established a procedure to obtain the
favorable tax rate. See 16 Tex. Admin. Code § 3.50 (2001). (4) In July 1996 Occidental applied to the
Commission for approval to expand the existing enhanced recovery project at the Wasson ODC Unit
and the concomitant reduced tax rate on future production. The Commission administratively denied
Occidental's request in August. See id. § 3.50(g)(2)(C) (application will be processed
administratively). Although Occidental could have requested a hearing following the denial of its
application, it did not immediately do so. See id. ("If the [C]ommission representative denies
administrative approval, the applicant shall have the right to a hearing upon request."). In spite of
the lack of Commission approval and without requesting a hearing, Occidental soon began the
increased CO 2 injections. (5)
Occidental did not request a hearing of the 1996 Commission denial until July 1998.
In August a hearing was conducted before two Commission hearings examiners, who, in October
recommended that the application be denied. The examiners observed that (1) the application "may
well have been approved if [Occidental] had requested a hearing immediately after the administrative
denial"; (2) if the application had not been approved and a hearing had been requested in mid-August
1996, Occidental could have obtained a final ruling before beginning the expansion; and (3)
Occidental "could have simply made its original application earlier." The examiners noted that
section 3.50(g)(1) "clearly requires approval of an application prior to active operations." See id .
§ 3.50(g)(1). The Commission adopted the findings and conclusions of the examiners and denied
the application. Occidental's motion for rehearing was unsuccessful. See Tex. Gov't Code Ann.
§ 2001.145 (West 2000). Occidental appealed to the district court, see id. § 2001.171, who affirmed
the Commission's order. See id. § 2001.174.
By three issues, Occidental appeals the district court's final judgment, asserting that
the Commission's order was arbitrary, an abuse of discretion, and not supported by substantial
evidence.
DISCUSSION
Substantial Evidence
By its last issue, Occidental argues that there is not substantial evidence to support
"the inferences, conclusions or decision that Occidental could have secured timely pre-approval if
it had requested a hearing immediately after staff administrative denial." We review Commission
decisions pursuant to the substantial-evidence rule. See High Plains Natural Gas Co. v. Railroad
Comm'n , 467 S.W.2d 532, 538 (Tex. Civ. App.--Austin 1971, writ ref'd n.r.e.). In a substantial-evidence review, we must first determine whether the evidence as a whole is such that reasonable
minds could have reached the conclusion the agency must have reached in order to take the disputed
action. See Texas State Bd. of Dental Exam'rs v. Sizemore , 759 S.W.2d 114, 116 (Tex. 1988). The
test is not whether the agency reached the correct conclusion, but whether some reasonable basis
exists in the record for the agency's action. Texas Health Facilities Comm'n v. Charter Medical-Dallas, Inc. , 665 S.W.2d 446, 452 (Tex. 1984). We may not substitute our judgment for that of the
agency and may consider only the record on which the agency based its decision. Sizemore , 759
S.W.2d at 116 .
The agency's findings, inferences, and conclusions are presumed to be supported by
substantial evidence, and the appealing party bears the burden of showing a lack of substantial
evidence. Charter Medical-Dallas , 665 S.W.2d at 453 . The appealing party cannot meet this burden
merely by showing that the evidence preponderates against the decision. Id. at 452 . Although
substantial evidence is more than a scintilla, the evidence in the record actually may preponderate
against the decision of the agency and nonetheless amount to substantial evidence. Id. If substantial
evidence would support either affirmative or negative findings, the reviewing court must uphold the
order, resolving any conflicts in favor of the agency's decision. Id. at 453 .
The relevant Commission rule provides, "In order to be eligible for the recovered oil
tax rate as provided in the Tax Code, § 202.054(b), the operator must apply for and be granted
Commission approval of . . . an expansion of an existing [enhanced oil recovery] project, prior to
commencing active operation of the . . . expanded project." 16 Tex. Admin. Code § 3.50 (g)(1)
(emphasis added). The record shows that Occidental's first request for approval of its expansion
occurred in August 1996 and was denied. Occidental does not dispute that in October 1996 it began
expansion without Commission approval, but argues that there are undisputed "facts" that "mitigate
[its] inability to receive timely pre-approval prior to [Occidental's] commencement of 'expansion.'"
However, even presuming such mitigating factors are present, there is still sufficient evidence in the
record that Occidental did not follow statutory and regulatory requirements for expansion-project
tax benefits. Both the tax code and the Commission's own rule are clear. We hold that Occidental's
noncompliance provides a reasonable basis for the Commission's order. See Charter Medical-Dallas , 665 S.W.2d at 452 . We overrule Occidental's final issue.
Was the Commission's Action Arbitrary, Capricious, or an Abuse of its Discretion?
By its first issue, Occidental argues that the Commission's order "is arbitrary and
denie[s] Occidental due process of law" because it contains errors that "are material and prejudice
. . . [its] substantial rights" and because the Commission "rel[ies] on 'outside-the-record' facts"
without providing prior "official notice" to Occidental that it would do so. By its second issue,
Occidental argues that the Commission's order "is arbitrary and discriminatory" because it treats a
"similarly situated applicant" differently. (6) We must reverse the Commission's order if the
Commission's action was arbitrary, capricious, or an abuse of discretion. See Tex. Gov't Code Ann.
§ 2001.174 ; Public Util. Comm'n v. Gulf States Utils. Co. , 809 S.W.2d 201, 210-11 (Tex. 1991).
An agency decision is arbitrary when its final order denies parties due process of law, see Lewis v.
Metropolitan Savings & Loan Ass'n, 550 S.W.2d 11, 16 (Tex. 1977), or fails to demonstrate a
connection between the agency decision and the factors that are made relevant to that decision by
the applicable statutes and regulations, see Gulf States Utilities , 809 S.W.2d at 202 . A court
reviewing a decision for arbitrariness should consider all relevant factors and may not substitute its
judgment for that of the agency. See id .
The Commission's order denying approval of Occidental's expansion project adopted
the findings of fact and conclusions of law contained in the "Examiners' Report and Proposal for
Decision" of the hearings examiners who heard Occidental's request for approval. Occidental
strongly urges that the Commission relied on "'outside-the-record' facts to reject Occidental's
request for retroactive relief." Its argument is based primarily on a portion of the examiners' report
that refers to "[t]he history of the other tertiary miscible flood expansions." This language, posits
Occidental, indicates that the examiners "swept away" the facts relevant to why Occidental did not
continue to pursue approval of the Commission by seeking a hearing before commencing the
additional CO 2 injection. We disagree.
The examiners' report makes several references to other expanded enhanced recovery
projects:
At about the same time [as the Occidental application], the operators of two other
major CO 2 floods made similar applications at the Commission. Those applications,
and [Occidental's], were denied administratively. The other operators requested
hearings and their applications were eventually granted. [Occidental] believes that
[its] application was similar to those that were approved after hearing, and is now
requesting reconsideration of the administrative denial.
. . . .
The other two oil and gas dockets, Nos.[]8A-0213592, heard on September
26, 1996, and XX-XXXXXXX, heard October 23, 1996, involved similar tertiary miscible
flood expansions. The final order in Docket No. XX-XXXXXXX was approved January
7, 1997, and the final order in Docket No. 8A-0213592 was approved January 28,
1997. [Occidental] . . . believes that [its] application would have also been approved
early in 1997, had [it] requested a hearing during the fall of 1996. [Occidental]
pointed out that there is no deadline in [section 3.50] regarding the date that a hearing
must be requested after an administratively [sic] denial, and is requesting approval
of this application retroactive to July 1996.
. . . .
The applications under Docket Nos. 8A-0213592 and XX-XXXXXXX were
similar to [Occidental's] proposed expansion of an existing [enhanced oil recovery]
project. Testimony established in those cases that significantly increasing the amount
of injected CO 2 in a [water alternating with CO 2 ] process above the original plan can
qualify as an expansion of a tertiary recovery process. [Occidental's] application may
well have been approved if it had requested a hearing immediately after the
administrative denial. Testimony in those hearings also indicated that even a short
cessation in CO 2 injection would have been very expensive and might have resulted
in the permanent loss of otherwise recoverable oil.
However, [section 3.50](g)(1) clearly requires approval of an application prior
to active operations. The history of the other tertiary miscible flood expansions
indicates that [Occidental] could have requested a hearing in mid-August and
received a final ruling prior to beginning the expansion. In addition, [Occidental]
could have simply made its original application earlier. [Occidental] made a business
decision in 1996, that proceeding with its project without a tax reduction was
preferable (and presumably more profitable) than taking a chance that the project
would be delayed. The unambiguous terms of [section 3.50] (and the underlying
statute - Tax Code §202.054(c)) preclude the Commission from relieving
[Occidental] of the consequences of [its] business decision.
(Emphasis added.) Both in the context of the examiners' report and in the record before them, it is
clear that "the other tertiary miscible flood expansions" were the Exxon and Amerada Hess projects.
The only witness at the Commission hearing was Occidental's engineer, James
Collier, and his initial testimony concerning the other projects was elicited by Occidental. (7) When
one of the hearings examiners asked Collier what had changed since 1996 with regard to
Occidental's project, Collier replied,
In essence nothing has changed. It is just that we now have empirical data that shows
if you stop CO2 you will go on a steeper decline. What we are recommending is that
the increment between the 80 percent case and the base waterflood case or the 50
percent case that would have occurred if the CO2 were stopped. I might add at this
point that that is identical to the other two applications which were denied for the
identical reason and then approved by the Railroad Commission subsequent to the
hearings on those two matters.
Q [by an examiner]: Do you have the docket numbers of those matters that you are
referring to?
A: Yes, I do. The other two cases I have been referring to were docket 8A-0213592,
which was heard September 26, 1996, and Docket XX-XXXXXXX, which was heard by
the Commission on October 23, 1996.
Later, when asked why Occidental did not request a hearing after the original administrative denial
of its application, Collier identified the two other projects as those of Exxon and Amerada Hess:
There was nothing in the denial that tied us to a time to have to bring it back to a
hearing. The hearings held on the other two cases were held in September and
October. And the decision, at least in the Amerada case and I believe in the Exxon
case, too, took about three to four months. So if we had brought it to hearing at
roughly the same time as those other two dockets, we would have been past the 50
percent by the time we had gotten a positive ruling anyway.
Collier then explained what effect delaying the injection of additional CO 2 would have had on
Occidental's project:
As I showed you, we would only have lost production and reserves if we had shut in
the project waiting on approval. That was an option we could have done. We elected
not to do that because we were trying not to lose reserves and rate. So we were sort
of caught in a catch 22. We had to either shut the thing in waiting on internal policy
to be made and see what happened as result [sic] of those other two hearings or we
had to decide to just continue on, take the administrative denial and at some later
date, which is what we are doing today, come in and show - - and really we are
smarter now because we now have empirical results showing that this project is
working.
From Collier's testimony, it is evident that Occidental was directing the Commission to the Exxon
and Amerada Hess cases and urging the Commission to consider both the similarities and differences
between Occidental's situation and those in the two contemporaneous cases. Occidental cannot now
be heard to object to references to the other projects as being "outside the record." The Exxon and
Amerada Hess cases are "inside the record" and are there at the behest of Occidental.
Even if we were to accept the argument that the Commission's order contains a
reference to facts not contained in the record, our result would be the same. The order adopts the
examiners' findings of fact and conclusions of law in support of its decision. See generally Smith
v. Houston Chem. Servs., Inc. , 872 S.W.2d 252, 266 (Tex. App.--Austin 1994, writ denied)
(rejecting assertion that commissioner's comment during meeting indicated improper agency
decision because "numerous findings of fact and conclusions of law indicate that the Commission
as a tribunal performed its duty in determining the case based on the relevant law and the evidence").
We disagree with Occidental's claim that the order shows that the Commission relied on information
about other entities' expansion approval experiences. The Commission's order reflects that the
Commission considered the "examiners' report and proposal for decision [and] the findings of fact
and conclusions of law contained therein." The findings of fact include the undisputed chronology
of Occidental's July 1996 application, the Commission's administrative denial a month later,
Occidental's subsequent commencement of its expansion project, and Occidental's 1998 request for
a hearing to reconsider its original application. Most importantly, conclusion of law number 3,
adopted as a part of the Commission's order, states that the "[r]equest for certification was not
approved prior to the beginning of the expansion of the existing project." Although this conclusion
would have been more appropriate as a finding of fact, prior approval is required by the tax code in
order for an operator to be eligible for the reduced production tax rate for oil production from
expanded enhanced oil recovery projects. See Tex. Tax Code Ann. § 202.054 (b); see also 16 Tex.
Admin. Code § 3.50 (g)(1) (Commission rule also requires prior approval). Such was recognized in
the final conclusion adopted by the Commission: "[Occidental's] expanded tertiary recovery project
does not qualify for certification under Statewide Rule 50 (8) or §202.054 of the Texas Tax Code."
(Footnote added.)
The Commission has provided a reasonable basis for its order; there is a clear
connection between its final decision and the standards set by the tax code and the Commission's
rule. See Gulf States Utils. , 809 S.W.2d at 202 . In addition, Occidental has not shown that it was
denied due process of law. See Metropolitan Sav. , 550 S.W.2d at 16 . We overrule Occidental's first
issue.
Occidental also argues that the Commission's order is "arbitrary and discriminatory
as to Occidental because the Commission has granted retroactive relief to a similarly situated
applicant," HCM, "that permitted HCM to pre-qualify their proposed expansion project under the
terms of §202.054 [of the tax code] and Rule 50." Occidental raised this argument for the first time
in its motion for new trial before the district court and requested that the court take judicial notice
of the pertinent portions of the Commission's HCM record. (9) Specifically, Occidental alleged that
the Commission "practiced unlawful discrimination" against Occidental in denying it tax benefits
while ultimately granting "retroactive relief to a similarly situated applicant." (10)
In an administrative appeal of a contested case, the reviewing court is generally
restricted to the administrative record. Tex. Gov't Code Ann. § 2001.175 (e) (West 2000); Ramirez
v. Texas State Bd. of Med. Exam'rs , 927 S.W.2d 770, 773 (Tex. App.--Austin 1996, no pet.).
Occidental presented no evidence concerning HCM at the administrative hearing.
However,
[a] party may apply to the court to present additional evidence. If the court is
satisfied that the additional evidence is material and that there were good reasons for
the failure to present it in the proceeding before the state agency, the court may order
that the additional evidence be taken before the agency on conditions determined by
the court. (11)
Tex. Gov't Code Ann. § 2001.175 (c) (West 2000) (footnote added). Occidental did not request the
district court to order that evidence regarding HCM be taken before the Commission.
But Occidental asserts that a reviewing court may consider evidence not contained
in the record before an administrative agency if the new evidence is subject to judicial notice.
Occidental directs the Court to the government code: "The contents of the Texas Register are to be
judicially noticed and are prima facie evidence of the text of the documents and of the fact that they
are in effect on or after the date of the notation." Id . § 2002.022(a). Because the Commission's
order in HCM was noted in the Texas Register, Occidental argues, it is prima facie evidence of the
text of the order. Thus, the district court and this Court may and should consider the contents of the
HCM order even though it has never been a part of the Commission's record in this case and was
not presented to the district court except as a part of Occidental's motion for new trial. Although
Occidental directs us to several authorities to support its proposition, we find the law is not so well
settled.
In Office of Public Utility Counsel v. Public Utility Commission , the supreme court
reversed a decision of this Court that upheld a contested rate-making order on the sole ground that
the Office of Public Utility Counsel ("OPUC") had not timely filed a reporter's record. 878 S.W.2d
598, 598 (Tex. 1994). (12) OPUC had requested that a reporter's record be prepared to include "the
complete record of the proceeding conducted by the Public Utility Commission of Texas and entered
into the District Court record as Plaintiff['s] Exhibit No. 1." Id. at 599 . The supreme court held that
in such instance the appellate court should identify and address issues that may be reached without
a reporter's record. Id. at 598-99 . The court also held that this Court erred "by refusing to take
judicial notice of the published order of the PUC," which had been affirmed by the trial court. Id.
at 600 . The court noted that "[j]udicial notice is mandatory if 'requested by a party and [the court
is] supplied with the necessary information.'" Id. (citing Tex. R. Evid. 201(d)). However, Texas
Rule of Evidence 201 "governs only judicial notice of adjudicative facts." Tex. R. Evid. 201(a).
Adjudicative facts "are those facts concerning the immediate parties[;] who did what, where, when,
how, and with what motive or intent." First Nat'l Bank v. Jarnigan , 794 S.W.2d 54, 61 (Tex.
App.--Amarillo 1990, writ denied). Office of Public Utility Counsel does not compel a court to take
judicial notice of an agency order in a case other than the one then on appeal before the court.
Big Three Industries, Inc. v. Railroad Commission concerned whether a Commission
order in a severed portion of a case could be introduced in evidence in the trial court if it was not a
part of the record before the Commission but was incorporated by reference in the order on appeal.
618 S.W.2d 543, 549 (Tex. 1981).
The Commission specifically incorporated the final order in Docket 500 into the
record in Docket 1702 by its June 18 order. However, it did not physically place the
Docket 500 order in the record. The Commission cannot defeat appellate review by
failing to include the final order or any other order properly a part of the record.
Id. (emphasis added). Like Office of Public Utility Counsel , Big Three Industries does not support
the proposition that evidence from an arguably similar, yet unrelated, case must be considered by the
reviewing court if not included in the agency record.
This Court, in Gulf Oil Corp. v. Railroad Commission , was also asked to consider the
Commission's orders in cases other than the one on appeal when the orders were not contained in
the agency record. 660 S.W.2d 112 (Tex. App.--Austin 1983, writ ref'd n.r.e.). The Court assumed
"without deciding or validating" the proposition that we may consider other Commission orders to
determine whether the "Commission acted discriminatorily, arbitrarily, and capriciously, or in an
abuse of discretion, notwithstanding that copies of those orders and other pertinent documents were
not received in evidence in [the Commission hearing] and do not form part of the administrative
record therein or the record on appeal to this Court." Id. at 119 (footnote omitted).
The Court observed that we could not take judicial notice of records in other
proceedings without depriving an adverse party "of its right to contest the facts we may deem true
by way of judicial notice." Id. at 119 n.3. This, of course, is the problem. If a party to an
administrative proceeding may utilize judicial notice to supplement the administrative record with
orders from other proceedings, the adverse party has no practical way to respond to the
supplementation, and the agency's findings and conclusions are rendered incomplete by virtue of the
fact that the new evidence was not before it at the time of rendering a decision.
Gulf, however, argued that the orders in other cases "were referred to throughout the
proceedings" in the case on appeal. Id. Thus, they bear some similarity to the Exxon and Amerada
Hess orders considered by the Commission here. (13) But Gulf went on to assert that the Court should
consider the orders because they "were reported in the 'Gas Utilities Bulletin,' a 'regular reporting
system of the Railroad Commission,' citing Southwestern Bell Telephone Co. v. Nash ." Id.
Occidental also requests that we consider the HCM orders on the basis of Nash . In Nash we held
that "this Court will take judicial notice, in appropriate cases, of the acts of administrative bodies
officially published in the Texas Register." Southwestern Bell Tel. Co. v. Nash , 586 S.W.2d 647,
649 (Tex. Civ. App.--Austin 1979, no writ). Nash was decided by a divided court, with a
concurrence criticizing the majority's reliance on seemingly parallel provisions of state and federal
law to reach its holding, id. at 651 (Shannon, J., concurring), and observing that "[t]he [Texas]
Supreme Court has written that the statement that the courts of Texas are required to take judicial
notice of administrative rules and regulations adopted by all federal departments, boards, and
commissions pursuant to statute is 'overbroad.'" Id. at 651 n.1 (citing Tippett v. Hart , 501 S.W.2d
874 (Tex. 1973)).
Today we repeat the concern we expressed almost eighteen years ago in Gulf Oil
concerning the difficulty and propriety of evaluating contentions on appeal when those contentions
depend on the Commission's action in cases other than the one before the Court and on evidence not
presented to the Commission. But as we did in Gulf Oil , we will "assume for purposes of the present
appeal, without deciding the matter, that we may examine and consider the Commission's actions
in [HCM] based upon copies of documents therefrom furnished to us by the parties on appeal." Gulf
Oil , 660 S.W.2d at 119 n.3. Having examined the HCM documents presented by Occidental and,
for purposes of argument, taken as true the "HCM Case Facts" presented in Occidental's brief, we
conclude that the case before us is not so similar to HCM as to reflect such a disparity in the
Commission's actions in the two cases to conclude that the Commission's order is "arbitrary and
discriminatory as to Occidental." HCM applied for and received administrative approval before
beginning its expansion project. Three years later, after completing the project and achieving
enhanced production, HCM applied to the Commission for positive production response
certification, which would allow it to receive the benefit of the lower production tax rate. See Tex.
Tax Code Ann. § 202.054 (b). The Commission administratively denied the application on the basis
that the original approval was in error because the project did not qualify as an expansion. HCM
requested a hearing, but the examiners recommended against approval. Ultimately, the Commission
granted approval retroactive to the date that HCM first sought approval for its expansion project.
We hold that the Commission's action in HCM does not reflect that the Commission
acted in an arbitrary and discriminatory manner in denying Occidental's request for retroactive
approval when Occidental's request for certification was never administratively approved and
Occidental did not at once pursue a hearing of such denial. We overrule Occidental's second issue.
CONCLUSION
Having overruled all of Occidental's issues and held that the Commission's order is
supported by substantial evidence and is neither arbitrary, capricious, nor an abuse of discretion, we
affirm the district court's final judgment.
Lee Yeakel, Justice
Before Chief Justice Aboussie, Justices Yeakel and Patterson
Affirmed
Filed: May 31, 2001
Publish
1. Occidental was formerly Altura Energy Ltd. Altura Energy Ltd. is the successor-in-interest
to Amoco Production Company. Many of the actions described in this opinion were taken by, or in
the name of, Amoco or Altura. However, for clarity, we will refer to all three entities as
"Occidental."
2. Section 3.50 of the administrative code is also known as "Statewide Rule 50." 16 Tex.
Admin. Code § 3.50 (2001).
3. See Act of May 24, 1991, 72d Leg., R.S., ch. 604, §§ 1-4, 1991 Tex. Gen. Laws 2196 , 2196-99 ( Tex. Tax Code Ann. §§ 202.052 , .054, since amended).
4. "The purpose of this section is to provide a procedure by which an operator can obtain . . .
Commission approval and certification of enhanced oil recovery . . . projects pursuant to the Tax
Code, Title 2, Chapter 202, Subchapter B, §202.052 and §202.054." 16 Tex. Admin. Code § 3.50 (a).
5. At roughly the same time, two other operators, Exxon and Amerada Hess, applied for and
were denied approval for similar expansions. About five months after the denials (and after hearings
in each case), the Commission reversed the decisions and approved the Exxon and Amerada Hess
expansions.
6. The Commission argues that Occidental has waived both of these grounds for reversal by
failing to adequately include each in its motion for rehearing before the Commission. See Tex. Gov't
Code Ann. § 2001.145 (West 2000); Suburban Util. Corp. v. Public Util. Comm'n , 652 S.W.2d 358,
364 (Tex. 1983). Without addressing the merits of the Commission's contention, we will assume
Occidental has not waived either of its first two issues.
7. The testimony was as follows:
Coincidentally, at roughly the same time, two other operators of major field-wide CO2
floods in West Texas filed identical applications. And one was in the Means Unit in
Andrews County and one was in the Seminole San Andres Unit in Gaines County.
These were CO2 floods that had started up in the early '80S and the original design
slug size was about to be reached and there were economics to spend the additional
money and generate additional recovery of oil. Those two applications were also
denied. So there were three applications here that were denied administratively.
After that the Commission reversed itself, and the reason why those applications
were denied were reversed here at the Commission. And after hearing those other two
applications were approved. And what we are asking today is to - - as [Occidental],
we are still operating that project and we are asking that that application that was
administratively denied now be approved as a result of this hearing and the evidence
we are going to show today.
8. 16 Tex. Admin. Code § 3.50 .
9. In its motion for new trial before the district court, Occidental asserted, inter alia , that (1)
"[b]ased on newly discovered authority, the Judgment of the Court should be reversed," (2)
"[a]nalysis of this newly discovered authority in light of the [Occidental] case requires the Court to
reverse the Order issued in [Occidental]," and (3) the district court should "take judicial notice of
the published Proposals for Decision and Final Order in the HCM case."
10. In summary, Occidental claims that HCM received administrative approval for the "expansion
of a waterflood project" and began operations, but the Commission later denied tax benefits because
the original approval "was in error." According to Occidental, the Commission then "'bent over
backward' to help qualify [HCM's] expansion project." Apparently HCM was ultimately allowed
the benefit of the reduced production tax.
11. Occidental appears to have abandoned the argument that the HCM information was "newly
discovered," though it did assert that in its motion for new trial.
12. The supreme court uses the term "statement of facts" for "reporter's record." The terms refer
to the same portion of the appellate record. Compare Tex. R. App. P. 50(a), 53 (1986, amended
1997), in 49 Tex. B.J. 556 (1986), with Tex. R. App. P. 34.1, 34.6. For clarity, we use the term
found in the current Texas Rules of Appellate Procedure.
13. The HCM order was not before the Commission, having been presented for the first time as
an exhibit to Occidental's motion for new trial before the district court.
font-family: Times New Roman">Publish
1. Occidental was formerly Altura Energy Ltd. Altura Energy Ltd. is the successor-in-interest
to Amoco Production Company. Many of the actions described in this opinion were taken by, or in
the name of, Amoco or Altura. However, for clarity, we will refer to all three entities as
"Occidental."
2. Section 3.50 of the administrative code is also known as "Statewide Rule 50." 16 Tex.
Admin. Code § 3.50 (2001).
3. See Act of May 24, 1991, 72d Leg., R.S., ch. 604, §§ 1-4, 1991 Tex. Gen. Laws 2196 , 2196-99 ( Tex. Tax Code Ann. §§ 202.052 , .054, since amended).
4. "The purpose of this section is to provide a procedure by which an operator can obtain . . .
Commission approval and certification of enhanced oil recovery . . . projects pursuant to the Tax
Code, Title 2, Chapter 202, Subchapter B, §202.052 and §202.054." 16 Tex. Admin. Code § 3.50 (a).
5. At roughly the same time, two other operators, Exxon and Amerada Hess, applied for and
were denied approval for similar expansions. About five months after the denials (and after hearings
in each case), the Commission reversed the decisions and approved the Exxon and Amerada Hess
expansions.
6. The Commission argues that Occidental has waived both of these grounds for reversal by
failing to adequately include each in its motion for rehearing before the Commission. See Tex. Gov't
Code Ann. § 2001.145 (West 2000); Suburban Util. Corp. v. Public Util. Comm'n , 652 S.W.2d 358,
364 (Tex. 1983). Without addressing the merits of the Commission's contention, we will assume
Occidental has not waived either of its first two issues.
7. The testimony was as follows:
Coincidentally, at roughly the same time, two other operators of major field-wide CO2
floods in West Texas filed identical applications. And one was in the Means Unit in
Andrews County and one was in the Seminole San Andres Unit in Gaines County.
These were CO2 floods that had started up in the early '80S and the original design
slug size was about to be reached and there were economics to spend the additional
money and generate additional recovery of oil. Those two applications were also
denied. So there were three applications here that were denied administratively.