Anadarko E&P Company, L.P. v. Railroad Commission of Texas, No. 03-04-00027-CV (Tex. App. 1/7/2009)
| Decision Date | 07 January 2009 |
| Docket Number | No. 03-04-00027-CV.,03-04-00027-CV. |
| Court | Texas Court of Appeals |
| Parties | ANADARKO E&P COMPANY, L.P. F/K/A RME PETROLEUM COMPANY; LARRY T. LONG, SAMMY ADAMSON AND L. ALLAN LONG, IN THEIR CAPACITIES AS TRUSTEES FOR THE LAWRENCE ALLAN LONG TRUST, CHARLES EDWARD LONG TRUST, LARRY THOMAS LONG TRUST AND JOHN STEPHEN LONG TRUST, Appellants, v. RAILROAD COMMISSION OF TEXAS; ANADARKO E&P COMPANY, L.P. F/K/A RME PETROLEUM COMPANY, Appellees. |
Appeal from the District Court of Travis County, 200th Judicial District, No. GN204461, Honorable Lora J. Livingston, Judge Presiding.
Affirmed.
Before Chief Justice LAW, Justices PATTERSON and PURYEAR; Chief Justice LAW Not Participating.
This administrative appeal involves a challenge to a final order issued by the Texas Railroad Commission granting a well-spacing exception under Statewide Rule 371 to appellant Anadarko E&P Company, L.P. f/k/a RME Petroleum Company. On appeal, Anadarko raises several procedural challenges to the Commission's final order, and appellants Larry T. Long, Sammy Adamson, and L. Allan Long, in their capacities as trustees for the Lawrence Allan Long Trust, Charles Edward Long Trust, Larry Thomas Long Trust, and John Stephen Long Trust (collectively the "Long Trusts"), argue that the Commission's order was not supported by substantial evidence. Because we find no merit in Anadarko's procedural challenges and we conclude the Commission's final order was supported by substantial evidence, we affirm the district court's judgment affirming the Commission's order.
The Commission issued a final order granting a permit for the Barksdale Well No. 8 on September 12, 2002.2 Commission staff had previously granted a permit for Well No. 8 to Anadarko's predecessor, which was challenged by the Long Trusts for lack of notice. In its final order, the Commission determined that the original permit, granted administratively by Commission staff without protest, was void ab initio because the Long Trusts failed to receive notice of the permit application in accordance with Commission rules. Upon proper notice and hearing, the Commission granted an exception to the spacing requirements under Rule 37 to prevent waste and issued a new permit for Well No. 8.
Anadarko's predecessor UPRC applied to the Commission for a permit to drill Well No. 8 in 1997. As part of its application, UPRC requested a Rule 37 exception and submitted a conditional waiver of objection from Sonat Exploration. The plat attached to UPRC's application erroneously identified the offset leaseholder and operator as Sonat Exploration, instead of the Long Trusts. Given the conditional nature of the waiver executed by Sonat Exploration, the Commission sent notice of UPRC's Rule 37 application to Sonat Exploration on January 9, 1998. The Commission received no objection to UPRC's application within the requisite ten-day time period and, therefore, Commission staff granted UPRC an administrative Rule 37 exception as allowed under subsection (h)(2)(A). See 16 Tex. Admin. Code § 3.37(h)(2)(A). In the absence of an objection, the Commission did not hold a hearing or receive evidence regarding UPRC's application. UPRC completed the well in June 1998 after receiving approval of its Rule 37 application from Commission staff.
On May 23, 2001, the Long Trusts filed a complaint with the Commission on the ground that they failed to receive notice of UPRC's application for a Rule 37 exception for Well No. 8. The Commission set the matter for hearing and conducted an administrative hearing on the complaint. During the hearing, the Commission also considered whether the well was entitled to a Rule 37 exception.
Because no one disputed that the Long Trusts were entitled to receive notice under Rule 37 and UPRC had failed to give notice of its application for a Rule 37 exception to the Long Trusts, a major focus of the administrative hearing was whether the original permit was void or voidable. Anadarko argued that the permit was merely voidable because evidence was submitted that the Long Trusts had actual knowledge of the proposed location for Well No. 8 before it was drilled. The Long Trusts are a working interest owner in Well No. 8 and, in this capacity, UPRC sent the Long Trusts an approval for expenditure ("AFE") with well location plats showing that the proposed location for Well No. 8 would require a Rule 37 exception. The Long Trusts signed the AFE in March 1998. Thus, Anadarko argued that the Long Trusts' signing of the AFE demonstrated actual knowledge of UPRC's application for a Rule 37 exception and, therefore, cured any defect in notice. However, like the plat submitted with UPRC's application to the Commission, the plat sent to the Long Trusts failed to identify the Long Trusts as the offset operator to the west of the portion of the unit where Well No. 8 was drilled.
The hearings examiners issued a proposal for decision recommending that the original permit be declared voidable, not void, because the Long Trusts had actual knowledge of the proposed well location and did not file a timely complaint with the Commission. The hearings examiners further recommended that the Commission grant a Rule 37 exception for Well No. 8 on the basis that the well is necessary to prevent waste.
The Commission considered the proposal for decision in a public conference on September 12, 2002, and rejected the hearings examiners' recommendation in part. Contrary to the recommendation, the Commission voted to declare the permit void ab initio because the Long Trusts did not receive notice of UPRC's application as required by the plain language of Rule 37. The Commission adopted the examiners' recommendation to grant a Rule 37 exception for Well No. 8 to prevent waste. Those commissioners who were present signed a final order.
Although representatives of the Long Trusts were present at the Commission's public conference on September 12, 2002, they were not given a copy of the Commission's signed order. The record reflects that later that day Commission staff faxed a courtesy copy of the order to the attorneys for Anadarko and the Long Trusts. The next day, September 13, 2002, the Commission mailed a cover letter and a copy of the final order to the attorneys of record in the administrative proceeding. The attorney for the Long Trusts received the cover letter and final order on Monday, September 16, 2002.
Anadarko filed its motion for rehearing on October 2, 2002. That same day, after receiving Anadarko's motion for rehearing, the Long Trusts filed a letter with the Commission requesting that the Commission revise its final order and deny the Rule 37 exception. Two days later, on October 4, 2002, the Long Trusts filed a formal document specifically labeled as its motion for rehearing. Like the letter filed on October 2nd, the October 4th motion asked the Commission to reconsider its final order and deny the Rule 37 exception. Relying upon the date it mailed the copies of the final order, the Commission considered both Anadarko's motion for rehearing and the Long Trusts' motion for rehearing filed on October 4th to be timely filed.
On November 13, 2002, the Commission denied the parties' motions for rehearing and issued a nunc pro tunc order correcting two clerical errors in its previous order. The Commission corrected the year of the hearing from "2002" to "2001" and, based on the evidence in the record, the Commission corrected the year that the Long Trusts learned about Well No. 8 from "1988" to "1998." Following the issuance of this nunc pro tunc order, Anadarko filed a second motion for rehearing. The hearings examiners advised the parties by letter that the nunc pro tunc order corrected only clerical errors and that the Commission no longer had jurisdiction to act on the matter. The Commission therefore took no action on Anadarko's second motion for rehearing.
Anadarko and the Long Trusts filed separate appeals from the Commission's final order issued September 12, 2002. The district court signed an agreed order consolidating the two appeals. Thereafter, the district court entered final judgment affirming the Commission's final order.3 Anadarko and the Long Trusts appeal the district court's final judgment affirming the Commission's final order.
On appeal, Anadarko raises nine issues. In general, Anadarko faults the Commission for declaring the original permit void, not voidable, and for considering what it views as an untimely motion for rehearing filed by the Long Trusts. For their part, the Long Trusts challenge the merits of the Commission's order arguing that the Commission applied the wrong legal standard in granting a Rule 37 exception and that the Commission's order was not supported by substantial evidence.
We review the Commission's final order under the substantial evidence rule. See Tex. Gov't Code Ann. § 2001.174 (West 2008). Under the substantial evidence rule, we give significant deference to the agency in its field of expertise. Railroad Comm'n v. Torch Operating Co., 912 S.W.2d 790, 792 (Tex. 1995); Texas Health Facilities Comm'n v. Charter Med.-Dallas, Inc., 665 S.W.2d 446, 452 (Tex. 1984). We presume that the agency's order is valid and that its findings, inferences, conclusions, and decisions are supported by substantial evidence. City of El Paso v. Public Util. Comm'n, 883 S.W.2d 179, 185 (Tex. 1994); Charter Med., 665 S.W.2d at 452. The complaining party has the burden to overcome this presumption. City of El Paso, 883 S.W.2d at 185; Hammack v. Public Util. Comm'n, 131 S.W.3d 713, 725 (Tex. App.-Austin 2004, pet. denied).
In conducting a substantial evidence review, we may not substitute our judgment for that of the agency on the weight of the...
To continue reading
Request your trial