Face Challenges Confidently

654 Ring Energy v. Trey Resources, Inc., No. 08-15-00080-CV, 2017 WL 192911 (Tex. App.—El Paso Jan. 18, 2017, no. pet.)

Tuesday, July 17th, 2018

Richard F. Brown

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

Ring Energy v. Trey Resources, Inc., No. 08-15-00080-CV, 2017 WL 192911 (Tex. App.—El Paso Jan. 18, 2017, no. pet.) (TRC jurisdiction for injunctive relief over injection wells), held that pre-injury injunctive relief challenging the injection of fluids into an injection well permitted by the Texas Railroad Commission (“Commission”) may be sought outside of the Commission and in any county where the injury is threatened. Trey Resources, Inc. (“Trey”) was conducting oil and gas operations in Andrews County, Texas. Trey obtained nine permits from the Commission for the operation of injection wells. Ring Energy, Inc. (“Ring”) operated several oil wells that were near the injection wells. Before Trey began operating the injection wells, Ring filed suit in Andrews County seeking an injunction against Trey’s operation of the injection wells. Ring sued under Tex. Nat. Res. Code Ann. § 85.321, which gives a property owner a private cause of action if that owner’s property “may be damaged” by waste. Ring claimed that Trey’s injection wells would cause substantial damage to Ring’s mineral interest and would result in waste.

Trey filed a motion to dismiss Ring’s suit and maintained that the court in Andrews County lacked subject matter jurisdiction because the suit should have been filed in Travis County. Both Trey and Ring agreed that § 85.321 permitted an injured party to file suit in the county where the injury occurred, but they disagreed as to whether an uninjured party could file outside Travis County. Because the permit had not been put into use, and because no injury had occurred, Trey contended that the suit should be viewed as an appeal of the issuance of the permit by the Commission, and therefore Ring could only seek injunctive relief in Travis County. Trey’s argument relied on Tex. Nat. Res. Code Ann. § 85.241, which provides that anyone who is affected by an order of the Commission related to the waste of oil and gas may sue the Commission in Travis County. Ring argued that § 85.321 also permits suits for equitable relief in any state court where venue is proper. The trial court dismissed for lack of subject matter jurisdiction.

The court considered the language of §§ 85.241, 85.321, and 85.322. Section 85.241 provides that anyone “who is affected by . . . orders of the commission relating to oil or gas and the waste of oil or gas . . . may file suit against the commission” so long as that suit is brought in Travis County. Section 85.321 permits suits in law or equity by someone “who owns an interest in property or production that may be damaged by another party,” if that other party is committing waste. Section 85.322 states that no suit against the Commission “‘shall impair or abridge or delay a cause of action for damages or other relief’ that a land owner, or producer might have for violation of a rule or order of the Commission.”

In analyzing the statutory language to determine legislative intent, the court used several grammatical tools of interpretation, including the use of “modal auxiliary verbs.” Additionally, the court looked at the act as a complete document. After studying the text of the statutes and finding no other adequate remedy, the court determined that the “Legislature intended to allow pre-injury injunctive relief in the county where the injury is threatened.”

The significance of this case is the holding that the Commission does not have exclusive or primary jurisdiction over suits seeking pre-injury injunctive relief against the operation of injection wells.