              "~FHEA~ORNEYGENERAL
                       OF TEXAS




Honorable Olin Culberson, Chairman
Railroad Ccsmnissionof Texas
Austin, Te'exas

Dear Sir:                            Opinion No. O-7068
                                     Rer Application of Rule 37 and
                                     other conservation regulations
                                     to unproven territory.

       Receipt is aoknowledged of your letter of January 29, 1946, which
reads as follm:

"The Railroad Commission has a statewide spacing rule that is applicable
until such time as special field rules can be promulgated after discovery
of oil by wildcat operations.

"This rule provides that no well shall be drilled nearer than 330 feet to
lease or property line and requires wells to be s'paoedno closer than 933
feet on tie same lease. These same statewide rules also provide for cas-
ing rules and other rules governing the drilling and operation of such
lease in the event no special field rules are requested by the operator.

"In the Kemp area of Kaufman County, different operators owning town lots
that are only 50 feet by 150 feet in area are filing notices of intention
to drill on such small tracts. The policy of the Commission has always
been to set donm for hearing any notice of intention to drill a wildcat
well which is pearer than 330 feet to a property or lease line as an ax-
oeption to Rule 37, which is the spacing rule.

"QUSSTIO~;l: V&herethe notice of intention to drill shows the location to
be nearerthan 330 feet to a property or lease line, is the Commission,
under the statewide spacing rule, required to set such notice of intention
to drill for hearing as an exception to Rule 37?

'QUESTION 2% Can the Commission require more than the filing of notioe of
intention to drill in an area that does not yet have production.

"In view of the fact that different operators are insisting that they do
not have to wait for hearing on exceptions to drill by reason of their
claiming wildcat operations, may the Consnisnionnot ask for an emergency
ruling on the question and that you imnediately give us your decision."

       As we understand your first question, you desire to be advised
whether or not Rule 37, the statewide spacing rule, has application 'co
Hon. Olin Culberron, page 2 (o-7068)



wildcat operations. This rule was originally promulgated on November
26, 1919, and, as amended Nay 29, 1934, January 25, 1940, January 1,
1942, February 18, 1943, and Eay 1, 1944, reads as follows:

"Section (a). ISowell for oil or gas shall hereafter be drilled nearer than
nine hundred thirty-three (933) feet to any well completed in or drilling to
the ssme horizon on the same tract or fans, and no well shall be drilled
nearer than three hundred thirQ (330) feet to aqy proper* line, lease line
or subdivision line; provided that the Connnission,in order to prevent waste
or to prevent the confiscation of property, may grant exceptions'to pennit
drilling within shorter distanaes than above prescribed when the Commission
shall determine that such exaeptions are necessary either to prevent waste
or to prevent the confisoation of property. mhen exoeption to such rule is
desired, application therefor shall be made by filing Form 1 in duplicate,
completely filled out, with the Deputy Supervisor of the Railnoad Commission
in the Commission District where the well or wells are located, which appli-
cation shall be aoeompanied by a plat or sketch drawn to the scale of one (1)
inch equalling four hundred (400) feet, accurately showing to scale the
property on which permit is sought to drill a well under an exception to
this rule, and accurately showing toscale all other completed, drilling
and permitted wells on said pncpperty;and aocurately showing to scale all
adjoining surrounding properties and wells. Such a;lplicationshall be veri-
fied by some person acquainted with the facts, stating that all facts therein
statedsre within the knowledge of the sffiant true and that the accompanying
plat is accurately drawn to scale and correctly reflects all pertinent and
required data. Such exception shall be granted only after at least ten (10)
days' notice to all adjaoent lessees affected thereby has been given, and
after public hearing at which all interested parties may appear and be hesrd,
and after the Commission has determined that an exoeption to such rule is
necessary either to prevent waste or to protect property belonging to the
applicant from confiscation. All pending applicants shall be amended to
conform to this rule before being acted upon.

"SECTION (B). In order to prevent waste or to prevent the confiscation of
property, the Railroad Commission of Texas may upon its own motion or order,
izsuc or grant a permit or permits for the drilling of anywells or wells
for oil or gas nearer than nine hundred thirty-three (933) feet to any well
completed in or drilling tc the same horieon on the same tract or farm, and
nearer than three hundred thirty (330) feet to any property line, lease line
or subdivision line as hereinbefore prescribed whenever the Commission shall
determine that the drilling o P any such well or wells is necessary to pre-
vent waste or to prevent the confiscation of proper@. When in the opinion
or judgment of the Conmission waste or confiscation of property is reasonabl;r
imminent or is taking place on any leasehold, the Commission may, on its own
initiative or motion, order a hearing for the purpose of determining whether
such waste or confiscation of property is taking place. Such permit or per-
mits shall be issued or granted only after at least ten (10) days' notice to
the owners of said leasehold and to -11 a4jaoentlessees affected thereby
has been given, and after public hearing at which all interested parties may
appear and be heard and after the Conmission has determined that the drilling
                                                      ,-




Ron. Olin Culberson, page 3 (O-7068)



of sny well or wells for oil or gas is necessary either to prevent waste
or to protect the cnmersof said leasehold from confiscation.

"SECTION(C). In filing BERM 1 as hereinabove provided ,it shall not be neo-
essary to file more than one plat.

"SECTION ,D). In the interest of protecting life, andfor the purpose of
preventing waste and preventing the oonfiscation of property, the Connnission
reserves the right in particular oil and gas fields .to enter special orders
increasing or decreasing the minimum distanoes provided by this rule.

"SECTION (E). No well' drilled in violation of this rule without special per-
mit obtained, issued or granted in the manner presoribed in said rule, and
no well drilled under suoh speoial permit or on the Cons&&on's   own order
which does not oonfonn in all respects to the terms of suah permit shall be
permitted to produce either oil or gas, and aqy such well so drilled in vio-
lation of said rule, or on the Commission*s own order shall be plugged.

"SECTION (F). This rule shall in no wise^resaind, abrogate or modify the
provisions of special orders applicable to the spacing of wells in partiou-
lar fields requiring minWnn spacing distanoes either greater or smaller
than provided herein.

"SECTION (G). This rule shall become effective February 18, 1943, and so
remain until changed by order of the Ccmnnission.

"In the adoption and promulgation of this order, it is here deolared that
the Commission intends to adopt eaoh phrase, sentence and paragraph separ-
ately and independently of each other such phrase, sentence and paragraph
and if any portion of this order or alrgportion of the rule hereby adopted
shall be declared invalid, such declaration and suoh invalidity shall not
affeot any other portion."

         w special order dated May 29, 1934, known as the "subdivision
rule," the Railroad Commission provided*

"IT IS ORDERED    lhe Railroad Commission of Texas, That in applying Rule
37 (Spacing Rule
               7  of Statewide application and in applying every special
rule with relation to spacing in every field in this State, no subdivision
of property made subsequent to the adoption of the original spaoing rule
will be oonsidered in determining whether or not any property is being
confiscated within the terms of such spacing rule, and no subdivision of
property will be regarded in applying such spicing rule or in determining
the matter of oonfiscation if such subdivision took place subsequent to the
promulgation efldadoption oftie original spaoing rule.

"IT IS SO ORDERRD, This the 29th day of&y,   Ad.   1934."

         It is observed from a carefuf reading of Rule 37 that there is no
express provision in the rule which would limit its operation to oil fields
Zen. Olin Culberson, page 4 (o-7068)



or proven territory. It is obvious that if the rule is not so limited, then
by its very terms and provisions, awons desiring to drill a well for oil or
gas anywhere in the State of Texas must comply with the rule, and if the pro-
posed looation of the well is nearer than 350 feet of am property line, lease
line, or subdivision line, then such wsll may be drilled under onsof the exoep-
tions to the rules By its terms the Commission has stated that such an exomp-
tion will be granted only after notiae and hearing. The notice provision of
the rule is in oomplianbe with Art. 6036a, Vernon's Annotated Civil Statutes,
and is mandatory. Rabbit Creek Oil Company vs. Shell Petroleum Corporation, 66
S. E. (2d) 737; Sun Oil Company vs. Railroad Comnission, 68 S.W. (2d) 609,
reversed on other grounds, 126 Tex. 269, 84 8.W. (2d) 693; Gulf Land Company
VS. Atlantic Refining Company, 134 Tex. 59, 131 S.W. (2d) 73.

            The view that the rule has no application to unproven territory
seems to have orieinated in the eqressions of Assooiate  Juetioe Blair of the
3rd Court of Civil Appeals. In his opinion in the Rabbit Creek Oil Compaw
case, supra, page 739, he states:

            "Exceptions are only neeeasary after the particular field
             has been proved. . . .s   (Emphasis ours)

            The foregoing expression in the Rabbit Creek Oil Company ease,
however, in the opinion of this Beparhaent, is merely diotum not necessary to
a decision of the Case. This for the reason that the applioation in that ease
was for an exception in the East Texas Oil Field after its disaovery, and the
case deals with the matter of goving notioe to interested parties of hearings
held on such-exceptions. It holds that the issuanoe of a pensit tithout
notice and hearing is invalid.

            Again, in Er. Justice Blair's dissenting opinion insthe case of
Sun Oil Company VS. Railroad Commission, 68 S.W. (2d) 609, 614-622, the follow-
ing expressions are founds

"In each oil and gas circular promulgated bythe oonrmissionsince the above
amendment in March, 1923, rule 37 has been designated as a 'general rule,"
althoueh it has always exempted proven salt dome fielda and'-hasalways been ~. 't.
eonstrued by the oonsni&sionas having no.appliontion to'unproven or wildoat      -
fields. . . ." (Emphasis ours)

"Sinoe'this is true. and sinoe saoh rules neoessarily vary in different oil
fields, and sinoe they are subject to frequent variations and ohange at aq
time end have no application to 'unproven fields,* the rules in foroe at
the time the oil is souaht to be produoed should be auplieiI: and the aommis-
sion has always so construed and applied its spaoing rules and regulations.
The oommission has never assumed the power or authority to deprive any owner
of his oil and gas estate in land by any spacing rule for oil wells, Eaoh
such rule has from its inception and as a part of it provided for an exaep
tion 'to protect vested rights.'" (Emphasis ours)
        .    -




Hon. Olin Culberson, page 5 (o-7068)



“If the majoritg view is correct, and 5-fappellees in these suits were required
to take cogniaranceof and contraot with reference to rule 37 as promulgated in
1919, then they would be compelled to ascertain whether their lands were locab
ed in an unproven oil field, or whether, if in an oil field, it was a 'salt
dome field,' because in either instance rule 37 would have no application under
its own terms and the oonstrcotion uniformly given it. But, nokithst&&ing
the rule has no application to unproven fields, or salt dome fields, nor the
faot that no oil field RYM in prospeat or had been though of where the lands
of appelles are situated until long after rule 3'7was adopted, still the major-
ity view requires that they or that 'all parties leasing land subsequent tc its
promulgation . . . must contract with reference to this settled rule.' . o .I1

            These expressions of Mr. Justiae Blair are found in a dissenting.
opinion and do not refleot the viem of the majority. The holding of the major-
ity was that the lease of a 2.59 acre portion of a much large traat of land,
capable of development in compliance with the spacing rule. maa an unlawful
subdivision in derogation of the spaoing rule. The 2.59 awe traot was held
not entitled toconsideration as a traot separate and apart frcmthe larger
tract frcmwhioh it was divided.

            The dicta of Mr. Justioe Blair expressed in the Rabbit Creek ease
and in the Sun Oil Company ease seem to have orystallised in his holding in
Shell Petroleum Corporation VS. Railroad Ccnm&ssion, 116 S.W. (2d) 439, writ
dismissed. In his opinion in that oaee, the broad statement is made that:

"Neither rule 37 of the so-called state-wide application as promulgated by the
Railroad Commission in 1919, nor 8~ amendment thereto, nor any special rule 37
has a~ applioation to territory not known nor antioipated to be productive of
oil or gas; and the rule inhibiting voluntary subdivision of lands which could
have been developed as a whole in order to ciroumvent the provisions of rule 37
has no application to subdivisions of lands prior to the discowry of oil and
gas in the terr%tary where the lands are located. . . .

"The Railroad Ccmnission has oontinueusly interpreted rule 37 as having no appli-
oation to unproved territory. It did promulgate an order in Ray, 1934, wherein
it is prcvided that no subdivision of lands after the so-called state-wide rule
37 was prcmulgated in 1919 would be considered in determining whether or not
urncerty is being 'confiscated* within the meaning of that   t.nn as used in the
spacing rule. Whatever construction may be plaaed upon this order as applying
to subdivisions after 1919, it is operative only as to oil fields that have
been discovered prior to the time of +be subdivision, because in 1932 the
Legislature enacted a statite, declaratory or expository in its nature, whiah
provided in effect that the Railroad Commission is without authority or power
to restrict or in aqy manner 1Mt    the drilling of wells for the purpose of ex-
ploring for oil or gas in territory not known to produce either oil or gas.
Chapter 2, section 2, Ahats 1932, 42nd Leg., 4th c.S. p. 3, and wended in
other partioulars by Acts 1935, 44th Leg., oh. 76, section 3, p. 180, Vernon's
Am. Civ. St. art. 6014a. So it is immaterial whether this act be regarded
as expository, expressang the view of the Legislature that the commission has
never had the power or authority to restrict the drilling of wells in terri++ery
                                                                -     .




Hon. Olin Culverson, page 6 (o-7068)



not kncmn to produce oil and gas3 or whether the aot be considered as of that
time withdrawing from the Railroad Ccnmxissionthe pcwer to apply a spacing
rule regulating aella in a fvritory not tican or anticipated to be productive
of either oil or gas3 bemause uuder eitherview, the ocemnissicnis without
authority to restriatwells for ail or gas in territory not kucwn to be produc-
tive of oil or gas."

            Takenat faoe value, this statement muld seem to be a dire& ens-
wer to your first question. It is not heli~ed, however, that the court intend-
ed to announce an interpretation of Rule 37 so far reaohing. On m&ion for re-
hearing in this case, F&. Justioe Raugh stated:

"The writer concurs in the disposition of thi8 appe&l made in the original opin-
ion herein by Associate Justioe BLAIR; and in his conelusion that the voluntary
subdivision rule originally announced by this court in Deomnber, 1933, and Janu-
ary, 1934 (see the several rule 37 ease8 reported in68 S&'2d     609-628, supra),
should not and does not apply to inatrnoes where one in good faith acquires fee
title to land in unproven territorg~ and suoh aoqnisition was not in contempla-
tion of oil d-?WelopmeBt. Hcmever, the writer does not acnstrus the prcvisionr
of chapter 2, section 2, Acts 1932, 4th Cd. 42Bd Leg., as amended by Acts 1935,
44th Leg., c. 76, g 3, VerBoB*s Ann. Civ~ St. art. 6014a, as limiting or govern-
ing the rules and regulationacf the Railroad Cemnissio~ in itu administration
of the conservation lam.    I awour in the oonstmiot;lonof these acts given %y
Chief Justioe MoLendon, in R& 8670, TI P. rash et alslv. Shell Petroleum Cor-
poration et al., Tex. Give App.,        SoWe 2d -,       this day decided. I
deem it advisable to nake this stct       that there mey he ac misapprehension
about the respective views of ttfiedifferent members of this court."

            It mill be noted that Mr. Justioe Eangh limited his hciding (that
the rule does not apply to unproven territory) to inataneas where one in good
faith aoquires fee simple tc land in unprcvemterritory and suoh acquisition
is not in contemp~tiOB  of oil development* He fui+lmr  h&lb  that Art. 6014a,
Vernon's Am. Civ. Stat., referred ta by Rr. Justice Raugh, isnot to be inter-
preted as limiting the Railroad Colmaissionin its applioation of the spaoing
 rule.

            The views of Chief Justiae M&lend-,   also sitting on the 3rd Court
of Civil Appeals at that ime, are given in the eaee of Nash VS. Shell Petrole-
                          2d) 522, writ dismissed. His holding is limited to
um Ccrporation, 127 S.H. t;
the voluntary subdivision-rule. It is thatnhere title to a tract of land is
segregated by deed conveying fee simple title on Rcvember 14, 1929, about a year
before the discovery of oil in the East Terrs Field, such land is not with&n
the subdivision rule and an applicant is W&itled as a matte r of law to drill
one well on the tract. Chief Justice McClendon further held that he did not
cocur in tie holding of Mr. Justioe Rlair in Shell Petroleum Corporation VS.
Railroad Commission, supra, that Art. 6014a deprived the Ccumdssion of the
power to apply rule 37 to other than proven territory.
Hon. Olin Culberson, page 7 (O-7068)



           Another ease decided by the 3rd Court of Civil Appeals     is also perti-
 nent to your f'rst question. In Shell Petroleum Corporation vs.      Railroad Comm-
 ission, 133 6. # . (2d) 194, write refused, Mr. Justioe Ibgh held    that where lands
 are leased expressly for the purpose of oil development, Rule 37     and the subdivi-
 sion rule are appliaable to such lands, notwithstanding   that the   area involved
 is not proven territory. He said:

 s. . . lbtwhere lands are leased expresslyfor the purpose of oil developent,
 an entirelv different situation is Dresented. In the latter instance. whether
 the lease -ke in proven territory or-not, the~oonservation laws bsacmeWa~
 ble tothe subsequent develoment thereof; and the rights of the parties become
 referable to the rubs and regulations of the Conmission governing the develop-
 ment of the urowrtv
             **      - which the lessor himself contemnlated and whhiohhe reauiied
 of the lessee. Nash v. Shell Pet. Corp., supra. Wier these oiroumstanoe;,
 application of the provisions of the rule, as a conservation msa*ure, is asesssn-
 tial in a given area before the disaovery of oil as it would bs after such dis-
 oov6ry.s (Emphasis ours)

           Further illustrating the 314 Court of Civil Appeals'interpretation of
 the sukdivision rule is the following:
 * . . . IIIoonsequenee, puestlon '1' must be answered in the negative under the
 several deoisions holding t




II. 2d 439. error dismissedx Rash v. Shell Pet. Corp., Tex. Civ. App.. 120 S.H.
522, error dismissed; Shell Pet. Cor . v. Railroad‘C&ission, T&i Civ. App.,
120 S.H. 2d 526, error dismissed." PEmphasis ours)

           (Wenolcervs. Railroad C&&sion     of Texas, 149 S.H. (2d) 1009)

           The attention of the Commission is invited to the statement in each of
 Judge Blair's opinions to the effect that "the Railroad Cammission has oontinuo-
 usly interpreted rule 37 as having no application to unproven territory." Long
 standing administrative interpretation of rules and regulations is persuasive in
 passing upon the intent of the regulatory body. Ws have not been advised by the
 Conmission as to the aoeuracy of such expresssions, and note the statement in
 your letter to the effect that, "The polioy of the Commission has always been to
 set down for hearing any notice of intention to drill a wildcat well whioh is
 nearer than 330 feet to the properly or lease line as an exception to Rule 37,
 which is the spacing rule." All of Judge Blair's expressions are found in his
 opinions prior to the opinion of the majority of tha Court in Shell Petroleum
 Corporation VS. Railroad Consaission,133 S.H. (2d) 194, which opinion was ap-
 proved by the Supreme Court by its refusal of a writ of error. The holding in
 the Shell cmee is clear, and we therefore assume that the Consaissionhas had no
 such administrative interpretation of F&&e 37 since the date of the Shell opin-
 ion, hbvmber, 1939.
Hen. Olin Culberson, Page 5 (O-7068)



          It is believed that the praatieal effeot of these holdings may be
stated a8 follows: (1) that ths vekntarg division rule does not apply to the
oonveyanoe of lend by fee transfer ooourring prior to ,*e disowery of oil,
when not nude in contemplation of oil development: (a) that when an interest
in the subsurface estate in land is conveyed by lease or other means oontsm-
plative of oil development, whether the oonveyaxxoe%e in ~reven territory or
not, the aonservation law8, inoluding Rule 57 and the suWivi+sion rule, be-
come applioable to the subsequent develoIssentof'the land.

           Therefore, in answerto your first quo&ion, me hold and you are ad-
vised, that a lessee under an oil and gae leaee may a& undertaketo drill a weI1
on a tract of land not susoeptible of deveeat     in keeping nit% the spaoiag
distanoes reoited in statewide Rule p7 without first applying to the Con&s&on
for a permit under an exoeption to Rule 37 and having notioe issue and hearing
held as therein provided. libhoId thie to bs true notwithstanding the evidence
adduced at the hearing may show that such le8ree is entitled to drill such well
as a matter of right. This for the reaaoa that the Legislature has designated
the Railroad Cwmission as the body whose duw~it is-primarily to determine suoh
faots. Gulf Land Company VS. Atlantio Refining Company, 134 Ten. 59, 131 S.11;
(2d) 7%

          It is believed that the answer to your second question, whether the
Commission may require more then the filing of a notiee ef intention to drill in
an area that does not yet have production, is to some extent, at least, emIn-aoed
*i&in our an*wer to your first question.

           Railroad Cmmuis8ion Rule Roe 9 presently in foree and effeot reads as
follow§:

"(a) NOTICE OF INTENTION TO DRILL OR DEEPEB. Rotioe shall begiven to the Railroad
Commission of the state of Tezmnsof the intention to drill or deepen any oil or
gas ~11 and of the exaot location of each andevery suoh well. Suoh notioe shall
be given by filing in duplioate Fans 1 of the Connsission,attaahed hereto end
made a part hereof with the Deputy Supervisor of the Railroad Consmissionin the
ConsaissionDistrict where the well or wells are looated. The location of any wild-
oatwell shall be given by specifying the distsnoe of same from at least two (2)
of the lines of the survey within which it is to ‘bedrilled. In no oase shall
drilling operations be commenced until the expiration of at least five (5) days
after the filing of Form 1 hereinabrat mentioned. Ro permit to drill ary well
or wells for oil or gas shall be required by the Cosssissionexcept for such
wells as may be drilled under exoeptions to Rule 57 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 @opted %y the Railroad Cummission.

*It is further ordered that all notioes of intention to drill or deepen aqy well
or wells under and as exceptions to Rule 37 of statewide application, or speoial
rules governing the drilling of any well or aells in ary partioular oil field, or
under any amendments thereto, shall be filedem Form 1, hereby adopted as a part of
this order, with the Deputy Supervisor of the Railroad Colmnissionin the ConmxLs-
sion district where the well or wells ars located.
                                                         ,4




Hon. Olin Culherson, page 9 (o-7068)



ePrwided further that it shall not be necessary to file more than one plat or
sketah as provided for in Form 1 hereinahwe mentioned, and adopted by the corn-
mission."

          B :addition t0 ':henotice of intention to drill required by rule g,
there are maqy other rules and regulations that have been established v the
Railroad CosmuLssionof statewide application that are intended to govern drill-
ing operations in the event no speoial rules for a partioular area have been
promulgated. We have examined many of these rules and regulations a& find in
none of them an exception limiting their operations to proven territory. Para-
phrasing Mr. Justice Saugh in Shell Petroleum vs. Railroad Commission, supra,
it would seem tc be just as important from a conservation standpoint that these
rules be applied in a given area before the discovery of oil as it would be
after such discovery. The interests of the State to be subserved, the prevention
of fire hasards,the proteation of underground strata and the surface of land from
percolating waters, and the proteotion of adjoining proprty owners, would seem to
be the same. It is just as~important so far as the oonservation polioies of the
State ars oonoerned that its conservation Paivsand rules and regulations of the
Railroad Commission be applied to the first or wildcat operations in a field as to
subsequent operations after the field has bean proved. We interpret your second
question, therefore, as asking whether or not the Railroad Consnissionhas been
delegated authority bythe Legislature to make such regulations.effective in tild-
aa& areas. The only limitation imposed by the Legislature we have found is that
contained in Art. 6014a of Vernon's Ann. Civ. Stat. reading as follows:

"Rothing in this Act shall be construed as granting to the Comnission aqy power
or authority to restrict, or in any manner limit the drilling of wells for the
purpose of exploring for arude petroleum oil or natural gas or both in territory
not known to produce either suoh oil or gas."

          The act referred to in the foregoing quotation is Chapter 2 of the Acts
42nd Leg., 4th C.S. pages 3-10. That act was a very comprehensive one amending
several of the artioles appearing in Title 102 >f the Revised Civil Statutes of
Texas, 1925, conferring broad authority upon the Railroad Conmission in the mat-
ter of regulating the production, storage, end transportation of oil and gas.
Two of the articles amended by the act of the 42nd Legislature were Articles 6014
and 6829, the former defining what shall constitute "waste," and the latter speo-
ifying the duty of the Railroad Commission to make and enforce rules, regulations,
and orders for the oonsnrvation of oil and gas for a number of stated purposes.

          As stated in answer to your first question, a majority of the present
Court of Civil Appeals has held that the limitation contained in Art. 6014a has
no application to the Railroad Conmission Rule 37, the Court stating:

"The purpose of this amendment was clearly to deny the Corsnissionpower to pre-
vent or restrict oil development in unproven territory. The spacing rule is not
                                                          a.
in any proper sense a prevention or restriotion upon drill!     It is merely one
of a number of regulations towhich all ene*aged in oil development must conform.
To apply the amendment to the spacing rule would make it possible by dividing up
leases into small tracts in advance of drilling to circumvent the rule entirely
                                                                       . -




Hon. Olin Cul.berson, page 10 (O-7069)



in subsequently proven territory.    It IS not lmliemd that the amendment map-
ifests any such~legislative intent.' lQssh7.vb+~On&rW.en,                   fZ0:
S.W, (2d) 522&mS:dimissed)        (Gphasis am)

          & even more limited Interpretation of &t. 60148 is contained in the
opinion of Mr. Justioe Baugh in Shell Petrolti Corporation VII.Railroad Comnie-
sion, 116 S.W. (2d) 439, 441, wherein he statesa




. . .R   (Fbphasis ours)

          In answer tu your seaond question, in vimf of Art. 6014a, we advise you
that if a partioular rule of statewide applic8tioa dees not have ihe effeot of pre-
venting or unreasonably restrioting drilling,eper&ic%w interritorg not known to
produce either 011 or w, tthw suak rule or ngnlat%ao'applles to such territory
even in unproven territory unlbss,~‘bgi%e terms and prwlaiins,:.it is clear that
the Railroad Comuissioa had a oontnary inteab

                                                    Tours very truly

                                                ATTORUEY aExEF&   OF TJsxhs

                                                &y /8/ JPme# D. Smuller!
APPROVED F'EB6, 1946
/s/ Carlos Ashley                                       James D.~Smullen
FIRST ASSISTART A                                              Aaeistanf
ATTORNFX GEMERAL


JDS:jtregw
