Opinion ID: 6108334
Heading Depth: 2
Heading Rank: 4

Heading: The Contract Permits Consideration of 1987 Baseline Data

Text: By its plain terms, section 11.1(1)(ii) imposes a well-restoration requirement contingent on an alteration of suitability that emanated from PAA 1 mining operations as determined by baseline data and the water quality that existed before URI's mining in PAA 1. According to TCEQ regulations, [b]aseline quality refers to [t]he parameters and their concentrations that describe the local groundwater quality of an aquifer prior to the beginning of injection operations. 77 Section 11.1 does not refer to any particular set of baseline data, prescribe the use of particular data, place limitations on the data that may be considered in determining pre-mining suitability, or require restoration of any well, let alone a particular well. The trial court found the 1987 baseline data URI relied on is valid, and the evidence at trial establishes that the TCEQ accepted the 1987 data as accurately reflecting baseline quality. Per the trial court's express findings, the 1987 baseline data shows the water in Well I-11 was unsuitable for any of the contractually specified uses before URI began mining in PAA 1 in 1988. The trial court's findings are unchallenged. Accordingly, under a plain reading of section 11.1(1)(ii), URI had no obligation to ensure the water in Well I-11 was suitable for drinking, livestock watering, or irrigation before resuming mining in PAA 3. The lower courts concluded, however, that URI could not use the 1987 baseline data, alone or in combination with the 1985 baseline data, precisely because this outcome would ensue from a plain and objective reading of the Settlement Agreement. Even though the contract admits no ambiguity, the lower courts engrafted limitations that are entirely external to the instrument  and directed to fulfilling Kleberg County's unexpressed subjective intent. This is not a proper use of surrounding facts and circumstances. [C]ourts cannot rewrite the parties' contract or add to or subtract from its language. 78 If the parties intended to obligate URI to restore the water quality in Well I-11 to use for irrigation purposes (or higher) or guarantee a minimum number of wells would be made suitable, the parties could have articulated so. But rather than agreeing to a particular result, the parties adopted a process that would be nugatory under Kleberg County's construction of the contract. 79 For example, in section 11.1(1)(ii), the Settlement Agreement does not identify specific wells subject to restoration and, instead, leaves the matter subject to determination by reference to baseline data. If the parties intended to require Well I-11 to be restored to irrigation use, there would be no need for the open-ended description of the wells encompassed by section 11.1(1)(ii) as 90% or more of the combined total of TCEQ production area baseline wells in KVD Production Area 1 and any other wells in the production patterns that URI sampled and for which baseline is available before mining begins. To make an analogy, one would not mandate delivery to the green house on Pecan Street by agreeing that delivery could be made at a colored house on a street with a nut name. Subsection 11.1(2) would likewise be superfluous if the parties contemplated that specific data would be used or a specific outcome was guaranteed. In that subsection, the parties agreed that URI would provide a copy of the analytical data URI relied on in certifying which wells are deemed to have produced water suitable for either drinking, stock watering, or irrigation use before URI's mining in PAA 1. That would be unnecessary if the parties already agreed on which data to use. The agreement, construed as a whole, thus expresses an intent that URI would follow a process to identify subject PAA 1 wells, using unspecified baseline analytical data, to certify which wells were deemed to have produced suitable water before URI's mining in PAA 1 began. If the 1987 baseline had indicated a higher use for Well I-11 than irrigation, or resulted in more wells with prior suitability, URI would have been contractually bound to restore the water quality accordingly. The fact that no wells ultimately triggered the restoration requirement in section 11.1(1)(ii) does not render the provision or the substance of the Settlement Agreement meaningless. Kleberg County bargained for a process in section 11.1(1)(ii), and it got just that. While the agreement is silent regarding averaging the 1985 and 1987 data, the record reflects averaging was a more conservative approach than relying solely on one set of data. According to the evidence at trial, the TCEQ requires only a single sample to establish baseline quality. Despite the industry practice of using only one sample to establish baseline quality, the testifying experts agreed that using multiple data points is a better measure of baseline quality than a single sample.  Though they disagreed as to the optimal number of data points, the record reflects that only two such samples existed for Well I-11. Thus, rather than relying on the 1987 data alone, URI reasonably averaged the available data. Focusing on the term available in subsection 11.1(1)(ii), Kleberg County argues the Settlement Agreement linguistically fences out the 1987 data. The 1987 data existed before PAA 1 mining began in 1988 and before URI resumed PAA 3 mining in 2007, 80 but Kleberg County construes available as meaning publicly available or otherwise known by the County at the time the Settlement Agreement was executed. Neither of Kleberg County's proposed limitations is expressed in the agreement, and extrinsic evidence of the parties' knowledge and expectations cannot be considered to add to, alter, or otherwise change the unambiguous language in subsection 11.1(1)(ii). 81 Regardless, Kleberg County's reliance on its interpretation of available is misplaced. Well I-11 is indisputably subject to a restoration determination under subsection 11.1(1)(ii) because it is either a (1) TCEQ production area baseline well[ ] in KVD Production Area 1 or (2) any other well[ ] in the production patterns that URI sampled and for which baseline is available before mining begins [in PAA 3]. As a practical matter, it doesn't matter which one. What matters is URI's restoration obligation. Well I-11 must be returned to suitability ... for the same use to which it was suited before such mining only if it had water suitable ... before URI's mining in PAA 1 for use as either drinking water, livestock water, or irrigation water .... Available is pertinent to defining the subject PAA 1 wells but says nothing about the restoration obligation. Subsection 11.1(1)(ii) requires restoration of wells for which there is available baseline data, but beyond that, does not limit the baseline data for purposes of a suitability determination. Kleberg County alternatively argues URI breached the Settlement Agreement because URI's section 11.1 certification did not, itself, comply with the contract requirements. Kleberg County alleges noncompliance in the following respects: (1) the sworn certification states that the analytical data showed unsuitability for contractually specified uses, rather than whether any wells had been suitable for those uses; (2) the certification is self-contradictory because it uses a double negative (None of these wells were not suitable for use.); and (3) no documentation for the certification was submitted at trial. We find no merit in this argument which relies on unpleaded theories of contract breach, inverts the burden of proof, and contradicts unchallenged trial court findings. The sworn certification and its accompanying transmittal letter state that the analytical data URI relied on was attached, as required by the Settlement Agreement. To establish URI's noncompliance with the contract requirements, Kleberg County bore the burden of proving the circumstances were otherwise.  With respect to the asserted inaccuracies in the certification, the Settlement Agreement requires only a sworn statement of a URI officer certifying to the Kleberg County Judge that pore treatment and required well restoration was completed before mining recommenced in PAA 3. Understanding these terms according to their normal usage, the agreement required URI's officer to swear under oath a formal assurance that URI met the contractual requirements. 82 The agreement thus requires only that the certification be honest. The trial court found URI's alleged breach was unintentional and without deliberate intent and that there was no bad faith on the part of either party with regard to [the] language interpretation issues and the parties' respective positions. We hold that, under a plain and grammatical reading of section 11.1, URI did not breach the Settlement Agreement when it resumed mining operations in PAA 3, and Kleberg County is not entitled to attorney's fees or a specific-performance remedy on its breach-of-contract claim. 83