Court Opinion

ID: 9675559
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:57:47.111692+00
Date Added: 2024-06-11T18:16:35.525809
License: Public Domain

Mr. Justice Smith, joined by Justice Griffin,
dissenting.
This suit was brought by the respondent in the District Court of Travis County to test the validity of orders and acts of the Eailroad Commission of Texas, and specifically for the purpose of determining the validity of Eailroad Commission Order No. 6-3219, dated February 20, 1956, entitled “Special Order Denying the Application of C. F. DeBardeleben, Jr. for exceptions to the density Order for Four Wells in the Bethany Field, Panola and Harrison Counties, Texas,” as well as the validity of actions of the Eailroad Commission of Texas, its agents and employees in applying the Commission’s Special Order No. 20-27-088 (statewide density) to respondent’s wells. The respondent sought to enjoin the Eailroad Commission from interfering with him in producing natural gas ratably from the same common reservoir; and from applying the Commission’s Special Order No. 20-27-088 (statewide density) to said four wells.
The primary question before us is: Was the Eailroad Commission’s order No. 32,919, denying the application of C. F. De-Bardeleben, Jr. for exceptions to the Density Order (statewide No. 20-27-088) for four wells in the Bethany Field, Panola and Harrison Counties, Texas, reasonably supported by substantial evidence? I think this question should be answered in the affirmative. If I am correct in this, then, we do not reach the question discussed by the majority. The question deemed controlling by the majority as stated in the second paragraph of its opinion is:
“Substantially the only question for decision here is whether or not the evidence shows as a matter of law that respondent’s gas producing properties are being confiscated, or in other words, was the order of the Eailroad Commission reasonably supported by substantial evidence.”
I construe this to mean that the majority is holding that the order as to confiscation was not supported by substantial evidence.
Eespondent states in his petition filed in the District Court *528that he challenges the validity of Commission Order No. 32619. That order was entered because the respondent had violated Special Order No. 20-27-088, the Statewide Density Order. In other words, as will be hereinafter shown, respondent secured a permit to drill four wells on four units, the acreage of 640 acres in each unit having previously been assigned to four wells. These four wells were drilled by respondent in accordance with the density order governing the Bethany Field. I shall hereafter refer to the first four wells as the “legal wells” and the last four as the “illegal wells.”
The order denying the application for exceptions to the density order recites facts showing that permits were obtained by respondent to drill the “illegal wells” by filing applications which did not represent the true facts. Respondent failed to disclose in these four applications that the four “illegal wells” said to be in the Elysian Fields Field were included in the units covered by his four previous applications for the “legal wells” in the Bethany Field.
The respondent presented the two sets of applications in such language and form that no exception to the spacing rule or the density rule was required. The permits in each instance were issued for regular locations.
In 1954 and 1955, respondent made application to drill a gas well on each of the unitized tracts (640 acres) in the Bethany Field. Each well location was within the 2640-1320 spacing distances required by the Bethany Field rules and each unit was of sufficient size to constitute a 640-acre proration unit. So far as this record shows the laiw and the rules of the Railroad Commission were strictly followed so far as the “legal wells” are concerned .
The fact that the Bethany Field and the Elysian Fields Field were later merged and combined by order of the Commission dated September 13, 1955, and the two fields were found to be producing- from a common reservoir does not validate the wrongful acts of the respondent committed prior to the order of merger of the two fields. At the time the respondent presented both sets of applications it was not even known that the two fields were producing from a common reservoir. The fields were separate and distinct entities, and the Bethany Field rules were substantially different from those in the Elysian Fields Field. In the Bethany Field the spacing rules provided that no gas *529well shall be drilled nearer than 2640 feet to any well on the same tract or nearer than 1320 feet to any line constituting the limits of a proration unit, a 160-acre spacing pattern. Pro-ration units of 640 acres with a ten per cent tolerance in acreage were established, and the allocation formula for determining allowables was based upon 2/3 acreage and 1/3 well.
In the Elysian Fields Field the spacing rule provided that no gas well shall be drilled less than 933 feet to any well on the same tract or nearer than 330 feet to any property line, a 20-acre spacing pattern. Proration units of 320 acres with a ten per cent tolerance in acreage were established, and the allocation formula for determining allowables was based on 100% acreage times bottom hole pressure. Both the Bethany and the Elysian Fields Field rules provided that the spacing distances were minimum distances to allow an operator flexibility in locating a well and that the spacing rule and the other rules promulgated were designed to permit only one well to each pro-ration unit.
Respondent violated three of the four important provisions of the statewide density order (640 acre unit) by misrepresenting the facts in his applications for permits to drill the four “illegal wells.” By so doing he gained an advantage by eliminating from consideration by the Commission of the matter involved in the fourth provision, that is, he by false representations got the equivalent to an exception to the density provisions of the Statewide Density Order, supra, without a hearing and without presenting the matter to the Commission for determination. The applications were sworn to by the respondent and represented a desire to drill four wells on four units of approximately 320 acres each in the Elysian Fields Field. Each location was shown to be within the 933-330 spacing distance required by the Elysian Fields Field Rule. Therefore, it is clear that the applications showed no information which would require exceptions to the spacing rule or the density rule. Such being the factual representations, the Commission issued permits for the four wells in the Elysian Fields Field for regular locations. Had the respondent disclosed in his sworn applications that the land on which he proposed to drill the four wells had previously been included in the units covered by his applications to drill the “legal wells” in the Bethany Field, the Commission would not have granted the permits. Respondent, no doubt, would have gotten by, but for the fact that after he obtained gas production from the four “illegal wells” it became necessary for him to go back to the Railroad Commission for an *530order fixing the allowables for each well. It was at this time the false representations were discovered, and the Commission refused to grant the applications for allowables. Then, for the first time, respondent sought a hearing on exceptions to the Statewide Density Rule. The Commission refused to grant the exceptions, but it is clear, at least to me, that the Commission denied respondent relief primarily on the fact that he had violated the Commission’s rules and regulations, and without regard to the issue of confiscation. In other words, without regard to whether the order denying the exception to the density order was supported by substantial evidence, the order denying the exception because of the apparent deliberate violation of the Commission’s rules and regulations was supported by substantial evidence and is and was sufficient within itself to deny respondent the relief he seeks in the present case.
Respondent should not be permitid to dedicate four 640 acre tracts, all the land in issue, to the Bethany Field 640 acre pro-ration units, and then in subsequent applications without stating in such applications that he had without authority carved out of such units four units of 320 acres each. By doing so he got two wells for each 640 acres instead of one well for each such unit. It must be remembered, in this connection, that while it is true the Commission did hold a hearing on respondent’s application for an exception to the Statewide Density Order there is no evidence that respondent filed applications other than those designating that the wells were to be drilled in the Elysian Fields Field. In fact, on the day of the hearing, respondent filed affidavits that the acreage within his original four Bethany applications consisted of the acreage remaining after he carved out the Elysian Fields Field units.
Thus, it is seen, that none of the acreage originally designated to the Bethany Field units has ever at any time been lawfully separated from the original units. Respondent’s misrepresentations could not change this fact, and I don’t think that the Commission by holding a hearing under the circumstances intended to or was in a position to by holding such hearing waive the strict requirements of the law governing its duties. The Commission held the hearing and on February 20, 1956 entered its order setting out all the findings of facts I have been discussing and in addition thereto made the following findings and order:
“WHEREAS, From evidence adduced at said hearing, the Commission is of the opinion and finds that fio’ exception was *531requested to reduce the acreage assigned to the Bethany gas units prior to the affiant’s request for Elysian Field well permits ; that the unitized tract plats accompanying the requests for permits to drill Elysian Fields Field wells did not indicate thereon the acreage which had been previously dedicated to Commission approved Bethany Field well locations on said unitized tract plats; that such actions on the part of affiant were violative of the express provisions of Special Order No. 20-27-088, dated August 28, 1953; and
“WHEREAS, From evidence adduced at said hearing, the Commission is of the opinion and finds that the well density on the four unitized tracts in question is one well to each 640 acres which is in accordance with the density pattern allowed by the Bethany Field special field rule; that no good and sufficient reason was advanced at said hearing which would justify exception to said special field rule either for the prevention of waste or for the protection of correlative rights.
“NOW, THEREFORE, IT IS ORDERED by the Railroad Commission of Texas that the application of C. F. DeBardele-ben, Jr., together with his motion for rehearing on same, for exceptions to the Density Order for his four wells in the Bethany Field, Panola and Harrison Counties, Texas, be and they are hereby denied.”
It was from this order that respondent appealed by filing this suit in the District Court. It is clear that unitized tracts once accepted by the Commission cannot be subdivided thereafter without the approval of the Commission. The hearing prior to the order of February 20, 1956 was not, as contended by respondent, a hearing involving the drilling of second wells on unitized tracts, but to the contrary, each of the applications for the wells here in issue affirmatively states that the wells were tobe drilled on a 320 acre tract on which no other well had been drilled. Another thing, it seems to me that to permit respondent under the record in this case to have his four “illegal wells,” would be to absolutely ignore the Railroad Commission’s Rule 37 spacing rule. No exception to the spacing rule was applied for, neither was it granted. Therefore, the effect of the judgment of the trial court and the Court of Civil Appeals is to grant exceptions to the spacing rule without requiring the erspondent to properly comply with the rules which provide that applications for exceptions to both the spacing rules and density rules promulgated by the Commission shall *532first be filed and considered by that body after notice of hearing. The commission, as heretofore indicated, is bound by its own rules and cannot legally act to the contrary if it so desired. Under the record in this case, the Commission was without lawful authority to validate the four “Ilegal wells.” But, be that as it may, the Court was certainly without authority to consider the question of confiscation.
Petitioner agrees that this holding does not work a forfeiture of the four “illegal wells.” It contends that the case at bar is similar in principle to the cases of Railroad Commission v. Magnolia Petroleum Company, Texas Civ. App., 125 S.W. 2d 398, er. ref. and Cheesman v. Amerada Petroleum Corporation, Texas Civ. App., 227 S.W. 2d 829, (no writ history.)
I agree with the petitioner. Respondent under the record in this case was without lawful application and the record before the Commission justified its order that respondent’s proof of confiscation, if any, was of no avail since the application (pleadings so to speak) did not show all of the acreage covered by the units in question. This failure, together with other misrepresentations alone, justified the order of February 20, 1956 regardless of the merits, that is, the proof offered by the respondent pn the question of confiscation.
However, if we assume that the question of confiscation was before the Commission, I contend that the Commission’s order is supported by substantial evidence. The respondent in his petition did not complain or claim that he was entitled to additional wells because of waste. His only contention in the trial court was that he was entitled to an exception to the Density Rule on the ground of confiscation. He makes the contention that he has a vested property right in the oil under his land; that he has not been afforded his fair share of the oil and gas in the fields (not just the Bethany field), and that by reason of drainage his inherent property right is being deprived him. On this point, I agree with the petitioner when it says:
“Since DeBardeleben was entitled to no wells as a matter of right on his 640 acres unitized tracts except the four original wells he had thereon, his only contention that he was entitled to the four new wells because of confiscation, must go for naught, because to grant him additional wells on this ground would give every operator to the east, south and west the same ground for exceptions to the density rule.”
*533To allow this in the Bethany Field would totally destroy the one well to 640 acres proration-conservation program.
Since the evidence before the trial court did not establish that the order denying an exception to the Density Rule was illegal, unreasonable and arbitrary, and since the order was supported by substantial evidence, the Commission’s denial to respondent of exceptions to the Density Rule should be upheld.
I shall not attempt to set out the evidence or point out in this opinion wherein the evidence is lacking. Suffice to say, if respondent is not getting his fair share of the gas produced from the Bethany Field, he has a way to proceed so as to get that fair share. He accepted the 640 acre unit, one well to the unit without protest. He voluntarily put all the acreage involved in the four units and got his one well per unit.
Now, if he is not getting his fair share, one way he could get relief if he can make out a case, would be on the basis of allowables by either limiting the allowables for the sixteen wells to the north, or increasing the allowables for the 103 wells to the south. Certainly, confiscation has not been shown.
I would reverse the judgments of both courts below, and dismiss the cause without prejudice to the right of respondent to file a proper application to the Commission.
Opinion delivered July 24, 1957.
Rehearing overruled October 2, 1957.