Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-22
Toll CONSERVATION
LAW AWAITS TEST
Oklahoma Statute for Prora-
ton to Be Passed on by
Supreme Court.
BY DEAN DINWOODEY.

The oil industry may now look for
ward to final judicial determination
of the legality of the proration method
of Governmental regulation which has
been invoked in several States to over
come the ills of overproduction that
have beset the industry.
The power of State to control pro-
duction by means of proration, which
admittedly constitutes an interference
with an oil producers business, whether
fer better or for worse, has been ques-
toned in recent litigation. A decision
of this legal controversy by the Supreme
Court of the United States may be
awaited as a result of the courts an
nounceme~t that it will hear and de-
termine the case in which the Okla
homa oil proration law is being tested.
Authority Challenged.
In this case the Champlin Refining
Co. is challenging the authority OF the
Oklahoma Corporation Commission to
prohibit it and other oil producers
from taking from their wells more than
a small percentage of their oil produc-
ment act-t'', -proration law-and the
orders of the commission complained
of are claimed to constitute an unWar-
ranteof interference with the right OF
the refining company to carry on It's
business as it deems best
The State Corporation Commission Is
the agency which enforces the statute
when Gov. Murray is not using the
extra legal means of military law 70
increase crude oil prices.
The Oklahoma curtailment act was
lately has its constitutionality been
questioned. Effective enforcement OF
the proration measure was not had un-
til a large increase in oil production
brought with it a decline in prices. The
law is designed ostensibly as conser-
walton measure. Waste is prohibited.
The taking of oil "at time When there
is not a market demand therefor at
the we'll at price equivalent to the &C
tual value of such crude oil or petro-
leum'' is also forbidden. The Corpora
ton Commission is vested with author
ity to determine. from time to time, the
actual value of the Oil at the well. V1o-
lations of the law and orders OF the
commission subject operators to fines
and imprisonment.
The attack on the statute in the ST.
preme Court will be based principally
on the ground that it is price-fxing
measure. my oSbAOAl VIC
signed to fix the price of commodities
has been frowned on by the court in the
past.
Should the court sustain the validity
of the law, it will most probably con-
strue it as a conservation measure. In
this connection, an interesting question
arises as to the power OF State TO
conserve its natural resources.
Texas Decision.
If not considered as a conservation
law, the court, to uphold the statute,
must place the oil business in the class
CT public utilities, such as the business
of furnishing electricity, transportation
and the like. The right of regulation,
including the fixing Of prices, would
then follow as a matter of course. That
the court will adopt this latter alterna-
tive is extremely doubtful
In Texas a Federal court has re-
Gently enjoined the State Railroad
Commissions enforcement Of prQration
orders designed to prevent economic
waste" This case most likely will soon
reach the Supreme Court. The high
tribunal now has under advisement 4
case involving the validity of a Cali
fornia statute prohibiting the waStage
of natural gas.
PronouncementS of the Supreme
Court in the near future on the prob
lem of oil proration may clear the mud
died legal situation in which the oil
industry finds itself.