Republic Natural Gas Co. v. Oklahoma Court Opinion

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334 US 
61, 62 SUPREME COURT OF THE UNITED STATES

N61]
reasonably possible *that competi­
tion would be substantially affected. 
Hence, the discount, w'hether more 
or less than the exact savings in 
handling, would not fall under con­
demnation of the statute. The inci- 
donee of this discount on customers 
IS not arbitrarily determined by the 
volume of their business but depends 
upon an obvious difference in han­
dling and delivery costs.

The Commission has forbidden re­
spondent to continue this carload-lot 
differential. The Commission has 
no power to prescribe prices, so that 
it can order only that the differen­
tial be eliminated. Unless competi­
tive conditions make it impossible 
the respondent’s self-interest would 
dictate that it abolish the discount 
and maintain the higher base price, 
rather than make the discount uni­
versally applicable. The result 
would be to raise the price of salt 
10 cents per case to 99.9% of re-

O c t . T e r m ,

spondent’s customers because 1/10 
of 1% were not in a position to ac­
cept carload shipments. This is a 
quite different effect than the elim­
ination of the quota discount.

It seems to me that a discount 
which gives a lowered cost to so 
large a proportion of respondent’s 
customers and is withheld only from 
those whose conditions of delivery 
obviously impose greater handling 
costs, does not permit the same in­
ferences of effect on competition as 
the quota discounts which reduce 
costs to the few only and that on a 
basis which ultimately is their size.

The two types of discount involved 
here seem to me to fall under differ­
ent purposes of the Act and to re­
quire different conclusions of fact as 
to effect on competition. According­
ly, I should sustain the court below 
insofai as it sets aside the cease and 
desist order as to carload-lot dis- ‘ 
counts.

*[62]
iee-k-«w . ■ K •REPUBLIC NATURAL GAS COMPANY, Appellant,

v.

■ ■ •«!* STATE OF OKLAHOMA, Corporation Commission of the State 
of Oklahoma and Peerless Oil and Gas Company

(334 US 62-99.)

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SUMMARY

order requiring a producer with a pipe line to a market ?or gas to r^eive

owi w e |s .J S order S  t c S  S X ^ ^ h ^ g a l ' w £  t o l l  r Z V e d
commission.011’ °r ’ the be Unable to a^ree’ to fixed by the

This order having been sustained by the highest state court the con
theC ourt S einWa T  ^ P.ea1̂  % the SuPreme Court. Five members of the Court held, in an opinion by F r a n k fu r t e r , J., that by reason o ’ the
matters left open by the order, the state court's judgment lacked the finality
requisite to a review by the Supreme Court, even though the order si mid
be construed as immediately effective. J l“u



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1947. REPUBLIC NATURAL GAS CO. v, OKLAHOMA 334 U S

natives presented by the order would give rise to different constitutional 
questions, the Court should refrain from considering the case ‘‘until the 
precise pinch of the order on the appellant is known.”

R utledge, J ., with whom B la ck , M u r ph y  and B urton , J J „  joined dis­
sented on the ground that deferring decision on the merits to some future 
ume would only prolong the litigation unnecessarily and w’ith possible 
irreparable harm to one party or the other. This was based on a construc­
tion of the order as requiring taking to begin at once.

The terms of the taking were regarded by him as presenting only a con­
tingent, collateral matter, so that the need for further adjudication might 
never arise, and almost certainly would not do so if the constitutional 
questions were presently determined.

He therefore proceeded to the merits, and expressed the view that as 
under the circumstances the purchase of gas from or its transportation to 
market for the producer which otherwise could not operate its well is the 
only feasible way- of protecting the one from drainage by the other, there 
was no violation of the due process and equal protection clauses of the 
Fourteenth Amendment.

HEADNOTES
Classified to U.S. Supreme Court Digest, Annotated

Appeal, § 83 — finality of judgment —- 
lack of formula for determination.

1. No self-enforcing formula can be de­
vised to define when a judgment is “final” 
within a statute granting the Supreme 
Court of the United States the power of 
review in state litigation only after the 
highest state court in which a decision 
may be had has rendered a “final judg­
ment or decree.”

[See annotation references, 1 and 2.] 
Appeal, § 83 — finality of judgment — 

decision of major issues.
2. The requirement of finality in a state 

court’s judgment upon which reviewability 
by the Supreme Court of the United States 
is conditioned is not met merely because 
the major issues in a case have been de­
cided and only a few loose ends remain

ANNOTATION
1. As to w hat judgm ents of state 

courts are final for purpose of review 
in the Supreme Court of the United 
States, see annotation in 5 L ed 302, 
49 L ed 1001, 60 L ed 802, and 89 L ed 
1186.

2. As to  w hat adjudication of state 
courts can be brought up fo r review 
in the Supreme Court of the United 
States by w rit of erro r to those courts, 
see annotation in  62 LRA 513,

3. On constitutionality  of statu te  
controlling exploitation or w aste of

and gas, see annotation in 78 ALR 
Ou4.

to be tied up, as, for example, where 
liability has been determined and all that 
needs to be adjudicated is the amount of 
damages.

[See annotation references, 1 and 2.] 
Appeal, § 83 — finality of judgment where 

only ministerial act remains to be 
done.

3. A determination by a state court is 
final, so as to be reviewable in the Su- 
pieme Court of the United States, where 
nothing more than a ministerial act re­
mains to be done, such as the entry of 
judgment upon a mandate.

[See annotation references, 1 and 2.] 
Appeal, § 83 — finality of judgment — 

interlocutory judgment working ir­
reparable injury.

4. A determination by a state court 
REFERENCES

4- Generally, as to validity of s ta t­
ute lim iting or controlling exploita­
tion or waste of natu ral resources, see 
annotation in 24 ALR 1307, and 51 
ALR 279.

5- On respective righ ts o f adjoin­
ing owners as to pumping oil, see an­
notation in 5 ALR 421.

6. As to property in petroleum  oil, 
see annotation in 44 L ed 729.

7. As to constitutionality  of s ta tu t e 
regulating petroleum  production, see 
annotation in 86 ALR 418.



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1947 . REPUBLIC NATURAL GAS CO', v . OKLAHOMA 54 U S
1

men p o o l, f r o m  r e q u i r i n g  o n e  e i t h e r  to  
shut down its wells or to take gas ratably 
from the other producer upon such terms 
as the parties may agree upon or, in de­
fault of agreement, a state commission 
may fix, when the purchase- from or trans­
portation to market for the other pro­
ducer is the only practical or feasible al­
ternative consistent with production by 
both to protect the latter from drainage 
by the former. [Per Rutledge, Black, Mur­
phy and Burton, JJ.]

[See annotation reference, 3.]
Constitutional Law, § 529 — due process 

— alteration of property rights.
14. The Fourteenth Amendment does not 

preclude the exercise of state power to 
create institutions of property in accord 
with local needs and policies or to alter 
them in the public interest. [Per Rut­
ledge, Black, Murphy and Burton, JJ.]

Constitutional L a w , § 877  —  p o w e r  o f  
state to adjust correlative rights of 
owners of oil or gas properties — 
source.

15. The power of a state to adjust the 
correlative rights of owners of oil or gas 
properties is not merely incidental to 
the fundamental right of the state to pre­
serve its natural resources, but stems 
rather from the basic aim and authority 
of government to protect the rights of its 
citizens and to secure a just accommoda­
tion of them when they clash. [Per 
Rutledge, Black, Murphy and Burton, JJ.]

[See annotation references, 3-7.] 
Evidence, §§ S9, 243 — presumption of 

constitutionality of state action.
16. In considering the proper scope of 

state experimentation with new property 
rules, every reasonable presumption in 
favor of the state’s action should be in­
dulged. [Per Rutledge, Black, Murphy 
and Burton, JJ.]

[No. 134.]
Argued January 6, 1948. Decided May 3, 1948.

APPEAL by a producer of natural gas against which the Oklahoma State 
Corporation Commission made an order requiring it to market pro rata 
gas of another producer in the same field, from a judgment of the Supreme 
Court of the State of Oklahoma sustaining such order. Appeal dismissed. 

See same case below, 198 Okla 350, 180 P2d 1009.
Robert M. Rainey, of Oklahoma City, 

Oklahoma, and John F. E berhard t, of 
W ichita, Kansas, argued the cause, 
and, w ith Robert C. Foulston, also of 
W ichita, filed a brief for appellant: 

The judgm ent appealed from is 
final. Cf. Georgia R. & Power Co. v. 
Decatur, 262 US 432, 436, 67 L ed 1065, 
1072, 43 S Ct 613; Richfield Oil Corp. 
v. State Bd. of Equalization, 329 US 
69, 91 L ed 80, 67 S Ct 156; M arket 
S treet R. Co. v. Railroad Commission, 
324 US 548, 551, 552, 89 L ed 1171, 
1176, 1177, 65 S Ct 770; United States 
v. 243.22 Acres of Land (CCA2d NY) 
129 F2d 678, 680; Kasishke v. Baker 
(CCA 10th Okla) 144 F2d 384, 386; 
Bronson v. La Crosse & M. R. Co. 2 
Black (US) 524, 17 L ed 347; Gulf Ref. 
Co. v. United States, 269 US 125, 70 L 
ed 195, 46 S Ct 52; Radio Station WOW 
v. Johnson, 326 US 120, 124, 125, 89 L 
ed 2092, 2096-2098, 65 S Ct 1475; Knox 
Nat. Farm  Loan Asso. v. Phillips, 300 
US 194, 81 L ed 599, 57 S Ct 418, 108 
ALR 738; Re Casaudoumecq (DC Cal) 
46 F  Supp 718, 50 Am Bankr NS 799;

P ierce Oil Corp. v. Phoenix Ref. Co. 
259 US 125, 66 L cd 855, 42 S Ct 440, 
affg 79 Okla 36, 190 P 857.

An order depriving a litigan t of spe­
cific property possesses appealable 
finality even though the term s of tak ­
ing are deferred for subsequent deter­
mination. Radio Station WOW v. 
Johnson, 32S US 120, 89 L ed 2092, 65 
S Ct 1475; Carondelet Canal and Nav. 
Co. v. Louisiana, 233 US 362, 58 L ed 
1001, 34 S Ct 627; Kasishke v. Baker 
(CCAlOth Okla) 144 F2d 384; United 
S tates v. 243.22 Acres of Land (CCA2d 
NY) 129 F2a 678; Re Casaudoumecq 
(DC Cal) 46 F Supp 718.

The statu tes and the commission or­
der are, as applied to Republic, uncon­
stitu tional. See Texoma N atural Gas 
Co. v. Railroad Commission (DC Tex) 
59 F2d 750; Thompson v. Consolidated 
Gas U tilities Corp, 300 US 55, 81 L ed 
510, 57 S Ct 364; Pipe Line Cases 
(United S tates v. Ohio Oil Co. 234 US 
548, 58 L ed 1459, 34 S Ct 956.

E arl P ruet, of Oklahoma City, Okla­
homa, argued the cause, and, with

92 L ed 1215

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1947. REPUBLIC NATURAL GAS CO. v. OKLAHOMA 334  US
62, 63

*>00 US 527, 50 L ed 581, 26' S Ct 301,
4 Ann Cas 1174; Otis Go. v. Ludlow 
Mfg. CO. 201 US 140, 50 L ed 696, 26 S 
Ct 353; Oifield v. New York, N. H. & H. 
R. Co. 203 US 372, 51 L ed 231. 27 S Ct 
72: Noble State Bank v. Haskell, 219 US 
104, 55 L ed 112, 31 S Ct 186, 32 LRA 
NS 1062, Ann Cas 1912A 487; Mt. 
Vernon-Woodberry Cotton Duck Co. v. 
Alabama In te rs ta te  Power Co. 240 US 
SO 60 L ed 507, 36 S Ct 234; Block v 
Hirsh, 256 US 135, 65 L ed 865, 41
5 Ct 458, 16 ALE 165.

Mr. Justice Frankfurter delivered 
the opinion of the Court.

This is an appeal from a decision 
of the Supreme Court of Oklahoma, 
arising from an order of the State 

*[631
‘Corporation Commission which con­
cerned the correlative rights of own­
ers of natural gas drawn from, a com­

. mon source.

Since 1913, Oklahoma has regu­
lated the extraction of natural gas> 
partly to prevent waste and partly 
to avoid excessive drainage as be­
tween producers sharing the same 
pool. The legislation provided that 
owners might take from a common 
source amounts of gas proportion­
ate to the natural flow of their re­
spective wells, but not more than 
25% of that natural flow without 
the consent of the Corporation Com­
mission ; that any person taking gas 
away from a gas field, except for 
certain specified purposes, “shall 
take ratably from each owner of the 
gas in proportion to his interest in 
said gas” ; and that such ratable 
taking was to be upon terms agreed 
upon by the various well owners, or, 
in the event of failure to agree, upon 
terms fixed by the Corporation Com­
mission.1

1 Laws 1913, c 198, §§ 1-3 (Okla Stat 
(1941) title 52, §§ 231-233): ■

‘‘Section 1. AH natural gas under the 
surface of any land in this state is here­
by declared to be and is the property of 
the owners, or gas lessees, of the surface 
under which gas is located in its original 
state.

“Section 1  Any owner, or oil and gas 
lessee, of the surface, having the right to 
drill for gas shall have the right to sink 
a well to the natural gas underneath the 
same and to take gas therefrom until the 
gas under such surface is exhausted. In 
case other parties, having the right to 
drill into the common reservoir of gas, 
drill a well or wells into the same, then 
the amount of gas each ownei’ may take 
therefrom shall be proportionate to the 
natural flow of his well or wells to the 
natural flow of the well or wells of such 
other owners of the same common source 
of supply of gas, such natural flow to be 
determined by any standard measurement 
at the beginning of each calendar month; 
provided, that not more than twenty-five 
percent of the natural flow of any well 
shall be taken, unless for good cause 
shown, and upon notice and hearing the 
Corporation Commission m&y, by proper 
order, permit the taking of n greater 
amount. The drilling of a gas well or wells 
by any owner or lessee of the surface 
shall be regarded as reducing to posses­
sion his share of such gas as is shown 
by his well.

“Section 3. Any person, firm or cor- 
77

poration, taking gas from a gas field, ex­
cept for purposes of developing a gas 
or oil field, and operating oil wells, and 
for the purpose of his own domestic use, 
shall take ratably from each owner of the 
gas in proportion to his interest in said 
gas, upon such terms as may be agreed 
upon between said owners and the party 
taking such, or in case they cannot agree 
at such a price and upon such terms as 
may be fixed by the Corporation Commis­
sion after notice and hearing; provided^ 
that each owner shall be required to de­
liver his gas to a common point of deliv­
ery on or adjacent to the surface overly­
ing such gas. . . .”

See also Laws 1915, c 197, §§ 4, 5 (Okla 
Stat (1941) title 52, §§ 239, 240) :

“Section 4. Whenever the full produc­
tion from any common source of supply 
of natural gas in this state is in excess of 
the market demands, then any person, firm 
or corporation, having the right to drill 
into and produce gas from any such com­
mon source of supply, may take theiefrom 
onlv such proportion of the natural gas 
that may be marketed without waste, as 
the natural flow of the well or wells owned 
of controlled by any such person, firm or 
corporation bears to the total natural flow 
of such common source of supply having 
due regard to the acreage drained by 
each well, so as to prevent any such per­
son, firm or corporation securing any vm- 
fair proportion of the gas therefrom; 
provided, that the C o r p o r a t io n  C o m m is ­
s io n  m a y  b y  p r o p e r  o r d e r ,  p e r m i t  the t a k -

92 L ed 1217

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334 US
63-03 SUPREME COURT OF THE UNITED STATES O c t . T e r m ,

The Hug'oton Gas Field is one of 
the largest m the United States
£ ! £ ”* ? , Vast area ia sev e S  States, including Oklahoma. It was

discovered in 1924 or 1925, *but the
untfl l ^ y  P°rtl0,nr was not developed 
a” t’ Kcpublic, a Delaware cor- 
rJ«r^0ra-tl0n’ ?btained permission to 
do business in Oklahoma in 1938
d rn w ffedi P S lease? in this field and drilled wells, removing the gas in its
own p.peKnes I„ 1944, t h /g e r l e S  
Oil and Gas Company completed a 
well m a portion of the gas field
Dhfri1'7186 ta]?pecl  onJy by Republic.
fron /hi,marSet f°r the gas obtained Irom this well, nor means of trans-

f uch as to any market. It 
offered to sell the gas to Republic 
which refused it. Peerless/then ap­

, . ,  , * 1 6 5 ]

2nndf t0 the *CorP°ration/Commis­sion for an order requiring Republic 
to take such gas from it “ratably”— 
that is, to take the same proportion 
of the natural flow of Peerless’ well 
as Republic took of the natural flow 
of its own wells. After a hearing, 
the Commission found that the pro-
+rUrffi°m0t na.tural gas in the Hugo- ton field was in excess of the market 

S demand; t hat Republic had qualified
ing of a greater amount whenever it shall 
deem such taking reasonable or equitable 
J e c l / t  COmmis.!ion is authorized and di-
for the defreSCr 7- rUl6S and "filiations
S  anv t  i  lru tl0U °f the natura> of any such well or wells, and to regu-
al^such eak,ns 0f naturai Sas from any or
the sta e ”lm°n/ 0UrCeS °f SUPpIy withine state, so as to prevent waste, protect
the interests of the public, and of all those
having a right to produce therefrom and
favor6of”! Unreasonable discrimination in
sunnlv f y °ne SUch common source of supply as against another.
r ‘‘S„ect;on 5‘ That evory person, firm or 
corporation, now or hereafter engaged in 
t .e  business or purcnasmg and selling 
natural gas in this state, shall be a com> 
mon purchaser thereof, and shall purchase
for na ?ra ,?\ s whlch may be offeredfor Sole, and which may reasonably be 
reached by its trunk lines, or gathering 
lines ■without discrimination in favor of one 
producer as against another, or in favor of 
any one source of supply as against an- 
oJier save as authorized by the Corpora- 
92 L ed 1213

to do business m Oklahoma with full 
knowledge of the existing legisla­
tion requiring the ratable taking of 
natural gas; and that Republic was 
taking more than its ratable share 
* „ . *166] 
of gas from that portion of the field 

tapped both by its wells and that be­
longing to Peerless, thereby, drain­
e d  Stn 7frVa7 i'rc?ni Peerless’ tract and,_ m effect taking property be­
longing to Peerless. The Com 
mission ordered Republic •

i t  -I

• • • to take gas ratablv
from applicant’s [Peerless’] well 
• • • > and to make necessary 
connection as soon as applicant lays 
a line connecting said well with re­
spondent’s [Republic’s] line, and to 
continue to do so until the further 
order of this Commission; provided 
that, applicant shall lay its line from 
its well to the lines of respondent at 
some point designated by the re- * 
spondent but in said Section 14 in 
which said well of Peerless Oil and 
Gas Company has been drilled; and 
said respondent is required to make 
said designation immediately and 
without unreasonable delay and in 
event of failure of respondent so to 
do, respondent shall no longer be 
permitted to produce any of its wells

Cb°u?7fissi0n aftr dueng but if any such person, firm or cor- 
poratmn, shall be unable to purchase 1
natural °7ered’ thea >- shall purchase 
It shah £  ,r°mf ?ach Pr°ducer ratably.
purchaser l  n -f°r any such com™on purchaser to discnmmate between like
giades and pressures of natural gas or in 
favor of its own production, or of produc 
dirprtP ^  U may be directly „ ? r .  
va n  ??ed’ 6ither in wh0'e °r Tn
natural f0V hf PurP°se of Prorating the natural gas to be marketed, such produc­
tion shall be treated in like manner as 
-haH°hea7 y other, Producer or person, and 
b “ * L ,. t““cn on]y m the ratable pronor 
tion that such production bears to the total
C S r ? *  f°r - « ■ “corporation Commission shall have au- 

ority to make regulations for the de-
a n d T a k i S T ?i,and acluitab!e Purchasing 
author,raf r  SUCh gaS and sha11 have 
chorar tyrtt0 r ,elieve anV su<id common pur­chaser after due notice and hearing, from 
the duty of purchasing gas 0f a„ il fe^ r 
quality or grade.” . 1Iueaor

. .. • -

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1947. REPUBLIC NATURAL
334 t rSC'ti—

located in the Hugoton Oklahoma
Gas Field. nf

“2. The terms and conditions ox 
such'taking of natural gas by Repub­
lic Natural Gas Company from said 
Peerless Oil and Gas Company s well 
shall be determined and agreed upon 
by and between applicant and re­
spondent; and in the event said par­
ties are unable to agree, applicant 
and respondent are hereby granted 
the fight to make further applica­
tion to the Commission for an order 
fixing such terms and conditions, 
and the Commission retains juris­
diction hereof for said purpose.

On appeal, the Oklahoma Supreme 
Court affirmed, holding that Repu 
lie, having been given leave to enter 
the State on the basis of the legis­
lation governing natural gas produc­
tion, might not challenge its validity, 
and that neither the order nor the 

* *[67]
legislation on which it is based runs 
counter to asserted constitutional 
rights. 198 Okla 350, 180 P2d 1009. 
The court interpreted the Commis­
sion’s order as giving Republic a 
choice between taking the gas fiorn 
Peerless and paying therefor direct, 
or marketing the gas and accounting 
to Peerless therefor, or to shut in 
its own production from the same 
common source of supply. 198 
O k l a  at 356, ISO P2d 1009. Invok­
ing both the Due Process and the 
Equal Protection clauses of the 
Fourteenth Amendment, Republic 
appealed to this Couit.

This case raises thorny questions 
concerning the regulation of fuga­
cious minerals, of moment both to 
States whose economy is especially 
involved and to the private enter­
prises which develop these natural 
resources. Cf. Thompson v. Consoli­
dated Gas Utilities Corp. 300 Ub 
55, 81 L ed 510, 57 S Ct 364; Rai -
road Commission v f  *  NfiO S
Co. 310 US 573, 84 L ed 1368 60 b 
Ct 1021, 311 US 570, 85 L ed 358, 
fi1 S Ct 343- Before reaching tnese 
constitutional issues, we must deter­
mine whether or not we have juns-

dlEver tCsinceh°1789, Congress has

. 4 v . f \ t r T

granted this Court the power oi ie- 
view in State litigation only after 
“the highest court of a state  in 
which a decision in a suit could oe 
had” has rendered a “final judgment 
nr decree ” § 237 of the Judicial
Code 28 USCA § 344, 8 FCA title 28 
§ 344, rephrasing § 25 of the Act 
of Sept. 24, 1789, 1 Stat 73, 8b, c 20. 
Designed to avoid the evils of piece­
meal review, this reflects a marke 
characteristic of the federal Judicial 
system, unlike that of. some of the 
States. This prerequisite for the 
exercise of the appellate powers of 
this Court is especially pertinent 
when a constitutional barrier is as­
serted against a State court s deci­
sion on matters peculiarly of.local 
concern. Close observance ot this 
limitation upon the Court is not re­
gard for a strangling technicality. 
History bears ample testimony that 
it is an important factor m securing 
harmonious State-federal relations.

No self-enforcing formula defining 
when a judgment is “final can be 

devised. Tests have been 
*168] , . ,

Headnotc l indicated *which are 
helpful in giving direc­

tion and emphasis to decision from 
case to case. Thus, the regiUieF1 en“ 

of Tlffal ^  ^ ^

major issues in

a d j u S e d T f ’the dam-

Headnote 3

295
ao.

. . if
nothing more than a 
ministerial act remains 

to be done, such as the entry of a 
judgment upon a mandate, the de- 
See is regarded as concluding the 
case and is immediately reviewable 
Tippecanoe County v. Lucas 23 Lb 
108 23 L ed 822; Mower v Fletcher, 
114 US 127, 29 L ed 117, 5 S Ct -,99..

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C O U R T  OF THE UNITED STATES Oct. Term,

unavailing. Cf. Clark v. Williard. 
2M uS 2T i; 79 L ed 865, 55 S Ct 365, 
98 ALR 347; Gumbel v. Pitkin, 113 
US 545, 28 L ed 1128, 5 S Ct 616; and 
con ^ a r ^ I \ ) r p ^  v. ̂ Cojirad, 6 How

Barnard v. Gibson, 7 How ’(US) 650, 
657, 12 L ed 857, 860. For related 
reasons, an order decreeing immedi­
ate transfer of possession of physical 
property is iinal for purposes of re­
view even though an accounting for 
profits is to follow. In such cases 
the accounting is deemed a severed 
controversy and not part of the main 
case. Forgay v. Conrad, 6 How 
(US) 201,12 Led 404, supra; Carbn- 
delet Canal & Nav. Co. v. Louis­
iana, 233 US 362, 58 L ed 1001, 34 
S Ct 627; Radio Station WOW v. 
Johnson, 326 US 120, 89 L ed 2092, 
65 S Ct 1475. But a decision that 
a taking by eminent domain is for 
a public use, where the amount of 
compensation has not been deter­
mined, is not deemed final, certainly 
where the property will not change 
hands until after the award of com­
pensation. Grays Harbor Logging 
Co. v. Coats-Fordney Logging Co. 
(Washington ex rel. Grays Harbor 
Logging Co. v. Superior Ct.) 243 US 

*[69]
251, 61 L ed 702, 37 S Ct 295; *cf. 
Luxton v. North River Bridge Co. 
147 US 337, 37 L ed 194, 13 S Ct 
356; Gatlin v. United States, 324 US 

229, 89 L ed 911, 65 S Ct 
H e a d n o te  5 631.8 One thing, is elf

8 In the Catlin Case our decision was 
based on the general rule that condemna­
tion orders prior to determination of just 
compensation are not appealable. The 
wartime statutes there involved were 
urged by the claimants as a reason for 
not applying the general rule. We re­

jected this contention.
92 L ed 1220

------------- ide of the line, however
faint and faltering at times, dividing 
judgments that were deemed “final” 
from those found not to be so, does 
the judgment before us fall? The 
order of the Oklahoma Corporation 
Commission, as affirmed below, ter­
minates some but not all issues in 
this proceeding. Republic is re­
quired to take ratably from Peerless, 
but it may do so in any one of three 
ways. If, as is most probable, Re­
public would choose not to close 
down its own wells, under the Com­
mission’s order it must allow Peer­
less to connect its well to Republic’s 
pipeline. But there has been left 
open for later determination, in 
event of failure to reach agreement, 
the terms upon which Republic must 
take the gas, the rates which it must 
pay on purchase, or may charge if 
it sells as agent of Peerless. Does 
either its alternative character, or 
the fact that it leaves matters still 
open for determination, so qualify 
the order as to make it short of 
“final” for present review?

We turn first to the latter point. 
Certainly what remains to be done 

cannot be characterized 
H e a d n o te  6 as merely “ministerial,” 

Whether or not the
amount of
public from Peerless can be ascer­
tained through application of a for-

*[70]
mula, the determination of the *price 
to be paid for the gas if purchased, 
or the fees to be paid to Republic 
for marketing it if sold on behalf of

3 This case is unlike those in which a 
rate had been fixed, subject to a con­
tinuing jurisdiction to modify it later. Cf. 
Market Street R. Co. v. Railroad Com­
mission, 324 US 548, 89 L ed 1171, 
65 S Ct 770; St. Louis, I. M. & S. R. Co. 
v. Southern Exp. Co. 108 US 24, 27 L ed 
638, 2 S Ct 6. Here, no rates have been



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'ffl'T! _ . _

^ Sned review so Illusory jfsrlu make
chê—■‘i1fteT o m m i s s i o n a oraer reqm reore- 
public to designate a point on its 
pipeline at which Peerless might at­
tach a line, and after Peerless had 
done so to connect it immediately. 
But it does not appear that the order 
requires Republic to commence tak­
ing Peerless’ gas before the terms 
of taking have either been agreed 
upon or ordered by the Commission. 
Nor does it appear that Republic 
would have to bear the expense of 
connecting the pipeline, nor that 
such expense would be substantial. 
Indeed, the incurring of some loss, 
before a process preliminary to re­
view here is exhausted, is not in it­
self sufficient to authorize our inter­
vention. Cf. Myers v. Bethlehem 
Shipbuilding Corp. 303 US 41, 50­
52, 82 L ed 638, 643-645, 58 S Ct 
451. But even if the Commission’s 
order were construed to require Re­
public to take and dispose of Peer­
less’ gas immediately—and we are 
not so advised by the State court— 
there is no ground for assuming that 
any loss that Republic might incur 
could not be recovered should the 
completed direction of the Oklahoma 
Commission, on affirmance by that 
State’s Supreme Court, ultimately 
be’ found to be unconstitutional.

~~ rffiv-fficcauaa^m riy
H e a d n o te  7 5

H e a d n o te  8 Iff
M 7 1 ]  • ,

burden of * affirmatively 
establishing this Court’s jurisdic­
tion. Memphis Natural Gas Co. v. 
Beeler, 315 US 649, 651, 86 L ed 
1090, 62 S Ct 857. The policy 

_ against premature con- 
H e a d n o te  9 stitutional adjudications 

demands that any doubts 
in maintaining this burden be re­
solved against jurisdiction. See
set, and their future establishment has 
been left open.

citation or cases m tne .concurring 
opinion of Mr. Justice Brandeis in 
Ash wander v. Tennessee Valley Au­
thority, 297 US 288, 341, 345, 348, 
80 L ed 688, 707, 709, 56 S Ct 466.

The condemnation precedents at­
tract this case more persuasively 
than do the accounting cases. 
Where it is claimed that a decree 
transferring property overrides an 
asserted federal right, as in Forgay 
v. Conrad, 6 How (US) 201, 12 L ed 
404, and Radio Station WOW v. 
Johnson, 326 US 120, 89 L ed 2092, 
65 S Ct 1475, both supra, no disposi­
tion of the subsequent accounting 
proceeding can possibly make up for 
the defeated party’s loss, since the 
party wffio has lost the property must 
also pay to his opponent what the 
accounting decrees. Hence his_ de­
sire to appeal the issue of the right 
to the property will almost certainly 
persist. On the other hand, in an 
eminent domain case, as in a case 
like this, the fate of the whole litiga­
tion may well be affected by the fate 
of the unresolved contingencies of 
the litigation. An adequate award 
in an eminent domain case or a 
profitable rate in the case before us 
might well satisfy the losing party 
to acauiesce in the disposition of the 
earlier issue. It is of course not our 
province to discourage appeals. But 
for the soundest of reasons we ought 
not to pass on constitutional issues 
before they have reached a definitive 

stop. Another similarity 
H e a d n o te  io between this case and 

the condemnation cases 
calls for abstention until what is 
organically one litigation has been 
concluded in the State. It is that 
the matters left open may generate 
additional federal questions. This 
brings into vivid relevance the policy 
against fragmentary review. In ac­
counting cases, that which still re­
mains to be litigated can scarcely 
give rise to new federal questions.

* [7 2 ]
♦The policy against fragmentary re­
view has therefore little bearing. 
But contests over valuation in emi­
nent domain cases, as price-fixing in 
this type of case, are inherently

92  L  ed  1221

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334 us
72-74 SUPREME COURT OF THE UNITED STATES Oct. Term ,

provocative of constitutional claims. 
This -potentiality of additional fed­
eral questions arising out of the 
same controversy has led this Court 
to find want of the necessary finality 
of adjudicated constitutional issues 
in condemnation decrees before 
valuation has been made. Like con­
siderations are relevant here.

In short, the guiding considera­
tions for determining whether the 
decree of the court below possesses 
requisite finality lead to the conclu­
sion that this case must await its 
culmination in the judicial process 
of the State before we can assume 
jurisdiction, 
the case has 
belosCSPwn®

s

us makes it 
lary to consider 

Headnote u  whether the merd fact 
tha t the decree gave al­

ternative commands precluded it 
from being final. Cf. Paducah v. 
East Tennessee Teleph. Co. 229 US 
476, 57 L ed 1286, 33 S Ct 816; Jones 
v. Craig (Barker v. Craig) 127 US 
213, 32 L ed 147, 8 S Ct 1175; Note, 
48 Harv L Rev 302, 305, 306. Since 
the judgment now appealed from 
lacks the necessary finality, we can­
not consider the merits. All of Re­
public’s constitutional objections are 
of course saved.

AppeEil dismissed.
Mr. Justice Douglas, concurring.
The judgment of the Oklahoma 

court is not “final” merely because 
it establishes that Republic has no 
right to drain away the Peerless gas 
without paying for it. I think it 
would be conceded that, even so, the 
judgment would not be “final” if it 
offered appellant three alternative 
ways to comply and there were 
doubts as to the constitutionality of 
any one of them. Then we would 

*[73]
wait *to see which of the alterna­
tives was ultimately selected or im­
posed before reviewing the constitu­
tionality of any of them. But there 
would be no more reason to defer de- 
92 L ed L222

cision on the merits in that case than 
in this. For the constitutional ques­
tions would be isolated in each and 
we would be as uncertain in one as 
in the other which of the alterna­
tives would actually apply to appel­
lant. And the principle seems to me 
to be the same even when a majority 
of us would sustain the order what­
ever alternative was chosen as its 
sanction.

There is, of course, in the one case 
the chance of saving the order only 
if one remedy rather than another 
is chosen, while in the other the 
order would survive whichever was 
chosen. But in each we would be 
giving needless constitutional dis­
sertations on some points. That is 
nonetheless true in a case where the 
constitutional questions seem to a 
majority of us simple, uncomplicated 
and of no great dignity. For the 
single constitutional question neces-« 
sary for decision will not be isolated 
until the precise pinch of the order 
on the appellant is known. It will 
not be known in the present case at 
least until appellant elects or is re­
quired (1) to shut down, (2) to be­
come a carrier of the Peerless gas, 
or (3) to purchase it.

The legal, as well as the economic, 
relationship which Republic will 
bear to Peerless will vary as one or 
another choice is made. To make 
Republic a “carrier” is to submit it 
to different business risks than to 
make it a “purchaser.” The fact 
that each would raise only ques­
tions of “due process” under the 
Fourteenth Amendment does not 
mean that the questions are iden­
tical. Even when reasonableness is 
the test, judges have developed great 
contrariety of opinions. The point 
is that today the variables are pre­
sented only in the abstract. To­
morrow the facts will be known, 
when the precise impact of the order 
on appellant will be determined.

* f 74]
Thus to me the ^policy against pre­
mature constitutional adjudication 
precludes us from saying the judg­
ment in the present case is “final.”

Mr. Justice Rutledge, with whom

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REPUBLIC NATURAL GAS CO. v. OKLAHOMA1947.

Mr. Justice Black, Mr. Justice Mur­
phy, and Mr. Justice Burton join, 
dissenting.

I think the Oklahoma Supreme 
Court’s judgment is final for the 
purposes of § 237 of the Judicial 
Code, 28 USCA § 344, 8 FCA title 28,
§ 344, that the state commission’s 
order is valid, and that deferring 
decision on the merits to some in­
definite future time will only pro­
long an already lengthy litigation 
unnecessarily and with possible ir­
reparable harm to one party or the 
other.

Appellant, Republic Natural Gas 
Company, has operated gas wells m 
the Hugoton Gas Field for many 
years. It was the first major pro­
ducer to exploit the Oklahoma por­
tion of the field,1 having constructed 
its own gathering system and pipe 
lines extending from Oklahoma into 

'Kansas. With only minor exceptions 
Republic has never carried any but 
its own gas in its pipe lines.2 198 
Okla at 352, 180 P2d 1009.

In 1944 appellee, Peerless Com­
pany, completed its only well in 
Oklahoma, in the Hugoton field. 
This well is not connected to any 
pipe line. It therefore presently lies 
dormant. Surrounding Republic 
wells drilled into the same reservoir 
concededly are draining gas con-

334 U S 
7 4 -76

1 Republic has 92 wells in Kansas and 38
in Oklahoma. .

2 The Oklahoma Supreme Court found it 
unnecessary to consider whether Republic 
was either a common carrier or a common 
purchaser of gas. 198 Okla at 353, 180 
P2d 1009. The term “common purchaser” 
is explained in Okla Stat title 52, § 240. _

3 Appellant concedes that the “operation
of the Republic wells is draining gas from 
under the dormant Peerless well. The 
findings of the commission state: “ (d)
Republic . . .  is taking and will con­
tinue to take more than its proportionate 
part of the natural gas in said field unless 
required to take ratably from said well of 
Peerless . . . .

“ (e) Republic . . .  is draining gas 
from underneath said Section 14 into 
which said Peerless Oil and Gas Company’s 
well has been drilled, and will continue to 
drain gas from underneath said Section 14 
until all the gas thereunder has been 
drained and Peerless . . . will be pre-

stantlv from under the Peerless
*[75]

land.3 Except for the part of *Re- 
public’s gathering system which 
runs across the Peerless land, no 
market outlet tha t would take suffi­
cient gas to justify production of 
the Peerless well is close enough to 
make it financially practical for 
Peerless to construct its own pipe 
line. It is undisputed that the only 
feasible method of producing the 
well is to require Republic to take 
Peerless gas into its gathering sys­
tem.4

For this reason Peerless applied to 
the Oklahoma Corporate Commis­
sion for an order compelling Repub­
lic to connect its pipe line to the 
Peerless well and to purchase gas 
from Peerless at a price to be fixed 
by the commission. After hearing, 
the commission concluded that the 
applicable Oklahoma sta tu tes5 re­
quired it to enforce ratable taking 
and ratable production of gas as be­
tween Republic and Peerless.

The commission recognized alter­
native methods of protecting Peer­
less from loss due to drainage, first 

*[76]
by ordering *all wells in the area to 
shut down completely, and second 
by ordering Republic to purchase 
from Peerless. Since the first meth-
vented from taking its proportionate share 
of the natural gas in the field unless 
Republic . . .  is required to take gas 
ratably from [Peerless].”

4The Report of the commission states: 
“It is evident from all the facts and cir­
cumstances in this case that if the Peerless 
Company is to be allowed to produce gas 
from its well, this gas must be by it 
transported fifteen to thirty miles, unless 
said gas is transported or disposed of by 
the Republic Natural Gas Company.

“It would be impractical from a finan­
cial standpoint to construct a pipeline to 
any city or other market outlet that would 
take sufficient gas to justify the produc­
tion of this well; and it would be impos­
sible to economically operate the well 
under present conditions existing in that 
field unless the gas is taken into the pipe­
line of the Republic Natural Ga3 Com­
pany.”

» Okla Stat title 52, §§ 232, 233, 239, 240,
243.

92 L ed 1223

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*S3 4 tXS 
76-78 SUTREME COURT OF THE UNITED STATES
od was considered harsh, the second 
was preferred. Accordingly the 
commission issued an order requir­
ing Republic to take gas ratably 
from the Peerless well as soon as 
the necessary connection could be 
made, allowing it, however, the al­
ternative of closing down all of its 
wells in the Oklahoma portion of the 
field if it preferred this to taking 
the Peerless gas. The terms and 
conditions of the taking were to be 
determined by the parties; but, in 
the event of failure to agree, they 
were “granted the right to make fur­
ther application to the Commission 
for an order fixing such terms and 
conditions . . . ” 6 The taking,
however, was not to await this 
agreement or further order; it was 
to begin at once.7

*[773
♦Affirming the order, the Supreme 

Court of Oklahoma construed the 
state statutes to authorize the ad­
ministrative action. 198 Okla 350, 
180 P2d 1009. The case thus pre­
sents on the merits the question 
whether a state, as a means of ad­
justing private correlative rights in 
a common reservoir, has the power 
in such circumstances as these to 
compel one private producer to share 
his market with another, when oth­
erwise his production would drain 
off that other’s ratable share of the 
gas in place and thus appropriate 
it to himself.

O c t . T e i .m ,

I.
The majority consider that the

* The order required Republic “1. . . . 
to take gas ratably from [Peerless] and 
to make necessary connection as soon as 
applicant lays a line connecting said well 
with respondent’s line, and to continue to 
do so until the further order of this Com­
mission; provided that, applicant shall lay 
its line from its well to the lines of re­
spondent at some point designated by the 
respondent, but in said Section 14 in which 
said well of Peerless . . .  has been 
drilled; and said respondent is required 
to make said designation immediately and 
without unreasonable delayr and in event 
of failure of respondent so to do, respond­
ent shall no longer be permitted to pro- 
duoe any of its wells located in the Hugo- 
ton Gas Field. (Emphasis added.)
92 L ed 1224

proceedings in the state tribunals 
have not terminated in a final judg­
ment from which appeal to this 
Court lies, and therefore refuse to 
adjudicate this question.

In the strictest sense the state 
proceedings will not be completed 
until the parties have agreed upon 
the terms and conditions of Repub­
lic’s taking of gas from Peerless or, 
if they do not agree, until the com­
mission has issued an additional 
order fixing those terms. Since it 
is not certain that the parties will 
agree, the possibility remains that 
a further order may be required be­
fore all phases of the controversy 
are disposed of. It is this possibil­
ity, as I think a remote one, which 
furnishes one of the grounds for con­
cluding that the Oklahoma court’s 
judgment is not final within the 
meaning and policy of § 237.

The fact that all phases of the* 
litigation are not concluded does not 
necessarily defeat our jurisdiction. 
This is true, although as recently 
as Gospel Army v. Los Angeles, 331 
US 543, 91 L ed 1662, 67 S Ct 1428, 
we reiterated that, for a judgment 
to be final and reviewable under 
§ 237, “it must end the litigation 
by fully_ determining the rights of 
the parties, so that nothing remains 
to be done by the trial court ‘except 
the ministerial act of entering the

* [78]
judgment which the ^appellate court 
. . . directed.’ ” 331 US at 546. 
This is the general'rule, grounded

“2. The terms and conditions of such 
taking of natural gas by [Republic] from 
[Peerless] shall be determined and agreed 
upon by and between applicant and 
respondent; and in the event said parties 
are unable to agree, applicant and re­
spondent are hereby granted the right to 
make further application to the Commis­
sion for an order fixing such terms and 
conditions; and the Commission retains 
jurisdiction hereof for said purpose."

7 See note 6. The order’s language 
leaves no room for the inference, which 
appears to be injected here, that the taking 
was not required to begin until the terms 
had been agreed upon or determined by 
further order.

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1947.

in a variety of considerations re­
fleeted in the statutory command 8 
and coming' down to the sum that, 
in exercising the jurisdiction con­
ferred by § 237, this Court is not 
to be concerned with reviewing in­
conclusive, piecemeal, or repetitious 
determinations. The Gospel Army 
Case represents a typical instance 
for applying the terms and the poli­
cy of § 237.9 But not every decision 

by a state court of last 
H e a d n o te  12 resort leaving the con­

troversy open to further 
proceedings and orders is either in­
conclusive of the issues or premature 
for purposes of review under § 237. 
This appears most recently from the 
decision in Radio Station WOW v. 
Johnson, 326 US 120, 89 L ed 2092, 
65 S Ct 1475, which applied a settled 
line of authorities to that effect. 
Cf. Richfield Oil Corp. v. State Bd.

’ of Equalization, 329 US 69, 91 L ed 
80, 67 S Ct 156.

In such cases the formulation of 
the test of finality made in the Gos­
pel Army and like decisions has not 
been followed. Instead that ques­
tion, in the special circumstances, 
has been treated as posing essen­
tially a practical problem, not one 
to be determined either by the label 
attached to the state court judg­
ment by local law, Richfield Oil 
Corp. v. State Bd. of Equalization 
(US) supra, or by the merely me­
chanical inquiry whether some fur­
ther order or proceeding beyond 
“the ministerial act of entering the 
judgment” may be had or necessary 
after our decision is rendered. 
Radio Station WOW v. Johnson, su-

S34TTS 
78, 79

pra (326 US at 125, 89 L ed 2097, 65 
S Ct 1475).

The WOW opinion noted that the 
typical case for applying the broad­
er, less mechanical approach to the 

. *[79] _
‘ question of finality had involved 
judgments directing the immediate 
delivery of property, to be followed 
by an accounting decreed in the 
same order. It stated, with refer­
ence to these and like situations: 
“In effect, such a controversy is a 
multiple litigation allowing review 
of the adjudication which is con­
cluded because it is independent of, 
and unaffected by, another litigation 
with which it happens to be en­
tangled.” 326 US at 126. Accord­
ingly, since the two phases of the 
controversy were separate and dis­
tinct, we exercised our jurisdiction 
to determine the federal questions 
involved in the phase concluded by 
the state court’s decision. This was 
done, although the judgment re­
quired further and possibly exten­
sive judicial proceedings before the 
other and separable phase of the ac­
counting could reach a final deter­
mination.10 Those further proceed­
ings involved very much more than 
“ministerial acts” ; indeed the deter­
mination of a complicated account­
ing requires the highest order of 
judicial discretion.

Notwithstanding this and despite 
the want of strict finality, jurisdic­
tion was sustained because a number 
of factors were felt to require that 
action in order to give effect to the 
policy of § 237 providing for review, 
rather than to a merely mechanical

10 The two prior decisions deemed de­
cisive against mechanical determination of 
finality in such situations were Forgay v. 
Conrad, 6 How (US) 201, 12 L ed 404, and 
Carondelet Canal & Nav. Co. v. Louisiana, 
233 US 362, 58 L ed 1001, 34 S Ct 627, 
the former cf which W3 noted had “stood • 
on our books for nearly a hundred years 
in an opinion carrying the authority, es­
pecially weighty in such matters, of Chief 
Justice Taney.” 326 US 120, 125, 89 
L ed 2092, 2097, 65 S Ct 1475.

92 L ed 1223

8 Some of the considerations are enu­
merated in Radio Station WOW v. John­
son, 326 US 120, 123, 124, 89 L ed 2092, 
2096, 2097, 65 S Ct 1475.

9 Under California procedure the state 
supreme court’s unqualified order for re­
versal was “effective to remand the case 
‘for a new trial and [place] the parties 
in the same position as if the case had nev­
er been tried.’ ” 331 US at 546, 91 L ed
1665, 67 S Ct 1428, and authorities cited. 
The effect was thus to leave all issues in­
conclusively determined pending further 
proceedings in the trial court.

REPUBLIC NATURAL GAS CO. v. OKLAHOMA

. . . .  .

' . . . . . . .  . '  ' - . ■ . ■ . . .  . - - ■■■ ■ f  ■



5 1
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79-sY3 s u p r e m e  c o u r t  o f

application of its terms for denying 
review.

There was nothing tentative or 
inconclusive about the Nebraska 
court’s judgment for immediate de- 
livery^of the property. Nor was it 
necessary to execution of that phase 
of the judgment to have contempo- 

*[80]
raneous conclusion *of the account­
ing phase. Except for the latter, the 
judgment was ripe for review. In­
deed immediate execution without 
review of the federal questions af­
fecting the delivery phase until after 
the accounting had been completed, 
offered the possibility of irreparable 
harm to one or possibly both of the 
parties. This factor obviously tend­
ed to make later full review partly 
or wholly futile. Moreover, until 
the delivery phase had been settled, 
it could not be known whether the 
accounting would be necessary, for 
that need was consequentially in­
cident to and dependent upon de­
termination of the core of the 
litigation, which was the right to 
delivery.
. In these circumstances it was 

rightly considered more consistent 
with the intent and purpose of § 237 
to allow immediate review, notwith­
standing the possibility of a later 
further review in the accounting 
phase, than to deny review with the 
chance that a later one might not 
fully save the parties’ rights. The 
section’s policy to furnish full, ade­
quate and prompt review out­
weighed any design to secure abso­
lute and literal “finality.”

In all these respects this case pre­
sents a parallel to the WOW Case

11 See notes 6, 7 supra and text.
18 In the remote event that Republic 

should elect to shut down production, 
there would be no need for a further order 
or agreement of the parties, and the 
presently erected obstacle to finality would 
be completely removed.

13 To permit Republic to continue drain­
age from beneath Peerless’ land for the 
indefinite period required for sending the 
case back to the Oklahoma tribunals and 
then bringing it back here a second time 
will be to deprive Peerless of that gas 
unless the state law allows compensation 
22 L ed 1226

THE UNITED STATES Oct. Term,

too close, m my opinion, for distin­
guishing between them. Republic 
is not directed to negotiate terms 
and on completing the negotiation 
to make its facilities available to 
Peerless. It is ordered to make a 
connection with Peerless and to be­
gin carrying gas at once. That 
phase of the order, like the delivery 
phase in_ the accounting cases, does 
not await the fixing of the terms 
whether by agreement or by fur­
ther order.11 It is a present obliga­
tion, effective immediately and with­
out qualification.18 See Knox Nat. 
Farm Loan Asso. v. Phillips, 300 US 
194, 198, 81 L ed 599, 602, 57 S Ct 
418, 108 ALR 738.

*[81]
. Moreover there is nothing tenta­

tive or inconclusive about this phase 
of the order or the state judgment 
sustaining it. That phase not only 
is separable from the matter of fix­
ing the terms; like the order for 
delivery in the WOW Case, it is the 
main core of the controversy to 
which the aspect of fixing terms is 
both consequential and incidental. 
The WOW order required immediate 
delivery of property, with conse­
quent possibility of irreparable 
harm. Here the order required im­
mediate acceptance of delivery, with 
similar possibility of injury for one 
party or the other.13

Neither is there greater likelihood 
of piecemeal consideration of consti­
tutional and other questions than in 
the WOW Case. Cf. 326 US at 127, 
89 L ed 2099, 65 S Ct 1475. The 
matter of fixing terms here hardly 
can be more difficult practically or 
more complex legally ‘than making
for such continued taking from the date of 
the present order. It is at least highly 
doubtful that the state law allows such a 
remedy, even if the order is eventually 
held valid.

On the other hand, if the order should 
be invalidated on the deferred review. 
Republic will have been put to further and 
unnecessary delay, uncertainty and ex­
pense in ascertaining its rights, merely 
to secure a determination Which cannot 
possibly affect them. If this may not be 
irreparable injury, it certainly is not the 
policy of § 237.

(
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1947. REPUBLIC NATURAL GAS CO. v. OKLAHOMA 334 ITS 
B 1 -S 3

the accounting in the WOW Case.14
It is hard also to see how one would 
be either more or less likely to throw 
up new constitutional issues than 

*[82]
*the other. Nor can the WOW Case 
be taken to rule that this Court 
could not or would not consider con­
stitutional issues arising on the ac­
counting phase, unlikely though the 
necessity for its doing so may have 
been. There is thus a substantially 
complete parallel between the sit­
uation now presented and that in the 
WOW line of cases.

In one respect this case is stronger 
for finding appealable finality. For 
here no further order may be neces­
sary or made, since present resolu­
tion of the basic constitutional prob­
lem in all probability will end the 
entire controversy. That certainly 
would be the result if the decision 
should go against Peerless or if Rer 
public should elect to shut down pro*- 
duction. And if the decision should. 
be in Peerless’ favor, it is hardly 
likely that the parties will be unable 
to agree upon terms since, in case of 
failure to agree, the commission 
will prescribe them.15 The case in­
deed is not basically a controversy 
over terms at all. They present only 
a contingent, collateral matter. 
What is fundamentally at stake is 
the right of Republic to take the 
gas from beneath Peerless’ land and 
market it without paying Peerless 
for it. Once that question is finally 
determined, as it can be only by this 
Court’s decision of the constitu­
tional question, the need for a fur- 

• ther order will become highly im­
probable.

This case therefore is one in which 
the need for further proceedings

14 In view of marketing conditions in 
this industry, no such problem of valua­
tion or of reaching agreement upon it 
would be presented as, for instance, in 
the case of seeking to place a value upon 
real estate taken by condemnation for 
public use or valuation of property for 
rate-making purposes. The idea that de­
termining the value of the gas taken here 
would present all the difficulties of valuing 
a railroad for rate-making purposes blows

may never arise and almost certainly 
would not do so if the constitutional 
question were now determined. In­
deed, in a closer factual application 
than the WOW Case, it presents in 
the jurisdictional aspect an almost 
exact parallel to the order reviewed 
in Pierce Oil Corp. v. Phoenix Ref. 
Co 259 US 125, 66 L ed 855, 42 S Ct 
440, where the Oklahoma commis­
sion required the appellant to carry 
oil for the appellee at unspecified 

*[83] ,
rates. Cf. Gulf Ref. *Co. v. United 
States, 269 US 125, 70 L ed 195, 46 
S Ct 52; Clark v. Williard, 292 US 
112, 78 L ed 1160, 54 S Ct 615.

The parallel to the WOW line of 
decisions, however, is put aside and 
this case is decided by analogy to 
condemnation cases, particularly 
Grays Harbor Logging Co. v. Coats- 
Fordney Logging Co. (Washington 
ex rel. Grays Harbor Logging Co. v. 
Superior Ct.) 243 US 251, 61 L ed 
702, 37 S Ct 295. The analogy is 
inapposite. It is true that in such 
cases this Court generally, though 
not uniformly,18 has held that the 
trial court judgment is not final un­
til after the award of compensation 
is made. The decisions were prop­
erly rendered, but for reasons not 
applicable here. In the Grays Har­
bor Case the state constitution and 
controlling legislation prohibited 
the transfer of the condemned prop­
erty until after the compensation 
had been determined and paid. 
Thus the issue of the right to take 
was necessarily dependent for final 
resolution on the determination of 
the amount of compensation.17 The 
controversy "was not separable into 
distinct phases as in the WOW Case 
and here. 243 US at 256.13 Nor had

the matter up beyond all the practicalities 
of the situation.

15 See note 14.
16 Wheeling & B. Bridge Co. v. W heel­

ing Bridge Co. 138 US 287, 34 L ed 967, 
11 S Ct 301.

17 The same was said to be true of 
Luxton v. North River Bridge Co. 147 
US 337, 37 L ed 194, 13 S Ct 356. See 
id. 147 US 341, 37 L ed 195, 13 S Ct 356.

l* Moreover, under state practice review
92 L ed 1227



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£**?» SUPREME COURT OP

the state judgment already affected
the appellant’s property rights,- as 
was true in the WOW Case and is 
true here.

In Catlin v. United States, 324 US 
229, 89 L ed 911, 65 S Ct 631, the 
question of the right to take was 
settled conclusively below before the 
award of damages was fixed. But 
there to have permitted an appeal 
from the order transferring posses­
sion would have produced delays in- 

*[84]
consistent with the overriding fpur- 
pose and policy of the War Purposes 
and Declaration of Taking Acts. 
[Aug. 18, 1890] 26 Stat 315, 316, 
c  797, as amended by 40 Stat 241, 
c 35, [April 11, 1918] 40 Stat 518, 
c 51, 50 USCA § 171, 11 FCA title 
50, § 171; [Feb 26, 1931], 46 Stat 
1421, c 307, 40 USCA § 258a, 9A 
FCA title 40, § 258a, 324 US at 235, 
238, 240, 89 L ed 917-919, 65 S Ct 
631. Here the converse is true, for 
to refuse to pass on the merits can 
serve only to prolong the litigation 
without compensating advantage for 
the policy of § 237 or other enact­
ment. There is no overriding policy 
of independent legislation, compara­
ble to that of the War Purposes and 
Declaration of Taking Acts, dictat­
ing denial or deferring of review.

iThe asserted analogy to the Grays 
Harbor, Catlin and Luxton (see 
supra) Cases therefore does not hold 
for the entirely different situations 
now presented. In them either there 
was no separable phase of the litiga­
tion; or statutory policy independ­
ent of § 237 or other like require­
ment of finality forbade review be­
fore ultimate disposition of every 
phase of the litigation in the state 
or inferior federal courts. The con­
demnation cases therefore, though 
generally uniform in denying review 
of orders for condemnation prior to 
award of damages, are not uniform 
in resting this result wholly on the 
requirement of “finality” made by
of the condemnation order by the state 
supreme court was by certiorari, not by 
appeal which lay only from the order fix­
ing damages. As a matter of state law, 
therefore, the judgment on the condemna- 
92 L ed 122S

THE UNITED STATES Oct. Tekm,

§ 237 and like provisions for review, 
but frequently rest on other and in­
dependent grounds pertinent to the 
application of those provisions.

The “penumbral area” of appeal­
able finality, see 326 US at 124, 89 
L ed 2096, 65 S Ct 1475, may not 
be sweeping in its scope. It is nev­
ertheless one essential to prevent 
the letter of the section from over­
riding its reason. For this purpose 
it would seem to comprehend any 
situation presenting separable 
phases of litigation, one involving 
the core or crux of the controversy 
between the parties, the other col­
lateral matters dependent for the 
necessity of their consideration and 
decision upon final and unqualified 
disposition of the hub of the dispute. 
If a merely mechanical application 
of § 237 is to be avoided, it cannot 
be taken that the practical approach 
of the WOW line of decisions must 

*[85]
. *be limited exclusively to cases 
where an accounting is ordered to 
follow delivery of property decreed 
at the same time. The reason of the 
exception, indeed of § 237 itself, is 
not so limited. Because the delivery 
and accounting cases are not the only 
ones presenting such problems, judg­
ment must be given some play in 
other situations as well to decide 
whether the vices excluded by the 
policies underlying § 237 are pres­
ent, as they may be or not according 
to the character and effects of the 
particular determination sought to 
be reviewed.

Finally, it hardly can be that 
merely the alternative character of 
the order per se deprives it of final­
ity, regardless of whether any of the 
alternatives presents a substantial 
federal question. Because Republic 
is allowed to choose between shut­
ting down its wells and carrying or 
purchasing the Peerless gas, it seems 
to be thought that the order lacks 
finality until that choice is made,
tion order was interlocutory. See, how­
ever, as to this Catlin v. United States, 
324 US 229, 234, 89 L ed 911, 916, 65 
S Ct 631; Luxton v. North River Bridge 
Co. 147 US 337, 37 L ed 194, 13 S Ct 356.

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1847. REPUBLIC NATURAL GAS CO. v. OKLAHOMA 334 'v £> 
85-87

even though when made either 
course would be clearly within the 
state’s power to require.

The argument would have more 
force if the difference between the 
alternatives were great enough to 
make it likely that contrary results 
might be reached on the different 
alternatives. But where as here the 
difference emphasized, e.g., is merely 
between the passage of title before 
and after the carriage, it is hard to 
see how there could be more difficul­
ty with one alternative than with 
the other. See Part I I ; also Part IV. 
So minor a distinction hardly fur­
nishes a substantial basis for contra­
riety of judicial opinion on due proc­
ess questions. Nor is it suggested 
that allowing the choice between 
either of those two courses and shut­
ting down presents greater difficulty. 
Given constitutionality of all alter­
natives, it no more transcends state 
power to permit the party affected 
to select the course least onerous 
than to require him to follow the one 
most burdensome. It is equally hard 
to see how giving the choice destroys 

*[86] .
the order’s *finality, unless again a 
wholly mechanical conception of that 
term as used in § 237 is to control.

The section’s policy is against 
hypothetical, premature and piece­
meal constitutional decision, not 
against a choice of alternatives pre­
senting no such problem. Here the 
question is whether Oklahoma can 
offer Republic the choice of shutting 
down production or taking and pay­
ing for the Peerless gas. Either 
course will protect the latter’s rights 
against drainage by Republic.  ̂Ei­
ther standing alone in the order’s 
terms would not affect finality.

Neither, merely upon the premise 
that alternative character per se 
destroys finality, presents a doubt­
ful question of constitutionality. 
And finally the alternative of shut­
ting down, realistically considered, 
is more nearly sanction than alterna­
tive mode of compliance.19

In such circumstances to say that 
coupling the two courses alterna­
tively deprives the order of finality- 
seems to me to be giving to the 
terms of § 237 a mechanical applica­
tion out of harmony with the sec­
tion’s policy, just as does refusing 
to decide the case before it is known 
whether a further order may be 
necessary for fixing the price of the 
Peerless gas. Sueh a view can only- 
handicap administrative action ei­
ther by forcing orders to specify a 
single course of compliance when 
alternatives may be much more de­
sirable, or by delaying review and 

*[87]
thus ^effective administrative action 
until one or perhaps all of the alter­
natives in turn are tried out first in 
election and then in review. A de­
cision now would settle every sub­
stantial pending phase of the con­
troversy. At the most but a minor 
consequential and separable aspect 
would remain for remotely possible 
further action in the state tribunals. 
It is to the interest of both parties, 
and the state authorities as well, 
that their rights be determined and 
the controversy be ended. And on 
the facts the question of jurisdic­
tion is closely related to the merits.

In view of all these considerations, 
to deny the parties our judgment 
now is to make a fetish of technical 
finality without securing any of the 
substantial advantages for constitu-

18 Cf. Wabash & E. Canal v. Beers, 1 
Black (US) 54, 17 L ed 41; Milwaukee & 
M. R. Co. v. Soutter, 2 Wall (US) 440, 17 
L ed 800.

Control of production, of course, is the 
core of state conservation programs. In 
Champlin Ref. Co. v. Corporation Com­
mission, 286 US 210, 76 L ed 1062, 52 
S Ct 559, 86 ALE 403, proration orders 
limiting production of oil wells to as little 
as six per- cent of capacity were sus­

tained. See p 229. Cf. Walls v. Midland 
Carbon Co. 254 US 300, 65 L ed 276, 41 S 
Ct 118; Lindsiey v. Natural Carbonic Gas 
Co. 220 US 61, 55 L ed 369, 31 S Ct 337, 
Ann Cas 1912C 160. The power of a state 
to protect correlative rights hardly can be 
regarded as furnishing a less solid basis 
for control of production than the power 
to prevent waste. See note 29 and text 
infra.

92 L ed 1229

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87—89

SUPREME COURT OF THE UNITED STATES Oct. Term,

tional adjudication which § 237, in 
the light of its underlying policies, 
was designed to attain. Instead that 
section becomes an instrument of 
sheer delay for the performance of 
our function, for executing those of 
state agencies, and for settling par­
ties’ rights. The section has no such 
office. By declaring now that the 
state may follow either of two clear­
ly permissible courses and allow 
those with whom it deals to choose 
between them, we would not speak 
hypothetically or prematurely or vio­
late any other policy underlying 
§ 237.

II.
Beyond the m atter of jurisdiction, 

there is in this case no such question 
concerning its exercise as arose in 
Rescue Army v. Municipal Ct. 331 
US 549, 91 L ed 1666, 67 S Ct 1409. 
The constitutional issues are not 
speculative, premature or presented 
abstractly en masse. The “alterna­
tive character” of the state judg­
ment does not prevent the federal 
questions from being sufficiently 
precise and concrete for purposes of 
decision here, although various am­
biguities have been suggested.

• *[88]
*Thus it is said that we cannot tell 

Whether the order compels Republic 
to share its market or merely re­
quires it to carry gas to a market 
which Peerless must obtain for it­
self. Cf. Thompson v. Consolidated 
Gas Utilities Corp. 300 US 55, 81 
L ed 510, 57 S Ct 364. The order 
here is not subject to such an am­
biguity. It in terms commands Re­
public to take Peerless gas and to 
pay for it.20

It is also suggested that we can­
not tell whether Republic will have

to purchase gas from Peerless or 
just transport the gas to market 
and account for the profits. But 
whether legal title passes at one end 
of the Republic line or at the other 
is, as we have noted, wholly imma­
terial as a matter of constitutional 
law. Cf. Pipe Line Cases (United 
States v. Ohio Oil Co.) 234 US 548, 
58 Led 1459, 34 S C t956. In either 
event under the order and judgment 
Republic must take Peerless gas into 
its system, must pay for it and, un­
less 'its market should expand sud­
denly far beyond present expecta­
tions, must therefore share its mar­
ket with Peerless.

It is said further that we cannot 
be sure whether the commission in­
tends to make Republic act as a com­
mon carrier. The only basis for this 
doubt is the fact that the commis­
sion’s findings state that Republic is 
a common carrier and common pur­
chaser. But the state supreme court 
upheld the order on the assumption 
that those findings were incorrect.

*[89]
The justification for requiring ♦Re­
public to carry Peerless gas is based 
primarily on the fact of drainage 
caused by Republic’s production.

III.
I t has been noted previously that 

the question on the merits is not 
unrelated to the issue of 

H e a d n o te  13 finality. To it, accord­
ingly, attention is now 

directed. The real fight, as has 
been stated, is over the right of 
Republic to drain away the Peer­
less gas without paying for it. 
The question as cast in legal terms 
is whether the due process and 
equal protection clauses of the Four­
teenth Amendment deny Oklahoma

so In its report the commission con­
cluded that Republic should be required to 
“. . . allow the Peerless gas to enter
the Republic pipeline, and pay the Peer­
less Company for the gas.” The order 
itself in unqualified terms directs Republic 
“to take gas ratably from [Peerless] 
. . .  as soon as applicant lays a line 
connecting said well with respondent’s 
line . . . .” See notes 6, 7.
92 L ed 1230

Since neither the commission’s report 
nor the state supreme court’s opinion sug­
gests that the command was qualified by 
the condition that Peerless obtain its own 
market, we need not read such a condi­
tion into the order. The commission re­
port states that “Republic offers to trans­
port the Peerless gas if (market can be ob­
tained by [Peerless] . . . •”

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1047. REPUBLIC NATURAL G

the power to give one private pro­
ducer from a common pooi the op­
tion to shut down production alto­
gether of to purchase gas from an­
other for the purpose of adjusting 
their correlative rights in the pool, 
when that is the only practical or 
feasible alternative consistent with 
production by both to protect the 
latter from drainage by the former.

Republic denies the state’s power 
to do this. Its basic position is that 
it has a federal constitutional right 
to drain off all the gas in the field, 
unless other owners of producing 
rights can supply their own facili­
ties for marketing their production, 
regardless of varying conditions in 
different competitive situations and 
regardless of all consequent prac­
tical considerations affecting feasi­
bility of furnishing such facilities, f

Republic had no such right. The 
Constitution did not impress upon 
the states in a rigid mold either the 
common law feudal system of land 
tenures or any of the modified hnd 
variant forms of tenure prevailing 
in the states in 1789. Rather it left 
them free to devise and establish 
id eir own systems of property law 
adapted to their varying local con­
ditions and to the peculiar needs and 
desires of their inhabitants. The 
original constitution placed no ex­
plicit limitation upon the powers of 

*• *[90]
the states in *this respect.81 Not 
until the Fourteenth Amendment

21 The nearest approximations perhaps 
were in the prohibitions against state 
legislation impairing the obligation of con­
tracts and against ex post facto legislation 
before the latter was limited to criminal 
and penal consequences. Calder v. Bull, 3 
Dali (US) 386, 1 L ed 643. See Hale, 
The Supreme Court and the Contract 
Clause, 57 Harv L Rev 512, 621, 8o2.

22 See Mr. Justice Black dissenting in 
McCart v. Indianapolis Water Co. 302 
US 419, 423, 82 L ed 336, 340, 58 S Ct 
324; Boudin, Truth and Fiction about the 
Fourteenth Amendment, 16 NYUL Quart 
Rev 19.

23 It is precisely in cases where the 
Amendment has been made thus effective, 
often by giving expansive scope to the 
idea of “property,” that its interpreta-

AS CO. v. OKLAHOMA "is-ai

was ratified, nearly eight decades 
later, was one introduced.

The Fourteenth Amendment was 
not designed to nullify state power 

to create institutions of 
Headnote 14 property in accord with 

local needs and policies. 
Whether or not it was intended to 
secure substantive individual rights 
as well as procedural ones,22 it was 
not a strait jacket immobilizing 
state power to change or alter insti­
tutions of property in the public 
interest.83 Almost innumerable de-' 
cisions have demonstrated this, even 
though the Amendment has been 
effective to create substantial lim­
itations upon the methods by which 
the changes deemed necessary may 
be made.

The basic question here is really 
one of substantive due process. It 
relates primarily to whether Okla­
homa can curtail the unqualified 
right of capture which appellant con­
ceives it acquired by virtue of and 
as an unalterable incident to its ac­
quisition of surface rights including 
the right to drill for gas. For, in 

*[9l]
denying that the state *can enforce 
the only feasible method of limita­
tion consistent with production by 
Peerless, Republic in effect is saying 
that the state cannot restrict its 
right to take all gas in the common 
reservoir, including all that can be 
drained from beneath Peerless’ 
lease and the lands of other owners

tions have failed to withstand the test of 
time. Compare Ribnik v. McBride, 277 US 
US 350, 72 L ed 913, 48 S Ct 545, 56 ALR 
1327, with Olsen v. Nebraska, 313 US 
236, 85 L ed 1305, 61 S Ct 862, 133 
ALR 1500; Adair v. United States, 208 
US 161, 52 L ed 436, 28 S Ct 277, 13 
Ann Cas 764; and Coppage v. Kansas, 
236 US 1, 59 L ed 441, 35 S Ct 240, 
LRA1915C 960, with Phelps Dodge Corp. 
v. Labor Bd. 313 US 177, 187, 85 L ed 
1271, 61 S Ct 845, 133 ALR 1217; Lochner 
v. New York, 198 US 45, 49 L ed 937, 
25 S Ct 539, 3 Ann Cas 1133, and Adkins 
v. Children’s Hospital, 261 US 525, 87 
L ed 785, 43 S Ct 394, 24 ALR 1238, with 
West Coast Hotel Co. v. Parrish, 300 US 
379, 81 L ed 703, 67 S Ct 578, 103 ALR 
1330.

92 L ed 1231

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9 1 - 9 3 SUPREME COURT OF THE UNITED STATES Oct. Term,
similarly situated. This is, for the 
particular circumstances, a denial of 
the state’s power to protect correla­
tive rights in the field or to regulate 
appellant’s taking in the interest of 
others having equal rights propor­
tionate to their surface holdings. 
For, though Republic concedes it is 
bound by Oklahoma's statutory re­
quirement of pro rata production, 
that requirement becomes merely a 
time factor affecting the rate and 
length of the period of Republic’s 
drainage, not the total quantity 
eventually to be taken, if Republic 
can defy the commission’s order and 
thus leave Peerless in its present 
helpless condition.

The contention is bold and faf 
reaching, more especially when ao  
count is taken of the nature of the 
industry. Natural gas in place is 
volatile and fugitive, once a single 
outlet is opened. When extracted/it 
cannot be stored in quantity, but 
must be marketed ultimately /at 
burner tips in the time necessary 
for conveyance to them from the 
well mouth. The competitive strug­
gle for the industry’s rewards is 
particularly intense in the initial 
stage of developing a field. By the 
industry’s very nature large outlays 
of capital are required for success­
ful continuing production and mar­
keting. All those factors however 
tend toward monopoly once success 
has been achieved in a particular 
field.

These peculiar qualities, more­
over, have been reflected in the legal 
rights relating to the ownership of 
gas in place, as well as its extraction. 
They have been adapted to its na­
ture and to that of the competitive 
struggle regarding it. Only a spe­
cialist in this branch of the law, 
which varies from state to state, 

*[92]
can undertake to say ’"with any reli­
able degree of precision what rights 
may be in particular situations. 
These difficulties, intensified by the 
competitive struggle for the product 
and the inadequacy of common-law 
ideas to control it, have forced both 
the states and the federal govern- 
92 L ed 1232

ment to adopt extensive regulatory
measures in recent years. This has 
been necessary both to conserve the 
public interest in this rapidly deplet­
ing natural resource 24 and to secure 
fair adjustment of private rights 
in the industry. Rather than being 
a sacred, untouchable enclave of the 
common law, the field by its very 
nature lends_itself especially to gov­
ernmental intervention for such 
purposes. In this respect it is hard-' 
Iy comparable to situations compre­
hending only conventional manufac­
turers and merchants of consumable 
goods.

In accordance with Oklahoma’s 
law, appellant does not assert title 
to the gas in place. It asserts only 
the right to capture what it can pro­
duce. But that right, unqualified, 
would include the right to take gas 
from beneath others’ lands. So 
taken, it defines their rights to a 
proportionate share and the state’s 
power to secure them, if for reasons 
rendering marketing through their 
own facilities unfeasible they can­
not join in the unrestrained com­
petitive draining.
_ So far as the federal Constitu­

tion is concerned, there is no such 
unrestricted fee simple in the right 
to drain gas from beneath an ad­
jacent owner's land. It is far too 
late, if it ever was otherwise, to urge 
that the states are impotent to re­
strict this unfettered race or to put 
it upon terms of proportionate 
equality by whatever measures may 
be reasonably necessary to that end. 
Indeed our constitutional history is 
replete with instances where the 
states have altered and restricted 

*[933
schemes of property * rights in re­
sponse to the public interest and the 
states’ local needs. In some cases 
this has gone to the extent of abol­
ishing basic common-law concep­
tions entirely and substituting new 
ones indigenous to their areas and

24 Cf. Federal Power Commission v. 
Hope Natural Gas Co. 320 US 591, 88 L ed 
333, 64 S Ct 281; dissenting opinion of 
Mr. Justice Jackson at 628, 88 L ed 358, 
64 S Ct 281.

• -- .A-. ■ • ■ ••• - -----  -w' S - U * -■ ■ . f

1947.

the proble
the most e 
trations . 
terns d'.:v 
mountain! 
crning i 
ing streai 
respect to 
are not Ia< 

It hard* 
the creati 
respecting 
tion and 
are less in 
trol than 
for irriga 
the extra; 
the regio 
have calk- 
thority u 
suited to 
needs of ti 
ilaritics o 
problems, 
tionality 
powers, ai 
need to be 

Historic 
to exercisi 
and regul; 
and prorh 
been recoj 
quite as c 
freedoms

*5 See Cl; 
L ed 1085, 
Fallbrook I 
112, 41 L e 
Colorado, 2 
973, 27 S 
Grande Dar 
703, 43 L 
970; Strict: 
Co. 200 U: 
301, 4 Ann 
Min. Co. v. 
9 S Ct 511: 
196 US 11! 
Kendall v. 
US 658, S3 
r. Matko. 1<? p,
- J  U ,  l ,  i  — -

asHssri v 
9, 23 L eo 
Hoagland.
S Ct 1086; 
51 L ed 4 
v. Spokane.
66 L ed iis 

78

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1947. REPUBLIC NATURAL GAS CO. v. OKLAHOMA 334 tra

the problems they present. Perhaps 
the most extensive and obvious illus­
trations are to be found in the sys-. 
terns developed in our arid and 
mountainous western states for gov­
erning rights in the waters of flow­
ing streams and mining rights in 
respect to precious metals.25 Others 
are not lacking.26

It hardly can be maintained that 
the creation and control of rights 
respecting the ownership, extrac­
tion and marketing of natural gas 
are less broadly subject to state con­
trol than those relating to waters 
for irrigation and other uses or to 
the extraction of precious metals in 
the regions where those matters 
have called into play the states’ au­
thority to act in the manner best 
suited to local conditions and the 
needs of their inhabitants. The sim­
ilarities of the situations and the 
problems, for purposes of constitu­
tionality in the exercise of those 
powers, are so obvious they do not 
need to be specified.

Historically, the states’ freedom 
to exercise broad powers in defining 
and regulating rights of ownership 
and production of natural gas has 
been recognized almost as long and 
quite as completely as their similar 
freedoms to act in relation to water

85 See Clark v. Nash, 198 US 361, 49 
L ed 1085, 25 S Ct 676, 4 Ann Cas 1171; 
Fallbrook Irrig. Dist. v. Bradley, 164 US 
112, 41 L ed 369, 17 S Ct 56; Kansas v. 
Colorado, 206 US 46, 93, 94, 51 L ed 956, 
973, 27 S Ct 655; United States v. Rio 
Grande Dam & Irrig. Co. 174 US 690, 702, 
703, 43 L ed 1136, 1141, 1142, 19 S Ct 
970; Strickley v. Highland Boy Gold Min. 
Co. 200 US 527, 50 L ed 581, 26 S Ct 
301, 4 Ann Cas 1174; Parley’s Park Silver 
Min. Co. v. Kerr, 130 US 256, 32 L ed 906, 
9 S Ct 511; Butte City Water Co, v. Baker, 
196 US 119, 49 L ed 409, 25 S Ct 211; 
Kendall v. San Juan Silver Min. Co. 144 
US 658, 36 L ed 588, 12 S Ct 179; Clason 
v. Matko, 223 US 646, 56 L ed 588, 32 
S Ct 392.

86 Head v. Amoskeag Mfg. Co. 113 US 
9, 23 L ed 889, 5 S Ct 441; Wurts v. 
Hoagland, 114 US 606, 29 L ed 229, 5 
S Ct 1086; Bacon v. Walker, 204 US 311,
51 L ed 499, 27 S Ct 289. Cf. Ferry 
v. Spokane, P. & S. R. Co. 258 US 314,
66 L ed 635, 42 -S Ct 358, 20 ALE 1326;

78

*t94]
rights and mining rights. In *a line 
of cases beginning a half century 
ago with Ohio Oil Co. v. Indiana, 177 
US 190, 44 L ed 729, 20 S Ct 576, 
this Court has upheld various types 
of state regulatory schemes designed 
to prevent waste and to protect the 
“coequal rights” of the several own­
ers of a common source of supply.27 
These cases clearly recognize that 
the state regulation may be justified 
on alternative grounds, either to 
prevent waste or to adjust private 
correlative rights.28

It is true, as appellant points out, 
that none of those cases presented 
the specific issue of whether the 
state may adjust correlative rights 
independently of a conservation 

program. But it is not 
Headnote is true that this power is 

merely incidental to the 
fundamental right of the state to 
preserve its natural resources. In 
fact, if one power were incidental to 
the other, the Ohio Oil Case would 
support the view that waste pre­
vention is justifiable because it 
serves “the purpose of protecting all 
the collective owners.” 177 US at 
210.29 Moreover, it is significant 
that the opinion in Bandini Petro­
leum Co. v. Superior Ct. specifically
Campbell v. California, 200 US 87, 50 L ed 
382, 26 S Ct 182.

27 Ohio Oil Co. v. Indiana, 177 US 190, 44 
L ed 729, 20 S Ct 576; Lindsley v. Natural 
Carbonic Gas Co. 220 US 61, 55 L ed 369, 
31 S Ct 337, Ann Cas 1912C 160; Walls v. 
Midland Carbon Co. 254 US 300, 65 L ed 
276, 41 S Ct 118; Bandini Petroleum Co. 
v. Superior Ct. 284 US 8, 76 L ed 136, 52 
S Ct 103, 78 ALR 826; Champlin Ref. Co. 
v. Corporation Commission, 286 US 210, 
76 L ed 1062, 52 S Ct 559, 86 ALR 403; 
Hunter Co. v. McHugh, 320 US 222, 88 
L ed 5, 64 S Ct 19.

23 See Hardwicke, The Rule of Capture, 
13 Tex L Rev 391, 414-422; Marshall and 
Meyers, Legal Planning of Petroleum Pro­
duction, 41 Yale LJ 33, 4S-52; Ely, The 
Conservation of Oil, 51 Harv L Rev 1209, 
1222-1225; Ford, Controlling the Produc­
tion of Oil, 30 Mich L Rev 1170, 1181, 
1192.

29 Independently of any statute, several 
states have granted equitable relief 
against w a s te  in  o r d e r  to p r o t e c t  th e  c o r -

82 L ed 1233

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334 trs  
94-96

states that the California regula­
r s ]

tion 'ns valid on its face, even if 
viewed as a measure designed purely 
for the protection of correlative 
rights. 234 US 8, 22, 76 L ed 136, 
145, 52 S Ct 103, 78 ALR 826.30

Oklahoma’s power to regulate 
correlative rights in the Hugoton 
field therefore does not stem from 
her interest merely in the preserva­
tion of natural resources. It stems 
rather from the basic aim and au­
thority of any government which 
seeks to protect the rights of its 
citizens and to secure a just accom­
modation of them when they 
clash.31 That authority is constant­
ly exercised in our system in rela-

Oct. Term,

tion to other types of property.32 In
*[96]

view of this *fact and of what has 
been said concerning conditions in 
this industry, it would be incongru­
ous for us to hold that oil and gas 
law is the one phase of property law 
that cannot be modified except for 
conservation purposes. Especially 
in the light of its origin and develop­
ment in a laissez faire atmosphere 
appropriate for fostering intense 
competitive expansions, see Merrill, 
The Evolution of Oil and Gas Law, 
13 Miss LJ 281, the states should be 
allowed certainly not less freedom to 
evolve new property rules to keep 
pace with changing industrial condi­
tions than they possess in nearly 
every other branch of the law.33

SUPREME COURT OP THE UNITED STATES
1947.

Here a
Headnot*

indulge
tion in
They si
rcgulat
knowle
e'xperir
progre;
dissent
Licbmr
717, 7c

The 
whetht 
of ach

relative rights of common owners of a 
reservoir of gas or oil. Louisville Gas Co. 
v. Kentucky Heating Co. 117 Ky 71, 77 
SW 368, 70 LRA 558, 111 Am St Rep 225,
4 Ann Cas 355; Manufacturers Gas & 
Oil Co. v. Indiana Natural Gas & Oil Co. 
155 Ind 461, 474, 475, 57 NE 912, 50 LRA 
768; Ross v. Damm, 278 Mich 388, 270 
NW 722; Higgins Oil & Fuel Co. v. 
Guaranty Oil Co. 145 La 233, 82 So 206,
5 ALR 411; Atkinson v. Virginia Oil & 
Gas Co. 72 W Va 707, 79 SE 647, 48 LRA 
NS 167.
i 30 The Supreme Court of Texas has re­

cently upheld administrative action de­
signed solely to protect correlative rights. 
Corzelius v. Harrell, 143 Tex 509, 186 
SW2d 961. Note, 24 Tex L Rev 97.

31 Oklahoma can prevent agents of Re­
public from going on Peerless’ land by 
force of arms and there drilling a well and 
stealing gas. The state’s power to pre­
vent larceny and trespass and to enjoin 
any use of property that creates a nui­
sance for a neighboring property owner 
also justifies the regulation of common 
property for the mutual advantage of its 
several owners. Head v. Amoskeag Mfg. 
Co. 113 US 9, 28 L ed 889, 5 S Ct 441; 
Bacon v. Walker, 204 US 311, 51 L ed 499, 
27 S Ct 289.

Under certain circumstances a state may 
compel one individual to surrender pri­
vate property solely to enable another to 
exploit the potential resources of his pri­
vate property. Thus in Clark v. Nash, 
198 US 361, 49 L ed 1085, 25 S Ct 676, 4 
Ann Cas 1171, the plaintiff’s land could be 
made productive only by enlarging an 
irrigation ditch across defendant’s land, 
92 L ed 1234

and in Strickley v. Highland Boy Gold Min. 
Co. 200 US 527, 50 L ed 581, 26 S Ct 301, 
4 Ann Cas 1174, the mining company 
could deliver its ore to market only by 
constructing an aerial bucket line across 
defendant’s land. Here Peerless can ex­
ploit its property only if Republic is com­
pelled to take its gas to market. More­
over, until Peerless is able to produce the 
gas under its land, this gas will continue 
to be withdrawn by Republic. In effect 
Republic is now exploiting Peerless’ prop­
erty.

32 E. g., Head v. Amoskeag Mfg. Co. 113 
US 9, 28 L ed 889, 5 S Ct 441; Wurts v. 
Hoagland, 114 US 606, 29 L ed 229, 5 S Ct 
1086; Fallbrook Irrig. Dist. v. Bradley, 164 
US 112, 41 L ed 369, 17 S Ct 56; Bacon 
v. Walker, 204 US 311, 51 L ed 499, 
27 S Ct 289; Plymouth Coal Co. v. Penn­
sylvania, 232 US 531, 58 L ed 713, 34 S Ct 
359; Jackman v. Rosenbaum Co. 260 US 
22, 67 L ed 107, 43 S Ct 9.

33 “It is submitted that through the judi­
cial and legislative processes correlative 
right-duty relations against injury and 
non-compensated and preventable drain­
age do exist, but the difficulty of finding 
and proving the facts in a particular sit­
uation is such that the usual remedies of 
damages and injunction might not be prac­
ticable. It seems more advisable that leg­
islatures enact statutes expressly declar­
ing the existence of these correlative right- 
duty relations in landowners, apart from 
public rights against waste, and authorize 
an administrative agency, after a finding 
of facts, to promulgate rules and regula­
tions for their protection and authorize the 
Commission or private owners to enforce

of the ! 
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1947. REPUBLIC NATURAL GAS CO. v. OKLAHOMA 334 TTS 
96—98

Here as elsewhere, in considering 
the proper scope for 

Headnote 16 state experimentation, 
it is important that we 

indulge every reasonable presump­
tion in favor of the states' action. 
They should be free to improve their 
regulatory techniques as scientific 
knowledge advances, for here too 
experimentation is the lifeblood of 
progress. See Mr. Justice Brandeis 
dissenting in New State Ice Co. v. 
Liebmann, 285 US 252, 280, 76 L ed 
747, 754, 52 S Ct 371.

IV.
The remaining narrow issue is 

whether the most practical method 
of achieving a fair accommodation

*[97]
pf the *correlative rights of the par­
ties is invalid because Republic is 
required to take and to pay for gas 
that it does not want—at least does 
not want if it must pay for it.

Appellant relies heavily on 
Thompson v. Consolidated Gas Utili­
ties Corp. 300 US 55, 81 L ed 510, 
57 S Ct 364, where this Court in­
validated an order limiting respond­
ent’s production so severely that it 
would have had to purchase gas 
from unconnected wells in its vicin­
ity in order to satisfy its commit­
ments. Thus the necessary effect of 
that order was comparable to the 
effect of the order under review here.

But there is a crucial difference 
between the cases. In deciding the 
Thompson Case the Court explicitly 
assumed that the order could be up­
held if reasonably designed either to 
prevent waste or “to prevent undue 
drainage of gas from the reserves of 
well owners lacking pipe line con­
nections.” 34 Because of a geological 
anomaly there was a general drain­
age in the gas field away from the 
connected wells toward the uncon­
nected wells, 300 US at 71-73, so 
that the producing wells, rather 
than draining gas away from the 
dormant wells, would only reduce
su c h  r u l e s  a n d  r e g u l a t i o n s  t h r o u g h  a c t io n s  
in th e  c o u r t s . ”  S u m m e rs ,  L e g a l  L ig h t s  
a g a i n s t  Drainage o f  O il a n d  Gas, 18  l e x  
L Rev 27, 47.

their own loss by producing as much 
as possible. Therefore the limita­
tion on their production could not 
be justified, since it was neither for 
the purpose of preventing waste nor 
a reasonable regulation of correla­
tive rights. Instead of protecting 
one party from loss, it operated to 
aggravate the effect of the drainage 
away from the owners of connected 
wells. They suffered, not only by 
an increased drainage loss, but also 
by the consequence that they were 
forced to share their facilities and 
market with the very parties who 
profited by their loss. The Court 
held that such an order requiring 
one company to share its market 
with another was unconstitutional 

*[98] .
inasmuch *as it was not justified ei­
ther as a conservation measure or 
as a reasonable adjustment of cor­
relative rights. The latter justifica­
tion is present in this case.

The fact that Republic is com­
pelled either to purchase Peerless’ 
gas or to carry it to market and ac­
count for the profits does not  ̂make 
the regulation unreasonable. If that 
were the sole cause for complaint, 
the state could take the more drastic 
step of requiring all the well owners 
to shut down completely until all 
were able to produce on a ratable 
basis or came to some agreement 
effective to make this possible. It 
is clearly within the state’s power 
to require Republic to compensate 
Peerless for the gas drained from 
under the Peerless land. Patterson 
v. Stanolind Oil & Gas Co. 305 US 
376, 83 L ed 231, 59 S Ct 259. Here, 
instead of requiring Republic to 
make a cash payment based on the 
estimated amount of drainage, the 
commission has selected what is un­
questionably a more accurate meth­
od of adjusting the correlative 
rights. Even if it could be assumed 
that this method imposed a some­
what heavier burden on' Republic 
than possible alternatives, it does

^  300 US a t  76, 77. SI L ed 521, 522,
57 S Ct 364. T h is  a s s u m p t io n  is  r e p e a t e d  
s e v e r a l  t im e s  in  th e  o p in io n . S e e  300 U S  
at 58, G7, G9 and 72, 73.

92 L ed 1235

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SUPREME COURT OP THE UNITED STATES334 trs
83-100

not follow that the method selected 
by the commission is unconstitution­
al. For we have constantly recog­
nized the propriety of allowing wide 
discretion to the administrative 
agencies who are best qualified to 
select the most reasonable solutions 
to the thorny problems that accom­
pany regulation in this highly tech­
nical field. Railroad Commission v. 
Rowan & N. Oil Co. 310 US 573, 
84 L ed 1368, 60 S Ct 1.021. Keep­
ing in mind the fact that property 
law is peculiarly a matter of local 
concern, the special difficulty of de­
fining and regulating property rights 
in natural gas, the respect due to 
experts in this field, and the rather 
unusual facts this record presents, 
I cannot say that the state is with­
out power to enter this order.

It is suggested that the order, 
since it includes the requirement of 
purchase and not merely of trans- 

*[99]
portation *and accounting for prof­
its, becomes invalid because it shifts 
from Peerless to Republic the busi­
ness risk incident to ownership 
and sale of the gas. Possibly this 
might furnish a more serious basis 
for objection in materially different 
circumstances. But, apart from 
what has already been said, in those

Oct. Term,

now presented I conceive no substan­
tially greater harm to be possible 
from the order’s operation, than de­
priving Republic of the rights to 
drain gas from beneath Peerless’ 
lease without liability to pay for the 
gas so drained.

This assumes that if the parties 
should be unable to agree upon terms 
the commission will fix them in a 
manner taking due account of pre­
vailing market conditions relevant 
to the price to be paid, as well as 
reasonable compensation for the use 
of Republic’s facilities. With those 
limitations properly applied, it _ is 
hard to see what great business risk 
will be shifted to Republic. For, as 
we have already noted, the com­
modity is one not subject to storage, 
must be sold as soon as it is trans­
ported to the point of consumption, 
and therefore cannot be subject to 
possible wide fluctuation in selling 
price between the times of purchase 
and sale by Republic.

The facts here, it seems to me, 
justify the commission’s action. 
Whether others materially different 
may do so should be left to be con­
sidered when they arise.

I would affirm the judgment of the 
Supreme Court of Oklahoma.

V. v--:A ".A;

%. ?'• f4 :■ * '
i r !I

*H00]
• * UNITED STATES OF AMERICA, Appellant, .

v.
L. C. GRIFFITH, H. J. Griffith, Consolidated Theatres, Inc., et al.

(334 US 100-110.)
SUMMARY

The use of the combined bargaining power of a considerable number of 
motion picture theaters operated or controlled by affiliated corporations, to 
obtain from distributors of motion pictures for the benefit of such of the 
theaters as had competition, advantages in the way of first runs and 
clearances which they otherwise would not have been able to obtain, was 
held, in an opinion by D ouglas, J., with the concurrence of five other mem­
bers of the Court, to violate §§ 1 and 2 of the Shormdn Anti-trust Act, even 
though there was no intent to acquire a monopoly.

F r a n k f u r t e r , J., dissented without opinion, but indicated agreement 
with the views of the District Court. The District Court had held t at the 
92  L ed 1236 .

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