Gregg v. Delhi-Taylor Oil Corp.
| Decision Date | 22 February 1961 |
| Docket Number | DELHI-TAYLOR,No. A-7977,A-7977 |
| Citation | 344 S.W.2d 411,162 Tex. 26 |
| Parties | A. W. GREGG, Petitioner, v.OIL CORP. et al., Respondents. |
| Court | Texas Supreme Court |
William Darden, Corpus Christi, Tom G. Oliver, Jr., Ernest Morgan, San Marcos, Ewers, Toothaker, Ewers, Elick, Jones & Abbott, William E. York, McAllen, Hart & Hart, Austin, for petitioner.
Charles E. Thompson, McAllen, Turner, White, Atwood, Meer & Francis and C. Sidney McClain, Dallas, Franklin W. Denius, Austin, Looney, Clark, Mathews, Thomas & Harris, Austin, Jackson, Walker, Winstead, Cantweel & Miller, Dallas, for respondents.
A. W. Gregg is the owner of an oil and gas lease on .42 acres in the City of Pharr, Hidalgo County, Texas. The tract is approximately 75 feet wide. Delhi-Taylor Oil Corporation and Mayfair Minerals, Inc. (herein called Delhi-Taylor), own the mineral estates in lands surrounding Gregg's lease. Gregg is drilling or has drilled a well 37 1/2 feet from Delhi-Taylor's lease on the east and 80 feet from its south line. He plans to increase the productivity of his well by fracturing the gasproducing formation, a process by which sand is mixed with liquid and forced into the structure under great hydraulic pressure. Veins or cracks are thus opened so that the gas may flow from the producing rock or sand into Gregg's well. Delhi-Taylor brought this suit to enjoin Gregg from fracturing the common formation beyond Gregg's own property lines and into Delhi-Taylor's lease. It is a suit by Delhi-Taylor to enjoin a subsurface trespass by Gregg.
The case was transferred to Hays County for trial. There Gregg pleaded that the District Court was without jurisdiction to try the case. It was and is Gregg's contention that the matter must first be heard and determined by the Railroad Commission of Texas. His theory is that this administrative body has 'primary jurisdiction'; that the holding of that body may then be appealed to a District Court in Travis County and there tested by the substantial evidence rule.
Without hearing evidence, the District Court agreed with Gregg, and Delhi-Taylor's case was dismissed. That action was reversed by the Court of Civil Appeals in Austin. It ordered that the case be reinstated for trial in the District Court. 337 S.W.2d 216. It made a similar holding in a related case. 1 On the same day, the Court of Civil Appeals at San Antonio reached the opposite result in a similar case, one justice dissenting. 2 We granted applications for writs of error in all three cases. We here affirm the judgment of the Austin Court of Civil Appeals.
The question here is whether the courts of Texas have and will exercise the power to grant injunctive relief to preserve the status quo upon allegations and proof that a neighbor is about to fracture an oil or gas producing horizon beyond his property lines for the purpose of increasing the productivity of the neighbor's well. More broadly, the question is whether the courts have the power to determine whether a subsurface trespass is occurring or is about to occur, or whether the Railroad Commission has this power to the exclusion of the courts, with the courts having the power only to review, under the substantial evidence rule, or otherwise, the action of the Commission.
It is the contention of Gregg and his counsel that the Legislature has delegated to the Commission general powers to regulate the oil and gas industry; that the Legislature has said that the Commission 'shall make and enforce' rules and regulations to prevent waste and to protect correlative rights; and that more particularly, the Commission has the power and duty to supervise the drilling and completion of wells (with the further contention that sand fracturing is part of the completion process); that the Commission has the duty to establish rules 'for shooting wells' and 'to require wells to be drilled and operated in such manner as to prevent injury to adjoining property.' 3 Gregg points out that the Legislature has authorized the Commission to institute suits, to hear and determine complaints, to sue out such writs and processes as may be necessary to enforce its orders, and to punish for contempt or desobedience of its orders. 4
Gregg and his counsel rely heavily upon the theory of 'primary jurisdiction.' That theory is that when the Legislature has delegated the power to an administrative body to regulate a particular industry or business, the courts may not or will not interfere until the board or bureau has had an opportunity to pass upon the matter and has remedied, or attempted to remedy, the situation. Two of the main arguments supporting this theory are: (1) That the commission, board or bureau is staffed with experts trained in the handling of the complex problems presented, and (2) great benefit is to be derived from a uniform interpretation of laws, rules and regulations by an administrative body whereas different results might be reached under similar fact situations by various courts or juries. 5 It is their position that 'primary jurisdiction' is a principle which determines whether the court or the administrative body should make the initial decision. And this is a case, they say, in which the initial decision should be (must be) made first by the Commission.
This Court gave its approval to the application of the doctrine of primary jurisdiction in Kavanaugh v. Underwriters Life Insurance Co., Tex.Civ.App.1950, 231 S.W.2d 753 (writ refused). That was an action by shareholders and policyholders against a mutual assessment insurance company to require, among other things, the removal of officers of the company, the election of new officers, and an accounting from the officers for funds paid to themselves and others. The Court pointed out that the statutes specifically authorized the Board of Insurance Commissioners to order the removal of officers, to require tha election of new officers, to approve the officers and directors elected, and to make and supervise audits and accounts. The court concluded that the Legislature had vested the Board with primary jurisdiction in suits of this character and that the trial court correctly sustained a plea to its jurisdiction.
Gregg also relies heavily on Railroad Commission of Texas v. Gulf Production Co., 1939, 134 Tex. 122, 132 S.W.2d 254, 255. There Tippett already had two wells on 4.7 acres, and he got a permit from the Commission for a third. Upon appeal, the District Court set aside the third permit and ordered the third well plugged. This Court affirmed the action of the trial court in striking down the permit because under it, Tippett would have been allowed to recover 'more than his fair share of the oil and gas in and under his land.' It was held that the granting of the permit to prevent confiscation constituted an abuse of power by the Commission. This Court sustained that portion of the judgment which enjoined the operation of the well. But it reversed that part of the judgment by which the trial court ordered the well to be plugged. It reasoned that the Legislature had specifically delegated to the Commission the supervision of plugging of wells. The statute left to the Commission the best way to have the well plugged so as to protect fresh water, waste of gas, and danger from blowout. This was an administrative matter only. We do not regard the case as authority for Gregg's position here.
On the other hand, Delhi-Taylor and its counsel points out that the Legislature has not specifically delegated to the Commission the question of subsurface trespass or sand fracturing; that the Commission itself asserts no such power; that it has made no rules regarding the subject though requested to do so by Gregg; 6 and that two of the three Commissioners, while saying that sand fracturing was a standard practice, declined to be drawn into this controversy. 7
Delhi-Taylor contends that the Commission would have no authority to authorize a trespass onto its land; 8 that the Commission does not have the power to make lawful an unlawful trespass; that no administrative discretion is involved because the Commission would have no discretion to authorize the trespass; that is has no power to transfer property rights in gas (the gas itself) from one person to another; that the law of capture could not be extended by the Commission to 'capture by trespass'; that this is not a question of how a well should be completed but where it is completed. It contends that the theory of 'primary jurisdiction' in the Commission is not applicable here because the Legislature has not attempted to delegate that power, exclusive or concurrent, to the Commission; and that the question here is one of law.
The basic facts are relatively simple. Gregg has a well drilled into the Hansen sand at a depth of about 9,400 feet. The sand is hard and fairly tight. To increase the productivity of the well, Gregg planned to fracture the sand by shooting sand and liquid at very high pressure through holes in his drilling pipe. We understand that it is undisputed that the fractures will be about 1/10th of an inch in diameter at the well and diminish to zero, and that they will be supported by the injected sand. The gas can then reach the well through these cracks or veins. In this case, the trial court did not allow the introduction of evidence. So we have no evidence as to how far from the well the cracks will extend. Delhi-Taylor alleged that they would extend beyond Gregg's property lines and into its portion of the gas reservoir. Gas which was under Delhi-Taylor's land would thus be produced by Gregg. The question remains: do the courts have authority to issue an injunction to ascertain whether there is a trespass, and to enjoin it if there is?
We think the courts do have this jurisdiction. The questions presented are primarily judicial in nature. Where the issue is one inherently judicial in nature (as we think the...
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