*1 al.) et of Texas (Railroad et H. Brown al. C. Company. v. Humble Oil Refining & 12, 1935. No. 6729. Decided June Rehearing 27, 1935. November overruled 1069.) W., Series, (83 Series, 935; W., S. S. 2d 2d *3 Hamilton, Turner, Dallas, Wheeler, Hamilton & of J. W. Austin, Allred, Attorney General, of Gresham, James V. former E. Willis Attorney General, McCraw,
former Assistant Wm. Attorney General, Cheek, Gray, Maurice Archie D. Assistants Attorney General, plaintiffs for in error. proposition question
On Bosl, was moot. 22 Mullins v. (2d) 727; Weber, 857; S. W. Edy, v. (2d) Gilbert 19 S. W. Fuller v. (2d) 45 S. W. 448. There drilling was no evidence to show that the of the well producing oil therefrom create waste. & T. Houston C. would Ry. East, Texas, 146; Co. v. 98 Corp Comp- Clinchfield Coal v. ton, S., 139 U. 308. Townes, E. E. Baker, Rex Baker, G. Seagler, Hines H. R. E. Houston,
all of T. L. Foster Timmins, Dallas, J. W. both of Powell, Wirtz, Gideon, Austin, Rauhut & of for defendants error. police
Under powers regulate the State of Texas can spacing of oil wells on the land involved. The Railroad Commission has to make regulating and enforce rules spacing drilling wells, of oil and such rules have the effect of an Legislature. act Jarmon, State v. 25 S. W. (2d) 936; Magnolia Stroud, Pet. 462; Co. v. (2d) 3 S. W. McEachern v. Highland Town of Park, Texas, 36, S. (2d)W. 487. Thomas B. Greenwood, Moody, Robertson, Dan B. J. all of Austin, Fouts, Elwood R. Bogle, J. Banks, and W. of G. all Saner, Hardwicke, Worth, Fort Saner Houston, E. & Robt. Blalock, Blalock, Dallas, Myron Loh~ Jack, Jack Clarence G. Houston, Blalock, man, all of Marshall and Richard W. Falls, Keenan, and Robt. B. Kilgore, of Wichita John E. Tyler, curiae. all filed briefs amici opinion of the court.
Mr. delivered Justice SHARP Refining Company set & filed this suit The Humble Oil granting a aside an order Railroad guardian May McCook, Dora Gladys estate Mrs. minor, on Johnson, oil well acres of land to drill an 1½ Brown, against Gregg County, C. H. minor owned drilling contractor, thereof, Fisher, re and O. C. his lessee drilling therefrom; producing oil and to strain them from granting any further Railroad Commission restrain the re drilling permit Court refused such thereon. The District lief, Appeals at appealed the case was Court of Civil Austin, judgment the trial court reversed and and the was granted injunctive prayed relief a divided court. (2d) 68 S. 622. W. Appeals quote opinion from the
We Court of Civil following controlling facts: acquired 102- “The Humble a lease on a interest" in 47/48 Upshur Hooper survey acre tract out of the G. W. Gregg May in 1931. counties Dora Johnson owned other subject her mother. interest to the life estate of On 1/48 20, 1932, by partition October decree the District Court of *4 Gregg County, tract, there was set aside to said minor a 3-acre square, adjoining 130 varas south said 102-acre line of 17, 1932, tract, Mrs. near southeast corner. On December guardian, court, McCook, approval probate with of the and as pursuant previously attorneys, to executed contract her with Hamilton, compen conveyed attorneys, & to her Hamilton as services, 3-acre sation for their the minor’s east half of said De conveyed Hamilton & in turn on tract. Hamilton same 1932, 19, December cember to C. H. Brown who contracted on well, 22, 1932, This with O. C. Fisher drill a well thereon. to suit, necessary protests, proceedings after and other here, There set forth after, has been east acres. drilled on said 1½ 10, McCook, 1933, individually as April on Mrs. permit guardian, applied to the for a Railroad Commission tract, drill another well on acres 3-acre the west of said 1½ granted 21, 1933, permit April an ex was on 1933, ception rights. 28, protect April to rule 37 vested On McCook, guardian, pro Mrs. as under authorization Brown, court, acres to C. H. leased said west bate 1½ conveyed & whom Hamilton Hamilton had same man to drilling tract, entered into a con east acres said who 1½ 4, 1933, May drill thereon. on a well tract with O. C. Fisher thereupon This suit was filed the Humble which owned west, on the lands to the north and of the 3-acre tract lease east partitioned May to Dora Johnson.” question presented decision, presented
The first was question Appeals, Court Civil is that involved affidavit, upon here is moot. This contention is an based question completed which shows that well was had 28, producing permit been oil under such since 1933. June drilling permit granted 21, April The was on and a May 4, 1933, contract on A was made to drill the well. suit was filed in on the District Court to set aside the May 12, 1933, and, upon bond, temporary a execution restraining order was entered on that date. This order was 31, 1933, hearing May upon thereof, continued to 1, 1933, appeal order was on June An taken dissolved. was Appeals, 2, 1933, appeal the Court of Civil and on June correctly bond Appeals was filed. The Court of Civil held holding sound, the case was not moot. This is because order, upon question of the Railroad Commission this subject 4662, 6453, 6049c, to review the courts. See Arts. Certainly Vernon’s Annotated Civil Statutes. under the state rights of this parties record the are not settled until the litigation has terminated. We overrule contention. question The main for decision here involves the construc tion of Rule 37 of the Railroad Commission. This rule relates development production The dis covery brought of oil many complex has for solution problems. Legislature frequently has been called pass fixing laws parties of all therein. interested 59a, In 1917 Section Texas Article of the Constitution of adopted, provision Legislature requires was “pass
all such appropriate laws as to the conservation development of all the natural resources of this State.” *5 gas be, Oil and are, being should generally and treated as nat ural resources.
In 1899 Legislature, recognizing the clearly public interest gas, in oil 6004-6007, enacted Arts. Revised Civil Statutes 1925. These Articles describe how well shall be- drawing the precautions to taken when be drilled and gas bearing penetrated casing or had oil from well which rocks, prevent oil and “in such manner shall 6008-6013, Annotated escaping Vernon’s therefrom.” Arts. Statutes, heavy penalties for failure provide now Texas Civil recognize gas, plainly escape of oil and compliance compel any steps to to take citizen gas. of oil and to restrain the waste with law in order industry stupendous. There in this has become The oil State State, many in separate operated fields this are now oil leading in the varying Texas is now the State conditions. handling of this production The in oil refineries. oil and giant problems industry complex for the services calls and its utterly impossible experienced persons. It is trained Legislature every detail for the meet the demands gas. passage relating production The of laws placed duty require be situation necessities just carry and reasonable some out some tribunal public duty Commission. policy. placed the Railroad This on
The of the Railroad Commission for the basis Legislature, Arts. Title act 6004, is found in the Acts of The .etc., Vernon’s Annotated Texas Civil Statutes. language Legislature specific plain in has defined public respect policy conservation with of this State at in force and waste of oil Art. which was granted, part time reads: in this case was petro- storage production, transportation “The of crude or amount, manner, leum oil in such or natural such hereby de- or under waste is such conditions as constitute prohibited. term clared to be unlawful and is The ‘waste’ things among specifically other shall include: “(a) any operation an in- The oil well or with wells gas-oil ratio, given hereby efficient authority and the Commission is
to fix and ratio. determine order such “(b) drowning any part water of or with stratum capable producing gas, gas, thereof or oil both paying quantities. “(c) Underground waste or loss however caused and whether defined other hereof. subdivisions Permitting
“(d) any wastefully. natural well burn “(e) gas, provided, The wasteful utilization of natural however, gas, lawfully permitted pro- the utilization of to be producing gas, duced from a well both oil for manufac- .and turing gasoline wasteful, shall not be construed to *6 provided gas further that the utilization of natural authorized by provisions the Commission under the of Section 2 of Acts Forty-second Legislature, Session, First Chapter Called (Art. 6008), shall'not be construed as wasteful.
“(f) The creation unnecessary fire hazards. “(g) Physical to, resulting from, waste or loss incident or drilling, equipping, locating, so spacing operating or well or wells as reduce or recovery tend to reduce the total ultimate petroleum of crude any pool. oil or natural “(h) to, resulting Waste or from, loss incident or unnecessary, inefficient, improper excessive or use of energy, reservoir any including gas energy drive, or water pool; however, well or it is not the intent of this Act to require repressuring pool of an oil or separately owned properties any pool manage- be utilized under one ment, or ownership. control
“(i) loss, Surface waste including or unnecessary surface or excessive surface petroleum losses or destruction of crude or natural without beneficial use.
“(j) escape open air, The producing into the from a well gas, both oil and of natural in excess of the amount which necessary drilling operation efficient or the well. “(k) production petroleum The crude oil in excess transportation or market or de- facilities reasonable market mand. The Commission is authorized to when such determine production imminent, excess exists or is and to ascertain reasonable market demand. any expressly
“The to consider Commission is authorized making rules, regulations or all of the above definitions 1929, (As Acts orders to waste of oil or amended 1931, Leg., S., p. Leg., 694, 313; p. 1st C. 41st ch. Acts 42nd 3, 1932, Leg., S., 46, 26; p. ch. 2 §1.)” 4th ch. Acts 42nd C. 1935, by foregoing Acts of amended The was Article 782, Legislature, became effective H. B. §2, 44th No. following provision: adding by April thereto the to authorize “Nothing in shall be construed this Section marginal marginal wells, such production as limitation Statute, fixed Statute the amount below are defined wells for such wells.” (k) of the validity say pause Section We drawn Act is so foregoing questioned here. The not Article is destroy the invalid, that, would any if is declared .it section other sections. Article, from the entire because it is severable invalidity validity express opinion We, therefore, no (k). of Section Railroad Commission placed on the mandate was *7 con- rules, regulations for the or orders enforce “make and gas prevent and natural petroleum oil and of crude servation regulations for rules, orders including or thereof, the waste following purposes: defined, of waste, as hereinbefore prevent “(1) To drilling producing gas and in petroleum oil and natural crude operations thereof. storage, piping and distribution and (cid:127) in plugged to be require dry wells “(2) or abandoned To gas, and oil, petroleum natural way crude to confine such as prevent they and are found strata in which water escaping into other strata. them from record preserving a drilling
“(3) and For wells thereof. operated
“(4) require in such wells to be drilled To adjoining property. prevent injury maner as “(5) prevent petroleum oil and natural To crude escaping they found from the strata are water into other strata. regulations shooting
“(6) for To establish wells rules separating petroleum and for crude oil from natural “(7) kept reports require by To made oil records be gas drillers, petroleum operators, and carriers of crude by inspectors. or natural its
“(8) things necessary It shall do all for the conservation petroleum crude oil and natural and to rules, regula- thereof, waste enforce such and shall make and (As necessary tions or as to that end. amended orders 26; 1931, Leg., S., 46, 1932, p. 1st ch. 42nd Acts Leg., 42nd Acts C. S., p. 3, 2, 4th ch. §7.)” C. 1935, foregoing by
The Art. 6029 was amended the Acts of Legislature, 782, adding by fol- 44th lowing provision: H. B. No. thereto the §4, tenders, “(9) provide permits, To issuance per- permission other the issuance of such evidences when mits, tenders, permission necessary en- or is or incident regulations, prevention rules, for the forcement of its or orders of waste.” give empowered notice and conduct Commission is
hearings initiative, complaint com- upon its or on own without hearing pro- plaint any party interested, as notice and after 1925, 6038, to determine vided Art. Revised Civil Statutes being committed; waste if is imminent or and if such deter- made, promulgate rule, regulation, mination is such or order judgment reasonably necessary is to correct same. See Heavy penalties placed upon Art. 6049a. parties are all vio- lating provisions any regulation or law valid rule or promulgated by provides the Commission thereunder. It any party interested affected the conservation relat- laws ing petroleum gas, thereof, crude or natural or the waste by any Commission, or rule order of authorized to file against suit the District County Court of Travis the Com- validity laws, rules, mission regulations, to test the of such (Acts Legislature, orders. 2, 3, Session, p. 42nd 4th Called ch. 1932, Legislature, Acts §5; Session, p. 42nd 4th Called ch. 6049-c, Art. §8; Supplement, Complete Statutes, Second Texas 1934, pp. 226, 227.) *8 above, permit As stated question drill inwell was granted 21, April on 1933. Rule No. 37 in force the time was at granting permit. 31, 1933, January As amended this rule reads as follows: 37, adopted 26, 1919,
“Rule hereby November amended applies far so as it the East Texas so as hereafter Field read as follows: ‘No well shall hereafter drilled for oil or be gas any point at (660) sixty less than six hundred feet drilling any completed well; or and no shall hereafter well be drilled oil. any point or at than hundred less three thirty (330) line; any property pro- feet from or division vided, however, the Commission in order to or to waste protect rights, will, hearing, grant per- exceptions vested after mitting drilling herein- within less than or shorter distance prescribed, upon application stating duly fully above filed facts, hearing having application notice such been first given adjacent thereby; provided, to all if lessees affected adjacent writing, thereby all hearing lessees affected waive in notice objection granting application,
on of said may proceed application with- Commission to determine such hearing; and, provided off- out of forced further in cases grant exceptions sets without waivers hearing necessary it is are when evident that the wells desired ” protect properties proposed them.’ on to drill which it is adding 13, 1933, the ex-
Rule 37 was amended June any ceptions following: protect “or to described therein the n property against drainage operation undue reason of any operator.” However, purposes for the wells of other 305 opinion consider of this we will the rule in force at the time granting question. recognizes spacing regulations. The common law no well At common law the land owner can drill an unlimited number of gas upon Willingham, wells for oil land. his Mills & Oil & (1926), Summers, (1927), & §270; Gas Oil Gas 73-76. The ad joining complain land owner cannot if wells are drilled near his boundary only way line. Under this rule the the land owner protect can himself is to drill offset wells. Prairie Oil & Gas State, W., (Tex. App., 1921); Co. v. 231 1088 S. Comm. Hunt State, (2d), (Texas App., 1932); v. 48 Kelley S. 466 W. Civ. Co., St., 317, v. E., 399, A., Ohio Oil 57 Ohio 49 N. 39 L. R. 765, Rep., (1897); Monongahela 63 Am. St. 721 Barnard v. Nat Co., 362, Pa., Atl., However, ural (1907). Gas 216 65 801 rule 102, has been modified in this Title Anno State. Vernon’s Statutes, tated particularly 6014, 6029, Texas Civil Arts. 6046. recognizes ownership rule in Texas of oil and place, gives to the lessee a determinable fee therein. Garner, Texas, 502, 769;
Lemar v. reys-Mexia (2d), Humph 121 Gammon, 50 S. W. Texas, 247, W., 296,
Co. v. 113 254 29 S. R., 607; A. Waggoner L. Sigler Co., Texas, v. Estate Oil 27; (2d), Texas, S. Daugherty, W. v. Texas Co. W., 717, A., 1917F, 176 S. L. R. 989. Owing peculiar gas, characteristics of oil and foregoing ownership rule place should *9 considered in gives capture. connection with the law of rule This right produce gas to all of the oil and that will flow land; out of the property right. well on one’s and this is a And only it by physical is limited possibility adjoining diminishing land gas owner by the oil and under one’s land right capture. following 'exercise of the same The de capture cisions applied discuss the law of in this State: Stephens Co., Texas, 160, Co. v. Mid-Kansas & 113 Oil Gas 254 W., 290; S. Ry. East, Texas, & Houston T. C. Co. v. 98 146, W., 279, 81 A., 738, 620; S. Rep., 66 L. R. 107 Am. St. (Comm. W., Prairie Appls.) &Oil Gas Co. v. State 231 S. regulation 1088. subject police Both rules are to under the power of a state. impossible It is quantity of oil and to measure the exact
gas impossible beneath fix equally each to tract of land. It is give justice standard which land owners. will exact to all limit, Some gas land produce to owners wish to oil and 306 gas ground keep to their oil and and others desire
while quantities. develop Hence arises the conflict of inter- it less recognized now, however, that when an oil has field It is ests. developed, experts fairly approx- and can determine been tested place pool, imately and in a common the amounts oil equitably oil also determine amount of and can each the owner of tract land under certain recoverable operating conditions. Legislature power passed
The the exercise of has regulatory prohibit measures the waste in this 102, Statutes, Sup State. Title Annotated Texas Vernon’s plements power The thereto. Railroad Commission granted authority act is on this matter limited prescribed Legislature. in the stat The fundamental standards specifically passed Acts were utes will control. Certain declare, respect public policy the de of this with State gas, pri velopment protection of oil and established duty relating placed mary policy, to such standards carry out the details Railroad general this is a valid provisions the statutes. That Carlton, power definitely v. Trimmer exercise of settled. now Municipal Texas, W., 1070; 572, City 116 v. 296 of Denison S. Shupee Co., Texas, 794; R. R. 291, (2d), v. Gas 117 3 W. S. 505; Commission, P. Texas, 521, (2d), & Texas 123 73 S. W. Texas, 126, Commission, 124 W. Motor T. Co. v. R. R. 73 S. 509; Texas, 618, 622, (2d), Spears Antonio, 223 v. 110 S. San 560; 166; Co., W., (2d), Comp. Ry. West Texas Co. v. 15 S. W. 19, 33; Ruling Jones, Texas, City 28 6 Case of San Antonio v. Law, pp. 177, 178. §178, rule in
In the standard or absence a well defined defining public respect to policy statutes of the State with interests, the mineral would be With the Railroad Commission regulations, outhority promulgate rules, relat out or orders ing pass protection laws power delegated Legislature, rests with cannot 1 2 and some commission other tribunal. Article Section Texas, Miller, Constitution; Langever 124 Article 3 of the v. cited; 80, (2d), 1025, R., L. S. W. 96 A. and authorities Ct., Ryan, S., 388, Sup. Panama Ref. Co. v. 293 U. *10 678, Ed., Ed., 223; S., L. L. Poultry Corp. 79 Schechter v. U. Sup. Rep., 55 Ct. 837. Legislature, carry
In order to out the commands rule adopted validity Railroad of this Rule 37. 307 upheld repeatedly. v. has been Producing Co., Oxford Oil Co. Atlantic Oil & (2d), (N. Texas, 1926),
16 Fed. 639 D. af A., 5th, (2d), (C. 1927), denied, 22 597 firmed Fed. C. cert. S., 585, Ct., 433, Ed., Sup. (1928); L. 277 U. 48 72 1000 Com Review, 328; (1927), Refining ment 5 Texas Law Humble Oil & Strauss, W., 528, 536, (Tex. App., 1922); Co. v. 243 Civ. S. Bass, (2d), (Tex. Railroad Commission v. App., 1928); 10 586 S. W. Civ. Jarmon, 936, (2d), 938, (Tex. v. 25 State S. W. 1930), dismissed; App., Civ. writ of error Rabbit Oil Creek Co. Corp., (2d), 737, (Tex. App., 1933). v. Pet. Shell 66 S. W. Civ. Review, XIII, 1, p. 119, Texas Law No. Yol. an able contains interesting review of this rule. adopted Rule 37 was first It 1919. has been amended time, purposes from time to to meet for which it was adopted. possess Does the Railroad Commission carry purposes adopted? out the for which 37 was Rule Section 59a, Legislature 16 Article of the Constitution directs the necessary do whatever for the conservation of natural re Legislature comply sources. The has undertaken to with this provision Therefore, the Railroad the Constitution. Com mission, acting laws, ample authority, under valid has police power, both the Constitution and the waste and conserve the mineral interests of this This rule is State. supported by a host of authorities. For a full and exhaustive following: question discussion of this we cite the v. Lombardo Dallas, 1, 478; City Texas, (2d), 475, 124 73 S. W. Marble- 531; City Angeles, (2d), 528, head Land Co. v. of Los 47 Fed. (the Supreme United denied a certiorari in that States Court case, S., 634, Ct., 18, Ed., 540); Sup. 284 Houston U. 52 76 L. Dallas, Texas, 396, 413, 415, Ry. City 84 & T. v. 98 C. Co. W., 648, A., 850; Oxford, City 70 L. R. v. 24 Fed. S. Marrs 541, 134, R., (C. A., (2d), 552, (2d), 32 Fed. A. L. 1336 C. 67 8th, denied, 573, Ct., 29, 1929), S., Sup. L. 280 50 74 Cert. U. S., 199, 201, Ed., 625; (No. 1), Oil v. Indiana 177 U. Ohio Co. Ct., Ed., 729; Sup. 576, Linsley 20 44 v. Natural Carbonic L. Co., S., 337, Ed., 369, 61, Sup. Ct., Ann. 220 31 L. Gas Cas., U. 55 S., Commission,
1912C, 160; Champlin Rfg. 286 U. Co. v. R., 210, 233, St., 559, Ed., 1062, Sup. 86 A. L. 76 L. 403; Producing Co., Fed. Oxford v. Atlantic Oil Co. Oil Supreme (2d), 639, 642, 597; (2d), (the United States Fed. Sup. S., 585, 48 case, Court denied a certiorari in that 277 U. Ct., Inc., Henderson, Ed., 1000); v. Railroad 72 L. F. C. Sterling 221; Con Texas, (2d), 218, v. Commission of 56 Fed. *11 308 S., 378, 396, Ct.,
stantin, Sup. 190, Ed., 375, 287 U. 77 L. 53 384, 385; White, S., 187, 197, 198, 243 N. Y. C. R. Co. v. U. Ed., 672, 673; R., 667, p. 1348, A., 1917D, L. 61 L. 67 A. L. R. D, 1, Cas., Ann. 1917 629. City Dallas, Texas, 1,
In the case of Lombardo v. of 124 73 475, 478, (2d), very Chief Justice Cureton W. able S. opinion many touching exhaustive question, reviews authorities this opinion for the rendered Court said: right property insistence that the or the unrestricted “The long subject police power property use of is not to the has adversely to contention. since been determined general applied Jurisprudence the rule as “Texas states as follows: State “ ‘All property [******] is held subject the valid exercise of the regulations merely police power; unconstitutional be- nor are rights upon private person they operate as a restraint cause property to individuals. The infliction or will result in loss' pro- deprivation property due without of such loss subjects power upon law; police exertion of the cess of manner, scope, proper is due lying in a and lawful within ” process of law.’ He further said: police foregoing (rules) to show that
“The suffice regulate use, appropriate or may be and where exerted purposes in use, property necessary prohibit for certain welfare, morals, general public health, safety, of the aid impediment to its the constitutional limitations form no a fair exertion the enactment is reasonable and bears where sought relationship object to be attained.” (No. 1), Company The noted Oil v. Indiana case Ohio 729, S., 190, Ed., Ct., involved Sup. 44 L. U. right production of owner’s unrestricted neighbors’ In- the law of from his own and his lands under White, reasoning afterwards diana. The who of Mr. Justice Supreme of the United became Chief of the Court Justice States, convincing, applicable equally is so clear and In State, quote opinion. liberally laws of this that we opinion course he stated: restating general spent “No time common need ownership law rule that the earth in fee of the surface beneath, right carries con- with it the and the of the minerals sequent not, privilege mining And need them. we to extract therefore, pause legislative scope author- consider the ity regulate mining rights exercise of and to direct the enjoyment methods of their infringement so as to one miner Mining Del others. Monte Co. v. Mining Co., S., 55, Last Chance 171 U. 60.” exhaustively He analogies then discusses the between ani- *12 mals deposits naturae and mineral gas, ferae clearly identity. shows the lack of He defines the nature of property gas in oil and ground, while stored in the the rights respective of the owners of the surface to the oil and gas in reaching the common reservoir. In the conclusions stated, following language the is used: things “In naturae power all are endowed with the of ferae seeking portion to public reduce a property of the to the do private main ownership by reducing possession. them In to gas the right case of pub natural and oil no such in exists the lic. It only is vested in the owners in fee of the the surface of gas earth within points the area of the field. This difference at once to power the distinction between the which the law may one, maker exercise public as to the two. In the as the owners, are the seeking every absolutely prevented one be from divesting possession.
to private prop reduce to No erty, condition, under such a can the be conceived because public owners, are enacting by the and the a the State of law public ownership discharge govern as to the is but the of the resting mental property trust in State as to of that character. the Connecticut, S., 519, Sup. Ct., Ge supra, er v. U. Ed., 793.) oil, hand, 40 L. the other the On proprietors right surface within the field all have the possession reduce They the could not beneath. absolutely deprived right belongs be of this to them with which taking right private co-equal out a property. But there is a supply, them all to take from a the two common source of united, though things substances separate. which the nature of are right It from follows from the their essence of exerted, things, the situation that of the it can be as to which by part the of the use one of convert a his to seek to pro possession may common portion undue fund to actual in an result right, being possessors the attributed to one of the more, others, by to the by detriment or waste one it is annihilation of the Hence of the remainder. right legislative power, peculiar from the nature objects exerted, manifested which it is to can be be securing owners, purpose by protecting all collective them, just by distribution, enjoyment to arise from the privilege possession, reduce to their and to reach like by preventing implied necessarily legislative end waste. This authority by analogy suggested things out is borne naturae, unquestioned legislature it is which has ferae taking, authority protect to forbid all from order to them right destruction, so from undue of the common own- ers, public, possession may ultimately reduce ef- Viewed, ficaciously enjoyed. then, protect as a statute to property of the common waste of the surface own- ers, the law of the of Indiana which is here attacked be- State private it property it is asserted that devested cause without compensation, substance, protecting private due is a statute being property preventing it taken one of the regard enjoyment without others. common owners Indeed, argument, upon the attack on the entire dilemma, depend, If the must which is this: statute involves right from the the collective owners of the surface to take fund, possession, *13 portion thus it to and reduce a of common fund, property then create a interest in the common not does taking private property provide for the of statute does the be, hand, compensation. If, there as a other on the without right to reduce consequence of the of the surface owners right them, property in and the sub- possession, a of in supply, as then in common reservoir of contained the stances qual- right necessary property, of the of its indivisible result relates, things peculiar position it ity the of the to which and right legislative of power protect the must arise the there of property by another form illustrate destruction. To statement, argument property in the sur- is There this: is in natural reservoir. in the and oil held face owners devesting right them regulated Their cannot without take be in adequate compensation, violation property of their without although Amendment, this, it be of the Fourteenth and may de- regulation property if owner cannot be exerted one doing prive rights, act so since his all the others of their say one absque injuria. damnum This is but will be rights with- may their common owner devest all the others of lawmaking protect all wrongdoing, power out cannot but violating enjoyment Constitu- owners their without tion of the United States.” following language: opinion
He concludes deposits of regulations “In natural view of the fact that of in- right an them as of to take the owners by the earth, as said cident of title in fee to the surface of the regulation Indiana, ultimately but a of Supreme of is Court relating they hence treated property, must as real rights essentially an local preservation protection of Considering peculiar this fact and situation character. substances, the character of the as well as owners, say that amounts to a surface we cannot the statute taking regulation by private property, it when is but a subject especially of Indiana of a comes within State authority.” lawful fore
We shall now consider Rule 37 connection with the going recognize principles. difficulty rules We giving precise police definition of what is to be done under the power. Judge As said in the case of Houston & T. Williams Ry. Dallas, Texas, 396, 415, W., City C. Co. v. 84 S. A., 850, speaking power 70 L. R. of this and its lim itations : power one, arbitrary
“The is not an but has its limitations. with, duty pro- It is commensurate but does not exceed the health, people safety, vide for the real needs of in their the. convenience, pri- consistently may comfort and as as be with rights. extensive, property vate As those needs are various indefinite, broad, power in- them to deal with is likewise impracticable precise definite But, or limitation. definition property deprived without the citizen can not be of his process law, police privation by due power force of the and as a requirement only exer-
fulfills when ap- accomplishing purpose cised for the and in a manner propriate purpose it accomplishment for which exists, having courts, proper necessary it often become *14 regard safeguard in favor of to the referred to constitutional citizen, upon inquire facts the existence of the to as to the given rests, power which a into the manner exercise of the and exercise; property of of its and if there has an invasion been rights, guise justifying occa- power, under the of this without way, sion, unreasonable, oppressive to arbitrary or in an and give injured party protection the Constitu- that urged plaintiff, true, tion secures. It therefore not as inquiry judgment legislative body all the the concludes of of support as to the the assertion existence facts to of essential true, it power question. such a If this were as that now in disregard the con- always legislative power would to be within The provisions giving individual. protection stitutional the to subject.” practically upon authorities are in the accord ascertaining meaning difficulty the clear find no We grants exceptions rule, permitting1 except part which the pro drilling near another “to waste or to wells rights.” part of the rule is construed vested When tect stated, property above the cardinal rules in connection with language purpose of used is for the dominant think the we rights. language protecting property The used is suffi these rights protect the fundamental ciently certain to definite and general in connection with the when construed all concerned guarantees opportunity property. in each owner It rules of spac exception by providing an to a uniform oil to recover his doing regulation prevent him from so. ing otherwise that would change police power rule does not under this regulates The exercise way property. merely controls the It and rule of enjoyed. person Each property used and his shall be in which land, each place under his owns oil and still ownership right use, enjoyment, possession, to still has the land, through gas produced on his wells located the oil and ownership origin. primary is still regardless rule of secondary. operative. becomes The rule of convenience right, proper, may arise where it would be Conditions grant permit to be exceptions to wells just to the rule so as Also, condi- prescribed therein. tracts than drilled on smaller just right, proper, may where it would be tions arise drilled subdivisions tracts to be subdivided and such rule; it is adoption instances but all such after the allowable, adjust duty based give of such potential production, the owner as to so By just proportion only of the oil smaller tract his quantity person recover a this method each will be entitled to recover- gas substantially equivalent in amount trying to dictate oil land. able under his Without used, any particular we would form to be the Commission as to suggest, however, approximately possible since it is to ascertain particularly potential production proved field, and of a Field, so amended the East Oil that Rule 37 be Texas ap- specify exceptions in more definite noted therein propriate terms, the field persons so that all interested connec- In this definitely know more their thereunder. tion, Legislature we hold bestowed that since the has on administering of this State the oil and business apply to right Commission, every person Railroad has *15 a mat- right, not as that tribunal for relief as a matter of grace. ter
313 waste, power Commission, prevent has the in order to way has the in that it to limit the rate of flow the same Corporation regulate Refining Champlin v. spacing. Co. to See Ed., Commission, S., 210, 233; Sup. Ct., 76 L. U. 403; Danciger Refining R., v. Railroad 86 A. & Co. L. Oil Commission, right (2d), the rate to control 837. This S. W. prevent the Commission of flow order to waste also enables excep advantage given- by an to offset the one who is obtained to by limiting production spacing tion to the rule his allowable way advantage. necessary In this the extent this overcome common Commission, by controlling in the the reservoir, the oil stored pre purpose of carry is enabled to out the dominant venting waste, and, time, permit owner each at the same develop by enjoy fully opportunity the estate to realize his ing the recovering that hold his oil We therefore power, Railroad Statutes, has the the Conservation regulating done, rule, promulgate spacing as was drilling exception the wells, the provide avid to an for waste; ex protect prevent and the. rule to vested and to ception so as to the rule is not too uncertain or indefinite result, hardships render the need rule invalid. No unreasonable faithfully the those author impartially applied rule if ized law to administer it. granted the undisputed permit It is violates herein regulations spacing permit, If as a valid Rule 37. sustained support exceptions it must find rule. At in the noted minor, time the 3 Rule 37 be acre tract was aside to set regulations force, spacing fore amendment was and the than well same above set out. that rule more one Under acres, except by special permission could be drilled on 20 permit granted Railroad Commission. The Commission operation. acres, drill one well on the 3 well was partition Since well had been the 3 acres after one thereon, permit drilled another a second to drill was obtained on the was intro acres. It is contended that evidence no 1½ showing hearing at duced before the Railroad Commission drilling was neces of a the three acres second well on made; sary waste, was claim to that effect no grant Railroad Commission did not protect ground theory, well second on that but on the recited ing majority rights. Appeals vested The Court of Civil opinion found that: case,
“Under if the on well uncontroverted facts of this 1½ in such close permitted operate acres involved be *16 314 adjoining
proximity appellant’s lands, injury to those lands drainage directly result, occur, will and waste result.” The decisions of the question Railroad Commission on this upon proof, must capricious be based and must not be or un holding hearing reasonable. The mere justify of a does not its hearing action. If after regard a the Commission acts without evidence, ruling wholly unsupported or by makes a evidence, it cannot be said to have exercised its discretion. And where it is shown that the Commission has abused its discre tion, illegally permit or has acted and issued a in violation of rules, fully permit nullify courts are authorized to Shupee Commission and its enforcement. v. Commission, Texas, 521, 505; Railroad (2d) 123 73 42 S. W. Corpus Juris, pp. 691, 692.
The merits of may materially impaired the rule by be ex ceptions granted. improperty wisely provides The rule exceptions certain pre conditions made. This be injustice many vents of land and owners No announced, inflexible exception rule can be but if an neces be sary to justice, application per meet the ends of for such a mit is to Commission, be addressed to the are whose orders subject to review the courts. Its must not unreason acts able, unjust, arbitrary. Where Rule 37 is in in a cer force tain territory, voluntary subject a subdivision a tract land of development oil and as a whole would not entitle the for owner tract, said tracts, right, divided as a matter exception an ground rights, Rule 37 on the vested because such act destroy would the ride and render the conservation laws nullity. application The was made the Railroad to drill a well on the under the terms acres 1½ rights granted
Rule 37. exceptions The are virtue of the contained being true, plaintiffs rule. That in error are position now in validity provision to attack they rule under which their received and now hold benefits. Coman, Baker v. Texas, 85, W., 141. S. judgment Appeals of the Court of will be affirmed. Civil
Opinion delivered June 1935.
ON REHEARING rehearing This cause filed is now before us on a motion for by plaintiffs in error. original cause, supra (83 opinion
In the rendered 935), following language (2d) was used: S. W. now, however, recognized
“It is an field has that when experts ap- fairly developed, been tested can determine proximately place common the amount of oil and in a pool, equitably oil and can also determine the amount of *17 gas by of each tract of land under cer- recoverable the owner operating tain conditions.
“Conditions may [*] arise where it would be s{c [*] [*] Jfc proper, right, and grant just exceptions permit to the rule so as to wells be Also, prescribed on drilled smaller tracts than therein. condi- right, just may proper, tions it and arise where would be tracts to drilled be subdivided and such subdivisions adoption rule; after the in it but all such instances is duty adjust allowable, the of the Commission to based the give potential production, the so the of such as to owner gas. only just By proportion tract oil smaller his and quantity person this each will recover a method be entiled to gas substantially recov- equivalent of oil and in amount to gas oil erable and under his land.” appears quotation part
It of that first and above a this Court second have been construed to mean that some prescribe has undertaken to them as rules and standards rights property which to determine and as standards promulgating in conserva- to control the Railroad Commission relating gas. con- tion rules have and to oil and Others orders quoted language, language, part above strued the or acreage opinion ruling must be from the that to amount controlling determining many how used as the sole or factor gas on, much oil and or how oil may wells be drilled land, from, hold in effect that be taken a tract or to upon a permitted drilled to be whenever a well or wells are expection the allowable small tract under the in Rule per- adjusted be always so the tract will such wells must be that propor- by the produce only quantity mitted of measured developed acreage acreage tracts tion which its bears to general provisions the rule. opinion. The lan These are constructions of the erroneous prescribing guage quoted used, purpose rules was not for the pur validity standards, and merely or pose in a but discussion showing rule exception, that the rule and its reasonable; rights exception respect are with vested that, “impossible it quantity while to measure the of oil and land,” “give justice beneath each tract or to exact to all owners,” exception land and the rule can be so administered property as to by fairly the invasion of rea sonably, exactly, protecting but of course each owner in the of, ownership opportunity produce, to save and according oil and which to the decisions he State right has a to take. recognize
We Railroad Commission is authorized relating production to make rules This prescribe any Court will not undertake to rule standard guide Commission, except legal, must actions be reasonable, arbitrary. many factors, facts, and not There are circumstances, here, which we shall not undertake to detail hearing, considered, each case each and in must weighed, given effect, in the fair and reasonable adminis laws, rules, exceptions. questions tration of such All of fact primarily are for the Commission to determine. *18 original opinion, here, held in
We it reiterate Legislature- public enacted certain laws which declare the policy respect development State with and con gas, placed servation of oil duty the Rail carry lodged road duty Commission to out the details. The with carry the Railroad Commission to make out the rules Legislature, impartially mandates enforce them. power grant In exceptions rules, the exercise of its it duty parties is the of the Commission to treat all interested justly, fairly, impartially all and circum the facts case; rulings stances of the and the actions and of the Com attempting accomplish mission in such will not be dis results courts, illegal, they clearly turbed able, unless are unreason arbitrary. rulings All Railroad Com rules and presumed contrary mission are to be is made valid until the appear. illegal If a rule is found competent jurisdiction, invalid a court court so such adjudge. The for the court cannot rule one substitute new adjudged exclusively invalid. with the Rail That rests road Commission. rehearing foregoing explanation,
With the the motion for is overruled.
Opinion 27, 1935. delivered November