Opinion ID: 1129782
Heading Depth: 1
Heading Rank: 4

Heading: Transco's Claims Under Federal Law

Text: The initial thrust of Transco's appeal is that this state's authority to make and enforce a law such as Rule 48 has been effectively preempted by the United States. In Assignment of Error No. 3, Transco says that this preemption has occurred by virtue of the so-called negative Commerce Clause, that long established construction of the Commerce Clause of the Constitution of the United States which limits the authority of the states to enforce unreasonable burdens on interstate commerce. Complementing that argument is the one we consider now, made under Assignment of Error No. 2, to the effect that the Congress, in the exercise of its powers affirmatively granted under the Commerce Clause, has preempted state regulation by virtue of the Natural Gas Act, 15 U.S.C. §§ 717-717w, and the Natural Gas Policy Act of 1978, Pub.L. No. 95-621, 92 Stat. 3352 (1978), codified at 15 U.S.C. §§ 3301 et seq., and the authority and responsibilities vested thereby in the Federal Energy Regulatory Commission (FERC). The Supremacy Clause of the Constitution of the United States provides that all valid enactments of the Congress shall be the supreme law of the land and the Judges of every state shall be bound thereby, anything in the Constitution or Laws of any State to the contrary notwithstanding. U.S. Const. art. VI, § 2. From this source has sprung the doctrine of federal preemption of state law. Federal law has preemptive effective when the Congress acting within its constitutional powers expressly so provides. Arkansas Electric Cooperative Corp. v. Arkansas Public Service Commission, 461 U.S. 375, 385, 386, 103 S.Ct. 1905, 1912, 76 L.Ed.2d 1, 13-16 (1983); Fidelity Federal Savings and Loan Association. v. De La Cuesta, 458 U.S. 141, 152-53, 102 S.Ct. 3014, 3022-23, 73 L.Ed.2d 664, 674-75 (1982); Jones v. Rath Packing Co., 430 U.S. 519, 525-526, 97 S.Ct. 1305, 1309-1310, 51 L.Ed.2d 604, 613-14 (1977). This Court has respected the preemptive effect of such enactments. See, e.g., International Association of Bridge, Structural & Ornamental Iron-workers, AFL-CIO Local Union No. 710 v. Howard L. Byrd Building Service, Inc., 284 So.2d 301, 302-303 (Miss. 1973) (federal labor law preempts); Hattiesburg Building & Construction Trades Council v. Mississippi Mechanical Contractors, Inc., 207 So.2d 99, 102-103 (Miss. 1968) (same). It is now well recognized that state law may be preempted even in the absence of an express congressional enactment to that effect. This view has recently been articulated in Pacific Gas & Electric Co. v. State Energy Resources Conservation & Development Commission, 461 U.S. 190, 103 S.Ct. 1713, 75 L.Ed.2d 752 (1983), as follows: Absent explicit preemptive language, Congress' intent to supersede state law altogether may be found from a `scheme of federal regulation so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it,' `because the Act of Congress may touch a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject,' or `because the object sought to be obtained by federal law and the character of obligations imposed by it may reveal the same purpose.' [Citations omitted] Even where Congress has not entirely displaced state regulation in a specific area, state law is preempted to the extent that it actually conflicts with federal law. Such a conflict arises when `compliance with both federal and state regulations is a physical impossibility,' [Citations omitted] or where state law `stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.' 461 U.S. at 203-204, 103 S.Ct. at 1722, 75 L.Ed.2d at 765; Exxon Corp. v. Eagerton, 462 U.S. 176, ___, 103 S.Ct. 2296, 2301, 76 L.Ed.2d 497, 505 (1983); see Arkansas Electric Cooperative Corp. v. Arkansas Public Service Commission, 461 U.S. 375, 383-385, 103 S.Ct. 1905, 1912, 76 L.Ed.2d 1, 14-16 (1983) (decision not to regulate can be as preemptive as one to regulate). The State Oil and Gas Board has attempted to achieve equity and protect owners in a common pool from loss through drainage by the promulgation and enforcement of a rule requiring purchasers at the wellhead to take ratably. Transco, however, argues that Rule 48 as construed and interpreted in Order No. 409-82 regulates an aspect of natural gas production exclusive regulatory jurisdiction over which has been vested by the Congress in FERC. State power, accordingly, has been preempted and, Transco argues, the Circuit Court erred in failing to so hold. We consider Transco's affirmative preemption claim against the backdrop of our confidence that the State of Mississippi has the authority to regulate the production of natural gas from pools or fields situated within this state. Superior Oil Co. v. Foote, 214 Miss. 857, 874-878, 59 So.2d 85, 92-94 (1952). After all, such production is essentially an intra-state (intra-Mississippi) activity. This authority has, generally speaking, been delegated to the State Oil and Gas Board, and constitutionally so. Barnwell, Inc. v. Sun Oil Co., 249 Miss. 398, 406, 162 So.2d 635, 638 (1964). We are concerned here with an authority this state has lest it be preempted by paramount authority emanating from another sovereign, the United States of America. Cities Service Gas Company v. Peerless Oil and Gas Company, 340 U.S. 179, 186-87, 71 S.Ct. 215, 219-20, 95 L.Ed. 190, 202 (1950). All parties agree that prior to 1978 there existed in the Federal Energy Regulatory Commission (formerly the Federal Power Commission) plenary authority to regulate the sale and transportation of natural gas in interstate commerce. No one questions that prior to 1978 this federal authority within its sphere was more than sufficient to preempt any otherwise lawful state authority. Northern Natural Gas Co. v. State Corporation Commission of Kansas, 372 U.S. 84, 89-90, 83 S.Ct. 646, 649, 9 L.Ed.2d 601, 606 (1963). Prior to 1978 this state's authority to enforce Rule 48 requiring ratable taking had been effectively suspended  preempted, if you will, and any orders such as Order No. 409-82 would have been wholly unenforceable. In 1978 the Congress enacted and the President signed into law the Natural Gas Policy Act of 1978 (NGPA). 15 U.S.C. §§ 3301, et seq. Transco emphasizes that by virtue of this enactment the Congress extended federal regulation to intrastate gas. This was done to eliminate price discrepancies then existing between intrastate and interstate markets which were encouraging producers to withhold new supplies of gas from the heavily regulated interstate market. Coastal and the other producers, on the other hand, remind us that the Congress also coupled with that extension of regulation a comprehensive plan of deregulation under which some gas was immediately deregulated, other gas was more gradually deregulated, and regulated gas prices were allowed to escalate, all in order to provide producers, operators and pipeline purchasers with the degree of freedom from regulation and the price incentives necessary to encourage discovery and production of more gas and thus alleviate the theretofore seemingly perpetual natural gas shortage. [9] We are here concerned only with deregulated natural gas. The Congress specifically found that, under the old Natural Gas Act, FERC (formerly FPC) had kept just and reasonable wellhead sales prices of gas artificially low and had imposed a regulatory maze upon such sales so that production for sale in the interstate market was effectively deterred, all contrary to the national interest in having ready access to an adequate supply of natural gas. Tenneco, Inc. v. Sutton, 530 F. Supp. 411, 420 (M.D.La. 1981). However important the congressional policy and context may be, our precise question today is whether  following enactment of NGPA  federal preemption (with respect to deregulated high cost gas) which undoubtedly existed theretofore continued. Transco argues vigorously that FERC jurisdiction still exists (although in altered form), and that preemption under Northern Natural remains the order of the day. Coastal and the other producers candidly pose the issue We will not mince words: if the first sale (the wellhead sale) of deregulated gas continues to be subject to FERC's jurisdiction under Section 1(b) of the NGA, then Northern Natural applies to this case and Order No. 409-82 is invalid.  (Brief of Coastal Exploration, Inc., served November 29, 1983, at 22) Northern Natural held invalid a ratable take order which the Kansas Corporation Commission had entered against an interstate pipeline company. The basis of the decision was the state's invasion of the FPC's exclusive regulatory jurisdiction under Section 1(b) of the Natural Gas Act of 1938: We disagree with the Kansas Supreme Court, for we hold that the State Commission's orders did invade the exclusive jurisdiction which the Natural Gas Act has conferred upon the Federal Power Commission over the sale and transportation of natural gas in interstate commerce for resale.  372 U.S. at 89, 83 S.Ct. at 649, 9 L.Ed.2d at 606. It is our reading of the Natural Gas Policy Act of 1978 that wellhead sales of the sort of gas with which we are here concerned have been effectively deregulated. We are concerned here with high cost natural gas, 15 U.S.C. § 3317(c)(1), which as a matter of law is no longer subject to FERC (formerly FPC) jurisdiction. 15 U.S.C. § 3431(a)(1)(B)(i). Congress has declared that the first sale of deregulated gas is never made subject to the Natural Gas Act or to FERC's jurisdiction under that act, and dedicated gas which is determined to be deregulated gas ceases to be subject to the NGA or FERC's jurisdiction under the NGA. With respect to this category of gas, the regulatory situation existing at the time Northern Natural was decided has thus been altered radically. NGPA Section 601(a)(1)(A), (B) and (D), 15 U.S.C. § 3431(a)(1)(A), (B) and (D), provide as follows: SECTION 601. COORDINATION WITH THE NATURAL GAS ACT  (a) JURISDICTION OF THE COMMISSION UNDER THE NATURAL GAS ACT.  (1) SALES.  (A) NATURAL GAS NOT COMMITTED OR DEDICATED  For purposes of section 1(b) of the Natural Gas Act, effective on the first day of the first month beginning after the date of the enactment of this Act, the provisions of the Natural Gas Act and the jurisdiction of the Commission under such shall not apply to natural gas which was not committed or dedicated to interstate commerce as of the day before the date of the enactment of this Act solely by reason of any first sale of such natural gas. (B) COMMITTED OR DEDICATED NATURAL GAS  Effective beginning on the first day of the first month beginning after the date of the enactment of this Act, for purposes of section 1(b) of the Natural Gas Act, the provisions of such Act and the jurisdiction of the Commission under such Act shall not apply solely by reason of any first sale of natural gas which is committed or dedicated to interstate commerce as of the day before the date of the enactment of this Act and which is  (i) High-cost natural gas (as defined in Section 107(c)(1), (2), (3), or (4) of this Act); [Emphasis added]. The Joint Explanatory Statement of the Committee on Conference of the Congress, which accompanied the NGPA, makes clear what the conferees intended that Section 601(a)(1) accomplish. The Conference Agreement limits the jurisdiction of the Commission under the Natural Gas Act in a manner similar to the House-passed bill. Natural gas not committed or dedicated to interstate commerce as of the day before the date of the enactment of this Act is never made subject to the Commission's jurisdiction under sec. 1(b) of the Natural Gas Act. The Commission's jurisdiction under section 1(b) of the Natural Gas Act ceases on the first day of the first month beginning after the date of enactment of this Act for the following categories of natural gas: High-cost natural gas which qualifies for deregulated price treatment under section 107(c)(1), (2), (3), or (4); [Emphasis added].       Section 601(a)(1) [15 U.S.C. § 3431(a)(1)] means what it says  the Natural Gas Act of 1938 (NGA) and FERC's jurisdiction under the Act never apply to deregulated gas, and certain other categories of gas. That message is decisive of the preemption issue in this case. The reason the Supreme Court voided the ratable take order in Northern Natural was because at that particular point in time such an order substantially affected gas which was subject to the FPC's (FERC's) jurisdiction under the NGA. If the NGA and FERC's jurisdiction under the NGA no longer extend to deregulated gas, and FERC has no authority to regulate the first sales and purchases of deregulated gas either directly or indirectly, then Northern Natural does not dictate a preemption of otherwise existing state authority. We are not unmindful of the fact that FERC still has the authority to determine whether pipelines such as Transco may pass through the prices they pay at the wellhead, although pass through may be denied only where FERC determines that the amount paid [by the pipeline] was excessive due to fraud, abuse or similar grounds. 15 U.S.C. § 3431(c)(2). Transco cites this continuing pass through approval authority and urges that FERC jurisdiction continues, only FERC now regulates by reference to a fraud and collusion standard as distinguished from the old just and reasonable standard. A change in the standard, Transco argues, does not alter the de jure existence of jurisdiction the effect of which is preemption. The argument is disingenuous. FERC to be sure has today authority to prohibit a pipeline from passing through to consumers excessive wellhead prices paid producers as a result of some nefarious scheme to defraud a consumer. But FERC has no authority to intervene when the pipeline, denied pass through, seeks to get out of its deal with the producers. Though the price paid at the wellhead may well be FERC-determined excessive as the product of fraud or collusion when pass through is sought, it remains a just and reasonable price as a matter of law as between the pipeline and the producer. 15 U.S.C. § 3431(b)(1)(A). Nothing in the pass through provisions of NGPA continues in effect any FERC jurisdiction over wellhead first sales of deregulated natural gas. Our review of the congressional enactments discloses no explicit preemptive language. Our comparison of Rule 48 with federal law reveals no point of actual conflict. Transco's compliance with Rule 48 would not cause it to act in violation of the spirit or letter of any federal law. Finally, we find nothing in federal law as modified by NGPA which leaves in place a scheme of federal regulation so pervasive as to make reasonable the inference that Congress left no room for the states to supplement it. Fidelity Federal Savings & Loan Assn. v. De La Cuesta, 458 U.S. 141, 153, 102 S.Ct. 3014, 3022, 73 L.Ed.2d 664, 675 (1982). As presently constituted federal law fails to generate any spirit, policy or rule with which a natural gas producing state would collide if it sought to do equity between and among owners in a common pool of deregulated gas by the promulgation or enforcement of a common purchaser or ratable take rule. Our conclusion that federal jurisdiction and regulation, both the expressed and implicit varieties, have been withdrawn does not ipso facto leave the state free to reenter, for a federal decision to forgo regulation in a given area may imply an authoritative federal determination that the area is best left un regulated, and in that event would have as much pre-emptive force as a decision to regulate.  Arkansas Electric Cooperative Corp. v. Arkansas Public Service Commission, 461 U.S. at 384, 103 S.Ct. at 1912, 76 L.Ed.2d at 10 (emphasis in original). This notion must be taken seriously here. Our context is a congressional fact finding that regulation and price controls, however well intended, have had an effect contrary to the national interest. [10] The Congress has found that regulation of the sale and transportation of natural gas in interstate commerce has had the effect of stifling production for the interstate market. The Congress determined that the national interest would be served in the long run by a different approach, that first sales  wellhead sales  should be deregulated and that the inevitably increased cost of production should be borne by the consumer. In this context, the Congress certainly had the authority to enact not only a federal plan of deregulation of first sales but also that these sales should be free of state regulation. If federal regulation produces evils inimicable to the national interest, a plethora of state regulations varying from jurisdiction to jurisdiction seems equally capable. Our study of the terms and provisions of the Natural Gas Policy Act of 1978, however, convinces us that the Congress has not proscribed state regulation of wellhead sales of deregulated gas. However consistent a continued proscription on state regulation might have been with the theoretical underpinnings of deregulation, the Congress in NGPA in 1978 did not ban state regulation of deregulated gas. What, and all, the Congress has done insofar as we are concerned is strip away federal regulatory authority thus leaving in effect and wholly exercisable such state regulatory authority as otherwise exists. The lynchpin that holds Northern Natural together having been removed, and not having not been replaced by a congressional enactment that wellhead prices of deregulated gas be left unregulated by the states as well, Transco's preemption claim fails. The states today have the authority to require that an interstate pipeline company take deregulated gas ratably and without discrimination in favor of one owner, operator or producer and against another in the same common source of supply. Cities Service Gas Co. v. Peerless Oil & Gas Co., 340 U.S. 179, 185, 71 S.Ct. 215, 219, 95 L.Ed. 190, 201 (1950). Transco's Assignment of Error No. 2 is denied. A caveat: Today's facts and today's holding concern deregulated gas. The Harper Sand Gas Pool lies at a depth of more than 15,000 feet below the surface of the earth. The wells in issue produce highcost natural gas, 15 U.S.C. § 3317(c)(1), with respect to the wellhead sales pricing of which FERC has no jurisdiction. 15 U.S.C. § 3431(a)(1)(B)(i). The first sales of many other categories of natural gas remain subject to FERC jurisdiction and regulation according to NGPA. Nothing said here, of course, can decide any preemption question that may hereafter arise in the context of regulated natural gas produced in this state.
By virtue of the Constitution's having vested the Congress of the United States with the power to regulate commerce among the states, U.S. Const., art. I, § 8, cl. 3, Transco argues via Assignment of Error No. 3 that the State of Mississippi is without authority to enforce Rule 48 as interpreted in Order No. 409-82 because it creates an impermissible burden on interstate commerce. Grammatically speaking, the Commerce Clause is an affirmative grant of power to the Congress. A century and a half of constitutional decisional jurisprudence, traceable to a dictum by Chief Justice Marshall in Gibbons v. Ogden, 22 U.S. (9 Wheat) 1, 209, 6 L.Ed. 23, 73 (1824), have established the legitimacy and reality of the negative Commerce Clause. Even in the absence of exercise by the Congress of its power to regulate commerce, the clause stands as a barrier to the enforcement by the states of laws, statutes or regulations which unreasonably discriminate in favor of in-state interests. The values undergirding the negative Commerce Clause were articulated by Justice Robert H. Jackson on H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 69 S.Ct. 657, 93 L.Ed. 865 (1949). Our system, fostered by the Commerce Clause, is that every farmer and every craftsman shall be encouraged to produce by the certainty that he will have free access to every market in the Nation, that no home embargoes will withhold his export, and no foreign state will by customs duties or regulations exclude them. Likewise, every consumer may look to the free competition from every producing area in the Nation to protect him from exploitation by any.  336 U.S. at 539, 69 S.Ct. at 665, 93 L.Ed. at 875. The Commerce Clause is said to create a national common market. Individual business entities are free to operate commercially in any state where such operations are legal and may not be denied access to markets or resources based upon that choice. Conversely, a buyer's state of origin generally should not affect his access to goods produced anywhere in the country. The states are without authority to enforce laws imposing substantial burdens on such consumer. South-Central Timber and Development, Inc. v. Wunnicke, ___ U.S. ___, ___, 104 S.Ct. 2237, 2247, 81 L.Ed.2d 71, 76 (1984); Hughes v. Oklahoma, 441 U.S. 322, 326, 99 S.Ct. 1727, 1731, 60 L.Ed.2d 250, 255-56 (1979); H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 534-538, 69 S.Ct. 657, 663-64, 93 L.Ed. 865, 872-74 (1949); Cooley v. Board of Wardens, 53 U.S. (12 How.) 299, 319, 13 L.Ed. 996, 1004-05 (1851). Any regulation of a business enterprise engaged in interstate commerce has some effect on commerce among the states. This is undoubtedly so in the case of Rule 48 and Order No. 409-82. The question is not whether the state's regulations impose a burden on interstate commerce but whether the burden which is imposed is a constitutionally impermissible one. Just how much of a burden upon interstate commerce must be found before a state runs afoul of the negative Commerce Clause has been a subject of long debate and varying answers by the Supreme Court. This has particularly been so in the past decade or so as the Supreme Court has muddled its way along through the quagmire of a conceptually pleasing but practicably nightmarish (at least from the point of view of achieving rationally consistent results from case to case and thus affording the needed tools to states and citizens concerned with predictability) balancing of interests test first announced in Pike v. Bruce Church, Inc., 397 U.S. 137, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970). In Pike the Supreme Court articulated what has become the contemporary formulation of the negative Commerce Clause as applied to a state's attempt to regulate interstate commerce. Although the criteria for determining the validity of state statutes [regulations, rules or orders] affecting interstate commerce have variously stated, the general rule that emerges can be phrased as follows: where the statute [regulation, rule or order] regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. [citation ommitted] If a legitimate local purpose is found, then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate commerce.  397 U.S. at 142, 90 S.Ct. at 847, 25 L.Ed.2d at 178-79. We have been authoritatively instructed in this formulation of the negative Commerce Clause in Great Atlantic and Pacific Tea Co. v. Cottrell, 424 U.S. 366, 371-372, 96 S.Ct. 923, 928, 47 L.Ed.2d 55, 61 (1976). In that case the Supreme Court, reversing a decision of this Court, applied the balancing of interests test and invalidated a Mississippi restriction on the sale of milk as this state had sought to enforce it against a Louisiana milk producer. A review of the dozens of decisions since Pike v. Bruce Church , wherein the established formulation has been rotely recited, produces little in the way of doctrinal consistency or easily rationalized results. Just what is a legitimate public purpose and how much of one need exist before a state regulation will be sustained seems almost to depend on who is doing the looking and what that justice had for breakfast on the day of decision; the same with whether the inevitable burden on interstate commerce is only incidental or is clearly excessive. In the first years of litigation under the new balancing test, the Supreme Court seemed relatively easily satisfied that a burden was excessive and relatively hard to convince that the state did not have a nondiscriminatory alternative adequate to protect local interests. See Hughes v. Oklahoma, 441 U.S. 322, 339, 99 S.Ct. 1727, 1737-38, 60 L.Ed.2d 250, 263 (1979) (statute invalid that forbid export of minnows); Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333, 353, 97 S.Ct. 2434, 2446-47, 53 L.Ed.2d 383, 400-01 (1977) (statute invalid that mandated apples be ungraded); Great Atlantic and Pacific Tea Co. v. Cottrell, 424 U.S. at 377, 96 S.Ct. at 931-31, 47 L.Ed.2d at 64 (1976) (Mississippi statute invalid that prohibits importing milk from another state unless that state allows Mississippi milk to be imported). More recent cases give the states wider berth. See, e.g., Arkansas Electric Cooperative Corp. v. Arkansas Public Service Commission, 461 U.S. 375, 393-396, 103 S.Ct. 1905, 1917-18, 76 L.Ed.2d 1, 16-18 (1983) (state commission could govern wholesale electric rates); Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 471-73, 101 S.Ct. 715, 727-29, 66 L.Ed.2d 659, 673-75 (1981) (state could ban sale of milk in plastic containers); Reeves, Inc. v. Stake, 447 U.S. 429, 443-47, 100 S.Ct. 2271, 2281-82, 65 L.Ed.2d 244, 255-57 (1980) (state could limit sale of state-owned cement to residents); Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 127-29, 98 S.Ct. 2207, 2214-15, 57 L.Ed.2d 91, 101-02 (1978) (state could mandate that oil producers not own retail outlets). The same permissive trend is also discernible in recent state taxation of interstate commerce cases, arguably decided via a different doctrinal formulation. See, e.g., Commonwealth Edison v. Montana, 453 U.S. 609, 624-29, 101 S.Ct. 2946, 2957-59, 69 L.Ed.2d 884, 898-902 (1981) (state could place exorbitant severance tax on coal); Complete Auto Transit Co. v. Brady, 430 U.S. 274, 288-89, 97 S.Ct. 1076, 1083-84, 51 L.Ed.2d 326, 336-37 (1977) (upholding a tax imposed by this state against an interstate trucking company for the privilege of doing business within this state). One concern arising from the ad hoc interpretation of the negative Commerce Clause is the authoritative effect of pre- Pike decisions. We express this concern in the context of Transco's insistence that one of the burdens upon interstate commerce created by the rule and order here in issue is increased prices to the consumer. Pre- Pike decisions, however, establish that increased prices or decreased supplies to consumers in other states do not necessarily render a state's regulation unconstitutional. Cities Service Gas Co. v. Peerless Oil and Gas Co., 340 U.S. 179, 186-87, 71 S.Ct. 215, 219-20, 95 L.Ed. 190, 202-03 (1950) (state could order pipeline to ratably take sellers gas at fixed price); Parker v. Brown, 317 U.S. 341, 368, 63 S.Ct. 307, 322, 87 L.Ed. 315, 335-36 (1943) (state could control raisin marketing); and Milk Control Board v. Eisenberg Farm Products, 306 U.S. 346, 352-353, 59 S.Ct. 528, 530-31, 83 L.Ed. 752, 756-57 (1939) (state could set minimum price paid to milk producers). With some temerity, we assume that the premise derived from these cases is still good law. In this context, Pike v. Bruce Church, Inc . directs that we proceed to a consideration of what legitimate local interests may be said to undergird and be promoted by Rule 48 and Order No. 409-82. Coastal, Getty and the other producers argue that conservation of an important natural resource and the prevention of waste are implicated. Without doubt, if this were so, such would be a legitimate local interest entitled to great weight and consideration in the Commerce Clause balancing test. It is difficult, however, for us to see how there is waste of natural resources when an interstate pipe line company refuses to take ratably or otherwise. Waste would seem to follow from taking too much, not too little. We are aware of the statutory definition of waste. Miss. Code Ann. § 53-1-3(k) (Supp. 1983). How our Legislature defines waste for purposes of the Mississippi Conservation Act, of course, is its prerogative. Compare Stong, Administratrix v. Freeman Truck Line, Inc., 456 So.2d 698, 709 (Miss. 1984); McLaurin v. Mississippi Employment Security Commission, 435 So.2d 1170, 1171-1172 (Miss. 1983). Its definition, of course, is in no way controlling for purposes of analysis under the Commerce Clause of the Constitution of the United States. The true and entirely legitimate local interest here implicated is fairness. Rule 48 is a rule of equity. The drainage phenomenon is a fact of life of natural gas production. Shell Oil Company v. James, 257 So.2d 488, 494-495 (Miss. 1971). The state through its Oil and Gas Board has acted in this and other ways to assure equity and fairness between and among the varying interests in a common source of supply. See Phillips Petroleum Co. v. Millette, 221 Miss. 1, 15-17, 72 So.2d 176, 179 (1954) (protection against loss through drainage required by fundamental notions of equity and justice). We regard fairness as among the more noble purposes of the state. It is a fundamental component of the idea of justice. Rawls, A Theory of Justice (1971). That we are concerned here with the distribution of material and highly valuable resources does not denigrate or render less noble the state's duty to assure fairness between all persons affected. A laudable feature of Rule 48 in the present context is that it applies to owners of interests in the common source of supply without reference to whether they be Mississippians. Getty is entitled to the same fair treatment as is Coastal as are the Fairchilds as is Tomlinson and as is Inexco and so forth. Transco argues that the principal burden upon interstate commerce resulting from Rule 48 and Order No. 409-82 is higher prices to the ultimate purchasers and consumers of natural gas. The argument is not persuasive. First, as indicated above, we believe the proposition well-established that higher prices to consumers in another state do not render a state's regulation of commerce impermissible per se under the negative Commerce Clause. Cities Service Company v. Peerless Oil and Gas Co., 340 U.S. 179, 186-87, 71 S.Ct. 215, 219-20, 95 L.Ed. 190, 202-03 (1950); Parker v. Brown, 317 U.S. 341, 368, 63 S.Ct. 307, 322, 87 L.Ed. 315, 335-36 (1943); Milk Control Board v. Eisenberg, 306 U.S. 346, 352-353, 59 S.Ct. 528, 530-31, 83 L.Ed. 752, 756-57 (1939). Second, the Congress has declared that all reasonable costs of production of natural gas shall be borne ultimately by the consumer. This is one of the fundamental policy determinations underlying the Natural Gas Policy Act of 1978. Indeed, it was assumed by Congress that prices to the consumer would increase. This was found preferable to the pre-existing price controls and regulatory policies of FERC under the pre-1978 Natural Gas Act. Thus, whether increased prices to consumers may be fairly characterized as an incidental burden upon interstate commerce, we find it persuasive that Congress within the scope of its power under the affirmative Commerce Clause has expressly authorized such increases. Transco further argues that there is a burden on interstate commerce emanating from Rule 48 in that compliance with Order No. 409-82 will require that more natural gas be taken from Mississippi and less from Louisiana and Texas. The quick answer is that Louisiana and Texas also have ratable take regulations in effect. [11] Furthermore, no evidence has been adduced which would lend credence to Transco's argument that Rule 48 impermissibly discriminates against natural gas production in Louisiana and Texas. The fundamental flaw in Transco's reasoning on the burden point is that it seems to be talking much more about a burden upon Transco than a burden upon interstate commerce. The burden upon Transco appears traceable to its contract with Getty, not to Rule 48. That contract is one Transco freely and voluntarily entered with Getty. It is hard to see how a ratable take rule or order could be said to generate an unreasonable burden on interstate commerce when the only thing requiring Transco (or any other interstate pipeline) to take at all, ratably or otherwise, is its own contract. Many important provisions of that contract reflect that the parties carefully considered future eventualities. The so-called take-or-pay provision obligating Transco to pay whether it takes the production made available by Getty is one such clause. Transco's problem is that it failed to protect itself against the market glut and declining prices consumers are willing to pay for natural gas. It is not now and never has been the function of this Court to relieve a party to a freely negotiated contract of the burdens of a provision which becomes more onerous than had originally been anticipated. Bunting v. Orendorf, 152 Miss. 327, 332, 120 So. 182, 183 (1929); Jemison v. McDaniel, 25 Miss. 83, 86 (1852); Gulf Oil Corp. v. Federal Power Commission, 563 F.2d 588, 598-600 (3d Cir.1977). Not only did Transco freely and voluntarily  and no doubt in anticipation of accomplishing its own advantage  enter into the contract with Getty in 1980, it did so against the backdrop of Rule 48. One Transco official admitted actual knowledge of Rule 48. In any event, an interstate pipeline such as Transco is chargeable with full knowledge of Rule 48 and any other applicable state regulations (or statutes, laws, etc.) existing at the time of contracting. The parties contract against the backdrop of regulation and ought generally be held to an implied incorporation of applicable regulations into the contract. Transco's argument that Rule 48 had never been enforced is lame indeed. Transco knew of the existence of the rule or was certainly charged with knowledge of its existence; the rule has been on the books since 1952. Despite the arguments made here, Transco was chargeable with knowledge that the states became entitled to play a greater role in regulation of the production of deregulated natural gas following enactment of the Natural Gas Policy Act in 1978. More fundamentally, Transco was certainly aware of the drainage problem inherent in natural gas production when there are two or more wells producing from a common source of supply, thus necessitating a rule something like Rule 48 to assure equity and fairness amongst the owners of the various interests in the common pool. Transco has the right to pass the costs it incurs in purchasing natural gas through to the consumer. 15 U.S.C., § 3431(c). In this sense, it is not Transco who experiences a burden, it is the consumer. If higher purchasing prices at the wellhead lead to higher prices to the consumer and a loss of markets, this is simply one inevitable consequence of the free market policies of the era of deregulation with respect to which Transco is vested by the negative Commerce Clause with no right to complain. A final point by Transco here is that the state had a less discriminatory alternative adequate to protect local interest, i.e., a ratable production order as distinguished from a ratable take order. To be sure, one inquiry under the Pike v. Bruce Church balancing test is whether there are available to a state less discriminatory alternatives adequate to protect the local interests implicated, and the Supreme Court has made it clear that this inquiry must be taken seriously. Hughes v. Oklahoma, 441 U.S. at 339, 99 S.Ct. at 1737, 60 L.Ed.2d at 263; Hunt v. Washington State Apple Advertising Commission, 432 U.S. at 353, 97 S.Ct. at 2446-47, 53 L.Ed.2d at 400-01; Great Atlantic and Pacific Tea Co. v. Cottrell, 424 U.S. at 377, 96 S.Ct. at 930-31, 47 L.Ed.2d at 64. The search for such alternatives, however, need not be made in connection with our Commerce Clause inquiry until it first be established that the regulation in question creates an unreasonable burden on commerce. This Transco has failed to do  for as explained above, the burdens are on Transco, not interstate pipe lines generally, because only Transco has, wittingly or unwittingly, bound itself to a long term, fixed price gas purchase contract. When that contract is taken out of the case, it is seen that the so-called burdens of Rule 48 disappear. The point is made crystal clear by Transco's present policy of insisting upon market-out provisions in its contract  provisions which allow the price Transco pays to the producer to fluctuate with market price to the consumer. If Transco had negotiated a market-out clause in its contract with Getty, these proceedings no doubt would not be before this Court today. In summary, we hold that the State of Mississippi via its Oil and Gas Board had the authority to promulgate and has the authority to enforce Statewide Rule 48. Nothing in Rule 48 or its interpretation in Order No. 409-82 contravenes the authority remaining vested in the State of Mississippi once its authority to regulate commerce has been effectively restricted by the negative Commerce Clause. Transco's Assignment of Error No. 3 is rejected.
Under Assignment of Error No. 4, Transco argues that Rule 48 is void for vagueness. The claim is predicated upon rights said to be vested in Transco by virtue of the Due Process Clause of the Fourteenth Amendment to the Constitution of the United States. It is the foremost requisite of a legal system that there be general rules. Where those rules are not made clear and are not published and available to persons in the planning of their economic and social activities, the efficacy of the system is in substantial danger. Fuller, The Morality of Law, 46-51, 63-70 (rev. ed. 1969). These notions have acquired constitutional status. Connally v. General Construction Co., 269 U.S. 385, 46 S.Ct. 126, 70 L.Ed. 322 (1925) states [A] statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates the first essential of due process.  269 U.S. at 391, 46 S.Ct. at 127-28, 70 L.Ed. at 328. An unconstitutionally vague statute or regulation is unenforceable. A.B. Small Co. v. American Sugar Refining Co., 267 U.S. 233, 242, 45 S.Ct. 295, 298, 69 L.Ed. 589, 594-95 (1924). Most of the void for vagueness cases have arisen in the context of criminal prosecutions. See ABC Interstate Theatres, Inc. v. State, 325 So.2d 123, 125 (Miss. 1976) (obscenity statute overbroad). It is clear, however, that the doctrine applies to civil statutes and to regulations. See A.B. Small Co. v. American Sugar Refining Co., 267 U.S. at 237, 45 S.Ct. at 296, 69 L.Ed. at 592 (applied to civil statute); Hynes v. Mayor of Oradell, 425 U.S. 610, 620, 96 S.Ct. 1755, 1760, 48 L.Ed.2d 243, 253, (1976) (applied to regulation). On the other hand, when the doctrine applies in the context of economic regulation its strictures are relaxed. Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 498, 102 S.Ct. 1186, 1192, 71 L.Ed.2d 362, 371-372 (1982). A rule or standard is not objectionable merely because it is stated in general terms and is not susceptible of precise application. Familiar examples of such general standards abound in our law, e.g., negligence, unconscionability, fraud. We doubt anyone would seriously argue today that these standards are unconstitutionally vague. Transco focuses its attack upon three aspects of Rule 48. These are (a) ratable take, (b) purchase without discrimination, and (c) same common source of supply. We find these terms readily understandable. Transco's brief demonstrates that they are not susceptible of precise mechanical application, but what law is? Ratable take suggests a general rule of equity. The phrase refers to the taking of an amount of gas from one well such that the percentage of said amount to the well's allowable is the same as the percentage that the amount taken from a second well bears to the allowable for the second well. Ratable taking connotes fairness. Its synonym is pro-rata. HBOP, Ltd. v. Delhi Gas Pipe Line Corporation, 645 P.2d 1042, 1046 n. 9 (Okla. Ct. App. 1982). The concept as we understand it refers to production. It refers to the percentage of allowable production of a common source of supply. It also refers to equity between interests in a given pool. It means that the party taking must take pro-rata with respect to the relative interests, percentage-wise, the various owners have in the pool. That the concept is general hardly establishes that it is impermissibly vague. The phrase purchase without discrimination imparts the same meaning. At the risk of being repetitious, purchase without discrimination means to purchase or acquire pro-rata from a given pool the same percentage of one owner's interest as is purchased of another owner's interest. It likewise means, within a given pool or common source of supply, that the party purchasing will purchase the same percentage of one well's allowable as is the case with respect to all other wells in the pool or common source of supply. We pause here to note that a central question in this case is whether Transco may purchase without price discrimination with respect to the varying interests in the six wells said to be in a common source of supply. As we explain below, the Legislature has not vested the Oil and Gas Board authority to proscribe price discrimination or to inaugurate any other form of regulation of the prices of wellhead sales of natural gas. This is not to say that the Legislature could not endow the Oil and Gas Board with such authority, if it rationally determined that such was consistent with the public interest. We simply hold today that it has not yet done so. Finally, Transco challenges as vague the term common source of supply. This one gives us no trouble. The term simply refers to that geological configuration or area within which a significant drainage problem would result if there be unratable taking from one well to another. It is synonymous with pool. [12] The Supreme Court of the United States has decided that a state ratable take order, although couched in general language, presents no constitutional infirmities regarding vagueness. Phillips Petroleum Company v. Oklahoma, 340 U.S. 190, 192, 71 S.Ct. 221, 222, 95 L.Ed. 204, 206-07 (1950). We do not regard Corporation Commission v. Champlin Refining Co., 286 U.S. 210, 242-243, 52 S.Ct. 559, 567-68, 76 L.Ed. 1062, 1082-83 (1931) as being to the contrary. Assuming arguendo that Champlin is to the contrary, it has been in part overruled by more recent decisions.
Transco next argues that Order No. 409-82 is an arbitrary and unreasonable exercise of the state's police power and, if enforced, would result in a taking of Transco's property without compensation in violation of the Due Process Clause of the Fourteenth Amendment to the Constitution of the United States. It may be true that a taking of private property by governmental action violates the owner's due process rights if the action bears no reasonable relation to a legitimate governmental purpose or is otherwise arbitrary. Thompson v. Consolidated Gas Utilities Corp., 300 U.S. 55, 70, 57 S.Ct. 364, 371, 81 L.Ed. 510, 518 (1936). Here, however, we have a legitimate governmental purpose. The state has a completely legitimate interest, as articulated in the policy statement of the Conservation Act, to safeguard, protect and enforce the co-equal and correlative rights of owners in a common source or pool of oil and gas to the end that each such owner in a common pool or source of supply of oil and gas may obtain his just and equitable share of production therefrom. As discussed previously, it is Transco's contract with Getty  not Rule 48  which effects a taking of Transco's property. This sort of taking is colloquially known as business. We reject out-of-hand Transco's argument that Order No. 409-82 constitutes an impermissible taking of private property without compensation and in so doing we complete our determination that the claims advanced by Transco based in federal law are without merit.