Hunter Co v. Hugh
| Decision Date | 08 November 1943 |
| Docket Number | No. 25,25 |
| Citation | 64 S.Ct. 19,320 U.S. 222,88 L.Ed. 5 |
| Parties | HUNTER CO., Inc., v. McHUGH, Commissioner of Conservation of Louisiana, et al |
| Court | U.S. Supreme Court |
Appeal from the Supreme Court of the State of Louisiana.
Mr. Arthur O'Quin, of Shreveport, La., for appellee, Southern Production Co., in support of motion to dismiss.
Mr. John M. Madison, of Shreveport, La., for appellant in opposition thereto.
Messrs. Joe T. Cawthorn, of Mansfield, La., and John M. Madison, of Shreveport, La., for appellant on the merits.
Messrs. George A. Wilson, of Shreveport, La., and T. Hale Boggs, of New Orleans, La., for appellee McHugh, Commissioner on the merits.
Appellant is the lessee under an oil and gas lease of 190 acres in the Logansport Field in Louisiana. Under permit from the state it has drilled a well on the leased area, which was completed about June 1, 1938, and came into production in December, 1940. To enable it to reach a market for the natural gas produced by this well, appellant has constructed and owns a pipe line which extends from its well to the line of the United States Gas Pipe Line Company.
'For the prevention of waste and to avoid the drilling of unnecessary wells', § 8(b) of Act No. 157 of the Louisiana Acts of 1940, authorizes the State Commissioner of Conservation to establish drilling units for any oil or gas pool, except 'where conditions are such that it would be impracticable or unreasonable to use a drilling unit at the present stage of development'. The statute defines a drilling unit as 'the maximum area which may be efficiently and economically drained by one well'.
Section 9(a) provides that where a drilling unit embraces separately owned tracts the owners may agree to pool their interests, but provides that in default of such agreement 'the Commissioner shall, if found by him to be necessary for the prevention of waste or to avoid the drilling of unnecessary wells, require such owners to do so and to develop their lands as a drilling unit'; such orders 'shall be made after notice and hearing, and shall be upon terms and conditions that are just and reasonable, and will afford to the owner of each tract the opportunity to recover or receive his just and equitable share of the oil and gas in the pool without unnecessary expense.' The section also provides:
Proceeding under Act No. 157, the Commissioner, after notice and hearing, on October 16, 1941, promulgated Order No. 28-B, which designated drilling units of 320 acres for the production of gas from the Logansport Field, allowed the drilling of only one well on each such unit, required the operator of a well drilled before the effective date of the order to designate his drilling area, required him to account to each owner or lessee of land within the unit for the oil and gas produced, and provided for a bi-monthly determination by the Commissioner of the amount of the allowable gas production for each unit. The order also authorized the Commissioner, upon a showing by any operator that any part of the order as applied to his well 'will result in waste, or as to such operator is unreasonable' to make an exception to the directions of the order, provided that such exception 'will not result in waste in the field as a whole' or give the operator an 'inequitable and unfair advantage over another operator or other operators in the field.'
Less than thirty days after the promulgation of this order, no application having been made by an adjacent land-owner to require pooling, appellant, without having designated a drilling unit or made application to the Commissioner to make an exception to the order, brought the present suit in the Louisiana civil district court to enjoin the enforcement of Act No. 157 and of order No. 28-B or any similar order. By its bill of complaint appellant asserted that the order was invalid under the state constitution and laws, and violated the Fourteenth Amendment in that it made no provision for the payment to appellant of the reasonable value of its lease and for reimbursing it for the cost of development of the gas, including the cost of drilling its well and laying its pipe line.
The Civil District Court held Act No. 157 and order No. 28-B as applied to appellant to be null and void and enjoined enforcement of the Act and order or any similar order against appellant. The Supreme Court of Louisiana, 202 La. 97, 11 So.2d 495, set this judgment aside and ordered the complaint dismissed. It held that the order was a valid exercise of state power to prevent future waste of a natural resource of the state and that under the provisions of § 9(a) of the Act and of the order appellant was entitled to retain its proportionate share of the gas, and to reimburse itself from the proceeds of all the gas for the proportionate share of the cost of drilling and operation chargeable to the other landowners in the drilling unit.
The case comes here on appeal under § 237(a) of the Judicial...
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