Court Opinion

ID: 9523879
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:48:00.546238+00
Date Added: 2024-06-11T13:08:25.259346
License: Public Domain

BARTEAU, Judge,
dissenting.
The law of the case doctrine precludes a lower tribunal's consideration of an issue that has been resolved by an appellate court. Riggs v. Burell, 619 N.E.2d 562, 564 (Ind.1993); Closson Lumber Co., Inc. v. Wiseman, 507 N.E.2d 974, 977 (Ind.1987); Egbert v. Egbert, 235 Ind. 405, 415, 132 N.E.2d 910, 916 (1956). To invoke the law of the case doctrine, the issues decided in the appellate court's decision "must clearly appear to be the only possible construction of the opinion...." Egbert, 235 Ind. at 415, 132 N.E.2d at 916; see also, Riggs, 619 N.E.2d at 564; Closson Lumber, 507 N.E.2d at 977.
The majority determined that the Court's opinion on rehearing, Southern Indiana Gas & Elec. Co. v. Indiana Farm Gas Prod. Co., 549 N.E.2d 1063 (Ind.Ct.App.1990), trans. denied (Farm Gas II"), preserved the initial holding of Farm Gas I, 540 N.E.2d 621 (Ind.Ct.App.1989), that the Indiana Utility Regulatory Commission lacked jurisdiction to determine the legal question of ownership of the gas from the Travers Well. Op. at 981-82. However, one may conclude from a fair reading of Farm Gas II that the Court vacated its holding that the Commission lacked Jurisdiction.
The Farm Gas I decision is divided into three sections. In Section I, the Court determined that SIGECO's motion to dismiss filed with the Commission was done under Ind.Trial Rule 56(C). 540 N.E.2d at 624. In Section II, the Court found that the Commission lacked jurisdiction to resolve the property law question of whether IFG or SIGECO owned the gas extracted through the Travers Well. And in Section III, the Court determined that there was no genuine issue of material fact, and ordered the Commission to enter an adjudication in favor of SIGECO.
On rehearing the Court vacated "por tions" (Le. more than one Section) of Farm Gas I. 549 N.E.2d at 1064 (emphasis added). Farm Gas II specifically preserved that part of Farm Gas I that determined SIGECO's motion to dismiss to actually be a TR. 56(C) motion.2 However, the balance of the Farm Gas I decision was vacated because the ree-ord was not sufficiently developed to permit summary judgment under TR. 56(C), due to the fact that the record contained only IFG's unsworn "prefiled" evidence. "We find it *983erroneous to rely upon the prefiled testimony as a basis for ordering judgment against IFG." Id. The Farm Gas II opinion concluded with an order to the Commission to hold a hearing upon the issues presented by IFG's petition for an order to transport the gas.
All that remains of the Farm Gas I decision after being revised on rehearing is the determination that SIGECO's motion to dismiss is actually a motion for summary judgment under TR. 56(C). The Court vacated the remaining portions of Farm Gas I, including its finding that the Commission lacked jurisdiction to resolve the question of ownership, as such was extraneous to the dispositive issue of whether summary judgment based upon prefiled evidence was inappropriate.
The majority and SIGECO disagree with this interpretation of the proceedings before the Court, and maintain that Farm Gas II preserved the jurisdictional ruling espoused in Farm Gas I. At the very least, the Farm Gas I decision, as revised by the Farm Gas II opinion, is susceptible to more than one construction. Under the well-established law espoused by our Supreme Court, this precludes application of the law of the case doctrine.
Because the law of the case doctrine should not be dispositive of this case, I also address the issues raised by IFG.
JURISDICTION OF COMMISSION
Indiana Code section 8-1-2-87.6 (West. Supp.1995) governs the Commission's authority to order a gas utility to transport natural gas. It states:
(b) Any person, corporation, or other entity engaged in the production, gathering, sale, or transportation of natural gas produced in Indiana may petition the commission to:
(1) require a gas utility ... to purchase or transport Indiana produced natural gas owned by the petitidning entity.
1C. § 8-1-2-87.6. SIGECO and IFG concede that I.C. section 8-1-2-87.6 requires the Commission to determine that IFG owns the gas it collects from the Travers Well before the Commission may order SIGECO to transport the gas. SIGECO contends that the Commission is not empowered to make such a finding where ownership is disputed. I do not agree.
It is well-settled that an administrative agency has the inherent authority in its broad grant of power from the legislature to regulate that which is necessary to effectuate the regulatory scheme outlined in the statute. Northern Ind. Public Serv. Co. v. Citizens Action Coalition of Ind., 548 N.E.2d 153, 161 (Ind.1989). To issue an order requiring a utility to transport gas, the Commission must determine that the petitioner owns the gas. Thus, our legislature has given the Commission the express authority to determine ownership. And, inherent in the authority to determine ownership is the power to resolve disputes concerning ownership of the gas.
The limits of an agency's jurisdiction is dependent not upon the terms in which the parties frame the issues, but upon the relief sought. Where the legislature has expressly authorized an ageney to grant a certain form of relief, the ageney has the inherent authority to resolve the issues attendant to exercising that authority. In Northern Ind. Public Serv., the Commission determined that its statutory authority to order a utility to issue refunds to overcharged ratepayers did not include the power to award interest. Our Supreme Court reversed, and found that the Commission's authority to award interest to overcharged ratepayers was inherent in its authority to grant a refund. "[IJt would be strange to conclude that the legislature intended that ratepayers receive part of their just due from the commission and the rest through the courts." 548 N.E.2d at 161.
To hold that the Commission must determine that IFG owns the gas produced through the Travers Well before SIGECO may be ordered to transport the gas, but that the Commission lacks the authority to resolve a dispute over ownership onee SIGECO raises the challenge, reaches a similarly strange result. This rationale permits the Commission to determine ownership only when ownership need not be determined-when ownership is not in dispute. The end *984result is to render the legislature's grant of power to the Commission illusory by permitting a party to strip the Commission of jurisdiction simply by raising a dispute over ownership. Surely our legislature did not intend such an absurd result.
Indiana Code section 8-1-2-87.6 mandates that the Commission determine that a petitioner owns the gas for which it seeks an order to transport. This express statutory authority empowers the Commission to resolve disputes of ownership between parties, and includes the inherent power to resolve issues attendant to the dispute. The Commission has jurisdiction to determine whether IFG owns the gas extracted through the Travers Well.
RULE OF CAPTURE
The Court in Farm Gas I also found that the Commission lacked jurisdiction because the Commission exceeded its statutory authority by creating new law in derogation of the Rule of Capture and establishing a presumption in favor of ownership of natural gas extracted through a well on one's leasehold. 540 N.E.2d at 624-25. However, in finding IFG made a prima facie showing of ownership and denying SIGECO's motion to dismiss IFC's petition, the Commission did not create new law, and actually declined to establish new law, by refusing to recognize SIGECO's proffered exception to Indiana's well-established Rule of Capture.
The parties concede that the Rule of Capture has long been the law in Indiana. Underground oil and gas, which are fluid by nature and may roam across the property boundaries of landowners, become the property of one who raises the gas to the surface and severs it from the earth. See Manufacturer's Gas & Oil Co. v. Indiana Natural Gas & Oil Co., 155 Ind. 461, 57 N.E. 912 (1900); Foertsch v. Schaus, 477 N.E.2d 566 (Ind.Ct.App.1985), trans. denied.
[TJhe lessor, as owner of the fee, owns all of the oil beneath the surface of his acreage. But, because of the fugitive nature of oil, which can flow from and to adjoining lands, the lessor owns the oil only in a qualified sense. Absent an oil and gas lease, the landowner has the right to explore and drill for oil on his land and any such oil produced is thereby reduced to his personal property, even if it flows from adjoining lands.
477 N.E.2d at 570. In this case, IFG held a valid oil and gas lease and had the right to explore and drill for natural gas within its leasehold. IFG sunk its own well on its own land and extracted natural gas from below. SIGECO does not contest this fact.
SIGECO argues, and asks the Court to recognize an exception to the Rule of Capture to protect an owner of a natural gas storage field which is near or adjacent to property on which another drills for natural gas. SIGECO posits that the Rule of Capture only applies to native gas, and does not include storage gas, and its position is not without support. See White v. New York State Nat. Gas Corp., 190 F.Supp. 342 (W.D.Penn.1960); Lone Star Gas Co. v. Murchison, 353 S.W.2d 870 (Tex.Civ.App.1962); Bezzi v. Hocker, 370 F.2d 533 (10th Cir.1966); Ellis v. Arkansas Louisiana Gas Co, 450 F.Supp. 412 (E.D.Okla 1978), aff'd 609 F.2d 436 (10th Cir.1979), cert. denied 445 U.S. 964, 100 S.Ct. 1653, 64 LEd.2d 239 (1980); Texas American Energy Corp. v. Citizens Fidelity Bank & Trust Co., 736 S.W.2d 25 (Ky.1987).
Notwithstanding the above authority, I am persuaded by the recent decision of the Kansas Supreme Court in Union Gas Sys., Inc. v. Carnahan, 245 Kan. 80, 774 P.2d 962 (1989). Like the case at bar, Union Gas dealt with a landowner who operated a natural gas well adjacent to a utility's gas storage field. The utility brought an action under a Kansas statute that permits a utility to condemn the area beneath an adjacent owner's property so it could use the area as storage space. The utility also sought an accounting of the storage gas the adjacent property owner had extracted through the well. The Kansas Supreme Court held that because the utility failed to exercise its right of condemnation, the Rule of Capture applied to the gas the property owner previously extracted through his well. Only after moving to condemn the adjacent property, and providing the property owner with just compensation, could the utility preclude the property owner *985from gaining possession of the gas beneath 'his land. '
Similarly, I.C. sections 82-11-4, et seq., grant SIGECO the power to exercise eminent domain to secure IFG's gas leasehold as storage space. SIGECO has not acted to condemn IFG's leasehold and has not offered to compensate IFG for the fair value of the storage space. Instead, SIGECO suggests that we preclude application of the Rule of Capture and find that IFG does not own the natural gas it extracts from its well. The end result is to deny IFG the value of the natural gas in its leasehold, whether it be native or storage gas, as well as the value of its land as a storage field. Such a result is unconscionable.
Indiana statutes give SIGECO the means and tools necessary to protect its ownership of the natural gas it pumps into its storage field, but SIGECO has failed to act in its own interest and condemn IFG's leasehold. Instead, SIGECO asks that we carve an exception into the well-settled Rule of Capture so that it may secure ownership of the gas in its storage field, deny IFG the benefit of the natural gas under IFG's property, and gain the use of IFG's leasehold as storage space without being made to pay IFG the fair value of the use of its property.
IFG rightfully operates the Travers Well on its leasehold and extracts the natural gas from the reservoir beneath the surface. Under the Rule of Capture, IFG gains ownership of the gas when it severs the gas from the earth. And, because IFG's well and leasehold is within the State of Indiana, it follows that the gas produced through the Travers Well is Indiana produced natural gas.3 I would reverse the Commission's order dismissing IFG's petition for lack of jurisdiction, and remand the cause to the Commission for a determination of the remaining issues: whether the gas produced through the Travers Well is of pipeline quality and reliability, and whether the facility to which the gas is to be delivered has adequate capacity to accept and transport the volume of gas involved.4
I respectfully DISSENT.

. In Farm Gas II the Court stated: "We now stand by our decision that this matter should be treated as a Rule 56 motion." 549 N.E.2d at 1064.

. SIGECO argues that the gas produced by the Travers Well is not "natural gas produced in Indiana" as required in LC. section 8-1-2-87.6 because the gas in its storage field was purchased from Louisiana. This argument lacks merit. First, it ignores the fact that the Travers Well extracts native gas from IFG's gas reservoir as well as storage gas from SIGECO'S storage field. Second, the rationale behind the Rule of Capture is that gas that roams freely under the property of multiple landowners is not exclusively owned by any one landowner. IFG reduces the gas to its exclusive ownership when it brings it to the surface through its well, and thus IFG's labors and efforts produce the gas.

. Indiana Code section 8-1-2-87.6 requires the Commission to make this determination before it may issue an order to transport the natural gas. The Commission made no findings on these issues.