# Railroad Commission v. Sterling Oil & Refining Co. > Texas Supreme Court · February 16, 1949 · 147 Tex. 547 URL: https://www.frixlaw.com/law-library/cases/4898028 ## Case - **Full name:** Railroad Commission of Texas v. Sterling Oil and Refining Company - **Court:** Texas Supreme Court - **Decided:** February 16, 1949 - **Citations:** 147 Tex. 547; 218 S.W.2d 415; 1949 Tex. LEXIS 447 - **Precedential status:** Published - **Opinion:** Dissent by Garwood - **Judges:** Garwood, Sharp, Smedley - **Cited by:** 35 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4898028 ## How later opinions describe it (automated extraction) - recognizing that ballot language does not serve to limit the "natural meaning of the language of the amendment itself' - stating that ballot language must show an amendment's "character and purposes" ## Opinion text Mr. Justice Garwood, also dissenting. I agree with Justice Smedley’s able dissent on the matter of jurisdiction, but even assuming jurisdiction, believe that under the peculiar circumstances of this case the order of the Railroad Commission is unreasonable. No doubt the conservation statutes do empower the Commission to prevent the waste of residue gas which remains after processing casinghead gas for production of natural gasoline and the so-called liquified petroleum gases. But waste is, of course, a relative term, as emphasized in the opinion in the Seeligson case (referred to in the majority opinion), in which this court upheld a temporary injunction against a shut-down order designed to prevent the flaring of raw casinghead gas, while conceding in general the Commission’s jurisdiction to control such a practice. Until the date of the Commission’s order there evidently never has been anything like a clear policy on the part of the state to treat the flaring of casinghead residue alone as waste under any circumstances. Indeed only a few years ago few would have thought of legal waste in connection with flaring raw casinghead gas, and today no doubt the amount of the latter which is flared throughout the state is much greater than the residue flared in the Heyser field. It clearly appears from the conservation statutes that for many years the legislature has been well aware of the difference between casinghead gas and natural gas from gas wells and between the respective residues of each. It has made express provisions against the flaring of raw or residue gas *569 originating from gas wells while significantly omitting any such provision with respect to casinghead gas residue or even raw casinghead gas. See Vernon’s Annotated Civil Statutes, Art. 6008, Section 2, 3(g), 3(k), 7(1) (d), 7(3) ; Art. 6008a, Sec. 3; Art. 6014, Sec. (a). Article 6008a, Sec. 3, prohibits the flaring of residue gas from commingled casinghead gas and gas well gas. It was first enacted in 1937 following the enactment of Article 6008, Sec. 3, (k), which already prohibited the flaring of residue gas well gas, and by inference therefore recognized that, at least in the absence of an order of the Commission to the contrary, the flaring of residue from casinghead gas was permissible. It is common knowledge that large scale manufacture of natural gasoline and liquefied petroleum gases from cashing-head gas is a relatively recent development, and it is also common knowledge that the general availability of beneficial usage for such residue gas is a World War II development still in its infancy and still greatly impeded by the notorious war and postwar shortage of equipment and machinery related to the gas transmission business and other enterprises making large use of petroleum gas. In the Heyser field almost since its discovery some twelve years ago there has been in operation a plant manufacturing natural gasoline and liquefied petroleum gases from the raw casinghead gas, — a highly valuable and beneficial operation, which is, of course, specifically approved by the conservation statutes. At the time the plant was erected such operations were generally regarded as rather forward-looking measures for the conservation of the state’s resources. Until only three or four years ago there was no available use for most of the residue from that plant and the state evidently thought its flaring — even in the substantial volume of which the Commission now complains — to be a proper incident to the production of oil form the field. When a large potential gas purchaser moved into the area, efforts were evidently made in good faith by some of the leading producers of the field to bring about a sale of the residue, but the problem was such as naturally to require considerable negotiation and delay — particularly since the field was divided into a substantial number of different ownerships all or many of whom had to agree on a program, including the investment of very large sums of money in equipment, before the terms offered by the potential buyer could be met. The evidence shows that from the standpoint of the producers the sale of the residue gas on the terms finally agreed upon is of doubtful economic benefit, while the evident independence of the buyer about seeking the produce suggests that the arrangement is at least not a highly desirable one from its standpoint. In the *570 face of all this, however, and after the arrangement has been concluded, the equipment ordered, work started for its installation, and an evidently reliable estimate made that deliveries of the residue to the buyer would begin within the most reasonable time of five months, the field is in effect ordered shut down until deliveries of the gas can actually begin. While theoretically the situtaion differs from that involved in Missouri K. & T. Ry. Co. of Texas v. State, 100 Texas 420 , 100 S. W. 766 , in that no fine or penalty as such is here imposed, the effect is substantially the same under existing conditions, because there appears to be no doubt that deliveries of the gas will begin within the time stated, and the shut down is therefore in substance a penalty on the operators for not having acted sooner. The case also disposes of the contention that the operators were duly “warned” by the Commission long before the shut-down order was issued. The Commission has no more jurisdiction to “warn” than had the legislature in the case cited. Even giving absolute verity to the professional opinions that no substantial ultimate loss of oil will occur by reason of the shut down, the fact of substantial monetary loss to the operators cannot be denied. The shut down of any going business entails a loss, and this is certainly no less true of an oil field. It is true that in the short period in question a substantial amount of residue gas will be saved in the sense that the raw casinghead gas thus shut in will later be produced and the residue from its processing burned for heat and light or otherwise consumed somewhere in the nation instead of being burned at the field. This no doubt represents a theoretical benefit to the heat and light consumers, and it may also operate to extend for some small theorectical period the life of the oil and gas resources of the state. But while this latter object is, in a general sense, within the scope of the state’s conservation policy, I cannot see how in the light of the history of that policy as regards casinghead gas and particularly its residue; in the light of what has been done and within only a few weeks will be done by the operators in the Heyser field; of the fact that under these circumstances the shut down is in effect but temporary; and of the plainly remote or theoretical character of the conservation benefits to be derived from the temporary shut down as against its economic hardship on the operators, the order can be regarded otherwise than as an unjustifiable penalty. This is probably but another way of saying that under the circumstances the order plainly does not have any reasonable relation to the prevention of waste. This may have been what was in Commissioner Murray’s mind when he said that he individually favored giving the operators *571 more time. In determining the relationship between the order and the prevention of waste we cannot consider merely the volume of residue gas being flared in the field on the date of the order. Such a view would probably justify shutting down a great number of the oil fields of the state. Many other things must be considered, not least of which are the facts that in the case of oil fields the marketing of such residue for light and heat is a relatively new thing, that on the date of the order no such disposition of the gas was possible despite good faith efforts for many months by at least a substantial part .of the operators to bring it about, that definite arrangements have been made to accomplish it by a certain time in the quite reasonably near future and that the shut down will obviously entail economic loss to the operators. Certainly the conduct of the operators in this case does not remotely approach the “indifference” or “perversity” mentioned in the hypothetical example in the Seeligson case, and indeed it is hard to imagine how any operator in his right mind would choose to burn a valuable product if in truth it is valuable rather than merely potentially valuable as of some future date. If the order had for example given the operators until May 1, 1949, before the shut down should become effective, the situation might well be fundamentally different, but, under the facts, I think the trial court’s injunction should be sustained. Opinion delivered February 16, 1949. Rehearing overruled March 30, 1949. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4898028. Public record. Not legal advice.