Rosser NewtonDallas · energy and Texas history

Reference · Organization

Railroad Commission of Texas

The Railroad Commission of Texas is the state agency with primary regulatory jurisdiction over the oil and natural gas industry in Texas, along with pipelines, natural gas utilities, the liquefied petroleum gas industry and surface mining of coal and uranium.1 It was created in 1891 to regulate railroads and is the oldest regulatory agency in the state.1 Because it could set the rate at which Texas oil wells produced, the Handbook of Texas describes it as having been, for much of the twentieth century, one of the most important regulatory bodies in the nation.2

Creation

James S. Hogg won the governorship in 1890 largely on a promise to regulate the railroads, and a constitutional amendment adopted at the same time allowed such a body.2 On April 3, 1891, the legislature passed the act creating the commission, with jurisdiction over the rates and operations of railroads, terminals, wharves and express companies.3 Hogg appointed the first three commissioners: John H. Reagan as chairman, William Pinckney McLean and Lafayette L. Foster.23 In 1894 the legislature made the office elective, with three commissioners serving six year overlapping terms.2

Federal regulation of interstate transport through the Interstate Commerce Commission, limited funding and some adverse court decisions constrained the early agency, though it had some success in holding down freight rates within the state.2

From railroads to oil and gas

The move toward energy regulation began in 1917, when the Pipeline Petroleum Law declared oil pipelines common carriers and placed them under the commission, so that a line could not refuse to carry anyone’s oil.23 The Oil and Gas Conservation Law of 1919 gave the commission jurisdiction over production, and among its first statewide rules was Rule 37, which set minimum distances between wells to protect field pressure and the rights of neighboring owners.3 The Gas Utilities Act of 1920 added authority over those who produced, transported or distributed natural gas.3

The discovery of the East Texas oil field in 1930 turned those powers into the center of state politics. Unrestrained production there sent crude prices down around the world.2 Ernest O. Thompson, a former mayor of Amarillo appointed to a vacancy by Governor Ross Sterling in 1932, became the dominant commissioner and led the effort to limit output.24 After a long struggle in the courts and the legislature, the commission won the authority to prorate, setting the allowable production of every oil well in the state.2 Thompson’s commission allowed narrow well spacing and allocated production per well, policies that favored the independent operators who held most of the East Texas acreage.4 Under the Connally Hot Oil Act of 1935, federal authorities enforced the Texas production orders in interstate commerce.2

Proration made the commission a model for the Organization of Petroleum Exporting Countries when that body was formed.23 Its influence over world oil supply lasted until the early 1970s, when declining Texas reserves, rising world demand and the growth of OPEC reduced it.2

Natural gas and later duties

The commission’s attention turned increasingly to gas. By the middle 1940s about a billion and a half cubic feet of casinghead gas a day was being flared in Texas, and in 1947, prompted by commissioner William J. Murray Jr., a petroleum engineer, it issued orders that effectively prohibited the practice, which also helped maintain reservoir pressure and increase oil recovery.2 When a gathering company could not meet its contracts to supply gas to about four million consumers in South and Central Texas in the winter of 1972 to 1973, the commission spent seven years working out a settlement, finally approved in September 1979.2

Other duties accumulated over the century. After the New London school explosion of 1937 the legislature gave the commission authority over the odorization of natural gas, and liquefied petroleum gas safety followed in 1939.3 The Texas Surface Mining and Reclamation Act of 1975 added coal, lignite and uranium mining and the reclamation of mined land.3 In 2005 the last rail function, safety regulation, was transferred to the Texas Department of Transportation, and the commission has had no railroad duties since.35 Bills to rename the agency have been introduced but none has passed.5 In February 2012 it put into effect a rule requiring disclosure of the chemical ingredients used in hydraulic fracturing fluids.3

Organization

Commissioners are elected statewide to six year staggered terms, with one seat on the ballot every two years; the commissioners choose their own chairman, and the governor fills a vacancy until the next general election.6 In the early 1990s the agency had four regulatory divisions, and its Oil and Gas Division maintained ten district offices for monitoring and inspecting field operations.2 One of them was in Kilgore, near the center of the East Texas field.7

Any organization that drills, operates or services wells, hauls oilfield salt water for hire, or performs hydraulic fracturing within the commission’s jurisdiction must keep a current organization report on file, and most regulated activities also require a bond, letter of credit or cash deposit as financial assurance.8 Much of that work is done by the contractors described in the entry on oilfield services. The commission’s regulation of production also reaches the Permian Basin, which in 2025 produced more crude oil than any other region of the United States.9

Background and record

The commission received its spacing authority in 1919, eighteen years after the discovery of Spindletop, a field whose output fell sharply within three years as wells crowded the hill.310 The commission’s filings and incident records are among the public sources that the essays on this site draw upon, including a piece on reading insurance loss runs. Related entries are gathered in the reference section.

References

  1. Railroad Commission of Texas, About Us ↩ ↩2

  2. Texas State Historical Association, Handbook of Texas, Railroad Commission ↩ ↩2 ↩3 ↩4 ↩5 ↩6 ↩7 ↩8 ↩9 ↩10 ↩11 ↩12 ↩13 ↩14 ↩15

  3. Railroad Commission of Texas, RRC History ↩ ↩2 ↩3 ↩4 ↩5 ↩6 ↩7 ↩8 ↩9 ↩10 ↩11

  4. Texas State Historical Association, Handbook of Texas, Thompson, Ernest Othmer ↩ ↩2

  5. Railroad Commission of Texas, What, No Railroads? ↩ ↩2

  6. Railroad Commission of Texas, Commissioners ↩

  7. Texas State Historical Association, Handbook of Texas, Kilgore, TX ↩

  8. Railroad Commission of Texas, Summary of Requirements and Responsibilities ↩

  9. U.S. Energy Information Administration, Today in Energy, U.S. crude oil production rose in 2025, setting new record ↩

  10. Texas State Historical Association, Handbook of Texas, Spindletop Oilfield ↩