Hugo Black

“ Oil exists in the pores and crevices of rocks and sand and moves through these channels. A large area of this sort is called a pool or reservoir and the East Texas field is a giant pool. The chief forces causing oil to move are gas and water, and it is essential that the pressures be maintained at a level which will force the oil through wells to the surface. As the gas pressure is dissipated, it becomes necessary to put the well 'on the pump' at great expense; [7] and the sooner the gas from a field is exhausted, the more oil is irretrievably lost. ”

“ People's Petroleum Producers v. Smith, D.C., 1 F.Supp. 361 was the cause of the special session of November, 1932. In his introductory message to the special session, Governor Sterling said: 'Most assuredly, I would not, at this time, have called you into extraordinary session except I believe a grave crisis again confronts the State and our people on account of the Federal Court having held that the Railroad Commission has gone beyond the authority given in this statute enacted at that time in promulgating their orders as to proration and conservation of oil and gas. ”

“ To prevent 'past, present, and imminent evils' in the production of natural gas, a statute was enacted 'for the protection of public and private interests against such evils by prohibiting waste and compelling ratable production.' The primary task of attempting adjustment of these diverse interests is delegated to the Railroad Commission which Texas has vested with 'broad discretion' in administering the law. ”

“ The very 'confusion' which the Texas legislature and Supreme Court feared might result from review by many state courts of the Railroad Commission's orders has resulted from the exercise of federal equity jurisdiction. As a practical matter, the federal courts can make small contribution to the well organized system of regulation and review which the Texas statutes provide. ”

“ Texas courts can give fully as great relief, including temporary restraining orders, as the federal courts. Delay, misunderstanding of local law, and needless federal conflict with the State policy, are the inevitable product of this double system of review. The most striking example of misunderstanding has come where the federal court has flatly disagreed with the position later taken by a State court as to State law. See MacMillan v. Railroad Commission, D.C., 51 F.2d 400; Railroad Comm. v. MacMillan, 287 U.S. 576, 53 S.Ct. 223, 77 L.Ed. 505, and Danciger Oil and Refining Co. ”

“ Time and experience, say the Texas courts, have shown the wisdom of this rule. [20] Concentration of judicial supervision of Railroad Commission orders permits the state courts, like the Railroad Commission itself, to acquire a specialized knowledge which is useful in shaping the policy of regulation of the ever-changing demands in this field. At the present time, less than ten per cent of these cases come before the federal district court. ”

“ Since the oil moves through the entire field, one operator can not only draw the oil from under his own surface area, but can also, if he is advantageously located, drain oil from the most distant parts of the reservoir. The practice of attempting to drain oil from under the surface holdings of others leads to offset wells and other wasteful practices; and this problem is increased by the fact that the surface rights are split up into many small tracts. ”

“ Equity may impose terms and conditions upon the party at whose instance it proposes to act and 'the power to impose such conditions is founded upon, and arises from, the discretion which the court has in such cases, to grant, or not to grant, the injunction applied for.' Inland Steel Co. ”

“ If a substantial amount of oil will be saved by the drilling of a well that otherwise would ultimately be lost, the permit to drill such well may be justified under one of the exceptions provided in Rule 37 to prevent waste.' Gulf Land Co. ”

“ While many other questions are argued, we find it necessary to decide only one: Assuming that the federal district court had jurisdiction, should it, as a matter of sound equitable discretion, have declined to exercise that jurisdiction here?
The order under consideration is part of the general regulatory system devised for the conservation of oil and gas in Texas, an aspect of 'as thorny a problem as has challenged the ingenuity and wisdom of legislatures.' Railroad Commission v. ”

“ It is particularly desirable to decline to exercise equity jurisdiction when the result is to permit a State court to have an opportunity to determine questions of State lwa which may prevent the necessity of decision on a constitutional question, City of Chicago v. ”

“ Equity in its discretion may decline to aid a utility which seeks to prevent a public service commission from making an investigation which is at least arguably within its power, Petroleum Exploration, Inc., v. ”

“ United States Realty Co., 310 U.S. 434, 455, 60 S.Ct. 1044, 1053. 84 L.Ed. 1293; American United Mutual Life Ins. Co. v. City of Avon Park, Florida, 311 U.S. 138, 145, 61 S.Ct. 157, 85 L.Ed. 91, 136 A.L.R. 860. ”