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300.

Argument for Appellees.

gas from their lands for the operation of their factory. This it does by imposing conditions as to full utilization of heat which are impossible of fulfillment.

The prohibition is imposed not upon all landowners who derive their supply of gas from a common source or reservoir, but only upon those whose wells are located within ten miles of any incorporated town or industrial plant. Each incorporated town and each private industrial plant (except that of the appellees), is thus surrounded by a circle or prohibited zone, whose area is three hundred and fourteen square miles. Elsewhere the ban is inoperative. What is the object of the ten-mile limitation? Admittedly, to benefit certain manufacturers and private consumers, who are or may become purchasers of natural gas, by depriving the owners of the gas produced in certain large areas of the right of sale to certain other manufacturers.

Natural gas is not public property. Ohio Oil Co. v. Indiana, 177 U. S. 190, 209; Oklahoma v. Kansas Natural Gas Co., 221 U. S. 229, 254; Haskell v. Kansas Natural Gas Co., 224 U. S. 217. In the case at bar not only are the appellees among the common owners because owners of lands in which the gas is found, but they have also become the owners in possession of the gas itself as private property in the four wells here involved.

Like the Oklahoma statute, the Wyoming statute does exactly what the Indiana statute did not do, and omits precisely those things which were with such care included in the Indiana statute. The Wyoming statute entirely ignores the rights of the owners of the land in which the natural gas is found-the common owners of the gas. It makes no provision for their protection. It does not restrict the number of wells that may be drilled into the gas reservoirs, nor the amount of gas that may be withdrawn by one well or by any one owner, nor does it prohibit the discharge of the gas into the open air without making

Argument for Appellees.

254 U.S.

any use of it. And there is uncontradicted evidence in the record that such waste within the true meaning of that word is taking place.

On the contrary, the sole purpose was to select the market, to preserve the gas, not for the owners but for third parties, that is to say, for private industries and private consumers in incorporated towns.

The intent of the statute was to take away certain rights to sell gas from the private owners of the gas and make a donation to that extent to certain towns and manufacturing establishments. The purpose is commercial-the business welfare of these towns and manufacturing plants, as coal might be, or timber. Oklahoma v. Kansas Natural Gas Co., 221 U. S. 255.

The peculiar form of the statute renders it applicable to these appellees alone, while leaving the door open for others to engage in similar manufacturing pursuits elsewhere in Wyoming. The inference is clear that the spoliation of the appellees for the advantage of the residents and industrial plants of Lovell is the real object sought.

The statute thus takes private property for private use under pretext of the public good. These purposes are not even public purposes such as would authorize the exercise of eminent domain to take the property of the appellees in their gas, nor yet public in such sense as would authorize any taxes therefor to be levied upon the property here involved even if it were located in one of the towns receiving the indirect benefits. Cole v. La Grange, 113 U. S. 1, 6; Missouri Pacific Ry. Co. v. Nebraska, 164 U. S. 403; Missouri Pacific Ry. Co. v. Nebraska, 217 U. S. 196; Michigan Sugar Co. v. Dix, 124 Michigan, 674; Dodge v. Mission Township, 107 Fed. Rep. 827; Oxnard Beet Sugar Co. v. Nebraska, 73 Nebraska, 57; Const., Wyoming, Art. I, §§ 32, 33.

The statute here in controversy takes property, since it forbids sale and use, although such sale and use in no way

300.

Argument for Appellees.

create or contribute to any nuisance or injury to the health, morals or comfort of anyone. And the sale and use prohibited, under the evidence, is without question the most profitable sale and use that can be made of the gas, and the one most beneficial to the world and to civilization. 2 Kent's Com. 320; Litchfield v. Bond, 186 N. Y. 66, 80; Buchanan v. Warley, 245 U. S. 60, 74; In re Kelso, 147 California, 609.

The statute "does not alone regulate the right of the reduction to possession of the gas, but when the right is exercised, when the gas becomes property, takes from it the attributes of property, the right to dispose of it." Oklahoma v. Kansas Natural Gas Co., 221 U. S. 229, 254. So, too, the deprivation of the right to use the factory, or the imposition of restraints rendering such use impossible, is a taking of property in as real a sense as if the factory were physically appropriated. Dobbins v. Los Angeles, 195 U. S. 223; In re Smith, 143 California, 368. See also: Forster v. Scott, 136 N. Y. 577; People v. Otis, 90 N. Y. 48; Pumpelly v. Green Bay Co., 13 Wall. 166; Kansas City Gas Co. v. Kansas City, 198 Fed. Rep. 500.

Oil is also a fuel, produced and transported under conditions substantially similar to natural gas. It is also an essential ingredient in printing inks, into the composition of which eight times as much oil as gas-black enters. The heating value of oil so used is totally lost. Would it be a reasonable exercise of police power to declare that oilor oil from certain wells-must not be sold for such use unless the heat contained in the oil be fully used for domestic or manufacturing purposes?

Wood is a fuel-the oldest and most widely used of fuels. From wood is made news-print paper. Again the heat, or fuel value, is lost. Could it be deemed a reasonable exercise of police power to forbid the sale of wood to pulp mills unless the heat contained therein be fully employed for other uses?

Argument for Appellees.

254 U.S.

In each instance a fuel is consumed. Its heating value is lost. A product of great pecuniary and cultural value results. The manufacture of the product would be impossible except at the sacrifice of the heat. A requirement that it shall be preserved is unreasonable and destructive.

Manifestly the contour and extent of the field or reser-, voir constituting the common source of supply are determined by geological conditions, bearing no reference to the boundaries of incorporated political subdivisions or to the location of industrial plants. If the fugitive character of natural gas, and the "co-equal right of all landowners to draw from a common source of supply" is, as stated in Ohio Oil Co. v. Indiana, 177 U. S. 190, 203, the very basis of the power of the legislature to restrain waste, then argument certainly cannot be needed to show that it may not lawfully require some to desist from such "waste" while permitting the same "waste" to others. The two propositions are mutually destructive.

Still more glaringly is it violated if permission to "waste" or "wastefully use" from the common store is denied to some and granted to others. Yet this is the precise construction of the law adopted and upheld by the state officials.

As construed by the state courts, the act involved in Lindsley v. Natural Carbonic Gas Co., 220 U. S. 61, prohibited only the use of pumps or artificial contrivances to accelerate the natural flow of percolating water, with the object, not to use the water in connection with the enjoyment of the land, but to extract and vend the gas as merchandise, allowing the water to run to waste. So construed, it was sustained by this court (p. 77).

Even if the analogy between water and natural gas were complete, the present law is wholly dissimilar.

Further as to arbitrary discrimination, see: Connolly v. Union Sewer Pipe Co., 184 U. S. 540; International Har

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vester Co. v. Missouri, 234 U. S. 199, 215; Gulf, Colorado & Santa Fe Ry. Co. v. Ellis, 165 U. S. 150; Cotting v. Kansas City Stock Yards Co., 183 U. S. 79; McFarland v. American Sugar Refining Co., 241 U. S. 79; s. c., 229 Fed. Rep. 284; Smith v. Texas, 233 U. S. 630.

MR. JUSTICE MCKENNA delivered the opinion of the court.

The complainants are corporations of Delaware and have their places of business in that State.

The defendants are officers of Wyoming, being respectively, its Attorney General, Prosecuting Officer of Big Horn County, and the Governor of the State.

It is alleged that jurisdiction of the District Court depends upon diversity of citizenship, and the Constitution of the United States, the Constitution being violated by an act of the legislature of the State. Chapter 125 of the Session Laws of 1919.

The object of the suit is to restrain defendants, and each of them, from enforcing or attempting to enforce the legislation.

It is declared by the act, which is attacked, that its purpose is "the protection and conservation of the supply of natural gas." The first section is as follows:

"The use, consumption or burning of natural gas taken or drawn from any natural gas well or wells, or borings from which natural gas is produced for the products where such natural gas is burned, consumed or otherwise wasted without the heat therein contained being fully and actually applied and utilized for other manufacturing purposes or domestic purposes is hereby declared to be a wasteful and extravagant use of natural gas and shall be unlawful when such gas well or source of supply is located within ten miles of any incorporated town or industrial plant."

Section 2 prohibits the use, sale or other distribution of

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