.




                              THEA~ORNEY                                              GENERAL
                                                       OFTEXAS




    Senator       George             Parkhouse                                  Opinion        No.    WW-84
    The     Senate       of The        State     of Texas
    Austin,       Texas                                                         Re:       Constitutionality               of Committee
                                                                                          Substitute        for      Senate       Bill     10 1.
    Dear      Senator          Parkhouse:


                              This    is in reply         to your         letter      of March         13, 1957,          in which         you
    re,quest      our     opinion           as to the constitutionality                      of Committee               Substitute         for
    Senate      Bill     101.


                          This        Opinion         supplements             Opinion        No.     WW-29.             The     proposed
    legislation          reviewed            in Opinion         No.     WW-29          was     entitled        “Committee                Sub-
    stitute     for     S. B. No.            10 1”.    It was         concluded         in that      opinion         that the proposed
    act was       unconstitutional.                   Amendments               to cure        the constitutional                objections
    were      then      made         to the bill.        This     bill,      with      the amendments,                  and which          is
    the     subject      matter         of this       Opinion         No.    WW-84~is          also      entitled        “New      Committee
    Substitute          for     S. B. No.        101”.         This     explanation           is made          to avoid        possible
    confusion          between         the two        bills,     both       of which       have      the same           S. B. number.


               SUMMARY                 OF     COMMITTEE                 SUBSTITUTE                 FOR      S.B.        101


                          Section           1 is the name             of the Act,         “Texas         Gas      for    Irrigation         Act.”


                          Section           2 declares         the policy,          intention         and   purposes             of the
    Legislature.               In substance            these     are        declared       to be to save             the soil       for     the
    basic     industry          of agriculture             by eliminating               erosion       and      deleterious            effects
    of wind,      drought            and excessive             rainfall        through        using      a portion            of available
    natural       gas     to pump           water      from      underground              reservoirs           for      irrigation.


                          Section           3 contains         a definition           of terms.


                          Section           4 provides         that     in order        to accomplish                the purposes
    that every          mineral         operator         shall        make      available          upon     request           of the sur-
    face     operator           an amount           of gas      produced           from      the   land     not to exceed                one-
    eighth     of the total            gas     production.
                     Section       5 provides             that    the Railroad              Commission               shall    derer-
mine.      in event       of dispute           between          mineral        operator         and     surface           operator,
as to the necessi,ty              of whether             ga s shoul,d          be made         available,           and    if so,     the
price     ar,d terms.


                     Section       6 provides             that    all    required           pipes,     connections            and
equipment         shall     be at the           sole     expense         and risk         of surface           operator.          Mineral
operator      shall       not be li.abl,e for             damage          to property.


                     Section       7 provides             for    appeals         from       rulings       of the order            ->f the
Railroad      Commi,ssion.


                     Section        8 provides            for    commence,ment                 of proceedings                be;cre
the Railroad          Commission,


                     Secti,on      9 provides             that mineral             operators           shall     not be required
to furnish      gas       for    use    off the premises                  from      which       it is~ produced;             that, actions
of the mineral            operator         Ian compl,ying               with   the provisions~hereof                      shall     not,    of
itself,    make      the mineral               operator          a public        utility.


                     Secti,on       10 provides            that. pending            determination              of    a caus,e       before
the Railroad          Commi,ssion,               the mineral              operator          shall     furnish.      gas      to surface
operator      upon        request        on temporary               terms        as may         be prescrib,ed,by                 the Rail,-
road      Commission.


                     Secti,on       11 p+ovides            for     the placing           of liability          ,upon the minerrl
operator      for     failing      to furnish            gas     at the request              of the     surface           operator.


                     Section        12 repeal,s           zII    Isws     or     parts      of laws       in conflict         herewith.


                     Section        13 is a savings                or    severability           clause.


                     Section        14 declares            an emergency                  and   suspends          the constltu-
tion,al    reading        rule    and provides              that the Act            shall      take     effect      from      the date
of its passages.


                     The        main     questions         for     our     determination               are     (1) whether            the
Bil.1 is violative          of Article           1, Sectlon             17, of the       Texas        Constitution,            relating
to the taking         of property              for     public     use,     (2) whether              the Bill     violates         Article
1, Section      16, of the             Texas         Constitution,         relating          t’o the impairment                oi obli-
gations      of contract:           (3) whethe,r           the Bill        violates         the due       process          clause      of
r.




     Senator        George        Barkhouse,             Page       3 (WW-84)




     the     14th Amendment               of the LJ. S. Constitution                      and Article          1, Section           19, of
     the    Texas        Constitution,           which       is the due         process         clause.


                           Also      involved        is whether           the Act         is within       the provisions               of
     Article        16, Section        59(a)       of the       Texas      Constitution,            relating      to the conserva-
     tion     and   the development                 of the natural           resources             of this     State.        (See     footnote.)


                           The     mo,st     difficult        constitutional              question        involved         in the proposed
     Act     is believed          to be that        relating         to the taking           of property.


                           Although         the power            of eminent          domain         is perhaps          most        frequently
     exercised           by a governmental                  unit,     it may       also     be given        to corporate             bodies
     or     individuals.    16a C.J.S.,   Constitutional                          Law,   Section           646,       page 921.             The
     power       of eminent   domain    extends   to real                        property,    all         kinds       of personal            pro-
     perty,      and     intangible         or    incorporeal            rights.          29 C. J.S.,       Eminent          Domain,
     Section        65, page       853.


                           Defining         a “public         use n is one          that has        given      the courts            much
     trouble,       and     upon which            there      is a great         amount          of conflict.          As    a general
     statement,           some      courts        have      treated       the term          “public       use”    as       synonymous
     with      “public     benefit”,         “public        convenience”             or     “public       advantage”,              whereas
     other      courts      have      a more         restricted           meaning          of “public         use”,     defining         it to
     mean       use by the public,                and not        that the use         may        incidentally           have       a public
     benefit.        29 C.J.S.,        Eminent            Domain,         Section          31, page       823, Ann.              54 A.L.R.         7.


                           Since      it is the Constitution                 that prohibits             the taking          of private
     property        for     other     than       public      use,      it is for     the courts           to determine              whether
     the particular           use     to which        the condemned                 property          is to be put is or              is not
     an authorized           taking.         Dallas         Cotton      Mills      v. Industrial            Company,              296 S.W.
     503 (Tex.Comm.App.                     1927).          Therefore,          in order         to determine              what      is an




     Article        16, Section        59(a):         The        conservation             and   development             of all       of the
     natural        resources         of this       State, including            the control,           storing,         preservation
     and     distribution          of its    storm         and    flood    waters,          the waters          of its      rivers          and
     streams,         for irrigation, ~ . . the reclamation      and irrigation   of its arid, semi-
     arid and        other lands needing    irrigation,   . . . and the preservation     and conser-
     vation      of all     such     natural        resources           of the land          are     each     and all        hereby         de-
     clared      public      rights       and duties;            and the Legislature                  shall    pass        all    such      laws
     as may         be appropriate               thereto.
,Cenator       George           Parkhouse,             Page        4 (WW-84)




authorized          taking,         resort          must      Se had to the cases                     rather            than to definitions.
A review          of the        Texas        decision          shows        that the       Texas            rule        has     been       that
called     the     “narrow”             or    “restricted”              definition         as to what                 is a public           use,
although         there     has      been       ? tendency              in recent          cases       to expand                such    definition.


                        In Borden            v. Trespelacios                  Rice       & Irrigation               Company,               98 Tex.
494,     86 S.W.         11 (1905),           affirmed             204 U.S.        667,    27 S.Ct.              785,      51 L.Ed.          671,
the issue         was     the validity              of a statute            permitting            the condemnation                         of private
land     by a private            corporation                for    an irrigation              canal.            The     Court         sustained
the    condemnation               proceeding                on the ground             that those                along     the canal           would
have     the right         to take       water         therefrom,             which        made            the taking           for    a pu.blic
use.     In this        connection             the Court            stated:


                        “The      contention            is that the laws                 in question               do not
           secure         any     such        uses to the public,                 or to any          part         of it, but
           that    they       authorize             the creation            of purely          private            corpora-
           tions        . . . for      carrying             on a business             wholly         private,             and
           attempt         to empower                them         to take     private          property             for        use
           in such        businesses                wholly        private,        without         being          required
           to assume             any     duty to, or to respect                      any      right        in, the public.
           If this       were       true,      we     should         feel     constrained              to sustain               the
           attack        upon     those        provisions              granting          the right              of condem-
          nation,         for    we     are     not inclined               to accept          that     liberal          defini-
          tion     of the phrase                ‘public           use’ adopted           by    some             authorities,
          which         make        it mean          no more           than       the public          welfare             or
           good,        and     under        which      almost          any       kind    of extensive                  business
          which         promotes             the prosperity                 and    comfort           of the country
           might        be aided         by the power                of eminent            domain.”


                        This     case        was      relied        upon      in subsequent                 Texas         decisions           in
determining             whether         the proposed                 use     was      “public”             or    ‘private”.            In Leathers
v. Craig,         228 S.W.          995 (Tex.Civ.App.                       1921)     (’involving               a condemnation                for   a
road     for     use by seven                citizens),           the Court          stated:


                        “There         is no law            i,n this    State        which      would            authorize
           the taking           of private            property          of one individual                   for       private
           use     or    convenience                of another          individual,            or     sets        of individ-
           uals,     as     is here          attempted.              That     the lands             of one citizen                   may
           be taken           under      the        right    of eminent             domain           for    public         high-
           ways      is well          settled;        but the        right        of eminent           domain             implies
           that the purpose                   for    which         it may      be exercise~d                be a public
Senator         George            Parkhouse,           Page           5 (WW-84)




           one and not a mere                      private            one.     A     ‘public        use’ is one
           concerned               with      the whole           community             in which           it exists,
           as     contra          distinguished                from     a particular               individual         or
           a number               of individuals.                It seems           not to be allowable,
           therefore,               to authorize           private           roads      be laid       out across
           the land           of unwilling            parties          by an exercise                of eminent
           domain.”


                           In Brazes          River       Conservation                & R. District             v. Costello,            135
Tex.      307,       143 S,W.2d              577 (1940),          the Court            said:


                           “The      history       of the many               laws      enacted        by the Legis-
           lature          of this      State      relating           to the exercise               of eminent             do-
           main        clearly          shows       that       it is the policy               of the Legislature
           to liberalize               the exercise              of that power,                rather      than       to
           restri,ct          it . . .”


This      case       involved          the constitutionality                   of the statutes               authorizing             creation
of conservation                  and    reclamation               districts.           This        statute      was        held     constitu-
tional,     the       Court         relying      on Article             16, Section            59, of the         Texas           Constitution,
this    provision            being        adopted         in 1917.


                           The    Court       cited       Subdivision              (b) of this        constitutional               provision
as follows:


                           ‘“That     conservation               and     reclamation               districts        are
           to have           such      powers         of government                  and with         the authority
           to exercise               such       rights,        privileges            and functions             . . . as
           may        be conferred               by law.”


                           In Housing           Authority          of the       City     of Dallas           v. Higginbothom,
135 Tex.          158,       143 S.W.2d            79 (1940),            it appears            that the        Texas        Court      has
perhaps          adopted          a broader           view       of what        is a public           use so as to include
elements             of “public         benefit”          or     *public       advantage”.                In this      case       the Court
sustained            the    validity         of the Texas              Housing         Authorities             Law,        Article       1269k.
which      authorized               the taking        of private              land     for     the purpose            of building           low-
rent      housing           units.        The    contention             was     made         that the        statute        was      unconsti-
tutional        as    it constituted             a taking          of private           property          not for          public     use    within
the meaning                of Article          1, Section          17; that the construction                        would         not be for
the public           generall.y,          but for         only        a selected             few    low-income              groups       of in-
dividuals.            It was         held,      however,          that       the purpose            for    which       the land        was
Senator        George         Parkhouse,                Page       6 (WW-84)




being     taken       was      constitutional.                   It is not clear           in the decision               whether           it
was     held    that the land              was      being        taken      for       a “public        use”      or    a use        which
would      be of a public              “benefit”.              The       Court        did conclude,            however,             “We     are
thoroughly            convinced         that the use               to which           the housing          projects          will     be
devoted        is a public           one.”         In its opinion               the Court         stated:


                       “We      have       cited        the above           Texas        cases     to illustrate
           the trend          of the decisions                   in this     jurisdiction              in the deter-
           mination           of what        is a public             use.       A review          of the cited           cases
           from        our    jurisdiction               demonstrates                 that this        Court     has     adopt-
           ed a liberal           view       concerning               what       is    or what         is not a public
           use.”


                       In Atwood            v. Willacy             County         Navigation           District,         271 S.W.2d                  137
(Tex.Civ.App.                1954,     error        ref’d        n.r.e.),       appeal      dism’d         76 S.Ct.          66, the validity
of the statutes              authorizing            the condemnation                     of private         property             in the develop-
ment      of port       areas        was     before         the courts.                It was     contended            that the act was
unconstitutional               in that it permitted                    the taking          of land        to be rented              or    leased
to individuals.               In refu,ting          this    claim,          the Court           stated:


                       “We      hold     that the acquisition                      of land       for    the purpose
           of leasing          the     same        as     industrial            sites     in the proximity                  of
           a port       is reasonably               necessary               to the successful               operation
           of such       port.         Such        use     comes         well     within        the definition              of
           “public       use’ as laid              down        in the case             of Housing         Authority
           of the City          of Dallas           v. Higginbothom,                     135 Tex.         158,        143
           S.W.2d        79.     e . o Our          holding          is likewise           supported            by the
           Federal           decision.         ” Citing           cases.


It was     also       held     in this       decision            that the taking            of the land            in question             was
authorized            under     Article          16, Section             59, which         authorizes             the creation              of
such     navigation           districts.


                       The     above        cases         involved          primarily            whether         the taking          was         a
“public        usel     or    a “private            use”         under      Article        1, Section           17, and the              14th
Amendment.               In considering                  the validity            of the proposed                Act,    the provisions
of Article        16, Section              59(a)     must         also      be considered.                It is an elementary
rule     of construction               that all         parts       of the constitution,                  and    statutes,          are     to
be construed            together           so as to give              effect          to each     part.        That     oil,      gas,     water
and     soil   are     natural         resources            is unquestioned.                    It is believed              that the great
bulk     of the natural              resources             are     privately            owned      and     are        subject       to use           of
Senator         George         Parkhouse,             Page      7 (WW-84)




the i,ndividual,            citizen      Ir hi,s capacity               as an individual.             The     Constitution
directs         that pr-:va?e, p~opesty                  not, be taken        except       for     a publ,ic       use,     the
Constitution            also      directs        f:har the      Legislature          conserve          natural        resources,
making          no    distlPc:ion          as to ,ihe ownership,               public       or private,            of the natural
resources.


                        The       Courts       have      had    lIttIe    difficulty       in upholdIng            the use        of
eminent,         domail        1~. ai,d OF irrigation              and drainage            problems.            A number               of
states     have        cons71tu:,iond’ A p,*,nv?sions                   relating     to the u,se of lan,d Ian connec-
ti,on with        the developmer:?                of na.tural       resou,rces.            As     observed          by the Idaho
Court      ir    Po?la<ch            v. Petersor.          12 Idaho        769,     88 Pac.        426 (1906):


                        “‘1~ Idaho,           owing      to the contour            of the country            _ ~ ~ and
           also       ew<.ng to the ari,d              condition         vf the State,          the neceszity
           for       irrigation         in the development                 of the St,ate’s          agri.cultural,
           resources              and    in the devel.opment                of its bou,ndless              mineral
           wealth.          it was      considered             a necessity         to the complete             develop-
           ment        of the materi.al               resources          of the State           to enlarge         and
           broaden           the power           of eminent         domain         in the State,           hence      the
           adoptton           of sai,d Srction             14, Arti,cl,e       1 ( of our        Constitution.            In
           many         of the State           Ccnstltx:.tlons,           the right       t,o e:xercise        zhe power
           of eminent             domair         ~;s made       to depend          upon    the question             of whe-
           ther       the ilse        con,!.emplated           ins or    i s not a public           ,Ase in the most
           narrow           a?d      -es?-ic!ed          mean;!ng        of the phrase            ‘pitblic    use’.       The
           decz.s;or    Ijrd--  mazy Sla7.e Consiitut~lons,                             therefore,           are    of lit-
           t,le v~al;~e a j p-eced<v::-, r,:>- case3 arising                              under      copsstitutions
           :lke      Idaho.       Coio:ado,           and other          western       St.ates,     wh;,ch     make
           the ---
                characrer    (emphasis  addydj     of the u,se. whether   strictly
           pub!:c   or ht.herwi ie, the c-?.i-rion    oi the right to c-xe~rcise the
           pWVer.^~


                        A!,+hoiigh       it may        be said      that, %h:s statement               was     dictum          since
the     Court.       held    +ha+, *he li;je contempl,a?ed                   by t.he condemnor                was     in a strict
sense      a pvb!,:c         ::se,     +h:s    I;bservaiioq         is be!+ved            to be valid         in those         States
having      a consti?u,:iondl                 pro.;ision       similar       to the       Texas      consti,?utioral            provi-
sion.     Artic1.e          16, Section         59(a).


                        The    Cour:s          have      had    !it~t.le diffjculty        ir    upholding         the uje        of
eminent          doma,:n       in a+d o< :rrigation.                dra:nage.          spur      t,racks     i,o private          plants,
pri~vate roads   3rd !rgging    r<>ads, ‘ised 10 cor.r.ectior~ with the dr,elopmen!
ot natural  resouTcPs~        _-
                           Iv Str:rk!and    v. Highlard    Boy Gold Minir%g Company,
Senator        George           Parkhouse,               Page      8 (WW-84)




200 U.S.         527,     26 S.Ct.            301,     50 L.Ed.           581 (1906),            a condemnation                of a right
of way     for     an aerial               bucket      line      was      upheld     against         a claim         that      it was
taking     property             for    private           use.     The      Utah      statute       permitted           the right         of
eminent;        domain          for     such       purpose          to aid       in mining.           In Clark          v. Nash,        198
U.S.     361,     25 S.Ct.            676,    49 L.Ed.            1085,     the problem              involved          was      the consti-
tutionalj,ty       of a Utah               statute       which      permitted          the condemnation                   of land        for
the irrigation             of other           lands       belonging         to a private            person.            Such     a purpose
had been         declared             as     a permi,tted           use     of eminent            domain       by the statutes                  of
Utah,     and the Utah                Cou,rt       had     upheld         condemnation              for     such     purpose.           The
U.S.     Supreme           Court           affirmed         the    Utah      Court’s        holding.          In Fallbrook              Irri-
gation     District         v. Bradley,                164 U.S.          112,     17 S.Ct.         56, 41 L.Ed.              369 (1896),
the Supreme              Court         affirmed           a California            decision         which       had held          that irri-
gat.ion    of arid         lands        was        i.n accordance            with      California            statute     which       stated
this    to be a public                purpose.            The     Supreme           Court         stated,      LI+ . . that the fact
that    the water          is limited              to the one landowner                    is not a fatal            objection          to the
legislat.ion.”


                     In Clark               v. Nash,        w,             in discussing            public       use     in connection
with     one     individual            havi,ng        the right         to condemn           for     an irrigation              ditch    for
the condemnor”s                  sole        benefit,       the Court            stated:


                        “This         Court        has     stated       that what          is a public         use      may
          frequently             and largely               depend         upon     the facts         surrounding
          the SUbJeCt,                and we         have       said     that the people             of a State,          as
          also      its courts,              must        in the nature            of things         be more          fami-
          liar     with         such       facts      and with          a necessity          and     occasion          for
          the i.rrigation,                 oi land,       than     can     anyone       be who         is a stranger
          to the         soil    of the State,              and that such            knowledge              and famili-
          ari.ty    must          have        their      due weight          with      the State          Courts.            . . .
          We      are,      however,               as we        have     said,     disposed         to agree           with
          the Utah          Court           with      regard        to the validity              of the State          statute,
          which         provides,             under        the circumstances                     stated      in the act for
          the condemnation                      of the land             of one individual              for    the purpose
          of allowing             another            in.di.vidual         to obtain        water      from      a stream
          in which          he has           an interest,              to irrigate         his    land,      which       other-
          wise      would         remain            absolutely            valueless.             . ~ . But we          do not
          desire         to be understood                     by this       decision        as approving               of the
          broad         proposition                that private           property         may      be taken           in all
          cases         where          the    taking        may        promote       the public             interest      and
          tend     to develop                the natural           resources           of the State.             We      simply
          say      that in this              parti,cudar          case,      and upon            the facts      stated         in
          the finding             of the Court,                 having      reference            to the conditions
Senator         George         Parkhouse,              Page       9 (WW-84)




              already         stated,       we are        of the opinion             that the use             is a public
              one,    although          the taking          of the right            of way         is for     the purpose
              simply         of thereby         obtaining          the water            for    an individual,             where
              it is absolutely              necessary            to enable          him       to make         any     use what-
              ever     of his       land,      and which           will     be valuable             and fertile           only    if
              water      can     be     obta,ined.”


                        Many         States      have       enacted         statutes          regulating         many       phases            of the
oil    and gas          industry.             These        statutes        have      been         attacked       as    permitting             the
taking        of private         property           without        due process                of law,       among         other        unconsti-
tutional        grounds          alleged.           Almost         without         exception,           these       statutes       have        been
sustained,            where         the stated         purpose            has    been      to conserve           natural          resources
and      a reasonable               relation        has     been       found      between          the stated         purpose           and the
method         which         the Legislature                prescribed            to achieve            such     result.


                        In Brown            v. Humble            Oil      & Refining           Company,             126 Tex.           296,
83 S.W.2d             935,     87 S.W.Zd            1069     (1935).        the Texas             Supreme        Court,          in uphold-
ing the spacing                rule,     stated,          “Section         59(a),     Article         16, of the Texas                  Consti-
tutiondirects                the Legislature               to do whatever                  is necessary             for   the conserva-
tion     of natural           resources.              The     Legislature             has      undertaken             to comply           with
this     provision           of the Constitution.                      Therefore,             the Railroad            Commission
acting        under      valid        laws,     has       ample        authority,          under       both the Constitution
and the police               power       to prevent           waste             and conserve            the mineral              interests
of this       State.         This      rule    is    supported            by a host           of authorities”               Citing        cases.


                        That        the U. S. Supreme                   Court       will      uphold      the State         Legislature
and State            Supreme          Court      in its      determination                 of what       is    or what       is not neces-
sary      in the conservation                   of its natural              resources              is evident         in the case             of
Railroad         Commission                   v. Rowan           k Nichols          Oil     Company,            310 U.S.          573,    60
S.Ct.      1021,       84 L.Ed.          1368,       amended            311 U.S.           614,    61 S.Ct.         66, 85 L-Ed.              473
(1940).         In this       case      the Plaintiff             appealed          from       an ordrr          of the Railroad
Commission               setting        the all.owable             for     the East           Texas      Field        on a per-well
basis.         The      Plaintiff        complained              of the order,              saying       that it was         denying           him
an opportunity                to produce            his    oi.1, and that           his     oil would         be drained           and        taken
by adjoining            leases;         that his          uncompensated                 drainage         was     an unconstitutional
confiscation             of his       property.            This        order      was      upheld,       the Supreme               Court
stating,        u ~ ~ ~ but such               cases       are     only     episodes           in the evolution              of adjust-
ments         among       private           interests        and       in reconciliation                of all      these    private
interests         with       the underlying               public        interest          in such      a vital        source       of energy
for     our    days      as    oil.”
Senator         George          Parkhouse,             Page         10 (WW-84)




                         The     Railroad            Commission                 has    power         to shut         down      completely
all     production         from         an oil       and     gas     field,       if necessary,               to prevent           waste         and
conserve          natural         resources.               Railroad             Commission              v. Sterling             Oil      & Refin-
ing     Company,           147 Tex.            547,     218 S.W.2d               415     (1949).        The      city       ordinance            pro-
hibiting        the drilling            of but one well               to a city          block        is constitutional                and       does
not violate          the due        process            clause.            Marrs        v. City        of Oxford,            32 F.2d          134,
(CA-S,       1929,        cert.     denied           280 U.S.         573).


                         In Marrs         v. Railroad               Commission,                  142 Tex.            293,    177 S.W.2d
941 (1944),          the Court            set    aside        an allowable               order        for     the McElroy                Field
in West         Texas.          The      Court        sustained,            however,            the power             of the Railroad
Commission               to prescribe                an allowab1.e              order,         but held        that    such        an order
was      not reasonable                 under     the circumstances                       there        presented.              In discuss-
ing Article          16, Section            59(a),         of the Constitution,                      the Court         stated         that the
Legislature              must     act     under        this    provision              of the Constitution                   in relation           to
the     other     provisions             of the Constitution,                     which        are     above         discussed.


                         In many         of these          decisions             regulating           oil and        gas,      the effect         has
been      t.o restri.ct         the use         to which           the gas        has     been        put;     the amount             of produc-
tion;     the number              and location             of wells          and      in some          situations            there       has      been
a complete           denial        of a right          to drill           a well.        All     of these        regulations              have      re-
stricted        the free          and    unfettered            use        and control            of private           property,           and     in a
sense      is a “‘taking           of property”.                   That     these        regulations             and     enforcement                of
conservation              measures             are     for    the benefit              of the public            at large         is well         settled.
Bandini         Petroleum             Company           V- Superior               Court,         284 U.S.         8, 52 S.Ct.             103,
76 L.Ed.          136 (1931).


                         The     Texas      Legi,slature,                 in accordance                with     Article         16, Section
59(a),     has     directed           the creation             of water           conservation                districts,         navigation
districts,         and have           passed         other         acts    for     the conservation                    of water          and      soil.
The      Legislature            has      ako     passed            statutes         whose        purpose          has       been      to conserve
oil    and gas.          Apparently             this    act        is the first          instance           where        the    Legislature
has     proposed          that     one natural               resource            be utilized          to capture            and make             avail-
able     another         natural         resource            for    the purpose                of the better            utilization          and
conservation              of stil.1 another             natural            resource,            the soil.         That       the State           has
an interest          in the conservation                      of all       natural        resources             is beyond             question.
In our      opinion        such       act is within                the constitutional                 provisions            of Article            16,
Section         59(a),    and will         not constitute                 a taking        of private            property           for    a purely
private      use     in violation              of Article            1, Section          17, and the             14th Amendment.                        If
the State        Court         upholds         a particular               use     as not being               violative         of the     “taking”
provisions          of its        own     statute,         the U. S. Supreme                     Court        will     accept         this     as not
Senator           George         Parkhouse,             Page      11 (WW-84)




being       violative           of the     14th Amendment.                    Hairston           Y. Danville           St W.    Ry.       Co.,
208 U.S.           598,     28 S.Ct.          331,     52 L.Ed.         637    (1908).       Here         the Court           stated,
“No      case       is    recalled        where         this    Court      has      condemned             as a violation             of-the
14th Amendment                       a taking       upheld      by the State             Court     as a taking           for    public
uses       in conformity               with     its’ laws.”


                          In our       opinion        the proposed            act    satisfies          the procedural               require-
ments        of Article              1, Section’l9,            relating       to the taking             of property           by due           pro-
cess.        The         act provides           for     a hearing         before         the designated            administrative
body       for     a determination                 of the necessity               of the taking,           and the terms                 and
conditions           thereof          if such        is deemed          necessary           for    the conservation                  of water
and     soil.       The        decision        of this     administrative                body      can be appealed                  to the
Court       for     a judicial          review         of its action.             This     satisfies        the constitutional
requirement.                   Voght      v. Bexar         County,         23 S.W.         1045        (Tex.Civ.App.            1893,          error
ref’d.).


                          In our       opinion        the proposed            act does          not violate        Article           1, Section
16, relating              to impairment                of contracts.             The     proposed          act    does        not seek          to
act     directly          upon       any particular             contract,         touching        contracts            only    incidentally.
Henderson                Company          v. Thompson,               57 S.Ct.       447,     300 U.S.           258,    81 L.Ed.           632
(1937).          In this case the statute prohibited   the use of sweet gas for the manu-
facture          of carbon  black. The Plaintiff   contended,  among   other things, that
it impaired              the obligation              of a contract            in which      he was          a party       to buy and to
sell     sweet       gas       for    the prohibited             use;     however,         the     statute       was     sustained              as
being       constitutional.


                          In our       opinion        the provision            permitting          those        who     are     using          the
surface          to have         a right      to demand             a portion        of the gas           produced        from           the
same        surface            is a reasonable             classification.               This     group      has       been     found          by
the     Legislature,              if enacted,           to encompass              a sufficiently           large       group        to aid
in the conservation                     of soil.        This     is not an unreasonable                     classification                as to
those      who      may         require       gas      and as to those              who    must         supply     gas        as to make
the act          unconstitutional.               Fort      Worth          & D. C. Ry.            Co.     v. Welch,        183 S.W.2d
730 (Tex.Civ.App.                     1944,     error        ref’d).


                          The     proposed            legislation         would     not be an unwarranted                       interfer-
ence       with     interstate           commerce.              Cities Service Gas Company     v. Peerless
Oil     & Gas       Company,              203 Okla.          35, 220 P.2d 279 (1950), affirmed    340 U.S.
179,     71 S.Ct.          215,       95 L.Ed.         156 (1950).


                          An    act    similar         to the proposed              legislation           was     enacted           in
Oklahoma            in 1955.           A principal             differenc.e        between         the Oklahoma                act    and
Senator         George         Parkhouse,            Page       12 (WW-84)




the proposed              legislation          is that        in Oklahoma              it was       de.clared         that      such
natural      gas       should      be made           available          for        such    use in preference                 to any
other      use,       there     being       no restriction              as    to the amount              which        could       be
taken      by the surface               operato,r.            The      Texas        act    limits       the amount            of gas
which      the surface            operator           may       demand          and buy         to one-eighth             of that
produced,           and then         the Railroad              Commission                 is to determine              controversies
as    to the necessity               for    such       gas.      Although            this’appears              to be a material
distinction,           this    was      not the reason               given         in the two decisions                 in which            this
statute      has      been      before       the Co~urts.


                       In Phillips           Petroleum              Company           v. Corporation                Commission                   of
Oklahoma,             decided        by the Oklahoma                   Supreme            Court        on November               20,    1956,
Volume          27,    “The       Journal”,          1921       (not yet       officially         reported),           the Oklahoma
Court      held       the act      to be      unconstitutional.                    Three        Justices        dissented.             In this
case      Phillips        contended           that the act converted                       it into a public             utility        in vio-
lation     of the due           process          clause        of the State           and Federal              Constitutions.                The
Oklahoma            act     expressly         provided           to the contrary,                 that the gas           producer            was
not to be considered                    a public        utility.        But the Court               held       that the effect              of
the act was            to require           Phillips          *to engage            in a field       of service           not heretofore
performed             in an area           not heretofore              served.            We     consider          it immaterial                 that
the    service         is limited          to a small           area     and        a few      people.”          The     Oklahoma
Court      also       held     that this       constituted             an unauthorized                 taking       of property             which
was      accomplished              without         eminent          domain.           As      of the    date       of this      Opinion,              an
application           fo’r rehearing              i.s pending          in the Oklahoma                  Supreme          Court.


                        The     same        act was        before       the Court              in Phillips          Petroleum            Com-
pany      v. Ray       C.     Jones,       et al.,      147 Fed.Supp.                122,      (D.C.     Okla.        1955).          The    Court
which      heard        this    case       was     a th~ree justice                district       court.        The     Federal             Court
held     that the act           complained             of was        constitutional.                At the time           this        decision
was      written,         the Oklahoma               Supreme           Court        had not yet written                 its decision.
The      Federal          Court      stated:


                        “Beyond          question,         the act’s          basic        objective        lies     within
           the pale           of local      police       power         authority.             Nothing       is more
           universally             recognized            than       the right        which        adheres          the State
           to conserve,              protect         and      develop        its    resources           for the people’s
           general           welfare        and    prosperity            . . , to achieve               this    end,     the
           enjoyment            of indivi.dual             property          rights        may      be curtailed,
           or     in some         instances          completely              denied.           In the act        before         us,
           the Oklahoma                Legislature             has     summoned                one subterranean
           natural          resource         to assist          in the capture                of another           critically
.




    Senator         George         Parkhouse,             Page       13 (WW-84)




               needed        subsurface            mineral           for     the use        and benefit           of the
               State’s       agricultural             economy;              and,    if the act         is given            the
               construction,              discussed            previously,            it does        not unconsti-
               tutionally          deprive        a property              without         due    process,         impair
               contractual            rights,         burden         interstate           commerce,             or deprive
               of equal          protection           of the laws.            Inasmuch             as the act            is not
               unconstitutional                 on its face,           and     since       we     cannot        speculate
               as    to how        it will      be enforced               in each      indi~vidual            case,        our
               inquiry       is at an end.”


                           We      have      examined            the Oklahoma               Constitution,              i.ncluding        amend-
    ments      thereto           through        1955.       No      provisions            similar        to the conservati,on                  pro-
    vision      (Sec.      16, Art.        59(a)       ) of the       Texas         Constitution           could           be foun.d.      It is
    therefore         assumed            that    the Oklahoma                 Legislature              does     not have           the consti-
    tutional        powers         in this      regard         as    does     the Texas             Legislature.


                           In summary,                the    Texas         Constituti~on           prohibits           a taking         of private
    property         except        for    public       use.         By inference,               and the courts               have     su held,
    the    Constitution            prohibits          the     taking        of private           propert~y       for       the psr~vate use
    of another          individual.             The    question            always         present.      is whether               the new       use
    (after     the condemnation)                   will     be a public             use     or    a private           use.       As   stated,
    the Courts          in the various                States        are     in conflict          as to what           is    and .wh,at. is not
    a public        use,     an exact           deftnition          being     impossible.               The      final       determinati.on
    of this     question           is a judicial            matter,         and     is not alone           a matter              of legislative
    determination.                 A review           of the Texas            decisions            shows        that the earlier
    Texas      Courts        were         reluctant         to define          “public          use”    to mean             a use     which
    would      havea        public       advantage            or    a public        benefit        when        it was        being      used    by
    an individual            in his       individual          capacity         as    t,he new          owner.          The       more     recent
    Texas      Supreme             Court        decisions           appear  to be adopt,ing elements     of ‘public
    advantage”,            “public        convenience*                or “public benefit”  in its judicial   defini-
    tion     of “public          use”.


                           Also,      Article         16,Section             59(a)     of the        Texas       Constitution             expressly
    provides         that the        “preservation                 and     conservation             of all      such        natural      resources
    of the State           are     each      and all        hereby         declared         public       rights        and duties.”             In
    addition,        that the use of all property,   including                                   property    rights in water,                     oil,
    pas and         the land itself, is subject to the police                                    power   of the State is well                     settled.
    Hudson       County          Water       Company               v. McCa&er,              209 U.S.           349,  28 S.Ct. 529, 52
    L.Ed.      828 (1908);           Lombard0               V. City        of Dallas,            124 Tex.        1, 73 S.W.2d  475 (1934).
                                                                                  - .




Senator    George   Parkhouse,   Page   14 (WW-84)




             Requiring a mtneral operator to eel1 gas to a eurfnca operator
ia a “taking” of property.   In view of the later Texas Sup,rcme Court defini-
tionr of “public we”, the expre,ss provisiona     of the Conrtitution declaring
conservation   of natural resources to be “public right8 and duties* and the
police power of the State to regulate the use of all types of property, we
conclude that the proposed legislation    is constitutional.


                                     SUMMARY

               Senate Bill 101, with the new Committee           Substitute,
               is, in our opinion, constitutional,

                                             Very truly yours,




                                             WILL WILSON
                                             Attorney
                                                    General




                                                     Edwin P. Horncr
EPH :tiw                                             Aeaistant

APPROVED:                        I

OPINION COMMITTEE
H. Grady Chandler, Chairman
