Untitled Texas Attorney General Opinion

TEEATTORNEY GENERAL OF TEXAS Auwrmu ~~.TExAe PRICE DANIEL ATTORNEYGENERAL Hon. Wll1ia.m J, JWray, Jr., Chairnmn Railroad Commi6sion of Team hatin 11, TeJras Opinion No. V-836 Rot whore a traot of 65.65 aoipw3IS segregated out of a 148.71 ao~e tract, tawt the Comnisricin 00x1~ rldor the orlglnol tmot to deterufae lðer tit0 r*grP*gakd traot ir etl- t2md &Qanothu. wall 18 ‘aa exorption to Rule 37r You huve reque6teU mu? oplnlou with rmprrat to the taeuaaae of a pemit a8 an exoeptlon to ?h~J,e 37* on the Luir of ee~tuia facts subaWmd in frour requart. la, brwlty, ue 8ummlse the toots 6a iol2ew81 li. P, Pouell hat made appl.ioatlvn to the hll6Ilf66b#l ?OF 8 6jWOilhl *FIllit t0 drill a fifth wel.2; u a ulxoeption to l@ale 37 on his 65.65aare knot sh%oh ao&airu 2388 pro- duatiw aore& Tirr D@IWBIII~LOU do66 Mb pant, a8 an uroeptioa to the rpaalag mile, a asoond OF udditieiial~,~~11 ii Ineluding the m a4 ~11 #H well &n&y on the product puclra- # aare6 will be 2u8m than five aorea Sop each onde~ this foamala of the am- $s%‘i fiStl8 ml2 or2 the 23,04 gmxlwt$ve aem could not b6 ~;rraead, It 16 I ‘i th8 ap lioant, heuewr, thrt the “Fa 2 Pane tZet of 65. aozw ir 6 6thdivLion of a lrrg+r 8 5 148.71 6~6 tmdt; and &we there em aftlJ rldmn wells on &he entlrr 148.71 acr8 &Wick, ho ir entitled to anothm w&l on the 65.65 acvo Waot under tbs doatrine o? the 0ontw-y kioa. William J, Rurray, Jr. -,Page 2 (v-836) .~ care? ~4km 65.65 lore traot woe degrepted tram the 148.71 awe traot 6yb66qU6nt to th6 prowlptian of’ the or$g1n61 sploi rule, and rliqr the dL$mvery of’ pm&toY lon. . The qwrtion presented Is whetbrr, under the above faote, the Cwwtaaion 10 required to $rmt a alt luthorleing the drilUn& of the fifth well on t R” e’ Pour11 65.65 aare tract under u1e fhetrlfm 0E tM m, oaae, .* ’ On,Hag 29, 1934, the Railroad Conualrel~n en- ,.tared the folfowlry order:2 “R uo~aatmmsn the RaIlFord Cor- miarion oi !!a66, thaT Zn applying Rule 37 -. 1 olia ?etraloum Cg. ,130 9371 h 1Ql that where the’suidiv%ed portion . I# entitled to a 1 well in orae ta pro-’ toot the vested rights o$.th?.ouners ~o.~eoorer their fair share of oil, a permit to drill’ a well, on the W- regated tract may be sustained.. For.@ d&3cusslon @f &he “Century Doctrine”, see 17 T,.L.Xt. 382 (note 1939); . 2 . ... -* Hon.,william J. Murray, Jr. - Page 3 (v-836) (spacing Rule) of statewide application and in applying every special rule with relation to spacing in every field in this State no subdivision of property made sub- sequent to the adoption of the original spacing rule will be considered in deter- mining whether or not any property Is being confiscated within the terms of such spat- lng rule, and no subdivision of property will be regarded in applying such spacing rule or in determining the matter of a@ka- fiscatlon If such subdivision took place . subsequent to the promulgation and adop- tion of the original spacing rule.” Under the “Rule of Ray 29” no subdlvlslon of property made subsequent to the adoption of the original spacing rule will be considered in determining whether or not any property Is being confiscated within the terms of such spacing rule, and the Commission cannot grant a special permit for a well on a voluntary subdivided tract on the basis of confiscation. Gulf Land Co. v. Atlantic 134 Tex. 59, 131 S W 2Q 73 (1939) . This is subject to the ;oEtrlne of the Centur;y case, and a siecial permit issued by the Commission en a voluntarily subdivided ;tract may be upheld If the original tract, a8 it was ‘before the subdivlslon, is entitled to another well,to protect the landowner from drainage. All of the caees applying the rule of the Centu case appaar to’be based on a finding of.voluntary aud slon within the meaning of the Rule. Although we have been unable to find a definite expression by the courts that the doatrlne of the Centure case Is applicable only where there 10 a voluntary subdivision, we believe such 1s true, be- cause if the tract is not a voluntary subdlvlslon.wI.thln the “Rule of May 29, ” the Commission could, upon a proper flnd- lng, grant a permit for.a well on the segregated tract un- der the~conflscatlon exception to Rule 37, The question arlaea ‘only when’the Commission cannot grant the exception because of,the ap llcation of the ‘Rule of Ray 29.” 31A T’ex; :Jur. 689, II $07. ,.’ . .’ It is therefore material to determine If the segregation of the 65'.65 acre Powell tract from the 148.71 acre Caddie Fisher tract is a voluntary subdivision within the “Rule of Ray 29. ” Under the submitted facts, the POWeLl Hon. William J. Murray, Jr, - Page 4 (v-836) tract was segregated subsequent to the date of the original spacing rule, and after the discovery of the production. Also, at the time of the subdivlaion the regular spacing pattern for the East Texan Field was 660’-330’. The term “subd1v1e1on” as used in the “Rule of May 29” was construed by the Supreme Court in Gulf Land Co, v. Atlantic Refining COY, supra, as follows n . The Rule of May 29th, supra, uses tks’term lsubdivlsionl in defining traote of land that have no protection from confiscation. The Commission has not seen fit to define ‘such term and ordinarily it would not require, a deflnit$og,:)because any tract of land segregated from a larger tract would constitute a subdivision. It is obviour that the term Isubdlvlslont 81) used In the order or rule under discussion, has no such general meaning. If such a mean- ing should be given the, term, a partition 0~ ‘. ‘Y”* ‘..I:. division of a 1,000 acre tract of land into two 500 acre tracts would constitute a subdivision of the land under the rule. Manifestly, ‘such a construction of the rule would be absurd,,ba- cause the two 500-acre tracts would come under its law against subdivision, while tracts of much smaller area which do not constitute sub- divisions after the effective date of Rule 37 would not. As we construe the rule pertaining to reubdlvlsionl subsequent to the effective date of Rule 37, It means that where a tract of land ir of such size and shape that It is nectirsary to obtain a permit aa a special exception to the spacing provision of Rule 37 before a well can be drilled thereon, such a tract will be regarded as a subdivision within the meaning of the Rule of May29th, supra, if it was subdivided out of a larger tract after Rule 37 became effective, Humble Oil & Re- fining Co. v, Railroad Commission (Tex, Civ. APP., writ ref.), 94 S,W.2d 1197; Falvey v. Simms 011 Co. (Tex, Clv. App~,), 92 S.W.28 292.” ._ .-- Ron. William J. Murray - Page 5 (V-836) The Powell tract of 65.65 acres is generally in a rectangular shape with an average width of 1389’ and an average length of 1900’ and Is of sufficient size and shape that a well codd have been drilled thereon without the necessity of a special exception to the spacing provisions of Rule 37. The 65.65 acre tract would, therefore, not be a voluntary sub- division within the “Rule of May 29th”, and the doc- trine of the Centure case doe8 not apply; As to the’particular facts of this case, how- ever, two arguments might be urged to remove this case from the above rule: 1. That the 65.65 acre tract is an edge lease along the eastern side of the East Texas Field and the four previous wells now on the tract were all drilled as exceptions to the spacing rule; therefore, under the Gul Land case definition, the 65.65 acre tract 1s a & subdivision since the special permits grant- ed on the first four iells are presumed to be necessary. In answer to this, we believe that the four prior wells were drilled as exceptions to Rule 37 In order that such wells could be drilled 81) near known production as possible, and not because of the size OS rhape of the segregated tract. 2. That the C&f Lanf2;t;; f;ft;iti;;e;; ~~~~~j, oable only to productive acres and if the productive acres are of such a size m 8hape that a special exception to the spacing provisions la re- quired before a well could be drilled thereon, the traot is a voluntary subdivision within the “Rule oi’ i?ay 29th.” The above argument Is not applicable to the facts of this case, and we render no opinion thereto, since the record reveals no facts which would lead us to believe that considering the Powell tract as a 23.04 acre tract, that It Is “a tract of land , , , of euch size and shape that it Is necessary to obtain a permit aa a special exception to the spacing re#ulatlon of Rule 37 before a well can be drilled thereon. .-. __ Ron. William J. Murray - Page 6. (V-836) i2Jmaix Under the facts stated, a 5 .’ 65.65 acre tract is not a voluntary eubdlvision within the Commleslenis Rule of May 29, 1934, and the Corn- miaaion need not look to the original .’ , 148.71 aorea, aa It waa prior to ae- gregation, in determining whether ano- ther well should be granted on the 65.65 acrea aa an exception to,Rule 37. Yours very truly ATTORREY ‘ORR BY JEWrbt APPROVED &u.2d’ 0ENERAL ATTORNEY