Senator George Parkhouse Opin. No. WW-29 

The Senate of The State of Texas 

Austin, Texas Re: Constitutionality of 

Committee Su.bstitute 

Dear Senator Parkhouse: for Senate Bill, LOI. 

Wi.th reference to your letter of February 6, 1957, requesting an 

opini.on on the constitu,tionality of the above captioned bi.lll, we tende,r the lollowing opinion: 

SUMMARY OF COMMITTEE SUBSTITUTE FOR S. B. NO. 101 

Section 1 declares the policy, intention and purposes of the Legislature. 

The policy of the Legislature is declared to be to save, protect and preserve the 

soi, of thi,s State for posterity. It is stated that in many areas of “.he State there 

is a total lack of surface water:> but that in many of such areas there is an ample 

supply of underground water whi,ch might be used to water such 1an.d and grow 

cover crops that would prevent wind as well. as water erosion due $0 excessi,ve 

rainfall, thereby permj.tting soil conservation practices. It is fti,rther stated that 

where there exists ample subsurface reservoirs of water, the cost of pumpin.g 

such water is prohibitive, but there are great reservoirs of naturai gas prodwed 

and sold at prices such as would permit the pumping of water for irrigati~oxn, and 

would ai,d in the prevention of soi.1 erosi,on, and would promote the general wel~fare. 

Because of their importance, Sections 2 and 3 are quoted in farl,l., as hollows: 

“Sec. 2. From and after the effective date of this act-. every 

person owning or operating any gas weI.1, from which natural gas 

is produced, sold or used off the premises on which such gas we!l 

is located in order to aid in the prevention of soil erosion and the 

protecti,on of the soil, shall make available, from the production 

of such gas well, to the person or perSons engaged in agricul,tural 

acti,vjties u,pon such premises, if requested to do so, gas from the 

production of said well, up to an, amount equal to the royalty i,nterest 

of the owner of the land on which said well is located, as reflected 

by the terms of the oil and gas lease of such person owning or 

operating said gas well, for the operation by such person or pesson,s 
Senator George Parkhouse, Page 2 (WW-29) 

engaged in agricultural activities of pumps necessary for the 

pumping of said water, as may be necessary and propar for 

the irrigation of such portion of said premises as may be devoted to the growth of agricultural products or to pasture or 

orchard use, to the end that the soil upon which said agricultural produc~ts are grown shall be preserved and protected 

from erosion due to any cause:.” 

““Sec. 3, The prices, terms and conditions upon which, 

natural gas sha1.l be made available under thi.s act shall be 

determined by negotiation between the parties. In the event 

of their inability to agree as to any or all of such prices, terms 

and conditions, either party to the negotiation may apply to the 

Railroad Commission of Texas to fix same. In reaching its 

determination, the Railroad Commission shall consider the 

necessity of the applicant for the gas for the purposes specified 

herein, the value of such gas and its components, the efficient 

operation of the gas wells of the producer of the gas, the obligations assumed by such producer in the sale or other disposition 

of such gas, and all other factors relevant to the effectuation of 

the policy and purposes of this act with justice to all concerned.” 

Sec. 4 provides that under this act, the procedure before the Railroad 

Commission shall be that applicable to such proceedings by general law and orders 

promulgated by the Commission and provides that appea1.s may be taken from its 

decisions in the same manner. 

Sec. 5, relates to parties to such proceedings. 

Sec. 6 provides that this act shall not create an obligation on the part 

of the operator of a gas well to furnish gas for use off the premises from which 

it is produced or to assume any public utility duties to the public at large. 

Sec. 7 provides that in case of a controversy before the Commission, 

the owner or operator of the gas well or wells involved shall make available to 

the persons entitled thereto natural gas as prescri.bed in Set, 2 on such temporary terms and conditions as the Commission shall prescribe by order or general rule subject to adjustment retroactively. 

Sec. El provides for penalties against an owner or operator who fails 

to comply with any duty imposed by the act. 
Senator George Parkhouse, Page 3 (WW-29) 

Sec. 9 declares all laws or parts of laws in conflict with the act 

repealed to the extent of such conflict. 

Sec. 10 is a standard saving or severability clause. 

Sec. 11 delcares an emergency and suspends the constitutional 

reading rule, and provides that the act shall take effect from and after its 

passage. 

We have examined the proposed legislation with particular reference 

to a majority decision of the Supreme Court of Oklahoma1 holding a similar bill 

violative of Article 2, Section 24, of the Oklahoma Constitution in that the act 

constituted a taking of property without due process of law. Phillips Petroleum 

Company v. Corporation Commission of Oklahoma, et al., Cause No. 37250, 

November 20, 1956, (as yet reported only in an advance sheet, Volume 27, The 

Journal, pa 1920). 

An opposite result was reached when the validity of the same bill 

was questioned before a three-judge Federal District Court. Phillips Petroleum 

Company v. Ray C. Jones, et al., December 12, 1955, No. 6794, Civil. Docket, 

District Court for United States Western District of Oklahoma, (not yet reported). 

The main questions for our determination are (a) whether the bill 

is violative of Article 1, Section 17, of the Constitution of Texas, rel.ating to 

property taken for public use; (b) whether the bill violates Article 1, Section 16, 

of the Constitution of Texas, protecting the obligations of contracts; and (c) 

whether the bill. violates substantive due process afforded by Article 1, Section 

19, of the Constitution of Texas and the 14th Amendment to the Federal Constitution. 

The Constitution of Texas authorizes the conservation of our natural 

resources, Article XVI, Section 59~2, Vernon’s Annotated Constitution. That 

the State has the constitutional authority to enact reasonable regulatory legislation for the conservation of our natural resources when not otherwise in contravention of constitutional principles, is settled law. 31a Tex. Jur., Oil and 

Gas, Set, 354. The constitutional provision construed in the Oklahoma case, 

w, provided a detailed method for ascertaining compensation for property 

taken for a public usee2 This provision differs from the provisions of Article 1, 

1. Two Justices dissenting. 

2. See Appendix. 
Senator George Parkhouse, Page 4 (WW-29) 

Section 17, of the Texas Constitution. In our opinion, the duty to make gas 

available to irrigators, as created by the Act, constitutes a “taking” within 

the meaning of Article 1, Section 17, of the Constitution of Texas. 

We must presume that the Railroad Commission, in enforcing the 

provisions of this Act, will do so with the provi.sions of Article 1, Section 17, 

of the Texas Constitution in mind. We see no reason why the Commission 

could not adopt rules and regulations that would fully satisfy this constitutional 

requirement. However, since the Act itself does not set up machinery for 

determining the question of whether an applicant is entitled to the benefits provided by the Act, it will be incumbent upon the Railroad Commission to first 

determine that a particular applicant will apply the use of the gas to the purpose 

of soil conservation. Otherwise, an order of the Commission making gas available under the Act would be questionable on the ground that the taking was not 

for a public purpose. While a particular order of the Commission might be held 

violative of Article 1, Section 17, by an appellate court, because that order might 

be declared unreasonable, arbitrary, or capricious, 3 this possibility does not 

make the bill unconstitutional on its face. 

The above quoted language in Section 2 of the bill presents an entirely 

different question. While it is true that the Act’s basic objective, soil conservation, lies within the pale of the state’s police power and authority, the provisions 

of Section 2 limiting the amount of gas available to the owner of the surface of 

land from which the gas is produced to an amount not more than that owner’s 

royalty interest creates a fatal discrimination as between those surface owners 

owning royalty interests and those who do not. 

Under the provisions of the Fourteenth Amendment of the Federal 

Constitution and Arti,cle 1, Section 19, of the Constitution of Texas, the Legislature cannot pass legislation which makes an improper discrimination by conferring the privileges on a class arbitrarily selected from a large number of 

pers,ons standing in the same relationship to the pri.vileges and purposes of an 

act, without a reasonable distinction of substantial difference, 16a C.J.S., Constitutional Law, Section 489. In order to be valid, a statutory classificati.on 

3. For example, see Marrs v, Railroad Commission, 142 Tex. 293, 177 S.W.2d 

941, where the court held a proration order of the commission violative of 

Article 1, Section 17, of the Constitution of Texas and stated that the order 

constituted a ““taking” within the meaning of that provision, 
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Senator George Parkhouse, Page 5 (WW-29) 

must reasonably promote some proper object of public welfare or interest, 

must rest on real and eubstantial differencea, having a natural, reasonable, 

and substantial relation to the subject of the legislation, and must affect 

alike all persons or things within a particular class, or similarly situated. 

Hawaii Brewing Corp. v.-Bowles, Em. App. 148 F.2d 846, Fort Worth and D-C, 

Ry. ‘Co. v. Welch, Civ. App. 183 S.W.2d 730, 735, error ref”d. In our opinion, 

the discrimination between surface owners owning royalty and such owners 

who do not own royalty has no reasonable basis in the declared purpose of the 

legislation. 

As to the constitutional question of the impairment of the obligations 

of contract, it is well settled that the obligations of contracts must yield to a 

proper exercise of the police power, and vested rights cannot inhibit the proper 

exercise of the police power. Treigle v. Acme Homestead Assn., 297 U.S. 189, 

197 (1936). 16 C.J.S. Constitutional Law, Section 175. Where the ‘takingW is 

for a public purpose and ‘“due process ” is served by a method for fixing value, 

the impairment of contracts becomes immaterial. The true owner of the gas 

at the time of taking may be paid for its value whether he owns by contract of 

purchase or by holding a mineral title to land. 

SUMMARY 

It is our opinion that committee substitute for Senate Bill 

No. 101 is unconstitutional on the ground that the limitation on gas made available under the bill~to persons having 

royalty interests in connection with the surface devoted to 

agricultural activities, as provided by Section 2 of the bill, 

constitutes an unreasonable classification between persons 

similarly situated. We are of the opinion, however, that 

the bill is not otherwise unconstitutional. 

Very truly yours, 

WILL WILSON 

Attornev General 

HB:tiw 

APPROVED: 

OPINION COMMITTEE 

H. Grady Chandler, Chairman 

Houghton Brownlee, Jr, 

Assistant