Stabilization - Proration in Texas in 1932

Legal and legislative matters constituted the outstanding features of proration in Texas in 1932. From East Texas emanated most of the political, legal, technical and industrial activity. Conroe and Thompson developed into fields of major importance. Proration orders were issued by the Railroad Commission on many of the producing fields of the Gulf Coast and West Texas not covered in previous years. In Yates, Penn Pool, Winkler, Van, the Panhandle, North Texas and West Central Texas there were 110 changes of importance, except in allowables. New proration schemes were introduced in East Texas, Conroe, Thompson, Saranosa, Government Wells, Tuleta and Howard-Glasscock. Little progress was made in administration or technical development. Legal and Legislative Matters Proration first began in Texas in 1927 as a voluntary attempt to divide the market outlet of a field on an equitable basis. The statutes then in existence were considered somewhat archaic and the Railroad Commission's authority was limited. Subsequent efforts to strengthen the laws were not wholly successful. The 1929 Conservation Act made no mention of market demand but declared that the term "waste" did not mean " economic waste." With the passage of the Pipc Line Act of 1930, providing for ratable purchasing, it was the opinion of many lawyere that a legal means of proration had been found. The 1931 law had ths same provision as that of 1929 with respect to economic waste but specifically prohibited limiting of production to market demand. The law passed Nov. 12, 1932, omitted reference to economic waste and specifically provided for limitation of production to reasonable market demand. Vigorous attacks were being made in State and Federal Courts on the constitutionality of the laws and the validity of the Commission's orders. In Peoples Petroleum Producers, Inc. et al. vs. Lon A. Smith et al., which had been heard before a three-judge U. S. District Court in Houston on May 28, 1932 and again on Sept. 19, the Court's decision for plaintiffs, released Oct. 2, influenced in a large measure the calling of the Legislature and the passage of the Market Demand Law on Nov. 12.