Amazon Petroleum Corporation v. Railroad Commission

• Decision Date: 12 February 1934
• Docket Number: No. 652.,652.
• Citation: 5 F. Supp. 633
• Parties: AMAZON PETROLEUM CORPORATION v. RAILROAD COMMISSION OF TEXAS et al.
• Court: U.S. District Court — Eastern District of Texas

5 F. Supp. 633

AMAZON PETROLEUM CORPORATION v. RAILROAD COMMISSION OF TEXAS et al.

No. 652.

District Court, E. D. Texas, Tyler Division.

February 12, 1934.

Saye, Smead & Saye, of Longview, Tex., F. W. Fischer, of Tyler, Tex., and W. Edward Lee, of Longview, Tex., for plaintiff.

James V. Allred, Atty. Gen., for defendant Railroad Commission.

Charles I. Francis and Douglas Arant, Sp. Assts. to the Atty. Gen., for defendants Ryan and others.

Before HUTCHESON, Circuit Judge, and KENNERLY and BRYANT, District Judges.

HUTCHESON, Circuit Judge.

Plaintiffs, owners and operators of oil wells in East Texas, to prevent what they alleged to be unconstitutional, illegal, and confiscatory penalties under state statutes, brought these suits in the Eastern District of Texas against the members of the Railroad Commission and their agents, the Attorney General of Texas, and district and county attorneys. Specifically invoking the Fourteenth Amendment, they sought injunctive relief, interlocutory and final, to restrain the enforcement against them of the orders of the Railroad Commission limiting their production of oil.

In addition to this cause of action, they joined in the suits separate and distinct causes of action, and sought injunctive relief, interlocutory and final, against Ryan, Marshall, Bennett, and Baer, as agents of the federal government, to restrain them from enforcing against plaintiffs pretended but illegal, as without constitutional sanction, rules and regulations promulgated under the National Industrial Recovery Act (48 Stat. 195), and from exacting of and enforcing against them the drastic penalties provided for disobedience.

It plainly appearing that the first cause of action presented a case for three judges, the District Judge called two judges to his assistance and set the hearing on the application for injunction on both causes of action for the same time. Upon assembling, the statutory court in limine suggested its want of jurisdiction over the cause of action against the federal defendants as not within 28 USCA § 380, and that that cause of action was one for the consideration of the District Judge. Thereupon all parties desiring the applications to be heard and determined as to both causes of action at this time, it was in open court stated and agreed to by all parties and the judges consenting, made matter of record, that each cause should be regarded as submitted to and to be decided by the tribunal having jurisdiction of it. As the hearing advanced, it was further stipulated of record that the suits be submitted on the evidence taken at this hearing, both on the application for interlocutory injunction and on the merits. So submitted, they stand before us for disposition.

Disposing first, as we must, of the question of jurisdiction, we think it plain that each suit asserts two wholly separate and distinct causes of action. Of one of these actions, that against the state officers, we have jurisdiction. We are without jurisdiction of the other. But for the agreements submitting it to the District Judge alone, we should be obliged to dismiss it. Horton Mfg. Co. v. Hardy Light Co. (Tex. Civ. App.) 294 S. W. 320. Under that agreement, instead of dismissing it, we are directing its severance for submission, under such repleading in it, if any, as may be deemed necessary, to the District Judge as a separate and independent suit. We turn now to the cause of action before us for decision.

We find that it is, in its general nature and aspects, another of the attempts we have so often had to deal with to obtain injunctive relief against the regulation by the commission of production from wells in the East Texas oil field. Plaintiffs vigorously insist that this case is the same in its facts, and is ruled by the law, of those cases in which we have heretofore granted injunctions, specifically the MacMillan and the People's Cases. Defendants vigorously deny this, asserting that the case is rather the same in fact and in principle as those in which injunctive relief has been denied.

Plaintiffs, in addition to their attack on the orders as invalid, attack the statutes as well as our decisions upholding those statutes (Vernon's Ann. Civ. St. Tex. arts. 6014, 6049c). They also maintain that those cases in which we have refused injunctions have not been well decided. The defendants in turn argue that we have done well when we have sustained the statutes and orders of the commission; ill, when we have done otherwise.

Since we entertain the belief that all of our decisions have been consistent in principle, and that the differences in the particular results have been due to material differences in fact and law between the cases, it may be well, before proceeding to decide this one, to review those cases to determine what was actually decided by them.

In each of the cases we have sustained the statutes as a valid exercise of the powers of the state to control the manner of the taking of the state's natural resources in order to conserve them. We have been at the utmost pains to state and emphasize the statutory agency of the commission, and that its powers must be found in the statutes it purports to execute. In each case we have definitely affirmed that the right of one whose business consists in the taking and depletion of oil and gas, the natural resources of this state, to carry on that depletion is not an absolute, but a qualified one, to be enjoyed only in accordance with the reasonable restrictions the state may impose. In short, we have pointed out again and again that the business of taking and depleting natural resources may not be carried on except within the limitations and according to the regulations which the state may constitutionally prescribe. In not a single one of these cases did we find the statute unreasonable or invalid. In not a single one did we find the orders invalid because, though complying with the statute, they violated the Constitution. In each of the cases in which injunctions issued, we made it clear it was because we thought the orders had been entered in the teeth of statutes forbidding the commission's doing what it attempted to do. We were at pains in them all, we are at pains again, to make it clear that in our opinion the state, through the Legislature, has broad powers in conserving its natural resources of oil and gas, to regulate and control the business of producing and handling them, with the right to broadly delegate to the commission, as statutory agents, the administration of the regulation and control it decides upon.

In all of these cases we specifically disclaimed for the courts any administrative powers, and particularly any power to substitute for the administration of the commission, our own administrative views. In not a single one of the cases in which we refused to enjoin, did we do so because we felt that the orders represented good administrative practice. In not a single one of them in which we enjoined, did we do so because we felt they represented bad administrative practice. We granted or refused relief according to the view we took that the proof did or did not show sufficiently to overthrow the prima facie presumption of validity attending them, that the orders were, because beyond their powers, arbitrary and confiscatory; that is, that they were not in accord with, but in violation of, the statutory directions they were bound to carry out. Let us examine the cases.

In Henderson, Inc., v. Railroad Commission of Texas Case, 56 F.(2d) 218, we sustained the statute against a direct attack against it, as reasonable and valid. In MacMillan v. Railroad Commission of Texas Case, 51 F.(2d) 400, a successful attack upon the orders of the commission, we took pains to point out that we enjoined the orders not because we had found them in violation of constitutional provisions, but because we found them to be not conservation orders to prevent physical waste as the statute required them to be, but price-fixing orders to prevent economic waste in the face of a statute forbidding this.

In Constantin v. Smith, 57 F.(2d) 227, we swept aside the pretensions of the Governor that he could substitute military for constitutional government, could disregard the conservation statutes by supplanting them with regulations of his own, and could oust from the performance of its duty the commission, the conservation agents of the state. We reaffirmed that these were valid statutes of great public and private importance and concern by which all were bound. That the commission was duly authorized, as statutory agent, to enforce and administer them, and issuing an injunction against the Governor and the military, we declined to issue one against the ousted commission until it had had an opportunity to take up again its duty of administering these laws.

In People's Petroleum Producers v. Sterling Case, 60 F.(2d) 1041, we refused an interlocutory injunction against orders apportioning a 325,000-barrel allowable per well over the field for the reasons fully set out in the opinion, that the statutes were valid, that every reasonable presumption must be indulged that the commission's orders followed its statutory authority, and that plaintiffs had not offered sufficient evidence to rebut and overthrow these presumptions. This decision was rendered under a different statute and under different facts from those controlling the MacMillan Case. We there pointed out that whereas in the MacMillan Case the statute had neither authorized nor suggested that proration might be resorted to, or that fields might be treated as a whole, the amended statute required the commission to consider questions of waste present or imminent, from the standpoint of the field as a whole, and to prorate the amount decided upon as necessary to prevent waste in the field equitably among the owners, and that plaintiffs having made no proof that the statute had been violated in doing so, we must...