The Oklahoma Bar Journal May 2024

drill, the Corporation Commission can require owners to pool and develop their interests all together, as a unit. 18 In 1943, in the case of Hunter Co. v. McHugh , the United States Supreme Court upheld the con stitutional power of a state “to regulate production of oil and gas so as to prevent waste and to secure equitable apportionment among the landholders.” 19 Here, we have an instance of an extremely important three-letter conjunction: and . The purpose of the power is to prevent waste and secure bene fits to landholders – two separate purposes. If the latter is a benefit to landholders, then to whom is the former a benefit? The Oklahoma Supreme Court provided a direct answer to that question in 1957 when it held, “To curtail over-production and waste for the benefit and protection of the general public, restraints had to be placed around the individual’s rights to develop and produce [oil and gas].” 20 The curtailment

waste, surface waste, and waste inci dent to the production of crude oil or petroleum in excess of transpor tation or marketing facilities or rea sonable market demands.” 16 Waste, as defined by the statute, is not only oil that may spill onto the ground or gas that escapes into the air, it is also underground waste, oil and gas that could technically be extracted but instead is left in the ground by a producer, as well as economic waste, hydrocarbons extracted at too high a cost or sold at too low a price to be financially advantageous to mineral owners, operators and the tax-funded state coffers. In 1947, as part of the ongoing effort to minimize waste and encourage the full development of the state’s mineral resources, the Oklahoma Legislature passed the forced pooling law. 17 The law provides that where there are sep arately owned tracts or undivided interests within a spacing unit and the mineral and/or leasehold own ers have not agreed on joint devel opment and one owner proposes to

The Oklahoma Legislature gave teeth to this purpose in the domain of oil and gas when, in 1915, it passed the Oil and Gas Conservation Act, specifically conferring upon the Corporation Commission the power to regulate oil and gas drilling in the state for “the protection of the rights of all parties entitled to share in the ben efits of oil and gas production.” 14 To the 21st-century reader, the Oil and Gas Conservation Act of 1915 has a rather misleading name in that its purpose is not to conserve resources in the sense of preventing their exploitation but to conserve them in the sense of ensuring their full – i.e. , not wasteful – exploitation. The act directs the Corporation Commission to reg ulate the industry so as to ensure that oil and gas stays in the ground until it “can be produced and utilized without waste.” 15 The act is careful to establish that, in addi tion to its ordinary meaning, the word waste in the statute refers also to “economic waste, underground

To the 21st-century reader, the Oil and Gas Conservation Act of 1915 has a rather misleading name in that its purpose is not to conserve resources in the sense of preventing their exploitation but to conserve them in the sense of ensuring their full – i.e. , not wasteful – exploitation.

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

MAY 2024 | 9

THE OKLAHOMA BAR JOURNAL