Court Opinion

ID: 9625204
Source: CourtListenerOpinion
Date Created: 2023-08-22 07:31:35.731323+00
Date Added: 2024-06-11T12:15:36.819693
License: Public Domain

HALLEY, Chief Justice
(dissenting).
The majority opinion in affirming the Corporation Commission in this case is wrong. I am compelled to express a dissent.
On December 1, 1946, Natural Gas Pipe Line Company of America entered into a contract with D. D. Harrington and others who comprised a partnership doing business under the firm name of Harrington and Marsh. Panoma Corporation acquired all the interest of the partnership in the contract.'
Under the contract Natural was to purchase gas from the partnership and pay for it until the first day of July, 1951 at six cents (6¾⅞) per thousand cubic feet. The unit volume for the measurement of gas delivered under the contract was one cubic foot of gas at a base temperature of sixty degrees Fahrenheit (60°F) and at an absolute pressure of sixteen and four-tenths (16.4) pounds per square inch.
Panoma began the delivery of gas to Natural in August, 1948. This gas was paid for at a price basis of 5.12 cents per thousand cubic feet in accordance with the base provided by the Corporation Commission. From August 1948 to the end of 1950 Pan-oma received from Natural $3,634,523.74.
On December 9, 1946, the Corporation Commission issued an order which is as follows:
“1. That no natural gas shall be taken out of the producing structures or formations in the Guymon-Hugoton Field in Texas County, Oklahoma, at a price, at the wellhead of less than 7‡ per thousand cubic feet of natural gas measured at a pressure of 14.65 pounds absolute pressure per square inch.
“2. This order shall be effective as of January 1, 1947.”
Not until January 30, 1951, did Panoma take any action in regard to this matter when it filed an application with the Corporation Commission for a hearing. As a result of the hearings had on this application the Corporation Commission made an order that Natural pay Panoma the difference between the amount it had heretofore paid for such gas delivered to it by Panoma and the amount which the Commission said it should have paid for the gas herein determined, computed at seven cents (7‡) per thousand cubic feet measured at a pressure base of 14.65 pounds per square inch absolute and if Natural did not pay it Panoma should stop delivering gas to Natural, From this order Natural properly appealed'.
The evidence taken at the hearing showed that Panoma had received from the *364sale of extracted liquids the sum of $2,968,-405.33 in the period August 1948 to December 31, 1951. With the $3,634,523.74 received over the same period from Natural and the amount received from sale of liquids Panoma was paid a total of $6,602,-929.07 or $ .09301 per thousand cubic feet on 14.65 pressure base for all the gas disposed of.
The order of December 9, 1946 fixing the price that should be paid at the wellhead was made as if the producer of the gas was selling at the wellhead. In the instant •case the producer, Panoma, was not selling at the wellhead.
At no time did Natural buy the raw gas (spoken of in the majority opinion as rough gas at the wellhead). The contract stated .that title to the gas passed to Natural at the meter station and at this point the hydrocarbons had been extracted.
The contract in Section One, Article V, specifically provided that Panoma reserved the right to extract from the gas nitrogen, helium, natural gasoline, propane and other hydrocarbons other than methane, together with any methane necessarily removed from the gas in the process of recovering such other constituents.
The Corporation Commission only has the right to fix the price of gas as a conservation measure under the theory that if no price is fixed that the gas might be consumed in producing cheaper products and full benefit would not be received from the gas. We held that this right was given by implication in the 1915 Conservation Act, Cities Service Gas Co. v. Peerless Oil & Gas Co., 203 Okl. 35, 220 P.2d 279. The order did not attempt to guarantee the producer a profit of 74 a thousand and it had no right to attempt to do so. It only said it should not be sold for less than 7¾⅛ per thousand at the wellhead. In my opinion under the evidence and the order of the Commission, Panoma received more than the 7‡ required and for that reason Natural owes Panoma nothing. There was no evidence that there was any waste in the use to which this gas was put.
If Natural is to be charged with the payment of 7‡ per thousand for gas at the wellhead then it should be credited with everything that was taken out of the gas as if it was done before it reached the wellhead since Natural only received dehydrated gas. It is no concern of the Corporation Commission as to what price is paid the producer. Their concern is with conservation and to see that the gas is not used in a manner whereby a natural resource would be dissipated without the State receiving the proper benefit.
This Court should not say that a purchaser of dehydrated gas which has constituents extracted to the extent of 45% of the value of the whole should be burdened with paying a fixed wellhead price without receiving any credit for the by-products. The order of the Corporation Commission of December 9, 1946 was not made with the contract in this case in mind. Neither was the contract written with such an order in mind. The order and contract must be considered with the point in mind that the Commission was not guaranteeing a profit to the producer but was endeavoring so as to conserve the gas in this State in this particular area.
I am also of the opinion that the Corporation Commission had no authority to tell Panoma that it must not furnish Natural any more gas unless Natural paid them this $1,300,000. This was a matter for the courts. Our Constitution and Statutes at no place provide for the Corporation Commission taking the action it has in this case by saying to a purchaser of the gas you pay the producer $1,334,960.50 or else the source of supply of gas for many of your customers will be chopped off. The Natural had a binding contract with Panoma through its predecessors and that contract should be interpreted by the courts and not by a regulatory body. In Southwestern Light & Power Co. v. Elk City, 188 Okl. 540, 111 P.2d 820, we said that the Corporation Commission is without jurisdiction or power to enter or enforce a judgment or order adjudicating the claimed contracted rights of a consumer of electric current under a written contract with a utility to receive a stated reduction of rate and refund of money for electric current. The case at bar presents just as much the construction of contractual rights as in that case. I *365think that in this case as there the rights of the parties should he determined in courts of general jurisdiction. It is not a job for laymen.
The Corporation Commission has no right to tell the producer he could not sell constituents of raw gas separately. Strictly speaking all the' order did was to say that when gas is sold at the wellhead it must bring not less than 7‡ per thousand cubic feet. If the producer desired to retain for his use and profit certain constituents he had a perfect right to do so and as long as there was a substantial compliance with the Commission order it should be sufficient to satisfy the Commission. This was its conclusion as to the right of the Phillips Petroleum Company when it disposed of certain elements of gas separately. In that instance Phillips received 6.9855 cents per thousand cubic feet from all the constituents of the gas.
This Court is given the authority by Section 20, Article IX of our Constitution to exercise its own independent judgment as to both the law and the facts of an appeal involving an asserted violation of any right of the parties under the Constitution of the United States or the Constitution of this State. Such assertion is made in this case. I reiterate that when it appears from the testimony that the producer has received over nine cents for his gas when he had only to receive seven and when under the plain terms of the contract the producer has retained for his own use and benefit certain elements of the gas from which he gets 45% of the total value of all the gas after it has been through the dehydration plant it is contrary to fundamental conceptions of justice to say that the buyer of the dehydrated gas shall pay 7‡ for the raw gas and not receive credit for the profit received from the other constituents of the gas. He did not intend to buy them. The producer did not intend to sell the hydrocarbons. The Corporation Commission was without authority to make a new contract for the parties.
In this case Natural complied with its part of the contract. It did not know what Panoma was receiving for the hydrocarbons that it retained. It had the right to rely on Panoma to comply with the Commission’s rules as its contract with Panoma had been in existence four years and two months when Panoma’s application was filed with the Commission. Furthermore it had been two years and a half before any action was taken by Panoma to question the position of Natural.
Neither the Constitution, Acts of our Legislature or any decision of this Court provide a penalty for purchasing residue or dehydrated gas at any price. Since the Commission has not provided for this situation by its orders, it cannot assess such a penalty after the taking. Such action on its part is clearly a violation of the due process clause of both the federal and state Constitutions.
The producer cannot “have his cake and eat it too.” If he is to sell his gas to the Pipe Line Company at seven cents then he must of necessity account to the buyer for all the by-products or hydrocarbons. Under no interpretation of the contract can Panoma be the employee of Natural. In no way that you can analyze this case can the order of the Corporation Commission be sustained.
■ I respectfully dissent.