Champlin Refining Co. v. Corporation Comm'n of Oklahoma
286 U.S. 210 (1932)

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U.S. Supreme Court

Champlin Refining Co. v. Corporation Comm'n of Oklahoma, 286 U.S. 210 (1932)

Champlin Refining Co. v. Corporation Commission of Oklahoma

No. 122

Argued March 23, 1932

Decided May 16, 1932*

286 U.S. 210

Syllabus

1. In Oklahoma, as generally elsewhere, the owners of the land containing an oil and gas pool do not have absolute title to those minerals as they permeate below the surface, but each has the right, through wells on his own land, to take all the oil and gas that he may be able to reduce to possession, including that coming from the land of the others. P. 286 U. S. 233.

2. This right, however, is constitutionally subject to reasonable regulation by the state, to the end that the natural gas pressure available for lifting the oil to the surface may not be unreasonably and wastefully used, and that the common supply of gas and oil may not be unreasonably and wastefully depleted to the injury of the others who are entitled to take from the same pool. Id.

3. Even though an operator have facilities for making useful disposition of all the oil and gas that may naturally flow from his wells, he has not a constitutional right to operate them at full production where such operation, by improvident use of natural gas pressure, would itself cause a serious diminution of the quantity of oil ultimately to be recovered from the pool, and, by compelling other

Page 286 U. S. 211

owners to speed production in self-defense, would cause them to add to that waste and cause them to waste oil on the surface by producing it in excess of their means of transport and proper storage and their market demand. P. 286 U. S. 233.

4. A statute of Oklahoma prohibits waste of petroleum. Section 3 defines waste to include, in addition to its ordinary meaning, economic, underground and surface waste, and waste incident to production in excess of transportation or marketing facilities or reasonable market demands, and it empowers a Commission to make regulations for the prevention of such waste. Section 4 provides that, whenever full production from any common source of supply "can only be had under conditions constituting waste as herein defined," then any person having a right to produce from such common source

"may take therefrom only such proportion of all crude oil and petroleum that may be produced therefrom, without waste, as the production of the well or wells of such person . . . bears to the total production of such common source of supply."

Held that, in this case, it is not shown that the rule of proration prescribed in § 4, or any other provision involved, amounts to or authorizes arbitrary interference with private business or property rights or that such statutory rule is not reasonably calculated to prevent the wastes specified in § 3. P. 286 U. S. 234.

5. Section 2 of the statute, objected to as authorizing the regulation of prices of crude oil, is separable from the parts under which the order of proration, to prevent waste, was made in this case, and its constitutionality need not be considered. Id.

6. A declaration in a statute that invalidity of any part shall not affect the validity of the other parts creates a presumption that, eliminating invalid parts, the legislature would have enacted the reminder. Id.

7. Proration orders applying to the production of oil but not to sales or transportation held consistent with the commerce clause of the national Constitution. P. 286 U. S. 235.

8. An order of the Oklahoma Corporation Commission prorating the production of oil from a common source to prevent waste will not be set aside at the suit of one of the producers when not shown to be arbitrary or discriminatory in fact merely because information as to production etc., upon which the Commission acted, was procured by other producers in the same field, serving the Commission without pay, and by an umpire whose salary and expenses, in default of legislative appropriations, were paid by such producers. P. 286 U. S. 236.

Page 286 U. S. 212

9. Since a proration order, though valid under the Oklahoma statute at one time, may, through change of conditions, cease to be so, and may become unjust and arbitrary at a later time, denial of an injunction will not preclude the plaintiff from applying again on a different state of facts. P. 286 U. S. 236.

10. To warrant an injunction to restrain criminal proceedings under a state statute as unconstitutionally affecting property rights, there must be a present danger that such proceedings will be taken. P. 286 U. S. 237.

11. In a suit attacking the constitutionality of administrative orders made under a state statute, held that the federal court had authority to stay their enforcement pending an appeal from its order denying a temporary injunction. P. 286 U. S. 239.

12. Section 9 of the Oklahoma statute, supra, provides that any person violating the Act shall be subject to have his producing property placed in the hands of a receiver by a court of competent jurisdiction at the suit of the state through the Attorney General, but that such receivership shall only extend to the operating of producing wells and the marketing of the production thereof under the provisions of the Act.

Held:

(1) That a proceeding under the section, taken in a state court against the plaintiff in a pending suit in the federal court, was properly restrained by the latter pending its final decision on the validity of provisions of the statute and orders made under it. P. 286 U. S. 239.

(2) The fact that the Attorney General dismissed the proceeding brought, though not required to do so, did not establish that prosecution under the section was no longer imminent. P. 286 U. S. 240

(3) The section, considered with other parts of the Act, is plainly a penal provision. Id.

(4) As such, it is void under the due process clause of the Fourteenth Amendment because it purports to punish violations of regulatory provisions of the Act, §§ 1, 3, 4, (not orders of the Commission) which are too vague and indefinite to afford a standard of conduct. P. 286 U. S. 243.

51 F.2d 823 affirmed with modifications.

Appeals in a suit brought by the Refining Company for the purpose of enjoining the enforcement of certain provisions of the Oklahoma "Curtailment Act," as to oil and gas, and of certain orders made under it by the Corporation Commission. No. 122 was an appeal from an order denying a temporary injunction. It is dismissed. The other two branches were cross-appeals from different parts of the final decree.

Page 286 U. S. 223

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