Texas Panhandle Gas Co. v. Thompson

• Decision Date: 07 October 1935
• Docket Number: No. 539.,539.
• Parties: TEXAS PANHANDLE GAS CO. v. THOMPSON et al.
• Court: U.S. District Court — Western District of Texas

12 F. Supp. 462

TEXAS PANHANDLE GAS CO. v. THOMPSON et al.

No. 539.

District Court, W. D. Texas, Austin Division.

October 7, 1935.

C. C. Mount, of Oklahoma City, Okl., and Morgan, Culton, Morgan & Britain, of Amarillo, Tex., for complainant.

William McCraw, Atty. Gen., and William C. Davis and Archie Gray, Asst. Attys. Gen., for defendants.

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

HUTCHESON, Circuit Judge.

A continuation of the controversy which has long been going on in the Panhandle gas field, this litigation has for its background the same familiar figures, the same interests, the same general issues. Canadian River Gas Co. v. Terrell (D. C.) 4 F. Supp. 222; Texoma Natural Gas Co. v. Terrell et al. (D. C.) 2 F. Supp. 168; Texoma Natural Gas Co. v. Railroad Commission (D. C.) 59 F.(2d) 750; Sneed v. Phillips Petroleum Co. (C. C. A.) 76 F.(2d) 785. Here, as before, in the favorable situation of the pipe line companies as to markets for their gas for light and fuel uses, and the unfavorable situation of other well owners who have not markets, may be found the real genesis of the law and order under attack.

All recognize that this is so. All agree that the purpose and the probable effect of the order complained of will be the same as that intended for the orders enjoined in the earlier cases, to require plaintiff, and those situated like plaintiff, to supply part of their needs by purchase from well owners having no markets, by preventing their supplying all of them from their own wells.

Plaintiff insists that the law itself, the order issued under it, and the facts it is applied to, are in substance the same law, the same order, and the same facts as those which were presented and ruled adversely to the Commission in the earlier cases. Defendants deny this. They say that at last they have a law and order which, based on a different situation and exerting different powers, presents a valid exercise of the police power, a valid regulation of the state's natural resources. They claim that the grounds of invalidity successfully urged against the orders in those cases do not apply here, because (a) this one rests upon a finding of waste, and (b) was entered in the exertion of a power to protect correlative rights, not granted to the Commission in the earlier cases, but specifically granted here.

Plaintiff insists that the finding of waste is a fiating, not a fact finding at all, a mere arbitrary conclusion entered without any credible evidence to support it, and flatly contradicted by the admissions and all the evidence in the former cases, and all the credible evidence in this. It points to the fact that it was entered after the order, promulgated by the Commission under its claimed authority to equalize opportunities in the field, had come under attack, as conclusive that it is a mere makeweight fiating, to bolster up the insufficient grounds originally put forth. It insists that the order in form limiting the plaintiff to the use of its market facilities and markets, but in fact designed to appropriate them in part to the use of other well owners not so equipped, was entered and must rest, not upon considerations of preventing waste, but entirely upon those of equalizing one well owner with another, by so limiting the takings from their wells, of those having markets and market facilities, as to compel them to purchase and take from the wells of those who have neither.

Upon the showing in plaintiff's bill as to the similarity, if not complete identity, of this case with all the others, and that the immediate enforcement of the order against it would either deprive plaintiff's customers, towns and cities, and their people, of the gas they counted on to sustain their civic life, or would put plaintiff to an enormous expense unnecessarily incurred if the law and order were held invalid, a restraining order pending the interlocutory hearing was issued.

The considerations which there prevailed, that no substantial injury could follow a temporary restraint pending hearing, while serious and irreparable inconvenience and loss would certainly follow the refusal to grant it, are urged upon us here in support of plaintiff's application for an interlocutory injunction pending a hearing of the cause on its merits. Defendants insist that the temporary injunction should be denied. They urge that the questioned order was entered to make effective a comprehensive legislative scheme to regulate and control the taking of gas from the field, so as to prevent its waste; that a part of that scheme was to supply a market for light and fuel to owners of wells whose use of their gas for stripping and other wasteful purposes the amended law had prohibited; and that, if the pipe line companies were permitted to supply their requirements from their own wells without sharing their facilities with others, there would result the injustice of depriving well owners without market for light and fuel of right to use their gas, while others with markets were permitted to fully use theirs.

Plaintiff, conceding that this would indeed be the result, insists that, not the situation caused by the present law, but that complained of in Sneed v. Phillips Petroleum Co., supra, caused by the old law, was the unjust one; that the present law prohibits all from wastefully using, enjoins upon all to use, gas nonwastefully; that plaintiff is not now using, and never has used, its gas wastefully, and that those for whose benefit the Commission has enacted its order have the same right in law to use their gas for light and fuel purposes as plaintiff has, if they will, at their own expense, as plaintiff did at its, provide themselves with market facilities and markets. It insists that there is no principle under our law by which the facilities and property of one person may be appropriated by law to the use of another. It declares that an order attended with such results is supported by no presumptions, but, on the contrary, comes heavily burdened with presumptions against it.

In addition to invoking the protection of the Federal Constitution, plaintiff points to and invokes the state statutes (Vernon's Ann. Civ. St. Tex. art. 6049c, § 8) authorizing court review of orders of the Commission and the granting of an injunction (section 10) pending final judgment in that proceeding. Insisting that, whatever may be the correct rule as to the presumptions attending the findings of the Commission and the burden to overthrow them when the Federal Constitution alone is invoked, the statutory burden in a review proceeding is met when a preponderance of the evidence shows the order to be wrong. It reminds us of the state statute providing that, pending the trial of that issue on the merits, one who seeks a review of the Commission's order, may have the status preserved by a temporary decree. Plaintiff, in short, while insisting that viewing this as a constitutional suit it has, on the face of the proceedings and in the state of the record, clearly shown that the order was wrong and cannot stand, and that it should have a temporary decree against it, urges further that, looking at it as a statutory suit as well, it is quite plain that a consideration of the equities requires a stay pending this proceeding for review.

Whether the Legislature may, in the absence of waste and in the interest alone of eliminating abuses, evils, and injustices which it may be claimed the present "law of capture" entails, taking into consideration by means consistent with due process the vested rights of all owners in a field, provide a substitute for the now prevailing rule, we need not now consider, for it has not, in the statute before us, undertaken to do this.

The statute, House Bill No. 266 (Acts Tex. 1935, c. 120 Vernon's Ann. Civ. St. Tex. art. 6008), is a comprehensive one, declaring the policy of the state with reference to the conservation of natural gas and the prevention of waste in its production. It classifies gas as sweet and sour, provides the uses to which each kind of gas may be put, authorizes the zoning of a field for the purpose of its regulation and administration, and directs the Commission in the discharge of the duties imposed and powers conferred, and provides penalties. That it is a waste statute only its declaration of policy¹ makes clear. The specific sections involved here are sections 10 to 19 (Vernon's Ann. Civ. St. Tex. art. 6008, §§ 10...