The provision in the Act of March 4, 1893, of the State pf
Indiana
"that it shall be unlawful for any person, firm or corporation
having possession or control of any natural gas or oil well,
whether as a contractor, owner, lessee, agent or manager, to allow
or permit the flow of gas or oil from any such well to escape into
the open air without being confined within such well or proper
pipes, or other safe receptacle, for a longer period than two days
next after gas or oil shall have been struck in such well, and
thereafter all such gas or oil shall be safely and securely
confined in such well, pipes or other safe and proper
receptacles"
is not a violation of the Constitution of the United States, and
its enforcement as to persons whose obedience to its commands were
coerced by injunction, is not a taking of private property without
adequate compensation, and does not amount to a denial of due
process of law, contrary to the provisions of the Fourteenth
Amendment to the Constitution of the United States, but is only a
regulation by the State of Indiana of a subject which especially
comes within its lawful authority.
The title, preamble, and first section of a law enacted March 4,
1893, by the State of Indiana (Acts of 1893, c. 36, p. 300) are as
follows:
"An act concerning the sinking, safety, maintenance, use, and
operation of natural gas and oil wells, prescribing penalties, and
declaring an emergency."
"Whereas great danger to life and injury to persons and property
is liable to result from the improper, unsafe, and negligent
sinking, maintenance, use, and operation of natural gas and oil
wells, therefore,"
"SECTION 1. Be it enacted by the General Assembly of the State
of Indiana, That it shall be unlawful for any person, firm, or
corporation having possession or control of any natural gas or oil
well, whether as a contractor, owner, lessee, agent, or manager, to
allow or permit the flow of gas or oil from any such well to escape
into the open air without being confined within
Page 177 U. S. 191
such well or proper pipes or other safe receptacle, for a longer
period than two (2) days next after gas or oil shall have been
struck in such well. And thereafter all such gas or oil shall be
safely and securely confined in such well, pipes, or other safe and
proper receptacles."
The remaining sections of the law in question are printed in the
margin.
*
Page 177 U. S. 192
The issue which this record presents on the subject of the law
just referred to is this: did the enforcement of the first section
of the statute produce, as to the persons whose obedience to its
commands were coerced by injunction, a taking of private property
without adequate compensation -- that is, did the execution of the
statute amount to a denial of due process of law contrary to the
provisions of the Fourteenth Amendment to the Constitution of the
United States?
The controversy was thus initiated: the State of Indiana,
through its attorney general, filed a complaint in the Circuit
Court of the County of Madison in the State of Indiana against the
Ohio Oil Company, a corporation organized under the laws of the
State of Ohio but authorized to carry on its business in the State
of Indiana, as it had complied with the regulations enacted by that
state as to foreign corporations doing business therein. The cause
of complaint was thus stated:
"Plaintiff says that for many years heretofore, there has
Page 177 U. S. 193
existed, underlying the Counties of Madison, Grant, Howard,
Delaware, Blackford, Tipton, Hamilton, Wells, and other counties of
the State of Indiana, a large subterranean deposit of natural gas
occupying a reservoir of large extent, with well defined boundaries
and utilized for fuel and light by the people of those counties and
many other counties and cities of Indiana, including Indianapolis,
Fort Wayne, Richmond, Logansport, Anderson, Muncie, Marion, Kokomo,
and others of the most populous cities of said state, to which
cities said gas is conducted, after being brought to the surface of
the earth, through pipes and conduits by means of which many
hundreds of thousands of the people of the State of Indiana are now
and have been for more than ten years last past continuously
supplied with gas for light and fuel; that said natural gas
underlying the counties aforesaid and other portions of the state
is contained in and percolates freely through a stratum of rock
known as Trenton rock, comprising a vast reservoir in which the gas
is confined under great pressure, and from which it escapes, when
it is permitted to do so, with great force."
"The fuel supplied by the natural gas thus obtained is the
cheapest and best known to civilization, and the value of the
natural gas deposit to the state and to its citizens is many
millions of dollars; that, since the discovery of said gas deposit
in 1886, immense sums of money have come into the state and have
been invested in large manufacturing interests, and other vast sums
of money belonging to the people of the State of Indiana have been
invested in similar enterprises, causing a great increase in the
population, principally in the territory underlying which said gas
is found. Many cities in and adjacent to the gas territory,
including those named, are wholly dependent for fuel upon natural
gas, and for that reason the people of the State of Indiana have
become and are interested in the protection and continued
preservation of the natural gas supply; that many millions of
dollars invested in manufacturing and other properties in and near
said gas territory are wholly dependent for their continued
preservation and for the permanent value of their property upon
said natural gas supply; that their location and establishment in
said gas territory was due
Page 177 U. S. 194
to the presence of natural gas underlying the same, without
which such enterprises could not operate at a profit, and that in
the event the supply of gas should be exhausted in said territory
many of such manufacturing enterprises, in which thousands of the
citizens of Indiana find employment at remunerative wages, will be
compelled to stop operation."
"That their employees will be thereby thrown out of employment,
and many of them, being dependent upon their labor for support, may
and will become charges upon the state and its several municipal
subdivisions; that the property of said manufacturing enterprises
and the vast investments depending upon them and related to them
will become worthless and the owners will be driven to remove to
other parts of the country, taking away from Indiana great wealth
now interested in said enterprises as aforesaid."
"That in the cities named and in all the territory known as the
'gas belt,' the inhabitants have for years used practically no
other fuel than natural gas; that their houses have in many
instances been constructed with a view to the use of such fuel, and
will have to be differently equipped before other kinds of fuel can
be used; that the cost of natural gas as fuel to the people of the
'gas belt,' who number several hundreds of thousands, is very much
less than that of any other fuel that has ever been or can be
procured by them, and that to the other inhabitants of the state
using said natural gas it has become and is a source of great
convenience, comfort, and increased happiness because of its
cheapness, convenience, and cleanliness as fuel."
"That many small villages in and near the gas territory have
within a few years become flourishing and opulent cities."
"That the state's wealth and its revenues derived from taxation
on account of such increased population and the various interests
that have been fostered and supported by natural gas have been
greatly increased, and will, in the event natural gas gives out, be
correspondingly curtailed."
"That the State of Indiana, relying upon the permanent supply of
natural gas, has at great expense equipped many of its public
institutions, including the state house, the Central and
Page 177 U. S. 195
other hospitals for the insane, the asylums for the blind and
deaf and dumb, the institution for the care of orphans of American
soldiers, and other public institutions owned and maintained by the
State of Indiana and its various municipal subdivisions, together
with the courthouses in many counties, and a vast number of public
schools for the use of natural gas as a fuel, by which the cost of
maintaining the public buildings and institutions above named has
been materially lessened and the comfort and happiness of their
inmates and occupants immensely increased."
"That the supply of natural gas underlying the territory
aforesaid is so placed in such Trenton rock that the diminution or
consumption of said gas taken from said reservoir affects and
reduces correspondingly the common supply."
"That if the gas supply is husbanded and protected, it will last
for many years and continue to furnish the various cities named
with abundant fuel, and the population, wealth, and other material
interests of the state will continue to be benefited and enhanced,
and the comfort, happiness, and enjoyment of the people of the
state greatly increased."
"That underlying a portion of said natural gas territory and at
the same levels, occupying the interstices -- said Trenton rock in
common with said gas, are large quantities of petroleum oil, and
that, because of the volatile character of said gas and the
pressure under which it is confined in said Trenton rock when said
reservoir is tapped by wells drilled into the same from the surface
of the earth, said gas and oil will and do escape into the open air
in great volumes unless securely confined in tanks or other proper
receptacles."
"That on or about the 25th day of May, 1897, said defendant, the
Ohio Oil Company, drilled, near the City of Alexandria, in said
Madison County, a number of wells into said gas and oil bearing
rock, producing natural gas and petroleum as aforesaid in large
quantities, which wells are known by the name of the land owner
upon whose land they are situated, which name and the description
of said wells are as follows, to wit."
The complaint then enumerated five gas and oil wells which
Page 177 U. S. 196
had been opened and were being operated by the defendant for
extracting oil, and averred as follows:
"That instead of securely anchoring said wells and each of them
when so drilled, so as to confine within the same or within tanks
or pipes or other safe receptacles the natural gas produced
therefrom within two days after said wells were respectively
completed and gas and oil were struck therein, the said defendants,
ever since the completion of said wells, all of which have been
completed for periods varying from four to nine months, have
unlawfully permitted the gas produced therein to flow and escape
into the open air, whereby many millions of cubic feet of natural
gas have been greatly diminished, and the property of its citizens
in and near said gas territory dependent upon the continued supply
of said natural gas for fuel, as aforesaid, has been greatly
damaged and decreased in value."
"That the defendants and each of them avow their purpose to
permit said gas to escape continuously and indefinitely hereafter
from such wells, and refuse to make any effort to confine the same,
but declare their purpose to drill other wells in said gas
territory and permit the gas therefrom to flow and escape into the
open air, and that, if said gas continues to flow from said wells,
the supply of natural gas upon which the citizens of said state
depend, as aforesaid, will be greatly diminished, that the pressure
of said gas, as found in said Trenton rock, will be greatly
diminished, and that, by the diminution of said pressure, water
will accumulate in said rock stratum and ultimately entirely
displace and overcome said gas supply."
"Plaintiff therefore says that, because of the wrongful acts of
defendants above described, heretofore committed and now
continuing, its property and that of its citizens has been and will
continue to be essentially interfered with and the comfortable
enjoyment of the lives of its citizens greatly interrupted."
Averring the irreparable injury to result from allowing the
wells to continue to flow, as stated, the inadequacy of the
enforcement of the penalties provided in the statute to meet the
evil complained of, and the fact that a multiplicity of suits would
be engendered if the writ of injunction prayed for was not issued,
the bill charged --
Page 177 U. S. 197
"That the value of the gas wasted by permitting said several
wells to remain open each day is of great value, and that, in
addition to the value of the same, the whole gas territory or field
is greatly damaged by permitting said wells to remain open, in that
what is known as 'back pressure,' resulting from the confinement of
said gas, is in a great measure relieved and destroyed when said
gas is liberated in the manner aforesaid, and that said back
pressure is necessary throughout said field in order to prevent the
flow of water into said rock stratum and the consequent
displacement of the gas therein contained; that, for the protection
of said gas supply from the invasion of salt water, it is necessary
that, in the use of gas from wells drilled into said reservoir,
only a fraction of the entire volume of said wells should be used,
to the end that the back pressure shall be maintained at as high a
pressure as possible, and that any other or freer method of using
said gas has a tendency to expose the same to danger of salt water,
as aforesaid."
The prayer was as follows:
"And plaintiff therefore prays that a temporary order issue
forthwith from this court prohibiting, restraining, and enjoining
said defendant, its agents, servants, and employees, from further
suffering or permitting the natural gas produced in said wells or
any of them, or any part thereof, to longer escape therefrom, and
that said defendant be ordered, directed, and commanded forthwith
with to securely confine the same either by anchoring each of said
wells or by confining the gas produced therefrom in tanks, pipes,
or other proper receptacles, and that, failing or refusing so to
do, the Sheriff of Madison County be ordered and directed forthwith
to procure necessary materials and labor, and thereby anchor,
secure, and confine the natural gas produced from said wells and
each of them, and that the expense of so doing be taxed as part of
the costs of this suit."
"And the plaintiff further prays that, upon the final hearing of
this cause, said defendant company, its officers, servants, agents,
and employees, be perpetually enjoined and prohibited from further
suffering said gas to escape, and that they be forever thereafter
commanded to confine said gas safely and securely in pipes, tanks,
or other proper receptacles, and for all proper relief. "
Page 177 U. S. 198
The temporary injunction issued as prayed for. The defendant
appeared and demurred to the complaint as not stating a cause of
action. This was overruled. The defendant then answered as
follows:
"The defendant, further answering, says that before and at the
commencement of this action, it had in good faith been and then was
engaged in the business of producing oil by drilling therefor in
the earth and rock below in said County of Madison, and that, in
the carrying on of said business, it has expended many thousands of
dollars in the leasing of territory, the purchase of machinery and
equipment thereof, and for the drilling of a number of wells and
for pipes and pipelines, all of which it then owned and still
owns."
"The defendant admits that it drilled the well complained of
herein, but says that said well was so drilled in good faith solely
for the purpose of raising and producing oil, the defendant not
being engaged in the business of producing or transporting natural
gas in said county and having there no plant for that purpose, and
such gas in such case being of no value to defendant, and there
being reasonable grounds to believe that oil existed in said
territory in sufficiently paying quantities to be utilized."
"That said well complained of was not drilled in or near any
village, town, or city, but, on the contrary, was drilled in the
country and remote from any dwelling, and the same, as so
constructed and operated, is not dangerous to life or
property."
"That said well was so drilled and completed, oil was found
therein in paying quantities, and the defendant proceeded to and
did save and utilize the same, paying to the land owner the
stipulated royalties therefor, and so operated the same with
knowledge, approbation, and consent of such land owner, and was so
operating the same solely as an oil well and in entire good faith
at the time of the commencement of this action, all of which was so
done under and by virtue of a lease to defendant by the owner of
said land granted before the commencement of this suit, under which
lease defendant owns all the gas and oil in said well and under
said land, and said well is of great value as an oil well."
"That in said well and in the same strata of rock whence
such
Page 177 U. S. 199
oil was produced, there were also found at said time quantities
of natural gas, which by its own pressure escaped through said
pipes and into the open air, said pipes being the same as the ones
through which said oil was produced and saved, and in so saving
such oil, defendant utilized such gas as power, force, and agency
to raise said oil from the rock-bearing strata below the surface of
the ground, such being the usual, natural, and ordinary method of
raising and saving oil in such cases."
"And the defendant further says that no machinery or process of
any kind has ever by the highest skill been devised or known to the
world whereby in such a case the oil in such well can be produced
and saved unless at the same time such natural gas as may be in
such well is suffered to escape, and the defendant charges the fact
to be, therefore, that if such gas shall be shut into such well in
such case that it will be impossible to raise or produce oil in any
such well, and thereby defendant's said business, together with its
said plant, property, and profits, will be entirely destroyed and
the people of said county and state will be deprived of the use and
profits of such oil, which is vastly of more value than natural gas
in said well, and the defendant says it so operated said well with
the highest skill, with the most improved machinery and appliances
known to the world, and with employees of the highest skill, and
that no more gas was suffered to escape from such well than was
consistent with the due operation of said well with the highest
skill."
"The defendant further alleges that for many months before the
completion of said well, it was openly and publicly engaged in
acquiring territory, in equipping said plant, in constructing such
oil lines, and in incurring the liabilities and paying the money
therefor, as hereinbefore alleged, all with the knowledge and
acquiescence of the plaintiff and with no notice or knowledge
whatever to or on the part of defendant that it would not be
allowed to operate such well or wells until after the said money
had been so expended and after said well had been so
completed."
"That in the territory where said well complained of is
situated, there are a number of paying oil wells, owned and
operated by various persons and corporations, and said field,
when
Page 177 U. S. 200
properly developed, may reasonably be expected to be a large one
for the production of oil, which will be and is of great value to
the people of said county."
Referring to the law of Indiana, the context of which has
already been stated, the answer contained this averment:
"This defendant further alleges that said act of the General
Assembly of the State of Indiana, as above set out, violates the
Fourteenth Amendment of the Constitution of the United States in
this, that it deprives the defendant and others of liberty and
property without due process of law, and denies to defendant and
others the equal protection of the laws."
The state demurred to the answer as not alleging facts
sufficient to constitute a defense. This demurrer was sustained.
The defendant refusing to answer further, a decree granting a
permanent injunction was entered. An appeal having been prosecuted
to the Supreme Court of the State of Indiana, in that court the
decree of the trial court was in all respects affirmed. 150 Ind.
698. This writ of error was thereupon allowed.
MR. JUSTICE WHITE, after making the foregoing statement,
delivered the opinion of the Court.
The assignments of error all in substance are resolvable into
one proposition, which is that the enforcement of the provisions of
the Indiana statute as against the plaintiff in error constituted a
taking of private property without adequate compensation, and
therefore amounted to a denial of due process of law in violation
of the Fourteenth Amendment.
When this proposition is analyzed by the light of the facts
which are admitted on the record, it becomes apparent that the
foundation upon which it must rest involves two contentions which
are in conflict one with the other -- in other words, the argument
by which alone it is possible to sustain the claim becomes,
Page 177 U. S. 201
when truly comprehended, self-destructive. Thus it is apparent
from the admitted facts that the oil and gas are commingled and
contained in a natural reservoir which lies beneath an extensive
area of country, and that, as thus situated, the gas and oil are
capable of flowing from place to place, and are hence susceptible
of being drawn off by wells from any point, provided they penetrate
into the reservoir. It is also undoubted that such wells, when
bored from many points in the superincumbent surface of the earth,
are apt to reach the reservoir beneath. From this it must
necessarily come to pass that the entire volume of gas and oil is
in some measure liable to be decreased by the act of anyone who,
within the superficial area, bores wells from the surface and
strikes the reservoir containing the oil and gas. And hence, of
course, it is certain, if there can be no authority exerted by law
to prevent the waste of the entire supply of gas and oil, or
either, that the power which exists in everyone who has the right
to bore from the surface and tap the reservoir involves, in its
ultimate conception, the unrestrained license to waste the entire
contents of the reservoir by allowing the gas to be drawn off and
to be dispersed in the atmospheric air and by permitting the oil to
flow without use or benefit to anyone. These things being lawful,
as they must be if the acts stated cannot be controlled by law, it
follows that no particular individual having a right to make
borings can complain, and thus the entire product of oil and gas
can be destroyed by any one of the surface owners. The proposition,
then, which denies the power in the state to regulate by law the
manner in which the gas and oil may be appropriated, and thus
prevent their destruction, of necessity involves the assertion that
there can be no right of ownership in and to the oil and gas before
the same have been actually appropriated by being brought into the
possession of some particular person. But it cannot be that
property as to a specified thing vests in one who has no right to
prevent any other person from taking or destroying the object which
is asserted to be the subject of the right of property. The whole
contention, therefore, comes to this: that property has been taken
without due process of law, in violation of the Fourteenth
Amendment, because of the fact that the thing taken
Page 177 U. S. 202
was not property, and could not therefore be brought within the
guaranties ordained for the protection of property.
The confusion of thought which permeates the entire argument is
two-fold: first, an entire misconception of the nature of the right
of the surface owner to the gas and oil as they are contained in
their natural reservoir, and this gives rise to a misconception as
to the scope of the legislative authority to regulate the
appropriation and use thereof. Second, a confounding, by treating
as identical, things which are essentially separate -- that is, the
right of the owner of land to bore into the bosom of the earth, and
thereby seek to reduce the gas and oil to possession, and his
ownership after the result of the borings has reached fruition to
the extent of oil and gas by himself actually extracted and
appropriated. In other words, the fallacy arises from considering
that the means which the owner of land has a right to use to obtain
a result is in legal effect the same as the result which may be
reached. We will develop the misunderstanding which is involved in
the matters just stated.
No time need be spent in restating the general common law rule
that the ownership in fee of the surface of the earth carries with
it the right to the minerals beneath, and the consequent privilege
of mining to extract them. And we need not, therefore, pause to
consider the scope of the legislative authority to regulate the
exercise of mining rights and to direct the methods of their
enjoyment so as to prevent the infringement by one miner of the
rights of others.
Del Monte Mining Co. v. Last Chance Mining
Co., 171 U. S. 60.
The question here arising does not require a consideration of the
matters just referred to, but it is this: does the peculiar
character of the substances, oil and gas, which are here involved,
the manner in which they are held in their natural reservoirs, the
method by which and the time when they may be reduced to actual
possession or become the property of a particular person, cause
them to be exceptions to the general principles applicable to other
mineral deposits, and hence subject them to different rules? True
it is that oil and gas, like other minerals, are situated beneath
the surface of the earth, but except for this one point of
similarity, in many other respects they greatly differ. They have
no fixed situs
Page 177 U. S. 203
under a particular portion of the earth's surface within the
area where they obtain. They have the power, as it were, of
self-transmission. No one owner of the surface of the earth, within
the area beneath which the gas and oil move, can exercise his right
to extract from the common reservoir in which the supply is held
without, to an extent, diminishing the source of supply as to which
all other owners of the surface must exercise their rights. The
waste by one owner, caused by a reckless enjoyment of his right of
striking the reservoir at once therefore operates upon the other
surface owners. Besides, whilst oil and gas are different in
character, they are yet one, because they are unitedly held in the
place of deposit. In
Brown v. Spilman, 155 U.
S. 665,
155 U. S.
669-670, these distinctive features of deposits of gas
and oil were remarked upon. The Court said:
"Petroleum gas and oil are substances of a peculiar character,
and decisions in ordinary cases of mining for coal, and other
minerals which have a fixed situs, cannot be applied to contracts
concerning them without some qualifications. They belong to the
owner of the land, and are a part of it, so long as they are on it
or in it or subject to his control, but when they escape and go
into other land, or come under another's control, the title of the
former owner is gone. If an adjoining owner drills his own land and
taps a deposit of oil or gas extending under his neighbor's field,
so that it comes into his well, it becomes his property.
Brown
v. Vandergrift, 80 Pa. 142, 147;
Westmoreland Nat. Gas
Co.'s Appeal, 25 Weekly Notes of Cases (Penn.) 103."
In
Westmoreland & Cambria Natural Gas Co. v. De
Witt, 130 Pa. 235, the Supreme Court of Pennsylvania
considered the character of ownership in natural gas and oil as
these substances existed beneath the surface of the earth. The
court said:
"The learned master says gas is a mineral, and while
in
situ is part of the land, and therefore possession of the land
is possession of the gas. But this deduction must be made with some
qualifications. Gas, it is true, is a mineral, but it is a mineral
with peculiar attributes which require the application of
precedents arising out of ordinary mineral rights with much
more
Page 177 U. S. 204
careful consideration of the principles involved than of the
mere decisions. Water also is a mineral, but the decisions in
ordinary cases of mining rights, etc., have never been held as
unqualified precedents in regard to flowing or even to percolating
waters. Water and oil, and still more strongly gas, may be classed
by themselves, if the analogy be not too fanciful, as minerals
ferae naturae. In common with animals, and unlike other
minerals, they have the power and the tendency to escape without
the volition of the owner. Their 'fugitive and wandering existence
within the limits of a particular tract is uncertain,' as said by
Chief Justice Agnew in
Brown v. Vandergrift, 80 Pa. 147,
148. . . . They belong to the owner of the land, and are a part of
it, so long as they are on or in it and are subject to his control,
but when they escape and go into other land or come under another's
control, the title of the former owner is gone. Possession of the
land therefore is not necessarily possession of the gas."
In
Hague v. Wheeler, 157 Pa. 324, the question involved
in the cause was the right of a land owner who had a gas well on
his own land to complain of the escape of gas from a well situated
on the land of another. After adverting to the rule embodied in the
maxim
sic utere tuo ut alienum non laedas, and after
referring to the exceptional nature of the right to acquire
ownership in natural gas and oil, it was decided that the
complainant was not entitled to relief. The court said,
340-341:
"Now it is doubtless true that the public has a sufficient
interest in the preservation of oil and gas from waste to justify
legislation upon this subject. Something has been done in this
direction already by the acts regulating the plugging of abandoned
wells. . . . In the disposition he may make of it [private
property], he is subject to two limitations. He must not disregard
his obligations ligations to the public. He must not disregard his
neighbor's rights. If he uses his product in such a manner as to
violate any rule of public policy or any positive provision of the
written law, he brings himself within the reach of the courts. If
the use he makes of his own, or its waste, is injurious to the
property or the health of others, such use or waste may be
restrained, or damages recovered therefor, but,
Page 177 U. S. 205
subject to these limitations, his power as an owner is absolute
until the legislature shall, in the interest of the public, as
consumers, restrict and regulate it by statute."
Again, in
Jones v. Forest Oil Company (January, 1900),
194 Pa. 379, the same subject was once more considered. The
complaint was filed by one land owner having a gas well on his land
to enjoin the owner of adjoining property from using in a gas well
thereon a pump which was asserted to have such power that its
operation would draw away the oil and gas from the well of the
complainant to that of the defendant. Reviewing the cases to which
we have just referred, and after quoting the language of Chief
Justice Agnew in
Brown v. Vandergrift, 80 Pa. 142, 147,
wherein, as we have seen, oil and gas were by analogy classed as
"minerals
ferae naturae," the court decided:
"From these cases, we conclude that the property of the owner of
lands in oil and gas is not absolute until it is actually in his
grasp and brought to the surface."
Again, applying the consequences of the doctrine just stated,
the court declared:
"If possession of the land is not necessarily possession of the
oil and gas, is there any reason why an oil and gas operator should
not be permitted to adopt any and all appliances known to the trade
to make the production of his wells as large as possible?"
A brief examination of the Indiana decisions on the subject of
oil and natural gas and the right to acquire ownership thereto will
make it apparent that, from the peculiar nature of these
substances, courts of that state have announced the same rule as
that recognized by this Court in
Brown v. Spilman,
155 U. S. 665,
155 U. S.
669-670, and which has been applied by the Supreme Court
of the State of Pennsylvania. In
State ex Rel. Corwin v.
Indiana & Ohio Oil, Gas & Mining Co., 120 Ind. 575, a
law of the State of Indiana which made it unlawful for any person
to conduct natural gas beyond the state, and imposing penalties for
so doing was assailed as unconstitutional because repugnant to the
commerce clause of the Constitution of the United States. The court
held the statute to be void for the asserted cause. The
Page 177 U. S. 206
property in natural gas when reduced to actual possession was
decided to be like any other property, and therefore the subject of
commerce and within the protection of the Constitution of the
United States. In
Jamieson v. Indiana Natural Gas & Oil
Company, 128 Ind. 555, a law of that state which prohibited
the transportation of natural gas through pipes at a greater
pressure than three hundred pounds per square inch, or otherwise
than by its natural flow, was attacked not only on the ground of
its interference with the right of property which sprang into
existence with the possession of the gas, but because also the act
in question was a regulation of interstate commerce. Both
contentions were decided to be without merit, substantially on the
ground that the dangerous nature of the product, its susceptibility
to explosion, and the consequent hazard to life and property which
might arise from its movement through pipes made the act of
transmitting a fit subject for police regulation. In the course of
its opinion, the court said:
"The local character of such a substance as natural gas is, we
repeat, marked and peculiar. It is a natural product, and its
source is in the soil or rocks of the earth. It is as strikingly
local as coal or petroleum, and yet no one has ever questioned the
power of a state to enact laws governing mining. . . . It is so
essentially local that only local regulation can be effective or
appropriate. It is found in very few localities, and the character
of locality is impressed upon it more clearly and strongly than
upon almost any other natural product in the world."
Again, said the court:
"The local and peculiar character of natural gas makes it almost
impossible that it should be the subject of general national
regulation. . . . Upon this point we affirm that natural gas is
characteristically and peculiarly a local product; that its
production is confined to a limited territory; that, because of its
local characteristics and peculiarities, it is a proper subject for
state legislation, and cannot, so far as regards local protection,
be made the subject of general legislation by Congress."
In
People's Gas Co. v. Tyner, 131 Ind. 277, 281,
Page 177 U. S. 207
the controversy was this: a lot owner in a town filed a bill for
an injunction to prevent a neighboring lot owner from using
nitroglycerine "to shoot" a gas well on his property. The court
refused the injunction. In the course of the opinion, it was
said:
"It has been settled in this state that natural gas, when
brought to the surface of the earth and placed in pipes for
transportation, is property, and may be the subject of interstate
commerce.
State v. Indiana & Ohio Oil, Gas & Min.
Co., 120 Ind. 575. Water, petroleum, oil, and gas are
generally classed by themselves as minerals possessing in some
degree a kindred nature."
After quoting authorities relating to subterranean currents of
water, and treating gas and oil before being reduced to possession
as of a kindred nature, the court said:
"Like water, it is not the subject of property except while in
actual occupancy, and a grant of either water or oil is not a grant
of the soil or of anything for which ejectment will lie."
The case of
Brown v. Vandergrift, 80 Pa. 142, from
which we have previously quoted, was then referred to, and the
analogies between oil and gas and animals
ferae naturae
were approved and adopted. In
Townsend v. State, 147 Ind.
624, the constitutionality of a statute forbidding the burning of
natural gas in flambeau lights was attacked because it was asserted
to violate the Fourteenth Amendment to the Constitution of the
United States and various provisions of the Constitution of the
State of Indiana. The court held that the statute was not amenable
to the assaults made upon it. In a full opinion reviewing the
nature of the ownership in oil and natural gas, the power of the
state to regulate and control their use and waste in the interest
of all those within the gas field and of the public at large was
elaborately considered. Reviewing its own previous adjudications,
which we have cited, and those of the Supreme Court of the State of
Pennsylvania, to which we have also referred, it was decided that
the owners of the surface of the land within the gas field, whilst
they had the exclusive right on their land to sink wells for the
purpose of extracting the oil and gas, had no right of property
therein
Page 177 U. S. 208
until, by the actual drawing of the oil and gas to the surface
of the earth, they had reduced these substances to physical
possession. It was further held that, in consequence of the nature
of the deposits, of their transmissibility, of their
interdependence, of the rights of all and of the public at large,
the state could lawfully exercise the power to regulate the right
of the surface owners among themselves to seek to obtain
possession, and to prevent the waste of the products in which all
the surface owners within the area wherein the gas and oil were
deposited, as well as the public, had an interest, because in the
preservation of these substances the wellbeing and prosperity of
the entire community was largely involved. And it was upon the
opinion announced in that case that the court rested its decree in
the case now under review.
Without pausing to weigh the reasoning of the opinions of the
Indiana court in order to ascertain whether they in every respect
harmonize, it is apparent that the cases in question, in accord
with the rule of general law, settle the rule of property in the
State of Indiana to be as follows: although, in virtue of his
proprietorship, the owner of the surface may bore wells for the
purpose of extracting natural gas and oil until these substances
are actually reduced by him to possession, he has no title whatever
to them as owner. That is, he has the exclusive right on his own
land to seek to acquire them, but they do not become his property
until the effort has resulted in dominion and control by actual
possession. It is also clear from the Indiana cases cited that, in
the absence of regulation by law, every owner of the surface within
a gas field may prosecute his efforts and may reduce to possession
all or every part, if possible, of the deposits, without violating
the rights of the other surface owners.
If the analogy between animals
ferae naturae and
mineral deposits of oil and gas, stated by the Pennsylvania court
and adopted by the Indiana court, instead of simply establishing a
similarity of relation, proved the identity of the two things,
there would be an end of the case. This follows because things
which are
ferae naturae belong to the "negative community"
-- in other words, are public things subject to the absolute
control
Page 177 U. S. 209
of the state, which, although it allows them to be reduced to
possession, may at its will not only regulate, but wholly forbid,
their future taking.
Geer v. Connecticut, 161 U.
S. 519,
161 U. S. 525.
But whilst there is an analogy between animals
ferae
naturae and the moving deposits of oil and natural gas, there
is not identity between them. Thus, the owner of land has the
exclusive right on his property to reduce the game there found to
possession, just as the owner of the soil has the exclusive right
to reduce to possession the deposits of natural gas and oil found
beneath the surface of his land. The owner of the soil cannot
follow game when it passes from his property; so, also, the owner
may not follow the natural gas when it shifts from beneath his own
to the property of someone else within the gas field. It being true
as to both animals
ferae naturae and gas and oil,
therefore, that whilst the right to appropriate and become the
owner exists, proprietorship does not take being until the
particular subjects of the right become property by being reduced
to actual possession. The identity, however, is for many reasons
wanting. In things
ferae naturae, all are endowed with the
power of seeking to reduce a portion of the public property to the
domain of private ownership by reducing them to possession. In the
case of natural gas and oil, no such right exists in the public. It
is vested only in the owners in fee of the surface of the earth
within the area of the gas field. This difference points at once to
the distinction between the power which the lawmaker may exercise
as to the two. In the one, as the public are the owners, everyone
may be absolutely prevented from seeking to reduce to possession.
No divesting of private property under such a condition can be
conceived, because the public are the owners, and the enacting by
the state of a law as to the public ownership is but the discharge
of the governmental trust resting in the state as to property of
that character.
Geer v. Connecticut, 161 U.
S. 519,
161 U. S. 525.
On the other hand, as to gas and oil the, surface proprietors
within the gas field all have the right to reduce to possession the
gas and oil beneath. They could not be absolutely deprived of this
right which belongs to them without a taking of private property.
But there is a coequal right in them all to take from a common
source of supply the two
Page 177 U. S. 210
substances which in the nature of things are united, though
separate. It follows from the essence of their right and from the
situation of the things as to which it can be exerted that the use
by one of his power to seek to convert a part of the common fund to
actual possession may result in an undue proportion's being
attributed to one of the possessors of the right to the detriment
of the others, or by waste by one or more to the annihilation of
the rights of the remainder. Hence it is that the legislative
power, from the peculiar nature of the right and the objects upon
which it is to be exerted, can be manifested for the purpose of
protecting all the collective owners by securing a just
distribution, to arise from the enjoyment by them of their
privilege to reduce to possession, and to reach the like end by
preventing waste. This necessarily implied legislative authority is
borne out by the analogy suggested by things
ferae
naturae, which it is unquestioned the legislature has the
authority to forbid all from taking, in order to protect them from
undue destruction, so that the right of the common owners, the
public, to reduce to possession may be ultimately efficaciously
enjoyed. Viewed, then, as a statute to protect or to prevent the
waste of the common property of the surface owners, the law of the
State of Indiana which is here attacked because it is asserted that
it divested private property without due compensation, in
substance, is a statute protecting private property and preventing
it from being taken by one of the common owners without regard to
the enjoyment of the others. Indeed, the entire argument upon which
the attack on the statute must depend involves a dilemma, which is
this: if the right of the collective owners of the surface to take
from the common fund, and thus reduce a portion of it to
possession, does not create a property interest in the common fund,
then the statute does not provide for the taking of private
property without compensation. If, on the other hand, there be, as
a consequence of the right of the surface owners to reduce to
possession, a right of property in them in and to the substances
contained in the common reservoir of supply, then, as a necessary
result of the right of property, its indivisible quality, and the
peculiar position of the things to which it relates, there must
arise the legislative
Page 177 U. S. 211
power to protect the right of property from destruction. To
illustrate by another form of statement the argument is this: there
is property in the surface owners in the gas and oil held in the
natural reservoir. Their right to take cannot be regulated without
divesting them of their property without adequate compensation, in
violation of the Fourteenth Amendment, and this although it be
that, if regulation cannot be exerted one property owner may
deprive all the others of their rights, since his act in so doing
will be
damnum absque injuria. This is but to say that one
common owner may divest all the others of their rights without
wrongdoing, but the lawmaking power cannot protect all the owners
in their enjoyment without violating the Constitution of the United
States.
These considerations are sufficient to dispose of the case. But
as there are several contentions which seem to have been
considered, in argument, as resting on different premises, though
such in reason is not the case, we briefly notice them separately.
First, it is argued that as the gas, before being allowed to
disperse in the air, serves the purpose of forcing up the oil,
therefore it is not wasted, hence is not subject to regulation.
Second, that the answer averred that the defendant was so situated
as not to be able to use or dispose of the gas which comes to the
surface with the oil, from which it follows that the gas must
either be stored or dispersed in the air. Now the answer further
asserted that, when the gas is stored and not used, the back
pressure, on the best-known pump, would, if not arresting its
movement, at least greatly diminish its capacity. Hence, it is said
the law, by making it unlawful to allow the gas to escape, made it
practically impossible to profitably extract the oil. That is, as
the oil could not be taken at a profit by one who made no use of
the gas, therefore he must be allowed to waste the gas into the
atmosphere, and thus destroy the interest of the other common
owners in the reservoir of gas. These contentions but state in a
different form the matters already disposed of. They really go not
to the power to make the regulations, but to their wisdom. But with
the lawful discretion of the legislature of the state we may not
interfere.
In view of the fact that regulations of natural deposits of
oil
Page 177 U. S. 212
and gas and the right of the owner to take them as an incident
of title in fee to the surface of the earth, as said by the Supreme
Court of Indiana, is ultimately but a regulation of real property,
and they must hence be treated as relating to the preservation and
protection of rights of an essentially local character. Considering
this fact and the peculiar situation of the substances, as well as
the character of the rights of the surface owners, we cannot say
that the statute amounts to a taking of private property when it is
but a regulation by the State of Indiana of a subject which
especially comes within its lawful authority.
Affirmed.
*
"SEC. 2. Whenever any well shall have been sunk for the purpose
of obtaining natural gas or oil or exploring for the same, and
shall be abandoned or cease to be operated for utilizing the flow
of gas or oil therefrom, it shall be the duty of any person, firm,
or corporation having the custody or control of such well at the
time of such abandonment or cessation of use, and also of the owner
or owners of the land wherein such well is situated, to properly
and securely stop and plug the same as follows: if such well has
not been 'shot,' there shall be placed in the bottom of the hole
thereof a plug of well seasoned pine wood, the diameter of which
shall be within one-half inch as great as the hole of such well, to
extend at least three feet above the salt-water level, where salt
water has been struck; where no salt water has been struck, such
plug shall extend at least three feet from the bottom of the well.
In both cases, such wooden plugs shall be thoroughly rammed down
and made tight by the use of drilling tools. After such ramming and
tightening, the hole of such well shall be filled on top of such
plug with finely broken stone or sand, which shall be well rammed
to a point at least four feet above the Trenton limestone, or any
other gas or oil bearing rock; on top of this stone or sand there
shall be placed another wooden plug at least five feet long with
the diameter as aforesaid, which shall be thoroughly rammed and
tightened. In case such well shall have been 'shot,' the bottom of
the hole thereof shall be filled with a proper and sufficient
mixture of sand, stone, and dry cement, so as to form a concrete up
to a point at least eight feet above the top of the gas or oil
bearing rock or rocks, and on top of this filling shall be placed a
wooden plug at least six feet long, with diameter as aforesaid,
which shall be properly rammed as aforesaid. The casing from the
well shall then be pulled or withdrawn therefrom, and immediately
thereafter a cast-iron ball eight inches in diameter shall be
dropped in the well and securely rammed into the shale by the
driller or owner of the well, after which not less than one cubic
yard of sand pumping or drilling taken from the well shall be put
on top of said iron ball."
"SEC. 3. Any person or corporation violating any of the
provisions of this act shall be liable to a penalty of $200 for
each and every such violation, and to the further penalty of two
hundred dollars for each ten days during which such violation shall
continue, and all such penalties shall be recoverable in a civil
action or actions, in the name of the State of Indiana, for the use
of the county in which such well shall be located, together with
reasonable attorney's fees and costs of suit."
"SEC. 4. Whenever any person or corporation in possession or
control of any well in which natural gas or oil has been found
shall fail to comply with the provisions of this act, any person or
corporation lawfully in possession of lands situate adjacent to or
in the vicinity or neighborhood of such well may enter upon the
lands upon which such well is situate, and take possession of such
well from which gas or oil is allowed to escape in violation of the
provisions of section one of this act, and pack and tube such well,
and shut in and secure the flow of gas or oil, and maintain a civil
action in any court of competent jurisdiction in this state against
the owner, lessee, agent, or manager of said well, and each of them
jointly and severally, to recover the cost and expense of such
tubing and packing, together with attorneys' fees and costs of
suit. This shall be in addition to the penalties provided by
section three of this act."
"SEC. 5. Whenever any person or corporation shall abandon or
cease to operate any natural gas or oil well, and shall fail to
comply with the provisions of section two of this act, any person
or corporation lawfully in possession of lands adjacent to or in
the vicinity or neighborhood of such well may enter upon the lands
upon which such well is situate, and take possession of such well,
and plug and fill the same in the manner provided by section two of
this act, and may maintain a civil action in any court of competent
jurisdiction of this state against the person, persons, or
corporation so failing, jointly and severally, to recover the costs
and expenses of such plugging and filling, together with attorneys'
fees and costs of suit. This shall be in addition to the penalties
provided by section three of this act."
