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During the following decade the interest in geological surveys seems definitely to have lagged, with only two States being added to the list and one of these coming at the very end of the decade. However, starting with the fifties the interest was revived, and 7 States were added, thus making a total of 28 States that had authorized geological surveys prior to the Civil War. The second spurt of interest was due in no small part to the American Association for the Advancement of Sciences which in 1849 had memorialized the legislatures of the States having no geological surveys to undertake the task or complete work that had been suspended. The coming of the war naturally disrupted the work in most States (except California and Illinois). In only one State was the geological survey permanently launched as a regular function of the State government, namely, New York, in 1836. (See fig. 4.)
With the cessation of hostilities and resumption of normal civil government, several of the States reestablished their geological surveys. Most of them were scheduled only for a short time, but some of these performed excellent work, as in the case of Illinois, whose work has been characterized by the United States Geological Survey as follows:
Its notable accomplishments were recognized by scientists of the whole world. The pioneer work which it performed in American paleontology is of the highest order and constitutes one of the standards on which paleontologists of the present day work.
While the contributions might be thus of high value in particular instances and for limited purposes, the State geological surveys were seriously hampered by that lack of continuity in work which is so basic to all scientific research and to planning efforts in particular. In the case of Illinois-so highly commended above-the survey lapsed in 1872, and no further geological investigation was undertaken for more than 30 years.1 18 Unfortunate as the case clearly was, it was only too typical of many States which had made a splendid start forward toward securing basic understanding of the geological structures and premises of their State and of their mineral resources in particular.
However, a number of States were seeking to correct this situation by making the professor of geology at the State universities responsible for conducting such of the geological investigations of the State as the legislature should meagerly provide for. Apparently the first permanent working arrangement of this type dates from 1854 in Kentucky.19 Prior to the establishment of the United States Geological Survey in 1879, no other State had followed Kentucky's example, but, more aggressively, at least three States (Alabama in 1873, New Jersey in 1864, and Michigan in 1869) had established permanent full time officials to undertake geological investigations. By the end of the nineteenth century this number had increased to 10 and by 1932 was reported as 30, while the remaining States largely depended upon part-time or incidental university surveying. In several States the Geological Survey is responsible for administrative duties as well as staff surveying, notably in connection with oil regulation and land management. The tendency seems for the geological work to be either incorporated into the State university or into one of the State departments, as conservation.
Conservation of Mineral Fuels.-Governmental control of mineral development on other than the public lands has been very slow in emerging and so far has been limited to the mineral fuels as coal, oil, and gas. The metallic minerals are substantially unaffected by any mineral conservation program of the State governments; and even in the case of the mineral fuels the problem has been more economic than conservational. The crying need has been for governmental intervention to stabilize mining operations by preventing or con
18 Volumes were issued up to 1885 by the curator of the State Museum of Natural History which was created in 1877, but no funds were available for field work. 19 Alabama authorized such a relationship from 1847 to 1858.
trolling surplus production and plant capacity. Insofar as there has been a problem of waste, technology rather than administration has been called upon. Indeed, astounding progress is to be recorded in the field of mining technology, and this development may more than offset the apparent paucity of administra tive achievement in mineral conservation.20 The economic character of the Government's interest in the mineral fuels may be strikingly indicated by the fact that all the 19 investigations or hearings before Congress or by specially created commissions between 1913 and 1935 were primarily concerned with price and labor problems of the coal industry, not conservation of coal resources. Even in the case of the voluminous report of the United States Coal Commission, stretching for some 2,700 pages, only two short chapters (on bituminous and anthracite coal, respectively) considered the problem of waste and its prevention. So far the problem of coal has been one of stabilization of production rather than conservation of the resource.21
The first expression of State concern with mining apparently dates from a Pennsylvania statute of 1869 (applicable to the county of Schuylkill), which provided for the inspection of coal mines. In the following year this was extended to include five additional counties in the anthracite region and Mercer County in the bituminous field. Not till 1877 was a general mining law passed, and a State-wide bureau did not appear till 1887, when it was put in the Department of Internal Affairs.22 The purpose of the early mining legislation appears clearly from the following provision of the Illinois Constitution of 1870:
It shall be the duty of the general assembly to pass such laws as may be necessary for the protection of operative miners, by providing for ventilation, when the same may be required, and the construction of escapement shafts, or such other appliances as may secure safety in all coal mines, and to provide for the enforcement of said laws by such penalties and punishment as may be deemed proper. 23
Comparatively little legislative progress in coal planning may be recorded other than that relating to conditions of employment, health, safety, wages, and price regulation.
Even such an elementary conservation measure as the regulation of abandoned coal mines, comparable to the required plugging of oil wells, is lacking in most States. A problem that is rapidly becoming acute is that of strip mining. This technique permits greater recovery of coal from the earth (as high as 95 percent) than obtainable by regular underground methods, but it plays havoc with the surface land, unless the operators are required to level off the ground and, perhaps, afforest it, as German mining regulations require.
Legislation for the conservation of oil apparently first dates from a State which has not contributed much to the production of oil but which has tradi tionally stood in the vanguard of the cause of conservation. This is the State of New York which as early as 1879-two decades after the first oil well had been drilled (in neighboring Pennsylvania)—required by law that abandoned oil wells be plugged, so as to prevent seepage. Pennsylvania passed a similar law 2 years later and in 1885 made the requirement applicable to gas wells. By the end of the century six other States had passed similar laws designed to prevent waste in oil production. 24
20 See Technological Trends and National Policy, pp. 145-176. Note how mineral technology is frequently more concerned with utilization than with recovery from the earth.
21 The problem of production is aggravated by the dispersion of ownership. It has been estimated that there are more than 6,000 competing mines worked by 4,612 commercial operators in 31 States. G. S. Rice, D. C. Fieldner, and F. G. Tryon, Conservation of Coal Resources (1936), p. 25. See also Myron W. Watkins, Oil Stabilization or Conservation?
(1937.) 23 Pa. Laws 1869, c. 852; Pa. Laws 1877, c. 56. In 1903 a separate department of mines was created. From a study of the State session laws, the spread of mining safety legislation seems to have been as follows: By 1880, 7 States had passed laws. 1881-90, 8 States; and 1891-1900, 9 States; and 5 States in the period since 1900. This list accounts for all the States in which some bituminous coal is produced except Georgia, an examination of whose statutes failed to reveal any safety legislation.
13 Art. IV, sec. 29.
24 N. Y. Laws 1879, c. 217; Pa. Laws 1881, No. 123; 1885, No. 114. Indiana (c. 33) and Ohio (p. 48) in 1889, West Virginia (c. 56) and Kansas (c. 151) in 1891, Kentucky (c. 39) in 1892, and Texas (c. 49) in 1899.
By far the most ambitious lead was taken by the State of Indiana, particularly with reference to gas. Under the promptings of Blatchley and other farseeing geologists in her State service, a department of geology and natural resources was established in 1889 for the purpose of "preserving" the natural resources of the State. In 1893 waste of oil or gas from open wells was forbidden, and the regulations enforced through the department until 1903, when a State natural gas supervisor was specifically empowered to enforce it.
In most of the other States, however, comparatively little was accomplished in preventing the escape of gas into the air, and in fact the gas was commonly "considered only a nuisance." In 1915 the Bureau of Mines, in stating what it considered the essential requirements of a wise oil-and-gas conservation measure, said that the statute must "not only protect against waste but also insure a market for natural gas, and thus induce producers to conserve gas instead of allowing it to escape, a ratable marketing of all oil and natural gas offered for sales being provided for." 25 The prevention of gas waste became one of the particular concerns of President Coolidge's Oil Conservation Board, which was established in 1924. Ely reported that by 1933, 23 States had enacted such legislation.26
The major legal and administrative difficulties of effective oil conservation arise from the rule of capture. Under this rule competitive drilling is the only means available to a landowner to protect his property rights as against abutting owners. The capture doctrine is reported to have originated in Pennsylvania under somewhat accidental circumstances-"at a time when that State was a recent convert to the harsh English rule of percolating waters"—and took root "when engineers knew but little of the forces with which they were dealing and the lawyers less." 27 Under this rule the landowner owns the oil and gas in place under his property, but he cannot maintain title to it unless he produces it, i. e., "captures" it. In so obtaining oil it makes no legal difference that the oil and gas actually come from pools under the ground of adjacent owners, for there are no practicable means of identifying the oil. "The off-set-drilling rule (drilland-produce-as-you-please) as the only means of protecting against adverse drainage" became the inevitable corollary of the capture doctrine.28
Every landowner or his lessee may locate his wells wherever he pleases, regardless of the interest of others. He may distribute them over the whole farm or locate them on only one part of it. He may crowd the adjoining farms so as to enable him to draw the oil and gas from them. What can the neighbor do? Nothing; only go and do likewise. He must protect his own oil and gas. He knows it is wild and will run away if it finds an opening and it is his business to keep it at home.20 The geological fact is the oil pool, not the legal fact of surface ownership. The legal doctrine is showing signs of breaking down under the demands for produc tion control and waste prevention. The courts have begun to "restore" in part certain correlative rights in the landowners which might have been recognized at common law had the first oil and gas cases been tried out after basic knowledge had been placed on a sounder footing.
By far the greatest attention has centered in recent times on the problem of control of production-in terms of the effect upon market prices rather than prevention of waste or reservation of supply, upon which the former may clearly
25 Annual Report for 1915, p. 80.
26 Oil Conservation Statutes (1933). These States included Alabama, Arkansas, California, Colorado, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Montana, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, West Virginia, and Wyoming. The Washington law listed by Ely applies entirely to State lands under lease.
17 N. Ely, Oil Conservation Laws, pp. 5-8. The rule of percolating waters has been since abandoned by most American courts in favor of the rule of correlative rights and reasonable uses.
18 R. E. Hardwicke, "The Rule of Capture and Its Implications as Applied to Oil and Gas," 13 Texas Law Review, pp. 391-422 (1935). The phraseological analogy to the common-law rule of wild animals has perhaps eased the problem of State regulation in the sense that the possessor of a property right which has not been completely vested, i. e., oil not yet "captured," cannot ordinarily complain as to the methods prescribed by the State for the vesting of his rights. 16 Barnard v. Monongahela Natural Gas Co., 216 Pa. 362 (1907) at p. 365.
STATE CONSERVATION OF RESOURCES
produce an ultimate if indirect effect by preventing suicidal competition and exploitation.30
The first extensive attempt by a State to prevent wholesale waste of oil and (primarily) to curb or stabilize oil production occurred in Oklahoma in 1914, when the corporation commission issued its famous order "forbidding any fur ther drilling, except where necessary to offset wells already drilled or to comply with lease requirements," and fixing a minimum sales price of oil. Practical difficulties rapidly arose-rumors were circulated that the pipe lines had promoted the new policy, disputes arose over practical application of the order to wells that were in the process of construction, there were constitutional doubts as to means of enforcement, and, above all, tl e price of oil soared upward under wartime demands. As a result State control of oil production lapsed for the time. More than a decade later (in 1926) Oklahoma revived the technique of State production control in the Seminole field by providing for a system of rating oil production in flush fields, but the proration scheme was shortly extended to include both old and new fields.31 In 1931 the Governors of Kansas, Oklahoma, and Texas entered in an informal compact setting State quotas for oil production, the provisions of which were temporarily enforced by martial law in Texas and Oklahoma.
Usually proration is based on market demands, but in one State (Texas) the allowable rate of production is based on the engineering fact of maintaining a uniform reservoir pressure by equalizing the withdrawals of oil, gas, and water in relation to the encroachment of edge water. Studies by the engineering staff of the Texas Railroad Commission for the east Texas field indicate that a "production rate of about 450,000 barrels daily from this field will maintain an ap proximately constant reservoir pressure, prolong the flowing life of the field, and result in an increased recovery of oil." Under this scheme of control it has been estimated that the oil recovery has increased by at least 30 percent.32 The United States Bureau of Mines has credited the proration device with ac complishing "its primary objective, which was to give current production and current demand at least a semblance of balance during periods of enormous production." In addition to its State of origin, proration has been regularly administered in Texas, New Mexico, Kansas, and Louisiana, which produce three-fourths of all American oil.33
In 1933 it was concluded in a special study for the Federal Oil Conservation Board that the States possessed the following legal powers, i. e., as demonstrated by existing legislation and tested by litigation:
1. The State may establish a regulatory agency, and delegate to it the power to enforce the statutes, hold hearings, make rules and orders, and enforce them with statutory effect.
2. It may, through its regulatory agencies, regulate drilling; that is, it may require permits to drill and fix minimum spacing requirements, even though the effect is to limit the rate at which the landowner can recover oil.
3. It may protect productive strata, i. e., through casing requirements, regulation of drilling methods, of plugging, of abandonment, use of nitroglycerin, etc.
80 It would be incorrect, however, to leave the impression that this problem was absent during the very infancy of the oil industry. In 1872 price tobogganing had led to a curtailment or shut-down campaign. In 1 field 200 producers signed a pledge not to drill any more wells for 6 months, under penalty of $2,000 fine. Agitation demanded the cessation of all pumping for 30 days, but no agreement could be obtained. A permanent (in design) producers' protective association was formed and more than a million dollars in subscription was reached. But "even before the agency was formally established, however, there were signs that the shut-down agreement was being violated." John Ise, United States Oil Policy (1926), pp. 21-22.
31 The order was issued under an earlier antitrust law at the urgent solicitation of many of the producers. In 1915 the Oklahoma Legislature expressly validated the proration order (c. 25). This statute was sustained in Julian v. Capshaw, 145 Okla. 237 (1930), and in Champlin Refining Co. v. Corporation Commission, 286 U. S. 210 (1931). See J. H. Marshall and N. L. Meyers, "Legal Planning of Petroleum Production," 41 Yale Law Journal 33-68 (1931); 42: 702-46 (1933).
33 Statement of Secretary Ickes before House Committee on Interstate and Foreign Commerce conducting hearings on the Connally oil bill, April 27, 1937.
33 Conservation of Petroleum and of Natural Gas, p. 25. Okla. Laws 1933, c. 131; Kans. Laws 1933, c. 226; La. Laws 1934, No. 61: N. M. Laus 1935, c. 72; and Tex. Vernon's Civil Statutes, sec. 6008. See Hardwicke, "Legal History of Proration of Oil Production in Texas," 56 Texas Bar Association Report, 99 (1937).
STATE CONSERVATION OF RESOURCES
4. It may prohibit and prevent the escape of gas or oil into the air, even though to prevent the escape of gas may make impossible the production of oil.
5. It may classify some uses of gas as wasteful, and prohibit them; thus it may limit the amount of gas that may be produced with each barrel of oil, even though the gas is utilized; it may prohibit or regulate the manufacture of carbon black; and it may prohibit certain other uses of gas, such as in flambeau lights or flares.
6. It may forbid "economic waste" in general terms and enforce the prohibition by restricting production to market demands.
7. It may, without resort to "proration," restrict production as by limiting the open flow of gas and oil, by restricting artificial production devices, restricting transportation pressures, and by requiring certificates of compliance with the conservation laws as a prerequisite to connecting with pipe lines.
8. It may regulate production from a common source (1) by "proration," or (2) possibly by requiring that purchasers take ratably from all offerors, or (3) by regulation of carriers. Proration, which is the allocation among producing wells of some determined outlet for the entire field, may be effected on a number of different bases. Thus the outlet may be determined on a basis of market demand or physical waste, and may be allocated according to "potentials" or otherwise.
9. It may, under particular circumstances, regulate, and possibly require, the operation of a field as a unit.
10. It may fix a production quota for the entire State, and allocate that production among the fields of the State, and prevent discrimination among them by purchasers.34
Unit operation of oil pools is substantially confined to publicly owned areas. It was proposed as early as 1924 by Henry L. Doherty to cope with the evils arising out of the competitive offset drilling and production practice. It is considered impracticable for privately owned fields because the whole attempt is likely to fail if one or more individual owners refuse to join, as is usually the case. So far the State has been successful in compelling owners to unitize their holdings only in the case of the oil fields located within the city of Oxford, Kans., on the grounds of health and fire hazards.35 The most successful adoption of the plan of unit operation has been in the Government fields in the Kettleman Hills (Calif.).
34 Adapted from Ely, op. cit., pp. 86-91.
15 See Marrs v. Oxford, 24 Fed. (2) 541 (1928), cert. denied, 280 U. S. 573 (1929). Cf. Tysco Oil Co. v. Railroad Com mission, 12 F. Supp. 195 (So. Dist. of Tex., 1935) which upheld an order limiting drilling to one well per district (16 acres) and providing for the pooling of expenses and profits.