Document: 340 U.S. 179 71 S.Ct. 215 95 L.Ed. 190 CITIES SERVICE GAS CO.v.PEERLESS OIL & CO. et al. No. 153. Argued Nov. 9—10, 1950. Decided Dec. 11, Mr. Glenn W. Clark, Oklahoma City, Okl., for appellant. D. A. Richardson, appellee Peerless Oil Gas Co. Floyd Green, Corporation Commission of State Oklahoma. Justice CLARK delivered the opinion Court. 1 The issue in this case is power a state to fix prices at wellhead on natural gas produced within its borders and sold interstate. It originates from proceedings before which terminated with promulgation two orders. first order set minimum price all taken Guymon-Hugoton Field, located Texas County, second directed Cities Service, producer field operator an interstate pipe-line system, take ratably Peerless, another same field, incorporated order. Supreme Court upheld both orders against contentions that they contravened constitution statutes Fourteenth Amendment Commerce Clause, art. 1, § 8, cl. 3, Constitution United States. 1950, 203 Okl. 35, 220 P.2d 279. From judgment Service appealed A substantial federal claim having been duly raised necessarily denied by highest court, we noted probable jurisdiction. 28 U.S.C. 1257(2), U.S.C.A. 1257(2). I. 2 may be summarized as follows. Hugoton 120 miles long 40 wide, lies States Texas, Kansas. portion, known has approximately 1,062,000 proven acres some 300 wells, 240 are producing. About 90 percent Guymon-Hugoton's production ultimately consumed outside State. pipe line connected owns about 300,000 123 wells. In addition, it 94 wells dedicated lease life 19 under term lease, giving control over 236 Aside holdings few small tract owners acreages held trust Land Office—some 49,600 acres—the only services not owned or affiliated those Harrington-Marsh 75,000 100,000 acres. Under prevailing market conditions, range 3.6 5 cents per thousand cubic feet, varying being paid different producers time. contrast, there evidence 'commercial heat value' gas, terms competitive fuel equivalents, excess 10 feet wellhead. 3 While Field three principal horizons, so interconnected make effect one large reservoir gas. Cities' area pressure considerably lower than found beneath Peerless. As result, was causing drainage section losing even though were 4 Having no outlet own, offered sell potential output Service. refused except condition dedicate acreage, leases. Dissatisfied other terms, requested (a) connection well purchase fixed Commission, (b) purchasers Field. Shortly thereafter, Office intervened owner field. alleged fair, adequate existed field; existing discriminatory, unjust arbitrary if continued would deplete, destroy exhaust years. joined Peerless' prayer relief. thereupon, written notice, invited appear participate proceedings. heard testimony direct bearing conservation. Witnesses testified low enforcement conservation more difficult, retard exploration development, result abandonment recoverable extracted. They also contribute uneconomic rate depletion economic waste promoting 'inferior' uses. 6 At end hearings, concluded integrated able dictate without outlets, below value. further taking resulted physical loss royalty owners, gross taxes, inequitable common source supply, discrimination various On basis these findings, issued challenged here. provided 'that shall out producing structures formations * price, wellhead, less 7¢ measured 14.65 pounds absolute square inch.' 'to (Peerless') accordance formula ratable prescribed Order 17867 Commission' (a provision attack here), indicated general field-price 7 appeal Court, attacked following grounds: (1) acted beyond authority did permit price-fixing specific figure contemplate prevention economic, distinct physical, waste; (2) construed such price-fixing, thereunder violated constitution; (3) construed, Due Process Equal Protection clauses Amendment, cannot reasonably related waste, contain standards governing Commission's powers, (c) too vague, (d) lacked procedural due process, (e) discriminates order, applying purchasing (4) violate Art. I, cast undue burden on, discriminate against, commerce. 8 rejected claims. fully empowered action took. legislature, early 1913, declared underlying land property his lessee; supply proportionately flow drilling lessee regarded reducing possession share gas; any person cases here pertinent, each proportion interest upon agreed upon; agreement can reached then after notice hearing. 52 Okla.Stats. §§ 23—25, 231—233 (1941). These sections explicitly authorize requiring price. 1915, strengthened laws authorizing regulation when demand. 5i 239—240 authorized limit 'such marketed waste' bears total source. regulation, legislature 'so prevent protect public, right produce therefrom, unreasonable favor another.' 1915 Act setting ruled contemplation statute. Finally, regard questions, Constitution. 9 court made do Federal grounds relied We agree. II. issues appellant virtually substance. now undeniable adopt reasonable regulations This numerous kinds legislation designed curb resources correlative rights through taking, Champlin Refining v. 1932, 286 210, 559, 76 1062, economy state. Railroad Rowan Nichols Co., 1940, 310 573, 60 1021, 84 1368. ends have justify uses profitably put restricted. Walls Midland Carbon 1920, 254 300, 41 118, 65 276. 11 Like lawful substantially legitimate sought attained. Nebbia People New York, 1934, 291 502, 54 505, 78 940 therein cited. case, ample sustain finding resulting conducive waste. That sufficient issued. concern ours regulatory devices might appropriate, extensive measures suffice. Such matters province Commission. 12 considered arguments concerning find them similarly lacking merit. III. 13 Clause gives Congress commerce paramount broad scope. But legislative functions required treated exclusive. Cooley Board Wardens Port Philadelphia, 1851, How. 299, 996. settled regulate local exercised, impact Parker Brown, 1943, 317 341, 63 307, 87 315; Milk Control Pennsylvania Eisenberg Farm Products, 1939, 306 346, 59 528, 83 752; South Carolina Highway Dept. Barnwell Bros., 1938, 303 177, 58 510, 82 734. requirements consistently recognized place embargo commerce, safeguard obvious interest, stake outweigh whatever national restrictions. Nor should lightly translate quiescence into affirmation complete freedom regulation. supra. Compare Leisy Hardin, 1890, 135 100, 681, 34 128, decided prior Wilson Act, 26 Stat. 313, 27 121, re Rahrer, 1891, 140 545, 865, 35 572, thereafter. 14 clear. justifiably concerned preventing rapid dissipation chief resources. contention urged group private derive gain does contradict established between state-wide Cf. Thompson Consolidated Utilities Corp., 1937, 55, 57 364, 81 510. 15 recognize strong problems. far clear balance harmed Presumably consumers, domestic industrial alike, want obtain cheaply possible. hand, groups transportation competing fuels complain competition cheap Moreover, but fraction consumers burner-tip, herein little Some who get bargain rates uses, suffer. preserving limited resource completely satisfactory substitute. See generally, F.P.C., Natural Investigation (1948); F.P.C. Hope 1944, 320 591, 657—660, 64 281, 315, 88 333 (dissenting opinion). Insofar concerned, states tend coincide. event, complexity diverse interests involved, say employed fall ban Clause. supra; us consider whether Oklahoma's unilateral efforts conserve will effective. supra, pages 190—191, 516, 517, 16 H. P. Hood Sons Du Mond, 1949, 336 525, 69 657, 93 inconsistent result. specifically excepted consideration question raised, forbidden carefully distinguished Eisenberg, approved applied whose entire purchases milk directly, processing, vice invalidated solely facilities company articulated ground divert supplies needed consumers; words, discriminated There problem applies destined intrastate consumers. 17 Appellant contend conflict asserted 821 (1938), 717 seq. (1948), Power participated Whether authorizes sales independent producers, leaves function states, 18 hold record valid orders, decision affirmed. Affirmed. 20 BLACK constitutional questions frivolous therefore dismissed.

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