This is an original proceeding in this court wherein C. C. Julian Oil Royalties Company, an express trust, organized under the laws of Oklahoma, seeks a writ of prohibition against the Corporation Commission of this state composed of C.C. Childers, chairman, Fred Capshaw and E.R. Hughes.
The parties will be hereinafter referred to as petitioner and Commission. Petitioner seeks to prohibit the Commission from enforcing, as against it, certain orders and rules and regulations made by the Commission to prevent the waste of oil and *Page 245 petroleum in certain oil fields in the state including what is known as the Oklahoma City field. Petitioner alleges it is the owner of an oil and gas lease covering three lots in an addition to Oklahoma City and that it has drilled an oil well thereon capable of producing 5,000 barrels of oil per day and that said premises are within the Oklahoma City field. It also alleges that there is a market demand at its well for crude oil at a price equivalent to the actual value thereof, and for the total production thereof, and that it has expended large sums of money in drilling its well and other wells in Oklahoma, and producing, transporting and preparing to refine the oil produced therefrom. Petitioner further charges that the Commission made and entered of record on June 30, 1930, order No. 5189, copy of which is attached to petition, whereby the Commission found that it was necessary to curtail the output of crude petroleum in Oklahoma from the potential capacity of all the wells in the state amounting approximately to 1,450,000 barrels per day to 650,000 barrels per day, and that by its order No. 5246, entered on July 24, 1930, the Commission reduced the total allowable production of crude oil in said state to 550,000 barrels per day, a copy of which last mentioned order is also attached to the petition herein, and alleges that under said order No. 5246 it is provided that only 18 3/4 per cent. of the total potential production of all the wells in the Oklahoma City field may be produced and that the operators committee and the umpire appointed by the Commission arbitrarily, and without right, reduced said percentage of allowable production to 8 1/3 per cent. of the potential production of the wells in said field. Petitioner further charges that under said order 16 other oil fields in the state are allowed to produce 50 per cent. of their potential production, two fields 25 per cent., and five fields 18 3/4 per cent. and that many other fields in the state are not prorated at all. Petitioner further alleges that the members of the Commission and the umpire and operators committee for the Oklahoma City field have demanded that it comply with said orders and produce only 8 1/3 per cent. of the potential capacity of its well therein and that the operators committee and the umpire have ordered the petitioner to shut in its well for 65 days and then produce it only one day out of twelve, and that the committee intends to and will, unless restrained or prohibited by the order of this court, carry out their threats to take charge of the properties of the petitioner and run the oil from petitioner's well under the orders of said umpire and operators committee and the said Commission, and further, that said Commission has threatened to punish petitioner for contempt, if it violates said orders and is threatening to and will, unless prohibited by order of this court, attempt to render said orders effectual by contempt proceedings against petitioner by instituting proceedings in court for appointment of a receiver for its property. Petitioner further contends that all of said orders and each of them are void for the following reasons:
(1) Because the law under which the Corporation Commission pretended to act in making said orders, namely, section 7954 to 7963, both inclusive, C. O. S. 1921, being the so-called "Oil Conservation Act," of the 1915 Legislature, is void because in violation of the Fourteenth Amendment to the Constitution of the United States, in that they have the effect of depriving petitioner of its property, without due process of law and deny to petitioner the equal protection of the laws, of section 7 of article 2 of the Constitution of Oklahoma, providing that no person shall be deprived of life, liberty or property without due process of law, and of section 2 of article 2 of the Constitution of Oklahoma, providing that every person has the inherent right of enjoying the gains of his own industry.
(2) That the provisions of the statute are too general and are so indefinite and uncertain that they are void.
(3) That they vest the Corporation Commission with legislative authority and hence are void.
(4) That if the statute be valid, the orders are nevertheless void, because they are not within the scope of the authority of said Commission as laid down by the said act of the Legislature.
(5) That said orders were entered in an ex parte proceeding, without notice to petitioner and without evidence in support thereof, and were in fact entered pursuant to an agreement entered into by a large number of the owners of oil wells in the Oklahoma City field whereby they agreed among themselves that they would cause to be taken such action as would restrain the amount of oil shipped by the railroad and through the pipe lines serving said field in interstate and intrastate commerce, and that said owners agreed among themselves that an operators' committee should be formed to determine the amount which could be produced by each operator in the field and the amount *Page 246 which should be run through the pipe lines.
(6) That the order delegated nondelegable power to an umpire and operators' committee to make orders as to the proration of production in said field and to increase or decrease the allowable percentage of production therein and to instruct the pipe lines and railroads is to their takes of oil from the field.
(7) And that said orders, are not uniform throughout the state in that they do not place any curtailment on the production of oil in many oil fields therein, and in the prorated fields allows a larger percentage of potential production from some than from others.
The respondents have filed an answer in which they have denied generally the allegations of the petition; have asserted the validity of the statute under which the orders in question were made; that the orders were entered after the filing of an application therefor and the publication of notice as provided by section 7959, C. O. S. 1921, and the serving of personal notice upon all parties in interest, including the petitioner herein; the taking of testimony and conducting a full hearing at the time and place set therefor; that full findings of fact justifying the said orders were made and entered by the commission, that the umpire and operators' committee were appointed with the consent of the Governor us provided by section 7958, C. O. S. 1921, and they further allege that the petitioner has never applied to the Corporation Cominission for any modification of said orders, or either of them, nor sought any relief before the said Commission; that petitioner took no appeal from the said orders, or either of them, and they deny they have intended or threatened to take charge of petitioner's said property or operate his said well; they admit that their agents, the umpire and operators' committee, have demanded that petitioner comply with said orders, and admit that there is pending before said Commission contempt proceedings for alleged violation by petitioner of said orders, and allege that contempt proceedings are pending against more than fifty other operators in the State for alleged violations of said orders.
First let us consider the relief sought by petitioner and whether or not prohibition will lie.
It must be borne in mind that the relief here sought is the issuance of a writ of prohibition and it must therefore be further borne, in mind that under numerous decisions of this court, the writ will not, issue unless it clearly appears that the Commission is wholly without jurisdiction or authority to do what it is attempting to do, or is attempting to make an unauthorized application of judicial force. Hirsh v. Twyford,40 Okla. 220, 139 P. 313; State ex rel. Mayes v. Breckenridge, 43 Okla. 711, 142 P. 407; State v. District Court of Marshall Co., 46 Okla. 654, 149 P. 240; Baker v. Capshaw et al., Okla. 86, 265 P. 115; Crews v. Bird.141 Okla. 143, 285, Pac. 132. 'These authorities support the proposition as above stated and also hold that the writ of prohibition cannot be used as a substitute for an appeal.
It was further held in Jeter v. District Court of Tulsa County 81 Okla. 3, 206, Pac. 831, that:
"Prohibition is an extraordinary writ and cannot be resorted to when the ordinary and usual remedies provided by law are available. It will only issue where an inferior tribunal does not have jurisdiction or assumes to exercise judicial power not granted by law, or is attempting to make an unauthorized application of judicial force."
Section 20 of article 9, Constitution of Oklahoma, provides:
"* * * All appeals, from the Commission shall be to the Supreme Court only, and in all appeals to which the state is a party. It shall be represented by the Attorney General or his legally appointed representative. No court of this state (except the Supreme Court, by way of appeals as herein authorized) shall have jurisdiction to review, reverse, correct, or annul any action of the Commission within the scope of its authority, or to suspend or delay the execution or operation thereof, or to enjoin, restrain, or interfere with the Commission in the performance of its official duties; Provided, however, that the writs of mandamus and prohibition shall lie from the Supreme Court to the Commission in all cases where such writs, respectively, would lie to any inferior court or officers. * * *"
Under this provision, together with section 7960, C. O. S. 1921, an appeal lies to the Supreme Court from any order or action of the Corporation Commission, and no court of the state has jurisdiction to review, reverse, correct or annul any action of the Corporation Commission within the scope of its authority or to suspend or delay the execution or operation thereof or to enjoin, restrain, or interfere with the Commission in the performance of its official duties, save only this court on appeal, except that when the Commission acts outside the scope of its authority or assumes to exercise a power not granted to it or is attempting to make an unauthorized application of judicial *Page 247 force, this court may restrain it by the issuance of the writ of prohibition.
It follows, therefore, that the questions presented here for our consideration and determination are, first, is the Oil Conservation Law, being the Act of 1915, constitutional? and second, Are the acts of the Commission which are here sought to be prohibited within the scope of its authority? The consideration of this latter question also necessarily involves the further question of the reasonableness of the orders herein complained of and upon which petitioner lays much stress, both in oral argument and in the briefs filed herein.
Section 1 of the Oil Conservation Act, being section 7954, C. O. S. 1921, is as follows:
"That the production of crude oil or petroleum in the state of Oklahoma, in such manner and under such conditions as to constitute waste, is hereby prohibited."
Section 3, being section 7956, C. O. S. 1921. provides as follows:
"That the term waste as used herein, in addition to its ordinary meaning, shall include economic waste, underground waste, surface waste, and waste incident to the production of crude oil or petroleum in excess of transportation or marketing facilities or reasonable market demands. The Corporation Commission shall have authority to make rules and regulations for the prevention of such waste, and for the protection of all fresh water strata, and oil and gas bearing stuata, encountered in any well drilled for oil."
In the case of Quinton Relief Oil Gas Co. v. Corporation Commission, 101 Okla. 164, 224 P. 156. this court held that the police powers of the state extend to the conservation of its natural resources.
In the case of Pawhuska Oil Gas Co. v. City of Pawhuska,47 Okla. 342, 148 P. 118, this court cited with approval Commonwealth v. Trent et al., 117 Ky. 34, 77 S.W. 390, 4 Ann. Cas. 209, and quoted therefrom as follows:
"* * * The Legislature may protect from waste the natural resources of the state, which are the common heritage of all. The right of the owner of property to do with it as he pleases is subject to the limitation that he must have due regard to the rights of others. To allow the storehouse of nature to be exhausted by the waste of the gas would be to deprive the state and its citizens of the many advantages incident to its use. That the Legislature may prevent this is well settled. Ohio Oil Co. v. Indiana, 177 U.S. 190, 20 Sup. Ct. 576, 44 L.Ed. 729: State v. Ohio Oil Co., 150 Ind. 21. 49 N.E. 809, 47 L. R. A. 627; Donahue on Petroleum Gas, section 23."
In Rich v. Doneghey, 71 Okla. 204, 177 P. 86, in referring to the rights of a surface owner or a leaseholder, this court said:
"But with respect to such oil and gas, they had certain rights designated by the same courts as a qualified ownership thereof, but which may be more accurately stated as exclusive right * * * and the like, to erect structures on the surface of their land, and explore therefor by drilling wells through the underlying strata, and to take therefrom, and reduce to possession, and thus acquire absolute title as personal property to such as might be found and obtained thereby."
It is so well settled that the police power of the state extends to the protection of its natural resources against waste that the citation of further authorities is, in our judgment, wholly unnecessary. The above quoted sections of the act which prohibit the waste of crude oil, define waste, and authorize the Corporation Commission to make rules and regulations for the prevention of such waste, come clearly within the police power of the state.
Petitioner contends that these provisions are too general and indefinite and that they are void for uncertainty. With this contention we cannot agree. The Commission is not left to define the meaning of the term "waste," even if that term alone should be considered as too general and indefinite. Section 7956 defines waste as including, in addition to its ordinary meaning, economic waste, underground waste, surface waste, and waste incident to the production of crude oil or petroleum in excess of transportation or marketing facilities or reasonable market demand. The word "waste" means to destroy wantonly, to diminish, to squander, to impair. Ordinarily, the term, when used in connection with the waste of crude oil, means to permit oil to be discharged or to flow out on the ground or be washed away and put to no useful purpose. Practically all surface losses of oil comes from the lack of proper storage and pipe line facilities and the inability of producers to control the flow of wells when they are first brought in under heavy pressures. It is a matter of common knowledge that serious surface wastage of oil results from putting it in earthern storage. These and other kinds of surface or ordinary waste are intended to be, prevented by the act herein under consideration. "Underground waste" takes place whenever oil in the reservoir where it is discovered is left in the ground when it could, by proper operating methods, have been recovered. *Page 248
We quote from amicus curiae brief filed on behalf of The Mid-Continent Oil Gas Association and sundry producers, as follows:
" 'Underground waste' may not be so readily apparent to one not fairly conversant with the production of oil. It consists in so improperly finishing and equipping or inefficiently operating a well or wells in an oil field as to leave unrecoverable in the ground oil which otherwise could be extracted from the ground. It also may result from the flooding of the oil-bearing formation with salt water. Salt water is almost invariably present in the lower portion of the oil-containing formation, and whenever there is an extraction of the oil, this salt water, by reason of the pressure underground rises into the upper portions of the formation, and unless there is an efficient extraction of the oil through the wells, salt water can very readily, 'drown out' the oil by being permitted to accumulate about the bottom of the well in such a way as to shut off the oil at points away froyn the well and prevent its moving toward the well. Also, underground waste often results from a too rapid releasing through the oil wells of the gas pressure contained in the oil-containing formation. What is known as 'rock pressure' or 'gas pressure' is almost universally present in an oil-containing sand or lime formation, and if this pressure is too rapidly released through the wells, so that what is known as the 'gas energy,' not utilized to bring the oil out of the ground, it will result in leaving in the ground great quantities of unrecoverable oil, as well as in bringing to the bottom of the well much too rapidly the salt water which, in its original state, lay beneath the oil in the formation. See Oil, Its Conservation and Waste (Third Ed.) James H. Westcott; Function of Natural Gas in the Production of Oil (1929) by H.C. Miller, Senior Petroleum Engineer, U.S. Mines."
Another definition of waste, in section 7956, of the act is:
"Waste incident to the production of crude oil or petroleum in excess of transportation or maketing facilities or reasonable market demand."
Surface waste or underground waste, or both, may occur as an incident to the production of crude oil in excess of transportation or marketing facilities or reasonable market demand. It is readily apparent that if the production exceeds the market demand or transportation facilities, then the oil must be placed in storage, and if one producer produces in excess of such demand, then another must do likewise to prevent his oil from being drained, and so on with all the producers in the field, with the result that much oil would have to be placed ill earthen storage and considerable oil would almost certainly be allowed to waste on the surface of the ground, to evaporate and to waste in streams and rivers. These several definitions of waste, all of which are prohibited by the act, are, in our judgment, definite and certain, and we so hold. In the case of Sears Roebuck Co. v. Federal Trade Comm., 258 Fed. 307, 311, the U.S. Circuit Court of Appeals for the 7th Circuit had under consideration the question as to whether the words "unfair methods of competition" contained in section 5 of the Act of Congress creating the Federal Trade Commission, approved on September 26, 1914, reading as follows: "Unfair methods of competition in commerce are hereby declared unlawful," were too indefinite, and the court said:
"Petitioner urges that the declaration of section 5 must be held void for indefiniteness unless the words 'unfair methods of competition' be construed to embrace no more than acts which on September 26, 1914, when Congress spoke, were identifiable as acts of unfair trade then condemned by the common law, as expressed in prior cases. But the phrase is no more indefinite than 'due process of law.' The general idea of that phrase as it appears in Constitution and statutes is quite well known; but we have never encountered what purported to be an all-embracing schedule or found a specific definition that would bar the continuing processes of judicial inclusion and exclusion based upon accumulating experience. If the expression 'unfair methods of competition' is too uncertain for use, then under the same condemnation would fall the innumerable statutes which predicate rights and prohibitions upon 'unsound mind,' 'undue influence,' unfaithfulness,' 'unfair use,' 'unfit for cultivation." 'unreasonable rate,' unjust discrimination,' and the like."
The provisions for proportionate taking on the part of each producer in a common pool whenever the full production from the pool can only be obtained under conditions constituting waste, as defined in section 3, and which is prohibited by section 1, is found in section 4 of the act, which is as follows:
"That whenever the full production from any common source of supply of crude oil or petroleum in this state can only be obtained under conditions constituting waste as herein defined, then any person, firm, or corporation, having the right to drill into and produce oil from any such common source of supply, 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 any such person, firm, or corporation, bears to the total production of such common *Page 249 source of supply. The Corporation Commission is authorized to so regulate the taking of crude oil or petroleum from any or all such common sources of supply, within the state of Oklahoma as to prevent the inequitable or unfair taking, from a common source of supply, of such crude oil petroleum, by any person, firm, or corporation, and to prevent unreasonable discrimination in favor of any one such common source of supply as against another."
The first part of this section conforms to the rule announced by the Supreme Court of the United States in Ohio Oil Co. v. Indiana, 177 U.S. 190, 44 L.Ed. 729, and in Lindsley v. Natural Carbonic Co., 220 U.S. 61, 55 L.Ed. 369. Ann. Cases, 1912C. 160, the first of which this court cited with approval in Pawhuska Oil Gas Co. v. City of Pawhuska, supra, and Rich v. Doneghey, supra. In the Lindsley Case the United States Supreme Court reaffirmed its holding in Ohio Oil Co. v. Indiana, supra, and stated that were the question an open one it would still solve it in the same way. Both of these cases have been frequently cited and followed. Notably in Oxford Oil Co. v. Atlantic Oil Co., 16 Fed. (2nd.) 639, same case on appeal, 22 Fed. (2nd.) 597; Nowata County Gas Co. v. Henry Oil Co., 269 Fed. 742; Marrs v. City of Oxford, 24 Fed. (2nd.) 541, same case on appeal, 32 Fed. (2nd.) 138.
In sustaining the validity of a statute of Indiana which made it unlawful for any person, firm, or corporation having possession or control of any natural gas or oil wells to allow or permit the flow of gas or oil from such well to escape into the open air without being confined within such well or proper pipes or other receptacles for a period of two days next after the gas or oil shall have been struck in such well, the United States Supreme Court, in the Ohio Oil Co. Case, supra, said:
"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. Prom 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 any one 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 every one 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 any one. 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 court further said:
"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 co-equal right in them all to take from a common source of supply, the two 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 being attributed to one of the possessors of the right, to the detriment of the others, or to 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."
In that case the court held that although the Ohio Oil Company could not produce its oil at a profit without producing and permitting the gas to waste into the air, for the tea son it had no market for the gas, the enforcement of the Indiana statute did not deprive said company of its property without due process of law. The principle upon which the first part of section 7957 is based, is found in the maxim, "Everyone must so use his own property as not to injure the rights of others," which was expressed by this court in Pawhuska Oil Gas Co. v. City of Pawhuska, supra, when it stated that "The right of the owner of properties to do with it as he pleases is subject to the limitation that he must have due regard for the rights of others."
On account of the vagrant and fugitive nature of oil in the ground, it was clearly within the powers of the Legislature to protect "the co-equal rights" of all the owners of land in a common source of supply of crude oil in order to prevent any of such owners from taking from the pool more than his fair proportionate share of the *Page 250 oil and gas in pool, and it could reach such end by preventing waste.
In 6 R. C. L. "Constitutional Law," section 186, it is said:
"The police power to a large extent rests on the maxim 'Sic utere tuo ut alienum non laedas,' and it is the function of the government by which this maxim is enforced. One of the objects of government is to impose that degree of restraint on individual action which is required for the reasonable enjoyment of all in their respective rights. It has been said that nearly every problem involved in the police power finds its solution in the application of the principle embodied in this maxim, that every one must so use his own property as not to injure the rights of others, and that this principle should he observed in the exercise of the police power."
The last sentences of sections 7956, 7957, confer authority upon the Corporation Commission to make rules and regulations for the prevention of the prohibited waste and to so regulate the taking of crude oil or petroleum from any or all common sources of supply within the state as to prevent the inequitable or unfair taking from a common source of supply of crude oil or petroleum by any person, firm or corporation. This court has frequently and on numerous occasions upheld the authority of the Legislature to invest such power in the Corporation Commission. In the case of Quinton Relief Oil Gas Co. v. Corporation Commission, supra, one question involved under the gas conservation statute, which is very similar in its provisions to the oil statute, was whether the Corporation Commission could be invested with power to determine whether the use of natural gas for the manufacture of carbon black was a "wasteful utilization" thereof, wasteful utilization being one of the definitions of waste as contained in the gas statute, and therein this court said:
"Counsel for petitioners insists that the Legislature has failed to define what constitutes wasteful utilization of gas, but has delegated to the Corporation Commission the power to determine that fact; and this constitutes an unlawful delegation of power, and renders the act unconstitutional."
The court then said:
"We are unable to concur in the contention of counsel for the petitioner that the Act of 1915 repeals section 4319, Revised Laws 1910 (sec. 7964, Comp. Stat. 1921), or that said Act of 1915 is unconstitutional by reason of the power delegated to the Corporation Commission for uncertainty in its provisions."
After mentioning the provisions of the acts there in question, the court said:
"This is a general term which vests the Corporation Commission with power to determine under a particular given state of facts whether or not the same constitutes a wasteful utilization of gas. It was within the constitutional power of the Legislature to vest the Corporation Commission with this jurisdiction."
At the conclusion of the opinion, the court said:
"It therefore is obvious that the state in the proper exercise of its police power and in conservation of so valuable a natural resource as natural gas, may prohibit the wasteful utilization of the same in the interests of the public welfare."
There is no limitation contained in the Constitution upon the power of the Legislature to vest the Corporation Commission with authority to act as an administrative agency of the state in the enforcement of laws enacted under the police power of the state.
In the case of Plymouth Coal Co. v. Pennsylvania,232 U.S. 531, 542, 58 Law Ed. 713, 718, the court, in passing upon the validity of an act of the Legislature of Pennsylvania which required the owners of coal mining property to leave or cause to be left a pillar of coal in each seam or vein of coal worked by them along the line of adjoining property of such width that taken in conjunction with the pillar to be left by the adjoining property owner would be a sufficient barrier for the safety of the employees of either mine in case the other should be abandoned, "such width of pillar to be determined by the engineers of adjoining property owners together with the inspector of the district in which the mine is situated," among other things, said:
"The Legislature has not defined with precision the width of the pillar, and it is very properly admitted that, in the nature of things, this would have been impossible, because the width necessary in each case must be determined with reference to the situation of the particular property. From this it necessarily results that it was competent for the Legislature to lay down a general rule, and then establish an administrative tribunal with authority to fix the precise width or thickness of pillar that will suit the necessities of the particular situation and constitute a compliance with the general rule. United States v. Grimaud, 220 U.S. 506, 517-522, 55 L.Ed. 563, 567-569, 31 Sup. Ct. Rep. 480. Administrative bodies with authority not essentially different are a recognized governmental institution. Commissions for the regulation of *Page 251 public service corporations are a familiar instance. Interstate Commerce Commission v. Cincinnati, N. O. T. R. Co.167 U.S. 479, 495, 42 L.Ed. 243, 251, 17 Sup. Ct. Rep. 896. And it has become entirely settled that powers and discretion of this character may be delegated to administrative bodies, or even to a single individual. Re Kollock, 165 U.S. 526, 536, 41 L.Ed. 813, 17 Sup. Ct. Rep. 444; Wilson v. Eureka City, 173 U.S. 32, 43 L.Ed. 603, 19 Sup. Ct. Rep. 317; Gundling v. Chicago,177 U.S. 183, 44 L.Ed. 725, 728, 20 Sup. Ct. Rep. 633; Fischer v. St. Louis, 194 U.S. 361, 371, 372, 48 L.Ed. 1018, 1023, 1024, 24 Sup. Ct. Rep. 673; Jacobson v. Massachusetts, 197 U.S. 11, 25, 49 L.Ed. 643, 649, 25 Sup. Ct. Rep. 358. 3 Ann. Cas. 765; New York ex rel. Lieberinan v. Van De Carr, 199 U.S. 552, 560, 562, 50 L.Ed. 305, 305, 311, 26 Sup. Ct. Rep. 144."
The United States Circuit Court of Appeals for the 5th Circuit, in Oxford Oil Co. v. Atlantic Oil Producing Co., 22 Fed. (2nd.) 597, sustained the authority of the Legislature of Texas to invest the Railroad Commission of that state with power to make rules and regulations for the conservation of oil and gas and the protection of the rights of owners of adjoining lands, and sustained the validity of an order of the Railroad Commission relating to the drilling of wells within a certain distance of property lines, from which we quote as follows:
"It was within the power of the Legislature to lay down a general rule for the protection of the mineral rights of the owners of adjoining lands, and to leave the details of enforcing that rule to an administrative agency or board. Plymouth Coal Co. v. Pennsylvania, 232 U.S. 531, 34 S.Ct. 359, 58 L.Ed. 713."
The concluding part of section 7957 authorizes the Corporation Commission to prevent unreasonable discrimination in favor of any one common source of supply as against another. What constitutes unreasonable discrimination depends upon the facts and circumstances and, as in Quinton Relief Oil Gas Co. v. Corporation Comm., supra, this court held that the Commission had the power to determine whether the use of natural gas for the manufacture of carbon black was a wasteful utilization thereof, so here the Commission is vested with authority to determine the facts and ascertain what is not an unreasonable discrimination as between the several oil pools. This also gives the Commission power to classify the pools.
The rules which govern the determination of a classification in order that it may be sustained under the equal protection clause of the 14th Amendment to the Federal Constitution are well stated by the Supreme Court of the United States in the case of Lindsley Natural. Carbonic Gas Co., supra, from which we quote as follows:
"The rules by which this contention must be tested, as is shown by repeated decisions of this court, are these: 1. The equal protection clause of the Fourteenth Amendment does not take from the state the power to classify in the adoption of police laws, but admits of the exercise of a wide scope of discretion in that regard, and avoids what is done only when it is without any reasonable basis and therefore is purely arbitrary. 2. A classification having some reasonable basis does not offend against that clause merely because it is not made with mathematical nicety or because in practice it results in some inequality. 3. When the classification in such a law is called in question, if any state of facts reasonably can be conceived that would sustain it, the existence of that state of facts at the time the law was enacted must be assumed. 4. One who assails the classification in such a law must carry the burden of showing that it does not rest upon any reasonable basis, but is essentially arbitrary. Bachtel v. Wilson,204 U.S. 36, 41, 27 S.Ct. 243, 51 U.S. (L.Ed.) 357; Louisville, etc., R. Co. v. Melton, 218 U.S. 36, 30 S.Ct. 676, 54 L.Ed. 921; Ozan Lumber Co. v. Union County Nat. Bank, 207 U.S. 251, 256, 28 S.Ct. 89, 52 L.Ed. 195; Munn v. Illinois,94 U.S. 113, 132, 24 L.Ed. 77; Henderson Bridge Co. v. Henderson,173 U.S. 592, 615, 19 S.Ct. 553, 43 L.Ed. 823."
In the case at bar, counsel for the Commission have cited the cases of Bacon v. Walker, 204 U.S. 311, and Walls v. Midland Carbon Co., 254 U.S. 300, as cases bearing upon the question of the validity of the police regulations when attacked on the ground that they deny the equal protection of the laws. In Bacon v. Walker, the court had under consideration a law of the state of Idaho which prohibited the grazing of sheep within two miles of the residence of an owner of a claim. This statute was sustained as a valid exercise of the police power of the state although it did not apply to cattle or horses, but only to sheep. It was pointed out that sheep destroy vegetation and without the limitation imposed by this law the development of the state would be greatly retarded. In Walls v. Midland Carbon Co., the court had under consideration a statute of Wyoming, which prohibited the burning of natural gas for the manufacture of carbon black when the gas was produced from wells located within 10 miles of a city or town or industrial plant unless the heat contained in such gas was first used for domestic or industrial purposes. The court *Page 252 upheld this statute as a valid exercise of the police power of the state and held that the fact that it was limited to gas produced from gas wells within 10 miles of a city or town or an industrial plant did not invalidate it under the equal protection clause, although gas from wells located outside of the 10 mile limit might be used for such purpose without the heat contained therein being used for industrial or domestic purposes. This court cited the Walls Case with approval in Quinton Relief Oil Gas Co. v. Corporation Commission, supra. If a classification of the several common sources of supply of crude oil which the Commission makes in its order or orders for the prevention of unreasonable discrimination between common sources of supply has any reasonable basis and is not purely arbitrary, then this court cannot, on a petition for a writ prohibition, hold it is void.
We are forced to the conclusion, and so hold, that the sections of law herein under consideration and hereinbefore quoted (excluding section 7955 not involved herein and upon which we are not called upon to pass) are constitutional; that the delegation of authority to the Corporation Commission is lawful, and that the Commission may lawfully make rules and regulations to prevent the waste of crude oil and to protect the co-equal rights of the owners of land in a common pool to take proportionately from the pool and that the Commission may prevent unreasonable discrimination between pools.
Petitioner very vigorously contends that even though this be true, which it does not concede, the orders made by the Commission are unreasonable and that the attempt of the Commission to enforce same amounts to an unauthorized application of judicial force and should therefore be prohibited by this court.
The Commission found as a fact that the commission of waste was imminent and that rules and regulations were necessary to prevent it; that the market demand in the flush and semi-flush pools was far below the potential production of the wells in those pools and that unless the production was curtailed waste would result; that the demand for oil from said pools was not the same; that in order to prevent waste a different percentage of production was necessary in some of said pools than in others because of variations in the demand and it ordered curtailment of production in said pools and fixed the percentage for each. It expressly required proportionality of taking from the wells by the producers in each of the prorated pools. In so doing it is enforeing the provisions of the first part of section 7957. In the Oklahoma City pool new wells of large capacity have been coming in almost daily, thus increasing the potential production of that field, but the market demand has not kept pace with the production or potential production. This condition, it seems, has been the cause of the lowering of the percentage in that field from 16 2/3 per cent. found by the Commission order of June 30, 1930, to correspond to the then existing demand.
The Commission foresaw the possibility of having to change the Oklahoma City field percentage and took care of it in its order, for, as is well known, that field is under the most intensive development of any field in the state. But, contemplating the possibility of an increase in the demand in that field, the Commission in its order said "The Corporation Commission finds that the output from the Oklahoma City pool should be limited to the reasonable market demand from said pool, which at the present time is about 16 2/3 per cent. of the potential production, but which may increase to as much as 25 per cent. of the potential production from said Oklahoma City area, and that therefore, the maximum permitted production should be left at 25 per cent. of the potential as in existing order," etc. Later, because of the increase in the potential, the Commission lowered the percentage for this field to 8 1/3 per cent. It is clear therefore that the Commission had some basis for its decision and whether, on an appeal from its order, this court upon reviewing the evidence, would have arrived at a different conclusion is not before us in this proceeding for a writ of prohibition.
The orders set forth in considerable detail the reasons for the percentages in the different curtailed pools and it cannot be said from the record before us that there is no reasonable basis for them, and it necessarily follows that it cannot be said that the orders are not valid. Lindsley v. Natural Carbonic Gas Co., supra.
As to the uncurtailed fields in the state the Commission finds that they are old fields with settled production and an adequate market outlet, and that to leave them unprorated will not result in waste; and it finds that in most of them the wells are very small and it points out certain harmful results from curtailing such very small wells. We are unable to say there is no reasonable basis for this decision nor that under the circumstances it results in any unreasonable discrimination in favor of the old pools.
Petitioner alleges that it is not wasting *Page 253 any of its own oil, and that it has expended large sums of money in the work of producing, transporting, and preparing to refine the oil it has produced and expects to produce from its wells. In other words, petitioner contends that it will be able to handle in its own refinery the production from its wells, and it places great stress on its contention that the orders of the Commission of which it here complains unconstitutionally interfere with its alleged right to operate its wells to full capacity, transport the oil therefrom to its own refinery, and refine it into gasoline and other products for disposition in the ordinary conduct of its business. The authorities cited by petitioner on this question do not, in our judgment, support this contention, but the contrary view is sustained by other authorities hereinbefore cited and quoted from. Ohio Oil Co. v. Indiana, supra. As has been shown, the state may, in order to prevent waste, limit the production of oil from any well. This is true whether the owner of such well has his own market outlet or not; and, as has already been shown, the state has the power to protect all the collective owners in a common pool against the disproportionate taking by any one or more of said owners. Since, unquestionably, the power of the state extends to requiring proportionality of taking by all the owners in any pool where the production from the pool cannot be obtained without waste, it extends also to limiting the taking of only their proportionate parts of the common fund by those producers who possess their own pipe lines or refineries or other means of disposing of the full amount of the potential production of their wells. Certainly not all the owners in the Oklahoma City pool have outlets for their full potential production, else there would be a market outlet for the full production of the field, and no need for any curtailment. A limited few, one or more large producers, and one or more small producers, may have such outlet, but if they be allowed to produce without limit, then the oil of the remainder will be drained and appropriated by these fortunate ones, or such remaining well owners will have to produce and store, many of them in earthen tanks, their oil, and thus great waste will result. A law which prohibits these things is valid. It does not unconstitutionally interfere with the rights of one in the situation of petitioner. He may not indirectly cause waste to occur nor may he deprive others of their fair share of the oil in the common pool.
Petitioner also contends that the purpose of the orders in question is to control the price of crude oil. When the production exceeds the market demand the price is very apt to drop, and when it is held within the market demand, the tendency is to stabilize the price. The enforcement of the Conservation Act and of these orders may have some influence on the price, but if so, same is merely incidental and not the primary purpose thereof. One of the purposes and functions of government is to promote the general prosperity of the country wherever possible, and if this result flows incidentally from the enforcement of this act, same will not be stricken down because of that fact. This is only another element of the broad functions of the police power. See Ex parte Tindall,102 Okla. 192, 229 P. 125, and Bacon v. Walker, 204 U.S. 311. However, as hereinbefore suggested, this law is intended to prevent waste and to protect the co-equal rights of the landowners in the pools when the full production cannot be obtained without waste, and it applies at all times regardless of the price of oil or its effect on the price. While the public is largely interested in and affected by the oil industry, the industry is not impressed with a public interest like public service companies, but the state is, as it should be, interested in the prevention of the waste of its natural resources. And, if as an incident of this prevention, the laborers and smaller, as well as larger, producers of oil and those who sell goods and loan money to those engaged in the oil business are kept out of financial distress, then that result is commendable and cannot permit any basis for an objection to the law, if otherwise valid.
Petitioner further contends that the umpire and operators committee have been authorized to perform legislative duties, but, from a careful examination of the orders, we find that this committee and the umpire act only in an administrative capacity in enforcing the orders. They report to the Commission for approval any changes in percentages which the market outlet may require. It is merely a matter of mathematical calculation to determine how this market outlet compares to the potential production and to determine what the percentage in any case is, but final action thereon is taken by the Commission.
Vigorous complaint is made as to that part of the order requiring newly completed wells to be shut in for 65 days, except for one day of open flow for test thereof, before being allowed to produce under the proration plan. The order is one of a series of proration orders which have been entered from time to time, each being limited to about three months ahead. The drilling of new wells has not been retarded by *Page 254 any orders of the Commission, but the Commission found it was reasonable and proper to require new wells to be shut down for a while in order to establish equality between them and older prorated wells, which had suffered a great deal of shut down time. In the brief of the Mid-Continent Oil Gas Associaton, hereinbefore referred to, we find this statement:
"An examination of the orders of the Commission will show that all other wells in the Oklahoma City pool were treated similarly; that in other pools aside from the Oklahoma City pool a certain amount of shut down time was imposed and that the reason for thus requiring new wells to refrain from production for a stated length of time was to establish an equality between existing wells which had previously been compelled to shut down and the new wells which might come in thereafter."
An examination of the orders discloses that this statement is correct. We are therefore unable to say that there is no reasonable basis for this part of the order, or that it is purely arbitrary. It appears on its face to be fair, and the response alleges that it was agreed to by the operators in the field. We assume that the operators would not have agreed to it if it was apt to ruin the wells or did not appear to them to be reasonable.
Petitioner contends that it had no notice of the proceedings before the Commission. The response shows that there was notice by publication to all persons and classes interested, and personal service of notice on petitioner and others. Service by publication is not denied, but as to personal service, petitioner contends that the persons served were not its agents. An affidavit has been filed showing that they were employed by petitioner and we are satisfied that petitioner had actual knowledge of the proceedings as they were carried on. It had the right under section 7959 to file an application before the Commission at any time and seek a modification of the order, if unreasonable or if conditions changed, and to be heard, and, if aggrieved at the decision of the Commission, could appeal to this court under section 7960. Likewise, it could have appealed from the original order, had it so desired.
Petitioner further says that the title of the 1915 Law embraces more than one subject and its contents are not expressed in the title. Under the law as announced by this court in Oklahoma Light Power Company v. Corporation Commission, 96 Okla. 19, 220 P. 54; Carr v. State,25 Okla. Cr. 289, 220 P. 479; Griffin v. Thomas, 86 Okla. 70,206 P. 604, and Jackson v. State, 22 Okla. Cr. 338, 211 P. 1066, this contention is without merit. The act deals with the prevention of the waste of crude oil, the equitable taking of same from the ground, conferring authority on the Commission and prescribing penalties for violation of the act. These cover but one general subject, though there are several details. The inhibition is against two or more unconnected subjects being embraced in the act, and such is not the case here, as we view it.
The orders of the Commission do not interfere with interstate commerce as petitioner contends. They deal with the production of oil from the ground and its waste. One method of enforcing the order is to forbid carriers from taking oil produced in violation of the orders. This, as shown by the order of June 30th, was to prevent purchasers and transporters from aiding and abetting producers in violating the order so that neither producer nor transporter could disrupt the plan and thus bring about the commission of waste. The effect, if any, on interstate commerce is purely incidental and remote.
In Field v. Barber Asphalt Paving, Co., 194 U.S. 618, 623, 48 L.Ed. 1142, 1154, the court said:
"The right of a state, in the exercise of the police power, to make regulations which indirectly affect interstate commerce, has been frequently sustained."
Also, it does not appear that petitioner desires to ship oil from its well in inter-state commerce, and it is therefore not in a position to raise this point here. Pioneer T. T. Co. v. State, 40 Okla. 417, 138 P. 1033; Insurance Co. v. Welch,49 Okla. 620, 154 P. 48.
It appears from the order of June 30, 1930, that all the operators, save one, agreed to it and petitioner contends that the orders were made because some producers agreed to have them made, and that they therefore do not, in fact, represent the judgment of the Commission.. But it also appears that the Commission received an application to make the orders, it gave notice to all concerned, set a time and place for its hearing; heard evidence and made rather extended and elaborate findings of fact based on the evidence and entered its orders accordingly. The fact that practically all the operators agreed is no objection to the validity of the orders, but may be considered as a circumstance in favor of their reasonableness. See Gorieb v. Fox, 274 U.S. 603, 71 Law Ed. 1228, and Miller v. Schoene, 276 U.S. 272, 72 Law Ed. 568. *Page 255
It is shown by the response that some 60 operators are now cited by the Commission for contempt for violations of these orders. The Commission has the power, and it is its duty, to punish for contempt any intentional or willful violations of its orders, from which the right of appeal lies to this court.
If discrimination has occurred or errors or mistakes as to facts or of judgment on the part of the Commission or its agents in the administration of this law have been made, which is very likely true, same can afford no basis for declaring the law invalid, proper and adequate methods being provided for the correction of same.
In the early case of Anderson v. Ritterbusch, Treas.,22 Okla. 761, 98 P. 1002, in all opinion by Justice Kane this court said:
"It may be that Senate Bill No. 245 is not as complete a piece of legislation as possible, but we believe it is adequate for the purposes for which it was enacted, and infringes no vested rights of the persons affected by it. That it may be capable of improvement is a matter with which we have nothing to do. That is with the Legislature. 'Judges ought to remember that their office is jus dicere, and not jus dare — to interpret law, and not to make law, or give law.' The rule laid down by Mr. Chief Justice Marshall in Fletcher v. Peck, 6 Cranch, 87-128, 3 L.Ed. 162, is sound and salutary;
" 'The question whether a law be void for its repugnancy to the Constitution is, at all times, a question of much delicacy, which ought seldom, if ever, to be decided in the affirmative in a doubtful case. * * * But it is not on slight implication and vague conjecture that the Legislature is to be pronounced to have transcended its powers, and its acts to be considered as void. The opposition between the Constitution and the law should be such that the judge feels a clear and strong conviction of their incompatibility with each other'."
It may be that the 1915 Act could be improved upon in some respects, but the matter of its alteration or improvement or repeal by the Legislature is one with which we have nothing to do, since our function is exclusively to interpret law, not to make law.
The question here is, as in all cases involving the constitutionality of an act of the Legislature, not whether it is a good or bad law, but only whether the Legislature, representing one of the three co-ordinate branches of the state government, to wit, the legislative, acted within its powers as prescribed and limited by the Constitution in passing same.
The rule was early announced in this jurisdiction in City of Pond Creek v. Haskell, 21 Okla. 711, 97 P. 338, in a very exhaustive opinion by Justice Dunn, and has consistently been followed since that time. The first paragraph of the syllabus of that opinion is as follows:
"A court will never declare an act of legislation, passed with all the forms and solemnities requisite to give it the force of law, unconstitutional and void, unless the nullity and invalidity of the act are placed, in its judgment, beyond a reasonable doubt."
We have carried comment and citations further than we otherwise would because of the vigorous insistence of counsel that the act in question was vulnerable to their attack on the constitutional grounds discussed and because of the questions presented. We feel, however, that the importance of this matter is ample justification for our rather extended discussion of same.
From a careful review of the act in question, the orders of the Commission, and the authorities cited, we are clearly of the opinion that, the sections of the act here in question are not repugnant to the Constitution of this state nor to the federal Constitution, and we are unable to say from the record before us in this proceeding that the orders of the Commission are unreasonable, and it therefore follows that the writ of prohibition must be, and the same is hereby, denied.