Devon Corp. v. Miller
| Decision Date | 09 July 1981 |
| Docket Number | No. 14488,14488 |
| Citation | 167 W.Va. 362,280 S.E.2d 108 |
| Court | West Virginia Supreme Court |
| Parties | DEVON CORPORATION, Eason Oil Company, and P & O Oil Corporation v. Walter N. MILLER, Director, West Virginia Department of Mines, Robert L. Dodd, Deputy Director, West Virginia Department of Mines, Oil and Gas Division, and Thomas E. Huzzey, Commissioner, West Virginia Oil and Gas Conservation Commission. |
Syllabus by the Court
1. The clauses of the Constitution of the United States and the Constitution of West Virginia which forbid the passage of a law impairing the obligation of a contract are not applicable to a statute enacted prior to the making of a contract. Specifically, an oil and gas lease obtained subsequent to the enactment of W.Va.Code, 22-4A-7(b)(4), which statute requires an operator to obtain the written consent and easement of surface owners prior to the drilling or operation of a deep well, is not unconstitutionally impaired by such statute. U.S.Const., Art. I, § 10; W.Va.Const., Art. III, § 4; W.Va.Code, 22-4A-7(b)(4).
2. "A law is not retroactive merely because part of the factual situation to which it is applied occurred prior to its enactment; only when it operates upon transactions which have been completed or upon rights which have been acquired or upon obligations which have existed prior to its passage can it be considered to be retroactive in application." Syl. pt. 6, Lester v. State Workmen's Compensation Commissioner, 242 S.E.2d 443 (W.Va.1978); Syl. pt. 3, Sizemore v. State Workmen's Compensation Commissioner, 219 S.E.2d 912 (W.Va.1975).
Bowles, McDavid, Graff & Love, Paul N. Bowles and Ricklin Brown, Charleston, for: P. E.
Snyder & Segal and Benjamin N. Snyder, Clendenin, David B. McMahon, Charleston, Lorie Blackman Howley, Chloe, Tobias J. Hirshman, Charleston, amicus curiae: Oil and Gas Reform, Hallie Mae Johnson, Timothy P. Higgins.
Chauncey H. Browning, Jr., Atty. Gen., Richard L. Earles and James F. Wallington, Asst. Attys. Gen., Charleston, for: D. E.
This action is before this Court upon the petition of Devon Corporation, Eason Oil Company and P & O Oil Company (hereinafter "petitioners") for an appeal and supersedeas from a final order of the Circuit Court of Kanawha County, West Virginia, upon all stipulations, exhibits and other matters of record, upon the briefs and argument of counsel and upon the brief on behalf of amici curiae.
The petitioners seek review of a final order entered January 16, 1979, of the Circuit Court of Kanawha County by which the petitioners' application for a writ of mandamus was denied. This order further made a part of the record the December 21, 1978, letter memorandum of opinion of the circuit court.
The petitioners are foreign corporations licensed to do business in West Virginia. They are engaged in the exploration, production and sale of oil and natural gas.
During the period in question, the petitioners obtained a leasehold interest in a certain 96 acre tract of land located in Jackson County, West Virginia. On August 21, 1978, the petitioners, through Devon Corporation, applied to the Oil and Gas Conservation Commission of the West Virginia Department of Mines for a permit to drill a "deep well" upon the 96 acre tract. 1 However, by letters dated August 21, 1978, and September 1, 1978, the Commission denied the petitioners' permit application. The basis of this denial was the failure by the petitioners to obtain a written consent and easement for the drilling of a deep well from the surface owners of the tract as required by W.Va.Code, 22-4A-7(b)(4) and Rule 3.04 of the Operational Rules of the West Virginia Oil and Gas Conservation Commission.
Consequently, on September 15, 1978, the petitioners filed in the Circuit Court of Kanawha County a petition for a writ of mandamus seeking to compel the respondents to grant the necessary permit to drill a deep well upon the 96 acre tract.
As indicated above, it is from the final order of the circuit court denying relief to the petitioners that the petitioners appeal to this Court.
In its final order, the Circuit Court of Kanawha County set forth the following findings of fact:
1. The petitioners are corporations engaged in the exploration for, production and sale of oil and natural gas within the State of West Virginia.
2. Respondents are responsible for the administration and enforcement of the provisions of Section 7, Article 4A, Chapter 22, of the Code of West Virginia, as amended.
3. Under date of October 9, 1968, Lottie Barnette, then the owner of the surface and an undivided one-half interest in the oil and gas of a 96-acre tract of land in Ripley District, Jackson County, West Virginia, executed an oil and gas lease covering her interest in said land to Commonwealth Gas Corporation. Petitioners are successors in title of Commonwealth Gas Corporation in said lease by assignment made by Commonwealth Gas Corporation in June, 1973.
4. Under date of August 2, 1978, Belle Friese, widow, and Betty L. Nuzum and Stanley W. Nuzum, her husband, then the owners of an undivided interest in the oil and gas in and under the same tract of 96 acres, leased their interests to Petitioners for oil and gas purposes.
5. Under date of August 2, 1978, Doris B. Elicker and Peter Elicker, her husband, then the owners of an undivided interest in the oil and gas in and under the same tract of 96 acres, leased their interest to Petitioners for oil and gas purposes.
6. The oil and gas interests leased to Petitioners by the two separate leases dated August 2, 1978, as aforesaid, were oil and gas interests that had been severed from the ownership of the surface by deed from John Kay and Edna G. Kay his wife, dated August 23, 1924, of record in Jackson County, West Virginia, in Deed Book 102, page 173.
7. On August 21, 1978, Petitioners were the owners of the leasehold estates and rights created and existing by virtue of the three oil and gas leases designated above.
8. On August 21, 1978, Petitioners filed with the Oil and Gas Division of the West Virginia Department of Mines their application for a permit to drill an oil and gas well on the 96-acre tract of land covered by the aforesaid leases. The application was to drill a "deep well" as such is defined in Code 22-4A-2(a)(13). The application as filed was complete in all respects except it did not have accompanying it the written consent and easement executed and acknowledged by the then owners of the surface of said 96-acre tract, which such written consent and easement is required by Respondents under the provisions of West Virginia Code 22-4A-7(b)(4) and Rule 3.04 of the Operational Rules of the Oil and Gas Conservation Commission. At the time Petitioners filed their application for a drilling permit there were not then pending any applications or proceedings to have drilling units established pursuant to the provisions of Article 4A, Chapter 22, of the Code.
9. Respondents refused to grant or issue to Petitioners a drilling permit as applied for and Respondents' sole reason for refusing to issue the permit was Petitioners' failure to accompany their application with the written consent and easement executed and acknowledged by the then owners of the surface of said 96-acre tract of land.
As their petition filed in this Court states, the petitioners do not dispute the above findings of fact of the circuit court.
W.Va.Code, 22-4A-7(b)(4) provides as follows:
No drilling or operation of a deep well for the production of oil or gas shall be permitted upon or within any tract of land unless the operator shall have first obtained the written consent and easement therefor, duly acknowledged and place (sic) of record in the office of the county clerk, for valuable consideration of all owners of the surface of such tract of land, which consent shall describe with reasonable certainty, the location upon such tract, of the location of such proposed deep well, a certified copy which consent and easement shall be submitted by the operator to the commission.
Furthermore, Rule 3.04 of the Operational Rules of the West Virginia Oil and Gas Conservation Commission provides in part as follows: "All applications submitted to deputy director for oil and gas for a permit to drill * * * any deep well * * * shall be reviewed by the commission (of the oil and gas conservation commission) or by an authorized agent to ascertain compliance with these rules and regulations."
The Circuit Court of Kanawha County concluded that, without the written consent for the drilling of a well from the surface owners, the petitioners had not complied with the provisions of W.Va.Code, 22-4A-7(b)(4), and were thus not entitled to the permit. Specifically, the circuit court noted that W.Va.Code, 22-4A-7(b)(4) was enacted in 1972 and therefore, the statute was effective prior to the time in 1978 when the petitioners acquired the remaining undivided one-half interest in the oil and gas underlying the 96 acre tract. It was upon this basis that the circuit court held that the petitioners were subject to the surface owners consent requirement. 2
In their petition filed in this Court, the petitioners assert that the requirements imposed by W.Va.Code, 22-4A-7(b)(4) and Rule 3.04 of the Operational Rules of the Oil and Gas Conservation Commission violate the United States and West Virginia Constitutions. Specifically, the petitioners assert that the statutory consent and easement to be acquired from the surface owners prior to drilling a deep well (1) impairs the obligation of a contract existing prior to the 1972 enactment of W.Va.Code, 22-4A-7, and (2) constitutes a taking of the property of the petitioners without due process of law. 3 Furthermore, the petitioners contend that the requirements of W.Va.Code, 22-4A-7(b)(4) and Rule 3.04, if constitutional, do not apply in this particular case.
The circuit court in its...
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