Roland Oil Company v. Railroad Commission of Texas ( 2015 )

ACCEPTED
03-12-00247-CV
3853909
THIRD COURT OF APPEALS
AUSTIN, TEXAS
1/21/2015 8:13:12 PM
JEFFREY D. KYLE
CLERK
No. 03-12-00247-CV
IN THE COURT OF APPEALS FILED IN
3rd COURT OF APPEALS
FOR THE THIRD JUDICIAL DISTRICT OF TEXAS AUSTIN, TEXAS
AT AUSTIN 1/21/2015 8:13:12 PM
JEFFREY D. KYLE
Clerk
ROLAND OIL COMPANY
Appellant,
v.
RAILROAD COMMISSION OF TEXAS,
Appellee.
Appeal from the 353rd Judicial District Court
Travis County, Texas
Cause No. D-1-GN-08-003472
APPELLANT ROLAND OIL COMPANY RESPONSE TO
APPELLEE’S MOTIONS FOR REHEARING AND FOR ENBANC
RECONSIDERATION
DARIO BARGAS
SBN: 01733600
BARGAS LAW FIRM
1000 HERITAGE CENTER CIRCLE
ROUND ROCK, TEXAS 78664
PHONE: 512-785-5955
FAX: 1-866-415-0828
ATTORNEY FOR APPELLANT
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TABLE OF CONTENTS
PAGE
Table of Contents……………………………………………………………ii
Index of Authorities………………………………………………………...iii
I. Response to Rehearing Point 1:
A. By considering the unique facts of this case, along with
the express language of the Unitization Lease, the Court
correctly found the operations of Roland Oil Company to
qualify as “Unit Operations.” ……………………………………...2
II. Response to Rehearing Point 2:
B. This Court is not changing precedence regarding
the Hall case………………………………………………………….2
III. Response to Rehearing Point 3:
C. Thirdly, the Court did not error in applying the Substantial
Evidence Test.………………………………………………………..4
PRAYER…………………………………………………………………….5
Certificate of Compliance…………………………………………………...7
Certificate of Service………………………………………………………...8
ii
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INDEX OF AUTHORITIES
CASES PAGE
Bargsely v. Pryor Petroleum Corp.,
196 S.W.3d 823 (Tex. App.—Eastland 2006, pet. Denied)…………..3
Hall v. McWilliams,
404 S.W.2d 606 (Tex. Civ. App.—Austin 1966, writ ref’d n.r.e.)…...3
Cox v. Stowers,
786 S.W.2d. 102 (Tex. App—Amarillo 1990, no writ)………………4
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No. 03-12-00247-CV
IN THE COURT OF APPEALS
FOR THE THIRD JUDICIAL DISTRICT OF TEXAS
AT AUSTIN
ROLAND OIL COMPANY
Appellant,
v.
RAILROAD COMMISSION OF TEXAS,
Appellee.
Appeal from the 353rd Judicial District Court
Travis County, Texas
Cause No. D-1-GN-08-003472
APPELLANT ROLAND OIL COMPANY RESPONSE TO
APPELLEE’S MOTIONS FOR REHEARING AND FOR ENBANC
RECONSIDERATION
TO THE HONORABLE COURT OF APPEALS:
NOW COMES Roland Oil Company, Appellant, by and through
undersigned counsel, and respectfully requests that this Court deny
Appellee’s motion for rehearing and en banc reconsideration.
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A. By considering the unique facts of this case, along with the express
language of the Unitization Lease, the Court correctly found the
operations of Roland Oil Company to qualify as “Unit
Operations.”
This Court ruled that Appellant’s actions to satisfy the Commission’s
regulations are essential in operating the lease and producing regarding
active wells. (Roland Oil Co. v. R.R. Comm’n of Texas, No. 03-12-00247-
CV, at 13 (Tex. App.—Austin Aug. 29, 2014) (mem. Op.).
The Commission has incorrectly interpreted this Court’s decision with
respect to Unit Operations. As stated above, the heart of producing oil and
gas is compliance with the Commission’s regulations. Simply put,
Appellant cannot produce the lease in question without testing the inactive
wells because of the Commission’s regulations of plugging. (Roland Oil Co.
v. R.R. Comm’n of Texas, No. 03-12-00247-CV, at 13 (Tex. App.—Austin
Aug. 29, 2014) (mem. Op.). Thus, this Court did not negate the full concept
of Unit Operations.
B. Secondly, This Court is not changing precedence regarding the
Hall case.
Appellee has indicated in their Motion for Rehearing that Appellants
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actions did not constitute operations based on well-established oil and gas
law. However, in Bargsely v. Pryor Petroleum Corp., 196 S.W.3d 823 (Tex.
App.—Eastland 2006, pet. denied.), the court indicated that activities under
certain circumstances might be considered “operations”. This leaves the
question open as to what circumstances these activities will be deemed
“operations.”
Appellees contend that this Court is not following precedent, relying
on the previous ruling in Hall v. McWilliams. However, the case at issue is
different than Hall because the facts in Hall indicated that the actions done
by the operator was minimal, i.e, starting the motor on well once a week and
pumping the well for about five minutes to pass fluid. 404 S.W.2d at 609.
In this case at hand, Appellant was out on the oil site every day, performed
flow-line and electrical repairs on the Lease’s active wells (“its just a matter
of continuous operations”), and monitored the flow lines and tank batteries.
(Roland Oil Co. v. R.R. Comm’n of Texas, No. 03-12-00247-CV, at 12 (Tex.
App.—Austin Aug. 29, 2014) (mem. Op.). The actions of Appellant clearly
show more than minimal work as opposed to the Hall case. Further, in this
case, this court correctly asserted that there was evidence that Appellant’s
work and maintenance was extended to the whole lease during the gap in
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production. Id Therefore, making this case distinct from the Hall case. In
the Hall case, the operations performed were done solely to the inactive
wells for the purpose of keeping the pump from sticking. Cox v. Stowers,
786 S.W.2d 102 at 2 (Tex. App.—Amarillo 1990, no writ).
C. Thirdly, the Court did not error in applying the Substantial
Evidence Test.
Here, Appellee claims the Court erred in applying the Substantial
Evidence test by improperly weighing the evidence against the
Commissioner’s findings. However, a quick overview of the court’s opinion
in this case shows why the Court did not deviate from the correct standard of
review.
In the two step Substantial Evidence analysis, the court must make
two inquiries: (1) whether the agency made findings of underlying facts that
logically support the ultimate facts and legal conclusions establishing the
legal authority for the agency’s decision or action and, in turn, (2) whether
the findings of underlying fact are reasonably supported by the evidence.
Roland Oil Co. v. R.R. Comm’n of Texas, No. 03-12-00247-CV, at 7 (Tex.
App.—Austin Aug. 29, 2014) (mem. Op.) In this analysis, although the
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Court may not “substitute” its judgment for that of the state agency on the
weight of the evidence or questions of fact, it may, concerning the first
inquiry, review “embedded questions of law” de novo.” Id. Thus, allowing
the court to review agency questions of law without a presumption of
validity under the substantial evidence test, as it did in this case.
As for the second inquiry, the Court, in its review of the findings by
the Commission, found that no evidence was presented by Appellee to show
Appellant’s performance during the “gap” in production was solely
performed on the inactive wells. Roland Oil Co. v. R.R. Comm’n of Texas,
No. 03-12-00247-CV, at 13 (Tex. App.—Austin Aug. 29, 2014) (mem. Op.).
Coincidently, the Commission based its decision on the reliance of its own
finding that Appellant solely performed Unit Operations on inactive wells.
Here, the Court reasoned under the second inquiry, that because no evidence
supported the Commission’s finding, the evidence couldn’t reasonably
support the finding.
PRAYER
In conclusion, this Court found the operations of Roland Oil Company to
qualify as “Unit Operations” after considering the unique facts of this case,
along with the express language of the Unitization Lease. The Court did not
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err in its application of the Substantial Evidence test, and so Appellant
requests that the Court deny Appellee’s motion.
Respectfully Submitted,
/s/Dario Bargas
Dario Bargas
SBN: 01733600
Attorney for Appellant
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Certificate of Compliance
Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), I certify that this
computer-generated document, excluding the contents listed in Texas Rule
of Appellate Procedure 9.4(i)(1), contains approximately 850 words and
therefore complies with the word count limits set forth in Texas Rule of
Appellate Procedure 9.4(i)(2)(D). I relied on the word count of the
computer program used to prepare the document.
/s/ Dario Bargas
Dario Bargas
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Certificate of Service
On January 21, 2015, a true and correct copy of the foregoing
Appellant Roland Oil Company Response to Appellee’s Motion for
Rehearing and for En Banc Reconsideration was served on the following
counsel electronically through electronic filing service provider by email:
Anthony W. Benedict
Assistant Attorney General
SBN: 02129100
anthony.benedict@texasattorneygeneral.gov
Elizabeth R.B. Sterling
SBN: 19171100
elizabeth.sterling@texasattorneygeneral.gov
Priscilla M. Hubenak
Assistant Attorney General
SBN: 10144690
pricilla.hubenak@texasattorneygeneral.gov
Linda B. Secord
SBN: 17973400
linda.secord@texasattorneygeneral.gov
Steven Lord
SBN: 24074618
Assistant Attorney General
steven.lord@texasattorneygeneral.gov
/s/ Dario Bargas
Dario Bargas
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