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History of the Railroad Commission

A Chronological Listing of Key Events in the History of the Railroad Commission of Texas (1940-1959)

June 3, 1940
United States Supreme Court upholds the substantial evidence rule as applied by federal courts to Railroad Commission order. The court holds it is not a proper function of the federal courts to resolve fact issues contrary to Railroad Commission findings, and that whatever rights the State statutes may afford are to be pursued in the State courts.
Railroad Commission v. Rowan & Nichols Oil Co., 35F. Supp.573 (W.D. Tex.), rev'd, 310 U.S. 573, 60 S.Ct.1022, modified, 311 U.S. 614, 61 S.Ct 66 (1940).

1941
Ernest O . Thompson becomes Chairman of the Railroad Commission.

January 1, 1941
Olin Culbertson succeeded Lon A. Smith as a Railroad Commissioner.

April 30, 1941
Texas Supreme Court declares judicial review of Railroad Commission decisions should be based on a "legislative" or "administrative" distinction in the order or action, and where the order is of a "legislative" nature, a de novo trial is essential. The Court also declares rate orders of the Railroad Commission to be of a "legislative" nature.
Lone Star Gas Co. v. State, 153 S.W.2d 681, (Tex. 1941).

June 30, 1941
Legislature amends the definition of a "marginal well', and declares any well falling within the new classification cannot be curtailed below the limits set out in the statute.
Tex. Nat. Res. Code Ann. ''85.121 to 85.124 (Vernon 1978) original version at 1941 Tex. Gen. Laws, ch.550, Tex. Rev. Civ. Stat. art. 6049b (Vernon 1962)].

December 15, 1941
Court of Civil Appeals rules on the first Texas appellate case involving interpool proration among several producers, holding where the fairness of distribution of statewide allowables is questioned, the protection of correlative rights requires all fields and operators fairly share the burden of any restrictions of allowables found to be reasonable to prevent waste.
Railroad Commission v. Continental Oil Co., 157 S.W.2d 695 (Tex. Civ. App.- Beaumont 1941, writ ref'd w.o.m)

March 11, 1942
Texas Supreme Court rejects the argument of "more wells, more oil" in holding an exception to Railroad Commission spacing rules to prevent waste can be obtained by a showing of unusual conditions in the area to be drilled; and further holding administrative flndings of fact are not conclusive on review. (Trem Carr Case).
Railroad Commission v. Shell Oil Co., 161 S.W.2d 1022 (Tex. 1942).

May 6, 1942
Texas Civil Appeals Court, sustained by the Supreme Court of Texas on review, holds the Railroad Commission may lawfully restrict the total allowable of a field to prevent waste even though such may result in awarding a few properties within the field allowables so low as to cause physical waste as to these individual properties.
Railroad Commission v. Fain, 161S.W.2d 498 (Tex. Civ. App.- Austin l942, writ ref'd w.o.m.).

January 1, 1943
Beauford Jester succeeded G. A. Sadler as a Railroad Commissioner.

1943
Beauford H. Jester becomes Chairman of the Railroad Commission.

February 1, 1943
Legislature issues a resolution to encourage an increase in oil prices in order to prevent an anticipated oil shortage after World War II.
1943 Tex. Gen. Laws, H.C.R No. 16.

February 8, 1943
Legislature issues a resolution to encourage the federal authorities to use the nation's inland waterways to transport petroleum products as a less expensive alternative than other methods being used to supply fuel for domestic use.
1943 Tex. Gen. Laws, S.C.R No. 15.

April 28, 1943
Texas Supreme Court holds where an applicant for a drilling permit makes a reasonably satisfactory showing of a good faith claim of ownership to a tract, the fact that a bona fide title dispute over such tract is in the courts does not defeat his right to a permit, and the Railroad Commission is not required to abate any such action pending the settlement of the suit in the courts. (Landman Case).
Magnolia Petroleum Co. v. Railroad Commission, 163 S.W.2d 446 rev'd, 170 S.W.2d 189 (Tex. 1943).

May 24, 1943
Supreme Court of the United States orders federal courts not to take jurisdiction in suits against the Railroad Commission in matters which, under State statutes, the Railroad Commission has a duty to act, even though diversity of citizenship exists.
Burford v. Sun Oil Co., 130 F.2d 10, rev'd, 319 U.S. 315, 63 S.CL 1098 (1943).

October 6, 1943
Texas Supreme Court interprets the Marginal Well Law as affected by the water-oil ratio proration orders of the Railroad Commission. The Court says where a water-oil ratio order limits the amount of water that a well can produce, it is a conservation measure, and consequently does not conflict with the marginal well law, and as such, is not an order restricting the production of a marginal well contrary to the 1941 statute.
Railroad Commission v. Konowa Operating Co., 174 S.W.2d 605 (Tex. Civ. App. - Austin 1943, no writ).

October 20, 1943
Railroad Commission orders operator, as its agent, to commence drilling a directional well immediately to kill a burning "wild well".

March 8, 1944
Texas Supreme Court, rejecting the substantial evidence rule as applied to causes regarding the violation of constitutional rights, holds that the Railroad Commission is not bound to promulgate separate field allowables, but each field should be allocated its fair market share of the State market demand and it should not have its market demand determined separately.
Railroad Commission v. Marrs, 161 S.W.2d 1037 (1943) rev'd, 177 S.W.2d 941 (Tex. 1944).

July 19, 1944
Railroad Commission order of October 20, 1933, directing operator as its agent to drill a directional hole to kill a cratered well is upheld by the Texas Supreme Court on the basis of abating a wasteful operation.
Corzelius v. Railroad Commission, 182 S.W.2d 412 (Tex. Civ. App. - Austin 1944, no writ).

August 3, 1944
Railroad Commission issues an amending order pertaining to proration of the field allowable in the Hawkins Field. The amending order prorates allowable among the wells on the basis of 50% of the total allowable on a per well basis, and 50% of the total allowable on the surface acreage basis (except as to marginal and high gas-oil wells not here involved).

1945
Olin Culberson becomes Chairman of the Railroad Commission.

May 9, 1945
Texas Supreme Court, citing approval of the language used in Thompson v. Consolidated Gas Corporation, holds that under Art.6008, '10(b), the Railroad Commission may prorate the production of gas for the protection of correlative rights even though there is no waste involved.
Corzelius v. Harrell, 179 S.W.2d 419 (Tex. Civ. App. - Austin 1944), rev'd, 186 S.W.2d 961 (Tex. 1945).

April 10, 1946
Texas Court of Civil Appeals upholds the Railroad Commission proration order of August 3, 1944, stating the Railroad Commission has the discretion to assign allowables to small tracts which will result in drainage to smaller tracts, and away from adjoining areas drilled in accordance with the spacing regulations. Court said in dicta that an allowable for a small tract could not be cut down to the point where it could not be drilled and operated at a reasonable profit. (Hawkins Case).
Railroad Commission v. Humble Oil & Refg. Co., 193 S.W.2d 824 (Tex. Civ. App. - Austin 1946, writ ref'd n.r.e.), aff'd per curiam, 331 U.S. 791, 67S.Ct. 1523 (1947).

July 11, 1946
Texas Court of Civil Appeals upholds the Railroad Commission's denial of a permit to drill a second well on a 4.22 acre tract as a Rule 37 "eight-times-area" provision where the tract was more densely drilled than 98.7% of the entire field. (Hawkins Field).
Kraker v. Railroad Commission, 188 S.W.2d 912 (Tex. Civ. App. - Austin 1945, writ ref'd w.o.m).

November 27, 1946
Texas Supreme Court upholds the "substantial evidence rule" as applied by State courts to Railroad Commission orders and findings, saying that any order of the Railroad Commission will be sustained by the Court if its action in reaching the conclusions embodied in the order are reasonably supported by substantial evidence.
Trapp v. Shell Oil Co., 189 S.W.2d 26 (Tex. Civ. App. - Austin), rev'd, 198 S.W.2d 424 (Tex. 1946).

December 31, 1946
Texas Supreme Court hands down companion case to the Trapp decision, reiterating its stand as to application of the substantial evidence rule.
Stanolind Oll & Gas Co., v. Railroad Commission, 188 S.W.2d 418 (Tex. Civ. App. - Austin 1945), rev'd, 198 S.W.2d 420 (Tex. 1946).

1947
Ernest O. Thompson becomes Chairman of the Railroad Commission.

January 21, 1947
William J. Murray, Jr. succeeded Beauford Jester as a Railroad Commissioner.

March 17, 1947
Railroad Commission issues the Seeligson Order which restricts the production of gas and oil wells completed in the various reservoirs underlying the Seeligson Field by prohibiting the production of oil and gas in the entire field unless and until all of the casinghead gas produced with the oil is utilized for one of the beneficial purposes enumerated for sweet gas in '7(1) of Art. 6008. Title 102 of the Civil Statutes.

May 5, 1947
Fifth Circuit Court holds that operators who do not join in a voluntary unitization program may be left without complaint even though the operation of the unitization program does incidental damage to their financial interests.
Tidewater Ass'd Oil Co. v. Stott, 159 F.2d 174 (5th Cir.), cert. den., 331 U.S.817, 67 S.Ct. 1306 (1947).

June 10, 1947
Legislature broadens the permissible uses of sweet and sour gas.
Tex. Nat. Res. Code Ann. ''87.001, 87.011 to 87.014, 87.051 to 87.054, 87.091 to 87.097, 87.131 to 87.134, 87.171 to 87.174, 87.241, 87.242 (Vernon 1978) [original version at 1947 Tex. Gen. Laws, ch.351, Tex. Rev. Civ. Stat. arts.6008a, 6008a note (Vernon 1962)].

June 23, 1947
Legislature enacts a law amending the method of computing and allocating gas well allowables
(see 1935 Tex. Gen. Laws, ch.l20, supra), and providing for production in excess of the monthly allowable under certain conditions.
Tex. Nat. Res. Code Ann. ''86.044 - 86.088, 86.090 (Vernon 1978) (original at 1947 Tex. Gen. Laws, ch.453).

December 31, 1947
First Flare Gas Case. Supreme Court of Texas upholds authority of Railroad Commission to, in a proper case, enter an order to prevent the wasteful flaring of casinghead gas. Railroad Commission order of March 17, 1947 was contested, and the Court, while recognizing the authority of the Railroad Commission in the above situation, approved the temporary injunctive power of lower court, but did not rule on the merits of the case.
Railroad Commission v. Shell Oil Co., 206 S.W.2d 235 (Tex. 1947).

March 31, 1948
Supreme Court of Texas holds that the "substantial evidence rule" should be interpreted so that the courts will consider all of the evidence in determining if there was "substantial evidence", and that the courts should "not consider incredible, perjured or unreasonable testimony."
Hawkins v. Texas Company, 203 S.W.2d 1003 (Tex. Civ. App. - Austin 1947), aff'd, 209 S.W.2d 338 (Tex. 1948).

November 22, 1948
Railroad Commission, on the basis of the Seeligson Case, issues orders covering sixteen fields, shutting down every oil well in those fields from which casinghead gas is being flared.

1949
William J. Murray becomes Chairman of the Railroad Commission.

March 30, 1949
Second Flare Gas Case. Supreme Court of Texas upholds authority of Railroad Commission to declare flaring of casinghead gas wasteful when the facts so warrant such a finding. The Court holds that the order shutting down the sixteen fields (among which was the Heyser Field) from December 1, 1948 to April of 1949 was supported by substantial evidence.
Railroad Commission v. Sterling Oil and Refg., 218 S.W.2d 415 (Tex. 1949).

April 13, 1949
Third Flare Gas Case, Texas Court of Civil Appeals upholds Railroad Commission order of March 17, 1947 shutting down the sixteen fields (among which was the Flour Bluff Field) declaring the order was justified by substantial evidence, and saying that non-compliance with conservation regulations ". . . cannot be justified on economic grounds."
Railroad Commission v. Flour Bluff Oil Corp., 219 S.W.2d 5()6 (Tex. Civ. App. - Austin 1949, writ ref'd)

May 24, 1949
Legislature authorized operators to submit voluntary unitization agreements to the Railroad Commission for their approval; and where approval is granted, parties to the unitization agreement gain benefits under the State anti-trust laws.
Tex. Nat. Res. Code Ann. '101.001 (Vernon 1978) [original version at 1949 Tex. Gen. Laws, ch.259, Tex. Rev. Civ. Stat. art.6008b (Vernon 1962)].

June 29, 1949
Legislature authorizes use of natural gas for carbon black without prior extraction of liquids within certain limits. Where it is shown that the extraction of additional liquids is not economically feasible, the legislation gives the Railroad Commission authority to grant exceptions to the 1 l/2 gallon per 1000 cubic feet limit imposed by statute (i.e., where gas contains less than l 1/2 gallons per 1000 cubic feet of propane or heavier hydrocarbons and where recovery is 1 l/2 pounds of carbon black or better per 1000 cubic feet.) Effective October 6, 1949.
Tex. Nat. Res. Code Ann. ''87.171 to 87.174, 87.211, 87.134 (Vernon 1978) [original version at 1949 Tex. Gen. Laws, ch.482, Tex. Rev. Civ. Stat. arts.6008a, '3(h)(i), 6008a(1), 6008(a)note (Vernon 1962)].

June 30, 1949
Legislature provides a standard measurement of gas and the Railroad Commission is directed to determine and publish the average temperature of gas and other variables necessary to calculate the metered volumes in each oil and gas field. Effective October 6. 1949.
Tex. Nat. Res. Code Ann. ''91.051 to 91.062 (Vernon 1978) [original version at 1949 Tex. Gen. Laws, ch.519, Tex. Rev. Civ. Stat. arts. 6008, '2(k), 6066b, ''1 & 2, 4(a)(b), 5 & 6, 7047b, '2(12) (Vernon 1962)].

1951
Olin Culberson becomes Chairman of the Railroad Commission.

May 17, 1951
Legislature authorizes the Oil and Gas Division to plug improperly capped oil wells that were flowing salt water into the Frio River, a water supply for the City of Calliham in McMullen County.
1951 Tex. Gen. Laws, ch.227.

June 2, 1951
Legislature establishes the Liquefied Petroleum Gas Division as a separate department within the Railroad Commission, requiring the use of malodorants and regulating storage and distribution for protection of the public safety. The principal gases regulated are butane for fuel, iso-butane for manufacture of rubber and explosives, and propane for internal combustion engines.
Tex. Rev. Civ. v. Stat. Ann. art.881a-44 (Vernon 1962) (repealed) (original version at 1951 Tex. Gen. Laws, ch.363).

July 11, 1951
Texas Supreme Court holds unenforceable the Railroad Commission order for oil company to purchase ratably between two fields based on the Common Purchaser Act. The court held the oil company is governed by '8aa of the Act, and as such, is required to purchase ratably only between purchasers.
Col-Tex Refg. Co. v. Railroad Commission, 236 S.W.2d 221 (Tex. Civ. App. - Austin 1950), rev'd, 240 S.W.2d 747 (Tex. 1951).

1953
Ernest O. Thompson becomes Chairman of the Railroad Commission.

March 17, 1953
Railroad Commission holds a hearing to determine whether flaring of casinghead gas in the Sprayberry Trend Area Field can be stopped. The Sprayberry Field at this time extends through five West Texas counties and is about 55 miles long and 20 miles wide, containing more than 2,000 oil wells, each of which produces casinghead gas with the oil.

March 25, 1953
Railroad Commission enters an order shutting in all the wells in the Sprayberry Field until all casinghead gas produced in the field can be devoted to one of the four uses specified in Article 6008. At this time the casinghead gas produced from 468 wells in the field is being sold for light and fuel purposes and within the statutory requirements, some of the remaining 1800 wells are connected with gasoline plants which flare the residue gas, and others have no connection with a plant and their raw residue gas is being flared. A total of 220 million cubic feet of gas is being flared daily in the field.
(Sprayberry Order.)

May 12, 1953
Legislature authorizes co-operative construction and operation of facilities for conservation and utilization of gas to include facilities for extracting and separation of hydrocarbons from natural and casinghead gas.
Tex. Nat. Res. Code Ann. ''103.001, 103.002, 103.041 to 103.046 (Vernon 1978) [original version at 1953 Tex. Gen. Laws, ch.117, Tex. Rev. Civ. Stat. art.6066c (Vernon 1962)].

May 14, 1953
Legislature authorizes the State Board of Water Engineers of Texas to plug all improperly capped oil wells that were flowing salt water into the Frio River, a water supply for the City of Ca11ihan in McMullen County; costs for plugging to be paid by the Railroad Commission. (see 1951 Tex. Gen. Laws, ch.227, supra).
1953 Tex. Gen. Laws ch.141.

June 30, 1953
Texas Supreme Court holds that the Railroad Commission has no power to shut down completely a non-wasteful well to protect the correlative rights of owners of shut-in wasteful wells, saying that for a waste order to be valid, it cannot be confiscatory. In this case where the order is inseparable as to wasteful and nonwasteful wells, the entire order must be held valid, thus striking down the March 25, 1953 Commission order.
(Sprayberry Case.) Railroad Commission v. Rowan Oil Co., 259 S.W.2d 173 (Tex. 1953).

July 16, 1953
Railroad Commission issues second Sprayberry Order as a result of the Rowan Decision, shutting in all the wells in the field for twenty days per month and fixing the field allowable in terms of the market outlet for casinghead gas. The order is unchallenged.

1955
William J. Murray becomes Chairman of the Railroad Commission.

March 19, 1955
Railroad Commission adopts Statewide Rule 55, regarding fresh water pollution abatement.

July 14, 1955
Legislature authorizes promulgation of rules by the Railroad Commission regarding the abatement of pollution of fresh water in the oil field operations, to include control over exploratory holes "wildcat operations".
Tex. Nat. Res. Code Ann. ''91.101 to 91.108 (Vernon 1978) [onginal version at 1955 Tex. Gen. Laws, ch.406, Tex. Rev. Stat. art.6029a (Vernon 1962)].

November 1, 1956
Railroad Commission issues proration order (supplemented on November 15, 1956) for the Puckett-Ellenberger Field, allocating the production among the wells therein on the basis of gross acre feet of pay times reservoir pressure, and requiring the principal purchaser from the field to purchase ratably from the operators in the field. This "Henze-type" of order is established by the Commission assigning a percentage factor to each well to produce a certain percentage of the total gas produced from the field, and after a particular month has passed, the Commission then determines the actual production from the field during the preceding month. By applying the percentage factor of each well to its actual production, it is determined whether the well was overproduced or underproduced during the month, and such overproduction or underproduction then adjusted in the following months.

1957
Olin Culberson becomes Chairman of the Railroad Commission.

April 13, 1957
Texas Court of Civil Appeals holds the Henze-type order of November 1, 1956 (as amended) to be valid and further holds that it does not encroach upon federal jurisdiction or unduly burden interstate commerce.
Railroad Commission v. Permian Basin Pipeline Co., 302 S.W.2d 238 (Tex. Civ. App. - Austin 1957, writ ref'd n.r.e.).

December 16, 1957
Railroad Commission issues first Normanna Order for the Normanna Field, basing the proration of the total field allowable on a 1/3 - 2/3 formula, i.e., l/3 of the total field allowable to be divided equally among all wells in the field, and 2/3 of the total field allowable to be divided among the wells on a per acre basis. Effective October 7, 1957.

1959
Ernest O. Thompson becomes Chairman of the Railroad Commission.