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 StanolindOil and Mr~noliaFatroloum at IEdgar

and thr OOS&~OA validity orl

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 hdlV8jurla6i0tion to isrlis

such RUl8 37 permit ort!ari

"2. Tbr ?Xper f~+s88 in o_uertion oon8tItutode ~voluntary rubdivlaion in violation ef Fuls 37';

"3. Es Zdgor leaca alraedy had reaaoaable devalopmrntanb 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 authorizingproductionoi rpoh wrll Ho. 3, the wall havim pr8vlounlybeen drilledunder authorityof the p-it **order** &ted Septomb8r
2&, 1934. An urlpinal $roo88dIngMI fileb by Stanoltidand Ya&nolIa In #he Court.of Civil Appesla #askingwrite vi pr,roblbltion,injunotion, and othrr mllaf to rsrrtraln EQrr ?rom **opersting** said well end to prohibit thr Gomir8Ian from mrsltting the produotlonOS 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 lffaotIv8 arid

controlllasof the lwat permit trlsr;

"2. The Comalabion*a ordrr and eef t888ra i8s\ud th8rrunderar8 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.Honorabl8John 8, Taylor,page 3

wEdgararQll*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 raatlonfor rshesrlng w.8 OV#rrUl#dby the SU~r*n# Court. Rdp,ar wae th8rruponoOmp8~18d to c1088 in his well and
**O8668 plPdUOti,71L**  th#r#fWX.
“~4~?&il#, StenolInd 8Id ~&lOli. b#Bd filed an originalproQ88din&,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 courtfirriolating l uah **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 authorityOf ?ih#

&3RE&i@iMl's

Q#mit Order dated Srpteabar11, 1936.
*Th#r8aft8r,

stano1lBd@ml M8unolia ii184 silt **Weti#t &i&Or**  **#IL4** the Crarni##IOn ill **th8** DletrfotCOUrt **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 judgment1ik*wl** fiajudgine,

that *allpart 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 .;PbQl'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

BonorablaJohn 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 suthorityfrom the Ooaalaalon tc produoa Ohi8 oil in euoh da.ily qusntltlss

and a~poants

above the our

### rant sllovmbla praduotlou aro&gn& to add ~611 by the praretlon ~6h6dulesof 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 qu66tlonvm6 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 8oh6dul66Of 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 **cop** rle6ioa hr tha authority **to** ahJo6t the aUowa~la from this ~011 in 

### thepreaczt8 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 allowablaproduotim whloh ka lost dudag tha tlm6 wkn hi6 w6llwa6 olo6ad do-.

Oanarally apesking, tba erithority of ehs R6ilroad Oo~ieelon to promulg6t6ruha 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~rouador **OVergxOUdl,** mhioh ra aulte

lithar f?on lsmtilclsntsethAs 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 9IWduotionof 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 productionrrom 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 ep4cifiororraula ror tha dirtribution0r the fmorr6bl4 produotlon,

but mrroly provide in grnual **tarma** that, "tha Comilselonshall dlatrlbuts,promtm, or otherwieaapportionor allocate tha sllow6bl6produotlon amqc the varlouoprodnoaraou a rsaeonablabasis.* Artlcla 60~90, Saation 7.

while there hava barn go roportrd court drcirion6 on tha mbjaot, the quaetlonof thr authxltp
or the R6ilmed COmmiaalonto permit en operator to produor "beak 6110wablawh6s bean praviouelypaaaad 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 authorityto pemlt an operator to produoa "beck ellowabla.* Th6 mama oonolu6lon we6 raaohad in an opinion by A66i.atant AttornayG6nar61 V. 3. (Diok) b$lt, sddrersrd to thr Railroad Co3mi66iOaof Taxas, dated Ncveabar 2C, 1935. Cop166 of these o9lnlons
ara attached hereto.

The Railroad Com618(lion ha6 sated upon thr conetructlonof **it6** pmarf! by tha .Attornay Gansral'4 Deprtmnt, end hss oonsistently takan tha position that 1: do46 not have the suthoritfto 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*ntwar4 written In 1933, varlow parson6 war4 aarartREP th4 right t0 produc6 large cyentities0r oil a4 "back sllwabla," and tke mrmlmCant dapartmantaloonatrnctlonof the RailrO6dCoanl~~ion~s authority by thi8 dapartmnt and by the RailroadOo~~lsslonha6 directly Orfsotd important property rl@ifs.

In the reoa of thie aspart3cntslconstruction, the Leginl5turrbee not aesn rit to 8aand the conasmtlon statutes 21008 to confer on the Railr 0rU CCmmi6Sl0n,

HonorebleJohn B. Taylor,p-8 6

the euthorltrto 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, gegularSesrlcn,r!ratlon 6, atrsotirrApril 13, 1935, anO that

containedthe mxe rorlslon8a8 to the powers or the Railroad Coamirr Pon 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 otlte

term of thl8 aot
was extendedto septeaber 1, 1939, and bl Hoc188 Bill 851, P,otm

46th Legislaturrr, Regular 888eion, 8eotIon 1, the 8rr80tiw tfim **or** the sot war 8gain l xt8ndad, to srptenber1, 19&l. Roth Of the88 l Xt8B8iOB8WeF8 rlthCut any asennOla8nt

t0 the 8t8nitiryprOtiaiOn8relating to the prorationpowar8 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 pertlonlarlytF\i8where the OOBstructlondimotlj arrrOt8 importantproparty ri@ittr. 31 followingthe drparts8ntalcocn88ruCtion 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 FroductlonCo., 12?- 

### n06a ox. 617, 625, 104 s. w. ml--

"iin eraainetionof our oonrarvatI0n etRtUt.8dieOlOSca8 that they d0 SiOt

In any manner directlydeel'v?lth such quertion, but are opsn to constructionin 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 Tollesonv. ??og,an, Lend Conuolesloner, 96 ':‘exa8 424, 73 8. %. 520.”Eonorabl8Jnhn B. Taylor, pa+?8 7

There Is additional reason for adopting ths ds;zzt%sntal

o~netruotizn

where, subeeguantto the Qerert7entalconatFUOtiOB, the Legia18turrhas re-em&tad or nxtssdedthe e%tuta without char&o, th8 preeu~ptlonbeing that the Leqislsturrkn8W of tts Ee~9rtsantal csnstruotlonand 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 (errorrefU8ed).

?c'~ en of the Opinion that f&hi8 depart!IWIb ehoulC a&here to ths construotionherstorom oolllristently follow86by thle Urpartmaatand the Railroad Conmisaim, and we thereforeare 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