CopyPublished | Florida 1st District Court of Appeal | 1996 WL 152877
...lahassee, for Appellees. ALLEN, Judge. Coastal Petroleum Company (Coastal) and other interested persons appeal from final orders of the appellee Board of Trustees of the Internal Improvement Trust Fund (the trustees) whereby the trustees relied upon section 253.571, Florida Statutes, in requiring a surety bond as a condition precedent to Coastal's drilling for oil and gas....
...annual fee pursuant to section
377.2425, Florida Statutes, as a condition precedent to granting Coastal's application for a permit to drill an oil and gas exploration well upon the leased lands. Subsequent to that decision, the trustees relied upon section
253.571 in ordering that Coastal would be required to post a $500 million bond as a further condition precedent to any drilling upon the leased lands. The trustees then reconsidered the issue and voted to raise the bond requirement to $1.9 billion. The two orders have been consolidated for this appeal. Section
253.571 authorizes the trustees to require a bond from each lessee of public land prior to the lessee's drilling for oil or gas upon leased lands. But Coastal contends that application of the statute to its lease constitutes an impairment of the obligation of contract, contrary to article I, section 10 of the state constitution, because its lease was executed in the 1940's and section
253.571 was not enacted until 1969....
...The trustees offer several arguments for their contention that the lease is subject to the bond requirement of the statute. The trustees first rely upon the following language in the 1976 settlement agreement to argue that Coastal subjected itself to section 253.571: Coastal shall secure permits from all appropriate State environmental protection agencies in compliance with the then existing laws and regulations, prior to any drilling or mining....
...This language expressly waived any right of the trustees to assert drilling requirements not specified in the referenced statutes. Alternatively, the trustees suggested for the first time at oral argument that they had the authority to impose the bond requirement because section
253.571 is merely a continuation of the trustees' broad authority pursuant to section
253.04, Florida Statutes (1941), which provides that the trustees may "take such other action or do such other things as may in the judgment of the said tru...
...nding state contracts. We therefore cannot agree that section
253.04 provides a valid basis for the trustees' actions in this case. Finally, the trustees argue that even if they were without authority to impose the bond under the terms of the lease, section
253.571 does not unconstitutionally impair the obligation of contract under the federal constitutional analysis set forth by the United States Supreme Court in Energy Reserves Group, Inc....
CopyPublished | Florida 1st District Court of Appeal | 1996 Fla. App. LEXIS 4368, 1996 WL 200228
...s lacked the authority to impose the $1.9 billion bond requirement. We agree and reverse on the authority of Coastal Petroleum Co. v. Chiles,
672 So.2d 571 (Fla. 1st DCA 1996), in which this court held that the trustees’ retroactive application of section
253.571, Florida Statutes, to a preexisting oil and gas lease to impose a $1.9 billion bond requirement impaired obligations under Coastal’s lease contract and thereby contravened Article I, section 10 of the state constitution....
