709 R.R. Comm’n of Tex. v. Polk Operating, LLC, No. 03-17-00080-CV, 2018 WL 1004567 (Tex. App.—Austin Feb. 22, 2018, no pet. h.)

Monday, July 8th, 2019

Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.

R.R. Comm’n of Tex. v. Polk Operating, LLC, No. 03-17-00080-CV, 2018 WL 1004567 (Tex. App.—Austin Feb. 22, 2018, no pet. h.) (mem. op.) held that the District Court in Austin had jurisdiction to hear an appeal from Railroad Commission orders that failed to grant all of the relief requested. Polk Operating, LLC, (“Polk”) operated an oil and gas waste facility licensed by the Railroad Commission of Texas (“TRC”). The TRC brought an enforcement action against Polk involving inadequately lined and over capacity storage pits. Evergreen Underground Water Conservation District intervened (according to Polk, urged on by Polk’s competitor). Evergreen “sought discovery regarding the identity of Polk’s customers, Polk’s compensation arrangements, and Polk’s activities on the property adjacent to the recycling facility.”

Polk objected to the discovery request, and after an administrative law judge entered a protective order, but granted discovery, Polk asked the TRC to reverse the ALJ’s interim orders and to “fashion a more comprehensive protective order” to prevent the release of trade secrets. The TRC responded by strengthening the protective order, but did not reverse the discovery request. When Polk responded by filing for a writ of mandamus and writ of injunction in the Austin District Court, the TRC argued that Polk failed to exhaust its administrative remedies at the agency level and that the TRC had jurisdiction. The district court denied the TRC’s plea to the jurisdiction, and an interlocutory appeal to the Austin Court of Appeals followed. The issues were whether Polk exhausted the administrative remedies available to it at the TRC and whether Polk had standing to challenge the discovery orders because Polk was successful in its appeal to the TRC.

The TRC argued that Polk’s “appeal to the Commission did not explicitly reference the ALJ’s failure to make a necessity finding regarding Polk’s trade secret objections” and that because the TRC did strengthen the protective order Polk lacked standing because “Polk’s appeal to the commission was successful.”

In determining whether Polk had exhausted its remedies with the TRC, the court reasoned that failure to invoke the trade-secret necessity issue “would constitute a waiver of the necessity issue, not a failure of jurisdiction.” “Thus the adequacy or sufficiency of Polk’s appeal of the interim orders of the Commission does not affect the district court’s jurisdiction here.”

In regard to the standing issue, the court reasoned that the Commission had not granted all of the relief requested. “The Commission . . . did strengthen the protective order as requested . . . [but] did not reverse the discovery order. . . .” “Thus, Polk did not receive all of its requested relief.”

The case followed existing precedent that the filing of a motion for rehearing is jurisdictional, but the sufficiency of that motion is not. On its face, the TRC did not grant all the relief requested.