Consolidated Gas Utilities Corporation v. Thompson

14 F. Supp. 318, 1936 U.S. Dist. LEXIS 1306
CourtDistrict Court, W.D. Texas
DecidedMarch 30, 1936
Docket539, 550
StatusPublished
Cited by10 cases

This text of 14 F. Supp. 318 (Consolidated Gas Utilities Corporation v. Thompson) is published on Counsel Stack Legal Research, covering District Court, W.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Consolidated Gas Utilities Corporation v. Thompson, 14 F. Supp. 318, 1936 U.S. Dist. LEXIS 1306 (W.D. Tex. 1936).

Opinion

HUTCHESON, Circuit Judge.

On amended pleadings bringing down to date 1 the proration orders of the commission plaintiffs complain of, these causes went on January 6, 1936, to final hearing on their merits.

Though complainants’ attacks were leveled against both the statute, House Bill No. 266 (Acts of Texas 1935, c. 120, Vernon’s Ann.Civ.Stats.Texas, art. 6008), and the orders of the commission, the primary attack was, it was bound to be, on the orders; for none of the matters of which complaint is made are the result of the self-execution of any of the provisions of the statute. They arise on, they exist, only because of the orders. The act is under attack only if and to the extent that it supports the complained of orders. Both act and orders are greatly comprehensive. The act declares the policy of the state in the conservation of natural gas and the prevention of waste in its development and production, and provides broadly for its administration by the commission. It classifies gas as sweet and sour, fixes the uses to which each kind of gas may be put, authorizes the zoning of fields for the purpose of their regulation and administration, directs the commission in the discharge of duties imposed and powers conferred, and provides penalties. The specific sections of the statute involved here are sections 10 to 20, Vernon’s Ann.Civ.Stats, of Texas, art. 6008. 2

*319 The orders under attack, particularly that of December 10, 1935, are, as to the area in question, the Panhandle district of Texas, like the statute, conceived and couched in comprehensive terms, and purport in accordance with the statute, to bring the whole field under a comprehensive plan of regulation and control. Upon a full recitation of the history of the field, physical, political, and legal, which we adopt as substantially correct, 3 in general this plan created two zones, the eastern *320 and the western, fixed the drainage area of each well in each of these zones, and, in the Western Panhandle field, where alone sour gas was found to exist, established a line of demarkation between sweet and sour gas areas.

Plaintiffs do not complain of the zoning provisions, of the order. Neither do they complain of the statute or order demarking sweet from sour gas areas and dedicating gas from the wells" in each area to the uses the statute provides. Their complaint is *321 general against the provisions .of the order which, fixing an allowable production from plaintiffs’ wells below the amount they require and have been taking from their wells to serve their customers’ needs, makes it compulsory upon them to purchase from the wells of others gas of which plaintiffs have an already ample supply. Their claim as to these provisions is that since it is undisputed that plaintiffs are and always have been producing their wells without waste of any kind, the order as to plaintiffs is not a waste order, but as all the prior orders have been, simply one designed to furnish markets to those having none. They insist that these pretended proration, but in reality reduction, orders are invalid, (1) because not authorized by , the statute they purport to administer, and (2) because they take plaintiffs’ property without due process of law, and deny them the equal protection of the laws in violation of the Fourteenth Amendment to the Constitution of the United States and of sections 16, 17, and 19 af article 1 of the Constitution of Texas.

As to the statute, they complain of it as violative of the constitutional provisions above invoked only if it be held to support the orders. Their complaint on this score is general, it goes not merely to the particular scheme, but to any scheme of proration the commission may devise. Their insistence is that no scheme of allocation or pro-ration which is designed to and will curtail complainants’ production, and by preventing their taking their own gas, compel them to buy from adjoining well owners *322 can be constitutionally applied against them. They insist that the proof is clear and abundant, in fact, that it is admitted, that from the beginning they have conducted their operations prudently and without waste, and have taken for their use only a small part of what they own. Especially do they insist that the orders are partial and unjust as to them, for not only have they not injured their neighbors by excessive takings in proportion to their holdings, but they have themselves been greatly victimized by the excessive, exorbitant, amf wasteful takings, of well owners from whom the orders in question, if enforced, will compel plaintiffs to buy back their own gas already diverted from under their land.

In subordination to this general complaint, and only in the event it be not sustained, plaintiffs complain of the order in the particulars to which it has descended in providing the proration scheme, as not in accordance with the statute it purports to rest on, and also as violative of the constitutional provisions already invoked. The particulars of which they complain are that in the purported effort to comply with the legislative direction 4 for fixing the daily allowable for each gas well in a common reservoir, the respondents have departed from it and have unjustly, unfairly, and unreasonably fixed their allowable. They have fixed it by arbitrarily disregarding factors 'the statute fixed as controlling, and arbitrarily selecting a standard or basis having no reasonable relation either to the legislative directions or to the physical situation. Instead of taking into account,- as the statute requires, the size of the tract, its producing capacity, and the actual drainage area of each well, the commission has arbitrarily fixed the drainage area of each well in the Eastern Panhandle field at 160 acres, in the Western Panhandle field at 640 acres, and has fixed the allowable of each well by an arbitrary formula allowing 50 per cent, based on the potential of the wells, and 50 per cent, based not on the real drainage area, but on the acreage the commission has arbitrarily assigned to each well. (2) It has made this more arbitrary by extending this formula of acreage influence to tracts very much smaller in size, thus allowing tracts held in smaller acreage ownership a greatly larger proportionate production than tracts like complainants’, held in large ownership.

Respondents insist that the statute and the orders must be looked at and construed in the light of the conditions of wasteful use existing especially in the sour gas area where gas was being stripped when the statute was enacted, and in the light of the present inability of many well owners for want of light and fuel markets, to make use. of their gas. They declare that every intendment should be indulged in favor of their validity, since the public interest in the conservation of gas as a natural resource of the state, the existence of wasteful conditions in portions of the Panhandle field when the statute was enacted, and the power of the state, through the commission, to put a stop to wasteful practices, are beyond question.

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Bluebook (online)
14 F. Supp. 318, 1936 U.S. Dist. LEXIS 1306, Counsel Stack Legal Research, https://law.counselstack.com/opinion/consolidated-gas-utilities-corporation-v-thompson-txwd-1936.