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History of the Railroad Commission

Chronological Listing of Key Events in the History of the Railroad Commission of Texas (1866-1939)

1866
First producing Texas well drilled at Melrose, Nacogdoches County, by Lynis T. Barrett.

1872
First known gas production in Texas from well owned by the Graham brothers and located near Graham, Young County, Texas.

April 5, 1889
Legislature enacts H.B. No.167, "An Act to Provide for the Inspection of Refined Oils Which Are the Product of Petroleum, and Which May Be Used for Illuminating Purposes Within This State, and to Regulate the Sale and Use Thereof, and to Provide Penalties for the Violation of Same."
1889 Tex. Gen. Laws, ch. 103.

December 19, 1890
Art. X, 2 of the Texas Constitution amended to provide for the Railroad Commission, stating the "Legislature ...may provide and establish all requisite means and agencies invested with such powers as may be deemed adequate and advisable (to regulate Railroads)."
Adopted at November 4, 1890 election; Proclamation of December 19, 1890.

April 3, 1891
Railroad Commission of Texas established by Legislature, giving the Commission jurisdiction over rates and operations of railroads, terminals, wharves and express companies.
1891 Tex. Gen. Laws, ch. 51.

June 10, 1891
First three Railroad Commissioners appointed by Governor Hogg: John H. Reagan (resigned seat in Senate to become first Chairman), Judge W. P. McLean, and L. L.Foster.

November 21, 1894
L. J. Storey succeeded W. P. McLean as a Railroad Commissioner.

December 21, 1894
Art. XIX, '30 of the Texas Constitution amended to provide for elective six year overlapping terms for Railroad Commissioners.
Adopted at November 6, 1894 election; Proclamation of December 21, 1894.

May 1, 1895
N. A. Stedman succeeded L. L. Foster as a Railroad Commissioner.

January 5, 1897
Allison Mayfield succeeded N. A. Stedman as a Railroad Commissioner.

March 29, 1899
Legislature declares that any gas well is to be shut-in within ten days after its completion until such time as the gas produced therefrom is to be used for light, fuel or power purposes. 
Tex. Nat. Res. Code Ann. '86.081 (Vernon 1978) [original version at 1899 Tex. Gen. Laws, ch 3, Tex. Rev. Civ. Stat. art. 6008, '11, (Vernon 1962)].

January 10, 1901
First salt dome discovery, and first great gusher brought in at Spindletop, Jefferson County, by Capt. Anthony F. Lucas. Production from this well was so enormous that price of oil dropped to an all-time low of  .34 a barrel.

1903
L. J. Storey becomes Chairman of the Railroad Commission.

January 21, 1903
O. B. Colquitt succeeded J. H. Reagan as a Railroad Commissioner.

May 9, 1905
Legislature amends Act of March 29, 1899 by adding ''7 - 10, and declaring an emergency pertaining to regulations of the drilling, operation and abandonment of oil, gas, and water wells.
1905 Tex. Gen. Laws, ch.119.

1907
Allison Mayfield becomes Chairman of the Railroad Commission.

April 28, 1909
William D. Williams succeeded L. J. Storey as a Railroad Commissioner.

January 21, 1911
John L. Wortham succeeded O. B. Colquitt as a Railroad Commissioner.

January 2, 1913
Earle B. Mayfield succeeded J. L. Wortham as a Railroad Commissioner.

April 2, 1913
Legislature amends Chapter l, Title 134 of the Rev. Civ. Stat of l911, by amending Art.7849, and by adding to the Chapter, Art.7849a and Art.7849b, relating to the prevention of waste of natural gas, and declaring an emergency.
Tex. Nat. Res. Code Ann. '86.001 (Vernon 1978) [original version at 1913 Tex. Gen. Laws. ch. 111, Tex. Rev. Civ. Stat. art. 6008, '11 (Vernon 1962)].

May 21, 1915
Texas Supreme Court holds landowner to be the absolute owner of oil and gas in place.
Texas Company v. Daugherty, 160 S.W. 129 (Tex. Civ. App. - Ft. Worth 1913), rev'd. 176 S. W. 717 (Tex. 1915).

October 10, 1916
Charles H. Hurdleston succeeded W. D. Williams as a Railroad Commissioner.

February 20, 1917
Legislature declares pipelines to be common carriers, and gives Railroad Commission jurisdiction over same. This is the first act to designate the Railroad Commission as the agency to administer the conservation laws relating to oil and gas.
Tex. Nat. Res. Code Ann. '111.013 (Vernon 1978) [original version at 1917 Tex. Gen. Laws, ch. 30, Tex. Rev. Civ. Stat. art. 6019 (Vernon 1962)].

December 21, 1917
"...The preservation and conservation of all natural resources of the State are each and all hereby declared public rights and duties, and the Legislature shall pass all such laws as may be appropriate thereto."
Adopted at August 21, 1917 election, Proclamation of December 21, 1917.

January 1, 1919
Clarence E. Gilmore succeeded C. H. Hurdleston as a Railroad Commissioner.

March 31, 1919
Legislature enacts a statute requiring the conservation of oil and gas, forbidding waste, and giving the Railroad Commission jurisdiction.
Tex. Nat. Res. Code Ann. '81.051 (Vernon 1978) [original version at 1919 Tex. Gen. Laws, ch. 155, Tex. Gen. Civ. Stat. art. 6023 (Vernon 1962].

April 3, 1919
Legislature enacts a law outlining the conditions under which a court may issue an injunction against drilling or mining operations.
Tex. Rev. Civ. Stat. Ann. art. 4644 (Vernon 1952) (original at 1919 Tex. Gen. Laws. ch.162).

November 26, 1919
Railroad Commission adopts first Statewide Rule regulating the oil and gas industry. Texas is the first state to adopt a well spacing rule: Rule 37, which has a conservation basis, was promulgated primarily to reduce fire hazards, and to minimize the danger of water percolation into oil stratum from wells drilled in too great a number or in too close proximity.
Railroad Commission v. Bass, l0 S.W.2d 586 (Tex. Civ App.- Austin 1928} writ dism'd, 51 S.W.2d 1113 (Tex. Comm'n App. 1932}

NOTE: Some authorities say the above rules were first promulgated by the Railroad Commission as early as July 26, 1919 and later republished under the above date.

June 12, 1920
Legislature declares the production and sale of natural gas to be a public utility and gives the Railroad Commission jurisdiction.
Tex. Rev. Civ. Stat. Ann. art. 6053 (Vernon 1962) (original version at 11920 Tex. Gen. Laws. ch. 14).

1921
Legislature issues a resolution requesting the Attorney General to investigate price-cutting activities of oil and gas pipe line companies.
1921 Tex. Gen. Laws. H.C.R No. 21.

1923
Clarence E. Gilmore becomes Chairman of the Railroad Commission.

March 1, 1923
William W. Splawn succeeded E. B. Mayfield as a Railroad Commissioner.
W. A. Nabors succeeded Allison Mayfield as a Railroad Commissioner.

March 19, 1923
Legislature amends article 695a of the former Penal Code to make water pollution by crude petroleum, oil or other like substance a crime.
1923 Tex. Gen. Laws, ch. 85; repealed, 1969 Tex. Gen. Laws, ch. 154.

June 30, 1923
Texas Supreme Court holds that all ordinary types of oil and gas leases convey the title to the oil and gas in place and create a corporeal determinable fee estate in these minerals.
Stevens County v. Mid-Kansas Oil & Gas Co., 254 S. W. 290 (Tex. 1923).

January 12, 1924
Texas Court of Civil Appeals sustains the general power of the Railroad Commission to regulate gas utilities.
City of Denison v. Municipal Gas Co.,257 S.W.616 (Tex. Civ. App. - Dallas 1923), aff'd, 3 S.W.2d 794 (Tex. 1924).

August 15, 1924
C. V. Terrell succeeded William W. Splawn as a Railroad Commissioner.

January 29, 1925
Lon A. Smith succeeded W. A. Nabors as a Railroad Commissioner.

May 6, 1925
Texas Court of Civil Appeals, in interpreting provisions of a "Producer's 88" lease, holds that casinghead gas is included within the term "oil".
Livingston Oil Corp. v. Waggoner, 273 S.W. 903 (Tex. Civ. App. - Amarillo 1925, writ ref'd).

1927
First voluntary proration in Texas is accomplished by limitation of production to a figure below the capacity to produce, and attended by a distribution of allowable production among the operators in the Yates Field. By agreement of the operators with the blessings of the Railroad Commission.

April 1, 1927
Legislature enacts statute relating to buses, regulating their use for hire on the highways and giving the Railroad Commission jurisdiction over rates and operation of same.
Tex. Rev. Civ. Stat. Ann. art. 911a (Vernon 1964) (original version at 1927 Tex. Gen. Laws, ch. 270).

February 22, 1928
Supreme Court of Texas holds that the Railroad Commission is not a constitutional body. Art. X, '2 and Art. XVI, '30, do not create the Railroad Commission as a constitutional body, nor deprive the legislature of the right to confer additional duties on the Commission.
City of Denison v. Municipal Gas Co., 257 S.W.616 (Tex. Civ. App.-Dallas l923) aff'd, 3 S.W.2d 794 (Tex. 1928).

April 4, 1928
Railroad Commission issues its first proration order based on the conservation statutes, pertaining to Hendricks Pool in Winkler County.

April 16, 1928
First Rule 37 Case. United States Supreme Court holds that the Act of March 31, 1919, conferring authority on the Railroad Commission to administer the oil and gas laws is a proper exercise of the police power of the state in controlling the development of natural resources. Rule 37 was attacked as violating of the 14th Amendment to the U.S. Constitution.
Oxford Oil Co. v. Atlantic Oil & Producing Co.,22 F.2d 597 (5th Cir. l927), cert den., 277 U.S. 585. 48 S.Ct. 433 (1928)

January 1, 1929
Pat M. Neff succeeded C. A. Gilmore as a Railroad Commissioner.

March 13, 1929
Legislature enacts statute relating to trucks and their use for hire on the highways, giving the Railroad Commission jurisdiction over their rates and operation. The bill became effective without the signature of the Governor.
Tex. Rev. Civ. Stat. Ann. art.911b, '4 (Vernon 1964) (original version at 1929 Tex. Gen. Laws, ch. 314.)

March 19, 1929
Legislature enacts a law setting forth the conditions under which pipe lines maybe built, extended or operated to lead into the Gulf of Mexico. The Railroad Commission is given jurisdiction to determine whether an emergency warrants an exception to the general rules.
1929 Tex. Gen. Laws, ch. 230; repealed, 1977 Tex. Gen. Laws, ch. 871.

March 19, 1929
Legislature enacts a law authorizing designated Railroad Commission employees to hold hearings, conduct investigations, and make records of the same.
Tex. Rev. Civ. Stat. Ann. art.6519a, (Vernon Supp. l986) (original at 1929 Tex. Gen. Laws, ch. 262).

March 29, 1929
Legislature amends the 1919 conservation statute, stating waste (which was prohibited in 1919 statute) "..shall not be construed to mean economic waste."
Tex. Nat. Res. Code Ann. 81.011 to 81.016, 81.018, 81.019, ''85.045, 85.205. 85.206,85.381 to 85.385 (Vernon 1978) [original version at 1929 Tex. Gen. Laws. ch. 313, Tex. Rev. Civ. Stat. arts.6014, 6030, 6036, 6036a (Vernon 1962)].

October 10, 1929
Railroad Commission issues proration order based on market demand pertaining to the Panhandle Field.

1930
Pat M. Neff becomes Chairman of the Railroad Commission.

March 18, 1930
Legislature passes the Common Purchaser Act which provides in part that a purchaser of oil who is a common carrier or is affiliated with a common carrier shall purchase oil ratably with no discrimination. (Little or no effort was made to enforce this act.)
Tex. Nat. Res. Code Ann. '111.052 (Vernon 1978) [original version at 1930 Tex. Gen. Laws, 5th Spec Sess., ch. 36, Tex. Rev. Civ. Stat. art.6049a '8 (Vernon 1962)].

March 20, 1930
Legislature enacts a law outlining the use of depositions in matters pending before the Railroad Commission.
Tex. Rev. Civ. Stat. Ann. art.647a (Vernon Supp. 1986) (original at 1930 Tex. Gen. Laws, ch. 431).

August 14, 1930
Railroad Commission issues first Statewide Proration Order with effective date of August 27, 1930 to limit the production of the state to 750,000 barrels per day. This order represents a cut in the production from previous year of some 50,000 barrels, and is based on the reasonable market demand formula.

October 9, 1930
East Texas Field discovered. The first well is brought in by "Dad" Joiner on Mrs. Daisy Bradford's farm in Rusk County.

December 13, 1930
Railroad Commission issues proration order for Panhandle Field, limiting production to 25% of the potential production. This order is issued on the expiration of a similar order of August 14, 1930, as extended.

1931
C. V. Terrell becomes Chairman of the Railroad Commission.

April 4, 1931
Railroad Commission issues first proration order for the East Texas Field with an effective date of May 1, 1931, providing for an allowable in excess of 1000 barrels per day per well. (Order changed on April 22, 1931 prior to effective date.)

April 16, 1931
Legislature enacts the first Marginal Well Statute providing for ten barrels to a depth of 2000 feet, twenty barrels from 2000 to 3500 feet and forty barrels if deeper than 3500 feet.
Tex. Nat. Res. Code Ann. '85.122 (Vernon 1978) [original version at 1931 Tex. Gen. Laws, ch. 58, Tex. Rev. Civ. Stat. art.6049b. '1 (Vernon 1962)].

May 1, 1931
First proration order for the East Texas Field becomes effective. At this time the East Texas Field is producing one million barrels of oil per day, one-third of the national production, and the price of oil drops to 104 a barrel. "There was much unrest, with talk of threats of blowing up wells and pipelines."

July 14, 1931
Governor Sterling calls special session of the Legislature to pass an oil conservation statute. (Macmillan Case is handed down during the Special Session, see infra, July 28, 1931.)
Tex. Nat. Res. Code Ann. ''685.045 to 85.047, 85.125, 85.203 (Vernon 1978) [original version at 1931 Tex. Gen. Laws, 1st Spec. Sess., ch.26, Tex. Rev. Civ. Stat. art.6014 (Vernon 1962)].

July 28, 1931
Three judge federal court holds April 4, 1931 proration order for East Texas Field invalid on the basis that the order has no reasonable demand which affects price fixing and economic waste (which is specifically prohibited by the March 29, 1929 amendment).
Macmillan v. Railroad Commission 51 F.2d 400 (W.D. Tex. 1931), rev'd per curiam, 287 U.S. 576, 53 S. Ct. 223 (1932).

August 12, 1931
Legislature amends 1899 statute (which limited gas to light, fuel or power purposes) to allow use for any other purpose which Railroad Commission finds to be practical and conducive to the public welfare. The act defines "physical waste", and forbids the Railroad Commission to limit production to market demand, either directly or indirectly.
Tex. Nat. Res. Code Ann. 85.001(a)(1), 85.002, 85.011 to 85.013, ''85.049 to 85.053,85.058 to 85.064,85.125,85.241 to 85.259,85.291 to 85.294,85.321,85.322 (Vernon l978)[original version at l931 Tex.Gen. Laws,lst Spec.Sess.,ch.26,Tex. Rev. Civ. Stat. art.6049c, '7 (Vernon 1962)].

Legislature amends Common Purchaser Act of March 18, 1930 to include gas, and again expressly forbidding Railroad Commission to prorate production on the basis of current or market demand for such gas.
Tex. Nat. Res. Code Ann. ''111.081 to 111.083 (Vernon 1978) [original version at 1931 Tex. Gen. Laws, Ist Spec. Sess., ch.28, Tex. Rev. Civ. Stat. art.6049a, '8a (Vernon 1962)].

August 17, 1931
Governor J. Ross Sterling, finding that a state of insurrection existed in the East Texas Field, declares martial law in the area and places General Jacob Wolters in charge, ordering him to shut in all wells temporarily in order to preserve order.

September 2, 1931
Railroad Commission issues second proration order for the East Texas Field limiting production to approximately 400,000 barrels per day, but changes materially the method of distribution of the allowable production by allowing each well to produce 225 barrels a day without respect to the potential of the well or the size or productive character of the tract upon which the well is drilled. (Note: Prior order of May 1, 1931 distributed allowable on the basis partly on the areas of productive units and partly on the maximum area to be credited to a producing well.)

October 30, 1931
Railroad Commission issues a special order for the Panhandle District -- Rules for Application of the Common Purchaser Act of March 18, 1930 as amended by the Act of August 12, 1931, adding gas.

February 10, 1932
Three judge federal court sustains amended statute of August 12, 1931 and order of October 30, 1931 adopted thereunder, and enjoins producer from stripping gas and flaring residue as wasteful.
Henderson Inc. v. Railroad Commission 56 F. 2d 218 (W.D. Tex. 1932).

February 18, 1932
Three judge federal court holds that Governor cannot take over the functions delegated to the Railroad Commission by the Legislature.
Constantin v. Smith 57 F.2d 227 (E.D. Tex.), aff'd, 287 U.S. 378, 53 S.Ct.190 (1932).

February 25, 1932
Railroad Commission issues 3rd proration order for the East Texas Field fixing allowable at 75 barrels per day, giving East Texas Field about 325,000 barrels per day, and retains the flat per-well method of distribution.
Order remains in effect, but operators continue to produce as they please, counting on federal judges to strike it down.

March 23, 1932
Texas Court of Civil Appeals upholds Panhandle Field proration order of October 10, 1929, saying that here the production in excess of reasonable market demand causes or results in physical waste. (But since the case arose under the 1929 Act which has since been amended, the case is later dismissed as "moot" by the Texas Supreme Court on February 13, 1933).
Danciger Oil and Refining Co. v. Railroad Commission,49 S.W.2d837(Tex.Civ. App.- Austin 1932), rev'd, 56 S.W.2d 1075 (Tex. 1933).
On the same date as the Danciger decision was handed down, the Champlin case was argued before the Supreme Court of the United States and the questions from the bench indicated that the Court's final decision would be favorable to the validity of the Oklahoma proration statutes; Proration orders which were based on a reasonable market demand much the same as the Texas order of October 10, 1929.
Champlin Refg. Co. v. Oklahoma Corp. Commission, 286 U.S. 210, 52 S.Ct. 559 (1932)

May 9, 1932
Railroad Commission issues proration order for the Panhandle Field, shutting in the field until all the gas wells producing casinghead gas shall use such gas as provided for in Art.6008, Texas Civil Statutes, and limiting production in the field to 25% of the open flow.

May 16, 1932
The United States Supreme Court hands down their decision in the Champlin case, upholding the Oklahoma proration statutes and orders (based on a reasonable market demand), and declaring that the limitation of production to a reasonable market demand is a proper method of preventing excessive storage and other types of physical waste, both above and below ground, and that the effect, if any, upon price of same is merely incidental.
Champlin Refg. Co. v. Oklahoma. Corp. Commission, supra.

June 8, 1932
Three judge federal court enjoins the enforcement of the Common Purchaser Act of March 18, 1930, as amended to include gas.
Texhoma Natural Gas Co. v. Railroad Commission, 59 F.2d 750 (W.D. Tex. 1932).

September 28, 1932
Railroad Commission sets up a comprehensive system of reports relating particularly to the production and transportation of oil.

October 10, 1932
Railroad Commission issues special order requiring Danciger Oil and Refining Company to restrict the flow of its wells in the Panhandle Field and to conform to Railroad Commission orders.

October 24, 1932
Three judge federal court enjoins the Railroad Commission proration orders of February 25, 1932 on the basis that production is limited to market demand and as such is contrary to the Act of August 12, 1931.
People's Petroleum Producer's Inc. v. Smith, I F.Supp. 361 (E.D.Tex. 1932).

November 3, 1932
Fourth Special Session of the 42nd Legislature convenes to amend the general oil and gas laws.
Tex. Nat. Res. Code Ann. ''85.058 to 85.064 (Vernon 1978) original version at 1932 Tex. Gen. Laws, 4th Spec Sess., ch.2, Tex. Rev. Civ. Stat. art. 6049c, '5 (Vernon 1962)].

November 12, 1932
Special Session of the Legislature hurriedly enacts the Market Demand Act which removes prohibition against the consideration of economic waste or limitation of production to market demand and authorizes the Railroad Commission to determine the reasonable market demand and prorate production accordingly. It also provides that the Railroad Commission is without authority to restrict or limit any drilling for the purpose of exploring for oil or gas in unproven territory, i.e., "wildcat" operations.
1932 Tex. Gen. Laws, 4th Spec. Sess., ch.2.

December 6, 1932
Railroad Commission rejects applications to strip gas in the Panhandle Field, instead ordering operators to shut in all gas wells in a certain part of the field, and to restrict the daily production from the remaining wells to 4% of their producing capacity or potential, citing Art.6014 of the Texas Civil Statutes as its authority.

December 23, 1932
Three judge federal court grants injunction against the Railroad Commission order of December 6, 1932, which shut in wells in the Panhandle Field. The court declares there was no statutory authority for the order.
Texoma Natural Gas Co. v. Terrell, 59 F.2d 750 (W.D. Tex. 1932).

December 30, 1932
Railroad Commission promulgates an order for the West Panhandle Field based on the Market Demand Act of November 12, 1932, finding that the full production from the sweet gas wells is in excess of the market demand for such gas. The Commission fixes the daily allowable on the amount of the gas that has been determined to be sufficient to supply the daily demand.

1933
Lon A. Smith becomes Chairman of the Railroad Commission.

January 1, 1933
Ernest O. Thompson succeeded Pat M. Neff as a Railroad Commissioner.

February 13, 1933
Supreme Court of Texas dismisses Danciger case involving the Railroad Commission proration order of October 10, 1929 on the basis of a United States Supreme Court decision reversing the findings of the three judge lower court in the July 28, 1931 Macmillan case.
Macmillan v. Railroad Commission, supra.

February 15, 1933
Railroad Commission extends its regulations pertaining to reports promulgated September 28, 1932, providing for elaborate reports to be used in the East Texas Field to be known as "EN forms".

Aprll 22, 1933
Railroad Commission issues orders fixing allowables for the East Texas Field.

April 25, 1933
As a result of questions concerning the validity of gas stripping permits issued in February of 1933 for the Panhandle Field, the Legislature amends Art.6008, to allow gas stripping operations which do not exceed 25% of the open flow of the well and which do not constitute waste and where there is no reasonable market demand existing for such gas.
Tex. Nat. Res. Code Ann. ''86.090 to 86.092 (Vernon 1978) [original version at 1933 Tex. Gen. Laws, ch.100, Tex. Rev. Civ. Stat. art.6008, ''14,15 (Vernon 1962)].

April 27, 1933
Legislature redefines "marginal well" by amending legislation adopted by the 42nd Legislature.
Tex. Nat. Res. Code Ann. ''85.121, 85.122, (Vernon 1978) [original version at 1933 Tex. Gen. Laws, ch.97, Tex. Rev. Civ. Stat. art.6049b (Vernon 1962)].

May 22, 1933
Legislature enacts a law prohibiting certain practices by oil and gas owners and operators. The purpose of this law is to facilitate accuracy in measurements and reports, and penalties are prescribed for preventing government inspection of property and records.
Tex. Nat. Res. Code Ann. ch.88 (Vernon 1978) (original version at 1933 Tex. Gen. Laws, ch.165).

June 22, 1933
Three judge federal court, for the third time strikes down a Railroad Commission order of December 30, 1932 for the West Panhandle Field by construing '4 of the Market Demand Act as relating only to physical waste in the production of oil and gas, and therefore the Railroad Commission has authority to restrict gas production only where "actual" physical waste is involved. Refused to pass on whether an act, authorizing the proration of gas production for any reason other than to prevent the commission of waste, would be valid.
Canadian River Gas Co. v. Terrell, 4 F.Supp. 222 (W.D. Tex. 1933).

June 25, 1933
Three judge federal court upholds Railroad Commission proration order of October 10, 1932, limiting production to a reasonable market demand.
Danciger Oil &. Gas Co. v. Smith 4 F.Supp. 236 (N.D. Tex.), rev'd per curiam, 290 U.S. 599, 54 S.CT.209 (1933).

October 25, 1933
Legislature enacts the Stripping Law or Sour Gas Bill, giving the Railroad Commission authority to allow stripping of sour gas in common reservoirs or pools of 300,000 acres or more, as well as permitting the use of natural gas for any other beneficial purpose.
Tex. Nat. Res. CodeAnn. 86.001 to 86.004, 86.011, 86.012, 86.041, 86.081 to 86.097, 86.141 to 86.145, 86.181 to 86.185, 86.221 to 86.225 (Vernon 1978) [original version at l933 Tex. Gen. Laws, lst Spec. Sess., ch.88, Tex. Rev. Civ. Stat. art. 6008 (Vernon 1962)].

December 4, 1933
United States Supreme Court dismisses second Danciger case as moot.
Danciger Oil & Gas Co. v. Smith supra.

January 2, 1934
Texas Court of Civil Appeals holds that as a matter of law a permit to drill a well is not authorized where a single tract owner voluntarily subdivided a single tract into several smaller tracts for leasing purposes after the adoption of the spacing rule (Rule 37).
Smith v. Stewart 68 S.W.2d 627 (Tex. Civ. App. - Austin 1934) aff'd, 83 S.W.2d 945 (Tex. 1935).

January 12, 1934
Three judge federal court upholds Railroad Commission proration order of April 22, 1933, limiting the production of oil in the East Texas Field where approximately 300,000 barrel per day reduction is involved.
Amazon Petroleum Corp. v. Railroad Commission, 5 F.Supp. 633 (E.D. Tex. 1934).

Federal court, in an action in equity by same parties on the same day, sustains the Railroad Commission proration order.
Amazon Petroleum Corp. v. Railroad Commission, 5 F.Supp. 639, rev'd, 71 F.2d 1(5th Cir. 1934), rev'd on other grounds, 293 U.S. 388, 55 S.Ct. 241 (1935).

March 19, 1934
Legislature amends the Penal Code to include the penalties prescribed in 1933 Tex.Gen.Laws, ch.165, supra, and to make violations of any other rules, regulations or orders issued pursuant to that act a felony.
Tex. Nat. Res. Code Ann. 88.133 - 88.134 (Vernon 1978) (original at 1934 Tex. Gen. Laws, ch.44).

September 25, 1934
Legislature extends the jurisdiction of the Railroad Commission to the regulation of the purchase, transportation, sale and handling of the products, by-products and derivatives of crude petroleum oil and natural gas.
1934 Tex. Gen. Laws, ch.64, repealed in part, Tex. Nat. Res. Code Ann. 85.041 et seq. (original at 1935 Tex. Gen. Laws, ch.76); see also Tex. Nat. Res. Code Ann. '85.381 (penalty provision).

1935
Ernest O. Thompson becomes Chairman of the Railroad Commission.

March 6, 1935
Legislature enacts a special rules for notice and expedited appeals where an injunction is sought against the Railroad Commission.
Tex. Nat. Res. Code Ann. ''85.244 - 85.259 (Vernon 1978) (original at 1935 Tex. Gen. Laws, ch.225).

March 28, 1935
District Judge Kennerly sustains the legality of stripping operations in an unreported opinion. On appeal to the United States Court of Appeals, 5th Circuit, the majority reversed the case without passing on the merits for lack of indispensable parties. (Sneed Case).
Sneed v. Phillips Petroleum Co., 76 F.2d 785 (5th Cir. 1935).

April 13, 1935
Legislature enacts a general oil and gas law, prohibiting the production of oil and gas in such a manner as to cause waste, and delegating to the Railroad Commission the duty to adopt the necessary orders to prevent wasteful operations. This legislation is very comprehensive and detailed and the effect is to restrict the use of sweet gas to light and fuel purposes.
Tex. Nat. Res. Code Ann. ''85.001(a)(1),(3), & (4)(b), 85.002, 85.041 to 85.054, 85.056 to 85.064, 84.125, 85.161 to 85.166, 85.201 to 85.207 note, 85.241 to 85.243, 85.351 to 85.353, 85.381 to 85.385 (Vernon 1978) [original version at 1935 Tex. Gen. Laws, ch.76, Tex. Rev. Civ. Stat. arts. 6014, 6014a, 6029, 6033, 6036, 6049c ''5, 7 & 8. (d), & (e)(Vernon 1962)].

April 15, 1935
Legislature authorizes the execution of the Interstate Oil Compact to promote the conservation of oil and gas.
Tex. Nat. Res. Code Ann. ''90.001 to 90.007 (Vernon 1978) [original version at 1935 Tex. Gen. Laws, ch.81, Tex. Rev. Civ. Stat. art. 6008-1, ''l-5, (Vernon 1962)].

May 1, 1935
Legislature enacts a comprehensive gas regulation statute with detailed provisions for apportioning the reasonable market demand of gas throughout the State. The act prohibits the production of gas in such a way as to cause underground waste, prohibits blowing to the air of gas from a gas well before or after such gas has been processed for its gasoline content, and prohibits the use of sweet gas for the manufacture of carbon black, but allowing sour gas to be used for such purposes.
Tex. Nat. Res. Code Ann. ''886.001 to 86.004, 86.011, 86.012, 86.041 to 86.043, 86.081 to 86.097, 86.141 to 86.145, 86.181 to 86.185, 86.221 to 86.225 (Vernon 1978) [original version at l935 Tex. Gen. Laws, ch.120, Tex. Rev. Civ. Stat. art.6008 (Vernon 1962)].

May 11, 1935
Legislature enacts the Hot Oil Statute, declaring as contraband any oil produced or transported in violation of statutes or regulations, and providing for the confiscation and sale by the State of such.
Tex. Rev. Civ. Stat. Ann. art.6066a (Vernon 1962) (original version at 1935 Tex. Gen. Laws, ch.246).

May 11, 1935
Legislature enacts a law making forgery of a Railroad Commission official's signature on documents or the knowing use of forged documents a crime punishable by 2-5 years in the penitentiary.
Tex. Nat. Res. Code Ann. '85.386 (Vernon 1978) (original at 1935 Tex. Gen. Laws, ch.225).

May 11, 1935
Legislature levies a tax on petroleum products and provided for the proceeds to fund the Railroad Commission and the Attorney General's department of enforcement of the oil and gas conservation laws.
1935 Tex. Gen. Laws. ch.245.

June 12, 1935
Texas Supreme Court holds the Railroad Commission has the power under the conservation statutes to promulgate a spacing rule (i.e.,Rule 37), and to provide for exceptions, protect vested rights, and prevent waste. (See Oxford Oil Co. case, supra. p.5). This is a suit to set aside a Railroad Commission order granting a Rule 37 exception and to restrain the Railroad Commission from granting any further drilling permits on the tract in question. Court holds that the decisions of the Railroad Commission on such exceptions must be based on proof and that the mere holding of a hearing will not in itself be sufficient to justify an exception.
Brown v. Humble Oil & Refg. co., 68 S.W.2d 622 (Tex. Civ. App. - Austin 1934), aff'd, 83 S.W.2d 935 (Tex. 1935).

August 28, 1935
Railroad Commission issues a Special Order fixing the allowable production of sweet gas in the Panhandle Field based on an oil-gas ratio.

September 25, 1935
Railroad Commission issues the second Special Order fixing the allowable production of sweet and sour gas in the Panhandle Field, basing the order on the reasonable market demand for such gas.

October 7, 1935
Three judge federal court grants interlocutory injunction against the Railroad Commission proration orders of August 28 and September 25, 1935, restraining the enforcement of such.
Texas Panhandle Gas Co. v. Thompson, 12, F.Supp. 462, (W.D. Tex. 1935).

December 10, 1935
Railroad Commission issues third Special Order fixing the allowable production of sweet and sour gas in the Panhandle, such order being based on the gas-oil ratio and the reasonable market demand for such gas.

March 30, 1936
Three judge federal court grants and makes permanent the interlocutory injunction granted on October 7, 1935, after a hearing on the merits. (This order based on the Railroad Commission proration order of December 10. 1935.)
Consolidated Gas Utilities Corp. v. Thompson, 14 F.Supp. 318 (W.D. Tex.1936), aff'd 300 U.S. 55, 57 S.Ct. 364 (1937).

May 13, 1936
Substantial evidence rule upheld regarding Railroad Commission orders and decisions on appeal to state courts.
Empire Gas and Fuel Co. v. Railroad Commission, 94 S.W.2d 1240 (Tex. Civ. App. - Austin 1936, writ ref'd).

1937
C.V. Terrell becomes Chairman of the Railroad Commission.

February 1, 1937
Supreme Court of the United States, although sustaining the March 30, 1936, three judge federal court permanent injunction, recognizes the power of the Legislature to provide against undue drainage even though the prevention of waste is not involved. Pipeline was producing gas without waste from a well in a high pressure area and plaintiff attacked Railroad Commission order limiting and prorating production from all wells on basis of market demand so as to force pipeline to buy gas for its markets from wells located in a low pressure area which was draining the pipeline's own high pressure areas.
Consolidated Gas Utilities Corp. v. Thompson, supra.

March 1, 1937
United States Supreme Court holds that State, through the Railroad Commission, has the power to classify certain wells as "sweet gas wells" and to forbid the use of the gas produced there from for the making of carbon black. The State has the power to conserve its natural resources by preventing the wasteful use thereof, and the exercise of such power is neither arbitrary nor unreasonable.
Henderson Company v. Thompson, 14 F.Supp. 328 (W.D. Tex.), aff'd, 300 U.S. 258, 57 S.Ct 447 (1937)

May 19,1937
Legislature enacts statute regulating the production and processing of sour natural gas, fixing the total daily volume of sour gas which may be withdrawn from any common reservoir in the State producing both sweet and sour gas to be used for the manufacture of carbon black and regulating the commingling of sweet and sour natural gas in any plant for the purpose of processing the gasoline content of same.
Tex. Nat. Res. Code ''87.001, 87.011 to 87.014, 87.051 to 87.054, 87.091 to 87.097, 87.131 to 87.133, 87.171 to 87.174, 87.241, 87.242 (Vernon 1978) [original version at 1937 Tex. Gen. Laws, ch.367, Tex. Rev. Civ. Stat. art. 6008a (Vernon 1962)].

June 8, 1937
Legislature authorizes the use of certified copies of all instruments pertaining to the drilling, completion, operation, abandonment and plugging of oil and gas wells in Railroad Commission hearings.
1937 Tex. Gen. Laws, ch.449, repealed by order of the Texas Supreme Court dated November 23, 1982, effective September I, 1983, adopting the Texas Rules of Evidence [see Rule 902(4)].

November 3, 1937
Texas Supreme Court announces the Century Doctrine. A tract that has been voluntarily subdivided so none of the subsections thus created is entitled to a well as a matter of right may be "reconstructed" as it existed prior to the subdivision, and one of the subdivisions granted an exception to Rule 37 on the basis of the reconstituted tract. Rule 37 is not overborne by any presumption of waste, real or supposed.
(Century case). Railroad Commission v. Magnolia Petroleum Co., 105 S.W.2d 787 (Tex. Civ. App.- Austin rev'd, 109 S.W.2d 967 (Tex. 1937).

May 4, 1938
Texas Court of Civil Appeals holds Art. 6014a of Texas Civil Statutes does not prevent application of Rule 37 to unproven territory. A well permit will not be given as a matter of right when a subdivision is made deliberately to circumvent the spacing rule, whether made in proven or unproven territory.
Nash v. Shell Petroleum Corp., 120S W.2d 522 (Tex.Clv. App.- Austin l938, writ dism'd).

Railroad Commission issues a proration order fixing the daily allowable production and method of allocation of sour gas for making carbon black in the Panhandle Field.

Court of Civil Appeals holds that applicant for a Rule 37 exception must rebut the prima facia proposition that the tract under consideration was not voluntarily segregated from a larger tract. The court also held that the entire tract prior to segregation must be considered, and it must be warranted as a protection to ensure the recovery of the fair share of the oil in place beneath the entire tract. This case arose where the court decreed partition the kind of 41/880th of the interest in a 30.47 acre tract on which there were two producing wells; and petitioner acquired 1.5 acre tract but neither of the producing wells as his share of the partition. Railroad Commission subsequently granted the 1.5 acre tract a drilling permit as exception to Rule 37.
Humble Oil & Refg. Co. v. Lasseter, 120 S.W. 2nd 541 (Tex. Civ. App.- Austin l938, writ dism'd).

July 23, 1938
Railroad Commission order of May 4, 1938 (regarding the maximum daily limit on the production of sour gas for the making of carbon black in the Panhandle Field) held valid, the court saying where the State restricts the amount of oil or gas that maybe produced from a common source of supply, it must make provision for justly apportioning this amount among the owners so no one of those thus limited may produce more that his fair share and due proportion and drain the lands of the others, and here there was no evidence of such.
Henderson v. Terrell, 24 F.Supp. 147 (W.D. Tex. 1938).

1939
Lon A. Smith becomes Chairman of the Railroad Commission.

January 1, 1939
G. A. Sadler succeeded C. V. Terrell as a Railroad Commissioner.

July 26, 1939
Texas Supreme Court holds even though drilling of more wells on a tract of land will result in the recovery of more oil, the right to a permit under Rule 37 will not follow as a matter of law to prevent waste. But the Court says where it is proved a substantial amount of oil will be recovered by drilling a well on such tract, and where the oil would not otherwise be recovered, exception can be granted.
Gulf Land Co. v. Atlantic Refg. Co., 122 S.W. 2d 197, aff'd, 131 S.W.2d 73 (Tex. 1939).