## Facts

- Interest owners in wells in the Fairway (James Lime) Field challenged a Texas Railroad Commission proration order allocating the field allowable among wells.
- The order retained a 160-acre proration unit per well and used a two-factor allocation formula: 50% based on surface acres in the unit and 50% based on acre-feet of productive formation.
- Appellants asserted that varying thickness of productive strata required a 100% acre-foot formula to prevent uncompensated drainage and to protect correlative rights.
- Appellants argued the order lacked substantial evidentiary support, emphasizing disputes about reservoir mechanics and drainage, including whether the field operated under a water drive.
- The Commission and aligned parties presented expert testimony that the reservoir was water-driven and that production would move water toward thinner, outer areas, affecting drainage and making a mixed surface-acre/acre-foot formula reasonable.
- The Commission issued the challenged order after hearings; the district court upheld it as reasonably supported by substantial evidence, and appellants directly appealed.

## Issues

1. Whether the proration order’s 50/50 surface-acre and acre-foot formula was reasonably supported by substantial evidence.
2. Whether the formula unreasonably failed to protect correlative rights by permitting uncompensated drainage.
3. Whether due process required a 100% acre-foot formula or otherwise rendered the order confiscatory or discriminatory.

## Decision

- The Supreme Court of Texas affirmed the district court’s judgment upholding the proration order.
- The court held the order was reasonably supported by substantial evidence.
- The court rejected the claim that due process or correlative-rights protection required an exclusively acre-foot-based allocation.
- The court held that objections focusing on the sufficiency of evidence presented to the agency, as opposed to the judicial review record, did not invalidate the order.

## Legal Principles

- Judicial review of Railroad Commission conservation and proration orders is limited to whether the order is reasonably supported by substantial evidence; courts do not decide the best or most equitable technical formula.
- Where expert evidence conflicts on reservoir behavior and drainage, the Commission may choose among reasonable regulatory alternatives, and the court will not substitute its judgment if substantial evidence supports the choice.
- Correlative-rights and due-process challenges to prorationing require a showing that the order is arbitrary, discriminatory, or confiscatory; the constitution does not mandate a particular technical allocation method.
- In this review framework, the adequacy of evidence heard by the agency is not controlling; the substantial-evidence test is applied to the judicial record developed in court.

## Conclusion

The court upheld the Commission’s mixed surface-acre/acre-foot proration formula for the Fairway (James Lime) Field because substantial evidence supported the Commission’s assessment of reservoir conditions and drainage effects, and the order was not shown to be arbitrary, confiscatory, or inconsistent with correlative-rights protection.


Pickens v. R.R. Comm’n of Tex., 387 S.W.2d 35 (Tex. 1965)