Court Opinion

ID: 2868803
Source: CourtListenerOpinion
Date Created: 2015-09-06 02:28:55.255777+00
Date Added: 2024-06-11T11:35:01.244618
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                             444444444444444444444444444
                              ON MOTION FOR REHEARING
                             444444444444444444444444444

                                      NO. 03-02-00474-CV
                                      NO. 03-03-00045-CV
                                      NO. 03-03-00046-CV

                             Pantera Energy Company, Appellant

                                                v.

           Railroad Commission of Texas; ConocoPhillips Company; and Pioneer
                          Natural Resources, USA, Appellees

    FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT
      NOS. GN103473, GN200177 & GN200727, HONORABLE W. JEANNE MEURER,
                               JUDGE PRESIDING

                                          OPINION

               To address concerns raised in the Railroad Commission’s motion for rehearing, we

withdraw our original opinion and judgments issued on October 30, 2003, and substitute this opinion

in its place. Pantera Energy Company filed two suits for judicial review challenging orders of the

Commission that dismissed its forty-eight applications to dissolve certain pooled gas units in the

Panhandle West Field. It also filed an action for declaratory relief that the Commission had acted
arbitrarily and capriciously by requiring Pantera to provide notice of its applications to offset

operators and mineral owners. Pantera asserts that the version of Rule 38(d)(3) in effect when its

applications were filed did not require such notice, and that the Commission could not consider other

provisions of Rule 38—particularly Rule 38(h), governing exceptions to density provisions—and

must have approved its applications without a hearing. See 14 Tex. Reg. 1575 (1989), adopted 14

Tex. Reg. 5255 (1989) (former 16 Tex. Admin. Code § 3.38(d)(3), (h)) (Tex. R.R. Comm’n)

(hereinafter cited as Former Rule 38(d)(3)); 16 Tex. Admin. Code § 3.38(h) (2003).1 While the three

causes were pending, the Commission amended Rule 38(d)(3) to expressly require notice to affected

persons listed in Rule 38(h)(1)(A). See 16 Tex. Admin. Code § 3.38(d)(3) (2003) (hereinafter cited

as New Rule 38(d)(3)). The district court held that the amendment to the rule was procedural in

nature and thus the Commission, whether it properly required such notice under Former Rule

38(d)(3), could require notice to offset operators and owners in its ongoing consideration of these

applications. The trial court thus dismissed all three actions as moot.

                We have consolidated the three causes on appeal to consider the common issue:

whether the amendment to Rule 38(d)(3) is procedural in nature and thus applicable to the pending

applications. We grant the motion for rehearing and affirm the district court’s dismissal of the suits

for judicial review because the amended rule moots the controlling issue in those actions;

additionally, we affirm the dismissal of the declaratory-judgment action because it is duplicative of

the relief sought in the suits for judicial review.

        1
          Because the other relevant portions of the former rule were not amended along with
subsection (d)(3) and do not differ from the current rule, citations to these other portions will be to
the current rule. See, e.g., 16 Tex. Admin. Code § 3.38(h) (2003).

                                                      2
                                           BACKGROUND

                In 1948, the Commission adopted special field rules specifying that each well in the

Panhandle West Field will drain 640 acres, making 640 the acreage required for each well drilled.2

If a tract does not contain 640 acres, an operator may pool several tracts into one unit in order to drill

a well. See 16 Tex. Admin. Code § 3.40 (2003). Almost sixty years ago, more than 150 separate

tracts were pooled to form these forty-eight units on which forty-eight wells have been drilled. The

operator of a unit that contains an existing well may seek the right to drill an additional well by

applying for an exception to the density restrictions and proving another well is necessary to prevent

the waste of hydrocarbons or confiscation of the operator’s property. See id. § 3.38(f) (2003). Under

either theory, the operator must present engineering and geological data to prove its entitlement to

an exception to the density rule. See id. § 3.38(i) (2003). More importantly to this dispute, the

operator seeking an exception must also give notice to all affected persons, including the operators

and unleased mineral owners of adjacent tracts, because additional wells might adversely affect their

interests. See id. § 3.38(h) (2003). In 1997, Pantera applied for a density exception to drill an

additional well on one of the units at issue here. Phillips Petroleum Company, an offset operator,

received notice and filed a protest; Pantera withdrew its application.3

        2
         The Commission’s statewide rules require an operator to have forty acres to drill and
produce an oil or gas well. See id. §§ 3.37(b), 3.38(b)(2)(B) (2003). However, the Commission may
adopt special field rules to protect the rights of mineral-interest owners in a certain reservoir and to
allow for the orderly and scientific development of the field. See Tex. Nat. Res. Code Ann.
§ 85.042(b) (West 2001). In the absence of a special rule for a field, the statewide density rule
governs.
        3
           Pantera then filed for a permit to drill at exactly the same well location, subject to not
producing concurrently with the existing well. When the new well was completed, Pantera shut-in
the existing well.

                                                    3
                Subsequently, in December 2000 and September 2001, Pantera filed a total of forty-

eight applications to dissolve formerly pooled units in the Panhandle West Field into their

component parts. Pantera filed its applications pursuant to Former Rule 38(d)(3);4 the Commission,

however, determined that the applications were, in effect, attempts to obtain exceptions to the density

provisions without complying with Commission rules.5 The Commission declined to consider the

applications until Pantera gave notice to offset operators and owners of unleased mineral interests.

       4
         After a unit has been voluntarily pooled and accepted by the Commission, the joined tracts
may not be divided into separate tracts composed of substandard acreage, “unless and until the
commission approves such division after application, notice to all current lessees and unleased
mineral interest owners of each tract within the joined or unitized tract, and an opportunity for
hearing.” Former Rule 38(d)(3).
       5
           According to the memorandum of Colin K. Lineberry (Office of General Counsel for the
Commission) dated April 3, 2001, Pantera is alleging that because the component tracts that would
result from dissolving these forty-eight units are alleged to have taken their current size and shape
prior to the attachment of the field rules requiring 640-acre units, each substandard-sized tract would
become a “legal subdivision” on which one well could be drilled. According to Intervenor
ConocoPhillips Company, if all forty-eight applications were granted, Pantera would be entitled to
drill one well on each of the resulting 157 component tracts, whereas they are currently entitled to
only forty-eight producing wells on the same acreage. Pantera does not dispute this assertion and
indeed advanced its “legal subdivision” argument before the Commission.

          Lineberry concluded that Pantera’s applications were, in effect, seeking exceptions to the
density provisions and that Rule 38(d)(3) did not apply to these facts. Lineberry agreed with the
examiner that Pantera was seeking to obtain an exception to density restrictions without complying
with the notice provisions of Rule 38(h):

           If Rule 38(d)(3) did apply to these facts as urged by Pantera, Pantera could
           effectively grant itself exceptions to the density rule for the Panhandle, West
           Field without giving notice to offset operators (or any third party) and without
           any discretion on the part of the Commission to grant or deny the exception. This
           interpretation would preclude the Commission from exercising its statutorily
           mandated duties of protecting correlative rights and preventing waste.

           Lineberry recommended that the Commission deny Pantera’s appeal, which it did.

                                                  4
See id. Pantera refused, relying on Former Rule 38(d)(3), which requires notice to only operators

and lessees of tracts within the pooled unit to be dissolved, in this case only to Pantera itself. See

Former Rule 38(d)(3). Specifically, Pantera insisted that the last sentence in Former Rule 38(d)(3)

required the Commission to grant its applications without deliberation: “If written waivers are filed

or if a protest is not filed within the time set forth in the notice of application, the application will

be granted administratively.” See id. The Commission declined to grant Pantera’s applications

administratively. Regarding two of the applications, the Commission informed Pantera that it could

seek a hearing, but only after giving notice to offsetting operators and unleased mineral interest

owners. Pantera continued to refuse to give notice and asked the Commission to reconsider. The

Commission declined to change its ruling and dismissed the applications.

                On October 19, 2001, while the applications were still pending before the

Commission, Pantera filed the first lawsuit in district court seeking a declaratory judgment that the

Commission was improperly applying Former Rule 38(d)(3) by requiring notice to the affected

persons listed in Rule 38(h)(1)(A). The Commission, in response, challenged the court’s jurisdiction

to grant declaratory relief when the Commission’s actions were subject to challenge in a suit for

judicial review. In October 2001, the Commission dismissed Pantera’s first two applications; in

December, the Commission dismissed Pantera’s remaining applications. Pantera filed two new suits

seeking judicial review of both Commission orders.6

        6
         Eventually three other operators in the Panhandle West Field intervened in all three suits,
urging their own pleas to the jurisdiction: Conoco Inc., Phillips Petroleum Company, and Pioneer
Natural Resources USA, Inc.

                                                   5
                On January 24, 2002, the Commission amended Rule 38(d)(3) to expressly require

notice to the “affected persons described in subsection (h)(1)(A).” See New Rule 38(d)(3); 16 Tex.

Admin. Code § 3.38(h). In April 2002, the district court granted the Commission’s and intervenors’

pleas to the jurisdiction and dismissed the declaratory-judgment action. The Commission and

intervenors then asserted a plea to the jurisdiction in the two suits for judicial review, urging that the

parties’ dispute had become moot because of the Commission’s amendment to Rule 38(d)(3). The

district court agreed that the amendment to the rule was a procedural change that applied to the

application process when the rule became effective, mooting any dispute about what notice Pantera

was required to give for these applications. It dismissed the two suits for judicial review. Pantera

asks this Court to reverse all three district-court judgments and remand the causes to the district court

for proceedings on the merits.

                                            DISCUSSION

                Pantera urges that the district court erred by declaring its dispute with the

Commission moot because (1) the Commission’s amended rule should not be applied retroactively

to its applications and (2) the district court had jurisdiction to determine whether the Commission

violated its own rule by arbitrarily and capriciously requiring notice to offset operators and other

affected persons. We review a district court’s ruling on a plea to the jurisdiction under a de novo

standard of review because subject matter jurisdiction is a question of law. Mayhew v. Town of

Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998); Cornyn v. County of Hill, 10 S.W.3d 424, 427 (Tex.

App.—Waco 2000, no pet.).

                                                    6
Mootness

               The mootness doctrine implicates subject-matter jurisdiction. Speer v. Presbyterian

Children’s Home & Serv. Agency, 847 S.W.2d 227, 229 (Tex. 1993). It dictates that courts avoid

rendering advisory opinions by only deciding cases that present a “live” controversy at the time of

the decision. Camarena v. Texas Employment Comm’n, 754 S.W.2d 149, 151 (Tex. 1988); see

Valley Baptist Med. Ctr. v. Gonzalez, 33 S.W.3d 821, 822 (Tex. 2000). For a plaintiff to have

standing, a controversy must exist between the parties at every stage of the legal proceedings,

including the appeal. Williams v. Lara, 52 S.W.3d 171, 184 (Tex. 2001) (citing United States v.

Munsingwear, Inc., 340 U.S. 36, 39 (1950)). If a controversy ceases to exist, “the issues presented

are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome,” and the case

becomes moot. Id. (quoting Murphy v. Hunt, 455 U.S. 478, 481 (1982)). If a case becomes moot,

the parties lose standing to maintain their claims. Id. A case becomes moot when (1) it appears that

one seeks to obtain a judgment on some controversy, when in reality none exists, or (2) when one

seeks a judgment on some matter which, when rendered for any reason, cannot have any practical

legal effect on a then-existing controversy. Texas Health Care Info. Council v. Seton Health Plan,

Inc., 94 S.W.3d 841, 846 (Tex. App.—Austin 2002, pet. denied) (citing Scholl v. Firemen’s &

Policemen’s Civil Serv. Comm’n, 520 S.W.2d 470, 471 (Tex. Civ. App.—Corpus Christi 1975, no

writ)). In this instance, the second rationale is implicated: a decision on the merits in the three

cases—whether the Commission properly required Pantera to give notice to offset operators or acted

arbitrarily and capriciously in so doing—would be an advisory opinion with no practical effect on

a live controversy if New Rule 38(d)(3) is a procedural amendment that now applies to future steps

                                                 7
concerning this dispute. To decide this appeal, we must determine whether the amended rule is

applicable to the pending applications.

Procedural v. substantive

               Pantera claims that Former Rule 38(d)(3), as it existed on the dates its applications

were filed, governs the notice Pantera was required to give, and that therefore the district court erred

in dismissing these causes as moot. To sustain this position, Pantera argues that the amendment to

the rule is substantive in nature and thus cannot apply retroactively. In the alternative, Pantera urges

that even if the amendment is procedural, it cannot be applied retroactively because to do so would

deprive Pantera of vested rights. The Commission, on the other hand, contends that the notice

required under New Rule 38(d)(3) is only a procedural requirement and thus should be applied from

its effective date forward to govern any consideration of Pantera’s pending applications. See Texas

Dep’t of Health v. Long, 659 S.W.2d 158, 160 (Tex. App.—Austin 1983, no writ).

               The basis for Pantera’s three suits in district court was that the Commission acted

arbitrarily and capriciously by requiring notice to offsetting operators and unleased mineral owners,

the “affected persons” named in Rule 38(h)(1)(A), when that requirement was not specified in

Former Rule 38(d)(3). This would seem to mirror the situation in Long, where the legal issue

presented in district court was whether the Department of Health failed to obtain a necessary

certificate from the local commissioners court before granting an application for a municipal landfill.

Before the case could be heard, the Department repealed its rule requiring the certification. This

Court held, “We have no difficulty in concluding that agency requirements for inclusion, or not, of

items in an application for a landfill are procedural in character.” Id. We thus held that the new rule

                                                   8
would retroactively govern any pending landfill application, including the appellee’s. This Court

then determined that omitting the very requirement complained of had the effect of eliminating the

whole foundation of the legal complaint and removed this Court’s subject-matter jurisdiction. “A

judgment by this Court on the merits of this appeal, under these circumstances, would be ineffectual

for want of a subject matter upon which it could operate, the validity or application of the

Department’s superseded rule being immaterial.” Id.

               In the present appeal, the district court faced the same dilemma. It first applied the

principle announced in Long to determine that the amended notice requirement in the new rule was

procedural in nature. Notice requirements have long been considered to be procedural in nature. See

Parrish v. Brooks, 856 S.W.2d 522, 526 (Tex. App.—Texarkana 1993, writ denied) (notice

provision of tort claims act is procedural, not substantive); Hydrocarbon Research, Inc. v. Calvert,

429 S.W.2d 539, 546 (Tex. Civ. App.—Austin 1968, writ ref’d n.r.e.) (notice provision of tax statute

is wholly procedural in nature). Although New Rule 38(d)(3) added a requirement while the

amended rule in Long eliminated one, the same principle applies to future steps in pending litigation:

that no litigant has a vested right in a procedural remedy. Id. (citing Merchants Fast Motor Lines

v. Railroad Comm’n, 573 S.W.2d 502 (Tex. 1978)).                The gravamen of Pantera’s legal

complaint—that the Commission improperly interpreted and applied its former rule—would be

eliminated if that rule were superseded by the new rule. A legal opinion regarding the proper

interpretation of the former rule “would constitute nothing more than an advisory opinion on an

abstract question of law.” Id. at 161.

                                                  9
                 Pantera insists that the amended rule did more than expand the notice provisions for

an application; it also added a provision that the Commission would grant administrative approval

of an application only if it “determines that granting the application will not result in the

circumvention of the density restrictions of this section or other Commission rules . . . .” New Rule

38(d)(3). Pantera has asserted that under Former Rule 38(d)(3), the Commission had no discretion

and had to grant an application when a protest was not filed. The last sentence of the former rule

reads, “If written waivers are filed or if a protest is not filed within the time set forth in the notice

of application, the application will be granted administratively.”7 By contrast, the amended rule

clearly affords the Commission discretion to consider whether density restrictions or other rules are

being circumvented before granting an application:

        A Commission designee may grant administrative approval if the Commission
        designee determines that granting the application will not result in the circumvention

        7
            The former rule reads:

            (3) Division after joinder or unitization.

                If two or more separate tracts are joined or unitized for oil, gas, or
                geothermal development and accepted by the commission, the joined
                or unitized tracts may not . . . be divided into the separate tracts . . .
                unless and until the commission approves such division after
                application, notice to all current lessees and unleased mineral interest
                owners of each tract within the joined or unitized tract, and an
                opportunity for hearing. If written waivers are filed or if a protest is not
                filed within the time set forth in the notice of application, the
                application will be granted administratively.

14 Tex. Reg. 1575 (1989), adopted 14 Tex. Reg. 5255 (former 16 Tex. Admin. Code § 3.38(d)(3)
(Tex. R.R. Comm’n) (hereinafter cited as Former Rule 38(d)(3)).

                                                    10
       of the density restriction of this section or other Commission rules, and if either . . .
       written waivers are filed [or] no protest is filed[.]

New Rule 38(d)(3).8

                Pantera argues that this makes the amendment substantive in nature, and as such it

may apply only prospectively to applications filed after its effective date. A substantive act, and by

analogy a substantive rule, will be applied only prospectively unless it appears by fair implication

from the language used that it was the intent of the legislature (or agency) to make it applicable to

       8
           The new rule reads:

           (3) Unit dissolution.

               (A) If two or more separate tracts are joined to form a unit for oil and gas
                   development, the unit is accepted by the Commission, and the unit has
                   produced hydrocarbons in the preceding twenty (20) years, the unit may
                   not thereafter be dissolved into the separate tracts . . . unless the
                   Commission approves . . . .

               (B) The Commission shall grant approval only after application, notice, and
                   an opportunity for hearing. [. . .] [I]f one or more wells on the unitized
                   tract has produced from the field within the 12-month period prior to
                   the application, the applicant shall include on the list all affected
                   persons described in subsection (h)(1)(A) [including offset operators]
                   of this section . . . .

               (C) A Commission designee may grant administrative approval if the
                   Commission designee determines that granting the application will not
                   result in the circumvention of the density restrictions of this section or
                   other Commission rules, and if either . . . written waivers are filed . . .
                   [or] no protest is filed . . . .

16 Tex. Admin. Code § 3.38(d)(3) (2003) (hereinafter cited as New Rule 38(d)(3)).

                                                  11
both past and future transactions. Ex parte Abell, 613 S.W.2d 255, 258 (Tex. 1981); Davis v. State,

846 S.W.2d 564, 569 (Tex. App.—Austin 1993, no writ). Although the merits of Pantera’s suit are

not before us, we find it helpful to our analysis to address Pantera’s complaint that the Commission

wrongfully withheld granting its applications when all of the then-required notice had been given,

as this goes to Pantera’s argument that the rule was substantively changed. Pantera implicitly asserts

that the use in the former rule of the phrase “will be granted administratively” means that the

Commission had (1) no choice but to grant its application in the absence of any protests, (2) no

discretion to require notice to additional people if it deemed such notice necessary, and (3) no right

to consider any other factors in granting an application, such as how density restrictions might be

circumvented. Thus, it concludes, the new rule’s reference to whether an application’s grant will

circumvent density restrictions is a substantive change because an application’s grant, in the absence

of a protest, is no longer automatic. However, it is quite possible that the use of the word “will” in

the former rule is not mandatory but merely directive, especially considering the Commission’s duty

to “regulat[e] the production of oil and gas for the prevention of waste as well as for the protection

of correlative rights.” See Texaco, Inc. v. Railroad Comm’n, 583 S.W.2d 307, 310 (Tex. 1979).

               By analogy, although the word “shall” is generally construed as mandatory by courts,

see Cities of Austin, Dallas, Ft. Worth and Hereford v. Southwestern Bell Tel. Co., 92 S.W.3d 434,

442 (Tex. 2002), courts have construed it as merely directive when legislative intent supports such

a construction. See Thomas v. Groebl, 212 S.W.2d 625, 630-31 (Tex. 1948); Texas Dep’t of Pub.

Safety v. Guerra, 970 S.W.2d 645, 648-49 (Tex. App.—Austin 1998, pet. denied). In determining

whether a statutory provision is directive or mandatory, a court should consider the entire act, its

                                                 12
nature and object, and the consequences that would follow from either construction. Chisolm v.

Bewley Mills, 287 S.W.2d 943, 945 (Tex. 1956). “Provisions [that] are not of the essence of the

thing to be done, but [that] are included for the purpose of promoting the proper, orderly, and prompt

conduct of business, are not generally regarded as mandatory.” Id. If the word “shall” can be

directive rather than mandatory, certainly the future-tense verb “will” is susceptible to a similar

interpretation. Because it is possible that the Commission did not have to grant Pantera’s

applications simply because no protests had been filed, we are not persuaded that the amended rule

added a substantive requirement that impeded the former “automatic” grant of an application.

               We are persuaded, rather, that the only issue presented in the three lawsuits turned

on a procedural question: whether Pantera had to give notice to the operators and owners of mineral

interests on adjacent offsetting tracts. The Commission required the notice and when Pantera refused

to give it, the applications were dismissed. We are further persuaded that the Commission could

make a procedural change in the notice requirements that would apply to future steps in pending

applications.9 See Long, 659 S.W.2d at 160. That moots the only issue presented in Pantera’s

       9
          We reject Pantera’s suggestion that there are no future steps to be taken concerning these
applications, only past steps to be reviewed. Pantera incorrectly suggests that the district court or
this Court could actually grant the applications that the agency should have granted, or could remand
the applications with “instructions” that the Commission grant them administratively. In a suit for
judicial review, the administrative procedure act empowers the reviewing court to examine the
agency record for error, but only empowers the court to reverse or remand the case to the agency.
Sierra Club v. Texas Nat. Resource Conservation Comm’n, 26 S.W.3d 684, 688 (Tex. App.—Austin
2000) (citing Tex. Gov’t Code Ann. § 2001.174(2) (West 2000)), aff’d, 70 S.W.3d 809 (Tex. 2002).
The reviewing court may identify error but may not dictate how to correct the error because to do
so would usurp the authority and discretion delegated to the agency by the legislature. Texas Dep’t
of Transp. v. T. Brown Constructors, Inc., 947 S.W.2d 655, 659 (Tex. App.—Austin 1997, pet.
denied).

                                                 13
lawsuits. The district court need not address the moot question of whether the Commission had the

authority or discretion to require the notice under Former Rule 38(d)(3) because it now has explicit

authority to do so under the amended rule.

Not arbitrary or capricious

               Pantera also asserts that the Commission’s actions were arbitrary and capricious. In

our original opinion, we expressed concern that by issuing an amended rule while these applications

were pending, the Commission had changed the rules in the middle of the administrative process,

a practice this Court condemned in Flores v. Employees Retirement System, 74 S.W.3d 532, 545

(Tex. App.—Austin 2002, pet. denied). In that situation a former employee who was denied benefits

complained that the ERS board of trustees acted arbitrarily and capriciously by deviating from its

own precedent, citing two decisions awarding benefits under similar circumstances. After a

contested-case hearing before the administrative law judge who recommended that benefits be

awarded, the ERS adopted a resolution that purported to change its policy and denied the benefits.

We concluded that by adopting this new policy months after the hearing, without pre-hearing notice,

when it was no longer possible for the employee to present her case differently, the ERS acted

arbitrarily and capriciously.

               By contrast, here the Commission announced at the beginning of the process that

Pantera must give notice to offset operators and owners, and then never wavered from that position.

The rules did not change in the middle of the process, but were applied consistently. Pantera insists

that by requiring notice when an application was submitted under Former Rule 38(d)(3), the

Commission deviated from its treatment of other similar applications. The Commission alleged that

                                                 14
it was following a longstanding practice to review all such applications for attempts to circumvent

density provisions or other Commission rules before granting administrative approval. We find that

there is sufficient evidence of this Commission practice to distinguish this situation from that

condemned in Flores. We reject the assertion that the Commission acted arbitrarily and capriciously.

Vested rights not divested

               Pantera argues that even if the new rule was procedural in nature, it cannot be applied

to these pending applications if its application would deprive Pantera of vested rights. “The rule is

well settled that procedural statutes may apply to suits pending at the time they became effective, but

even a procedural statute cannot be given application to a suit pending at the time it becomes

effective if to do so would destroy or impair rights which had become vested before the act became

effective.” Baker Hughes, Inc. v. Keco R. & D., Inc.,12 S.W.3d 1, 4 (Tex. 1999) (quoting Wilson

v. Work, 62 S.W.2d 490, 490 (Tex. 1933)); Grocers Supply, 978 S.W.2d 638, 643 (Tex.

App.—Austin 1998, pet. denied). We disagree that by changing the notice procedure, the

Commission deprived Pantera of a vested right. Pantera had at best an expectation, not a right, to

dissolve its units. It still has that remedy available after the amended rule, subject to a changed

notice provision.

               The production of oil and gas is subject to the Commission’s jurisdiction and control.

See Tex. Nat. Res. Code Ann. § 81.051 (West 2001). Pantera had no absolute right to do what it

wished with its property but was subject to the Commission’s oversight and regulation. Although

Pantera cites Buttes Resources Co. v. Railroad Commission in support of its argument, that case

turned on the fact that the Commission had set a retroactive effective date for the forced pooling of

                                                  15
certain acreage with another unit, which, the court held, deprived Buttes of its vested property rights;

the court did not, notably, hold that forced pooling itself is unlawful, even though it is “in derogation

of the right of one to do with his own property as he so desires.” See 732 S.W.2d 675, 682 (Tex.

App.—Houston [14th Dist.] 1987, writ ref’d n.r.e.) (quoting Superior Oil Co. v. Railroad Comm’n,

519 S.W.2d 479, 482 (Tex. Civ. App.—El Paso 1975, writ ref’d n.r.e.)). If forced pooling does not

unconstitutionally interfere with vested property rights, neither can procedural limits on the

unpooling of a unit. The procedural limits at issue here on Pantera’s right to “do with its property

as it desires” are certainly within the Commission’s authority to regulate oil and gas production in

Texas and do not interfere with a vested property right such as that at issue in Buttes.

                Although Pantera argues that the Commission had no choice but to grant its

applications in the absence of a protest being filed, the issue of notice undeniably affected the

likelihood that a protest would be filed. That is what this dispute is all about. And we reject

Pantera’s analogy that under its interpretation of the former rule it was entitled to a time bar to

prevent any timely protests. We hold that the application of the new notice provision did not divest

Pantera of any vested rights.

Declaratory judgment

                Pantera’s declaratory-judgment action seeks the same relief as its two suits for judicial

review: a determination that the former rule applies to its applications, that Pantera was not required

to give notice to offset operators under the rule, and that the Commission acted arbitrarily and

capriciously in not granting its applications. Thus, its declaratory-judgment action is duplicative of

its other two suits and was properly dismissed by the district court. See Young Chevrolet, Inc. v.

                                                   16
Texas Motor Vehicle Bd., 974 S.W.2d 906, 911 (Tex. App.—Austin 1998, pet. denied) (trial court

properly dismissed declaratory-judgment action requesting same relief as administrative appeal).

                                         CONCLUSION

               The notice requirement added by New Rule 38(d)(3) was a procedural change that

applies prospectively to all pending applications, whenever filed. As such it superseded the notice

requirement of the former rule and applied to all future steps concerning these applications. By

expressly requiring notice to all affected persons described in subsection (h)(1)(A), the new rule

moots the inquiry as to whether such notice could be required under the former rule. To decide

whether the former rule allowed the Commission to require notice to offset operators and owners

would constitute nothing more than an advisory opinion on an abstract question of law when the new

rule expressly requires such notice. Long, 659 S.W.2d at 160-61. The district court properly held

that the amended rule applied to Pantera’s applications and made the controversy moot. The

application of this notice requirement does not deprive Pantera of any vested rights. Furthermore,

the declaratory-judgment action was duplicative of the issues presented in the two suits for judicial

review. We affirm the district court’s dismissal of all three lawsuits.

                                              Bea Ann Smith, Justice

Before Chief Justice Law, Justices B. A. Smith and Patterson

Affirmed on Motion for Rehearing

Filed: February 5, 2004

                                                 17