Ohio Oil Company v. State of Indiana

• Decision Date: 09 April 1900
• Docket Number: No. 84,84
• Parties: OHIO OIL COMPANY, Plff. in Err. , v. STATE OF INDIANA
• Court: U.S. Supreme Court

177 U.S. 190

20 S.Ct. 576

44 L.Ed. 729

OHIO OIL COMPANY, Plff. in Err.,

v STATE OF INDIANA.

No. 84.

Argued December 18, 19, 1899.

Decided April 9, 1900.

The title, preamble, and first section of a law enacted in 1893 by the state of Indiana (Acts 1893, p. 300) are as follows:

'An Act Concerning the Sinking, Safety, Maintenance, Use, and Operation of Natural Gas and Oil Wells, Prescribing Penalties and Declaring an Emergency.

'Whereas, great danger to life and injury to persons and property is liable to result from the improper, unsafe, and negligent sinking, maintenance, use, and operation of natural gas and oil wells; therefore,

'Sec. 1. Be it enacted by the general assembly of the state of Indiana, That it shall be unlawful for any person, firm, or corporation having possession or control of any natural gas or oil well, whether as a contractor, owner, lessee, agent, or manager, to allow or permit the flow of gas or oil from any such well to escape into the open air without being confined within such well or proper pipes or other safe receptacle, for a longer period than two (2) days next after gas or oil shall have been struck in such well. And thereafter all such gas or oil shall be safely and securely confined in such well, pipes, or other safe and proper receptacles.'

The remaining sections of the law in question are printed in the margin.

The issue which this record presents, on the subject of the law just referred to, is this: Did the enforcement of the first section of the statute produce as to the persons whose obedience to its commands were coerced by injunction, a taking of private property without adequate compensation; that is, did the execution of the statute amount to a denial of due process of law contrary to the provisions of the Fourteenth Amendment to the Constitution of the United States?

The controversy was thus initiated: The state of Indiana, through its attorney general, filed a complaint in the circuit court of the county of Madison in the state of Indiana, against the Ohio Oil Company, a corporation organized under the laws of the state of Ohio, but authorized to carry on its business in the state of Indiana, as it had complied with the regulations enacted by that state as to foreign corporations doing business therein. The cause of complaint was thus stated:

'Plaintiff says that for many years heretofore there has existed, underlying the counties of Madison, Grant, Howard, Delaware, Blackford, Tipton, Hamilton, Wells, and other counties of the state of Indiana, a large subterranean deposit of natural gas, occupying a reservoir of large extent, with well-defined boundaries, and utilized for fuel and light by the people of those counties and many other counties and cities of Indiana, including Indianapolis, Fort Wayne, Richmond, Logansport, Anderson, Muncie, Marion, Kokomo, and others of the most populous cities of said state, to which cities said gas is conducted, after being brought to the surface of the earth, through pipes and conduits, by means of which many hundreds of thousands of the people of the state of Indiana are now, and have been for more than ten years last past, continuously supplied with gas for light and fuel; that said natural gas underlying the counties aforesaid and other portions of the state is contained in and percolates freely through a stratum of rock known as Trenton rock, comprising a vast reservoir in which the gas is confined under great pressure, and from which it escapes, when it is permitted to do so, with great force.

'The fuel supplied by the natural gas thus obtained is the cheapest and best known to civilization, and the value of the natural-gas deposit to the state and to its citizens is many millions of dollars; that since the discovery of said gas deposit in 1886 immense sums of money have come into the state and have been invested in large manufacturing interests, and other vast sums of money belonging to the people of the state of Indiana have been invested in similar enterprises, causing a great increase in the population, principally in the territory underlying which said gas is found. Many cities in and adjacent to the gas territory, including those named, are wholly dependent for fuel upon natural gas, and for that reason the people of the state of Indiana have become and are interested in the protection and continued preservation of the natural gas supply; that many millions of dollars invested in manufacturing and other properties in and near said gas territory are wholly dependent for their continued preservation and for the permanent value of their property upon said natural gas supply; that their location and establishment in said gas territory was due to the presence of natural gas underlying the same, without which such enterprises could not operate at a profit, and that in the event the supply of gas should be exhausted in said territory many of such manufacturing enterprises, in which thousands of the citizens of Indiana find employment at remunerative wages, will be compelled to stop operation.

'That their employees will be thereby thrown out of employment, and many of them, being dependent upon their labor for support, may and will become charges upon the state and its several municipal subdivisions; that the property of said manufacturing enterprises and the vast investments depending upon them and related to them will become worthless and the owners will be driven to remove to other parts of the country, taking away from Indiana great wealth now interested in said enterprises as aforesaid.

'That in the cities named and in all the territory known as the 'gas belt' the inhabitants have for years used practically no other fuel than natural gas; that their houses have, in many instances, been constructed with a view to the use of such fuel, and will have to be differently equipped before other kinds of fuel can be used; that the cost of natural gas as fuel to the people of the 'gas belt,' who number several hundreds of thousands, is very much less than that of any other fuel that has ever been or can be procured by them, and that to the other inhabitants of the state using said natural gas it has become and is a source of great convenience, comfort, and increased happiness, because of its cheapness, convenience, and cleanliness as fuel.

'That many small villages in and near the gas territory have within a few years become flourishing and opulent cities.

'That the state's wealth and its revenues derived from taxation on account of such increased population and the various interests that have been fostered and supported by natural gas have been greatly increased, and will, in the event natural gas gives out, be correspondingly curtailed.

'That the state of Indiana, relying upon the permanent supply of natural gas, has at great expense equipped many of its public institutions, including the state house, the Central and other hospitals for the insane, the asylums for the blind and deaf and dumb, the institution for the care of orphans of American soldiers, and other public institutions owned and maintained by the state of Indiana and its various municipal subdivisions, together with the courthouses in many counties, and a vast number of public schools, for the use of naturl gas as a fuel, by which the cost of maintaining the public buildings and institutions above named has been materially lessened and the comfort and happiness of their inmates and occupants immensely increased.

'That the supply of natural gas underlying the territory aforesaid is so placed in such Trenton rock that the diminution or consumption of said gas taken from said reservoir affects and reduces correspondingly the common supply.

'That if the gas supply is husbanded and protected it will last for many years and continue to furnish the various cities named with obundant fuel, and the population, wealth, and other material interests of the state will continue to be benefited and enhanced, and the comfort, happiness, and enjoyment of the people of the state greatly increased.

'That underlying a portion of said natural gas territory and at the same levels, occupying the interstices—said Trenton rock in common with said gas, are large quantities of petroleum oil; and that, because of the volatile character of said gas and the pressure under which it is confined in said Trenton rock when said reservoir is tapped by wells drilled into the same from the surface of the earth, said gas and oil will and do escape into the open air in great volumes, unless securely confined in tanks or other proper receptacles.

'That on or about the 25th day of May, 1897, said defendant, the Ohio Oil Company, drilled, near the city of Alexandria, in said Madison county, a number of wells into said gas and oil bearing rock, producing natural gas and petroleum as aforesaid in large quantities, which wells are known by the name of the land owner upon whose land they are situated, which name and the description of said wells are as follows, to wit.'

The complaint then enumerated five gas and oil wells which had been opened and were being operated by the defendant for extracting oil, and averred as follows:

'That instead of securely anchoring said wells and each of them when so drilled, so as to confine within the same or within tanks or pipes or other safe receptacles the natural gas produced therefrom within two days after said wells were respectively completed and gas and oil were struck therein, the said defendants, ever since the completion of said wells, all of which have been completed for periods varying from four to nine months, have unlawfully permitted the gas produced therein to flow and escape into the open air, whereby many millions of cubic feet of natural gas have been greatly diminished, and the property of its citizens in and near said gas territory dependent upon the continued supply of said natural gas for fuel, as aforesaid, has been greatly...