OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

Gil dL Gas Divirlon 

Rrllrord Comlrrloa of Taxar 

Austin, Tama 

f 31, 19@, in 

at facta, and 

934, th8 Railrowl 

la f7 prrait orr to drill 8od opTodd-stinohoomb 

County, Tora8, ea 

maw of 

wea riid by Stanolind Oil 

and Mr~nolia Fatroloum 

at IEdgar and thr OOS&~OA 

validity or l uoh pen&t orDistrict Court upon final hsarf$$,~$&r& raid parad order ta be unrraboaabl~ and InvalId and rnjoindl production fret mid Wall HO. 3. UpOn appO111~ 

tha Dirtrlot Court Ju&mrnt ma afiirmd br 

the court of clril App6ale. (mger t*. 

~.tsnollnd Oil k Gacr Oompny, et al, 90 

s. w. (26) 636). The appallate 0plr110n 

reolted that: 
Hmora bla John 8. Taylor, 98~8 2 

“1. Th4 Comn~osIori CIQ Mt hdlV8 jurla6i0tion to isrlis such RUl8 37 permit ort!ari 

"2. Tbr ?Xper f~+s88 in o_uertion oon8tItutod e ~voluntary rubdivlaion in violation ef Fuls 37'; 

"3. Es Zdgor leaca alraedy had reaaoaable devalopmrnt anb an equal opportunity 

o4th that OC adjoining lsrsrrholdsr8 to rooowr 

tha 011 beneath 8ach tract. 

_ L, ., 

” .- 812 

%A S~ptambrr. 11, 1936, 8fter now applioation, proper notio88, sti h88rlngo, the Conmir8ion again grantrd ldear a Rulr 37 permit 

ordrr authorizing production oi rpoh wrll Ho. 3, 

the wall havim pr8vlounly been drilled under 

authority of the p-it order &ted Septomb8r 

2&, 1934. An urlpinal $roo88dIng MI fileb 

by Stanoltid and Ya&nolIa In #he Court.of Civil 

Appesla #asking write vi pr,roblbltion, injunotion, and othrr mllaf to rsrrtraln EQrr ?rom 

opersting said well end to prohibit thr Gomir8Ian from mrsltting the produotlon OS 8aid 

wall and frm i88uiag t8adarr for ray all proeuorb the refrun. The a0m or Civil Apprle 

dsnlsa thla ralief (stanolin& VI. 'xtl&ar, 98 

S. &. (20) 222) upon tbr ground tit an l cl8cpmt8 

la&al raaad,y 8rIat8d; but t!i* Court 8nnouno.d. 

theta 

"1. mob baas or ita prior jud8mclt adfudging tha inval.ldity of thr Baptrnbar 21, 193L, permit order worst l ffaotIv8 arid controlllas of the lwat permit trlsr; 

"2. The Comalabion*a ordrr and eef t888ra 

i8s\ud th8rrunder ar8 toId, being In 

viola t Iaa or fbe juQa*at Of rush 

Court in OQUIO No. 8292, @onmqrntly 

any further rrstrcrining OT prohIbItory 

ordrra vwld ba aUp@r8rtW+tOry. 
Honorabl8 John 8, Taylor, page 3 

wEdgar arQll*d to the suprrs8 Court for 

a writ of srror, but the Suprena Court eeni#d 

the applio~tlon for lack of jurlrcliofilon cm 

January 6, 1937. Edgarr's raatlon for rshesrlng 

w.8 OV#rrUl#d by the SU~r*n# Court. Rdp,ar wae 

th8rrupon oOmp8~18d to c1088 in his well and 

O8668 plPdUOti,71L th#r#fWX. 

“~4~?&il#, StenolInd 8Id ~&lOli. b#Bd 

filed an original proQ88din&,in th8 Court o? 

citil App~al8 t0 #IIfO~# th8 $Idg#6UAt# Or that 

Court in eeusee No. 8292 (90 s. t?. (26) 656) 

and No. 8580 (98 8. IF. (26) 222), 8nd t0 $X-Ohlbit and enjoin Edgar trm produolng oil 

fl?cP 86i't HI11 NO. 3, t0 $lU~ it, 65d t0 bold 

Mdgar In contempt 0r courtfir riolating l ua h 

jUdgIll8Ilt6. Ths Court of Civil Appssls d#Bi#(L 

all of the raiief #ought by relatorr. (St8nolInd 

te. Edgar, 107 5. K. (24zd) 631.1 Edgar tlwn 

a@iB 6omaenord Op#IWtiOB Of SSid W811 Utnd8C 

authority Of ?ih# &3RE&i@iMl's Q#mit Order 

dated Srpteabar 11, 1936. 

*Th#r8aft8r, stano1lBd @ml M8unolia ii184 

silt Weti#t &i&Or #IL4 the Crarni##IOn ill th8 

Dletrfot COUrt of Tr8?i8 &U~iity, Ott@Okilrg 8814 

order of SeptWiIbor 11, 19%. On I;hy 27, 1939, 

final jUd#l#IIt was rendemd by the Dietrid 

court 8U#tainIU& an4 upholdlipg th8 r8lld:tf or 

said ardor, the Court In lt8 judgment 1ik*wl** 

fiajudgine, that *all part an6 fusurr Qrodoetlon 

Of Oil from SOid WSll 18 ill dL1 l'#.$60t# hld’ll.’ 

No appeal 0:: writ or error from raid judeimat 

VMS Q@rf#Ot#d. 

"By lW#SOfl Of th8 fOr#~Oin~ f6Ot8 .;Pb Ql'Ooeadingr, Edgar ~88 prohibit& and pr#+#nt#d 

frm opercatln~ a614 well xO. 3 for 8 Q#rIOd of 

103 day8 froai January 22, 1937, to,Yey 6, 1937. 

DurIq( said period the al&OUbl# pFo&OtiOIl a@- 

COP386 to said well by the Ql'OntiOn 8ChsdU10 

and order of the mIBiUI@#~O~ -8 25 b.rl’@l* $*r 

day, aggregatlqg a total of 2,575 barr814, for 

8uoh period which lCd$ar ~8s. 88 I tlnd8r@t*n~ th8 

fOOt8, m#dy, xlllin& 8nd 8ble t0 pMdUO8, but 
814 

Bonorabla John 1E. Taylor, peea 4 

an hemFnmbova pointad cut, was prsoantad 

?roa pn,dualng sam by vlrka of the praorsdingc trar~~~naOove act forth. 

"Sdgar MW m&a suthority from the 

Ooaalaalon tc produoa Ohi8 oil in euoh 

da.ily qusntltlss and a~poants above the ourrant sllovmbla praduotlou aro&gn& to add 

~611 by the praretlon ~6h6dules of the Commiralon in sny amamr tbst th6 Coaaiadon 

asay l uthori66. 

"Undar Lba raats haraiaobova eat roe& 

will you planer a&ire whaUhu or not tha production of the amount of oil haraizmbova ~aMonad iany, br pmalttrd by the Crollllrrlan?” 

Srcn the Isots 88 stated in fotw 18ttar, 

ltrppr6r8 that tha final dao%alon oi the oourt ~68 

that tha ~611 In qu66tlon vm6 16@61, and that tba paratttar 6houl.d hsoa bean allond to produo@ the allew6bla uhioh war aralgnad to t&i6 wall under the proxa8lon 8oh6dul66 Of tha Rail-d Cofad66ion of Taua for 

8h4 z44di ~9x48 raid. The quartion, 8harafoxa, nsolv66 

it66u intO 4 d4t434IPin: tl0n or tjh4thhrr the ad.m~a coprle6ioa hr tha authority to ahJo6t the aUowa~la from 

this ~011 in the preaczt8 and iotdta allouicrbla l ohadulaa 

for tha Ea8t Taxer flald 50 a6 to grant Sflgar *brok 

sllowablr”; in otbrr nuxde, to pm4f.t Edgar to lnorarra 

hi6 produotitn trim thlr *all 60 66 to ,neka up for tk 

uaount ot allowabla produotim whloh ka lost dudag 

tha tlm6 wkn hi6 w6llwa6 olo6ad do-. 

Oanarally apesking, tba erithority of ehs R6ilroad Oo~ieelon to promulg6t6 ruha relating to tha produatlon or oil and gs8 dap4nd8 upon the right or the 

mete or Taxsa and it6 eganolma to pravent the phfsioal 

waste of 011 and 866, l ithar andar~rouad or OVergxOUdl, 

mhioh r a a ultl e ithar f?on lsmtilclsnt sethAs at prodnotlon or produatdon in a%0668 ot aarkat Qalaund. Sac 

Artlolaa 603.4, 6023, 6029, 6042 end 60490, Bernonqs Annoteted Tax68 Civil Statutar. Th6 Railroad Caactl6sfon t6 

6p66lflcally given mthorlty to limit the 9IWduotion of 

oil, ~bPr6 tt rind6 thst %66ta is taking 91506, or $6 

r#as~ably imr&lsCit,,* Utl34F tha ~XOVilliOiu Of 6Ootion 7 

of- article 60~90. 
J 

Honorable J,:~hn B. Taylor, peea 5 

The liialtstlon or the production rrom En 

011 field n~~oaararlly carrier; with lt tha prcblam 

of, dlvldin& tm allowable prcduotion among the vsrlour 

produoare in thu tie ld. The 6tatutaa or Trxen prorid 

no ep4cifio rorraula ror tha dirtribution 0r the fmorr6bl4 produotlon, but mrroly provide in grnual tarma 

that, "tha Comilselon shall dlatrlbuts, promtm, or 

otherwiea apportion or allocate tha sllow6bl6 produotlon amqc the varlouo prodnoara ou a rsaeonabla basis.* 

Artlcla 60~90, Saation 7. 

while there hava barn go roportrd court drcirion6 on tha mbjaot, the quaetlon of thr authxltp 

or the R6ilmed COmmiaalon to permit en operator to 

produor "beak 6110wablaw h6s bean praviouely paaaad 

upon in opinions or this dspsrtmnt. In e lattrr 

opinion dated May 27, 1935, to Senator Arthur P. 

Du(JP(an, by Han. Soott hinas, Firat A68i4~nt Attorney 

Gen4ra1, it was atatrd that thbr RaILroad COmta.la6lon 

doer not have authority to pemlt an operator to produoa "beck ellowabla.* Th6 mama oonolu6lon we6 raaohad 

in an opinion by A66i.atant Attornay G6nar61 V. 3. (Diok) 

b$lt, sddrersrd to thr Railroad Co3mi66iOa of Taxas, 

dated Ncveabar 2C, 1935. Cop166 of these o9lnlons 

ara attached hereto. 

The Railroad Com618(lion ha6 sated upon thr 

conetructlon of it6 pmarf! by tha .Attornay Gansral'4 

Deprtmnt, end hss oonsistently takan tha position 

that 1: do46 not have the suthoritf to pamit 61n opcrater to !w!ka up by present produotion hi6 fsilura to 

pm&co hia (LLlOPlBblil in thr peat. It Is a inetter of Ronare1 lznowledga~ thet at the! tim the o,pinions of thi6 daperta*nt war4 written In 1933, varlow parson6 war4 aarartREP th4 right t0 produc6 large cyentities 0r oil a4 

"back sllwabla," and tke mrmlmCant dapartmantal oonatrnctlon of the RailrO6d Coanl~~ion~s authority by thi8 

dapartmnt and by the Railroad Oo~~lsslon ha6 directly 

Orfsotd important property rl@ifs. 

In the reoa of thie aspart3cntsl construction, 

the Leginl5turr bee not aesn rit to 8aand the conasmtlon statutes 210 08 to confer on the Railr 0rU CCmmi6Sl0n 
, 

Honoreble John B. Taylor, p-8 6 

the euthorltr to grant "beak allowable.* Section 7 

of what is now Artlole 6049~1, V~rnoa.1’8 Annotated Cirll 

StatuteP, wns aaondrtl by Chapter 76, Aotr L4th Leglaletun, gegular Sesrlcn, r!ratlon 6, atrsotirr April 

13, 1935, anO that contained the mxe rorlslon8 a8 

to the powers or the Railroad Coamirr P on to prorete thr 

produotlon of 011 a8 hereinbefore quoted. Dndrr Seotlon 

20 of thla act, Its provl8loa8 teminet86 S8ptubw 1, 

1937. Ry Chapter 15, Act8 1937, 45th Leg1618tur8, Bogular Se88lon, Se&ion 1, the l iio o tlte term of thl8 aot 

was extended to septeaber 1, 1939, and bl Hoc188 Bill 

851, P,otm 46th Legislaturrr, Regular 888eion, 8eotIon 1, 

the 8rr80tiw tfim or the sot wa r 8g a in l xt8ndad, to 

srptenber 1, 19&l. Roth Of the88 l Xt8B8iOB8 WeF8 rlthCut any asennOla8nt t0the 8t8nitiry prOtiaiOn8 relating 

to the proration powar8 of the Railroad Commi88i0n. 

Y;heP8 886tUtOr~ pmV181OIU al.8 $eB8r81 ti 

thrlr t8rm. the aapmllwnt81 oonstruotlon pb erd 

upon the rtatutr, ii reoaonable, till b8 iollowd by 

the oourta. Th18 18 pertlonlarly tF\i8 where the OOBstructlon dimotlj arrrOt8 important proparty ri@ittr. 

31 following the drparts8ntal cocn88ruCtion by th8 

Rdhad caParf88iOn Of Eh8 OOB8emtiOB 8tatUt88 in 

another aonneotion, th8 8upnme Court raid In W&8 

08118 Of lie&nOlia PatlQl.rUB i?QaWBt VI. w8W hod888 

Froductlon Co., 12?- 

n06 a 

ox. 617, 625, 104 s. w. ml-- 

"iin eraainetion of our oonrarvatI0n 

etRtUt.8 dieOlOSca8 that they d0 SiOt In 

any manner directly deel'v?lth such quertion, but are opsn to construction in regard thereto. Under such a reoord n-8 

think in thie Instenor wa should eU8tein 

the depmtmentel. ruling. ZOsubart v. 

Chloaeo, csto., iiy. Co., 116 Texar bu, 

296 S. w. 10903 Moon&en v. Terrell, 

Comptroller, If,9 Tixar 173, 202 8. K. 7271 

Tolleson v. ??og,an, Lend Conuolesloner, 96 

':‘exa8 424, 73 8. %. 520.” 
Eonorabl8 Jnhn B. Taylor, pa+?8 7 

There Is additional reason for adopting 

ths ds;zzt%sntal o~netruotizn where, subeeguant to 

the Qerert7ental conatFUOtiOB, the Legia18turr has 

re-em&tad or nxtssded the e%tuta without char&o, 

th8 preeu~ptlon being that the Leqislsturr kn8W 

of tts Ee~9rtsantal csnstruotlon and wea eatl8flad 

with it. Federal Crude 011 Go. 18. Youat-La8 011 

21 52 

%k&yl:~. -g&et' lldSi'e:*, &7 ‘16 s #+ 

(<a) 56; Bt?Bh;n& 801 

~6 r-d Coaaisa& of Taxi8 re: T. &'N.'O. 2. CO.! 

42 s. . d) 1091 (error refU8ed). 

?c'~ en of the Opinion that f&hi8 depart!IWIb 

ehoulC a&here to ths construotion herstorom oolllristently follow86 by thle Urpartmaat and the Railroad 

Conmisaim, and we therefore are cf the opinion thet 

the Rallrorad Colr~laslon fims na have authority to 

parmlt a?car tc produos thr "baok ellowable~ xhlah 

h8 %?6,8 FrsV8Zlt8b trOn p1.0 uOiB@ ttB68r tha trot8 8tat8d 

in your letter. 

Yours very truly 

Jama8 F. R8rt 

k88i6tbnt 

APPROVEDOCT 3, 1940 

/biL&L&.d