Hunter v. Justice's Court of Centinela Tp., Los AngelesCounty

• Decision Date: 01 November 1950
• Citation: 223 P.2d 465,36 Cal.2d 315
• Court: California Supreme Court
• Parties: HUNTER v. JUSTICE'S COURT OF CENTINELA TP., LOS ANGELES COUNTY, et al. L. A. 21652.

Page 465

223 P.2d 465

36 Cal.2d 315

HUNTER v. JUSTICE'S COURT OF CENTINELA TP., LOS ANGELES COUNTY, et al.

L. A. 21652.

Supreme Court of California, in Bank.

Nov. 1, 1950.

Rehearing Denied Nov. 30, 1950.

Arthur C. Fisher and John C. Packard, Los Angeles, for petitioner.

Harold Judson, Hollywood, and Orris R. Hedges, Los Angeles, amici curiae on behalf of petitioner.

Fred N. Howser, Attorney General and John F. Hassler, Jr., Deputy Attorney General, for respondents.

O'Melveny & Myers, W. B. Carman, William W. Alsup, Deane F. Johnson, Robert T. Patton and Donald S. Coye, all of Los Angeles, for real party in interest.

CARTER, Justice.

Petitioner seeks by prohibition to restrain respondent justice's court from proceeding to try him for violating sections 3600 and 3608 of the Public Resources Code. His motion in that court for dismissal on the same grounds now urged was denied, that is, that those sections violate the guarantees of due process and equal protection of the laws. U.S. Const. 14th Amendment; Cal.Const. Art. I, § 21, and Art. IV, § 25(19).

It appears that petitioner is the owner of two lots in a townsite which constitutes a residential area. The two lots consist of less than an acre in area. All of the property surrounding petitioner's lots is leased by the owners to Shell Oil Company, which is engaged in extracting oil therefrom. Before proceeding with drilling and production of oil from this area, the company filed pursuant to section 3608 of the Public Resources Code, supra, with the state oil supervisor a notice of intention to drill under its lease and the supervisor filed a declaration that petitioner's lots were deemed included in the company's lease. Thereafter petitioner's application for a permit to drill for oil on his lots was refused by the supervisor on the ground that they were included in the company's lease. Nevertheless, petitioner commenced drilling operations on his lots and the proceeding sought to be prohibited was commenced against him.

Section 3600 of the Public Resources Code establishes spacing requirements for drilling oil wells and declares that a well drilled in violation of it is a 'public nuisance.' It is conceded that petitioner cannot meet those requirements because of the small area of his lots, which brings into operation section 3608, reading:

'Where land aggregating less than one acre is surrounded by other lands, which other lands are subject to an oil and gas lease aggregating one acre or more, and if, under the provisions of Sections 3600 to 3607 * * * the drilling * * * of a well on said land is declared to be a public nuisance, said land shall, for oil and gas development purposes and to prevent waste and to protect the oil and gas rights of landowners, be deemed included in said oil and gas leasehold on said other lands when there is filed with the State Oil and Gas Supervisor a notice of intention to drill a well upon the said leasehold covering said other lands and the State Oil and Gas Supervisor has caused to be recorded with the county recorder of the county in which said land aggregating less than one acre is located a declaration as hereinafter provded.

'* * * The owners of the oil and gas mineral rights in said land so deemed included in said oil and gas leasehold on said other lands, as herein provided, shall thereafter receive in money, based upon the production of oil and gas from said leasehold hold including said land, a pro rata share of the landowners' royalty determined in accordance with the provisions of said oil and gas lease in the proportion that the area of said land bears to the aggregate of the total area covered by said oil and gas lease including the area of said land; provided further, that said owners of said oil and gas mineral rights in said land shall in no case receive less than their pro rata share determined, as herein provided, of the value of one-eighth part of the oil and gas produced, saved and sold from the operating unit comprising said leasehold on said other lands and said land, computed in accordance with the provisions of said oil and gas lease with respect to the computation of landowners' royalty; and provided further, that without the consent of said owners of said land and the lessee or operator of said oil and gas leasehold shall have no right to use the surface of said land nor to use the subsurface thereof down to a depth of 200 feet below the surface thereof.'

Section 3608 was probably adopted in response to this court's decision in Bernstein v. Bush, 29 Cal.2d 773, 177 P.2d 913, 918, where it was held that the spacing requirement, § 3600, as applied to the owners of several small pieces of property was invalid for the reason that they were wholly deprived of the right to take oil from their land in that they could not drill an offset well on their land to prevent the draining of the underlying oil basin by wells on adjacent land and that 'where, * * * the law, in its application at least, does not afford adequate means of protection as a substitute for the right to drill an offset well' it is invalidly applied. Thus we are not here concerned with the main holding in the Bernstein case, but accepting its premise we have the narrow question of whether, under facts now presented, § 3608, as applied to petitioner, gives him an 'adequate means of protection (or) substitute', for his right to extract oil from his property.

It is the settled rule that 'a state has constitutional power to regulate production of oil and gas so as to prevent waste and to secure equitable apportionment among landholders of the migratory gas and oil underlying their land, fairly distributing among them the costs of production and of the apportionment. Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 77, 31 S.Ct. 337, 340, 55 L.Ed. 369; Bandini Petroleum Co. v. Superior Court, 284 U.S. 8, 22, 52 S.Ct. 103, 108, 76 L.Ed. 136; Champlin Refining Co. v. Corporation Commission, 286 U.S. 210, 232-234, 52 S.Ct. 559, 564, 76 L.Ed. 1062; Thompson v. Consolidated Gas Corp., 300 U.S. 55, 76-77, 57 S.Ct. 364, 374, 81 L.Ed. 510; Patterson v. Stanolind Oil & Gas Co., 305 U.S. 376, 379, 59 S.Ct. 259, 260, 83 L.Ed. 231, and cases cited.' Hunter Co. v. McHugh, 320 U.S. 222, 227, 64 S.Ct. 19, 21, 88 L.Ed. 5. See also Bernstein v. Bush, supra; Patterson v. Stanolind Oil & Gas Co., 305 U.S. 376, 59 S.Ct. 259, 83 L.Ed. 231; People v. Associated Oil Co., 211 Cal. 93, 294 P. 717; Pacific Palisades Ass'n v. City of Huntington Beach, 196 Cal. 211, 237 P. 538; Bandini Petroleum Co. v. Superior Court, 110 Cal.App. 123, 293 P. 899, affirmed 284 U.S. 8, 52 S.Ct. 103, 76 L.Ed. 136; Marrs v. City of Oxford, 8 Cir., 32 F.2d 134, certiorari denied 280 U.S. 573, 50 S.Ct. 29, 74 L.Ed. 625. In conformity with that principle it has been recognized that certain measures are proper, such as the regulation of the space between wells or limitation of area to each. See Bernstein v. Bush, supra, 29 Cal.2d at page 777, 177 P.2d 913; Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424; Oxford Oil Co. v. Atlantic Oil Producing Co., 5 Cir., 22 F.2d 597, certiorari denied 277 U.S. 585, 48 S.Ct. 433, 72 L.Ed. 1000; Marrs v. City of Oxford, supra; Brown v. Humble Oil & Refining Co., 126 Tex. 296, 86 S.W.2d 935; Berline v. Waldschmidt, 159 Kan. 585, 156 P.2d 865, 868, and provisions for pooling of operations by the various owners in an oil field. See Hunter Co. v. McHugh, supra; Marrs v. City of Oxford, supra; Patterson v. Stanolind Oil & Gas Co., supra; Croxton v. Stoto, 186 Okl. 249, 97 P.2d 11.

There is a strong presumption of the constitutionality of the legislation here involved, Bernstein v. Bush, supra, 29 Cal.2d at page 777, 177 P.2d 913, and hence the question is whether the legislature had any reasonable basis for determining that the substitute provided for in section 3608 for the right to extract oil, was adequate. We believe the legislature acted within constitutional bounds in enacting section 3608. It was not unreasonable for it to have concluded that self-interest would dictate that the owners of surrounding lands would obtain a lease with the best terms obtainable on the market and hence the owner of a small parcel would be as well off as if he acted on his own behalf. It went further than that however. It guaranteed to such owner the most important part of the lease his share of a minimum royalty of 1/8. It may have reasonably determined that such royalty was the fraction commonly and usually given by lessees to lessors in oil leases. He is given a share of such royalty proportioned on the relation of the area of his land as to all the land. The surface of his land and 200 feet below cannot be invaded, which may leave him in a somewhat better position than that of his neighbors who made the lease. It is true that many states have set up a regulatory body which determines where the wells may be drilled and how the amount of the oil produced and expenses incurred are to be divided and borne by the consenting and nonconsenting owners of land in a pooling or unit development of an oil field. That may be a more satisfactory method, but that is a matter for legislative decision. 'The Federal Constitution does not invalidate state legislation because it fails to embody the highest wisdon or provide the best conceivable remedies.' Cohen v. Beneficial Loan Corp., 337 U.S. 541, 550, 69 S.Ct. 1221, 1227, 93 L.Ed. 1528. Unless we can say that the method fixed by section 3608 is an arbitrary and unreasonable method of achieving conservation of oil and equal protection of the several owners' right to extract it, the legislation cannot be declared invalid.

Analogous legislation has been upheld. In Marrs v. City of Oxford, supra (32 F.2d 140), a city ordinance provided that only one oil well could be drilled in a city block. A permit to drill would be granted to the holder of the greater area of ground in the block. The other owners would...