Source: https://www.law.cornell.edu/supremecourt/text/284/8/
Timestamp: 2019-04-19 10:50:25+00:00

Document:
BANDINI PETROLEUM CO. et al. v. SUPERIOR COURT OF STATE OF CALIFORNIA IN AND FOR LOS ANGELES COUNTY et al.
Argued: Oct. 13, 14, 1931.
Mr. Robert B. Murphey, of Los Angeles, Cal., for appellants.
Messrs. James S. Bennett, of Los Angeles, Cal., and U. S. Webb, of San Francisco, Cal., for appellees.
The Superior Court granted a preliminary injunction after a hearing upon the pleadings, affidavits, oral testimony, and documents submitted. The court recited in its order that there appeared to be an unreasonable waste of natural gas in the Santa Fe Springs oil field, and that an injunction was necessary in order 'to preserve the subject matter of the action to abide the decree of the court at the conclusion of the trial.' The court restricted the average daily production of 'net formation gas' from 'any lease or other property unit' to the amount shown for each operator in an accompanying schedule. 2 The court also directed each defendant to file reports showing the daily production of gas and oil, and the order was without prejudice to the right of any of the parties to move on five days' notice for modification of the injunction. The court later modified the order in particulars not important here. Appellants state that the order curtailed their production of gas from 57,120,000 to 27,187,000 cubic feet a day.
Thereupon the appellants sought a writ of prohibition from the District Court of Appeal, Second Appellate District of the state, restraining the Superior Court and the respondent, William Hazlett, as one of its judges, from enforcing the injunction order. The jurisdiction of the Superior Court was attacked upon the ground of the invalidity of the statute invoked. The appellants contended, in substance, that the statute violated the due process clause of the Fourteenth Amendment, in that it afforded no certain or definite standard as to what constituted 'waste' or 'unreasonable waste,' and unlawfully delegated power to the Superior Court to legislate upon that subject, in that, upon the facts and as applied against the appellants, the statute prohibited them 'from utilizing such amount of natural gas produced from their respective wells' as was 'reasonably necessary to produce oil therefrom in quantities not exceeding a reasonable proportion to the amount of oil produced from the same well'; and in that the statute required appellants to curtail their production of oil and gas 'for the purpose of conserving such natural gas for the benefit of the general public' without eminent domain proceedings and without just compensation, and was so arbitrary and oppressive that it was in excess of the power of the state. By reference to their pleadings in the injunction suit, the appellants also assailed, under the due process clause, the provision of the statute as to what should constitute prima facie evidence of unreasonable waste, and the appellants further insisted that the statute as enforced against them impaired the obligation of their lease contracts in violation of the contract clause of the Federal Constitution and that they were denied the equal protection of the laws as guaranteed by the Fourteenth Amendment.
The respondents (appellees here) demurred to the petition, and the District Court of Appeal, entertaining and overruling the contentions of the appellants under the due process clause, denied the writ of prohibition. 293 P. 899. The appellants then applied for a hearing in the Supreme Court of the state, and, this having been denied, they seek in this Court a review of the judgment of the District Court of Appeal.
After the decision of the District Court of Appeal, and before the denial by the Supreme Court of the state of a hearing in the instant case, the latter court passed upon the constitutional validity of the statute in question. That decision was made upon an application for a writ of supersedeas pending an appeal by certain codefendants of the appellants here (who were not parties to the appeal) from the above-mentioned injunction order. People ex rel. Stevenot, Director of Natural Resources, v. Associated Oil Company et al., 211 Cal. 93, 294 P. 717. The Supreme Court found no reason to interfere with the action of the Superior Court, and, later, the Supreme Court, on that appeal, affirmed the injunction order holding that under the statute the Superior Court had the power to determine what wastage of gas in the production of oil was unreasonable. Id. 297 P. 536, 537. The District Court of Appeal, in the instant case, had expressed the same opinion, and accordingly decided that it could not interfere by writ of prohibition. 293 P. at page 907.
It follows that, in considering and deciding federal questions in the prohibition proceeding, the District Court of Appeal must be regarded, as its opinion imports, as having determined merely that the statute was valid upon its face so that the Superior Court had jurisdiction to entertain the injunction suit. It is that determination alone that we can now consider.
The statute is to be read with the construction placed upon it by the state court. Lindsley v. Natural Carbonic Gas Company, 220 U. S. 61, 73, 31 S. Ct. 337, 55 L. Ed. 369, Ann. Cas. 1912C, 160. And, so read, we find no ground for concluding that the statute should be regarded as invalid upon its face, merely by reason of uncertainty, so as to deprive the Superior Court of jurisdiction to consider the relevant questions of fact and to determine with respect to a particular field whether or not there has been the unreasonable waste of gas which the statute condemns. Nash v. United States, 229 U. S. 373, 377, 33 S. Ct. 780, 57 L. Ed. 1232; Miller v. Strahl, 239 U. S. 426, 434, 36 S. Ct. 147, 60 L. Ed. 364; Omaechevarria v. Idaho, 246 U. S. 343, 348, 38 S. Ct. 323, 62 L. Ed. 763; Hygrade Provision Company v. Sherman, 266 U. S. 497, 502, 45 S. Ct. 141, 69 L. Ed. 402.
The appellants make the further contention that the statute is invalid because of the provisions of section 8b (supra, page 10) that 'the blowing, release or escape of natural gas into the air shall be prima facie evidence of unreasonable waste.' The state, in the exercise of its general power to prescribe rules of evidence, may provide that proof of a particular fact, or of several facts taken collectively, shall be prima facie evidence of another fact when there is some rational connection between the fact proved and the ultimate fact presumed. The legislative presumption is invalid when it is entirely arbitrary, or creates an invidious discrimination, or operates to deprive a party of a reasonable opportunity to present the pertinent facts in his defense. Mobile, etc., Railroad Company v. Turnipseed, 219 U. S. 35, 43, 31 S. Ct. 136, 55 L. Ed. 78, 32 L. R. A. (N. S.) 226, Ann. Cas. 1912A, 463; Bailey v. Alabama, 219 U. S. 219, 238, 31 S. Ct. 145, 55 L. Ed. 191; Lindsley v. Natural Carbonic Gas Company, supra, at pages 81, 82 of 220 U. S., 31 S. Ct. 337; Manley v. Georgia, 279 U. S. 1, 5, 6, 49 S. Ct. 215, 73 L. Ed. 575; Western & Atlantic v. Henderson, 279 U. S. 639, 642, 49 S. Ct. 445, 73 L. Ed. 884. In the present case there is a manifest connection between the fact proved and the fact presumed, and, under the construction placed upon the statute by the state court, there appears to be no deprivation of a full opportunity to present all the facts relating to operations within the field.
The question remains whether the statutory scheme of regulation, with the standard which it sets up under the construction of the state court, is on its face beyond the power of the state. The District Court of Appeal, in the instant case, approached this question by considering the correlative rights, under the law of California, of surface owners in the same field. The court concluded that under the law of California, 'on account of the self propelling or migratory character of natural gas, as well as oil,' the owner of the surface did not have an absolute title to the gas and oil beneath, and could acquire such a title only when he had reduced these substances to possession. As justifying this opinion, the court cited the case of Acme Oil Company v. Williams, 140 Cal. 681, 74 P. 296, where the Supreme Court of the state had said, with respect to oil, that it is 'of a fluctuating, uncertain, fugitive nature, lies at unknown depths, and the quantity, extent and trend of its flow are uncertain. It requires but a small surface area, in what is known as an oil district, upon which to commence operations for its discovery. But when a well is developed the oil may be tributary to it for a long distance through the strate which holds it. This flow is not inexhaustible, no certain control over it can be exercised, and its actual possession can only be obtained, as against others in the same field, engaged in the same enterprise, by diligent and continuous pumping. It is anybody's property who can acquire the surface right to bore for it, and when the flow is penetrated, he who operates his well most diligently obtains the greatest benefit, and this advantage is increased in proportion as his neighbor similarly situated neglects his opportunity.' And the Supreme Court of the state, in its decision dealing with the statute in question, quoted this language and held that 'the same rule would apply to natural gas.' 211 Cal. 93, 294 P. at page 722.
If the statute be viewed as one regulating the exercise of the correlative rights of surface owners with respect to a common source of supply of oil and gas, the conclusion that the statute is valid upon its face, that is, considered apart from any attempted application of it in administration which might violate constitutional right, is fully supported by the decisions of this Court. Ohio Oil Company v. Indiana, 177 U. S. 190, 210, 211, 20 S. Ct. 576, 44 L. Ed. 729; Lindsley v. Natural Carbonic Gas Company, supra, at page 77 of 220 U. S., 31 S. Ct. 337; Walls v. Midland Carbon Company, 254 U. S. 300, 323, 41 S. Ct. 118, 65 L. Ed. 276. In that aspect, the statute unquestionably has a valid operation, and it cannot be said that the Superiod Court was without jurisdiction to entertain the suit in which the injunction order was granted. That was all that the District Court of Appeal determined in the judgment now under review. It is not necessary to go further and to deal with contentions not suitably raised by the record before us. Constitutional questions are not to be dealt with abstractly. Having jurisdiction of the suit, the Superior Court had authority to take steps to protect the subject-matter of the action pending the trial on the merits. The injunction order stated that to be its purpose. Upon the trial, all questions of fact and of law relevant to the application and enforcement of the statute may be raised, and every constitutional right which these appellants may have in any aspect of the case as finally developed may be appropriately asserted and determined in due course of procedure.
'See. 8b. The unreasonable waste of natural gas by the act, omission, sufferance or insistence of the lessor, lessee or operator of any land containing oil or gas, or both, whether before or after the removal of gasoline from such natural gas, is hereby declared to be opposed to the public interest and is hereby prohibited and declared to be unlawful. The blowing, release or escape of natural gas into the air shall be prima facie evidence of unreasonable waste.' St. Cal. 1929, c. 535, p. 927.
'Sec. 14b. Whenever it appears to the director of the department of natural resources that the owners, lessors, lessees or operators of any well or wells producing oil and gas or oil or gas are causing or permitting an unreasonable waste of gas, he may institute, or have proceedings instituted, in the name of the people of the State of California, to enjoin such unreasonable waste of gas regardless of whether proceedings have or have not been instituted under section 8 hereof, and regardless of whether an order has or has not been made therein. Such proceedings shall be instituted in the superior court for the county in which the well or wells from which the unreasonable waste of gas is occurring or any thereof are situated. The owners, lessors, lessees or operators causing or permitting an unreasonable waste of gas in the same oil or gas field, although their properties and interests may be separately owned and their unreasonable waste separate and distinct, may be made parties to said action. In such suits no restraining order shall be issued ex parte, but otherwise the procedure shall be governed by the provisions of chapter three, title seven, part two of the Code of Civil Procedure of the State of California and no temporary or permanent injunction issued in such proceedings shall be refused or dissolved or stayed pending appeal upon the giving of any bond or undertaking, or otherwise.' St. Cal. 1929, ch. 535, p. 930.
'1. From blowing, releasing or permitting any natural gas to escape into the air from any well or wells in the Santa Fe Springs Oil Field before the removal of the gasoline from such natural gas.
'2. From operating any well producing natural gas in the Santa Fe Springs Oil Field except while exercising a high degree of care in the selection and adjustment of appliances and in the use thereof for the purpose of keeping each producing well in its 'optimum gas-oil ratio'-the term 'optimum gas-oil ratio' being defined as the smallest number of cubic feet of gas which can be produced with each barrel of oil from the same well at the same time.
'3. From producing more net formation gas on the average day of each seven (7) day period from any lease or other property unit than is set forth in and 'Allowed Gas Production' column' than that shown for each operator in the accompanying schedule.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.