United States v. Eason Oil Co.

Decision Date22 September 1934
Docket NumberNo. 1638.,1638.
Citation8 F. Supp. 365
PartiesUNITED STATES v. EASON OIL CO.
CourtU.S. District Court — Western District of Oklahoma

William C. Lewis, U. S. Dist. Atty., and Wade H. Loofbourrow, Asst. U. S. Dist. Atty., both of Oklahoma City, Okl., Douglas Arant, Sp. Asst. to the Atty. Gen., and John F. Davis, Counsel for Petroleum Administrator, both of Washington, D. C., for the United States.

P. C. Simons, of Enid, Okl. (Simons, McKnight, Simons, Mitchell & McKnight, of Enid, Okl., on the brief), and F. A. Rittenhouse, of Oklahoma City, Okl., for defendant.

VAUGHT, District Judge.

The United States of America brings this action alleging that the defendant is the owner of certain leases in the Crescent oil field of Logan county, Okl.; that, under the National Industrial Recovery Act, the President of the United States is authorized to prepare or have prepared a code of fair competition to effectuate the purposes of said act, and that, by virtue of and pursuant to section 3 (a), title 1 of the said Act (15 USCA § 703 (a), the President, by Executive Order No. 6256 dated August 19, 1933, approved a code of fair competition for the petroleum industry; that the Secretary of the Interior was duly designated by the President as Administrator of the Code of Fair Competition for the Petroleum Industry; that thereafter, on or about the 20th day of December, 1933, the Secretary approved and promulgated certain regulations governing the development of new pools as defined therein, and particularly promulgated regulations governing the Crescent Pool in Logan county, Okl., said regulations, among other provisions, containing the following:

"(2) Any and all wells hereafter drilled shall be located in accordance with a well spacing plan of one well in the center of each forty-acre tract, based upon legal subdivisions, except

"(3) Any lessee desirous of drilling at any location within a forty-acre tract other than the center of such tract, and who is able to present geologic and other data indicating that he is entitled to special consideration because his producing properties are at or near the edge of the pool, may submit such data to me, and may, if I so decide, be authorized to drill at such other location; but under no circumstances except those just described shall any well in any forty-acre tract be drilled at any location other than the center of such tract."

The bill further alleges that the defendant, Eason Oil Company, is now drilling a well on a 40-acre lease in said Crescent Pool at a point other than the center of said 40 acres, said lease being more particularly described as the southwest quarter of the southwest quarter, section 34, township 17 north, range 4 west, and that the drilling of said well is in violation of the regulations provided by the Administrator of the Petroleum Code, and in violation of the National Recovery Act.

The plaintiff seeks injunctive relief against the defendant, enjoining the defendant from drilling on the 10-acre tract in the northwest quarter of the southwest quarter of the southwest quarter of section 34, township 17 north, range 4 west, Logan county, Okl.; and from drilling in the northwest quarter of the northeast quarter of the southwest quarter of section 34, township 17 north, range 4 west, Logan county, Okl., until the Petroleum Administrator may act upon its petition for exceptions, and thereafter, if said petition for exceptions is denied; and further from drilling in the north half of the northeast quarter of the northeast quarter of section 4, township 16 north, range 4 west; and, further, from drilling wells elsewhere in the Crescent Pool except according to and in compliance with the plan of orderly development approved by the Petroleum Administrator, and/or, in the alternative, from shipping any petroleum which has been or may be produced from any well drilled in violation of the plan of orderly development for the Crescent Pool approved May 31, 1934, or the products thereof, and from selling or transferring the same for shipment; and that upon final hearing said preliminary injunction be made permanent.

The defendant has filed its response, alleging that the well in question was partially drilled prior to the adoption of the regulations promulgated by the Secretary of the Interior; that the well is being drilled in accordance with the regulations provided by the Corporation Commission of the State of Oklahoma; and that the entire plan as promulgated by the Administrator of the Petroleum Code is unfair, unjust, inequitable, and discriminates against the defendant, tends to oppress small enterprises and to permit monopolies by the major companies holding leases more favorably located on the proven area of the producing sand known as the Wilcox sand, and, if enforced, will deprive the defendant of a valuable property right without due process of law.

The defendant also alleges that the bill of complaint does not state facts sufficient to constitute a cause of action in favor of the plaintiff and against this defendant in order to entitle the plaintiff to the relief sought in this action.

The defendant has also filed its motion to dismiss, alleging that the bill of complaint is without equity; that it does not state facts sufficient to constitute a cause of action; that the Code of Fair Competition for the Petroleum Industry is unconstitutional, illegal, null, void, arbitrary, and discriminatory, and is in violation of the Constitution of the United States and the amendments thereto; that the Congress of the United States was without constitutional authority of law to enact the National Industrial Recovery Act and to delegate the powers therein referred to to the President of the United States and to authorize him to delegate the powers conferred upon him to other persons, organizations, or subordinate governmental agencies, or to provide rules and regulations of the Petroleum Industry, etc.; that the Secretary of the Interior, as Administrator of the Code of Fair Competition of the Petroleum Industry, was without authority of law to promulgate and enforce the regulations governing the development of new pools as defined therein; that such purported rules and regulations are unconstitutional, illegal, null, void, unjust, discriminatory, and in violation of the Constitution of the United States; that the drilling of an oil and gas well for the production of oil and gas therefrom is a private enterprise, and one over which the Congress of the United States is without jurisdiction to legislate, or to regulate or control the same, or to delegate power so to do either to the President of the United States or any of the other representatives or subordinate governmental agencies of the United States; and the defendant prays that the bill of complaint be dismissed.

The evidence as to the reasonableness of the regulations promulgated by the Petroleum Administrator was submitted in the form of affidavits, and the legal questions as to the jurisdiction of the court and the constitutionality of the Petroleum Code were submitted by oral argument and by written briefs.

The first question for determination is whether or not the regulations, as promulgated by the Administrator of the Petroleum Code, are in violation of the Constitution of the United States.

The plaintiff contends that the statutes and regulations involved are as follows:

First, the National Industrial Recovery Act (48 Stat. 195, 196, 200, §§ 1, 2 (b), 3 (a, b, c), 10 (a, b), 15 USCA §§ 701, 702 (b), 703 (a, b, c), 710 (a, b):

Section 701: "A national emergency productive of widespread unemployment and disorganization of industry, which burdens interstate and foreign commerce, affects the public welfare, and undermines the standards of living of the American people, is hereby declared to exist. It is hereby declared to be the policy of Congress to remove obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof; and to provide for the general welfare by promoting the organization of industry for the purpose of cooperative action among trade groups, to induce and maintain united action of labor and management under adequate governmental sanctions and supervision, to eliminate unfair competitive practices, to promote the fullest possible utilization of the present productive capacity of industries, to avoid undue restriction of production (except as may be temporarily required), to increase the consumption of industrial and agricultural products by increasing purchasing power, to reduce and relieve unemployment, to improve standards of labor, and otherwise to rehabilitate industry and to conserve natural resources."

Section 702 (b): "The President may delegate any of his functions and powers under this chapter to such officers, agents, and employees as he may designate or appoint, and may establish an industrial planning and research agency to aid in carrying out his functions under this chapter."

Section 703 (a): "Upon the application to the President by one or more trade or industrial associations or groups, the President may approve a code or codes of fair competition for the trade or industry or subdivision thereof, represented by the applicant or applicants, if the President finds (1) that such associations or groups impose no inequitable restrictions on admission to membership therein and are truly representative of such trades or industries or subdivisions thereof, and (2) that such code or codes are not designed to promote monopolies or to eliminate or oppress small enterprises and will not operate to discriminate against them, and will tend to effectuate the policy of this title: Provided, That such code or codes shall not permit monopolies or monopolistic practices: Provided further, That where such code or codes affect the services and welfare of persons engaged in other steps of the economic process, nothing in this section shall deprive such persons of the...

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5 cases
  • Butler v. United States
    • United States
    • U.S. Court of Appeals — First Circuit
    • 13 July 1935
    ...Co. v. Corporation Commission of Oklahoma, 286 U. S. 210, 235, 52 S. Ct. 559, 76 L. Ed. 1062, 86 A. L. R. 403; United States v. Eason Oil Co. (D. C.) 8 F. Supp. 365; United States v. Weirton Steel Co. (D. C.) 10 F. Supp. In Hammer v. Dagenhart, supra, 247 U. S. 251, page 275, 38 S. Ct. 529,......
  • United States v. Kinnebrew Motor Co.
    • United States
    • U.S. District Court — Western District of Oklahoma
    • 12 November 1934
    ...upon interstate commerce. In a recent case decided by this court, U. S. v. Eason Oil Co., decided September 22, 1934, and reported in 8 F. Supp. 365 this court collected and analyzed many of the principal decisions of the Supreme Court of the United States on this particular question, and w......
  • Douglas v. Wallace
    • United States
    • U.S. District Court — Western District of Oklahoma
    • 17 October 1934
    ...the question of whether or not a purely intrastate transaction constitutes an interference with interstate commerce (United States v. Eason Oil Co. (D. C.) 8 F. Supp. 365, decided September 22, 1934), and the court does not deem it necessary to restate the authorities and the reasoning cont......
  • United States v. Riggen, 4554.
    • United States
    • U.S. District Court — Southern District of Iowa
    • 29 January 1935
    ...Supp. 560; Douglas v. Wallace (D. C.) 8 F. Supp. 379; United States v. Greenwood Dairy Farms (D. C.) 8 F. Supp. 398; United States v. Eason Oil Co. (D. C.) 8 F. Supp. 365; United States v. Kinnebrew Motor Co. (D. C.) 8 F. Supp. As a finding of ultimate fact and conclusion of law, I must con......
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