Oil and Gas Lawyer Blog
The Texas Supreme Court has reversed a decision of the Austin Court of Appeals holding that the Texas Railroad Commission must consider traffic issues in deciding whether to issue a permit for an injection well to Pioneer Exploration, Ltd. in Wise County. In its decision, the Court held that, in considering whether issuance of the permit was “in the public interest,” the RRC need not consider the adverse impact on roads and traffic caused by truck traffic to and from the injection well.
The case is Railroad Commission of Texas and Pioneer Exploration, Ltd. v. Texas Citizens for a Safe Future and Clean Water and James G. Popp, No. 08-0497. The Court’s opinion may be viewed here. Chief Justice Wallace Jefferson issued a concurring opinion, joined by Justices Willett and Lehrmann, which may be found here. The Austin Court of Appeals’ opinion, reversed by the Supreme Court, created quite a stir and gave rise to amicus briefs in the Supreme Court from the Texas Oil & Gas Association, Pinnergy, Ltd., the Texas Pipeline Association, the Texas Water Conservation Association, and the Texas Association of Realtors. Their briefs may be found here.
Injection wells are a critical part of the infrasture of the oil and gas industry in Texas. Most wells produce water in addition to oil and gas. The water is usually saline and must be disposed of in properly permitted injection wells. Injection wells are also used to dispose of water and associated waste recovered from hydraulic fracturing operations. The new horizontal drilling technology being used in shale plays in Texas requires large volumes of frac water, making the disposal of used frac water an essential part of the drilling and completion process and profitable business for injection well operators.
Pioneer’s proposed injection well, in Wise County, is in the Barnett Shale, and residents living close to the proposed location for the injection well opposed the permit, arguing (among other things) that the traffic from trucks hauling the waste water to and from the facility would pose dangers to local residents and damage to the roads being used.
The statute that requires a company wanting to operate a disposal well to obtain a permit from the RRC requires the RRC to find that “the use or installation of the injection well is in the public interest.” The statute does not define what is meant by the “public interest.” The RRC argued that it had no jurisdiction to consider traffic issues in considering the permit application; it argued that it’s job was to consider only factors related to protection of fresh water resources and “prevention of waste.” “Prevention of waste” is a term with a long history in oil and gas legal jargon, and essentially means the efficient and economical recovery of oil and gas resources within the State. The RRC said it had no expertise in traffic issues and that it was foreclosed from considering the landowner’s traffic complaints.
The majority opinion of the Court, written by Justice Guzman, said that the statutory language “in the public interest” was ambiguous, admitting of more than one possible interpretation; that the RRC’s interpretation of the statute was entitled to deference and should be adopted if it was reasonable; that the statutory history supported the RRC’s interpretation; and that as a result the RRC need not consider traffic issues in deciding injection permit applications. The concurring opinion of Justice Jefferson went further, holding that the statute was unambiguous and precluded the RRC from considering traffic issues: Jefferson said that ” … the statute prohibits consideration of traffic safety in the Commission’s decision to issue injection permits ….”
Injection permits are increasingly being applied for in populated areas, and issues of traffic safety and road damages and maintenance from resulting truck traffic will continue to arise. If the proposed injection well site is in an unincorporated part of a county, no municipal authority has power to require the permit applicant to address traffic or safety issues. The authority of county commissioners in Texas over such issues is notoriously weak. Where the proposed well location is within the jurisdictional limits of a municipality, however, cities do have authority to regulate public safety, including zoning authority. Cities traditionally have required oil and gas companies who want to drill within their limits to obtain a city permit to do so, and cities are increasingly requiring the permit applicant to address public safety issues as a condition to granting the permit. The Supreme Court’s decision has the perhaps unintended consequence of strenthening municipalities’ argument that they have authority to consider traffic and other public safety issues in their oil and gas permit application ordinances. In areas outside city limits, the Legislature should consider giving counties permit authority to require drillers to address traffic and other public safety issues as well.