Court Opinion

ID: 2866535
Source: CourtListenerOpinion
Date Created: 2015-09-06 01:39:30.552069+00
Date Added: 2024-06-11T11:34:47.057159
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                        ON REMAND

                                     NO. 03-97-00002-CV

           WBD Oil & Gas Co. and WBD Oil & Gas Company, Inc., Appellants

                                               v.

     Railroad Commission of Texas; Greg Abbott, in his Official Capacity as Attorney
      General of the State of Texas; Anadarko Petroleum Corporation; MidCon Gas
           Services Corp.; Natural Gas Pipeline Company of America; Midgard
                        Energy Company; and Conoco, Appellees

    FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT
       NO. 95-07116, HONORABLE MARGARET A. COOPER, JUDGE PRESIDING

                           MEMORANDUM OPINION

              WBD Oil & Gas Co., Inc., (“WBD”) brought a declaratory judgment action to

challenge a set of field rules promulgated by the Texas Railroad Commission (“the Commission”).

The field rules were promulgated in a final order following a contested-case proceeding in which

WBD did not take part. The trial court dismissed the action for want of jurisdiction. This Court

reversed the trial court’s judgment, holding that the trial court had jurisdiction to consider a

challenge to the field rules pursuant to the Administrative Procedure Act (“the APA”) because the

field rules were “rules” within the meaning of APA section 3001.028. WBD Oil & Gas Co. v.
Railroad Comm’n, 35 S.W.3d 34 (Tex. App.—Austin 1999) (“WBD I”). The Texas Supreme Court

reversed, holding that because section 3001.028 exclusively governs judicial review of rules

promulgated under the APA’s rulemaking provisions, agency orders on contested-case proceedings,

as in WBD’s case, are subject to judicial review under other APA provisions. Railroad Comm’n v.

WBD Oil & Gas Co., No. 01-0177, 46 Tex. Sup. J. 442, 2003 Tex. LEXIS 9 (Feb. 13, 2003) (“WBD

II”). On remand, we have been directed to address WBD’s remaining issues to determine whether

there is an alternative basis for jurisdiction. Because WBD has not pleaded a sufficient basis for

jurisdiction, we will affirm the trial court’s order of dismissal.

                                          BACKGROUND

               In 1989, the Commission adopted amended field rules governing the production of

oil and gas for a new “Texas Panhandle Field” incorporating various wells in a large region of West

Texas (“the Field Rules”). The Field Rules affected WBD’s well-completion practices. WBD’s

wells are located in a dolomite formation that constitutes a single stratum in the Panhandle Field.

WBD holds title to both the oil and the “casinghead gas” produced from the same formation.

Because of the geologic nature of WBD’s holdings, WBD has been able to produce natural gas to

which it may not own the production rights by shooting perforations in the well casings into the gas

formations, higher up the hole. See Amarillo Oil v. Energy-Agri Prods., 794 S.W.2d 20, 27 (Tex.

1990); Howard Williams & Charles Meyers, Manual of Oil and Gas Terms 495 (11th ed. 2000). The

new Field Rules forbid this practice. Although WBD received adequate notice of the Commission’s

contested-case proceedings, it elected not to participate in them.

                                                   2
               In its first amended petition, in addition to its aborted rules challenge under the APA,

WBD asserted a claim under the Uniform Declaratory Judgments Act, Civ. Prac. & Rem. Code Ann.

ch. 37 (West 1997) (“UDJA”), and requested remedies under section 1983, see 42 U.S.C.A. § 1983

(West 1994). In its underlying claim, WBD asserted that the Field Rules were invalid because they

exceeded the Commission’s statutory authority under the natural resources code. See Tex. Nat. Res.

Code Ann. § 85.241 (West 1993). In addition, WBD claimed that the Commission’s enforcement

of the rules would violate various provisions of the United States and Texas Constitutions. The

Commission filed a plea to the jurisdiction, contending that WBD’s claims were barred by the

doctrines of sovereign immunity and primary jurisdiction and were without jurisdictional basis. The

trial court granted the plea to the jurisdiction as to all of WBD’s pleaded causes of action.1

                                           DISCUSSION

               A plea to the jurisdiction challenges the trial court’s authority to determine the subject

matter of the cause of action. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000).

Subject-matter jurisdiction is a question of law, which we review de novo. See Mayhew v. Town of

Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998). The plaintiff bears the burden of pleading facts that

show the district court has subject-matter jurisdiction. Texas Ass’n of Bus. v. Texas Air Control Bd.,

852 S.W.2d 440, 446 (Tex. 1993). We examine a plaintiff’s good faith factual allegations to

determine whether the district court has jurisdiction. See Blue, 34 S.W.3d at 554. Except when the

       1
          The district court’s order grants the plea to the jurisdiction with respect to all of WBD’s
pleadings. This includes the request for section 1983 remedies raised in WBD’s first amended
petition.

                                                   3
petition, on its face, demonstrates a lack of jurisdiction, we must liberally construe the allegations

in the petition in the plaintiff’s favor to support a jurisdiction finding. Texas Ass’n of Bus., 852

S.W.2d at 446; Beacon Natl. Ins. Co. v. Montemayor, 86 S.W.3d 260, 266 (Tex. App.—Austin 2002,

no pet.).

               The Texas Supreme Court has held that WBD’s claims were not cognizable under

the APA’s rulemaking provisions and that WBD had adequate notice of the contested-case

proceeding by which the Field Rules were adopted. WBD II, 2003 Tex. LEXIS 9 at *33-34; see also

Railroad Comm’n v. Torch Operating Corp., 912 S.W.2d 790, 792 (Tex. 1995) (Commission field-

rule proceedings binding if operator given notice and opportunity to be heard). We will now address

WBD’s remaining issues: (1) a validity challenge under the UDJA and (2) constitutional and

statutory complaints regarding the application of the Field Rules.

The UDJA

               The UDJA grants any litigant whose rights are affected by a statute the opportunity

to obtain a declaration of those rights under the statute. Tex. Civ. Prac. & Rem. Code Ann. § 37.004

(West 1997). The UDJA does not establish subject-matter jurisdiction—an action under the UDJA

is merely a procedural device for deciding matters already within a court’s subject-matter

jurisdiction. State v. Morales, 869 S.W.2d 941, 947 (Tex. 1994); Beacon Natl. Ins., 86 S.W.3d at

266. When a statute provides an avenue for attacking an agency order through an established

procedure, a UDJA action will not lie to provide redundant remedies. See Texas Mun. Power Auth.

v. Public Util. Comm’n, 100 S.W.3d 510, 518 (Tex. App.—Austin 2003, pet. filed); Beacon Natl.

Ins., 86 S.W.3d at 267; Young Chevrolet, Inc. v. Texas Motor Vehicle Bd., 974 S.W.2d 906, 911

                                                  4
(Tex. App.—Austin 1998, pet. denied). Thus, a court will have jurisdiction to hear a UDJA claim

challenging an agency’s statutory authority alleging that an agency lacks authority even to apply

APA procedures to a given activity or entity. See Beacon Natl. Ins., 86 S.W.3d at 267 (Department

of Insurance’s authority to address certain contractual issues); Public Util. Comm’n v. Allcomm Long

Distance, Inc., 902 S.W.2d 662, 665 (Tex. App.—Austin 1995, writ denied) (Public Utility

Commission’s authority to delegate authority to private entities); Public Util. Comm’n v. City of

Austin, 728 S.W.2d 907, 910-11 (Tex. App.—Austin 1987, writ ref’d n.r.e.) (Public Utility

Commission’s authority to set certain utility rates); see also Texas Mun. Power, 100 S.W.3d at 520

(Public Utility Commission’s authority to regulate a type of industry participant).

               WBD challenges not the Commission’s general authority to adopt well-completion

rules, but the Commission’s interpretation of a particular statute, section 85.241 of the Texas Natural

Resources Code. WBD argues that the code limits the Commission’s power to determine the means

by which wells are completed. However, both the Texas Supreme Court and this Court have held

that the Commission has broad statutory authority to regulate well-completion methods. See

Amarillo Oil, 794 S.W.2d 20 at 27 (courts will defer to Commission’s authority over production and

conservation regulations); Hufo Oils v. Railroad Comm’n, 717 S.W.2d 405, 409 (Tex. App.—Austin

1986, writ denied) (Commission has authority to limit production of liquified natural gas in

situations similar to WBD’s); see also Railroad Comm’n v. Fain, 161 S.W.2d 498, 500 (Tex. Civ.

App.—Austin 1942, writ ref’d w.o.m.) (economic effect of application of Commission production

rules is part of necessary application of state’s police power). Instead of challenging the scope of

the Commission’s authority, WBD attacks the Commission’s interpretation and application of a

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particular statute in making a contested-case decision. To make this argument, WBD was required

to participate in the proceedings and bring a suit for judicial review of the Commission’s final order,

which WBD failed to do. See WBD II, 2003 Tex. LEXIS 9, at *31-32. We overrule WBD’s

assertion of jurisdiction to challenge the Field Rules’ validity under the UDJA.

The Underlying Constitutional Claims

               WBD’s remaining complaints deal with the constitutional implications of the

Commission’s application of the Field Rules, i.e., whether WBD has been treated differently from

similarly situated producers, whether a vested property right has been taken without due process of

law, and whether the Commission’s actions have been arbitrary and capricious.2 These causes of

action require us to assess the facts of the Commission’s application of its rules to WBD’s wells.

See Gulf Land v. Atlantic Ref. Co., 131 S.W.2d 73, 82 (Tex. 1939) (oil and gas operator’s property

rights claim must be based on pleaded facts peculiar to its own wells); see also California Bankers

Ass’n v. Schultz, 416 U.S. 21, 56 (1974) (absent facts detailing parties’ interests, court may not be

in position to determine question of law); cf. City of El Paso v. Madero Dev. & Constr. Co., 803

S.W.2d 396, 400 (Tex. App.—El Paso 1991, writ denied) (regulatory takings claim could not be

brought without statement by government specifying the degree of government action impairing

supposed property rights). Because the Commission had not taken action to enforce the Field Rules

       2
         WBD may not bring a due process or due course of law claim because its procedural right
was to receive notice and process of law. The Texas Supreme Court has held that WBD received
adequate notice, Railroad Comm’n v. WBD Oil & Gas Co., No. 01-0177, 46 Tex. Sup. J. 442, 2003
Tex. LEXIS 9, *34 (Feb. 13, 2003), and the requirements of due process are therefore fulfilled. See
Railroad Comm’n v. Graford, 557 S.W.2d 946, 953 (Tex. 1977) (due process right means notice and
opportunity to have meaningful hearing before Commission).

                                                  6
against WBD at the time WBD’s first amended petition was filed, WBD has alleged no facts

substantiating its claims of unfair treatment. This case presents a classic situation requiring the

application of the doctrine of ripeness.

                An opinion issued in a case that is not ripe would address only a hypothetical injury

rather than remedying actual or imminent harm. See Texas Ass’n of Bus., 852 S.W.2d at 444.

Ripeness implicates subject-matter jurisdiction and emphasizes the requirement of a concrete injury

to present a justiciable claim. Waco Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 851 (Tex. 2000);

Patterson v. Planned Parenthood of Houston & Southeast Tex., Inc., 971 S.W.2d 439, 442 (Tex.

1998). In determining whether a cause is ripe, we look to see whether the facts have been

sufficiently developed to show that an injury has occurred, or is likely to occur.3 Gibson, 22 S.W.3d

at 852; Patterson, 971 S.W.2d at 442. A claimant need not show that the injury has occurred,

provided that the injury is imminent or sufficiently likely. Gibson, 22 S.W.3d at 852; Patterson, 971

S.W.2d at 442. To determine ripeness, then, we must examine (1) the fitness of the issues for

judicial decision and (2) the hardship occasioned to a party by the court’s denying judicial review.

Office of Pub. Util. Counsel v. Public Util. Comm’n, 843 S.W.2d 718, 724 (Tex. App.—Austin 1992,

writ denied).

                WBD has alleged no facts substantiating its claim that the Commission has

affirmatively acted to prejudice WBD’s rights. At most, WBD argues that the Commission has

       3
          In the specific context of UDJA claims, the ripeness requirement has been described as
requiring only that the “ripening seeds of a controversy” be present. See Mt. Olivet Cemetary Ass’n,
27 S.W.3d 276, 282 (Tex. App.—Austin 2000, pet. denied) (citing Texas Dep’t of Pub. Safety v.
Moore, 985 S.W.2d 149, 153-54 (Tex. App.—Austin 1998, no pet.)).

                                                  7
admitted that the Field Rules are applicable to WBD’s wells—not that the rules have been so

applied. Furthermore, the Field Rules provide for exceptions to their provisions and a proceeding

by which producers with non-complying wells can challenge the Commission’s enforcement actions.

Given that WBD has now acquired the production rights to the natural gas produced through its

already completed wells, the Commission might well determine that no enforcement action is

necessary. These circumstances are insufficient to substantiate a claim that the Commission has

taken affirmative action violating WBD’s rights. We also do not believe that our ruling will create

any hardship on WBD’s part. Because WBD’s rights in its completed wells are subject to the

Commission’s oversight and control, WBD will not suffer any additional hardship by resolving its

complaints through the Commission’s administrative process. This is not a situation wherein the

potential harm of enforcement outweighs the Commission’s need to enforce its neutrally applicable

rules. See Gibson, 22 S.W.3d at 852; compare Abbott Labs v. Gardner, 387 U.S. 136, 152-53 (1967)

(ripeness dismissal would harm drug companies because they would, as a pleaded fact, have to

purchase new manufacturing equipment), with Toilet Goods Ass’n v. Gardner, 387 U.S. 158, 165

(1967) (ripeness dismissal would not harm drug companies because enforcement procedure would

only result in suspension of production license, which could be immediately appealed through

administrative procedures).

               In an attempt to forestall dismissal, WBD characterizes its claims as requesting 1983

remedies under federal law. WBD cites us to several cases standing for the proposition that some

state-law rules, such as sovereign immunity, do not immunize the states from section 1983 suits.

See Howlett v. Rose, 496 U.S. 356, 369-71 (1990); Thomas v. Allen, 837 S.W.2d 631, 632 (Tex.

                                                 8
1992) (Texas courts may not refuse to hear valid section 1983 claims based on sovereign immunity).

WBD concludes from these authorities that it would be inappropriate under any circumstances for

a Texas court to dismiss a pleading in which section 1983 remedies have been requested. However,

section 1983 creates only a remedy, not an underlying right which confers jurisdiction on the courts.

Albright v. Oliver, 510 U.S. 266, 271 (1994). WBD has complained of no specific Commission

action creating a cause of action ripe for judicial involvement. Thus, no legal complaint remains

upon which WBD can request damages under the authority of section 1983. We therefore overrule

WBD’s constitutional claims.

                                          CONCLUSION

                Having reviewed and overruled each of WBD’s remaining bases for jurisdiction,

we affirm the trial court’s order of dismissal.

                                                  Mack Kidd, Justice

Before Chief Justice Law, Justices Kidd and Powers*

Affirmed

Filed: August 14, 2003

*
    Before John E. Powers, Senior Justice (retired), Third Court of Appeals, sitting by assignment.
    See Tex. Gov’t Code Ann. § 74.003(b) (West 1998).

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