311 U.S. 570 (1941), 218, Railroad Commission of Texas v. Rowan & Nichols Oil Co.

Docket Nº:No. 218
Citation:311 U.S. 570, 61 S.Ct. 343, 85 L.Ed. 358
Party Name:Railroad Commission of Texas v. Rowan & Nichols Oil Co.
Case Date:January 06, 1941
Court:United States Supreme Court
 
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Page 570

311 U.S. 570 (1941)

61 S.Ct. 343, 85 L.Ed. 358

Railroad Commission of Texas

v.

Rowan & Nichols Oil Co.

No. 218

United States Supreme Court

Jan. 6, 1941

Argued December 12, 13, 1940

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE WESTERN DISTRICT OF TEXAS

Syllabus

1. An order of the Texas Railroad Commission limiting the daily allowable production of the East Texas oil field and providing a method for its distribution among the several well owners, held:

(1) Consistent with the Fourteenth Amendment, p. 572.

(2) Not so clearly a violation of a State statute, Vernon's Texas Annotated Civil Statutes, art. 6049c, § 7, as to warrant an injunction in the federal courts, p. 577,

as applied to an operating company which challenged the basis of the formula and claimed that, by its minimum and maximum "allowables," it unduly favored wells of small capacity and impaired the future productivity of wells in high-producing and "thinly" drilled areas. Cf. Railroad Commission v. Rowan & Nichols Oil Co., 310 U.S. 573; post, p. 614.

2. In matters of this kind, the due process clause does not require that the judgment of an expert state commission be supplanted by the individual view of judges based on the conflicting testimony, prophecies, and impressions of expert witnesses. P. 576.

Reversed.

Appeal from a decree of the District Court, of three judges, which enjoined the enforcement of an order regulating production of oil in the East Texas field.

Page 571

FRANKFURTER, J., lead opinion

MR. JUSTICE FRANKFURTER delivered the opinion of the Court.

In conformity with the regulatory scheme devised by Texas for exploiting and safeguarding its oil resources, the Railroad Commission of that state, in 1938, issued an order formulating a method for distributing among well owners the total amount of oil which it then allowed to

Page 572

be produced in the East Texas field. The enforcement of this order was enjoined by lower federal courts at the suit of the complainant in the present case, Rowan & Nichols Oil Company, 28 F.Supp. 131; 107 F.2d 70. To avoid the dislocation resulting from this judicial frustration of its order, the Commission, by an order of September 11, 1939, had to devise a new plan of proration. Its action in doing so was again promptly challenged in a federal district court in Texas. A decree enjoining the Commission followed, and an appeal from that decree is the matter now before us. Judicial Code, §§ 238, 266, as amended, 28 U.S.C. §§ 345.

The challenged order of the Commission concededly satisfies all procedural requirements. It was part of a continuous process of administrative responsibility, preceded by a specific hearing affecting the immediate situation, with full opportunity given to the Oil Company to develop the facts and arguments which it later renewed below and here.

The Commission's action now in controversy cannot be severed from the earlier order which it replaced. Both set limits, incontestably valid, Champlin Rfg. Co. v. Commission, 286 U.S. 210, on the daily production of the East Texas...

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