EL PASO, Texas (CN) — In a case of first impression, a Texas Appeals Court said a property owner can seek “pre-injury” injunctive relief outside of the state capital to block a permitted party from operating an injection well.
Ring Energy sued Trey Resources in Andrews County Court in 2013. Andrews County is northwest of Midland-Odessa. The state capital, Austin, is in Travis County, 354 miles away.
Trey Resources had applied for nine permits from the Texas Railroad Commission to inject fluids into designated wells in Andrews County. Such permits are required because injection wells may damage nearby production wells or pollute fresh water sources.
Injection wells are similar to though not identical with geothermal fracturing, or fracking. In fracking, liquid, often waste liquid, is injected underground to fracture shale deposits and free up gas and oil to be extracted. Injection wells inject waste water and other products of drilling into the ground merely to get rid of them, though the injection may free up additional oil or gas for extraction.
Ring Energy is successor to Stanford Energy, which operated five wells in the immediate area of Trey Resources’ planned operations. It sought injunctive relief to stop Trey Resources from starting its injections, claiming the injections would cause irreparable “waste” damage to its mineral interests.
“Waste” as defined by state code includes “drowning with water a stratum or part of a stratum that is capable of producing oil or gas or both in paying quantities.”
Trey Resources sought dismissal for lack of jurisdiction and also argued that Ring Energy failed to exhaust its administrative remedies before the Railroad Commission.
The trial court dismissed Ring Energy’s suit for lack of jurisdiction, which led to its appeal.
On Jan. 18, Eighth Court of Appeals Judge Ann McClure reversed, finding that Texas law allows pre-injury injunctive outside of Travis County.
It appears to be the first such ruling, based on a party’s future injury from an operator of an injection well.
“We are faced with the narrow question, which appears to be one of first impression, as to whether a trial court outside of Travis County has the jurisdiction to enjoin a party with a valid permit from developing and using an injection well based on the claim that the injection well will cause imminent and irreparable injury to the complaining party,” McClure wrote.
Both the Texas Commission on Environmental Quality and the Railroad Commission oversee the permitting process for injection wells. The case at issue involves injection wells used for secondary recovery, which the Railroad Commission regulates.
McClure wrote that once a permit holder begins using its permit, “Texas courts are available to redress the consequences of a permit holder’s actions.”
She cited the Amarillo Court of Appeals, which found that “securing a permit does not immunize the recipient from the consequences of its actions if those actions affect the rights of third parties.”
The question of where an affected party can file suit hinges on the interpretation of Section 85.321 of the Texas Natural Resources Code. It authorizes a cause of action for an owner of an interest in property or production “that may be damaged” by waste.
The section states: “A party who owns an interest in property or production that may be damaged by another party violating the provisions of this chapter that were formerly a part of Chapter 26, Acts of the 42nd Legislature, 1st Called Session, 1931, as amended, or another law of this state prohibiting waste or a valid rule or order of the commission may sue for and recover damages and have any other relief to which he may be entitled at law or in equity.”
In determining where Ring Energy can file suit, McClure looked at the plain language of Section 85.321 and the Legislature’s intent. She noted that “injunctive relief has historically been equated with equitable relief.”
She went so far as to analyze the grammar.
“Turning to the text of the statute, the question here is whether the clause allowing equitable relief (‘and have any other relief to which he may be entitled at law or in equity’) is tied to, and limited by the phrase immediately preceding it (‘may sue for and recover damages’) such that only someone who has incurred actual damages might seek equitable relief …
“Here, if a comma were placed after the phrase ‘recover damages’ and before the conjunction ‘and,’ which separates the second and third terms in the series, it might have more distinctly indicated that recovering damages and equitable relief were not tied together. And while it may be tempting to focus on the absence of the comma here as support for Trey’s construction, the history of the enactment dictates otherwise.”
She disagreed with Trey Resources’ argument that any suit must be filed in Austin.
“Section 85.321 creates a cause of action for damages and injunctive relief, and Section 85.322 allows such suit against any party who violates a law, rule, or order of the Commission. Section 85.322 contains no venue provision, indicating to us that a Section 85.322 suit is governed by the venue restrictions applicable to any suit.”
She also disagreed with the argument that the Railroad Commission has exclusive jurisdiction over injection wells until all administrative remedies have been exhausted.
“Despite the statutory provisions vesting authority in the Commission to permit and regulate injection wells, the Legislature also expressly allowed for a cause of action in Section 85.321 and 85.322 which belied exclusive jurisdiction with the Commission.” McClure said the Railroad Commission does not have primary jurisdiction here.
“The Eastland court similarly reasoned that issues of negligence and waste were also inherently judicial, and held the Commission does not have primary jurisdiction. [In re Discovery Operating Inc., 216 S.W.3d 898 (Tex. App — Eastland 2007, orig. proceeding)] at 904-05. The only distinguishing fact between In re Discovery and this case is that here, no actual waste has as yet occurred.”
McClure also rejected Trey Resources’ argument that the lawsuit is a “collateral attack on the permit” that cannot be done outside of Travis County.
“Concluding that none of the authorities cited directly addresses our situation here, and looking to the language of Sections 85.321 and 85.322 in the context of the entire Act , we conclude the Legislature intended to allow pre-injury injunctive relief in the county where the injury is threatened. Ring of course carries a significant burden to demonstrate the requisites for injunctive relief. Whether it can ever meet that burden is not before us. But the trial court has jurisdiction to at least hear Ring’s claim.”
The Railroad Commission declined comment.