Boyce v. Corporation Commission

1987 OK CIV APP 51, 744 P.2d 985, 96 Oil & Gas Rep. 509, 1987 Okla. Civ. App. LEXIS 153
CourtCourt of Civil Appeals of Oklahoma
DecidedJune 30, 1987
DocketNo. 66128
StatusPublished
Cited by1 cases

This text of 1987 OK CIV APP 51 (Boyce v. Corporation Commission) is published on Counsel Stack Legal Research, covering Court of Civil Appeals of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Boyce v. Corporation Commission, 1987 OK CIV APP 51, 744 P.2d 985, 96 Oil & Gas Rep. 509, 1987 Okla. Civ. App. LEXIS 153 (Okla. Ct. App. 1987).

Opinion

BRIGHTMIRE, Presiding Judge.

Did corporation commission err when it vacated respacing order as to non-notified mineral owner and restored his rights and entitlements under the previous spacing until modified after a due process hearing?

We hold it did not and affirm.

I

Following completion of a producing oil well on his land in March 1982, Bill Boyce made application with the corporation commission to vacate a 320-acre gas drilling and spacing unit and establish forty-acre drilling and spacing units for oil production in common sources of supply underlying the unit, including the producing Cromwell formation. On December 7, 1982, the commission entered a despacing order, No. 229301, with an effective date of October 21, 1982 (1982 order), fixing forty-acre oil spacing for the Cromwell common source of supply in the N/2 of Section 12, Township 6 North, Range 10 East, Hughes County, Oklahoma.

G.E. Smith, a mineral interest owner in the W/2 NE/4 of Section 12 then stopped receiving royalty checks, and when he asked why was told he had been spaced out of the gas producing unit. Thereafter, he filed an application to vacate the 1982 order because he had not received actual notice of the proceeding in which the order was entered. The first hearing on the application to vacate was held June 7,1983, and in her report the trial examiner recommended granting the relief requested. On September 21, 1984, a subsequent hearing was held before a referee who affirmed the trial examiner’s recommendation. Exceptions to the referee’s findings were heard by the commission en banc December 17, 1984. By Order No. 272993, the commission vacated the 1982 order “insofar as such order purports to effect [sic ] in any manner the interest of G.E. Smith.” This February 8, 1985, order resulted in Smith’s interest being subject to a 320-acre drilling and spacing unit while the other mineral interest owners were bound by the forty-acre spacing units established by the 1982 order.

On April 12,1985, Boyce filed an application to vacate the February 8 order, to respace Smith and to determine the effect of the 1982 order upon Smith’s interest. Boyce sought to have Smith respaced effective October 21,1982, so as to have consistent spacing orders regarding all mineral interest owners. The application recited that four producing oil wells had since been drilled on forty-acre spacing to the Cromwell common source of supply. The hearing officer who considered this application [987]*987concluded that forty-acre drilling and spacing units should indeed be established as to Smith’s interest, but that Boyce’s attempt to have an effective date of October 21, 1982, constituted a prohibited collateral attack on the February 8, 1985, order, and therefore the despacing order should be made effective as of the date it is signed. The appellate hearing officer recommended affirming that report but also found that the commission has authority to make orders retroactive to the date relief was first requested in that proceeding.

Exceptions to the appellate hearing officer’s report with respect to the effective date of the despacing order were heard by the commission en banc October 16, 1985. On February 19, 1986, the commission entered Order No. 293186 granting Boyce’s application to respace Smith’s interest in the Cromwell common source of supply underlying the N/2 of Section 12 effective as of April 12, 1985, the date Boyce filed his application to respace Smith’s interest.

Boyce appeals the commission’s refusal to order the same effective date as the 1982 order, arguing that the commission erred in failing to reconcile conflicting spacing orders which existed from October 21, 1982, to April 12, 1985.

II

Boyce engages the opposed order with a multi-prong attack through five propositions of error, all of which condemn the commission’s refusal to make the Smith respacing order effective on the same date as the 1982 order. Boyce’s basic thesis is that it is contrary to legal and equitable principles for the commission to make April 12, 1985, the effective date of the order because all interested parties except Smith were bound by the 1982 order.

Smith counters with the argument that the “Commission has the [limited] authority to make its orders retroactive only as far back as the date of the filing of the application” and that application to respace his interest was not made until April 12, 1985. He further contends that backdating the order would violate the “due process of law” provision of the Oklahoma and United States constitutions, and constitute a prohibited collateral attack upon the 1985 order vacating the forty-acre spacing as to his interest.

Both parties are of the opinion that vested property rights are at issue. Boyce contends that the rights of parties bound by the 1982 order will be divested by an April 12, 1985, effective date. Smith maintains that predating the order would violate Okla. Const, art. II, § 7, and U.S. Const, amend. XIV, § 1, by depriving him of property without due process of law.

The applicable standard of review is found in Okla. Const, art. IX, § 20:

“The Supreme Court’s review of ap-pealable orders of the Corporation Commission shall be judicial only, and in all appeals involving an asserted violation of any right of the parties under the Constitution of the United States or the Constitution of the State of Oklahoma, the Court shall exercise its own independent judgment as to both the law and the facts. In all other appeals from orders of the Corporation Commission the review by the Supreme Court shall not extend further than to determine whether the Commission has regularly pursued its authority, and whether the findings and conclusions of the Commission are sustained by the law and substantial evidence.” (Emphasis added.)

And regardless of whether it falls within the first or second category the appealed order must be lawful and supported by competent and substantial evidence. Anderson-Prichard Oil Corp. v. Corporation Commission, 205 Okl. 672, 241 P.2d 363 (1951).

Turning now to Smith’s argument that the commission does not have authority to make its orders retroactive beyond the date of application, we note it is based on the provisions of 52 O.S.1981 § 87.1. This statute deals with spacing and drilling units and with regard to spacing modifications provides:

“(d) The Commission shall have jurisdiction upon the filing of a proper application therefor, and upon notice given as provided in subsection (a) above _” (Emphasis added.)

So the question is what effect does this notice requirement have on the [988]*988authority of the commission to give or refuse to give an order retrospective effect? For an answer both parties cite Union Oil Co. of California v. Brown, 641 P.2d 1106 (Okl.1981), each interpreting it differently. What the Brown court concluded was, however, that where a request to backdate the effective date of a commission order is “supported by substantial evidence,” the commission may make an order retroactively effective to the date the application was filed but not earlier. The evidence which governs such a decision here is that which is relevant to the issue of notice raised previously by Smith. More specifically it is the effect of Boyce’s failure to use reasonable diligence in giving Smith constitutional notice of the 1982 hearing.

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Bluebook (online)
1987 OK CIV APP 51, 744 P.2d 985, 96 Oil & Gas Rep. 509, 1987 Okla. Civ. App. LEXIS 153, Counsel Stack Legal Research, https://law.counselstack.com/opinion/boyce-v-corporation-commission-oklacivapp-1987.