Legal and legislative matters constituted the outstanding features ofproration in Texas in 1932. From East Texas emanated most of the political, legal, technical and industrial activity. Conroe and Thompson developed intofields of major importance. Proration orders were issued by the RailroadCommission on many of the producing fields of the Gulf Coast and West Texas notcovered in previous years. In Yates, Penn Pool, Winkler, Van, the Panhandle, North Texas and West Central Texas there were no changes of importance, exceptin allowables. New proration schemes were introduced in East Texas, Conroe, Thompson, Saranosa, Government Wells, Tuleta and Howard-Glasscock. Littleprogress was made in administration or technical development.
Legal And Legislative Matters Proration first began in Texas in 1927 as a voluntary attempt to divide themarket outlet of a field on an equitable basis. The statutes then in existencewere considered somewhat archaic and the Railroad Commission's authority waslimited. Subsequent efforts to strengthen the laws were not wholly successful. The 1929 Conservation Act made no mention of market demand but declared thatthe term "waste" did not mean "economic waste." With thepassage of the Pipe Line Act of 1930, providing for ratable purchasing, it wasthe opinion of many lawyer that a legal means of proration had been found. The1931 law had the same provision as that of 1929 with respect to economic wastebut specifically prohibited limiting of production to market demand. The lawpassed Nov. 12, 1932, omitted reference to economic waste and specificallyprovided for limitation of production to reasonable market demand.
Vigorous attacks were being made in State and Federal Courts on theconstitutionality of the laws and the validity of the Commission'sorders.
In Peoples Petroleum Producers, Inc. et al. vs. Lon A. Smith et al., which hadbeen 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 ofthe Market Demand Law on Nov. 12.