Phillips Petroleum Co. v. Corporation Commission

• Decision Date: 20 November 1956
• Docket Number: No. 37250,37250
• Citation: 312 P.2d 916
• Parties: PHILLIPS PETROLEUM COMPANY, a Corporation, Petitioner, v. CORPORATION COMMISSION of Oklahoma et al., Respondents.
• Court: Oklahoma Supreme Court

Page 916

312 P.2d 916

1956 OK 313

PHILLIPS PETROLEUM COMPANY, a Corporation, Petitioner, v. CORPORATION COMMISSION of Oklahoma et al., Respondents.

No. 37250.

Supreme Court of Oklahoma.

Nov. 20, 1956.

Rehearing Denied Jan. 8, 1957.

Second Petition for Rehearing Denied July 24, 1957.

Syllabus by the Court.

1. To compel a producer of natural gas to make gas available for pumping water for irrigation, a service producer has not theretofore undertaken or professed to serve and which it does not desire to serve, is tantamount to an appropriation of private property for public use without just compensation.

2. 52 O.S.Supp.1955 §§ 248-256, which provides that a producer of natural gas shall make a portion of its gas available for use in pumping water for irrigation of agricultural lands from which the gas is produced, a purpose to which the producer had not therefore dedicated its property, and authorizing the Corporation Commission to fix the prices, terms and conditions under which the gas shall be made available, is not a regulation under the police power, but would, if enforced, constitute a taking of producers property without due process of law.

Original proceeding by Phillips Petroleum Company, a corporation for writ of prohibition to prohibit the Corporation Commission of the State of Oklahoma from exercising jurisdiction under authority of 52 O.S.1955 Supp. §§ 248-256. Writ granted.

Rayburn L. Foster, Harry D. Turner, R. M. Williams, Kenneth Heady, James G. Williams, Jr., Bartlesville, Cecil C. Hamilton, Oklahoma City, for petitioner.

Embry, Crowe, Tolbert, Boxley & Johnson, Smith, Johns, Smith & Neuffer and James A. Rinehart, Oklahoma City, for respondents.

JACKSON, Justice.

This is an original action in this court by petitioner, Phillips Petroleum Company, pursuant to art. 7, § 2, Oklahoma Constitution, for a writ of prohibition against the Corporation Commission of Oklahoma. The action seeks to prohibit the Corporation Commission from proceeding further under the terms and provisions of 52 O.S.1955 Supp. §§ 248-256, H.B. 563, S.L.1955, upon the ground that the Act is unconstitutional.

The Act declares that agriculture constitutes one of the basic foundations of this State. It determines that in many areas agricultural production is restricted by insufficient rainfall; that in many of such areas irrigation can be provided by pumping water from subsurface reservoirs, and in some of those areas the only assured and adequate source of power for pumping water is from is from developed deposits of natural gas. The use of the gas 'on the premises from which it is produced to pump to the surface water to be used for irrigation on such premises is a preferred use, prior in order to all other uses which such gas may be devoted.'

The Act further provides that every person owning or operating any well from which natural gas is produced, sold or used off the premises on which said well is located shall, upon request, make gas available to the person engaged in agricultural activities upon such premises in sufficient quantity for the operation of irrigation pumps thereon. It is provided in the event the parties are unable to agree on the prices, terms and conditions under which the gas shall be made available, either party may apply to the Corporation Commission to fix the same. In reaching its determination, the Corporation Commission shall consider the necessity of the applicant for the gas, the value of such gas and its components, the efficient operation of the wells of the producer, the obligations assumed by such producer in the sale or other disposition of the gas, and all other factors relevant to the effectuation of the policy and purposes of the Act with justice to all concerned. Another provision is that nothing in the Act shall create a duty on the part of the producer to assume public utility duties to the public at large in respect to the gas produced from any well.

On January 17, 1956, the agricultural occupants of ten separate tracts of land in Texas County, Oklahoma, filed a joint application in the Corporation Commission alleging that the petitioner herein, Phillips Petroleum Company, produces natural gas from wells located upon each of the several tracts; that the agricultural occupants are in need of and desire gas to operate irrigation pumps on the premises and they request the Corporation Commission to assume jurisdiction under the Act and to fix prices terms and conditions under which the gas shall be made available for such use. Thereafter, and on February 11, 1956, Phillips Petroleum Company filed this action in this court seeking a writ to prohibit the Corporation Commission from proceeding further upon the petition of the agricultural occupants pending in the Corporation Commission.

Phillips Petroleum Company will hereafter be referred to as petitioner and the Corporation Commission and agricultural occupants as respondents.

In support of its petition for writ of prohibition petitioner contends that the Corporation Commission is without jurisdiction of the matter pending before it for the reason that the Act, 52 O.S.1955 Supp. §§ 248-256, is unconstitutional.

Among several propositions petitioner contends that the Act, if applied to petitioner, will violate the due process clauses of both the State and Federal Constitutions 'in that it attempts to convert Petitioner into a public utility and compels it to devote itself and its property to the performance of a service it has never agreed or undertaken to perform.' As a counter proposition respondents assert that the statute in question does not purport to, and does not, in fact, convert petitioner into a public utility in violation of the due process clauses of the State and Federal Constitutions. The issue will be more clearly presented if we quote at length from respondents' brief. Therein it is stated: (Emphasis supplied).

'We frankly admit, in the accepted sense of the phrase, that Phillips is not a public utility; it is no monoply, and it is in no way dependent upon a franchise from the State for the conduct of its activities. It is not a business which the public, itself, might appropriately undertake. However, it must be as frankly admitted by Phillips that it is a business affected with a public interest and thus subject to the exercise of the police power. * * *.'

'Under Point II of petitioner's brief, cases are cited to the effect that the State is without power to compel any person or corporation to become a public utility against its will, and is likewise without power to compel a public utility to serve persons * * * which are beyond the dedication which the utility has made of its property. This rule is established by many cases, and we do not dispute it. (Apparently referring to Oklahoma Natural Gas v. Corporation Commission, 88 Okl. 51, 211 P. 401 , and [Nicoma Park Tel. Co. v. State], 198 Okl. 441, 180 P.2d 626). The answer to petitioner's contention lies in the fact that it erroneously asserts that the statute in question has this effect.

'Petitioner also cites cases holding that where a statute, by legislative fiat, seeks to convert a private person into a public utility, or a common carrier, such statutes are unconstitutional. We do not dispute this proposition. It is established by the cases that the Legislature cannot say that a private person or corporation is a public utility or a common carrier and thereby make them such. In most of the cases cited by petitioner, the Legislature attempted, in plain words, to say that all carriers using the highways were common carriers. Such statutes do violate the due process clauses. (Obviously referring to Michigan Public Utilities Comm. v. Duke, 266 U.S. 570 69 L.Ed. 445).

'The statute in question contains no such provision, but expressly declares to the contrary. Title 52 O.S.A.Supp. § 254, is as follows:

"Nothing in this Act shall create in any manner an obligation or duty on the part of the operator of any well or wells who furnishes gas under the terms hereof to furnish had for use off the premises from which it is produced or to assume in any way public utility duties to the public at large in respect to the gas produced from such well, except as such duties may arise from such operator's acts separate and apart from any performance of obligations imposed under this Act.'

'In unmistakable terms, the Legislature has negated the idea that it requires producers of gas to become public utilities. Nor has the Legislature, by the regulation of the use of gas, set forth in the statute, in fact, constituted petitioner a public utility. In the first place, petitioner is not required to serve the public. Petitioners are only required to make gas available to the owner of the land from which it is produced for irrigation purposes, upon the payment by the owner of the value of the gas and its component parts. * * *.'

The quoted section of the statute merely restricts the area to be served. It is true that there is no requirement that gas be furnished for 'use off the premises from which it is produced', or that producer assume 'duties to the public at large in respect to the gas produced.' But there is a duty to make gas available on those lands from which it is produced. The duty is to a small part of the public and to a small part of the lands in the area. Does this make it any less a public utility function? If the producer of gas can be required to serve a small area and a few people, we see no reason why he could not be required to serve a larger area and more people. It is recognized by respondents that petitioner is not a public utility and has not heretofore dedicated its services to, or engaged in, the...