Court Opinion

ID: 9624017
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:48:44.528944+00
Date Added: 2024-06-11T18:05:37.792669
License: Public Domain

HALLEY, J.
(dissenting). There are two conclusions in the majority opinion in which I cannot concur. I cannot agree that the Corporation Commission has been given authority by the Legislature to make a general order fixing the price of gas for an entire gas field or common source of supply. I cannot agree that the Commission has the authority to require Cities Service to pay to Peerless a price for gas produced in the Guymon-Hugoton field, substantially above the current market price prevailing in that field. It is admitted that if the general price-fixing order for the entire field is authorized, then the price ordered paid to Peerless would necessarily follow the general price for the entire field. However, it is my view that the general price-fixing order is not within the powers granted to the Corporation Commission, and that Cities Service should only be required to pay Peerless the current market price prevailing in that field.
The majority opinion does not claim that general price-fixing authority for a common source of supply has been expressly granted to the Commission. It does conclude that such authority is necessarily implied as a means of carrying out the express powers given the Commission to regulate the production of gas, the prevention of waste, the protection of co-equal rights, and the interests of the state and its citizens. These are all worthy objectives. The conservation of a great natural resource challenges the best efforts of all, but does not warrant the Corporation Commission in exercising powers not delegated to it by the Oklahoma Legislature.
The statutes granting authority to the Corporation Commission to regulate the production of gas are generally referred to as the Acts of 1913 and 1915. The *49applicable portion of the 1913 Act, ch. 198, page 440, sec. 3 (sec. 233, Title 52, O.S. 1941), is as follows:
“Any person, firm, or corporation, taking gas from a gas field, except for purposes of developing a gas or oil field, and operating oil wells, and for the purpose of his own domestic use, shall take ratably from each owner of the gas in proportion to his interest in said gas, upon such terms as may be agreed upon between said owners, and the party taking such, or in case they cannot agree, at such a price and upon such terms as may be fixed by the Corporation Commission after notice and hearing; provided, that each owner shall be required to deliver his gas to a common point of delivery on or adjacent to the surface overlying such gas.”
In 1915, the following Act, being chapter 197, sec. 5 (sec. 240, Title 52, O.S. 1941) was enacted:
“Every person, firm or corporation, now or hereafter engaged in the business of purchasing and selling natural gas in this state, shall be a common purchaser thereof, and shall purchase all of the natural gas which may be offered for sale, and which may reasonably be reached by its trunk lines, or gathering lines, without discrimination in favor of one producer as against another, or in favor of any one source of supply as against another save as authorized by the Corporation Commission after due notice and hearing; but if any such person, firm or corporation shall be unable to purchase all the gas so offered, then it shall purchase natural gas from each producer ratably. It shall be unlawful for any such common purchaser to discriminate between like grades and pressures of natural gas, or in favor of its own production, or of production in which it may be directly or indirectly interested, either in whole or in part, but for the purpose of prorating the natural gas to be marketed, such production shall be treated in like manner as that of any other producer or person, and shall be taken only in the ratable proportion that such production bears to the total production available for marketing. The Corporation Commission shall have authority to make regulations for the delivery, metering and equitable purchasing and taking of all such gas and shall have the authority to relieve any such common purchaser, after due notice and hearing, from the duty of purchasing gas of an inferior quality or grade.”
Section 2, ch. 197, Session Laws of 1915 (sec. 237, Title 52, O.S. 1941) defines the term “waste” as follows:
“ . . . That the term ‘waste’, as used herein, in addition to its ordinary meaning, shall include escape of natural gas in commercial quantities into the open air, the intentional drowning with water of a gas stratum capable of producing gas in commercial quantities, underground waste, the permitting of any natural gas well to wastefully burn, and the wasteful utilization of such gas.”
The foregoing definition of “waste” was enlarged by the Legislature in 1933 and in 1935, and the term “wasteful utilization” was changed to “inefficient utilization”.
It is a cardinal rule of statutory construction that the primary aim is to arrive at the intention of the Legislature. This ancient rule was announced in United States v. Temple, 105 U. S. 97, 26 L. Ed. 967, in the following words:
“Our duty is to read the statute according to the natural and obvious import of the language, without resorting to subtle and forced construction, for the purpose of either limiting or extending its operation. When the language is plain, we have no right to insert words or phrases so as to incorporate in the statute a new and distinct provision.”
Again, in Russett School District No. C-8 v. Askew, 193 Okla. 102, 141 P. 2d 575, this court stated in the body of the opinion:
“As has often been said, the cardinal rule in such cases is to ascertain and give effect to the legislative intention. That intention is to be first sought in the language of the statute itself, and *50if it is there plainly expressed, it must be followed without further inquiry.”
The majority opinion correctly states the rule of construction to the effect that where an officer or government agency charged with the duty of administering a law construes the law and such construction is acquiesced in for a long period of time, such construction should be given great weight by the courts when called upon to construe such law. However, I am unable to agree that the record before us discloses that the Corporation Commission, charged with the duty of administering the law relating to the production of gas, has construed the regulatory Acts as giving it the authority to fix the price of gas produced from a reservoir, except where seller and buyer fail to agree upon a price, or that such construction has been long acquiesced in.
During the more than thirty years that the Commission has been charged with the authority to regulate the production of gas, there is shown only a single instance where it fixed the price of gas for a field or common source of supply. In 1920 the Oklahoma Natural Gas Company was taking gas from the Cushing Field in Creek county at 6c per MCF, and selling it to consumers. The producers were threatening to disconnect their wells. They appealed to the Commission to fix a higher price. The Commission entered an order fixing the price for the entire Cushing field at 10c per MCF. This order was not appealed from, and it is not shown how long it was effective. There had evidently been a previous agreement as to price. It was not shown whether all, or what per cent, of the producers joined in the application to the Commission.
In 1924 the Commission entered an order prohibiting the use of gas for the manufacture of carbon black. The order was appealed from to this court, which affirmed the order on the ground that the use complained of was a “wasteful utilization” of gas. The case is reported as Quinton Relief Oil & Gas Co. v. Commission, 101 Okla. 164, 224 P. 156. The court held that chapter 197, Session Laws of 1915, conferring upon the Commission the power to make rules and regulations to prevent the “wasteful utilization” of natural gas, also gave that body the power to define what uses are within the scope of that term.
In 1937, in Re Application of Jackson, 179 Okla. 577, 66 P. 2d 1101, this court upheld an order authorizing the use of gas for the manufacture of carbon black as not being a “wasteful utilization”. Reference is made to the Quinton case above, where such use was held to be wasteful, and it is held that if the Commission could determine what is “wasteful utilization”, it could also determine what use is not wasteful.
In 1944, the War Production Board requested the Commission to enter an order granting authority to use natural gas for the manufacture of carbon black in the Guymon-Hugoton field. The order was issued and the price to be paid fixed at 5c per MCF, being approximately the market price in the field. The order was not appealed from. It was an emergency war order.
The above record does not support the claim that the Corporation Commission has construed the statutes mentioned as giving it the power to fix the price of gas for an entire field. During the years these statutes have been in effect, most of the major gas fields of Oklahoma have been discovered and developed. I agree that “implied powers” flow from a grant of express powers, and that they are those powers necessary or incidental to the exercise of the express powers. The power to fix prices is a drastic one. In H. F. Wilcox Oil & Gas Co. v. Walker, 168 Okla. 355, 32 P. 2d 1044, this court announced the rule relative to implied powers as follows:
“It is well established that the authority of the Commission is definitely *51limited to the power expressly or by necessary implication granted to it by the Constitution and the statutes.”
That case involved the proration of oil, but the same principle is applicable to the authority of the Commission with respect to gas.
The majority opinion quotes extensively from the dissenting opinion by Justice Rutledge in the case of Republic Natural Gas Co. v. State et al., 334 U.S. 62, 92 L. Ed. 1212. However reasonable and persuasive that dissenting opinion, concurred in by three other members of the court, may be, it is not the law.
If it had been the intention of our Legislature to grant to the Commission the power to fix the price of gas at the wellhead for an entire field, the addition or inclusion of a few simple words in the statutes granting regulatory authority to the Commission would have settled the matter beyond doubt. Why did the Legislature expressly grant authority to fix the price of gas where seller and buyer fail to agree, and fail completely to grant such authority in the vastly wider and more important field of fixing the price over an entire field or common source of supply? It is incredible that the Legislature would expressly grant such authority in a narrow field and leave it to be implied in a vastly wider and more important area. A gas field, or common source of supply, is the basic unit to which conservation orders are generally applicable. The order of the Commission, which is approved by the majority opinion, means that the Commission may fix the price of gas in every field in the state. The production of oil is under the jurisdiction of the Commission under similar statutes authorizing the prevention of waste, the protection of co-equal rights, and conservation, yet the Commission has never asserted that it had the power to fix the price of oil. It is true that oil may be stored and transported in various ways, while gas cannot be stored and must be transported by pipeline.
It is not my view that conditions do not exist or may not hereafter arise in the Guymon-Hugoton field which may justify drastic regulatory measures by the Commission. The producers who have no pipeline facilities are wholly dependent upon those who have such outlets. These facts have prompted the Legislature to give the Commission express powers to prohibit discrimination and to protect the interests of all parties. The landowner is especially interested because he cannot receive, store or distribute his share of the gas produced from his land, but is dependent upon the limited number of purchasers in the field. It may be that the royalty owners are not receiving their proper share of the proceeds of gas produced and marketed from their land. If they are not receiving their just shares under the terms of their lease contracts, they should seek relief in the courts and not before the Corporation Commission. It may be that gas is selling at a price lower than its intrinsic value, but this does not justify the Commission in fixing the price until the Legislature has given it such power by clear and unmistakable terms, or by necessary implication.
The evidence shows that no physical waste is being practiced in the Guymon-Hugoton field. The only venting of gas is in the drilling and completion of wells, which is expressly allowed by statute. There is no claim of wasteful utilization. The gas is being sold for fuel, light, or power- — -all useful purposes.
The evidence as to the effect of price-fixing to prevent economic waste is too vague and nebulous to justify serious consideration. It is based largely upon the comparative values of competitive fuels, such as coal and oil, and if followed in the Guymon-Hugoton field, the price of( gas there would be so high that producers could not possibly compete with gas produced from other fields in Oklahoma, or in other states; and if the order of the Corporation Commission is made effective, there *52might result a forced shut-down of the entire field, depriving the state and its interested citizens of their right to compete in the open market in disposing of their gas.
The price fixed by the Commission, where seller and buyer are unable to agree upon a price, should be the current market price prevailing in the field. Any other price would be unfair, discriminatory, and inequitable.
If the Legislature had intended to give the Corporation Commission authority to fix the price of natural gas in every gas field in the state, such authority would have been expressly given. Failure to express such intention is proof that no such intention existed. To read into the statutes such drastic power is nothing short of legislation by judicial construction, and for the foregoing reasons I respectfully dissent.