1. The only order of the State Commissioner of Conservation
which was before the state courts in this case having been
superseded by later orders, the cause has become moot so far as it
is concerned with the original order, and this Court, in reviewing
on appeal the judgment of the highest court of the State, is not
free to, and will not, adjudicate the constitutionality of the
later orders where the state court has had no opportunity to pass
upon their validity under state law or the Federal Constitution. P.
320 U. S.
226.
2. A State has constitutional power to regulate production of
oil and gas so as to prevent waste and to secure equitable
apportionment among landholders of the migratory gas and oil
underlying their land, fairly distributing among them the costs of
production and of the apportionment. P.
320 U. S.
227.
3. Upon the record in this case, Act No. 157 of the Louisiana
Acts of 1940 cannot be held invalid on its face. P.
320 U. S. 228.
Dismissed.
Appeal from a judgment, 202 La. 97, 11 So. 2d 495, which,
reversing a decision of a lower state court, sustained the
constitutional validity, as applied to the appellant, of an order
promulgated by the State Commissioner of Conservation under
authority of a state statute providing for regulation of the
production of oil and gas.
Page 320 U. S. 223
PER CURIAM.
Appellant is the lessee under an oil and gas lease of 190 acres
in the Logansport Field in Louisiana. Under permit from the state,
it has drilled a well on the leased area, which was completed about
June 1, 1938, and came into production in December, 1940. To enable
it to reach a market for the natural gas produced by this well,
appellant has constructed and owns a pipeline which extends from
its well to the line of the United States Gas Pipe Line
Company.
"For the prevention of waste and to avoid the drilling of
unnecessary wells,' § 8(b) of Act No. 157 of the Louisiana Acts of
1940 authorizes the State Commissioner of Conservation to establish
drilling units for any oil or gas pool except 'where conditions are
such that it would be impracticable or unreasonable to use a
drilling unit at the present stage of development.' The statute
defines a drilling unit as 'the maximum area which may be
efficiently and economically drained by one well."
Section 9(a) provides that, where a drilling unit embraces
separately owned tracts, the owners may agree to
Page 320 U. S. 224
pool their interests, but provides that, in default of such
agreement,
"the Commissioner shall, if found by him to be necessary for the
prevention of waste or to avoid the drilling of unnecessary wells,
require such owners to do so and to develop their lands as a
drilling unit;"
such orders
"shall be made after notice and hearing, and shall be upon terms
and conditions that are just and reasonable, and will afford to the
owner of each tract the opportunity to recover or receive his just
and equitable share of the oil and gas in the pool without
unnecessary expense."
The section also provides:
"The portion of the production allocated to the owner of each
tract included in a drilling unit formed by a pooling order shall,
when produced, be considered as if it had been produced from such
tract by a well drilled thereon. In the event such pooling is
required, the cost of development and operation of the pooled unit
chargeable by the operator to the other interested owner or owners
shall be limited to the actual expenditures required for such
purpose, not in excess of what are reasonable, including a
reasonable charge for supervision. In the event of any dispute
relative to such costs, the Commissioner shall determine the proper
costs, after due notice to all interested parties and hearing
thereon. "
Proceeding under Act No. 157, the Commissioner, after notice and
hearing, on October 16, 1941, promulgated Order No. 28-B, which
designated drilling units of 320 acres for the production of gas
from the Logansport Field, allowed the drilling of only one well on
each such unit, required the operator of a well drilled before the
effective date of the order to designate his drilling area,
required him to account to each owner or lessee of land within the
unit for the oil and gas produced, and provided for a bi-monthly
determination by the Commissioner of the amount of the allowable
gas production for each unit.
Page 320 U. S. 225
The order also authorized the Commissioner, upon a showing by
any operator that any part of the order as applied to his well
"will result in waste, or as to such operator is unreasonable," to
make an exception to the directions of the order, provided that
such exception "will not result in waste in the field as a whole"
or give the operator an "inequitable and unfair advantage over
another operator or other operators in the field."
Less than thirty days after the promulgation of this order, no
application having been made by an adjacent land owner to require
pooling, appellant, without having designated a drilling unit or
made application to the Commissioner to make an exception to the
order, brought the present suit in the Louisiana civil district
court to enjoin the enforcement of Act No. 157 and of order No.
28-B or any similar order. By its bill of complaint, appellant
asserted that the order was invalid under the state constitution
and laws, and violated the Fourteenth Amendment in that it made no
provision for the payment to appellant of the reasonable value of
its lease, and for reimbursing it for the cost of development of
the gas, including the cost of drilling its well and laying its
pipeline.
The Civil District Court held Act No. 157 and order No. 28-B, as
applied to appellant, to be null and void, and enjoined enforcement
of the Act and order or any similar order against appellant. The
Supreme Court of Louisiana, 202 La. 97, 11 So. 2d 495, set this
judgment aside and ordered the complaint dismissed. It held that
the order was a valid exercise of state power to prevent future
waste of a natural resource of the state and that, under the
provisions of § 9(a) of the Act and of the order, appellant was
entitled to retain its proportionate share of the gas and to
reimburse itself from the proceeds of all the gas for the
proportionate share of the cost of drilling and operation
chargeable to the other landowners in the drilling unit.
Page 320 U. S. 226
The case comes here on appeal under § 237(a) of the Judicial
Code, 28 U.S.C. § 344(a), appellant assigning as error that the Act
and order deprive it of property without due process of law by
compelling it to combine its leasehold with the land of others
within the drilling unit for the purpose of gas production and to
share with them its pipeline and other facilities for the
production and marketing of gas, for which no compensation is
provided by the Act or order.
After the appeal was docketed in this Court, appellee Southern
Products Co., which had been allowed to intervene in the state
courts, moved to dismiss the appeal as moot by reason of the
promulgation by the Commissioner of new orders No. 28-C and No.
28-C-10, which operated to supersede order No. 28-B so far as
applicable to appellant's leasehold. Order No. 28-C prescribed
enlarged drilling units comprising 640 acres for the Logansport
Field. It made other provisions not now material for the regulation
of production applicable to the prescribed units. A later order,
No. 28-C-10, designated appellant at the operator of a unit and
directed that it should be entitled to receive and retain all
proceeds derived from the sale of the product of the well, after
deduction of royalties and costs of production, until it should
have recovered the costs of drilling and equipping and well and
laying and operating the pipeline, and that the balance of the
proceeds should be distributed among the landholders within the
unit, including appellant, in proportion to their acreage within
the unit.
Order No. 28-C was promulgated on February 10, 1942, before the
judgments of both the Civil District Court on February 26, 1942 and
the Louisiana Supreme Court on November 30, 1942. Although no
reason appears why its invalidity could not have been urged before
those courts, the order is not in the record, and does not appear
to have been considered by either state court. Order No.
28-C-10
Page 320 U. S. 227
was promulgated on February 25, 1943, after the decision and
judgment of the Louisiana Supreme Court. The only order before the
state courts was No. 28-B, to which alone their decisions relate
and to which alone appellant's assignments of error in this Court
are directed. Its operation has been superseded by orders No. 28-C
and No. 28-C-10, under which it appears that both the Commissioner
and appellant are now proceeding as controlling the operation of
appellant's well, and those orders were not before the state courts
or considered by them.
The cause has thus become moot so far as it is concerned with
order No. 28-B, and this Court, in reviewing on appeal the judgment
of the State Supreme Court, is not free to, and will not,
adjudicate the constitutionality of orders No. 28-C and No. 28-C-10
where the state court whose judgment is under review has had no
opportunity to pass upon their validity under state law or the
Constitution of the United States.
See McGoldrick v. Compagnie
Generale, 309 U. S. 430,
309 U. S. 433
et seq.
A minority of the Court are of opinion that, in these
circumstances, there is no outstanding order which this Court can
review, and that the appeal should, for that reason alone, be
dismissed.
In the present posture of the record, so far as the appeal seeks
to bring before us for review the judgment of the state court
sustaining the constitutionality of the statute, the record
presents no substantial federal question. We have held that a state
has constitutional power to regulate production of oil and gas so
as to prevent waste and to secure equitable apportionment among
landholders of the migratory gas and oil underlying their land,
fairly distributing among them the costs of production and of the
apportionment.
Lindsley v. Natural Carbonic Gas Co.,
220 U. S. 61,
220 U. S. 77;
Randini Petroleum Co. v. Superior Court, 284 U. S.
8,
284 U. S. 22;
Champlin Refining Co. v. Corporation Commission,
286 U. S. 210,
286 U. S.
232-234;
Thompson
v.
Page 320 U. S. 228
Consolidated Gas Corp., 300 U. S.
55,
300 U. S. 76-77;
Patterson v. Stanolind Oil & Gas Co., 305 U.
S. 376,
305 U. S. 379,
and cases cited. On this appeal, absent from the record any
operative order implementing Act No. 157, we cannot say that the
application of the Act can be enjoined as invalid on its face, for
we cannot say that no order could be made by the Commissioner which
would apportion the production and distribute the costs of
production and of the apportionment in a manner which would be
consonant both with the requirements of the statute and the Federal
Constitution,
compare Patterson v. Stanolind Oil & Gas Co.,
supra, with Thompson v. Consolidated Gas Utilities Corp.,
supra. It will be time enough to consider the
constitutionality of any particular apportionment and distribution
of costs when we have before us the specific provisions of an order
directing them which has been subjected to the scrutiny of the
state court.
See Bandini Petroleum Co. v. Superior Court,
supra.
The appeal will be dismissed for want of a properly presented
substantial Federal question.
So ordered.