"~FHEA~ORNEYGENERAL 

OF TEXAS 

Honorable Olin Culberson, Chairman 

Railroad Ccsmnission of Texas 

Aus tin, Te'exas 

Dear Sir: Opinion No. O-7068 

Rer Application of Rule 37 and 

other conservation regulations 

to unproven territory. 

Receipt is aoknowledged of your letter of January 29, 1946, which 

reads as follm: 

"The Railroad Commission has a statewide spacing rule that is applicable 

until such time as special field rules can be promulgated after discovery 

of oil by wildcat operations. 

"This rule provides that no well shall be drilled nearer than 330 feet to 

lease or property line and requires wells to be s'paoed no closer than 933 

feet on tie same lease. These same statewide rules also provide for casing rules and other rules governing the drilling and operation of such 

lease in the event no special field rules are requested by the operator. 

"In the Kemp area of Kaufman County, different operators owning town lots 

that are only 50 feet by 150 feet in area are filing notices of intention 

to drill on such small tracts. The policy of the Commission has always 

been to set donm for hearing any notice of intention to drill a wildcat 

well which is pearer than 330 feet to a property or lease line as an axoeption to Rule 37, which is the spacing rule. 

"QUSSTIO~;l: V&here the notice of intention to drill shows the location to 

be nearerthan 330 feet to a property or lease line, is the Commission, 

under the statewide spacing rule, required to set such notice of intention 

to drill for hearing as an exception to Rule 37? 

'QUESTION 2% Can the Commission require more than the filing of notioe of 

intention to drill in an area that does not yet have production. 

"In view of the fact that different operators are insisting that they do 

not have to wait for hearing on exceptions to drill by reason of their 

claiming wildcat operations, may the Consnisnion not ask for an emergency 

ruling on the question and that you imnediately give us your decision." 

As we understand your first question, you desire to be advised 

whether or not Rule 37, the statewide spacing rule, has application 'co 
Hon. Olin Culberron, page 2 (o-7068) 

wildcat operations. This rule was originally promulgated on November 

26, 1919, and, as amended Nay 29, 1934, January 25, 1940, January 1, 

1942, February 18, 1943, and Eay 1, 1944, reads as follows: 

"Section (a). ISo well for oil or gas shall hereafter be drilled nearer than 

nine hundred thirty-three (933) feet to any well completed in or drilling to 

the ssme horizon on the same tract or fans, and no well shall be drilled 

nearer than three hundred thirQ (330) feet to aqy proper* line, lease line 

or subdivision line; provided that the Connnission, in order to prevent waste 

or to prevent the confiscation of property, may grant exceptions'to pennit 

drilling within shorter distanaes than above prescribed when the Commission 

shall determine that such exaeptions are necessary either to prevent waste 

or to prevent the confisoation of property. mhen exoeption to such rule is 

desired, application therefor shall be made by filing Form 1 in duplicate, 

completely filled out, with the Deputy Supervisor of the Railnoad Commission 

in the Commission District where the well or wells are located, which application shall be aoeompanied by a plat or sketch drawn to the scale of one (1) 

inch equalling four hundred (400) feet, accurately showing to scale the 

property on which permit is sought to drill a well under an exception to 

this rule, and accurately showing toscale all other completed, drilling 

and permitted wells on said pncpperty; and aocurately showing to scale all 

adjoining surrounding properties and wells. Such a;lplication shall be verified by some person acquainted with the facts, stating that all facts therein 

statedsre within the knowledge of the sffiant true and that the accompanying 

plat is accurately drawn to scale and correctly reflects all pertinent and 

required data. Such exception shall be granted only after at least ten (10) 

days' notice to all adjaoent lessees affected thereby has been given, and 

after public hearing at which all interested parties may appear and be hesrd, 

and after the Commission has determined that an exoeption to such rule is 

necessary either to prevent waste or to protect property belonging to the 

applicant from confiscation. All pending applicants shall be amended to 

conform to this rule before being acted upon. 

"SECTION (B). In order to prevent waste or to prevent the confiscation of 

property, the Railroad Commission of Texas may upon its own motion or order, 

izsuc or grant a permit or permits for the drilling of anywells or wells 

for oil or gas nearer than nine hundred thirty-three (933) feet to any well 

completed in or drilling tc the same horieon on the same tract or farm, and 

nearer than three hundred thirty (330) feet to any property line, lease line 

or subdivision line as hereinbefore prescribed whenever the Commission shall 

determine that the drilling o P any such well or wells is necessary to prevent waste or to prevent the confiscation of proper@. When in the opinion 

or judgment of the Conmission waste or confiscation of property is reasonabl;r 

imminent or is taking place on any leasehold, the Commission may, on its own 

initiative or motion, order a hearing for the purpose of determining whether 

such waste or confiscation of property is taking place. Such permit or permits shall be issued or granted only after at least ten (10) days' notice to 

the owners of said leasehold and to -11 a4jaoentlessees affected thereby 

has been given, and after public hearing at which all interested parties may 

appear and be heard and after the Conmission has determined that the drilling 
,- 

Ron. Olin Culberson, page 3 (O-7068) 

of sny well or wells for oil or gas is necessary either to prevent waste 

or to protect the cnmers of said leasehold from confiscation. 

"SECTION(C). In filing BERM 1 as hereinabove provided ,it shall not be neoessary to file more than one plat. 

"SECTION ,D). In the interest of protecting life, andfor the purpose of 

preventing waste and preventing the oonfiscation of property, the Connnission 

reserves the right in particular oil and gas fields .to enter special orders 

increasing or decreasing the minimum distanoes provided by this rule. 

"SECTION (E). No well' drilled in violation of this rule without special permit obtained, issued or granted in the manner presoribed in said rule, and 

no well drilled under suoh speoial permit or on the Cons&&on's own order 

which does not oonfonn in all respects to the terms of suah permit shall be 

permitted to produce either oil or gas, and aqy such well so drilled in violation of said rule, or on the Commission*s own order shall be plugged. 

"SECTION (F). This rule shall in no wise^resaind, abrogate or modify the 

provisions of special orders applicable to the spacing of wells in partioular fields requiring minWnn spacing distanoes either greater or smaller 

than provided herein. 

"SECTION (G). This rule shall become effective February 18, 1943, and so 

remain until changed by order of the Ccmnnission. 

"In the adoption and promulgation of this order, it is here deolared that 

the Commission intends to adopt eaoh phrase, sentence and paragraph separately and independently of each other such phrase, sentence and paragraph 

and if any portion of this order or alrg portion of the rule hereby adopted 

shall be declared invalid, such declaration and suoh invalidity shall not 

affeot any other portion." 

w special order dated May 29, 1934, known as the "subdivision 

rule," the Railroad Commission provided* 

"IT IS ORDERED 

7 

lhe Railroad Commission of Texas, That in applying Rule 

37 (Spacing Rule of Statewide application and in applying every special 

rule with relation to spacing in every field in this State, no subdivision 

of property made subsequent to the adoption of the original spaoing rule 

will be oonsidered in determining whether or not any property is being 

confiscated within the terms of such spacing rule, and no subdivision of 

property will be regarded in applying such spicing rule or in determining 

the matter of oonfiscation if such subdivision took place subsequent to the 

promulgation efld adoption oftie original spaoing rule. 

"IT IS SO ORDERRD, This the 29th day of&y, Ad. 1934." 

It is observed from a carefuf reading of Rule 37 that there is no 

express provision in the rule which would limit its operation to oil fields 
Zen. Olin Culberson, page 4 (o-7068) 

or proven territory. It is obvious that if the rule is not so limited, then 

by its very terms and provisions, awons desiring to drill a well for oil or 

gas anywhere in the State of Texas must comply with the rule, and if the proposed looation of the well is nearer than 350 feet of am property line, lease 

line, or subdivision line, then such wsll may be drilled under onsof the exoeptions to the rules By its terms the Commission has stated that such an exomption will be granted only after notiae and hearing. The notice provision of 

the rule is in oomplianbe with Art. 6036a, Vernon's Annotated Civil Statutes, 

and is mandatory. Rabbit Creek Oil Company vs. Shell Petroleum Corporation, 66 

S. E. (2d) 737; Sun Oil Company vs. Railroad Comnission, 68 S.W. (2d) 609, 

reversed on other grounds, 126 Tex. 269, 84 8.W. (2d) 693; Gulf Land Company 

VS. Atlantic Refining Company, 134 Tex. 59, 131 S.W. (2d) 73. 

The view that the rule has no application to unproven territory 

seems to have orieinated in the eqressions of Assooiate Juetioe Blair of the 

3rd Court of Civil Appeals. In his opinion in the Rabbit Creek Oil Compaw 

case, supra, page 739, he states: 

"Exceptions are only neeeasary after the particular field 

has been proved. . . .s (Emphasis ours) 

The foregoing expression in the Rabbit Creek Oil Company ease, 

however, in the opinion of this Beparhaent, is merely diotum not necessary to 

a decision of the Case. This for the reason that the applioation in that ease 

was for an exception in the East Texas Oil Field after its disaovery, and the 

case deals with the matter of goving notioe to interested parties of hearings 

held on such-exceptions. It holds that the issuanoe of a pensit tithout 

notice and hearing is invalid. 

Again, in Er. Justice Blair's dissenting opinion ins the case of 

Sun Oil Company VS. Railroad Commission, 68 S.W. (2d) 609, 614-622, the following expressions are founds 

"In each oil and gas circular promulgated bythe oonrmission since the above 

amendment in March, 1923, rule 37 has been designated as a 'general rule," 

althoueh it has always exempted proven salt dome fielda and'-has always been ~. 't. 

eonstrued by the oonsni&sion as having no.appliontion to' unproven or wildoat - 

fields. . . ." (Emphasis ours) 

"Sinoe'this is true. and sinoe saoh rules neoessarily vary in different oil 

fields, and sinoe they are subject to frequent variations and ohange at aq 

time end have no application to 'unproven fields,* the rules in foroe at 

the time the oil is souaht to be produoed should be aupliei I: and the aommission has always so construed and applied its spaoing rules and regulations. 

The oommission has never assumed the power or authority to deprive any owner 

of his oil and gas estate in land by any spacing rule for oil wells, Eaoh 

such rule has from its inception and as a part of it provided for an exaep 

tion 'to protect vested rights.'" (Emphasis ours) 
. - 

Hon. Olin Culberson, page 5 (o-7068) 

“If the majoritg view is correct, and 5-f appellees in these suits were required 

to take cogniarance of and contraot with reference to rule 37 as promulgated in 

1919, then they would be compelled to ascertain whether their lands were locab 

ed in an unproven oil field, or whether, if in an oil field, it was a 'salt 

dome field,' because in either instance rule 37 would have no application under 

its own terms and the oonstrcotion uniformly given it. But, nokithst&&ing 

the rule has no application to unproven fields, or salt dome fields, nor the 

faot that no oil field RYM in prospeat or had been though of where the lands 

of appelles are situated until long after rule 3'7 was adopted, still the majority view requires that they or that 'all parties leasing land subsequent tc its 

promulgation . . . must contract with reference to this settled rule.' . o .I1 

These expressions of Mr. Justiae Blair are found in a dissenting. 

opinion and do not refleot the viem of the majority. The holding of the majority was that the lease of a 2.59 acre portion of a much large traat of land, 

capable of development in compliance with the spacing rule. maa an unlawful 

subdivision in derogation of the spaoing rule. The 2.59 awe traot was held 

not entitled toconsideration as a traot separate and apart frcmthe larger 

tract frcmwhioh it was divided. 

The dicta of Mr. Justioe Blair expressed in the Rabbit Creek ease 

and in the Sun Oil Company ease seem to have orystallised in his holding in 

Shell Petroleum Corporation VS. Railroad Ccnm&ssion, 116 S.W. (2d) 439, writ 

dismissed. In his opinion in that oaee, the broad statement is made that: 

"Neither rule 37 of the so-called state-wide application as promulgated by the 

Railroad Commission in 1919, nor 8~ amendment thereto, nor any special rule 37 

has a~ applioation to territory not known nor antioipated to be productive of 

oil or gas; and the rule inhibiting voluntary subdivision of lands which could 

have been developed as a whole in order to ciroumvent the provisions of rule 37 

has no application to subdivisions of lands prior to the discowry of oil and 

gas in the terr%tary where the lands are located. . . . 

"The Railroad Ccmnission has oontinueusly interpreted rule 37 as having no applioation to unproved territory. It did promulgate an order in Ray, 1934, wherein 

it is prcvided that no subdivision of lands after the so-called state-wide rule 

37 was prcmulgated in 1919 would be considered in determining whether or not 

urncerty is being 'confiscated* within the meaning of that t.nn as used in the 

spacing rule. Whatever construction may be plaaed upon this order as applying 

to subdivisions after 1919, it is operative only as to oil fields that have 

been discovered prior to the time of +be subdivision, because in 1932 the 

Legislature enacted a statite, declaratory or expository in its nature, whiah 

provided in effect that the Railroad Commission is without authority or power 

to restrict or in aqy manner 1Mt the drilling of wells for the purpose of exploring for oil or gas in territory not known to produce either oil or gas. 

Chapter 2, section 2, Ahats 1932, 42nd Leg., 4th c.S. p. 3, and wended in 

other partioulars by Acts 1935, 44th Leg., oh. 76, section 3, p. 180, Vernon's 

Am. Civ. St. art. 6014a. So it is immaterial whether this act be regarded 

as expository, expressang the view of the Legislature that the commission has 

never had the power or authority to restrict the drilling of wells in terri++ery 
- . 

Hon. Olin Culverson, page 6 (o-7068) 

not kncmn to produce oil and gas3 or whether the aot be considered as of that 

time withdrawing from the Railroad Ccnmxission the pcwer to apply a spacing 

rule regulating aella in a fvritory not tican or anticipated to be productive 

of either oil or gas3 bemause uuder eitherview, the ocemnissicn is without 

authority to restriatwells for ail or gas in territory not kucwn to be productive of oil or gas." 

Takenat faoe value, this statement muld seem to be a dire& enswer to your first question. It is not heli~ed, however, that the court intended to announce an interpretation of Rule 37 so far reaohing. On m&ion for rehearing in this case, F&. Justioe Raugh stated: 

"The writer concurs in the disposition of thi8 appe&l made in the original opinion herein by Associate Justioe BLAIR; and in his conelusion that the voluntary 

subdivision rule originally announced by this court in Deomnber, 1933, and January, 1934 (see the several rule 37 ease8 reported in68 S&'2d 609-628, supra), 

should not and does not apply to inatrnoes where one in good faith acquires fee 

title to land in unproven territorg~ and suoh aoqnisition was not in contemplation of oil d-?WelopmeBt. Hcmever, the writer does not acnstrus the prcvisionr 

of chapter 2, section 2, Acts 1932, 4th Cd. 42Bd Leg., as amended by Acts 1935, 

44th Leg., c. 76, g 3, VerBoB*s Ann. Civ~ St. art. 6014a, as limiting or governing the rules and regulationacf the Railroad Cemnissio~ in itu administration 

of the conservation lam. I awour in the oonstmiot;lon of these acts given %y 

Chief Justioe MoLendon, in R& 8670, TI P. rash et alslv. Shell Petroleum Corporation et al., Tex. Give App., SoWe 2d -, this day decided. I 

deem it advisable to nake this stct that there mey he ac misapprehension 

about the respective views of ttfie different members of this court." 

It mill be noted that Mr. Justioe Eangh limited his hciding (that 

the rule does not apply to unproven territory) to inataneas where one in good 

faith aoquires fee simple tc land in unprcvemterritory and suoh acquisition 

is not in contemp~tiOB of oil development* He fui+lmr h&lb that Art. 6014a, 

Vernon's Am. Civ. Stat ., referred ta by Rr. Justice Raugh, isnot to be interpreted as limiting the Railroad Colmaission in its applioation of the spaoing 

rule. 

The views of Chief Justiae M&lend-, also sitting on the 3rd Court 

of Civil Appeals at that ime, are given in the eaee of Nash VS. Shell Petroleum Ccrporation, 127 S.H. t; 2d) 522, writ dismissed. His holding is limited to 

the voluntary subdivision-rule. It is thatnhere title to a tract of land is 

segregated by deed conveying fee simple title on Rcvember 14, 1929, about a year 

before the discovery of oil in the East Terrs Field, such land is not with&n 

the subdivision rule and an applicant is W&itled as a matte r of law to drill 

one well on the tract. Chief Justice McClendon further held that he did not 

cocur in tie holding of Mr. Justioe Rlair in Shell Petroleum Corporation VS. 

Railroad Commission, supra, that Art. 6014a deprived the Ccumdssion of the 

power to apply rule 37 to other than proven territory. 
Hon. Olin Culberson, page 7 (O-7068) 

Another ease decided by the 3rd Court of Civil Appeals is also pertinent to your f'rst question. 

# 

In Shell Petroleum Corporation vs. Railroad Commission, 133 6. . (2d) 194, write refused, Mr. Justioe Ibgh held that where lands 

are leased expressly for the purpose of oil development, Rule 37 and the subdivision rule are appliaable to such lands , notwithstanding that the area involved 

is not proven territory. He said: 

s. . . lbtwhere lands are leased expresslyfor the purpose of oil developent, 

an entirelv different situation is Dresented. In the latter instance. whether 

the lease -ke in proven territory or-not, the~oonservation laws bsacmeWa~ 

ble tothe subsequent develoment thereof; and the rights of the parties become 

referable to the rubs and regulations of the Conmission governing the development of the urowrtv ** - which the lessor himself contemnlated and whhioh he reauiied 

of the lessee. Nash v. Shell Pet. Corp., supra. Wier these oiroumstanoe;, 

application of the provisions of the rule, as a conservation msa*ure, is asesssntial in a given area before the disaovery of oil as it would bs after such disoov6ry.s (Emphasis ours) 

Further illustrating the 314 Court of Civil Appeals' interpretation of 

the sukdivision rule is the following: 

* . . . III oonsequenee, puestlon '1' must be answered in the negative under the 

several deoisions holding t 

II. 2d 439. error dismissedx Rash v. Shell Pet. Corp., Tex. Civ. App.. 120 S.H. 

522, error dismissed; Shell Pet. Cor 

P 

. v. Railroad‘C&ission, T&i Civ. App., 

120 S.H. 2d 526, error dismissed." Emphasis ours) 

(Wenolcer vs. Railroad C&&sion of Texas, 149 S.H. (2d) 1009) 

The attention of the Commission is invited to the statement in each of 

Judge Blair's opinions to the effect that "the Railroad Cammission has oontinuously interpreted rule 37 as having no application to unproven territory." Long 

standing administrative interpretation of rules and regulations is persuasive in 

passing upon the intent of the regulatory body. Ws have not been advised by the 

Conmission as to the aoeuracy of such expresssions, and note the statement in 

your letter to the effect that, "The polioy of the Commission has always been to 

set down for hearing any notice of intention to drill a wildcat well whioh is 

nearer than 330 feet to the properly or lease line as an exception to Rule 37, 

which is the spacing rule." All of Judge Blair's expressions are found in his 

opinions prior to the opinion of the majority of tha Court in Shell Petroleum 

Corporation VS. Railroad Consaission, 133 S.H. (2d) 194, which opinion was approved by the Supreme Court by its refusal of a writ of error. The holding in 

the Shell cmee is clear, and we therefore assume that the Consaission has had no 

such administrative interpretation of F&&e 37 since the date of the Shell opinion, hbvmber, 1939. 
Hen. Olin Culberson, Page 5 (O-7068) 

It is believed that the praatieal effeot of these holdings may be 

stated a8 follows: (1) that ths vekntarg division rule does not apply to the 

oonveyanoe of lend by fee transfer ooourring prior to ,*e disowery of oil, 

when not nude in contemplation of oil development: (a) that when an interest 

in the subsurface estate in land is conveyed by lease or other means oontsmplative of oil development, whether the oonveyaxxoe %e in ~reven territory or 

not, the aonservation law8, inoluding Rule 57 and the suWivi+sion rule, become applioable to the subsequent develoIssent of' the land. 

Therefore, in answer to your first quo&ion, me hold and you are advised, that a lessee under an oil and gae leaee may a& undertake to drill a weI1 

on a tract of land not susoeptible of deveeat in keeping nit% the spaoiag 

distanoes reoited in statewide Rule p7 without first applying to the Con&s&on 

for a permit under an exoeption to Rule 37 and having notioe issue and hearing 

held as therein provided. lib hoId thie to bs true notwithstanding the evidence 

adduced at the hearing may show that such le8ree is entitled to drill such well 

as a matter of right. This for the reaaoa that the Legislature has designated 

the Railroad Cwmission as the body whose duw~it is-primarily to determine suoh 

faots. Gulf Land Company VS. Atlantio Refining Company, 134 Ten. 59, 131 S.11; 

(2d) 7% 

It is believed that the answer to your second question, whether the 

Commission may require more then the filing of a notiee ef intention to drill in 

an area that does not yet have production, is to some extent, at least, emIn-aoed 

*i&in our an*wer to your first question. 

Railroad Cmmuis8ion Rule Roe 9 presently in foree and effeot reads as 

follow§: 

"(a) NOTICE OF INTENTION TO DRILL OR DEEPEB. Rotioe shall begiven to the Railroad 

Commission of the state of Tezmns of the intention to drill or deepen any oil or 

gas ~11 and of the exaot location of each andevery suoh well. Suoh notioe shall 

be given by filing in duplioate Fans 1 of the Connsission, attaahed hereto end 

made a part hereof with the Deputy Supervisor of the Railroad Consmission in the 

Consaission District where the well or wells are looated. The location of any wildoatwell shall be given by specifying the distsnoe of same from at least two (2) 

of the lines of the survey within which it is to ‘be drilled. In no oase shall 

drilling operations be commenced until the expiration of at least five (5) days 

after the filing of Form 1 hereinabrat mentioned. Ro permit to drill ary well 

or wells for oil or gas shall be required by the Cosssission except for such 

wells as may be drilled under exoeptions to Rule 57 of statewide application or 

as-exceptions under special field rules governing the drilling of any well or 

wells which have been or may hereafter be @opted %y the Railroad Cummission. 

*It is further ordered that all notioes of intention to drill or deepen aqy well 

or wells under and as exceptions to Rule 37 of statewide application, or speoial 

rules governing the drilling of any well or aells in ary partioular oil field, or 

under any amendments thereto, shall be filedem Form 1, hereby adopted as a part of 

this order, with the Deputy Supervisor of the Railroad Colmnission in the ConmxLssion district where the well or wells ars located. 
,4 

Hon. Olin Culherson, page 9 (o-7068) 

ePrwided further that it shall not be necessary to file more than one plat or 

sketah as provided for in Form 1 hereinahwe mentioned, and adopted by the cornmission." 

B :addition t0 ':he notice of intention to drill required by rule g, 

there are maqy other rules and regulations that have been established v the 

Railroad CosmuLssion of statewide application that are intended to govern drilling operations in the event no speoial rules for a partioular area have been 

promulgated. We have examined many of these rules and regulations a& find in 

none of them an exception limiting their operations to proven territory. Paraphrasing Mr. Justice Saugh in Shell Petroleum vs. Railroad Commission, supra, 

it would seem tc be just as important from a conservation standpoint that these 

rules be applied in a given area before the discovery of oil as it would be 

after such discovery. The interests of the State to be subserved, the prevention 

of fire hasards,the proteation of underground strata and the surface of land from 

percolating waters, and the proteotion of adjoining proprty owners, would seem to 

be the same. It is just as~important so far as the oonservation polioies of the 

State ars oonoerned that its conservation Paivs and rules and regulations of the 

Railroad Commission be applied to the first or wildcat operations in a field as to 

subsequent operations after the field has bean proved. We interpret your second 

question, therefore, as asking whether or not the Railroad Consnission has been 

delegated authority bythe Legislature to make such regulations.effective in tildaa& areas. The only limitation imposed by the Legislature we have found is that 

contained in Art. 6014a of Vernon's Ann. Civ. Stat. reading as follows: 

"Rothing in this Act shall be construed as granting to the Comnission aqy power 

or authority to restrict, or in any manner limit the drilling of wells for the 

purpose of exploring for arude petroleum oil or natural gas or both in territory 

not known to produce either suoh oil or gas." 

The act referred to in the foregoing quotation is Chapter 2 of the Acts 

42nd Leg., 4th C.S. pages 3-10. That act was a very comprehensive one amending 

several of the artioles appearing in Title 102 >f the Revised Civil Statutes of 

Texas, 1925, conferring broad authority upon the Railroad Conmission in the matter of regulating the production, storage, end transportation of oil and gas. 

Two of the articles amended by the act of the 42nd Legislature were Articles 6014 

and 6829, the former defining what shall constitute "waste," and the latter speoifying the duty of the Railroad Commission to make and enforce rules, regulations, 

and orders for the oonsnrvation of oil and gas for a number of stated purposes. 

As stated in answer to your first question, a majority of the present 

Court of Civil Appeals has held that the limitation contained in Art. 6014a has 

no application to the Railroad Conmission Rule 37, the Court stating: 

"The purpose of this amendment was clearly to deny the Corsnission power to prevent or restrict oil development in unproven territory. The spacing rule is not 

in any proper sense a prevention or restriotion upon drill! 

*aged in oil 

a. It is merely one 

of a number of regulations towhich all ene development must conform. 

To apply the amendment to the spacing rule would make it possible by dividing up 

leases into small tracts in advance of drilling to circumvent the rule entirely 
. - 

Hon. Olin Cul.berson, page 10 (O-7069) 

in subsequently proven territory. It IS not lmliemd that the amendment mapifests any such~ legislative intent.' lQssh7.vb+~On&rW.en, fZ0: 

S.W, (2d) 522&mS:dimissed) (Gphasis am) 

& even more limited Interpretation of &t. 60148 is contained in the 

opinion of Mr. Justioe Baugh in Shell Petrolti Corporation VII. Railroad Comniesion, 116 S.W. (2d) 439, 441, wherein he statesa 

R . . . (Fbphasis ours) 

In answer tu your seaond question, in vimf of Art. 6014a, we advise you 

that if a partioular rule of statewide applic8tioa dees not have ihe effeot of preventing or unreasonably restrioting drilling,eper&ic%w interritorg not known to 

produce either 011 or w, tthw suak rule or ngnlat%ao'applles to such territory 

even in unproven territory unlbss,~‘bg i%e terms and prwlaiins,:.it is clear that 

the Railroad Comuissioa had a oontnary inteab 

Tours very truly 

ATTORUEY aExEF& OF TJsxhs 

APPROVED F'EB 6, 1946 

/s/ Carlos Ashley 

FIRST ASSISTART A 

ATTORNFX GEMERAL 

JDS: jtregw 

&y /8/ JPme# D. Smuller! 

James D.~Smullen 

Aaeistanf