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Gawenis v. Ark. Oil & Gas Comm'n

Supreme Court of Arkansas

May 28, 2015, Opinion Delivered

No. CV-14-648

Opinion

 [**454]  [*1]   JIM HANNAH, Chief Justice

Appellant Richard G. Gawenis appeals from an order of the Van Buren County Circuit Court affirming an order of appellee Arkansas Oil and Gas Commission to integrate Gawenis's unleased mineral interests into a drilling unit. For reversal, Gawenis contends that the Commission's forced integration of his mineral interests is an unconstitutional taking of his property and that the Commission's order deprived him of his constitutional right to a jury trial to determine just compensation for his property. This appeal requires interpretation of the Arkansas Constitution; therefore, our jurisdiction is pursuant to Arkansas Supreme Court Rule 1-2(a)(1) (2014). We affirm the circuit court's order.

Gawenis is the owner of the oil, gas, and other minerals beneath a .69 acre tract in Van Buren County, Arkansas, that is situated [***2]  within the Ozark Highlands Unit ("OHU"). Formed by the United States of America Bureau of Land Management, the OHU is believed to be prospective for natural-gas exploration and development from the Fayetteville Shale  [*2]  formation. The OHU is composed mostly of mineral interests owned by the United States of America, but it also contains some privately owned mineral interests, such as the .69 acre mineral tract owned by Gawenis.

On May 22, 2012, the Commission held a public hearing to receive evidence related to SEECO's application seeking to create a 5,154-acre oil-and-gas drilling unit in the OHU and to integrate all unleased and uncommitted mineral interests within the unit. On June 4, 2012, the Commission established the unit and integrated all of the unleased and uncommitted mineral interests within the unit, except for the unleased mineral interests of Gawenis.

On June 26, 2012, the Commission held a hearing to receive evidence related to SEECO's request to integrate Gawenis's unleased mineral interests into the drilling unit. Gawenis testified at the hearing, stating that he believed that the forced-integration procedures of the Commission amounted to a taking of his property, that [***3]  the risk-factor percentage was inappropriate, that his rights and his land belonged to him, and that he had not been afforded a jury trial to determine just compensation for his mineral interests. In a July 12, 2012 order, the Commission approved SEECO's application and integrated Gawenis's unleased mineral interests into the drilling unit.

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2015 Ark. 238 *; 464 S.W.3d 453 **; 2015 Ark. LEXIS 390 ***

RICHARD G. GAWENIS, APPELLANT v. ARKANSAS OIL & GAS COMMISSION, AND SEECO, INC., APPELLEES

Notice: THE LEXIS PAGINATION OF THIS DOCUMENT IS SUBJECT TO CHANGE PENDING RELEASE OF THE FINAL PUBLISHED VERSION.

Prior History:  [***1] APPEAL FROM THE VAN BUREN COUNTY CIRCUIT COURT. NO. CV-2012-150. HONORABLE H.G. FOSTER, JUDGE.

Disposition: AFFIRMED.

CORE TERMS

drilling, integration, mineral interest, oil and gas, oil, rights, mineral, forced-integration, unleased, acre, jury trial, Conservation, appropriated, landowner, capture, tract, pool, lease

Energy & Utilities Law, Discovery, Exploration & Recovery, Rule of Capture, Energy Conservation, General Overview, Regulators, Public Utility Commissions, Authorities & Powers, Pooling & Unitization, Compulsory Pooling, Constitutional Law, Case or Controversy, Constitutionality of Legislation, Inferences & Presumptions, Evidence, Burdens of Proof, Allocation, Bill of Rights, Fundamental Rights, Eminent Domain & Takings, Governments, Police Powers, Real Property Law, Elements, Involuntary Acquisition & Diminution of Value, Takings