Railroad Commission      of Texas
Austin, Texas

Dear   Sirs:                           Opinion No. O-3181
                                       Re:   ,Questions relating to the appli-
                                             cation of spacing rules and the
                                             subdivision rule as appIied to
                                             the Hawkins field.

               We have the letter of February       17. 1941, signed by Com-
missioners  Sadler and Culberson.     asking us thirteen questions with ref-
erence to the application   of the spacing rules and the subdivision    rule to
the Hawkins field.   In your letter you’first  set forth the applicable rules
as follows:

                  ‘On January 22, 1941. the Railroad Commission      of
         Texas, after due notice and hearing, promulgated     and adopt-
         ed field rules for the Hawkins field, Wood County, Texas,
         which was discovered    during the month of September,    1940.
         Rule 1 of the rules referred to provides as follows:

                        “‘RULE     1. (A) No well shall be drilled
                hereafter   fur oil and gas or either of them near-
                er than Nine Hundred Thirty-Three           (933) feet
                to any other completed or drilling well on the
                same or adjoining tract or farm, and no well
                shall be drilled nearer than Four Hundred
                Sixty-Six   (466) feet from any property line,
                lease line, or subdivision      line; provided that,
                subject to the further provisions        hereof, the
                commission,      in order to prevent waste or to
                prevent the confiscation      of property, will~grant
                exceptions    to permit drilling within shorter
                distances than above prescr~ibed whenever the
                commission      shall determine     that such excep-
                tions are necessary      either to prevent waste or
                to prevent the confiscation       of property.   When
                exceptions    to this rule are desired, application
                therefor shall be filed with the commission,
                fully stating the facts, which application       shall
                be accompanied       by a plat drawn to the scale of
                One inch equalling Four Hundred (400) feet, ac-
                curately showing to scale the property on which
Railroad     Commission   of Texas,   Page 2 (O-3181)




                  permit is sought to drill a well under an
                  exception to this rule, and accurately        show-
                  ing to scale all other completed,      drilling
                  and permitted wells on such property; and
                  accurately   showing to scale all adjacent
                  surrounding properties      and wells.    Such
                  application shall be verified by some per-
                  son acquainted with the facts, stating that
                  all facts therein stated are within the know-
                  ledge of the affiant true, and that the accom-
                  panying plat is accurately     drawn to scale
                  and correctly   reflects all pertinent and re-
                  quired data.   Such exceptions    shall be grant-
                  ed only after at least ten days’ notice to all
                  adjacent lessees,    affected thereby, has been
                  given, and after public hearing at which all
                  interested  parties may appear and be heard~,
                  and after the commission      has determined
                  that an exception to this rule is necessary
                  either to prevent waste or to protect the
                  property belonging to applicants from con-
                  fiscation.  All pending applications      shallbe
                  amended to conform to this rule before, be-
                  ing acted upon.

                         “‘(b) In applying this rule, the gener-
                  al order of the commission    with relation to
                  subdivision  of properties  shall be observed.’

           “On May 29, 1934, the Railroad Commission          of Texas    duly
           entered its order which read as follows:

                           “‘IT IS ORDERED BY the Railroad Com-
                   mission of Texas that in applying Rule 37 (Spac-
                   ing Rule) of statewide application and in apply-
                   ing every spacing rule with relation to spacing
                 ,.in every field in ,this state. no subdivision   of
                   property,made     subsequent to the adoption of the
                   original spaeing~,rule will be considered     in de-
                   termining whether or not any property is being
                   confiscated   within the terms of such spacing
                   rule and no subdivision    of property will be re-
                   garded in applying such spacing rule or in de-
                   termining the matter of confiscation     if such sub-
                   division took place subsequent to the promulga-
                   tion and adoption of the original spac~ing rule;’

           “On January 3, 1940, the Railroad     Commission     entered    an order
           which read as follows:
.   .

        .Railrcad     Commission         of Texas,   Page 3 (O-3181)




                                     “‘IT IS HEREBY ,ORDERED by the Rail-
                              road Commission     of Texas that in all orders,
                              other than those dealing with strictly depart-
                              mental affairs,  hereinafter  promulgated   or
                              adopted by the commission     no motion for re-
                              heaiing shall be entertained unless same is
                              filed within a period of Fifteen (15) days from
                              the date of the promulgation   and adoption of
                              any such order by the commission.

                                     “‘All such motions shall be filed in writ-
                              ing by the applicant for a rehearing   specifying
                              in detail the grounds upon whic’h the rehearing
                              is sought.   In no event shall the commission     con-
                              sider any grounds not specified in such motion
                              for rehearing in passing upon the merits of
                              same.’

                    “All of the rules and orders        hereinabove    set out are now in
                    force and effect.”

                        In your letter you make separate statements   and ask sep-
        arate questions relating thereto. and we will follow this form in replying
        to your questions.


                                                        I.

                                                “STATEMENT


                              “Article    6036a of the Revised    Civil   Statutes   now in
                    effect   provides    in part as follows:

                                     “‘No rule, regulation or order shall be
                              adopted by the commission      under the provi-
                              sions of this act or of Title 102 of the Revised
                              Civil Statutes of Texas,   1925, as amended, deal-
                              ing with the confiscation   of oil and gas and the
                              prevention of waste thereof, except after at Ieast
                              10 days’ notice given in the manner and form pre-
                              scribed by the commiss~ion * * *’

                              “Rule 1 of the spacing rules of the Hawkins            field,   here-
                inabove        referred to provides in part:

                                     “When exceptions     to this rule are desired.
                              applrcation therefor shall be filed with the commis-
                              sion fully stating the facts * * * Such exceptions
                                                                                .   .
Railroad     Commission    of Texas,   page 4 (O-3 181)




                   shall be granted only after at least ten (10)
                   days’ notice to all adjacent lessees   affected
                   thereby, has been given, and after public hear-
                   ing at which all interested   parties may appear
                   and be heard and after the c,ommission      has
                   determined that an exception to this rule is
                   necessary    either to prevent waste or to pro-
                   tect the property belonging to applicant from
                   confiscation.’


                                QUESTION     NO.   1


                    “Will you please advise whom the rule contem-
           plates as adjacent lessees as would entitle them to no-
           tice of a hearing on an application to drill an oil or gas
           well in the Hawkins field?”

                The proper c,onstruction of the notice provisions   of Rule
37, as applied to other fields in this State, has been discussed  in a few
cases.   In Magnolia Petroleum   Company v. Edgar, 62 S.W.(Zd) 359, 361
(writ refused) it was pointed out that Article  6036a. Vernon’s Annotated
Civil Statutes. merely provides that notice shall be given “in the manner
and form prescribed   by Commission,    ” and the court further observed:

                    “The statute itself does not undertake to desig-
           nate to whom such notice is to be given nor in what form.
           This for the obvious reason that it would be impossible
           to designate specifically   who are the interested parties.”

                 In Rabbit Creek Oil Co. v. Shell Petroleum   Corporation,
66 SW. (2d) 737,739      the question was raised as to whether Rule 37 was
valid. in that it provided merely for notice to “adjacent lessees,”   and did
not provide for notice to other adjacent owners.    In holding the rule to be
valid, the c~ourt said:

                    ” * * * But rule 37 is not unconstitutional    because
           it failed to provide for notice to adjacent landowners.       The
           rule deals with the practical matter of giving notice to the
           party most vitally interested     in the drilling of a well as an
           exception to the rule.    Exceptions    are only necessary   after
           the particular   field has been proved.     The adjacent lessees
           have the control and the respons~ibility of developing their
           respective   leases.   They are charged with the obligation of
           drilling offset wells.   Their interest also requires     them to
           procure all the oil possible under their leases, and the les-
           sees’ interest in the oil is greater than that of the owner of
           the fee, who usually receives      only one-eighth  of the oil as
           royalty.   Royalty interests   are often sold by the owners of
Railroad    Commission    of Texas,   page 5 (O-3181)




           the fee to numerous ,purchasers,   resident as well as non-
           res,ident. and to whom in many instances notice of an ap-
           plication and hearing for the permit could,not be given.
           If it should occur that an adjacent owner has developed or
           intends to develop his own land, then the commission      can
           give him notice.    The commission   is required to permit
           the development   of proven,fields in accordance    with the
           conservation   laws, and’as a pra~ctical proposition notice
           to the adjacent lessees in most cas,es should be and is suf-
           ficient.-

                Compare Humble Oil & Refining Company v. Railroad Com-
mission,  68 SW. (2d) 622, 624 (affirmed,   sub non, Brown v. Humble Oil &I
Refining Company.     126 Tex. 296, 83 S.W.Tm)m,     87 S,m     ) 106’9) in
whic,h the court said:

                   “While the statute (Vemon*s Ann. Civ. St. art. 6036a)
           does not undertake to define who are interested parties, it
           does provide that hearing must be held before the commis-
           sion shall adopt a rule or regulation,   after notice given in
           the manner and form prescribed      by the commission    itself.
           This we think clearly implies notice to those interested      in
           or to be affected by the rule or regulation contemplated.
           ***-

                From the foregoing authorities.   we c,onclude that the words,
“adjacent lessees,.” are generally to be given their ordinary meaning, that
is, owners of oil and gas leases c~overing tracts of land adjoining or bor-
dering on the tract of land on which the application for an exception is filed.
The usual situation presented to the Commission     will be one where all of
the land in question has been leased for oil and gas purposes,, and in such
cases the ‘lesseesa   are the persons owning the working interest in each
lease.  If cases should arise in which an oil and gas lease has not been ex-
ecuted, the owner or owners of the land should be given notice.

                                        II.

                                  “STATEMENT

                          “As lessee ‘A’ owns a lease of 160 acres
                   the size and shape of which admits of develop-
                   ment in accordance     with the spacing regulations
                   adopted for the field.    Less,ee also owns all con-
                   tiguous and adjacent leases to that of his 160-
                   acre tract.

                                “QUESTION     NO; 2

                   ‘In view of the provisions of the spacing rule adopted
           for the field and that lessee owns the lbO-acr~e tract and all
                                                                                    .   .

Railroad    Commission     of Texas,    page’ 6 (O-3181)




           contiguous and adjacent leases,    is it necessary   when ap-
           plication for a permit to drill is filed by the owner of the
           160-acre   tract for the commission    to give notice to the
           owner of the 160-acre    tract who is also the owner of the
           contiguous and adjacent leases of his intention to drill?”

                Although it is not explicitly  so stated. we assume from your
question that, while the tract in question could be developed without excep-
tions to Rule 37, a permit is applied for to drill a well as an exception to
Rule 37 at a closer distance to a lease line or another well than is allowed
by the rule.  Under our answer to question No. 3. infra, if the well is to be
drilled under the general provisions    of the rule, a-not   as an exception,
no notice to adjacent lessees  is required.

                Under the facts stated, where the applicant owns all con-
tiguous and adjacent leases~, we see no necessity    of giving notice to him,
as adjacent lessee,  that he, as applicant, has applied for a permit.     Of
course such applicant, in his capacity as applicant, should be notified of
the time and place of the hearing on his application,    but, in his capacity
as an adjacent lessee,   there is no necessity of giving him another notice
to the same effect.

                                           III.

                                   “STATEMENT

                     “Lessee owns a tract of 160 acres which is suscep-
           tible to development  under the spacing rule applicable to
           the field and desires  to drill a well which is not nearer than
           Nine Hundred Thirty-three      (933) feet to any other completed
           or drilling well on the same or adjoining tract or farm and
           not nearer than Four Hundred Sixty-six        (466) feet from any
           property line, lease line or subdivision     line.

                                “QUESTION         NO. 3

                    “Please advise ,whether under any spacing rule or
           the statutes of this state it is necessary    for said lessee to
           obtain a permit from the commission        authorizing  the drill-
           ing of said well and whether, if such permit is necessary,
           any notices are required to be issued to any adjace’nt lessee
           or interested   parties.”

               Under the facts          stated, the well may be drilled under the
general terms of Rule 37, and          no permit to drill as an exception to Rule
?7 need be obtained.   See~Gulf        land Co. v. Atlantic Refining Company,
134 Tex. 59, 70, 131 S.W.Tm)           73. 80. in which the Supreme Court said.
in construing Rule 37:
.   .

        Railr~oad Commission   of Texas,   page 7 (o-3181)




                       “,* * * In order to accomplish   orderly drilling,
               the Commission    has s~imply promulgated   a rule fixing
               minimum spacing distances at which wells may be
               drilled without application, notice or hearing. * + * w

                         We also direct your attention to the Railroad Commission
        Statewide Rule No. 9, as amended effective    January 1. 1940, which reads
        in part as follows:

                        “* * * No permit to drill any well or wells for
               oil or gas shall be required by the Commission     except
               for such wells as may be drilled unde~r exceptions to
               Rule 37 of statewide application   or as exceptions under
               special field rules governing the drilling of any well or
               wells which have been or may hereafter     be adopted by
               the Railroad Commission.”

                                              IV.

                                      “STATEMENT

                        “Lessee   owns a lot in the unincorporated    town of
               Hawkins, in the Hawkins field, same being of such size
               and shape as not to be susceptible     to development without
               an exception to the spacing rule adopted for the field, and
               files application with the commission      in accordance   with
               the rule for a special permit to drill a well on such lot,
               after which notices are issued to all owners of adjacent
               leases and interested parties.      Subsequent to the filing of
               such application and the issuance of notices to all adja-
               cent lessees    and intereste,d parties and before the hear-
               ing on such application,     one or more of such adjacent les-
               sees or interested    parties conveys his or her interest in
               such adjacent leases to a party or parties not served with
               notice.

                                    “QUESTION       NO. 4

                        “Is the commission     required to postpone the date
               of the hearing theretofore     set in order that such addition-
               al adjacent lessees    or interested   parties may be notified
               of the application and hear~ing, or are such purchasers       of
               the interest of the adjacent leases or interested     parties
               charged with notice of the filing of the application and the
               time of hearing by reason of the notice served on the pre-
               decessor    in title?”

                        Where the interests  of adjacent lessees were conveyed
        after the notice of the hearing had been given to such lessees, the grantees
        of such adjacent lessees would be charged with notice of the hearing on
                                                                                   .   .

Railroad     Commission    of Texas,,   page 8 (O-3181)




the application,   and it would not be necessary  to issue notices to such
grantees.    In our opinion, the analogy of the common law doctrine of lis
pendens would be applied, and the purchasers      from the adjacent less=
would be placed in the same position as purchasers       pendente lite. Com-
pare 28 Texas Jurisprudence      339. “Lis Pendens.”    $24.

                                           V.

                                  “STATEMENT

                    “Subsequent to the discovery   of oil in the Hawkins
           field, a 400-acre  tract was subdivided into twenty 20-acre
           tracts, each being susceptible   to development under the
           spacing rule applicable to the field and without exception
           to same.    A purchaser  of one of the interior tracts filed
           an application to drill a well on same as an exception to
           Rule 37 in order to meet offsets and to prevent undue
           drainage, such well being applied for less than 466 feet
           from the property line.

                                “QUESTION       NO. 5

                “Please advise whether the owners of the leases
       contiguous to the original 400-acre  tract are entitled to
       notice of the application and hearing as provided in said
       rule, or whether, such subdivision not being in contra-
       vention to the rule, notices are required to be given only
       to the owners of the leases adjoining or contiguous to the
       20-acre   tract.”

                 The 20-acre  tract, not being of such shape or area as to re-
quire development by drilling of wells as exceptions    to Rule 37 is not a sub-
division in violation of the subdivision  rule of May 29, 1934.  It therefore
may be treated as a separate tract in determining     whether a well may be
drilled on it as an exception to Rule 37 in order to prevent confiscation     of
property,   See Gulf Land Company v. Atlantic Refining Company,       134 Tex.
59, 71. 131 S.W. (2d) 73, 81, in which the Supreme Court said:

                ” * * 8 The Rule of May 29th, supra, uses the
       term ‘subdivision’ in defining tracts 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 definition, because any tract of land segregated
       from a larger tract would constitute a subdivision.         It is
       obvious that the term ‘subdivision.’     as used in the order
       or rule under discussion,      has no such’general   meaning.
       If such a meaning should be given the term. a partition
       or division of a lOOO-acre tract of land into two 500-
       acre trac’ts would c’onstitute a subdivision    of the land
       under the rule.    Manifestly,   such a construction   of the
Railroad     Commiss~ion   of Texas,   page 9 (0-3i81)




           rule would be absurd, because the tw-o 500-acre       tracts
           would come under its ban against subdivision,       while
           tracts of much smaller area which do not constitute
           subdivisions    after the effective date of Rule 37 would
           not. As we construe the rule pertaining to ‘subdivision’
           subsequent to the effective date of Rule 37, it means
           that where a tract of land is of such size and shape that
           it is necessary     to obtain a permit as 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 sub-
           division within the meaning of the Rule of May 29th,
           supra, if it was subdivided out of a large~r trac~t after
           Rule 37 became effective.       Humble Oil & Refining Co.
           v. Railroad Commission        (Tex.Civ:App., writ refused),
           94 S.W. (2d) 1197; Falvey v. Simms Oil Co. (Tex.Civ.
           App.). 92 S.W.(2d) 292.”

                 Since the 20-acre tract is of such size and shape that it
can be developed without obtaining an exception to the spac~ing rule. it is
not a subdivision and may be treated as a separate tract. and notices need
 be issued only to the lessee of tracts adjacent to the 20-acre  tract.

                                         VI.

                                  ‘STATEMENT

                    “Prior to the adoption of the spacing regulations       in
           the Hawkins field and the discovery      of oil. lesse~e obtained
           a lease on a 4-acre   tract, same being a separate fee owner-
           ship.   Subsequent thereto lessee assigned the West two acres
           of said tract to another party.     Lessee,  as the owner of the
           remaining two acres, applied for a permit to drill a well
           for oil as an exception to the spacing regulation on the ground
           that same was necessary      to prevent the confiscation    of his
           property by r~eason of the fact that other lessees      had drilled
           wells on the property contiguous to his which were admitted-
           ly draining his oil. No well had been drilled on either of the
           Z-acre tracts at the time the application was filed nor at the
           time of the hearing thereof.      The application was filed for a
           special permit authorizing     lessee to drill a well on the two
           acres mentioned above and no mention was made in the ap-
           plication or in the notice issued thereon of the west 2 acres
           or of the 4 acres as a whole.

                                -QUESTION      NO.   6

                    “(A) Was the application and notice of hearing on such
           application sufficient to authorize the commission   to hear evi-
           dence on the issue of c,onfiscation and to grant the permit as
                                                                                       .

Railroad     Commiss~ion   of Texas,   page   10 (O-3181)




           applied for on the 2-acre     tract, provided~notices   were
           issued to the owners of all leases adjacent and dontigu-
           ous to the original 4-acre     tract and other interested
           parties, and provided the evidence at the hear,ing justi-
           fied the commission     in granting same to prevent the con-
           fiscati~on of the applicant’s   property?

                    “(B) The location applied for on the East 2-acre
           tract is admittedly necessar’y    to prevent drainage of oil
           from the entire 4-acre    lease by reason of the density of
           drilling in the close proximity to the location applied for,
           and the owner of the West 2-acre      tract did not protest
           the application.   May the commission      on such application
           to drill a well on the East two acres, issue a permit to
           drill a well at a location different from that applied for
           and on the West two acres and at a place where protec-
           tion will not be afforded against drainage from wells on
           adjacent leases ?”
      .
                  (A) Under the facts stated. the assignment       of the lease on
2 acres out of the 4-acre     tract constituted a subdivision under the provi-
 sions of the Railroad Commission’s        rule of May 29. 1934.    A subdivision
by an oil and gas lease is held to be within such rule regardless         of when
it was made.     Sun Oil Co. v. Railroad Commission,        68 S.W. (2d) 609. af-
firmed 126 T-39        84 SW     (2d) 693 Shell Petroleum     Corporation   v. Rail-
road Commission:      133 S,W. (2d) 19d. And an assignment        of an oil and gas
lease on a portion of the leased premises        would come within the same rule
and would constitute a subdivision.       Compare Humble Oil & Re fining Com-
pany v. Railroad Commission,         68 SW. (2d) 625.    Each of the L-acre tracts
would be too small to be developed separately         except by wells granted as
exceptions    to Rule 37, since under the statewide rule prior to January 25.
 1940, the minimum area was 2.07 acres, and under the statewide rule in
force thereafter    and the special rule for the Hawkins field promulgated
 January 22, 1941, the minimum area is 20 acres.          Being subdivisions,
neither tract as such, would be entitled to a permit to prevent confisca-
tion.   In Gulf Land Co. v. Atlantic Refining Co,, 134 Tex. 59, 71. 131 SW.
 (2d) 73. 81, the court said:

                    u * * * An examination   of the order or rule of
           May 29, 1934, hereinafter    referred to as the Rule of
           May 29th. will show that subdivisions     of land, as such,
           which have or hereafter    may come into existence after
           Rule 37 becameeffective    are not protected at all against
           confiscation.   When Rule 37 and the Rule of May 29th are
           read together. it is evident that exception permits may be
           issued to protect such tracts from waste; but such exceP-
           tion permits cannot be issued to protect such tracts, as
           such, from confiscation.   * * *”
Railroad     Commission    of Texas,   page 11 (O-3181)




                Furthermore,    since the 2-acre   tract is a subdivision,  the
Railroad Commission     could validly grant the permit only on the basis of
the Z-acre tract when considered     as a part of the 4-acre   tract. from which
it was subdivided.   Railroad Commission     v. Magnolia Petroleum      Co., 130
Tex. 484, 109 S.W.7m)     967 .

                  Your question assumes      that the application was made for
a permit to drill a well on the 2-acre      tract, considered    as a separate tract,
and that the notice so stated.     In our opinion the notice would not be suf-
ficient to justify the granting of a permit to drill a well on the 2-acre        tract,
considered   as a part of the 4-acre    tract.   Persons receiving the notice
would be entitled to rely on the notice as stating the matter to be consid-
ered by the Commission.        A notice that a hear.ing was to be held on wheth-
er a permit should be granted to drill a well on the 2-acre         tract consid-
ered as a separate unit would not apprise the person receiving           the notice
that the Commission     was going to consider the matter of granting a per-
mit to drill a well on the 2-acre tract considered       as a part of the 4-acre
tract.   The issues, on the question of confiscation.      would be substantially
different if the 2-acre   tract were considered     as a part of the 4-acre    tract
instead of as a separate tract.

               It is well settled that the notice issued by the Railroad Com-
mission must give fair notice of the matter to be passed on by the Rail-
road Commission,    and conversely,   that the order must c~ome fairly within
the terms of the notice.  State v. Blue Diamond Oil Corp.. 76 S.W. (2d)852.

                (B) Under the facts assumed in your question the applica-
tion is for a permit to drill a well on the east 2-acre  tract, considered as
a separate tract. to prevent confiscation.   Clearly it would be unreason-
able and arbitrary for the Railroad Commission      on such application to
grant the permit on an entirely different tract, and such order would not
be valid.

                                        VII.




                    “Oil was discovered    in the Hawkins field during
           the month of September,     1940.   In 1937 ‘A’ owned a tract
           of land of approximately    40 acres,   his home being on five
           acres thereof.    In 1937, prior to the discovery   of oil in
           said fields, he executed a lease on all of the 40 acres, ex-
           cept the five acres upon which his home was located.         Said
           lease is now at this time in force and effect and ‘A’ desi~res
           to drill a well on the five acres which he has not leased and
           makes application therefor.
Railroad    Commission    of Texas,   page 12 (O-3181)
                                                                                     .
                               “QUESTION       NO. 7

                    “Is “A’ entitled to a permit to drill one well on
           said 5-acre   tract as a matter of law to prevent the con-
           fiscation of the property, there being no well on same
           at the time of the filing of the application as an excep-
           tion to the spacing rule in effect in the field?”

                 In 1937, the statewide Rule 37, providing for spacing dis-
tances of 150 feet from property lines and 300 feet from other producing
wells, was in effect.    The area covered by a regular location under this
spacing pattern is 2.07 acres.       The 5 acres retained by “A” would there-
fore be sufficient to justify the drilling of a well. under the spacing rule
then in effect. without obtaining a special per,mit. unless by reason of its
shape a well could not be drflled on the tract without being less than I50
feet from one or more property lines.        The spacing rule in effect at the
time of the subdivision    controls in determining    whether a special permit
is required.    Humble Oil and R,efining Company vs. Railroad Commission,
94 SW. (2d) 1197 (writ refused).       Gulf Land Company v. Atlantic Refining
Company,     134 Tex. 59, 131 S.W. (2d) 73. If the 5-acre    tract is of such
shape that a well can be drilled on it more than 150 feet fr~om the nearest
property line and more than 300 feet from the nearest producing well. then
 “A” is entitled to drill one well on his 5-acre    tract as a matter of law to
prevent confiscation    of property.

                  If, however, the 5-acre    tract is of such irregular   shape
that a well on it cannot be drilled except at less than 150 feet to the near-
est property line or less than 300 feet to the nearest producing well, then
the 5-acre   tract is a subdivision within the meaning of the rule of May 29,
 1934.  Gulf Land Co, v. Atlantic Refining Co., 134 Tex. 59, 131 S.W.(2d)
73. In such a case, the Railroad Commission            would have to consider the
small tract as a part of the larger tract from which it was subdivided, in
order to determine whether the lessee of this tract is entitled to a special
permit in order to prevent confiscation        of property.   Humble Oil and Re-
fining Co, v. Potter 143 SW. (2d) 135; Shell Petroleum          Corporation   Y.
Railroad Commission,       133 Saw. (2d) 194. Under the facts assumed,         “A”
would not be entitled as a matter of law to a well on his 5-acre         tract in
order to prevent confiscation,     but he would be entitled to such well if the
facts show that the original 40-acre      tract is entitled to such well.    Rail-
road Commission       v. Magnolia Petroleum      Co.,, 130 Tex. 484, 109 S&w
967; Atlantic Refining Co. v. Buckley, 146 SW. (2d) 1082 (writ dismissed).

                                       VIII.

                                 ‘“STATEMENT

                    “In 1920 ‘A’ and ‘B’ purchased a lo-acre    tract
           of land in the Hawkins field and each held an undivided
           one-half interest therein until approximately    1935, which
           was prior to the discovery   of oil in the Hawkins field.
           During the year 1935, ‘A’ and ‘B’ orally agreed to parti-
           tion such IO-acre tract and did orally partition same and
           thereafter  each exercised  complete dominion over the
.   .

        Railr.oad   Commission     of Texas,   page 13 (O-3181)




                part set aside to each of them.    No deed of conveyance
                or written agreement   of partition was ever executed or
                recorded of doing same, but the fact of partition as set
                out above was established   without dispute at the hearing
                on application for a permit to dr.ill wells on each of said
                tracts filed by the owners thereof;

                                        ‘QUE,STION      NO. 8

                        “May an oral partition         be effected and established
                as set out above and, if so, is       the commission   required
                as a matter of law to grant at        least one permit on each
                5-acre  tract on the application        of the owners thereof in
                order to prevent c’onfiscation        of property?”

                          Under the facts stated, the oral partition together with the
        actual division of possession    and dominion over the property, was legally
        effective to acc.omplish a partition as the parties intended, and, since the
        partition took place prior to the discovery    of oil, the partition would not
        be a subdivision within the contemplation     of the rule of May 29, 1934.
        Therefore,    “A” and “33” would each be entitled to a permit as a matter
        of law on his 5-acre   tract in order to prevent confiscation     of property.
        Shell Petroleum    Corporation   v. Railroad Commission,     116 S.W.(Zd) 439
         writ dismissed).

                                                 M.

                                          ‘STATEMENT

                         “‘A’ owns and has owned for many years prior to
                the discovery   of oil in the Hawkins field, two lots in the
                unincorporated    town of Hawkins in said field.    Said lots
                are separated by a public street or road dedicated as
                such many yea’rs prior to the discovery     of oil in the field.
                The two lots owned by ‘A’ face each other across said
                street or road.    Said road or street is 100 feet wide.     ‘A’
                owns no other property in the unincorporated       town of Haw-
                kins except the two lots mentioned above.

                                         “QUESTION      9

                            “Is ‘A’ entitled as a matter of law to drill at least
                one well      on each of said lots in order to prevent the con-
                fiscation     of his property?A

                        ‘Aw is not entitled as a matter of law to drill at least one
        well on each of his lots in order to prevent the confiscation   of his prop-
        erty.  The dedication of a street does not operate to pass the fee title to
Railroad     Commission    of Texas,   page 14 (O-3 181)




the public authority, but merely creates an easement         in favor of the pub-
 lic. O’Neal v. City of Sherman. 77Tex. 182, 14 SW. 31; 14 Tex. Jur. 722.
A conveyance     of a lot bordering on a street or alley ordinarily     passes ti-
 tle to the center of the street or alley. subject to the public’s easement,
unless a contrar,y intention is expressed     in plain and unequivocal terms.
 Cantley Y. Gulf Production Co., 135 Tex. 339, 143 S,W. (2d) 912; 60x v.
Campbell.    135 Tex. 428 143 S-W. (2d) 361. Exceptional         cases maye
where the erantor did n’ot own any interest in the land covered bv the road
 or street, and in such cases. of cburse. the purchaser       of the 10t~would not
by such conveyance acquire any title in the land covered by the street or
,road. Day v. Chambers.       62 Tex. 190. In the usual situation, however,
 ‘A”. in the case assumed by your question. would be the owner of the min-
 erals under the street or road, as well as under the two lots bordering on
 it. Since the two lots and the street together constitute one continuous
 tract, so far as the ownership of the minerals      is c~oncerned, the street and
 the two lots must be c,onsidered together in determining whether “A” is
 entitled to a permit to drill a well to prevent the confiscation     of his prop-
erty.    Compare Railroad Commission       v. Wood, 95 SW. (2d) 1328 (writ
 refused);  Humble Oil & Refining Company v. Railroad Commission,             99
SW. (2d) 1052, (writ refused).

                                         X.

                                  “STATEMENT

                    “The commission’s    statewide 20-acre   spacing rule
           became effective   January 25, 1940.    Subsequent to that date
           and prior to the discovery   of oil in the Hawkins field and the
           adoption of field rules for the Hawkins field, “A’ as the own-
           er in fee of a IO-acre tract in said field, executed a lease
           to “B’ on four acres out of such tract.

                               ‘“QUESTION     NO.   10

                   “(A) May the commission      grant ‘B’S application for
           a permit to drill a well on his 4-acre   tract in order to pre-
           vent confiscation of property?

                    ‘“(B) May the commission   grant ‘B’s’ application to
           drill a well on his 4-acre tract in order to prevent physical
           waste ?*

                (A) The Railroad Commission       may not grant “‘B”s” appli-
cation for a permit to drill on his 4-acre   tract, considered as a separate
tract, in order to prevent confiscation   of property.  As we have already
pointed out in answer to your 6th question, a subdivision by an oil and
gas lease falls within the rule of May 29, 1934. even though such lease is
made before the discovery    of oil. Sun Oil Company v. Railroad Commis-
sion, 68 S.W. (2d) 609. affirmed,   126 Tex. 269, 84 S. W. (2d) 693~O- Shell
.   .

        Railroad    Commission     of Texas,   page 15 (O-3181)




        Petroleum    Corporation  v. Railroad Commission,     133 SW. (2d) 194. It
        follows that “B’s” 4-acre    tract must be considered with the tract from
        which it was subdivided in determining whether lB” is entitled to drill
        a well on it in order to prevent confiscation   of property. Humble Oil &
        Refining Company v. Potter, 143 SW. (2d) 135; Shell Petroleum       Corpora-
        tion v. Railroad Commission,      133 S.W. (2d) 194.

                         (B) The question of subdivision  relates only to the issue of
        confiscation,  and the fact that such subdivision has taken place does not
        prevent the granting of a permit to ‘B” on his 4-acre    tract in order to
        prevent waste.    In Gulf land Co. v. Atlantic Refining Company,    134 Tex.
        59, 76, 131 S.W. (2d) 73, 83, the Supreme Court said:

                           ”
                             . . . As we interpret Rule 37 and the Rule of
                   May 29th, the fact that a tract.of land is a subdivision
                   within the meaning of the rule last mentioned is no im-
                   pediment to the granting of a well permit thereon as an
                   exception under Rule 37 to prevent waste.     In other words,
                   the rule pertaining to subdivisions  has no application to
                   well permits granted to prevent waste . . . -”

                                                 XI.

                                          “STATEMENT

                           ‘The commission’s      statewide 20-acre   spacing rule
                   became effective   January 25. 1940.     Subsequent to such date
                   and prior to the discovery    of oil in the Hawkins field and the
                   adoption of the special rules applicable to said field. ‘A’ as
                   the owner of a 4-acre   tract, exec,ut.ed a lease on two acres
                   to one person and on two acres to another person, and each
                   has applied f~or a permit to drill on his respective    2-acre
                   tract.

                                       “QUESTION       NO.   11

                            “(A) Can the commission    grant to each of said ap-
                   plicants a special permit authorizing   the drilling of a well
                   on each respective  tract in order to prevent confiscation
                   of property?

                            “(B) Can the commission   grant to each of said ap-
                   plicants special permit authorizing the drilling of a well
                   on each respective  tract in order to prevent physical waste ?R

                        (A) Under our answer to subdivision   MA” under question
        No. 10, supra, we have pointed out that a subdivision by oil and gas lease
        comes  within the provisions of the rule of May 29, 1934, regardless  of
Railroad     Commission   of Texas,   page 16 (o-3181)




whether it was before or after the discovery       of oil. Sun Oil Company v.
Railroad Commission,       68 SW. (2d) 1609, affirmed.     126 T   ~ Lb9 84 S W
 2d 693 Sh 11 P etroleum Corporation        v. Railroad Commi%on,       ;33 S.“W,
{2d{ 194; S’ mce each of the 2-acre     leases would constrtute a subdivision
within the meaning of the rule, neither of the applicants would be entitled
to the well of his 2-acre    tract considered   as a separate tract to prevent
confiscation  of property.     Gulf Land Co. v. Atlantic Refining Co.., 134 Tex.
59, 131 S.W. (2d) 73.

                  (B) As we have pointed out in answering    subdivision  “B”
of question No. 10, the question of subdivision    does not affect the author-
ity of the Railroad Commission     to grant a special permit to prevent waste.
Gulf Land Company v. Atlantic Refining Co., 134 Tex. 59. 131 S.W. (2d) 73.
Ther,efore,  rf the Commrssron   fmds upon substantial evidence that waste
will be prevented by the drilling of a well on each tract, it may grant a
special permit to each applicant.

                                      ‘XII.

                                 “STATEMENT

                     “The commission’s   statewide spacing rule became
           effective   January 25. 1940.  Prior to the discovery  of oil
           in the Hawkins field and the promulgation    of the special
           rules applicable to the field, ‘A’ as the owner of a separate
           fee ownership of a lo-acre    tract executed a lease on four
           acres of same to ‘B’.

                              ‘QUESTION       NO.   12

                    “Should it be held by you, in answer to the previous
           questions that ‘B’ as the lessee of such 4-acre    tract is not
           entitled to a special permit authorizing the drilling of a well
           on such 4-acre   tract in order to prevent confiscation   of
           property and/or physical waste, please advise whether, if
           the commission    should refuse a permit to drill on such 4-
           acre tract on the application   “B’ and “B’ surrenders   his
           lease to the fee owner, the fee owner would then be entit-
           led to make application for and receive the permit to drilLm

                  As we have already stated, the Commission        would not be
prevented by the fact of subdivision      from granting a special permit to
“BR to drill a well on the 4-acre     tr.act in order to prevent waste, but it
would be prevented from granting a special permit to ““Bm to drill upon
the 4-acre   tract, considered    as a separate tract in order to prevent con-
fiscation of property.     If “B’ surrenders    his lease to the fee owner’, and
the IO-acre tract is not itself a subdivision from a larger tract, the fee
owner would be entitled to one well on his IO-acre tract in order to pre-
vent confiscation    of property.   Dailey v. Railroad Commission,      133 SW.
(2d) 219 (writ refused);     Nash v. Shell Petr,oleum C orp00 LO S.W, (2d) 522
(wr,it dismissed).
Railroad    Commission   of Texas,   page     17 (O-3181)




                                      XIII.

                                “STATEMENT

                “The Cemetery Association      within the town of
      Hawkins owns a 2-acre burial plot, having acquired same
      long prior to the adoption of the original statewide spac-
      ing rule in 1919.   One and one&half acres of the 2-acre
      tract is used for burial purposes and is separated by a
      fence from the other one-half-acre     and has been so sep-
      arated for a number of years.      The one-half-acre   portion
      d the 2-acre  tract has never been used for* burial purposes.
      The Cemetery Association      prior to the discovery   of oil in
      the Hawkins field executed an oil and gas lease on the en-,
      tire Iwo acres.   The owner of the oil and gas lease then
      applied for a permit to drill a well on the unused portion
      of the cemetery   as an exception to the spacing rules in
      the Hawkins field.    No wells are now located either on the
      one and one-half-acre    portion of the tract or the one-half-
      acre portion of the tract.

                             “QUESTION        NO.   13

                 “(A) In the absence of any protest on the part of
      the families   or relatives of people who are buried in the
      cemetery,    may the c,ommission.   in order to prevent con-
      fiscation of property or physical waste, grant a permit to
      drill a well as an exception to the spacing rule on the un-
      used portion of the entire cemetery     lot.

                 “(B) Over the protest on the part of the families
      or relatives   of people who are buried in the cemetery,    may
      the commission,      in order to prevent confiscation of prop-
      erty or physical waste, grant a permit to drill a well as an
      exception to the spacing rule on the unused portion of the
      entire cemetery     lot? *

                 For convenience,    we shall     answer    subdivision   (B) before
answering    subdivision (A).

                 (B) From the facts stated, we assume that the entire 2-
acre tract was acquired by the Cemetery Association          for burial purposes,
but that only one and one-half acres of this tract is actually occupied by
graves. the remaining one-half acre being reserved         for such use when it
may be needed at some future time.        Based on this assumption,     it is our
opinion that if the families  or relatives   of persons who are buried in the
cemetery   pr~otest, the Cemetery   Association    would have no lawful author-
ity to permit the use of any part of the cemetery      for uses other than bur-
ials.  In Oakland Cemetery     Company v. Peoples Cemetery Association,           93
Tex. 569, 5 14~, 5 I S.W. 27, 28, the Supreme Court said:
Railroad   Commission        of Texas,   page 18 (O-3181)




                 “After the dedication of the land. then legal title
      remained in the~c’orporation     only for the purpose of con-
      veying the lots to those who desired to use them for the
      purpose of burying the dead. No power is given by the
      statute to such corporations     to c,onvey the property for
      any other purpose, and the, fact that the lots and ‘subdivi-       ”
      sions are made ‘unchangeable and that the power to con-
      vey is restricted   to the conveyance    of ‘any lot or lots * * *
      for purposes of sepulture’ operates as a limitation upon
      the power of the corporation      to convey the land to “a lot
      or lots’ and for the uses named.       Upon dedications the doe-
      minion of the corporation     over the land as owner in fee
      simple was surrendered      and the corporation    became in
      effect a trustee to Sell and convey’the ,lots for the purposes
      specified and to carry out the purposes enumerated in the
      statute, with the right to appropriate     the pr~oceeds of the
      sale to itself in payment of the land’.” ‘~
                           ,‘~
                  InHouston  Or1 Co.,vi,     Williams:;   57 S.Wa (2~d) 380,   384,
(writ refused)   the court sard:                                ,”

                     ‘- It appears to be the rule that,.where.‘prop-
                 I
                     o   e


      erty hasbeen    actually ippiopriated        either as a private fam-
      ily burying ground or was a publi         cemetery,     it cannot in
      either instance,be     inherited’or’conveyed’as~other          property’
      is done so as to interfere with the use and purposes to which
      it has been devoted.      Peterson v. Stoltz (Tex.Civ.App.)          269
      SW. 113; Stewart v. Ga,rrettr’119:.Ga:386:,~         46.S.E.    ,427, 64
      L.R. R. A. 99,‘,100 Am,St.Rep.’ 1,79; Hines ,v; State; 126.Tenna
      1, 149 S.W. 1058, 1059, 42 L.R.A.          (N.S.) 1138, and other cases.
      Quoting, as very aptly stated, fi~bm the Hines Case, supra:
       ‘When once dedicated to.bur’ial.purposeS,          and interments     have
      there been made;the       then cAvnir holds ,the’ti,tle, to some ex-
      tent in tiust for,the’benefit     of those entitled to burial in it,
      and the heir at iaw,‘devisee,       or; vendee takes. the property
      subject to this trust.‘m
                           :                                ,:     I
                 The relatives    of persons buried innthe cemetery would be
entitled to raise objections to the use of the cemeter,y for purposes ‘other
than as a place of burial.                 v D7-Iazel;Fain
                               In ‘Barker ~’               Oil Co;; 2,19 SW. 874,
879 (writ refused) tbe’court said:
                ” * D e They have, as we think, a r’ight to protect
      the graves of ‘their ‘dead;, not only ,as against~the’~origina1
      donor and the trustees    of ;the Pleasant Grove Church, but
      also as against all persons so long as the graveyard         main-
      tains its lawful existence., ,‘* ‘O2’   ”

                The right of the’family   and relatives  of persons buried ‘in
a cemetery   to object to the drilling of an oil well in the cemetery  extends
’   ‘Railroad   Commission     of Texas,   page 19 (O-3181)



    to all of the cemetery. and not merely to the part of the cemetery   that is
    actually occupied by graves.   In Cochran v. Hill, 255 S. W. 768, 770, the
    c,ourt said:

                    “We believe this equity power extends to the pro-
           tection of the entire lot owned’by the Cemetery Associa-
           tion, irrespective   of whether there are any graves in any
           certain part of it or not. Those who have loved ones buried
           there are entitled to have the hallowed spots protected from
           the heedless search for hidden wealth and from the rapacious
           hands who would~convert      its sacred confines into a place of
           money getting.”

                    In White   v. Williams,   57 S.W.   (2d) 395, 386,   the court said:

                    “* * * therefore   the only question to ba determined
           on this appeal is whether under the facts,, in this case Mrs.
           White was entitled to apply to a court of ‘equity for a re-
           straining order to prevent the drilling of an oil well on this
           plot of ground.   We think she had such right.     This was the
           effect of the holding in the case of Barker et al v. Haeel-
           Fain Oil Co., et al.    (Tex.Civ.App.)  219 SW. 874, 875, and
           that this right extends to the whole plot of ground and not
           just to that portion of the same where inter’ments had al-
           ready been made,      Cochran et al v. Hill et al. (Tex.Civ.
           App.) 255 SW. 768.”

                 The same holding is found in Smallwood v. Midfield Oil Com-
    pany, 89 SW. (2d) 1086, 1090, (writ dismissed) where the court sard:

                    ” * 8 * The dedication of Mt. &Aoriah Cemetery
           had been effected by actual interment and inclosure    many
           years prior to the Martin deed.    Such dedication extended
           to all that portion of the ground thus set apart for the grave-
           yard, whether actually occupied by graves or not. * * * *

                  See also Smith v. Merrill.   81 F. (2d) 609. and Rairr’road Com-
    mis~sion v. Wood, 95 S;W. (Ld) 13~8 (writ refused).    Zn,each of these cases,
    a cemetery was involved and an order of the Railroad Commission         refus-
    ing to grant a permit to drill an oil well was sustained.   However, each
    case was decided on points which did not involve the right to drill an oil‘
    well in a cemetery.

                    (A) Althou.gh the, law has not been settled,by any court de-
    cision, we are of the opinion that where the Cemetery A,ssociation          by its
    proper officers hasexecuted       aia oil and gas..,lease and all owners of lots
    in the cemetery     and a11 of the~,familiea and, re:lativ+s ~pf persons buried in
    the cemetery     consentto   the drilling ofa well on a .portion of the. ceme-
    tery snot actually used f.or graves, the Railroad,,Gommission         would be
Railroad     Commission     of Texas;      Rage ‘26 (O-3181)”


                                                              ,
                                                 .I   ,.i
                                     ,C?

authorized    to grant a permit      to. drill! a, we.11 on ,such, portion     of the ceme-
tery.

                  Article   922a,‘Vernon’s        Annotated       Civil, Statutes,   provides
as folIows:

                 “After such property is so dedicated to ceme-
      tery purposes,      neither the dedication nor the title of a
      plot owner shall ever be affected by the dissolution                  of
      the association      or bynon-user       ,on its part, or by aliena-
      tions of the property.       or by any encumbrances            thereon,
      or by forced sale under execution or otherwise,                  and such
      dedication shall ,not be,deemed           or, held invalid as violat-
      ing any existing laws against perpetuities                or the suspen-
      sion of the power of alienation of title to or use of prop-
                                  .
      erty. but such dedicatron is hereby expressly                 permitted,
      and shall be and shall~be deemed to be in~respect for the
      dead, a provision for the disposition             of the bodies of de-
      ceased persons,       and a ,duty to, and for the benefit of, the
      general public, and said property shall be held and used
      exclusively    for cemetery       purposes unless and until the
      dedication shall be, removed by an order and decree of
      the District Court of the county in which the same is sit-
      uated, in a proceeding brought therefor by the governing
      body of the city, if said cemetery            is within, or within five
      (5) miles’from      the city limits of, any city or more than
      twenty-five    thousand (25,090) inhabitants according to the
      last preceding Federal Census.,, or.by the District Attor-
      ney, if said cemetery        is not within, or within five (5)
      miles of the city limits of,. a city of, more than twenty-
      five thousand (25,OOO),inhabilnnts~, according               to the last ‘i
      preceding FedeiaJ Census..or            by. the owne,r of property
      so situated that its value is a,ffected, by said cemetery,
      upon notice and proof s,atisfactory            ,to the Court that all
      bodies have been re~moved therefrom,                 or that no inter-
      ments were made therein, or that,the same is no longer
      used or reguired for interment purposes.                  or until the
      maintenance      of said cemeter,y is enjoined or abated as
      a nuisance’,as    he~reinafter provided for. After. such~dedi-
      cation and as long as said property shall remain,dedicated
      to cemetery     purposes,      no railroads,       street, road, alley,
      pipe line, pole line, telephone, telegraph,              or electric     line,
      or other public utility o.r thoroughfare; whatsoeve’r shall
      ever be laid out through, over , or across any part thereof,
      without the consent~of, the directors. offthe cemetery asso-
      ciation owning or .pperating.the           same, or ofnot:less         than
      two-thirds    (2/3.) of the, owners of burial, plots therein. bnd
      all of such property, .includingroads;;alLeys;and                 walks
      therein, shall be exempt from public improvement                     assess-
      ments and all public taxation. and shall not be liable to be
Railroad   Commission    of Texas,   page 21 (O-3181)




      sold on execution or applied in payment of debts due from
      individual owners of burial plots therein. (Acts 1934, 43rd
      Leg., 2nd C-S., p. 146, ch. 66, § 1.)~”

                 It will be noted that this statute provides in part that the
dedication of property for cemetery        purposes shall not be affected “by
alienations  of the property”,    but it is further provided that for certain
specified purposes,     rights of way may be granted across part of the prem-
ises by the consent of the directors       or of two-thirds   of the owners of
burial plots therein.     Article 923a. Vernon’s Annotated Civil Statutes, also
provides that a vested right of interment may be waived.            While these stat-
utes do not relate to the spec,ific problem here involved, they do indicate a
policy that rights in a cemetery      or a part thereof may be waived or aban-
doned. Compare Meadows v. Edwards.             116 S.W. (2d) 831. 834 (writ re-
fused), in which the court said, with reference        to a private cemetery:

                “These undisputed facts and circumstances        com-
      ing in the main from appellees,    show in our opinion, con-
      clusively  that only that part of this tract of land inclosed
      by the fence as it has existed since 1931 is impressed       with
      and devoted to a cemetery.     Houston Oil Co. of Tex. v. Wil-
      liams, Tex.Civ.App..    57 S.W.(2d) 380, writ refused.    And
      the oil and gas leases given by these appellees     and their
      joint owners covering this tract of land, so long as operations
      thereunder were confined to the land outside the inclosed cem-
      etery and no desecration    thereof occurred,   were not illegal,
      immoral,    or against any phase of our public policy . . e R

                 We believes, therefore.   that public policy would not prohibit
an agreement    which in effect constituted an abandonment by all interested
parties of their rights to insist that a certain portion of the premises    be
used for cemetery    purposes, where the portion of the premises      so aban-
doned are not actually occupied by graves or sepulchers.        We further be-
lieve that the Railroad Commission       would be authorized to require the ap-
plicant to make proof that all persons owning burial plots and all of the
families and relatives   of pers’ons buried in the cemetery    had been given
adequate notice and had failed to protest or had consented to the granting
of such permit.

                                                Yours     very truly
APPROVED      MAR 24,    1941
                                               ATTORNEY         GENERAL     OF TEXAS
/s/ Grover Sellers
FIRST ASSISTANT                                By   /s/    James P. Hart
ATTORNEY    GENERAL                                        James P. Hart
                                                                Assistant

JPH:EP/cm                                           APPROVED    OPINION
                                                      COMMITTEE
                                                      By /s/ BWB
                                                         Chairman
