*1 Opinion Appeals Corporation, the Court VACAT- Atlantic Compa Richfield ny, ED; judgment Cities Service the trial court is AF- Corpora Oil and Gas tion, Energy Devon Corporation Ener FIRMED. gy Group, Inc., Reserves Explo El Paso Company, ration Exxon Corporation, Getty Company, Oil Grace SIMMS, C.J., DOOLIN, V.C.J., and LAV- Petroleum Corporation, Gulf Oil Corporation, ENDER, WILSON, KAUGER and SUM- Inexco Oil Company, Kerr-McGee Cor MERS, JJ., concur. poration, Kirby Exploration Company, Mapco Company, Production Marathon JJ., dissents.
OPALA and HODGES Company, Oil Monsanto Company, Oil Mustang Production Company, Phillips Company, Petroleum Samedan Oil Cor poration, Energy Santa Fe Company, Inc., Shell Western E & P Explora Sun tion and Company, Production Tenne Company, co Oil Inc., Ap Texaco pellants, v.
The CORPORATION COMMISSION of the State of Composed Oklahoma Hamp Baker, Honorable Chair man; The Eagleton, Honorable Norma Chairman; Vice and The Honorable Townsend, James Commissioner, B. Ap pellees. Nos. 61652. SEAL, Seal, Dennis E. Darlene C. Donald Supreme Court of Oklahoma. Seal, Upchurch, D. Pamela Sueellen Farris, Cooperative Farmers United June 1986. Pool, Royalty Oklahoma Western Asso West, ciation, Cooper Harris, J. Neva L. As Amended Sept. III, Heiman, Hugh Howard Walsh A.R.
Shelby Corporation, Snider R.C. Brad Rehearing Sept. Denied ley, Bradley Revo Trustee for R.C. Trusts, Tarpley,
cable F.M. Trustee for Tarpley Trusts,
the F.M. Revocable Brechiesen, Martin, A.E.
Gordon R.
Amory George Gallesty, Corporation, Inc., Gallesty Properties, Fuller Oil Pe
troleum, Neilson, Inc., Carl A. Elsie M.
Elder, Delong Machino, Nancy G.M.
Tapp Tapp, Appellants, and Albert B.
The CORPORATION COMMISSION of Oklahoma, Appellee.
the State of
AMERADA CORPORATION, HESS
Amoco Company, Apache Production
Tomerlin, High by High High, & David Stagner, Durbin, Delmer Larimore & Bial- by ick Larimore, James City, K. Oklahoma appellants Seal, for E. Dennis et al. Bailey, Counsel, James H. General Gret- Hoover, Counsel, chen P. Deputy General Willison, Counsel, Patrick W. Asst. General Com’n, Corp. City, Oklahoma for Oklahoma appellee. by Stanley
McAfee & Cunning- Taft L. ham, Huffman, Philip Laurence M. D. Hart Gary Catron, City, and W. Oklahoma appellants Corp. Amerada Hess Emery Gaitis, by McCandless & P.C. Gaitis, A. Neal Gerstandt and M. James City, appellant Oklahoma El Paso Ex- ploration Co. Walker,
Pray, Jackman, Williamson & Tulsa, Williamson, Marlar Bland for ant- icue Oklahoma Independent curiae Petrole- um Ass’n.
HODGES, Justice. This appeal presents consolidated to this regarding Court issues constitutionality O.S.Supp.1983 (Act) of 52 541-547 and §§ validity through of Rules 6-100 6-113 (Rules) promulgated by the Oklahoma Cor- (Commission) plaintiff in Or- not unless has poration Commission established “such personal No. stake the outcome der of the controversy toas assure that ad concrete Appellants Corporation, Amerada Hess sharpens presentation verseness which Amerada) challenge (collectively et al. upon largely issues the court so constitutionality of the Act both and the depends....”2 “personal stake” ele major ar- Rules. The thrust Amerada’s plaintiff seeking ment if the is met redress (1) guments Act and is twofold: Rules suffered, with, or is threatened some police exercise state’s are a valid of the palpable injury”3 “distinct and and if there power and are thus of the violative due causal some connection between the al provisions of the of the cess Constitutions leged injury being and the actions chall Oklahor", (2) and and United States enged.4 Because conclude we Amerada with contractual and Rules interfere alleges pecuniary injury, direct and and it the federal and under seeks its of sales from and state constitutions. illegal purported effect of Act and Seal, (collec- Appellants Dennis E. et al. thereunder, Rules we find Amerada has Seal) validity tively challenge challenge standing constitutionality only, maintaining they contrary Rules Rules. Act and purpose with the inconsistent taking Act and intent of the constitute II. property process due of law. without the Act and Commission asserts THE ACT Rules and are further- are constitutional policy prompt- The public considerations public legitimate ance of a interest and are challenged legislation first were po- a proper hence exercise of the State’s resolution, discussed in a concurrent S.C. power. lice No. 7 “Oil and Resolution entitled Gas— Discrimination,” passed the Sen- Sales— ate I. 22,1983, on February House
STANDING
Representatives
on March
on
merits,
Secretary
filed
of State March
Before we discuss the
we
with
*6
2,
findings
in
set forth
the reso-
argument concerning
must
Seal’s
address
standing
challenge
lution
as follows:
Amerada’s
the consti
are
tutionality of the Act.
contends
Seal
that
“WHEREAS,
of
the State
Oklahoma
standing
Amerada lacks
because Amerada
powers
right
police
under its
and
deprived
no
is
of
constitutional
as the
protect the citi-
authority
conservation
requires
equity
do
of
it to what courts
zenry of this state from losses
reason
require it to do
individual
would
in
actions
discrimination;
of
and
occurred.
where an imbalance has
“WHEREAS,
mineral
many
owners
gas
in
well
question
standing
participants
“In
is
and
oil and
drill-
essence the
of
being
litigant
projects are
discriminated
whether the
is entitled to have the
dispute
against
production
in the sale of the
court
the merits of the
or of
decide
purchases
being
in that
particular
standing
their wells
issues.”1 The
doctrine
against
one
as
an-
encompasses
on the
made from
co-owner
several limits
exercise
minimum,
other;
standing
At a
and
jurisdiction.
490, 498,
Glass,
(Okla.
Seldin,
P.2d
Dist. No. 9
639
1233
422 U.S.
95 S.Ct.
School
Worth v.
2197, 2205,
(1975).
1982).
“WHEREAS, price agreed the inherent wealth of upon by contract and from great being lands of Oklahoma is taking his share kind or rightful recipients; divested from its separately disposing of his share. “WHEREAS, the continuance of dis- provides electing Section 543 if purchases criminatory and the dishonor only owner receives a contract for sale of rightful pro produc- rata shares portion production, his electing the other proceeds many tion wells Oklahoma having no contract are entitled to upon will have serious effect the econom- ratably share in the revenue from the con- ic health of the State of Oklahoma.”5 tract “to the extent of their net revenue 3, 1983, May George Nigh On Governor electing receiving interest.” Each owner signed into Enrolled Bill law House No. give contract to sell must written notice to O.S.Supp.1983 codified 541- §§ all other net revenue owners without a 547. The Act im- which became effective purchase contract for the of their share. mediately expressly intended to address provides Section 544 that the amount of protection of “the and correla- gas produced daily from a well is owned tive of all interest owners of natural proportion each in the owner well to each gas producing casinghead wells and wells well, irrespective owner’s interest in the equal and to afford all such owners an actually produces gas. which owner opportunity their extract fair share of producing selling Each owner or dis- paid proportion and to sell and be posing separately must account to their interest therein.” The Act is further selling the other owners not or otherwise expressly intended “to such owners disposing compensate them for against purchases discrimination in in favor *7 proportionate part gas disposed their of the against of one owner as another.” of or sold. Under Section whenever a well is provides Section 545 that distribution of placed production, into all owners are enti- production revenue from the sale of be ratably tled to share in the revenues from pursuant O.S.Supp.1985 made to 52 540. § production. the sale of Prior to the date of Additionally, any receiving owner revenues production, operator first of the unit directly purchaser from the must forward area must offer each owner of the anwell party responsible the same to the for distri- whereby operator election seeks to bution under Section 540. pro- market that owner’s share of ratable designated portion duction or a thereof. In Section 546 states that the shall not elects, operator setting restricting event owner so be construed as or O.S.Supp.1983 5. 1983 Okla.Sess.Laws § 1172-1173. prop- type cotenancy tion and creates a under which a or conditions
price, terms proceeds. well; erty interest in such purchaser takes any purchaser to connect requiring Act, passage to Prior of the serious already obligated to not it is well gas problems industry beset connect; altering changing legal or and In the early State of Oklahoma. 1980s purchaser and com- common definitions of discriminatory practices resulted from a carrier. mon surplus gas. in deliverability of natural Pipelines had contractual obli- burdensome to empowers the Commission Section gations gas greatly to take which exceeded imple- regulations and promulgate rules ability their market. This to circumstance Act, including power to menting the pipelines ignore con- caused to either their viola- penalties for and enforce establish existing tractual to take under power provides that such thereof. It tions “mar- options contracts or exercise their preclude remedies available does regard Additionally, ket out.” with preclude nor through the district courts reserves, acquisition gas they would new dam- recovery of treble any owner from producers enter into with some contracts ages attorneys fees. and working to contract other and refuse with required historically law Oklahoma within the same well. interest owners source of taking from a common ratable generally un- Non-contracting owners were Corporation Inexco Oil Co. In supply.7 gas purchasing obtain contract able to (Okla. Commission, 628 P.2d surplus. gas due to the Thus their 1981), this in connection Court observed gas as de- purchasers take as much could concerning taking ratable a discussion with only from a with contractual sired well supply under 52 a common source producers. obligation favored and 24.1: O.S.1981 §§ gas industry employed the use of Okla- “The for the enactment basis joint balancing either contained contracts gas laws is oil and conservation homa’s otherwise, agreements, operating pur- rights. The protect correlative non-selling attempted protect regulatory scheme concern- of the pose by providing that working interest owners pur- and common ing common carriers be share of the would pro their rata producers to afford chasers depleted. were when the reserves balanced equal supply common source of of a balancing arrangement customar- This transport oil to market and opportunity de- any interest on ily not afford would (Footnotes their wells.” non-selling owners layed income. omitted). use of these funds were denied the legisla- previous moreover, guaranty all that the The Act differs with no there was producers than in that it is directed towards who received more selling tion owners purchasers and towards co- would pro than their rata share rather obligation, to single opposed capable, regardless within a well as owners balancing of satisfy a com- their liabilities after of interests between wells Moreover, in a well would rights. the Act All interest owners supply. source of mon proportionate their share ratably paid to share entitles each owner production; drilling completion costs produc- generated sale of by the revenues waste, 1913) (creates ply (enacted prevent interest so as §§ 7. 52 O.S.1981 23-25 having purchaser public, carri- those and common and of all of common status *8 taking); therefrom, imposes requirement of prevent ratable to unreasonable and and er duce 1913) (enacted (requires O.S.1981 233-235 com- §§ 52 any person favor of one such in discrimination gas taking gas to field take another); from supply against 52 source of as mon propor- gas ratably of the in each owner 1915) (autho- from (enacted and 242 §§ 240 O.S.1981 gas); in said 52 O.S.1981 to his interest tion regulations for deliv- to make Commission rizes (directs 1915) 236, (enacted 239 237 and §§ metering equitable purchasing and tak- ery, and regulations preserve rules and Commission to gas). of sup- taking gas of from common sources of however, purchasers challenge legislation not to because would the on both owners, ratably non-selling from all take grounds process of constitutional due and immediately would not receive their owners impair restrictions on laws which obli- the proceeds in share the from the Con- well. gation of is: contracts Whether the Act sequently, non-selling working interest proper constitutes a of police exercise the pay would be unable to excess or owners power of the As previously State. noted royalties overriding their to lessees until expressed legislative the protect intent is to provisions such time as the of their rele- rights rights and correlative of in- all gas balancing agreements vant come into wells, terest of all owners afford owners an gas balancing agreements, effect. Under equal opportunity to and extract sell their proceeds payment non-selling of the gas share protect against of and all owners in many owners would be deferred instanc- gas purchase discrimination. The of focus depletion es until of the if well argument Amerada’s is purchaser were unable to find a that the State is owners as opposed payment to and when the as affecting to rights only they limited as duction was taken from the well. relate in a to co-owners common of source supply separate relative to wells as distin-
The Act addresses these kinds of abuses industry by providing guished in the for immediate from single co-owners in a well. balancing production of all of And, by requiring producer the Act one to gas single from the date of from well share his with market other owners in a production on after first and the effective operate well not does to serve the ex- gives of the Act. date It pressed legislative intent. ownership gas ratably of interests in a well may It is well settled that the State proceeds generated each co-owner adopt regulation reasonable in the exercise well’s of the moment protect police power of its the correlative gas possession is reduced to consistent through taking.8 of owners ratable recognized principle with well capture legislation which is on infringe law founded “Such con- does naturae, i.e., concept of animals against taking stitutional inhibitions ferae property rights acquired in animals are not law, property process due without denial possession until the owner reduces them to equal protection laws, of the of the by capturing them. taking property just compensa- without tion.” Amerada asserts the does not III. rights urging involve correlative a defini- POWER
POLICE
tion of such as
existing
those
be-
tween owners of interests
Court,
common
question
The threshold
before the
supply
excluding
which is the common thread in Amerada’s
source of
while
Co.,
8. Cities
Gas Co. v. Peerless & Gas
other
is
Service
Oil
owners. Either situation
conducive to
279,
285, aff'd,
Okl.
ground
P.2d
340 U.S
waste above
that owners who are not
179, 185,
215, 219,
(1950);
71 S.Ct.
287 well, citing disproportionate taking gas within the same interests a of from a com- Exploration, Petroleum Inc. supply, United mon source of as it has attempted Resources, Ltd., F.Supp. 127 Premier argument.” so to characterize its In (W.D.Okla.1980). Tenneco Co. v. El Oil newly do not We believe the refined defi- 1049, 1053 687 P.2d Paso Natural Gas rights adopted nition of correlative in our (Okla.1984), dealing a case the n. with pronouncements regarding recent the Com- subject-matter jurisdiction, Commission’s subject-matter jurisdiction, mission’s inhi- accepted refinement our definit we the to police protect power bits the State’s cor- rights by of the United ion10 correlative rights challenged relative in the Act. in States District Court United: United, In federal court the in address- rights rights are those “[C]orrelative ing an interest assertion owner’s that an- possesses one in a common which owner owner/operator’s over-production other of supply of in to those source relation gas damaged in a well had its correlative rights possessed by other in the owners production, alleged stated the im- supply of same common source is] [which measure, “in large balance was a fiction.” from underlying geological strata the dispute It noted the was not whether gas produced, rather which oil operator’s reducing possession actions in through which the oil and than well quantity gas of in hamper- had resulted a possession.”11 reduced ability of owner’s to conduct its opinion it in In the text stated of was operation possession own to obtain of a proper a discussion of sub- connection with supply quantity from same private contract: “This is not to jects source; rather, but it revolved around designat- say rights produce that the producing gas the owner of the whether quantity hydrocarbons from the well ed portion could disclaim title to that well thereof, public inter- division occurring production phys- while was est, owner-operator and the interests ically possession unable to take of its fair con- proper subject private not the share, and assert instead an absolute added). own- (Emphasis tract.” 687 at 1053 P.2d mathematically ership over a balanced vol- Samson, In this was supra, definition possession production capabil- ume after the de- again reiterated in connection with provided. court ity was determined exer- termination of the Commission’s valid equitable required imme- considerations subject-matter jurisdiction cise of balancing cash rather than a bal- diate “in rights correlative situations which Although kind. ancing in United dealt actually affects such conflict exists which balancing production be- with supply within a common source of well, single in- co-owners in a tween public in the and thus affects the interest fringement upon rights did the correlative source protection particular exist. The circumstances There, this found an as a whole.” Court there the co-owner had re- presented were designated request to interest owner’s balancing cash ten- fused an immediate displacing operator, the unit well as unit operator anticipation by the voluntary did dered operator agreement, under of a stream split existence connection dispute public not concern a future. The co-owner refused the the near involved. interest correlative was balancing only method of then avail- for the own- viable We stated the basis interest argument Doubtless the co-owner’s correlative “truly er’s did not concern able. injure supply Kingwood Corporation Commis- other owners not to source Oil Co. v. sion, (Okla.1964): proportion undue P.2d duties not to take an Summers, Gas, gas.’ Oil rights’ oil and Vol. defined "The term 'correlative has been ‘indicating as a that each 63.” convenient method Sec. supply of owner of land in a common source of Corporation Co. v. legal privileges against 11. See also Samson Resources other oil and Com’n, (Okla.1985). operations P.2d land lawful conducted land, limited, however, by on his own duties *10 288
rights
injured.
inappo-
argument,
were
United is
In connection with its first
controversy.
site to the current
Conse- Amerada asserts the Act creates an unin-
quently,
rights
the discussion of correlative
party beneficiary
tended third
contract.
bearing
present
in that case has no
on the
sup-
Amerada cites
15 O.S.1981 2915
§
perceived
industry
abuse in the
as ad- port
argument.
per-
of this
We are not
challenged
dressed
Act.
suaded
Although
pur-
this assertion.
may
chaser
be held liable for conversion if
hold,
We do not read
United
purchaser
has notice that the non-con-
contends,
rights
Amerada
that correlative
tracting party
operator’s
has rescinded the
among
single
never exist
of a
well.
Kuntz,
authority
dispose
gas,
of his
1
opinion
In
our
unless all owners
a well
11.2,
(1962),
Oil and Gas
at 242-43
§
equal opportunity
from the
sell
non-contracting
Act does not entitle a
own-
well, they
opportunity
are not afforded the
er to sue on another owner’s contract with
produce
just
equitable
their
share of
purchaser.
correctly
The Commission
gas.
purpose
The
of the Act is to
maintains the benefit to the non-contract-
opportunity.
afford this
Viewed in this
ing party
incidentally
perform-
arises
light,
pro
there is no doubt that the Act
ance of the
contract due to the
cre-
rights.
tects correlative
ated
the Act.
point
It should be noted at this
that
judicial
the rule
requires
construction
us
process
core of Amerada’s due
The
legislative
to look to the
intent as manifest
argument
is that the Act does not serve
Act,
parts
being
ed from all
of the
mindful
any public purpose.
foregoing
Our
view of
reasonably possible,
that whenever
a stat
disposes
argument.
this issue
of this
In
uphold
ute must be so construed as to
its Cities
Gas Co. v. Peerless Oil &
Service
validity.12
Legislature may regulate
179, 185,
215,
Gas
340 U.S.
71 S.Ct.
public
business affected with a
interest for
219,
(1950),
IV.
gas.”
cal waste of natural
The standard
applied
regulations
was that such
be “sub
DUE PROCESS
stantially
legitimate
related to a
end
Amerada contends the Act denies
sought to be attained.”16
process
due
of law in
violation
feder
applying
present
In
this standard to the
al and state Constitutions.14 Under this
case,
find
employed by
we
the means
(1)
proposition argues
Act
constitutes
use,
substantially
legit-
Act are
related to the
taking
property
private
(2)
changes
protecting
rights.
imate end of
spacing
accrued
correlative
under
pooling
orders of the Commission and
measure of reasonableness of the Act
(3)
unconstitutionally vague.
the Act is
police power
enacted under the State’s
State,
235,
123,
contract,
12. Skinner v.
expressly
189 Okl.
115 P.2d
"A
made
for the benefit of
person, may
a third
be enforced
him at
time before the
thereto rescind it.”
13. Semke v. State ex rel. Okl. Motor Vehicle
Com’n,
(Okla.1970).
465 P.2d
(citing
Nebbia
16.
right or
determining legislative
“In
intention
proceedings
begun.
which have
Am-
under
words, phrases,
expressions
will be
argue
any
the existence of
erada does not
ordinary meaning
accorded their
when
which has been
accrued cause of action
so,
practical to do
...”23
by the Act.
disturbed
Furthermore,
given
“a statute should be
construction, bearing in
sensible
mind the
Lastly, Amerada maintains under
remedy
evils intended to be avoided or the
challenge
provisions
process
its due
afforded.”
vague.
unconstitutionally
In
the Act are
contention,
Applying
recognized principles
support of this
it construes var
these
re-
lating
legislative
conflicting
544 as
to construction of
enact-
ious sentences of Section
Act,
present
we find the sensi-
requiring both unit allocation and ments to the
mandates
given
to the noted
points
It
to the second ble construction
contract allocation.
provisions
urged by
is that
and the
asserting
requires
thereof
Seal
sentence
second sentence
of all
on a unit basis.20 Commission. The
allocation
ownership
gas
language
general
rule of
as to
further notes the
in the third
vides
It
17.
Id.;
produces
gas
Refining
City
or
“Each owner who
natural
Hud Oil and
Co. v.
Okla-
457,
(1934).
City,
separately
casinghead gas
homa
167 Okl.
V.
clause
many
contained in
existing oil and
*12
gas
generally provide
leases which
for allo
IMPAIRMENT OF CONTRACTUAL
cation
from a well on a unit
OBLIGATIONS
basis for owners
royalty
interests and
We next address Amerada’s con
an allocation on a tract basis for owners of
tention
impairs
that the Act
the
working interests. Under this scheme of
of contracts in
violation
the Contract
pursuant
allocation
interpre
this Court’s
Clause of the federal and state constitut
tation of
The
States
United
royalty owners from the increase
challenges
addressed Contract Clause
has
in-
passing
from
on the
producers
hibited
legislation
two recent
to oil and
state
Court held
purchasers.
to their
Group, Inc.
crease
opinions.
Energy
In
Reserves
pass-
Co.,
exemption and the
royalty
owner
Light
459 U.S.
v. Kansas Power &
28. Tenneco,
(quoting Okla.
Group,
provisions are
taking
prevent any
or to
owner from
its
urges
Court to
Act.
this
tent of the
Seal
separately
share of
in kind or
conflicting Rules.
alleged
strike down
share,
disposing of its
also includes an own
hand,
Commission,
asserts
on the other
The
right
gas balancing agree
er’s
to enter into
purpose of
administer the
the Rules do
provide
disposition
ments which
for the
be
urges sustention of the Rules Act and
nothing
We find
tween interest owners.
specific provisions attacked will
toto.
expresses
pre
which
an intent to
in turn.
the Act
now be addressed
Moreover, contrary
agreements.
such
vent
validity of Rule
first attacks the
Seal
contentions,
royalty
such
owners’
to Seal’s
exempts par-
the extent that it
6-10032 to
recovery merely delayed
until such time
agreements
existing gas balancing
ties to
provisions
pertinent
as the
bal
argues
application of the
It
from the
Act.
effect,
ancing agreements come into
exclusionary provisions of Rule 6-100
these
entirely.
exclusionary provi
precluded
with
541 which
are in direct conflict
Section
apparently designed to minimize
sions were
express purpose
and intent
provides for
private
impairment
under
all interest owners an
of the Act to afford
arrangements
interest
contractual
between
extract,
sell and be
equal opportunity
greater
than that
owners to
extent
proportionate share of the
paid for their
necessary
absolutely
asserts such
gas produced. It further
parties.
rights and correlative
contrary
to Section 544 which
visions
however,
reject,
the Commission’s con
We
day’s production shall
provides that each
appeal in
the Act raised on
struction of
belong
proportion
each interest owner
Rule,
challenge to the
response to Seal’s
Additionally, it
to each owner’s interest.
overriding
royalty
under which
if
limits the Act con-
maintains
this Court
inde
would be accorded an
6-100,
royalty owners
Rule
this will result
sistent with
right
produce gas and enter into
pendent
receipt
royalty in excess
cutting off the
of the basic nn Upon an examina-
for its sale.33
royalty owners whose
contracts
working
is a
interest own-
provides:
1. ‘Interest owner’
32. Rule 6-100
having
any person
in a well
er or
producing
*15
in a well
“A. All interest owners
gas;
separately dispose
produce or
of his
casinghead gas
gas
shall be afforded
natural
or
party’
any
in
is
interest owner
equal opportunity to extract their fair share
2.
‘Contracted
an
gas
paid
gas
party
gas
said
and to be
to a contract
of
and to sell
oil or
well who is a
proportion
gas
therein.
In the
to their interest
gas produced
or
of
from that oil
for the sale
party
any
such a well is a
event
interest owner in
well;
gas balancing
joint
agreement,
operating
to a
any
party’
interest own-
‘Non-contracted
is
3.
any
agreement,
agreement
written
other
and/or
gas
gas
not have a
er in an oil or
well who does
provisions
such
that the
then to the extent
of
gas production and
for his share of
contract
agreement
agreements expressly provide
or
for
agreement as
into
other
who has not entered
sharing
gas balancing
gas pro-
taking,
or
the
of
governs
taking
the
or shar-
provided
that
above
as
well in a manner other than
duced
such
from
therefore,
and,
subject
gas
of
Rules,
provisions
such
set
in these
then
forth
(Emphasis sup-
provisions
Rules.”
of these
party to
owner who is a
shall bind that interest
plied).
agreement
agreements
the
or
as between
such
marketing,
the
reve-
to the exclusion of
upon the term “own-
relies
33. The Commission
balancing
provid-
sharing
provisions
and
nue
O.S.Supp.1983
as used in 52
er” or “owners”
ed hereunder.
542(A), (D)
par-
mean
which we construe to
§
through Rule 6-
"B. As used in Rule 6-100
right
their share of
who have a
to take
ties
113:
tion
note,
of the Act
find this
we
construction We first
cardinal
principle
“[a]
clearly
was
Legislature
statutory
not intended
the
construction is that where the
or
language
It is
plain
Commission.
fundamental that
of a
unambig-
statute
and
grants
an oil
meaning
and
uous and the
lease
lessees the
clear and unmistak-
able,
right
And,
to drill
there is
for
produce.
construction,
and
a concomi-
no room
and
justification
tant
no
principle
royalty
exists for
overriding
interpretive
is that
and
de-
royalty
(the
vices to
mineral
fabricate
different meaning.”35
owners/les-
Also,
sors)
statutory
is the rule of
right
are
to drill
without the
and
construc-
“[i]t
tion that all
are
produce
given
statutes
to be
they
up
right
have
such
construed
having
prospective operation
in exchange
specified
unless the
for a
bonus consider-
purposes
Legislature
and intention of the
production.34
ation
royalty
and
on
By
give
retrospective
them a
bringing
effect is
into
ex-
balance
of all own-
pressly declared,
is necessarily implied
right
produce
ers of the
and
drill
the Act
language
from the
used.”36
royalty
will also benefit
and overriding roy-
alty
owners whose
derive from those We
Legislature’s
conclude that the
use
right
owners of the
to drill and
particular
language in the Act evidences
produce. We,
therefore, conclude that
an intent that
applied
it is
prospec-
Rule 6-100 does not vitiate the
pur-
overall
tively
Furthermore,
only.
Legislature
pose of the Act.
declare,
expressly
does not
by implica-
nor
tion, that the
should
Act
have retroactive
Seal contends Rule 6-102 errone
instance,
effect. For
Sections 543 and 544
ously limits
application
bal
provide for “on and after the effective date
ancing provisions
proceeds
Act to
speak
this act”
terms of the
production
received on or
May
after
present tense.
find the
We
Act is to be
1983, the
date
effective
of the Act.
It
applied prospectively only and thus sustain
argues
sharing provisions
the revenue
validity
of Rule 6-102.
the Act have full retroactive effect as to
revenue
prior May
received
challenges specific
1983. In
provi
Seal next
support of
argument
6-101,
this
leg
6-102, 6-103,
references
sions of Rules
6-107
history including
islative
comments of
6-112 on the
basis
such Rules are
one of the
of the Act
regarding
provisions
co-authors
conflict with the
of 52 O.S.
its intent
purpose
Supp.1985
and also
incorporated
S.C. Resolu
540 as
§
tion No. 7 of
Legislature.
provides
Section 545.37 Rule 6-101
separately dispose
payment
kind or
sold.
persons
Such
is to be made their share.
purchasers
entitled thereto
first
of such
production....
purchaser
first
shall be
Co.,
Quasar
34. O’Neill v. American
Petroleum
exempt
provision
this subsection
(Okla.1980);
Phillips
P.2d
Hinds v.
right
pro-
and the owner of
to drill
and to
(Okla.1979).
Petrol
tions are neither nor
any overground underground waste.
Every well owner the field is free to
produce gas, provided he does not do wastefully. and,
so He legally so far appears, physically
as' provide free to transpor-
himself with a market and with marketing tation and facilities. BRIGANCE, minor, Shawn and Earle Brigance, father, individually his purpose of the Commission under- [T]he parent guardian and natural was, lying upon these theory orders Brigance, Appellants, Shawn protecting rights, correlative to coerce complainant other similarly [others] gas from, to buy *21 situated and thus to RESTAURANT, The VELVET DOVE private marketing share INC., Stubbs, their contracts Jerry Richard Rimele, commitments and the use of their Appellees. pipe lines and other facilities for trans- No. 62005. mitting their to market with the own- Supreme Court of Oklahoma. ers of pipe wells not now connected to lines, money, who have not contributed July services, skill, negotiations, forethought Rehearing Sept. 23, Denied development otherwise to the of such markets and the construction of such
pipe lines other facilities. In short
to compel complainants to afford mar- having
kets to those none.”
The act examined this case has substan-
tially the same effect as that examined
Thompson, supra. statutory scheme simply rearranges
established the act private contractual indi-
viduals for the benefit a subclass well having
owners not contract sell their
product. proper As such it is not a exer- power,
cise of police the state’s for the law
benefits one at subclass well owners
expense designed of others and is thus general people
to benefit the welfare of the Nor can act state. be said to
prevent rights. waste or correlative Corporation attempted Commission has
to ameliorate the obvious constitutional by enacting which,
flaws with act rules effect, emasculate the act. Statutes uphold
should be construed so as to their
constitutionality, in this but instance given
obvious that the construction the act