TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

ON MOTION FOR REHEARING

NO. 03-19-00070-CV

Vergo Patio Gardens, Inc., Appellant

v. 

Railroad Commission of Texas, Appellee 

FROM THE 200TH DISTRICT COURT OF TRAVIS COUNTY

NO. D-1-GN-17-004723, THE HONORABLE JAN SOIFER, JUDGE PRESIDING

M E M O R A N D U M O P I N I O N

 After considering the motion for rehearing filed by the Railroad Commission of 

Texas, we deny the motion but withdraw our opinion and judgment issued on February 10, 2021, 

and substitute the following opinion and judgment in their place. 

 This appeal arises out of a suit for judicial review of an administrative order. In 

the underlying administrative proceedings, Vergo Patio Gardens, Inc., applied for the renewal of 

its landfarm permit, but the Railroad Commission of Texas denied the application. Vergo 

requested a contested case hearing. A week before the hearing, Vergo and staff for the executive 

director of the Commission (Staff) filed a joint motion to dismiss the hearing setting pursuant to 

an attached Rule 11 agreement (the Rule 11 Agreement), but the administrative law judge (ALJ) 

denied the motion. Following the hearing, the ALJ recommended denying Vergo’s application, 
2

and the Commission entered an order to that effect. The district court affirmed. We conclude 

that the ALJ had a ministerial duty to enforce the Rule 11 Agreement that settled the parties’

dispute and that proceeding with the hearing and denying the joint motion to dismiss prejudiced 

Vergo’s substantial rights. We therefore reverse and remand. See Tex. Gov’t Code 

§ 2001.174(2)(F).

BACKGROUND

Vergo received its original permit to landfarm in 1986. See 16 Tex. Admin. Code 

§ 3.8(a)(25) (2018) (R.R. Comm’n of Tex., Water Protection) (defining “landfarming” as “[a] 

waste management practice in which oil and gas wastes are mixed with or applied to the land 

surface in such a manner that the waste will not migrate off the landfarmed area”). In 1998, after 

amendments and renewals to that permit, Vergo applied to renew and amend its permit

under the 1996 version of section 3.8 of title 16 of the Texas Administrative Code (Rule 8). 

See 16 Tex. Admin. Code § 3.8 (1996) (R.R. Comm’n of Tex., Water Protection), repealed by

25 Tex. Reg. 6487, 6488 (2000), adopted by 38 Tex. Reg. 2318 (2013).1 Under Rule 8, Staff 

reviews permit applications and makes the initial decision to approve or deny an unprotested 

application. See Rule 8(d)(6)(D) (1996). Staff notified Vergo that its permit would not expire

until the Commission had made a final determination on Vergo’s application. See Tex. Gov’t 

Code § 2001.054(b). Staff did not take final action on the application until October 2013, when 

it denied Vergo’s application. In a letter, Staff claimed that the information submitted with the 

application and gathered during the review process demonstrated that Vergo violated Rule 8, 

1 Rule 8 has been amended and reorganized over the years. For convenience, we will 

use “Rule 8” to refer to the 1996 version and cite to this version as “Rule 8 (1996).”
3

mismanaged oil and gas waste, and may cause or allow pollution to surface and subsurface 

waters at the landfarm property. Vergo then requested a contested case hearing.

The Commission initially set the hearing for February 2014. Vergo filed a motion 

for continuance, and then the parties filed multiple agreed motions for continuances to conduct 

discovery, gather samples, and engage in settlement negotiations. The ALJ granted the requests 

for continuance, ultimately setting the hearing for October 2016. In a letter to the parties, the 

ALJ stated, “[t]he continuance granted by this ALJ on May 10, 2016 is the last that will be

granted” and “[i]f the parties have not reached a settlement by September of 2016, they should 

prepare to go to hearing.” In September, Vergo filed an opposed motion for further continuance

and a motion to reconsider the continuance, but the ALJ denied both.

On September 28, the parties filed a joint motion to dismiss the hearing setting, 

explaining that they “have entered into a Rule 11 Agreement allowing the parties to enter a 

60-day binding settlement period” and “request that the hearing setting be removed to allow the 

parties to resolve this matter without the necessity of a hearing.” The parties attached to the 

dismissal motion their signed Rule 11 Agreement—including exhibits—which provided:

1. A joint motion to dismiss the hearing date of October 3, 2016 shall be filed on or no later 

than September 30, 2016.

2. Either party shall file a motion to dismiss with prejudice the hearing request to consider 

denial of permit no. LF-0032 with prejudice against refilling [sic] on December 2, 2016.

3. Vergo waives any and all claims, demands, rights or interests, whether existing or alleged 

to exist now or at any time in the future, at either the administrative or district court level, 

relating to the proposed renewal of permit no. LF-0032, or any action of the RRC [the 

Commission] relating to such permit.

4. Vergo shall agree to the terms of the May 5, 2016 Settlement Agreement (“Draft Permit”) 

attached hereto as Exhibit “A.”
4 

5. Vergo shall, within 45 days of October 3, 2016 (i.e., on or before November 17, 2016), 

provide items 1–8 of Exhibit “B” to counsel for the RRC. Any items completed prior to 

this 45-day deadline should be submitted as soon as possible. A recommended 

submission schedule for items 1-8 is attached hereto as Exhibit “C.” 

6. Vergo understands that after review and approval by the RRC, items 1-8 of Exhibit “B” 

will be used to supplement and complete the “Draft Permit.” Vergo further understands 

and agrees that such documents must be submitted in form and substance that meets 

regulatory requirements of the RRC, and failure to submit documents that meet 

requirements will result in non-renewal of permit no. LF-0032. 

7. Vergo shall work diligently and cooperatively with RRC Staff to timely submit 

a stormwater management plan, as referenced in Exhibit “B,” within 45 days of 

October 3, 2016 (i.e., on or before November 17, 2016).

8. Vergo shall implement a method for stormwater management consistent with RRC 

methods approved by Staff as summarized and attached hereto as Exhibit “D.” 

9. The review and approval period for items 1–8, described in Exhibit “B,” shall end 60 

days from October 3, 2016 (i.e., on December 2, 2016). All submissions received after 

45 days from October 3, 2016 (i.e., after November 17, 2016) are deemed late and shall 

not be accepted for review of the permit renewal application. 

10. The current permit no. LF-0032, attached hereto as Exhibit “E,” shall expire on 

December 2, 2016 (i.e., 60 days from October 3, 2016). 

11. After December 2, 2016, Vergo shall not continue operations at the subject site unless the 

RRC issues a renewal landfarm permit.

12. The 45 and 60 day deadlines shall begin simultaneously on October 3, 2016. The 45-day 

deadline shall end on November 17, 2016 and the 60-day deadline shall end on 

December 2, 2016. 

In a September 29 letter to the parties, however, the ALJ stated, “I am not inclined to continue

the current hearing dates . . . over a hastily drafted Rule 11 Agreement that may be 

unenforceable. I will continue the current hearing dates if presented with a Rule 11 Agreement 

with teeth in it.”2 The ALJ then denied the joint motion to dismiss.

2 In the September 29 letter, the ALJ stated two reasons why the Rule 11 Agreement 

might be unenforceable. First, the ALJ asserted that the second paragraph discussed a hearing
5

After the hearing, the ALJ issued its proposal for decision (PFD), recommending 

that Vergo’s application be denied and concluding that Vergo failed to prove that renewal of the 

permit would prevent the pollution of groundwater and surface water resources, as required by 

Rule 8. The Commission adopted the findings of fact and conclusions of law—substituting one 

finding of fact to correct a date—and ordered Vergo’s application denied. Vergo filed a motion 

for rehearing challenging Staff’s experts and evidence submitted to support the PFD’s findings 

of fact, the ALJ’s and Commission’s application of Rule 8, and the ALJ’s denial of the Rule 11 

Agreement settling the case. The Commission denied the motion. Vergo sought judicial review 

in district court, and the district court affirmed. Vergo now appeals to this Court.

STANDARD OF REVIEW

“Final orders of the Commission are ‘deemed to be prima facie valid and [are] 

subject to review under the substantial evidence rule.’” Westlake Ethylene Pipeline Corp. 

v. Railroad Comm’n, 506 S.W.3d 676, 681 (Tex. App.—Austin 2016, pet. denied) (quoting H.G. 

Sledge, Inc. v. Prospective Inv. & Trading Co., 36 S.W.3d 597, 602 (Tex. App.—Austin 2000, 

pet. denied)) (alteration in original). The substantial evidence rule, as codified in the 

Administrative Procedure Act (APA), requires reversal or remand if the appellant’s substantial 

rights have been prejudiced because the administrative findings, inferences, conclusions, or 

decisions: (1) violate a constitutional or statutory provision, (2) exceed the agency’s statutory 

authority, (3) were made through unlawful procedure, (4) are affected by other error of law, 

request to consider denial of the permit, but the hearing request is to consider the renewal of the 

permit. Second, the ALJ claimed that the third paragraph is vague and implies that Vergo waives 

its right of appeal, but there is a “loophole” because some issues “may be fast-tracked straight 

into the court of appeals, skipping the district court level.” The Commission neither raises nor 

defends the ALJ’s stated reasons in its briefing to this Court.
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(5) are not reasonably supported by substantial evidence, or (6) are arbitrary or capricious or 

characterized by abuse of discretion or clearly unwarranted exercise of discretion. Tex. Gov’t 

Code § 2001.174(2). “We apply this analysis without deference to the district court’s judgment.” 

Jenkins v. Crosby Indep. Sch. Dist., 537 S.W.3d 142, 149 (Tex. App.—Austin 2017, no pet.) 

(citing Texas Dep’t of Pub. Safety v. Alford, 209 S.W.3d 101, 103 (Tex. 2006) (per curiam)).

DISCUSSION

On appeal, Vergo raises three issues: (1) whether the ALJ erred by breaching its

ministerial duty to enter an order dismissing the case when presented with the Rule 11 

Agreement and joint motion to dismiss, (2) whether Vergo met its burden to demonstrate that 

there was no potential for polluting subsurface waters, and (3) whether the Commission met its 

burden of good cause to terminate Vergo’s permit. Because we conclude that the first issue is 

dispositive of this appeal, we do not address Vergo’s other issues. See Tex. R. App. P. 47.1, .4.

Texas Rule of Civil Procedure 11 applies only to agreements made 

during pending litigation, which we have held does not include the course of an 

administrative proceeding. See Castillo v. Texas Bd. of Prof’l Eng’rs, No. 03-10-00124-CV, 

2010 WL 5129127, at *4 (Tex. App.—Austin Dec. 14, 2010, no pet.) (mem. op.) (“Because the 

parties entered into the agreement during the course of the administrative proceeding, it was 

governed by the provisions of the APA, not by the rules of civil procedure.”); see also Tex. R. 

Civ. P. 11 (“Unless otherwise provided in these rules, no agreement between attorneys or parties 

touching any suit pending will be enforced unless it be in writing, signed and filed with the 

papers as part of the record, or unless it be made in open court and entered of record.” (emphasis 

added)). Nevertheless, the APA provides that parties to a contested case may informally dispose 
7

of the matter by agreed settlement, unless precluded by law. Tex. Gov’t Code § 2001.056. And 

at the time of the hearing, the Commission’s rules provided, “No stipulation or agreement shall 

be considered unless it is in writing and signed by the parties or their authorized representatives, 

or dictated into the record during the course of the proceeding.” 16 Tex. Admin. Code § 1.123 

(2016) (R.R. Comm’n of Tex., Stipulations), repealed by 42 Tex. Reg. 1214, 1214 (2017),

adopted by 42 Tex. Reg. 4131, 4131 (2017). Because the language of former Rule 1.123 is 

substantially similar to that of Texas Rule of Civil Procedure 11 and given the lack of case law 

interpreting former Rule 1.123, we look to case law discussing Rule 11 agreements in our 

interpretation of former Rule 1.123. See Shamrock Psychiatric Clinic, P.A. v. Texas Dep’t of 

Health & Human Servs., 540 S.W.3d 553, 560 (Tex. 2018) (per curiam) (concluding that because 

State Office of Administrative Hearing’s Rule 155.415 and Rule 11 “are nearly identical in 

language,” “we agree that cases discussing Rule 11 agreements may guide our interpretation of 

. . . Rule 155.415”).

“Rule 11 agreements are contracts relating to litigation” and “[t]o be effective, a 

Rule 11 agreement must consist of ‘a written memorandum which is complete within itself in 

every material detail, and which contains all of the essential elements of the agreement.’” Id. at

560–61 (quoting Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995)). In construing a Rule 

11 agreement, we apply “the same rules as a contract.” Id. at 560 (citing Trudy’s Tex. Star, Inc. 

v. City of Austin, 307 S.W.3d 894, 914 (Tex. App.—Austin 2010, no pet.)). Thus, construing the 

agreement as a contract, we consider whether the Rule 11 Agreement contained the essential 

elements to informally dispose of the matter.

Here, there is no dispute that the Rule 11 Agreement was in writing, signed by the 

parties, and filed in the administrative proceeding. See id. at 561 (noting that agreement was in 
8

writing, signed, and filed with court as required by rules). The Commission describes the Rule 

11 Agreement as “an agreement-to-attempt-to-agree to settle” and argues that “the Rule 11 

agreement was not itself a settlement of the issues” but “merely provided for the possibility of 

settlement if certain underlying conditions were met.” We disagree. The Rule 11 Agreement 

provides that Vergo “shall” agree to the terms of the attached draft permit; that Vergo “shall”

provide necessary items and “shall” take certain actions for the Commission to supplement and 

complete the draft permit; that Vergo’s failure to provide the documents “will result in nonrenewal of permit”; that the attached permit to the Rule 11 Agreement “shall” expire on 

December 2; and that Vergo “shall not” continue operations after December 2 without receiving 

a renewal landfarm permit. Under the Rule 11 Agreement, nothing is left for Vergo to agree to;

the essential elements of the agreement are in place. If Vergo failed to perform, it would result 

in a nonrenewal of the permit; if Vergo did perform, the Commission would supplement and 

complete the permit. See Lesikar v. Moon, 237 S.W.3d 361, 367 (Tex. App.—Houston [14th 

Dist.] 2007, pet. denied) (“The word ‘shall’ as used in contracts is generally mandatory, 

operating to impose a duty.” (citing Roberts v. Clark, 188 S.W.3d 204, 210 (Tex. App.—Tyler 

2002, pet. denied))). Moreover, under either scenario, Vergo has waived its “claims, demands, 

rights or interest” relating to the renewal of the permit or to any action taken by the Commission 

related to the permit under the Rule 11 Agreement. And Exhibit B of the Rule 11 Agreement 

expressly states, “By participating in the Rule 11 Agreement, Vergo Patio Gardens relinquishes 

all rights to a hearing regarding the renewal of Permit no. LF-0032.”

The Commission’s only explanation for why the Rule 11 Agreement did not settle 

all the issues related to the permit renewal is that “the Rule 11 agreement specifically references 

a separate settlement agreement that was yet to be signed by Vergo.” But the referenced 
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“separate settlement agreement”—Exhibit A of the Rule 11 Agreement—is a draft permit titled

“PERMIT TO LANDFARM CERTAIN NONHAZARDOUS OIL AND GAS WASTES.” 

Exhibit A does not require Vergo’s signature: the only signature block was for a Commission

manager, and above the signature block it states, “This authorization is granted subject to review 

and cancellation should investigation show that such authorization is being abused.” Vergo’s

signature was not required for the referenced “separate settlement agreement”—i.e., the renewal

permit—to be issued. See Rule 8(d)(6)(A) (1996) (providing that permits are issued by 

Commission). Accordingly, we conclude that the Rule 11 Agreement contained the essential 

elements to informally dispose of the matter.

3

The Texas Supreme Court recently explained that administrative law judges 

generally have a ministerial duty to enforce a valid Rule 11 agreement. See Shamrock 

Psychiatric Clinic, 540 S.W.3d at 562. The relevant background facts of Shamrock Psychiatric 

Clinic are as follows. Shamrock and the Texas Health and Human Services Commission’s 

Office of Inspector General corresponded regarding consolidating a “payment-hold case with the 

soon-to-be-filed overpayment-recoupment case,” which was memorialized in the Inspector 

General’s status report and in the administrative law judge’s order relying on that report to 

continue the hearings. Id. at 556–57, 561. Nevertheless, the Inspector General later sent 

Shamrock a final notice of overpayment, which included notice of a 15-day appeal requirement, 

but Shamrock did not timely appeal. Id. at 557. The Inspector General “notified Shamrock of 

the State’s intent to dismiss the overpayment and payment-hold cases due to Shamrock’s failure”

to timely appeal, and Shamrock responded with a letter referencing their agreement to 

3 For these reasons, we also disagree with the stated rationale of the ALJ in describing 

the Rule 11 Agreement as potentially unenforceable.
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consolidate the cases. Id. “Disregarding the letter,” the Inspector General filed a motion to 

dismiss the pending case. Id. The administrative law judge initially denied the motion, finding 

that the parties had entered into an “agreement that the payment hold and final notice of 

overpayment cases would be heard together.” Id. But the Inspector General then withdrew its 

“payment-hold case” and argued that the administrative law judge no longer had jurisdiction to 

enforce the agreement because no contested case was pending on either issue. Id. at 558. The 

administrative law judge then dismissed the case. Id. Shamrock sued in district court for “a writ 

of mandamus directing the administrative law judge to enforce the alleged Rule 11 agreement 

between the parties,” alleging that the administrative law judge “had a ministerial duty to enforce

or abide by the Rule 11 agreement created by the parties’ communications.” Id. at 558–59.

The Texas Supreme Court, interpreting the Rule 11 agreement as a contract,

concluded that a valid Rule 11 agreement existed and that it was complete within itself and 

contained the essential elements of the agreement. Id. at 561. The Court then noted, “[t]he 

power to conduct adjudicative proceedings necessarily includes . . . ‘the power to accept and act 

upon an agreement between the parties that removes from dispute and litigation a subsidiary

issue of fact or law’” and “[w]ielding this power is not only a judge’s right, but a judge’s 

responsibility,” given the “‘ministerial duty to enforce a valid Rule 11 agreement.’” Id. at 561–

62 (quoting Fortis Benefits v. Cantu, 234 S.W.3d 642, 651 (Tex. 2007); Cities of Abilene 

v. Public Util. Comm’n, 146 S.W.3d 742, 747 (Tex. App.—Austin 2004, no pet.)). Accordingly, 

the Court concluded that “the administrative law judge failed to perform a purely ministerial act”

to enforce the Rule 11 agreement. Id. at 562.

Following Shamrock Psychiatric Clinic, we conclude here that the ALJ likewise 

failed to act in accordance with this responsibility and abused its discretion by failing to comply 
11

with its ministerial duty. The Commission argues that the joint motion to dismiss did not request 

that the ALJ dismiss the case; instead, the joint motion “merely asked the ALJ to ‘remove’ the 

hearing setting to allow the parties to enter settlement negotiations.” But the joint motion

described the Rule 11 Agreement as “allowing the parties to enter a 60-day binding settlement 

period” for the provision of additional information to “supplement” and “complete” the renewal 

permit and requested that the hearing setting be removed “to allow the parties to resolve this 

matter without the necessity of a hearing.” (Emphasis added.) Accordingly, we construe the 

joint motion not as a request to allow settlement negotiations, but as a request to enforce the 

Rule 11 Agreement to resolve the dispute by settlement agreement, not by hearing.

The Commission also claims that “[r]egardless, Vergo waived its complaint by 

failing to adequately state it in its motion for rehearing.” “The motion for rehearing is a statutory 

prerequisite to an appeal in a contested case and must be sufficiently definite to notify the agency 

of the error claimed so that the agency can either correct or prepare to defend the error.” Scally 

v. Texas State Bd. of Med. Exam’rs, 351 S.W.3d 434, 444–45 (Tex. App.—Austin 2011, pet. 

denied) (internal citations omitted); see Tex. Gov’t Code § 2001.145 (providing that “[a] timely 

motion for rehearing is a prerequisite to an appeal in a contested case”). “The standard is one of

fair notice” and does not require “a briefing of the law or facts.” Scally, 351 S.W.3d at 445. The 

Commission asserts that Vergo did not mention in its rehearing motion “the legal basis that 

Vergo now raises: that the ALJ had [a] ‘ministerial duty to enforce’ the Rule 11 agreement to 

dismiss the case.” But Vergo’s rehearing motion had a section titled “Denial of Settlement

Agreement” and expressly stated that “the parties entered into a Rule 11 Agreement settling this 

case”; “the [ALJ] refused to enter the agreement”; the parties were “forced” “to utilize their

resources trying this case” and “to attend a three-day hearing”; and “the ALJ wrongfully denied 
12

the settlement agreement.” We conclude that Vergo’s rehearing motion met the standard of fair 

notice on the legal issue of whether the ALJ should have enforced the Rule 11 Agreement. 

Compare, e.g., Burke v. Central Educ. Agency, 725 S.W.2d 393, 398 (Tex. App.—Austin 1987, 

writ ref’d n.r.e.) (finding waiver), with Morgan v. Employees’ Ret. Sys., 872 S.W.2d 819, 821 

(Tex. App.—Austin 1994, no writ) (concluding error preserved).

In sum, the parties entered into a voluntary settlement agreement,

4 but the ALJ 

refused to enforce the agreement by proceeding with the contested case hearing. Vergo 

preserved error and presented the ALJ’s error to the Commission in its rehearing motion, but the

Commission entered an order denying the permit application based on the hearing and resulting 

PFD. In so doing, Vergo’s substantial rights—including those created by the Rule 11 

Agreement—were prejudiced because Vergo was “forced” “to attend a three-day hearing” and 

“utilize [its] resources trying this case” when the dispute had already been settled by the Rule 11 

Agreement. We therefore hold that the administrative decision was “arbitrary and capricious or

characterized by an abuse of discretion or clearly unwarranted exercise of discretion,” and the 

APA requires that we reverse and remand this case. See Tex. Gov’t Code § 2001.174(2)(F).

THE COMMISSION’S MOTION FOR REHEARING

In its motion for rehearing, the Commission argues that this Court’s decision

“realign[s] the balance of power between the parties and the [ALJ] in an administrative 

4 “It is the policy of this state to encourage the peaceable resolution of disputes[.]” Tex. 

Civ. Prac. & Rem. Code § 154.002; see Transport Ins. v. Faircloth, 898 S.W.2d 269, 280 (Tex. 

1995) (noting that “[p]ublic policy favors the amicable settlement of controversies” because 

settlement “avoid[s] the uncertainties regarding the outcome of litigation, and the often 

exorbitant amounts of time and money to prosecute or defend claims at trial”); Schlumberger

Tech. Corp. v. Swanson, 959 S.W.2d 171, 178 (Tex. 1997) (“Texas law favors and encourages

voluntary settlements and orderly dispute resolution.”).
13

proceeding” and that “[u]ntil now, ALJs—like all tribunals—had the power to manage their 

dockets and grant or deny continuances in the sound exercise of their discretion.” But the 

Commission reads our opinion too broadly. This opinion is limited to a narrow and unusual set 

of facts and does not generally impinge on the power and discretion of ALJs to grant or deny 

continuances. Here, the motion to dismiss the hearing was a joint motion with the Rule 11

Agreement attached, the motion expressly stated that the parties “have entered into a Rule 11 

Agreement allowing the parties to enter a 60-day binding settlement period” and “request[ed] 

that the hearing setting be removed to allow the parties to resolve this matter without the 

necessity of a hearing,” and the attached Rule 11 Agreement removed from dispute and litigation 

the issues of fact and law. Contrary to the Commission’s assertion, the joint motion is not “a 

thinly disguised seventh motion for continuance reliant upon the Agreement as evidence.”5 And 

the ALJ’s power includes “‘the power to accept and act upon an agreement between the parties 

that removes from dispute and litigation a subsidiary issue of fact or law,’” and “[w]ielding this 

power is not only a judge’s right, but a judge’s responsibility.” Shamrock Psychiatric Clinic, 

540 S.W.3d at 562 (quoting Cities of Abilene, 146 S.W.3d at 747) (emphasis added).

5 The Commission argues that “[n]o unambiguous request to enforce [the Rule 11 

Agreement] occurred here,” that “the term ‘enforce’ does not appear in the Motion,” and that 

“the ALJ construed the Motion differently from the Court.” But there was no need to request the 

ALJ to “enforce” the Rule 11 Agreement against one of the parties because the motion was a 

joint motion. And the ALJ’s September 29, 2016 letter to the parties demonstrates that the ALJ 

construed the joint motion as “based upon a Rule 11 Agreement entered into by the parties” and 

as a request to enforce that agreement, as evidenced by the ALJ declining that request because 

the Rule 11 Agreement “appears to be unenforceable” and because the parties needed to present 

the ALJ “with a Rule 11 Agreement with teeth in it.” We do not agree with the Commission that 

“by using the template blessed by th[is] opinion, parties are in control of the docket” and that 

“nothing in th[is] opinion prevents the parties in any case entering into a “Rule 11 agreement’

and obtaining their preferred schedule because the ALJ has a ministerial duty to grant the 

motion.” Our opinion is limited to the filing of a joint motion that attaches a binding Rule 11 

agreement that removes the disputed issues from litigation.
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The Commission also argues that Vergo’s complaint is moot because “[t]he Rule 

11 Agreement required Vergo to submit several outstanding permitting documents, which it 

failed to do by the agreed-upon deadline of November 17, 2016, or at any time since,” and

therefore “Vergo failed to perform under the Agreement.”6 Vergo responds that “the Rule 11 

Agreement was erroneously nullified,” “the [Commission] cannot hold Vergo to the dates 

specified in the Agreement when the Examiner struck it down,” and “Vergo’s allotted time to 

produce the material documents should start upon completion of this Appeal, when the Rule 11 

Agreement is enforced.” But to the extent these questions regarding failure to perform,

agreement nullification, or deadlines for submitted documents are relevant and can be raised, 

they should be addressed on remand, not here; in a suit for judicial review of an agency action, 

we are “empowered to issue only a general remand when [we] find[] error that prejudices an 

appellant’s substantial rights.” Freightliner Corp. v. Motor Vehicle Bd. of Tex. Dep’t of Transp., 

255 S.W.3d 356, 361 (Tex. App.—Austin 2008, pet. denied) (quoting Ford Motor Co. 

v. Butnaru, 157 S.W.3d 142, 149 (Tex. App.—Austin 2005, no pet.)); see id. at 362 (noting 

courts generally are not authorized “to dictate how an agency conducts its review of remanded 

issues or decides them”); see also Tex. Gov’t Code § 2001.174(2).

Our conclusion here is that the September 29, 2016 administrative decision to 

deny the parties’ joint motion to dismiss the hearing setting when the parties had removed 

6 The Commission also argues that Vergo “could have sought reconsideration,” “file[d] 

an interlocutory appeal of the ALJ’s ruling on the Motion to the Commission,” or “even sought 

mandamus relief directing the ALJ to enforce the Rule 11 to prevent Vergo from suffering the 

expense and time of a wholly unnecessary hearing.” Although the Commission may be correct 

that these paths were available to Vergo and perhaps these paths would have been a more 

prudent and efficient approach, the Commission has not cited any authority supporting the 

proposition that the failure to seek reconsideration, interlocutory appellate relief, or mandamus 

relief waives Vergo’s right to raise this issue on appeal when it has raised the issue in its motion 

for rehearing before the Commission.
15

from dispute and litigation the issues of fact and law and to proceed with the scheduled 

October 3, 2016 hearing—just four days after the administrative decision—prejudiced Vergo’s 

substantial rights. Any subsequent failure to comply with the Rule 11 Agreement does not moot 

the question of whether Vergo’s substantial rights were prejudiced by being “forced” “to attend a 

three-day hearing” and “utilize [its] resources trying this case” when the dispute had already 

been settled by the Rule 11 Agreement. A decision to the contrary will disincentivize settlement 

in the administrative process: it will inject uncertainty into settlement negotiations as to whether 

ALJs will dismiss scheduled hearing settings—unquestionably an important settlement factor 

given the costs associated with hearings—when the parties submit a joint motion and a Rule 11 

agreement that removes from dispute and litigation the issues of fact and law to be addressed at 

that hearing.

CONCLUSION

For these reasons, we reverse and remand for further proceedings consistent with 

this opinion.

__________________________________________

Melissa Goodwin, Justice

Before Justices Goodwin, Baker, and Kelly

Reversed and Remanded on Rehearing

Filed: April 22, 2022