Opinion ID: 1737354
Heading Depth: 1
Heading Rank: 1

Heading: Applicability of the Administrative Procedure Act

Text: Imperial's first point of error is based upon an allegation that the order prejudices the substantial rights of Imperial and is based upon unlawful procedure in that the findings of fact are not sufficient under the relatively new Administrative Procedure and Texas Register Act, which became effective on January 1, 1976. [3] This is the first direct appeal from a Railroad Commission order of this nature which has been filed with this Court since the effective date of the Act. Consideration of Imperial's first point requires an examination of the general effect of the APA on Railroad Commission proceedings. All parties agree that the Act is applicable to the Railroad Commission and to judicial review of its orders. With a few stated exceptions, the Act applies generally to administrative agencies of the State. The Railroad Commission is not excepted. Appeal from its orders are still initiated as provided in Section 8 of Article 6049c, as follows: Any interested person affected by the conservation laws of this State relating to crude petroleum oil or natural gas, and the waste thereof, including this Act, or by any rule, regulation or order made or promulgated by the Commission thereunder, and who may be dissatisfied therewith, shall have the right to file a suit in a court of competent jurisdiction in Travis County, Texas, and not elsewhere, against the Commission, or the members thereof, as defendants, to test the validity of said laws, rules, regulations or orders. Such suit shall be advanced for trial and be determined as expeditiously as possible and no postponement thereof or continuance shall be granted except for reasons deemed imperative by the Court. In all such trials, the burden of proof shall be upon the party complaining of such laws, rules, regulation or order; and such laws, rules, regulation or order so complained of shall be deemed prima facie valid. Relevant portions of the Administrative Procedure Act (Article 6252-13a) are as follows: Sec. 16.... (b) A final decision must include findings of fact and conclusions of law, separately stated. Findings of fact, if set forth in statutory language, must be accompanied by a concise and explicit statement of the underlying facts supporting the findings....       Sec. 19.... (d) If the manner of review authorized by law for the decision complained of is other than by trial de novo: (1) after service of the petition on the agency, and within the time permitted for filing an answer (or such additional time as may be allowed by the court), the agency shall transmit to a reviewing court the original or a certified copy of the entire record of the proceeding under review. ... (2) any party may apply to the court for leave to present additional evidence and the court, if it 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 agency, may order that the additional evidence be taken before the agency on conditions determined by the court. The agency may modify its findings and decision by reason of the additional evidence and shall file such evidence and any modifications, new findings, or decisions with the reviewing court; (3) the review is conducted by the court sitting without a jury and is confined to the record, except that the court may receive evidence of procedural irregularities alleged to have occurred before the agency but which are not reflected in the record. (e) The scope of judicial review of agency decisions is as provided by the law under which review is sought. Where the law authorizes appeal by trial de novo, the courts shall try the case in the manner applicable to other civil suits in this state and as though there had been no intervening agency action or decision. Where the law authorizes review under the substantial evidence rule, or where the law does not define the scope of judicial review, the court may not substitute its judgment for that of the agency as to the weight of the evidence on questions committed to agency discretion but may affirm the decision of the agency in whole or in part and shall reverse or remand the case for further proceedings if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are: (1) in violation of constitutional or statutory provisions; (2) in excess of the statutory authority of the agency; (3) made upon unlawful procedure; (4) affected by other error of law; (5) not reasonably supported by substantial evidence in view of the reliable and probative evidence in the record as a whole ; or (6) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion. (Emphasis supplied.) It is apparent from the Act and from Section 8 of Article 6049c that orders of the Commission are still deemed to be prima facie valid and subject to review under the substantial evidence rule. The principal changes are that the Commission must include in its decision findings of fact and conclusions of law [4] and judicial review is based on the record made before the administrative agency, except as to procedural irregularities mentioned in Sec. 19(d)3, supra. Prior to the effective date of the Administrative Procedure Act (January 1, 1976), judicial review of a Railroad Commission conservation order was by trial in the district court upon a new record of evidence developed in the court without regard to the evidence heard by the Commission. The Commission's order was tested by the substantiality of the evidence adduced in the district court trial. The applicable substantial evidence rule was stated in Trapp v. Shell Oil Company, 145 Tex. 323, 198 S.W.2d 424 (1946), and refined in Hawkins v. Texas Company, 146 Tex. 511, 209 S.W.2d 338 (1948). This type of substantial evidence review of a newly developed record, which often was different from the evidence heard by the Commission, came under effective criticism. [5] The Legislature first limited judicial review to the record made before an administrator in the Savings and Loan Act of 1963, Article 852a, Sec. 11.12(5)(b). The record under that Act is tested by the substantial evidence rule if an order of the Commissioner is contested. Lewis v. Jacksonville Building and Loan Ass'n, 540 S.W.2d 307 (Tex.1976); Gerst v. Nixon, 411 S.W.2d 350 (Tex.1966). Through enactment of the Administrative Procedure Act as to other agencies, the Legislature has made a far-reaching change in limiting judicial review under the substantial evidence rule to the records made before the administrative agencies. The result is that the agencies and the courts now consider the same evidence. Judicial review under the essential standards of the substantial evidence rule has been preserved, but the courts now test the substantiality of the evidence upon which an administrative agency made its decision. This furnishes more assurance of administrative due process and a surer means of determining whether an agency acted arbitrarily, capriciously, and without due regard to the evidence. Imperial does not disagree with what has been said thus far about the APA. Neither does it assert error because the findings and conclusions were made initially by the examiner and then adopted by the Commission by incorporation as a part of its order. This practice was noted and approved by the Court in Auto Convoy Co. v. Railroad Commission, 507 S.W.2d 718 (Tex. 1974). Imperial complains that the findings are on ultimate issues, vague, and insufficient to support the commission's conclusion that the order was necessary to prevent confiscation of BTA's property. The relevant findings on this issue are: 4. The Texaco USM No. 1-B well which was formerly completed as an Ellenburger well on Applicant's lease, was incapable of producing sufficient quantities to recover the hydrocarbons underlying the lease. (Tr. 10, 12). . . . 7. There are good and poor producing wells offsetting BTA's lease in every direction with the good wells being to the north and east of the proposed location. (BTA Exhibit 1, Imperial-American 1). 8. Gas wells are producing from the Ellenburger formation on each side of BTA's lease, and therefore BTA's lease is presently suffering net uncompensated drainage of Ellenburger hydrocarbons away from the lease. (Tr. 24, BTA Exhibit 1). 9. The requested location is a reasonable location 100 feet up-structure from an abandoned well towards an area of better productivity that would provide the applicant a reasonable opportunity to recover the hydrocarbons under the lease before they are drained to offset tracts. (Tr. 24, 70, 71, BTA Exhibit 1, 3). 10. A regular location can be drilled on the BTA lease so as to encounter the Gomez (Ellenburger) Field at 19,000 feet below sea level which would be 100 feet structurally higher than the Texaco USM No. 1-B well that formerly produced on this lease, however, the location would be in the direction of poor wells and would not provide the applicant a reasonable opportunity to produce the hydrocarbons under the lease because of the lengthy period required to produce these hydrocarbons. (Tr. 29). We have carefully examined these findings and tested them against the more stringent requirements of Article 911b, Sec. 5a(d) (the Motor Carrier Act) and Article 852a, Sec. 11.11(4), (Savings and Loan Act), and decisions thereunder. Imperial asserts that the findings are insufficient to meet similar statutory requirements as interpreted and applied in Morgan Drive Away, Inc. v. Railroad Commission, 498 S.W.2d 147 (Tex.1973); Miller v. Railroad Commission, 363 S.W.2d 244 (Tex.1962); Thompson v. Railroad Commission, 150 Tex. 307, 240 S.W.2d 759 (1951); and Bay City Federal Savings and Loan Association v. Lewis, 474 S.W.2d 459 (Tex.1971). We disagree. These findings are clear and explicit. They are not couched in terms other than as findings; neither are they mere conclusions, references to, recitals or summations of the evidence, or otherwise insufficient for reasons set forth in the above cases. On the contrary, they are findings upon the material issues to be reviewed and tested under the substantial evidence rule. The findings are not set forth in statutory language, and therefore it is not required that they be accompanied by a concise and explicit statement of the underlying facts supporting the findings. While some of the findings might be more artfully worded, they are substantially as would be expected from a trial judge or a jury in answer to controlling rather than incidental fact issues. We believe they meet the statutory requirement for separate findings of fact and that they are sufficient to support the Commission's conclusions and order.