Railroad Commission v. Sterling Oil & Refining Co.

• Citation: 218 S.W.2d 415
• Decision Date: 16 February 1949
• Docket Number: No. A-1969.,A-1969.
• Parties: RAILROAD COMMISSION et al. v. STERLING OIL & REFINING CO. et al.
• Court: Supreme Court of Texas

Page 415

218 S.W.2d 415

RAILROAD COMMISSION et al. v. STERLING OIL & REFINING CO. et al.

No. A-1969.

Supreme Court of Texas.

February 16, 1949.

Rehearing Denied March 30, 1949.

Direct Appeal from District Court, Travis County.

Suit by Sterling Oil & Refining Company and others against Railroad Commission of Texas and others to enjoin enforcement of order promulgated by defendant commission. From judgment declaring the order invalid and enjoining its enforcement, the defendants appeal.

Reversed.

Price Daniel, Atty. Gen., Fagan Dickson, First Asst. Atty. Gen., and Elton M. Hyder, Jr., Joe R. Greenhill, and Charles D. Mathews, Asst. Attys. Gen., for appellants.

Powell, Wirtz & Rauhut, J. A. Rauhut, Graves & Dougherty, and Ireland Graves, all of Austin, Rex G. Baker, Nelson Jones, Archie D. Gray, Joe S. Brown, and Elston Law, all of Houston, Walace Hawkins, Raymond Myers, J. W. Timmins, and Martin A. Row, all of Dallas, Paul A. McDermott and Eugene T. Adair, both of Fort Worth, M. D. Kirk, of Tulsa, Okl., Ellis Chaney, Jr., of San Antonio, James H. Rogerts, of Austin, and E. E. Townes, W. B. Browder, Jr., and Vinson, Elkins, Weems & Francis, all of Houston, for appellees.

SHARP, Justice.

This is a direct appeal from the judgment entered December 2, 1948, by the 98th District Court of Travis County, declaring invalid an order promulgated by the Railroad Commission on November 22, 1948, and enjoining the Railroad Commission from enforcing the order. The order prohibited the production of either oil or gas from the Heyser Field unless and until all of the gas produced incident to such production is made available for one or more of the lawful uses as set out in Subsection (1) of Section 7, Article 6008, Title 102, of the Civil Statutes of this State, Vernon's Ann.Civ.St. art. 6008, § 7(1), which lawful uses, as therein set out, are as follows:

"(a) Light or fuel.

"(b) Efficient chemical manufacturing, other than the manufacture of carbon black * * *.

"(c) Bona fide introduction of gas into oil, or gas bearing horizon, in order to maintain or increase the rock pressure or otherwise increase the ultimate recovery of oil or gas from such horizon.

"(d) The extraction of natural gasoline therefrom when the residue is returned to the horizon from which it is produced."

The order was to become effective as of 7:00 a. m., December 1, 1948.

Suit was brought by Sterling Oil & Refining Company and a number of other Heyser Field producers, and it was alleged, among other things, that the order was illegal, unjust, unreasonable, arbitrary, and discriminatory, in that the Commission had no statutory authority to promulgate and enforce it; that compliance with the order within the time set by the Commission was a physical impossibility; that irreparable damage would be done to those wells in the field which have a water drive if they were shut in until the order could be complied with; that the order discriminates against this field in favor of other fields which are not shut down; that some of the leases are being kept in force by production only and might be jeopardized by the enforcement of the order; and that, in view of the fact that the residue gas in this field has been flared since 1938, of which fact the Commission is apprised, and the further fact that some of the producers in the field have made efforts to obtain a market for the gas which is now being flared, the order is unjust, unreasonable, and arbitrary. The trial court held that the order was invalid, and permanently enjoined the Railroad Commission from enforcing the order.

The appeal of the Railroad Commission is predicated upon Section 3-b of Article V of the Texas Constitution, Vernon's Ann. St., Article 1738a of Vernon's Texas Statutes 1948, and Rule 499-a of Texas Rules of Civil Procedure. The Railroad Commission contends that the judgment of the trial court was improper and unwarranted, in that the order of the Commission was reasonably supported by substantial evidence, and it is valid as a matter of law.

Appellees filed their motion to dismiss this appeal, and it is urged that this Court is without jurisdiction to decide the cause on direct appeal. The motion is based upon two grounds: (1) That the constitutional provision cited above gives jurisdiction to this Court only in cases involving the "constitutional validity" of certain laws and orders, and in this case the order is challenged on other than constitutional grounds; and (2) that the direct appeal may not be maintained under Rule 499-a of Texas Rules of Civil Procedure, because it necessitates the bringing to this Court of a statement of facts for purposes other than those provided for in the rule.

Section 3-b of Article V of the Constitution reads as follows:

"The Legislature shall have the power to provide by law, for an appeal direct to the Supreme Court of this State from an order of any trial court granting or denying an interlocutory or permanent injunction on the grounds of the constitutionality or unconstitutionality of any statute of this State, or on the validity or invalidity of any administrative order issued by any state agency under any statute of this State."

Pursuant to the adoption of Section 3-b of Article V of the Constitution and the enactment by the Legislature of Article 1738a of Vernon's Texas Statutes 1948, Rule 499-a of the Texas Rules of Civil Procedure was promulgated by this Court. The pertinent parts of Rule 499-a read as follows:

"(a) In view of Section 3 of Article 5 of the Constitution which confines the appellate jurisdiction of the Supreme Court to questions of law only, this court under the present and later amendment, above cited, * * * has and will take appellate jurisdiction over questions of law only, * * *.

"(b) An appeal to the Supreme Court directly from such a trial court may present only the constitutionality or unconstitutionality of a statute of this State, or the validity or invalidity of an administrative order issued by a state board or commission under a statute of this State, when the same shall have arisen by reason of the order of a trial court granting or denying an interlocutory or permanent injunction.

"(c) Such appeal shall be in lieu of an appeal to the Court of Civil Appeals and shall be upon such question or questions of law only, and a statement of facts shall not be brought up except to such extent as may be necessary to show that the appellant has an interest in the subject matter of the appeal and to show the proof concerning the promulgation of any administrative order that may be involved in the appeal. If the case involves the determination of any contested issue of fact, even though the contested evidence should be adduced as to constitutionality or unconstitutionality of a statute, or as to the validity or invalidity of an administrative order, neither the statute or statutes, above mentioned, nor these rules, apply, and such an appeal will be dismissed."

A similar order of the Railroad Commission was involved in the case of Railroad Commission of Texas v. Shell Oil Co., Inc., 146 Tex. 286, 206 S.W.2d 235 (known as the Seeligson case), and a direct appeal was taken from the judgment of the trial court to the Supreme Court. A motion to dismiss the appeal was based on the ground that this Court did not have jurisdiction of the case. This Court in an exhaustive opinion reviewed the provisions of the Constitution, the Articles of the Statutes, and Rule 499-a, and held that this Court did have jurisdiction of the case.

This Court has held that the Legislature has clothed the Railroad Commission with special powers to perform special functions relating to oil and gas, and in reviewing the evidence forming the basis for the type of order under consideration no question of the preponderance of the evidence is involved. In passing upon an order of this kind by the Railroad Commission, the rule is announced that it is a question of law as to whether or not the order is reasonably supported by substantial evidence, and the Supreme Court has jurisdiction to consider the record involved in the case and pass upon the validity of the order. Thomas v. Stanolind Oil & Gas Co., 145 Tex. 270, 198 S.W.2d 420; Trapp v. Shell Oil Company, Inc., 145 Tex. 323, 198 S.W.2d 424; Hawkins v. Texas Company, 146 Tex. 511, 209 S.W.2d 338; Wrather v. Humble Oil & Refining Co., Tex.Sup., 214 S.W.2d 112; Railroad Commission v. Humble Oil & Refining Co., Tex.Civ.App., 193 S.W.2d 824, writ refused. In this case the record of the proceedings in the trial court, including the statement of facts, is before us, and in considering the record as to whether there is any substantial evidence reasonably to support the order in the case we are passing upon a question of law, and are not determining a contested issue of fact, and in doing so Rule 499-a is not violated. Therefore the motion to dismiss the appeal is overruled.

It is further urged by appellees that the information or data printed on the ballot was too indefinite to apprise voters of the purpose of Section 3-b of Article V. The ballot contained the following statements:

"For the Amendment to the Constitution of the State of Texas Authorizing the Legislature to Provide for Appeals Direct to the Supreme Court in Instances Involving the Constitutionality of Certain Laws and Orders."

"Against the Amendment to the Constitution of the State of Texas Authorizing the Legislature to Provide for Appeals Direct to the Supreme Court in Instances Involving the Constitutionality of Certain Laws and Orders."

Article XVII of the Constitution provides the method by which amendments to the Constitution are to be adopted. That article provides that, "The Legislature * * * may propose amendments to the Constitution, to be voted upon by the qualified electors * * * which proposed amendments shall be duly published once a week for four weeks, commencing at least three months before an election, the...