Harrington v. Railroad Commission, s. A-9702

• Decision Date: 29 January 1964
• Docket Number: Nos. A-9702,A-9704,s. A-9702
• Citation: 375 S.W.2d 892
• Parties: H. M. HARRINGTON, Jr., Appellant, v. RAILROAD COMMISSION of Texas et al., Appellees (three cases). to
• Court: Texas Supreme Court

Page 892

375 S.W.2d 892

H. M. HARRINGTON, Jr., Appellant, v. RAILROAD COMMISSION of Texas et al., Appellees (three cases).

Nos. A-9702 to A-9704.

Supreme Court of Texas.

Jan. 29, 1964.

Rehearing Denied March 18, 1964.

C. K. Richards, Houghton Brownlee, Jr., Austin, for appellant.

Waggoner Carr, Atty. Gen., Austin, Joseph Trimble, Asst. Atty. Gen., Powell, Rauhut, McGinnis, Reavley & Lochridge, Frank Douglass, Austin, with above firm, J. K, Smith, Fort Worth, for appellees.

CALVERT, Chief Justice.

The three cases to be decided were tried together in the trial court and were submitted jointly in this court on direct appeal. The cases originated as suits in the nature of appeals to the district court by Harrington from orders of the Railroad Commission of Texas.

Harrington is one of the oil operators caught up in the East Texas 'slant-hold' dragnet. Two wells drilled by him as lessee on tracts of 1.1 and 5.25 acres in 1948, and a third well drilled on a tract of 34.7 acres in 1949 in which he acquired an interest in 1960, were found by directional survey in 1962 to be deviated from the vertical to a greater extent than was authorized. By order of the Railroad Commission the three wells were ordered disconnected from pipe lines and were sealed. Thereafter, Harrington applied to the Commission for permits to redrill, straighten and correct the well bore of the existing wells, or, alternatively, to drill substitute wells. The Commission denied his applications.

By his suits Harrington seeks to set aside the three orders and to enjoin the Commission from interfering with his drilling operations. The Commission is aided in its defense of the validity of its orders by Humble Oil & Refining Company and Pan American Petroleum Corporation, intervenors. The trial court has upheld the validity of the Commission's orders and has denied injunctive relief. We hold that Harrington is legally entitled to the permits applied for and we grant the injunctive relief sought.

Although the facts in the three cases differ to some extent, decision of common questions of law will dispose of all. The salient facts in the three cases are undisputed.

All three existing wells are located along the eastern edge of the East Texas oil field, and all were drilled under permits regularly issued by the Commission as exceptions to Rule 37 to prevent confiscation. Validity of the permits has never been questioned in legal proceedings. The well bore of each of the wells is deviated from the vertical by more than fifteen degrees and is bottomed under a lease in which Harrington owns no interest. We may assume that deviation and completion under adjoining leases was intentional. The permits for drilling the wells on the two small tracts contained 'straight-hole' clauses, which provided for a hearing before the Commission before an allowable would be assigned if the well bore was deviated more than three degrees from the vertical. Upon completion of each of the two wells Harrington filed an affidavit showing a deviation of less than three degrees. Had the Commission known the true facts, an allowable would not have been assigned the wells until the excessive deviation in the well bores was corrected.

Each of the existing wells has produced as much or more oil than was originally in place beneath the tract on which it is located, and will produce many times the original reserves if redrilled vertically and granted a normal allowable of production. However, this advantage in production is one shared by the three wells in common with other wells in the area because all are producing from a common pool and the water drive of the oil is from west to east. Developments since the wells were drilled have established that they would have been as productive, or substantially as productive, had they been drilled true to the vertical.

Determination of the issue which the parties seem to agree, in their post-submission briefs, is the true issue between them, is decisive of the cases. In their post-submission brief appellees put the heading of their argument in all three cases in this form: 'THIS IS A GARDEN VARIETY RULE 37 CASE.' In his post-submission brief appellant insists that these are not ordinary Rule 37 cases; that, on the contrary, they involve applications to redrill wells drilled long ago under Rule 37 permits. On this crucial issue we agree with appellant. But first, we must notice the reasons given by the Commission for its action on the applications to redrill.

In its order denying one of the applications the Commission gave as reasons: (1) that the lease had 'produced substantial quantities of oil in violation of the rules and regulations of the Commission'; (2) that the applicant had 'not shown legal justification for violating the terms of the drilling permit'; and (3) that the applicant had 'failed to show the use of diligence in the drilling' of the tract. No reasons were given for denying the other two applications. For opinion purposes we will assume the reasons were the same as those given for denying the first application.

If, as reasons (1) and (2) seem to indicate, the basis for the Commission's orders is punishment of appellant for violating the terms of his permits, or for wrongfully producing oil from beneath adjoining tracts or leases, the orders are void for want of power in the Commission so to punish. The Legislature has expressly provided the sanctions and penalties which may be imposed for violating the conservation laws or the rules, regulations and orders of the Commission promulgated thereunder.

Article 6033 ¹ requires an owner or operator of an oil or gas well to secure from the Commission a certificate showing compliance with conservation laws and conservation rules, regulations and orders of the Commission before he may secure a pipe line connection, and empowers the Commission to cancel any certificate of compliance when it appears that in the operation of the well or in the production of oil and gas such laws or rules are being violated. That sanction has been applied against appellant and his wells have been shut in for more than a year. Article 6036 authorizes the imposition of a penalty on any person violating the conservation laws or Commission rules and regulations of $1,000 for each day of violation and for each act of violation, the penalty to be recovered in a suit by the State of Texas to be prosecuted by the Attorney General. Article 6066a defines 'Unlawful oil' as including oil which has been produced in this State 'in violation of any law of said State or in violation of any order of the Commission', and authorizes the seizure and forfeiture of such oil to the State. Article 1111c, Sec. 2, Vernon's Ann. Penal Code, makes it a felony, punishable by confinement in the penitentiary for not less than two nor more than five years, knowingly to cause an officer or employee of the Commission to issue a permit relating to oil which misrepresents the true facts with respect to the oil, or to cause the issuance of such a permit with intent to defraud.

The sanctions and penalties thus expressly provided by the Legislature are exclusive, and the Commission has no power to impose different or additional sanctions or penalties of its own devising. The power is necessarily denied to the Commission by Art. 3, Vernon's Ann.Penal Code, which provides that 'no person shall be punished for any act or omission, unless the same is made a penal offense, and a penalty is affixed thereto by the written law of this State', which provision implements the design of the Penal Code declared in Article 1 to be 'to define in plain language every offense against the laws of this State, and affix to each offense its proper punishment.'

Appellees seem to suggest that the power to punish by denying the applications to redrill is conferred by Article 6036, which states that the penalty there provided, heretofore noticed, is in addition to penalties 'that may be imposed by the Commission for contempt for the violation of its rules, regulations, or orders.' We do not interpret this language to mean that the Commission is empowered to devise its own penalties for unlawful conduct or for violations of its rules and orders. No doubt the quoted language refers to the power conferred by Article 6024 wherein the Commission is authorized 'to punish for contempt or disobedience of its orders as the district court may do.' Penalties which may be imposed for contempt by the district court are specifically expressed in Article 1911, and no others may be imposed. Moreover, if the quoted language were interpreted to authorize the Commission to provide penalties differing from those provided in the statutes, we would be confronted with a grave problem of the constitutional authority of the Legislature to delegate this power. See 1 Am.Jur.2d 937, Administrative Law, § 127; 11 Am.Jur. 965, Constitutional Law, § 244; 1 Tex.Jur.2d 661, Administrative Law, § 17.

The Commission's reason (3) for denying the permits evidently refers to a lack of diligence in drilling a straight hole. The reason was given with respect to the application for a permit to redrill the well on the 1.1 acre tract which had been drilled originally within six months of the issuance of the permit in keeping with the terms of the permit. This reason seems to be the basis of a phase of appellees' principal argument in this court.

Appellees are not limited in their defense of the validity of the Commission's orders to the reasons assigned by the Commission for entering them. If there is any legal basis for the orders they must be upheld, and it is immaterial that the reasons given for them are unsound. Texas Employment Commission v. Hays, Tex.Sup., 360 S.W.2d 525, 527; Gulf Land Co. v. Atlantic Refining Co., 134 Tex. 59, 131 S.W.2d 73, 84; Railroad Commission of Texas v. Magnolia Petroleum Co., 130 Tex. 484, 109 S.W.2d 967, 970.

Appellees' principal defense in this court of...