Court Opinion

ID: 7916529
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:11:41.763413+00
Date Added: 2024-06-11T16:32:50.372924
License: Public Domain

Thiele, J.
(dissenting): In my opinion a correct disposition has not been made of this appeal, my reasons for dissent being briefly outlined as follows:
At the inception of the matter before the state corporation commission no formal written application was filed, but it is clear that the commission was asked to. make an order fixing a state-wide minimum well allowable for oil wells in excess of fifteen barrels per day.
The power of the commission to regulate the production of petroleum oil and prohibit waste was first conferred by the Laws of 1931, chapter 226. Without going into detail, it may be said the commission’s power was limited to common sources of supply or pools, a proviso to section 3 of that statute stating the power granted should not apply to wells from which the average daily production was less than fifteen barrels per day. There was nothing in this statute even approaching power to make a state-wide order.
Paragraph 2 of the above act was amended by .the Laws of 1933, chapter 214, to expand the definition of economic waste. By the Laws of 1939, chapter 227, the original act was considerably amended, the statute as presently involved now appearing as G. S. 1945 Supp., chapter 55, article 6, and reference is hereafter made thereto. Under 55-603, provision is made for the regulation of any common source of supply, called “pool” in the statute, under rules there laid down, it being provided that nothing in the section should authorize the reduction or limitation of the full production from any pool whose average well size is fifteen barrels per day or less, but that the commission might require ratable taking by any purchaser, therein from the properties with which it may be connected. Under 55-604 are provisions for rules and regulations, and setting up factors for consideration in determining the amount of oil which may be produced and sold from the several pools of the state, all as *444more fully set out in the statute. It may be noted the commission is to consider the estimated consumer demand, the offers to- purchase, the prices offered in relation to the price generally, the prevention of waste, and under B (e) the quantity of oil that may he produced from non-prorated pools; and further B (/) that the ratio of the daily capacity of each prorated pool to the daily total capacity of all such pools shall be such that the ratio will result in a fair and equitable allocation of production among such pools, and that the commission shall make a classification, in accordance with the statutory requirement “so that the respective pool classifications, in their order from the smallest to the largest, will be allocated a daily rate of production in percentages on a descending scale, but so as to result in a progressively increasing average daily allowed production in barrels per well from the smallest to the largest pool classification.” Some intervening factors will not be noted but it is noted that under C (c) “That the allowable production of any well in any prorated pool shall not be reduced below fifteen barrels peí day.”
It seems clear that if the commission makes a state-wide order as asked, that at least two results will occur. First, if the minimum daily allowable is fixed at any amount greater than fifteen barrels per day, it must have the effect of changing the base for determining what pools are subject to consideration under 55-603. It needs no demonstration that if the minimum is raised, the number of non-prorated pools will be increased. Second, if the minimum daily allowable is fixed at any amount greater than fifteen barrels per well per day, it has the effect of changing the weight to be given the factors for consideration under 55-604, especially B (/), with the result that the base for determining percentages will be changed, that there will be no fair and equitable allocation of production among pools and the statutory requirement will not be met.
The purpose of the statute was to provide a method of allocation under conditions prescribed by the legislature, and the purpose of the fifteen-barrel limitation, twice repeated, was not to permit the commission to raise the limitation as it would, but to provide a measure which it could not ignore for any asserted reason that a small pool in the one instance, or a small well in the other, could not be operated except by the commission of “waste” as that term is defined in the statute. If the commission has power to fix a minimum at twenty-five barrels per well per day by state-wide order *445such as was sought, then by the same authority it can make that minimum one hundred barrels per day. If that be true, then the legislature fixed no standards for the power delegated to the commission. As I read the statute, the legislature conferred no power on the corporation commission to make a state-wide order such as was sought.
I am authorized to say'that Mr. Chief Justice Harvey and Mr. Justice Parker concur in the foregoing views.