Petition for Writ of Mandamus Denied and Memorandum Opinion filed 

December 12, 2017.

In The 

Fourteenth Court of Appeals

NO. 14-17-00436-CV

IN RE BHP BILLITON PETROLEUM PROPERTIES (N.A.), LP AND BHP 

BILLITON PETROLEUM (TXLA OPERATING) COMPANY, Relators 

ORIGINAL PROCEEDING 

WRIT OF MANDAMUS 

164th District Court 

Harris County, Texas 

Trial Court Cause No. 2015-42862 

MEMORANDUM OPINION 

Relators BHP Billiton Petroleum Properties (N.A.), LP and BHP Billiton 

Petroleum (TXLA Operating) Company (collectively, “BHP Billiton”) ask this court 

to issue a writ of mandamus compelling the Honorable Alexandra Smoots-Thomas, 

presiding judge of the 164th District Court of Harris County, to (1) vacate an August 

11, 2017 order denying their plea to the jurisdiction; (2) grant the plea to the 

jurisdiction; and (3) dismiss certain claims over which BHP Billiton contends the 
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trial court has no jurisdiction. See Tex. Gov’t Code Ann. § 22.221 (Vernon Supp. 

2017); see also Tex. R. App. P. 52.

We deny the petition.

BACKGROUND

Real party in interest EF Non-Op LLC (“EF”) is an oil and gas exploration 

and production company; it owns working interests in leases and wells in the White 

Kitchen and Martin Ranch prospects in the Eagle Ford Shale.

BHP Billiton is a working interest owner and the operator of approximately 

60 wells in which EF holds a working interest. 

As operator, BHP Billiton develops the leases by drilling and operating wells. 

BHP Billiton also arranges for disposition of the oil and gas produced by those wells. 

EF is charged with its proportionate share of expenses from these operations and 

receives its share of the oil and gas produced. 

An affiliate of BHP Billiton called BHP Billiton Petroleum (Eagle Ford 

Gathering), LLC (“Eagle Ford Gathering”), provides gas gathering, compression, 

and treatment services in the Hawkville area of the Eagle Ford Shale.

Eagle Ford Gathering operates 568 miles of gathering pipelines, which 

transport gas from the wellheads to central delivery points where larger pipelines 

transport the gas to downstream sales points. BHP Billiton has contracted to have

Eagle Ford Gathering perform gas gathering services. Because EF elected to 

transport its gas on Eagle Ford Gathering’s pipeline, EF is charged a proportionate 

share of the gas gathering charges.
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EF sued and asserted that BHP Billiton breached obligations and duties arising 

under various joint operating agreements (“JOAs”).

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 BHP Billiton alleged JOA 

breaches included those relating to “Gathering Issues,” a shorthand term used in this 

litigation to describe EF’s contention that Eagle Ford Gathering charged more than 

59 cents per mcf — an above-market rate — for gathering, treating, and transporting 

the gas to a central delivery point. 

BHP Billiton filed a plea to the jurisdiction asserting that EF first had to pursue 

its claim for “Gathering Issues” with the Texas Railroad Commission before EF 

could sue. BHP Billiton argued that the Commission has exclusive original 

 

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In its original petition, EF brought claims against BHP Billiton for asserted breaches of 

the duties to (1) conduct its activities as a reasonable prudent operator; (2) drill wells on a 

competitive contract basis at the usual and prevailing rates; (3) keep an accurate record of the joint 

account, including all expenditures incurred thereunder; (4) account for non-operator funds 

advanced to BHP; (5) provide full and free access to all operations and activities, including but not 

limited to field operations and BHP Billiton’s books and records relating to those operations and 

activities; (6) refrain from conducting any reworking, deepening, plugging back, recompletion, or 

sidetracking operations with respect to any well then capable of producing paying quantities except 

with the consent of all parties; (7) provide each non-operator with a separate proposal and option 

to participate in any completion attempt with respect to wells drilled; (8) refrain from reworking, 

recompleting, or plugging back a well except pursuant to the proposal and election procedures 

provided for in the agreement; (9) refrain from undertaking any single project reasonably estimated 

to require an expenditure in excess of $50,000 except in connection with an operation previously 

authorized by the parties; (10) charge each working interest owner only for its proportionate share 

of the costs of developing and operating the contract area; (11) include statements with joint 

interest billings, which identified (a) the authority for expenditure; (b) the lease facility, and (c) all 

charges and credits, summarized by appropriate classifications of investments and expenditures; 

(12) include statements with submitted joint interest billings, which separately identified and fully 

described in detail controllable material and unusual charges and credits; (13) submit only 

appropriate expenses to the working interest owners for payment, as distinguished from expenses 

otherwise covered by the overhead rates set out in the accounting procedures; and (14) refrain from 

conducting workover or other drilling or development operations without the consent of all parties 

to the JOAs, so long as any completion in the subject well was producing or capable of producing 

in paying quantities.
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jurisdiction over disputes concerning rates charged by gas utilities such as Eagle 

Ford Gathering because the Commission regulates rates and services under the Gas 

Utility Regulatory Act (“GURA”). See Tex. Util. Code Ann. § 102.001(a) (Vernon 

2007). The trial court held a hearing on the plea to the jurisdiction and ordered EF 

to re-plead its claims regarding the Gathering Issues.

In response to EF’s seventh amended petition, BHP Billiton filed an amended 

and supplemental plea to the jurisdiction on the Gathering Issues. BHP contended

that these issues relate to Eagle Ford Gathering’s rates and services and, therefore, 

come within the Railroad Commission’s exclusive jurisdiction. After holding a 

hearing on the plea to the jurisdiction on May 12, 2016, the trial court signed the 

order denying the plea to the jurisdiction on May 16, 2017. 

BHP Billiton asks this court to compel the trial court to (1) set aside its May 

16, 2017 order denying the plea to the jurisdiction; (2) grant the plea to the 

jurisdiction; and (3) dismiss EF’s claims related to the Gathering Issues. 

STANDARD OF REVIEW

A relator seeking mandamus relief generally must demonstrate that (1) the 

trial court clearly abused its discretion; and (2) the relator has no adequate remedy 

by appeal. In re Nat’l Lloyds Ins. Co., 507 S.W.3d 219, 226 (Tex. 2016) (orig. 

proceeding) (per curiam). A trial court clearly abuses its discretion if it reaches a 

decision so arbitrary and unreasonable as to amount to a clear and prejudicial error 

of law or if it clearly fails to analyze the law correctly or apply the law correctly to 

the facts. In re H.E.B. Grocery Co., L.P., 492 S.W.3d 300, 302–03 (Tex. 2016) 

(orig. proceeding) (per curiam); In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 

379, 382 (Tex. 2005) (orig. proceeding) (per curiam). 
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Subject matter jurisdiction is essential to the authority of a court to decide a 

case. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993). 

A plea to the jurisdiction is a dilatory plea by which a party challenges the court’s 

authority to determine the subject matter of the action. Harris Cty. v. Sykes, 136 

S.W.3d 635, 638 (Tex. 2004). We construe the pleadings liberally in favor of the 

pleader and look to the pleader’s intent to determine whether the facts alleged 

affirmatively demonstrate the trial court’s jurisdiction to hear the cause. Tex. Dep’t 

of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). A trial court’s 

ruling on a plea to the jurisdiction is subject to de novo review. Id. 

District courts are courts of general jurisdiction and generally have subject 

matter jurisdiction absent a showing to the contrary. Dubai Petrol. Co. v. Kazi, 12 

S.W.3d 71, 75 (Tex. 2000). Mandamus may correct a trial court’s denial of a plea 

to the jurisdiction based on an agency’s exclusive jurisdiction because the judicial 

appropriation of state agency authority would be a clear disruption of the orderly 

processes of government. See In re Entergy Corp., 142 S.W.3d 316, 321 (Tex. 2004) 

(orig. proceeding). There is no presumption that administrative agencies have 

authority to resolve disputes. Subaru of Am., Inc. v. David McDavid Nissan, Inc., 

84 S.W.3d 212, 220 (Tex. 2002). “[A]dministrative bodies have only the powers 

conferred on them by clear and express statutory language or implied powers that 

are reasonably necessary to carry out the Legislature’s intent.” Thomas v. Long, 207 

S.W.3d 334, 340 (Tex. 2006). An agency has exclusive jurisdiction when “a 

pervasive regulatory scheme indicates that [the Legislature] intended for the 

regulatory process to be the exclusive means of remedying the problem to which the 

regulation is addressed.” Blue Cross Blue Shield of Tex. v. Duenez, 201 S.W.3d 674, 
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675–76 (Tex. 2006) (per curiam) (quoting Entergy Corp., 142 S.W.3d at 322). 

Whether an administrative agency has exclusive jurisdiction is a question of law 

subject to de novo review. Entergy Corp., 142 S.W.3d at 322. 

If an agency has exclusive jurisdiction, a plaintiff must exhaust administrative 

remedies before seeking judicial review of the decision. Thomas, 207 S.W.3d at 

340. If a party files suit before exhausting exclusive administrative remedies, the 

courts lack jurisdiction and must dismiss the case. Clint Indep. Sch. Dist. v Marquez, 

487 S.W.3d 538, 544 (Tex. 2016). Until the party has satisfied the exhaustion 

requirement, the trial court lacks subject matter jurisdiction and must dismiss the 

claims without prejudice to refiling. Thomas, 207 S.W.3d at 340. 

ANALYSIS

 The crux of this dispute is whether the Gathering Issues fall within the 

Railroad Commission’s exclusive jurisdiction under GURA. To resolve this dispute, 

we first discuss GURA in greater detail. We then analyze its applicability to the 

Gathering Issues being litigated in this case. 

I. GURA Establishes a Regulatory System for Gas Utilities 

The Texas Legislature enacted GURA because “[g]as utilities are by 

definition monopolies in the areas they serve. As a result the normal forces of 

competition that regulate prices in a free enterprise society do not operate. Public 

agencies regulate utility rates, operations, and services as a substitute for 

competition.” Tex. Util. Code Ann. § 101.002(b) (Vernon 2007). GURA 

establishes “a comprehensive and adequate regulatory system for gas utilities to 
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assure rates, operations, and services that are just and reasonable to the consumers 

and to the utilities.” Id. § 101.002(a). 

The term “‘gas utility’ includes a person or river authority that owns or 

operates for compensation in this state equipment or facilities to transmit or 

distribute combustible hydrocarbon natural gas or synthetic natural gas for sale or 

resale in a manner not subject to the jurisdiction of the Federal Energy Regulatory 

Commission under the Natural Gas Act (15 U.S.C. Section 717 et seq.).” Tex. Util. 

Code Ann. § 101.003(7) (Vernon Supp. 2017). 

The term “rate” means: 

(A) any compensation, tariff, charge, fare, toll, rental, or classification 

that is directly or indirectly demanded, observed, charged, or collected 

by a gas utility for a service, product, or commodity described in the 

definition of gas utility in this section; and 

(B) a rule, regulation, practice, or contract affecting the compensation, 

tariff, charge, fare, toll, rental, or classification. 

Id. § 101.003(12). GURA further defines the term “service” as follows:

“Service” has its broadest and most inclusive meaning. The term 

includes any act performed, anything supplied, and any facilities used 

or supplied by a gas utility in the performance of the utility’s duties 

under this subtitle to its patrons, employees, other gas utilities, and the 

public. The term also includes the interchange of facilities between two 

or more gas utilities. 

Id. § 101.003(14). 

“The statutory description of GURA as ‘comprehensive’ demonstrates the 

Legislature’s intent that GURA encompass all or virtually all pertinent 

considerations involving gas utilities operating in Texas.” Tara Partners, Ltd. v. 
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CenterPoint Energy Res. Corp., 371 S.W.3d 441, 446 (Tex. App.—Houston [1st 

Dist.] 2012, no pet.). 

GURA places responsibility for regulating gas utilities with the Railroad 

Commission. City of Port Neches v. R.R. Comm’n of Tex., 212 S.W.3d 565, 571 

(Tex. App.—Austin 2006, no pet.). “The railroad commission has exclusive original 

jurisdiction over the rates and services of a gas utility.” Tex. Util. Code Ann. 

§ 102.001(a). The Railroad Commission must ensure that each rate a gas utility 

makes, demands, or receives is “just and reasonable.” Tex. Util. Code Ann. 

§ 104.003(a) (Vernon 2007). GURA sets forth the factors the Railroad Commission 

applies in determining a just and reasonable rate for a gas utility, which include 

invested capital, rates of depreciation, amortization or depletion, net income, tax 

benefits, certain expenses, and postemployment benefits. See Tex. Util. Code Ann. 

§§ 104.051–.059 (Vernon 2007 & Supp. 2017). 

A gas utility must file schedules with the Railroad Commission “showing all 

rates that are: (1) subject to the regulatory authority’s original or appellate 

jurisdiction; and (2) in effect for a gas utility service, product, or commodity offered 

by the gas utility.” Tex. Util. Code Ann. § 102.151(a) (Vernon 2007). A gas utility 

may charge only rates set forth on schedules filed with each regulatory authority 

having original or appellate jurisdiction over those rates. City of Dallas v. R.R. 

Comm’n of Tex., No. 03-06-00580-CV, 2008 WL 4823225, at *2 (Tex. App.—

Dallas Nov. 6, 2008, no pet.) (mem. op.) (citing Tex. Util. Code Ann. §§ 102.151, 

104.002, 104.005). “A rate may not be unreasonably preferential, prejudicial, or 

discriminatory but must be sufficient, equitable, and consistent in application to each 

class of consumer. In establishing a gas utility’s rates, the railroad commission may 
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treat as a single class two or more municipalities that a gas utility serves if the 

commission considers that treatment to be appropriate.” Tex. Util. Code Ann. 

§ 104.003(a). 

An “affected person” may bring a complaint concerning the reasonableness 

of the existing rate of a gas utility. Tex. Util. Code Ann. § 104.151 (Vernon 2007). 

An “affected person” includes “a person whose utility service or rates are affected 

by a proceeding before a regulatory authority.” Tex. Util. Code Ann. 

§ 101.003(1)(B).

We now examine the Gathering Issues that are being litigated in this suit 

against the backdrop of this regulatory scheme. 

II. GURA Does Not Deprive the Trial Court of Subject Matter Jurisdiction 

to Consider the Gathering Issues 

Article V.A of the JOAs between BHP Billiton and EF pertains to the 

designation and responsibilities of the operator and provides in relevant part as 

follows:

Operator shall conduct its activities under this agreement as a 

reasonable prudent operator, in a good and workmanlike manner, with 

due diligence and dispatch, in accordance with good oilfield practice, 

and in compliance with applicable law and regulation . . . . 

Article V.D.1, which addresses the rights and duties of the operator regarding 

competitive rates and the use of affiliates, provides in relevant part as follows:

All work performed or materials supplied by affiliates or related parties 

of Operator shall be performed or supplied at competitive rates, 

pursuant to written agreement, and in accordance with customs and 

standards prevailing in the industry. 
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EF contends that BHP Billiton breached these articles and failed to act as a 

reasonable and prudent operator when it chose an affiliate to provide gas gathering 

services at non-competitive rates. According to EF, the Gathering Issues turn on 

whether BHP Billiton selected a reasonable gathering plan with a competitive 

provider.

BHP Billiton asserts that EF’s Gathering Issues focus on the reasonableness 

of Eagle Ford Gathering’s rates and services. BHP Billiton posits that EF’s claim

for breach of the JOAs based on the Gathering Issues must be predicated on a 

determination about whether Eagle Ford Gathering’s rates and services are just and 

reasonable. BHP Billiton argues that the Railroad Commission has exclusive 

jurisdiction to decide the reasonableness of Eagle Ford Gathering’s rates and 

services under section 104.003 of GURA. 

We reject BHP Billiton’s contention. EF’s contentions regarding Eagle Ford 

Gathering’s rates arise in the context of a claim that BHP Billiton breached the JOAs 

by (1) failing to conduct its activities under the JOAs as a reasonable and prudent 

operator; and (2) hiring Eagle Ford Gathering to supply gathering services at noncompetitive rates for the life of the wells. EF complains that BHP Billiton could 

have engaged other gathering companies doing business in the area, which charged 

less for providing the same service. EF’s Gathering Issues do not implicate the 

Railroad Commission’s exclusive jurisdiction under GURA because it is not 

necessary to decide whether the rate filed with and approved by the Commission is 

reasonable in determining whether BHP Billiton breached the JOAs by entering into 

life-of-the-well contracts with an affiliate charging rates higher than those charged 

by other gathering companies operating in the area. 
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BHP Billiton cannot change this conclusion by contending that EF seeks to

frame its Gathering Issues as a private contract dispute to evade the Railroad 

Commission’s jurisdiction. BHP Billiton misplaces its reliance on Tara Partners in 

making this contention. See 371 S.W.3d at 447–48.

Tara Partners contracted with a gas utility, CenterPoint, to purchase natural 

gas. Tara Partners sued CenterPoint for breach of contract because CenterPoint 

billed for more gas than Tara Partners actually consumed. Id. at 443. Tara Partners 

asked the trial court to correct CenterPoint’s bills retroactively and award damages 

for the overpayment. Id. CenterPoint filed a plea to the jurisdiction arguing that the 

Texas Utilities Code conferred exclusive jurisdiction over claims regarding rate 

disputes and refunds for overcharges with the Railroad Commission or the 

municipality involved. Id. 

Tara Partners contended that its suit was based on a private contract and, 

therefore, no administrative regulation of natural gas rates and services applied to its 

claim. Id. The court of appeals determined that Tara Partners’ claim that 

CenterPoint incorrectly charged for natural gas fell within the statutory definitions 

of “rate” and “service,” over which the municipality or Railroad Commission had 

exclusive original jurisdiction. Id. at 446 (citing Tex. Util. Code Ann. §§ 102.001, 

103.001). Rejecting Tara Partners’ argument that GURA did not apply to its claim 

for breach of a private contract, the court explained that the statutorily defined rate 

over which the municipality or Railroad Commission had exclusive original 

jurisdiction included a “contract affecting the compensation, tariff, charge, fare, toll, 

rental, or classification” charged by the gas utility. Id. at 447 (quoting Tex. Util. 

Code Ann. § 101.003(12)). 
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The reasoning of Tara Partners does not apply here because this case involves

a dispute arising from contracts between two non-utilities. EF is not suing utility

Eagle Ford Gathering. EF is suing non-utility BHP Billiton for breach of the JOAs. 

EF asserts that it is not seeking a gross reduction in Eagle Ford Gathering’s rate as a 

gas utility. Instead, EF has asserted claims for breach of contract against BHP 

Billiton based on allegations that BHP Billiton violated the JOAs by failing to act as 

a reasonable and prudent operator when it contracted with Eagle Ford Gathering for 

the life of the wells at higher, non-competitive rates than those charged by other 

gathering companies in the area.

The district court has jurisdiction to entertain EF’s claim that BHP Billiton 

breached the JOAs by failing to act as a reasonable and prudent operator when it 

contracted with Eagle Ford Gathering to pay gas gathering rates that were approved 

by regulators but nonetheless were not competitive in light of other rates available 

from other gas gathering companies in the area. This issue does not come within the 

exclusive jurisdiction of the Railroad Commission, and the trial court did not abuse 

its discretion by denying BHP Billiton’s plea to the jurisdiction. 

BHP Billiton has not shown that it is entitled to mandamus relief. 

Accordingly, we deny the petition for writ of mandamus. We also lift our stay 

entered on June 6, 2017. 

 

 /s/ William J. Boyce

 Justice 

Panel consists of Justices Boyce, Donovan, and Jewell.