Hair v. Oklahoma Corp. Com'n
| Citation | 740 P.2d 134,1987 OK 50 |
| Decision Date | 16 June 1987 |
| Docket Number | 58346,Nos. 58060,s. 58060 |
| Parties | J.C. HAIR, Lavelle Hair, Jessie J. Lawson, Lois Ardell Lawson, W.F. Weger, Frances Weger, and Nora Lee Price, Appellants, v. OKLAHOMA CORPORATION COMMISSION, Hamp Baker, Norma Eagleton, and James B. Townsend, Commissioners, Appellees. |
| Court | Oklahoma Supreme Court |
Charles Nesbitt, Oklahoma City, for appellants.
M. Keywood Deese, Conservation Atty., Gretchen P. Hoover and Laurie A. Williams, Asst. Conservation Attys., Oklahoma Corp. Com'n, Oklahoma City, for appellee.
Robert J. Emery, Oklahoma City, for applicant Kerr-McGee Corp.
On August 26, 1981, Kerr-McGee Corporation filed an application, Cause C.D. No. 86441, with the Oklahoma Corporation Commission (Commission) to amend previous spacing orders to extend the boundaries of various common sources of supply and to establish proper 640-acre drilling and spacing units for said formations underlying certain sections of land in Grady and Comanche Counties for the production of gas and gas condensate. In its spacing extension application, Kerr-McGee specifically requested "that said Order be made effective the date of the filing of this application and in no event later than the date of hearing said application."
In compliance with the legislative requirements then in force, 52 O.S.Supp.1982 § 87.1(a), 1 and Commission Rule 12(b), the Commission gave notice of the scheduled October 20, 1981, spacing extension application hearing solely by publication in Grady, Comanche and Oklahoma Counties. The published notice expressly stated the effective date of the proposed order was requested to be the date of the filing of the spacing extension application and in no event later than the date of the hearing on the application. No other notice was ever sent to the owners of minerals or other oil and gas rights affected by the determination of Kerr-McGee's application. Appellants are owners of a mineral interest in the spacing extension area and are specifically affected by the application inasmuch as the primary term of their lease expired after the date of filing the spacing extension application but before the date of the scheduled hearing and order rendered thereon.
Kerr-McGee's application sought an emergency hearing and was assigned for adjudication to the Administrative Review Panel (Panel), within the Commission under 17 O.S.1981 § 21-24 and 52 O.S.1981 § 1. 2 A hearing was held on October 20, 1981. Upon Kerr-McGee's emergency motion to reopen the record before the Panel, a subsequent hearing was held on October 30, 1981, to consider the effective date of the spacing order. One of the reasons expressed for the requested back-date of the Panel order's effectiveness was the termination of a certain lease while the Commission's spacing extension process was pending. In particular, the primary term of appellants' lease to a non-operating working interest owner which had indicated an interest to join with Kerr-McGee in exploration in the area would expire after the application was filed but before the order would be issued thereon unless the order was made effective prior to that date. On November 3, 1981, the Panel voted to grant the creation of spacing units in the requested area and issued Order No. 201716, effective August 26, 1981, the date Kerr-McGee's application was filed. The Panel order recited:
"That the evidence reflects the geological opinions expressed by the expert witness testifying in behalf of Applicant were applicable as of August 26, 1981; that the evidence reflects that severe economic loss would be incurred through loss of otherwise valid oil and gas leases by parties owning such leases within the spacing extension area in the event the Order herein is not made effective as of August 26, 1981; and that distortion of correlative rights and waste of petroleum hydrocarbons will not be caused by making the Order herein effective as of August 26, 1981."
On November 2, 1981, the Attorney General of Oklahoma issued Opinion No. 81-47 in which he declares the 1980 legislative enactment creating the Panel an unconstitutional transfer of the power and authority of the Commission to the Panel, and an unconstitutional grant to the Commission of the power to delegate its discretionary powers to a general deputy. The Commission alleges on appeal it did not receive notification of the subject of the Attorney General's Opinion until the afternoon of November 4, 1981, after the Panel order was issued.
The Commission en banc subsequently approved and adopted the Panel's spacing extension order in Cause G.D. No. 27016 in a monthly adoption procedure of all Panel orders issued which were no longer subject to appeal. This procedure had been followed after the passage of the enactment because of the uncertainty as to its constitutionality. The record discloses that when the Kerr-McGee cause came up for adoption it was protested. Therefore it was pulled off the general order numbers and an individual order was prepared addressing only the Kerr-McGee order. Commission Order No. 206198 adopts the drilling and spacing order of the Panel, "as though said order was entered by the Commission on the effective date of said order." The body of that order indicates August 26, 1981, as the effective date of the Panel order; however, the schedule at the end of the order recites the effective date as "8-16-81." Consequently, the Commission thereafter issued Order No. 210583, Order Nunc Pro Tunc, correcting the obvious clerical error in its former Order No. 206198, to reflect the Panel order's proper effective date as August 26, 1981, the date the application was filed.
J.C. Hair, Lavelle Hair, Jesse J. Lawson, W.F. Weger, Frances Weger, and Nora Lee Price (appellants) brought this consolidated appeal from the two separate orders entered by the Commission which adopt the Panel's spacing order. The essential issues in this appeal turn on the validity of the Panel order subsequently adopted in the Commission orders here under review.
This appeal presents four primary issues for determination:
(1) Is the repealed statutory enactment, 17 O.S.1981 §§ 21-24 and 52 O.S.1981 § 1, which created within the Commission an Administrative Review Panel constitutional?
(2) Whether the publication notice for Kerr-McGee's spacing extension application and the hearings thereon is sufficient to vest the Panel and Commission with jurisdiction to enter and adopt, respectively, the order which establishes various drilling and spacing units.
(3) Whether the Panel's drilling and spacing order and the Commission's adoption orders are sustained by the law and substantial evidence.
(4) Whether the Commission had jurisdiction to issue the nunc pro tunc order which establishes the effective date of its prior order inasmuch as an appeal had been perfected from the former order and was pending before this Court.
While we hold the enactment unconstitutional, the Commission and Panel were acting under color of authority prior to actual notice of Attorney General's Opinion No. 81-47 and the Panel was then a de facto body; therefore, we find the challenged Commission orders valid. We answer the second question in the affirmative based on this Court's decision in Harry R. Carlile Trust v. Cotton Petroleum, 732 P.2d 438 (Okla.1987), which applies the standards of due process enunciated in Cravens v. Corporation Commission, 613 P.2d 442 (Okla.1980), purely prospectively to affect those spacing units which were, as here, comprised of non-producing leaseholds. We answer the third and fourth questions in the affirmative.
The first issue appellants raise concerns the repealed 1980 statutory enactment creating the Administrative Review Panel. Section 21 of the enactment provides that the Panel shall consist of three Deputy Commissioners and it shall hear such cases, and perform such duties, as are assigned to it by the Commission or by law. 3 The Commission may delegate any duty, power, responsibility or case to the Panel, as the Commission, in its discretion, sees fit. The Panel shall have jurisdiction to issue such writs, orders or any other process necessary to the performance of its duties in like manner as is provided to the Commission. The Commission may remove any case or proceeding from the Panel at any time and proceed to hear that case or proceeding. The Panel shall hear all exceptions from trial examiners' orders in oil and gas cases, and shall hear all emergency oil or gas cases. Under Section 24, the Commission has the discretionary power to reverse, modify, remand or approve, in whole or in part, any decision or ruling of the Panel. 4
Appellants contend the repealed enactment is an unconstitutional delegation of discretionary powers granted exclusively to the Commission by the Oklahoma Constitution. Appellants rely on Attorney General's Opinion No. 81-47 which finds the 1980 legislative enactment unconstitutional. The opinion correctly concludes that none of the provisions contained in Okla. Const. Art. 9 §§ 18-34 granting the Commission its powers, duties and functions confer upon the Commission the power to delegate any part of its discretionary power to a panel. Appellants contend that because the delegation of power to the Panel by the Commission is unconstitutional, the order made by the Panel is void, and the subsequent orders of the Commission adopting the Panel order, which are the subject of this consolidated appeal, are likewise void.
The Commission does not dispute that the enactment is an unconstitutional transfer of the powers, duties and functions of the Commission to the Panel. But it argues the effect of the opinion of the Attorney General should apply prospectively, i.e., from actual notice to the Commission of the opinion. It argues up until the time of actual notice the Commission and the Panel were acting under color of law.
Kerr-McGee's primary contention is that the enactment is...
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