L & G Oil Co. v. Railroad Commission, A-9399

• Decision Date: 28 May 1963
• Docket Number: No. A-9399,A-9399
• Citation: 368 S.W.2d 187
• Parties: L & G OIL COMPANY, Appellant, v. RAILROAD COMMISSION of Texas et al., Appellees.
• Court: Texas Supreme Court

Page 187

368 S.W.2d 187

L & G OIL COMPANY, Appellant, v. RAILROAD COMMISSION of Texas et al., Appellees.

No. A-9399.

Supreme Court of Texas.

May 28, 1963.

Houghton Brownlee, Jr., Austin, H. M. Harrington, Jr., Longview, for appellant.

Waggoner Carr, Atty. Gen., Austin, Cecil C. Rotsch and Linward Shivers, Asst. Attys. Gen., Lloyd Armstrong and Clyde E. Willbern, Houston, Powell, Rauhut, McGinnis, Reavley & Lochridge, Frank Douglass, Austin, for appellees.

CULVER, Justice.

This is a direct appeal from a judgment of the 126th District Court of Travis County, denying appellant a temporary injunction in a cause involving the validity of administrative orders of the Railroad Commission.

The record in this appeal shows that during 1962 the Railroad Commission, in conjunction with the Attorney General's office and the Department of Public Safety, conducted an investigation in the East Texas field to determine the extent of the violation of the rules and regulations of the Commission and the conservation laws of the State of Texas by certain oil operators in the drilling of illegally slanted oil wells.

In the Kilgore district within the last eight or ten months the Commission personnel have conducted approximately 420 inclination surveys and approximately 97 directional surveys. The Commission in the past has been obtaining a survey company to do this type of work whenever a directional survey was required, as the Commission does not have the necessary personnel or equipment. The cost has been paid by the Attorney General out of a trust fund accumulated for that purpose. Approximately 750 wells have been shut down as a result of the violation of the Commission's rules and regulations reflecting a daily production of approximately 11,000 barrels and there are approximately 150 more wells that should be surveyed. ¹ The Commission itself operates upon an appropriation from the Legislature and has no funds available for running inclination or directional surveys.

In order to deal with this problem, the Commission on August 17, 1962, gave notice that on September 20, 1962, a hearing would be had in the Driskill Hotel in Austin 'to consider the matter of changing Statewise Rule 54 so that the bottom hole locations of oil and gas wells in the State of Texas will be more accuately known to the Commission'. Such hearing was held, and pursuant thereto on November 2, 1962, the Commission entered an order amending Rule 54 to include § V, which reads as follows:

'V. Surveys on Request of Other Operators:

'A. The Commission, at the written request of any operator in a field, shall determine whether a directional survey, an inclination survey, or any other type of survey approved by the Commission for the purpose of determining bottom hole location of wells, shall be made in regard to a well complained of in the same field.

'1. The complaining party must show probable cause to suspect that the well complained of is not bottomed within its own lease lines, and must also show that he is the owner or operator of a well located within the field.

'2. Unless the Commission cam make the appropriate survey with its own personnel and equipment, the complaining party must agree to pay all costs and expenses of such survey, and shall assume all liability, and shall be required to post bond in a sufficient sum as determined by the Commission as security against all costs and risks associated with the survey.

'3. The complaining party and the Commission shall agree upon the selection of the well surveying company to conduct the survey, which shall be a surveying company on the Commission's approved list.

'4. The survey shall be witnessed by the Commission, and may be witnessed by any party, or his agent, who has an interest in the field.

'5. Nothing in these rules shall be construed to prevent or limit the Commission, acting on its own authority, in conducting spot checks and surveys at any time and place for the purpose of determining compliance with Commission rules and regulations.'

We are concerned in this appeal with whether or not the Commission may, in order to enforce its valid rules and regulations and to prevent the illegal production of oil and gas, adopt the method set forth in § V.

We construe § V as contemplating that the survey authorized thereunder will be the act, and under the direction, of the Commission, and in the discharge of its statutory duties and powers.

Appellant L & G Oil Company, a trade name under which H. G. Lewis, Jr. operates and produces oil, has a well on the Alexander lease. Tidewater Oil Company has a producing well on the Castleberry lease, which adjoins the Alexander lease on the west. Both leases are located in the East Texas Oil Field in Gregg County.

On November 29, 1962, Tidewater requested the Commission to authorize a directional survey on the L & G Oil Company No. 2 M. E. Alexander well, in conformity with § V of Statewide Rule 54. The application of Tidewater alleged that there is probable cause to suspect that L & G's well is not bottomed within its own lease lines, and that while the surface location of the well is 331 feet from the west lease line, an old survey filed by L & G with the Commission, showed the bottom hole location to be only six feet from the west line.

On December 4th the Commission granted the application, its order reading in part as follows:

'The Commission being unable to make a directional survey with its own personnel and equipment, hereby authorizes Tidewater Oil Company to make the directional survey through the use of an approved surveying company, subject to the following conditions:

'1. Tidewater Oil Company shall pay all costs and expenses of the survey.

'2. Tidewater Oil Company shall post bond for the full value of $25,000 payable to L. & G. Oil Company, as security against all costs and risks associated with the survey, which bond must be approved by the Commission before becoming effective and to remain effective until released at the conclusion of the surveying operation. Commission approval and release shall be recorded on the face of this order.

'3. Tidewater Oil Company, in addition to acceptance of the bonding condition, shall assume all liability without limitation for damages to such well resulting from the directional surveying operations, including the preparation of the well for survey, and the replacing of the well to the same condition as existed when operations commenced.

'The Commission approves Tidewater Oil Company's selection of Sperry-Sun Well Surveying Company to run the directional survey.

'Such survey shall be witnessed by Railroad Commission personnel, and it may be witnessed by any party, or his agent, who has an interest in the field.

'Authority to conduct the directional survey in the manner and subject to the conditions above set out is granted on this the 4th day of December, 1962, and it is so ordered.

'IT IS FURTHER ORDERED, and L & G Oil Company is so directed, that interference by such operator in the conduct of the directional survey authorized herein shall result in the severance of pipeline connections for such lease.'

L & G challenges the validity of this order on the ground that the Commission has attempted to usurp the rule-making power of the Supreme Court and before it may conduct or order a directional survey to ascertain the bottom hole location, it must resort to the court for that authority as provided by Rule 167 of Texas Rules of Civil Procedure relating to discovery as amended in 1957. In support of that contention it cites the case of Hastings Oil Company v. Texas Company, 149 Tex. 416, 234 S.W.2d 389. Apparently L & G is claiming that the Commission, absent court permission, would not have the authority to enter upon L & G's property and conduct the survey even with the Commission's own personnel and equipment. Hastings makes no such holding. In that case the texas Company alleged that Hastings had so deviated its well that it had penetrated the subsurface of the Phillips tract, which amounted to a trespass. After a hearing the trial court found that there was probable cause to believe that the allegation of the Texas Company was correct. We held merely that the court was authorized to order a directional survey as an integral part of the temporary injunction under Rule 737 relating to discovery. ² Hastings Oil Company was insisting that the court was vested with no such authority.

Admittedly if Tidewater had sought authority for this action independently and for its own purposes it would have had to resort to the court just as Texas Company did in the above case. But that is not the situation here. The directional survey has been authorized by the Commission upon he request of Tidewater, which actually is in the nature of a complaint, but it is not for the private advantage and benefit of that company. While incidentally the location of the bottom hole of L & G's well may be of some value to Tidewater, yet that is not the reason for the issuance of this order to any extent or degree. To the contrary the information is sought by the Commission in accordance with § V of Rule 54, to enable the Commission to enforce its regulations and to discover and prevent the illegal production of oil and gas. The fact that the courts have a discovery procedure for private litigants does not require the Railroad Commission, in the performance of its statutory duty to enforce conservation laws of the state to follow the same procedure. Rule 167 requires that an action be pending before discovery relief will be granted. The Legislature has delegated to the Railroad Commission broad and extensive powers to regulate and control the drilling for and production of oil and gas to the end that these natural resources be conserved and that the interest of the public as well as individual operators be protected. For instance, Art. 6029, Vernon's Ann.Civ.St., provides that the Commission shall not only make but shall...