Swepi Lp v. Railroad Commission of Texas and Hidalgo County

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-09-00425-CV

SWEPI LP, Appellant

v.

Railroad Commission of Texas and Hidalgo County, Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT

NO. D-1-GN-06-003322, HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING

O P I N I O N

SWEPI LP appeals from the district court's judgment affirming final orders of

appellee the Railroad Commission of Texas and granting the Commission's plea to the jurisdiction

on SWEPI's declaratory claims. (1) In its final orders, the Commission approved two applications for

"qualified subdivisions" pursuant to chapter 92 of the natural resources code and the Commission's

companion rule 76. See Tex. Nat. Res. Code Ann. §§ 92.001 -.007 (West 2001) ("chapter 92");

16 Tex. Admin. Code § 3.76 (2009) (Tex. R.R. Comm'n, Commission Approval of Plats for Mineral

Development) ("rule 76"). Because we conclude that the district court did not err in affirming

the Commission's final orders and granting its plea to the jurisdiction, we affirm the district

court's judgment.

BACKGROUND

Chapter 92 and Rule 76

We begin by providing a brief overview of the relevant statutory scheme and common

law to give context to the parties' arguments. Under the common law, the mineral estate is

dominant, and a mineral estate owner's right to develop includes an implied right to use the surface

estate in ways reasonably necessary to carry out its operations as long as the operations are consistent

with the common law requirement to reasonably accommodate the current uses of the surface.

See Getty Oil Co. v. Jones , 470 S.W.2d 618, 621 (Tex. 1971); Texas Genco, LP v. Valence

Operating Co. , 187 S.W.3d 118, 121-22 (Tex. App.--Waco 2006, pet. denied) (discussion of

"accommodation doctrine"); Davis v. Devon Energy Prod. Co. , 136 S.W.3d 419, 423-24 (Tex.

App.--Amarillo 2004, no pet.) (discussion of common law balance between the mineral and surface

estates of the use of the surface and the accommodation doctrine).

In 1983, the Texas Legislature enacted chapter 92. See Tex. Nat. Res. Code Ann.

§§ 92.001 -.007 ("Mineral Use of Subdivided Land"). Chapter 92 provides a statutorily granted

exception to the common law. It provides a procedure for owners of surface estates to limit mineral

estate owners' use of the surface based upon the surface's future development, delegating

administration of the procedure to the Commission. See id . § 92.004. The commission has

jurisdiction over oil and gas wells in Texas and persons owning or engaged in drilling or operating

oil and gas wells in Texas. See id . § 81.051 (West 2001) ("Jurisdiction of Commission").

Section 92.003 provides that "surface owners of a parcel of land may create a

qualified subdivision on the land if a plat of the subdivision has been approved by the railroad

commission and filed with the clerk of the county in which the subdivision is to be located." See id .

§ 92.003. Section 92.002(3) defines a "qualified subdivision" as follows:

(3) "Qualified subdivision" means a tract of land of not more than 640 acres:

(A) that is located in a county having a population in excess of 400,000,

or in a county having a population in excess of 140,000 that borders

a county having a population in excess of 400,000 or located on a

barrier island;

(B) that has been subdivided in a manner authorized by law by the surface

owners for residential, commercial, or industrial use; and

(C) that contains an operations site for each separate 80 acres within the

640-acre tract and provisions for road and pipeline easements to allow

use of the operations site.

Id . § 92.002(3).

Within an approved qualified subdivision, the mineral estate owner's use of the

surface is limited to "designated operations sites for exploration, development, and production of

minerals and the designated easements only as necessary to adequately use the operations sites." Id .

§ 92.005. "'Operations site' means a surface area of two or more acres located in whole or in part

within a qualified subdivision, designated on the subdivision plat, that an owner of a possessory

mineral interest may use to explore for and produce minerals." Id . § 92.002(1). (2) An application to

create a qualified subdivision "must be accompanied by a plat of the subdivision showing the

applicant's proposed location of operations sites and road and pipeline easements." Id. § 92.004(a).

After notice to the applicant and owners of possessory mineral interests, the

Commission must hold a hearing on the application to "consider the adequacy of the number and

location of operations sites and road and pipeline easements." See id . § 92.004(b). "After

considering the evidence, the commission shall approve, reject, or amend the application to ensure

that the mineral resources of the subdivision are fully and effectively exploited." Id . An applicant

or owner of a possessory mineral interest may appeal the Commission's order "as provided by law."

Id .; see also Tex. Gov't Code Ann. § 2001.171 (West 2008) (judicial review of state

agency decisions).

The Commission adopted rule 76 to implement chapter 92. See 16 Tex. Admin. Code

§ 3.76 ; see also Tex. Nat. Res. Code Ann. § 92.004 (a) (commission charged with adopting rules).

The subsections of rule 76 at issue substantively track the language in the corresponding sections in

chapter 92. With this context, we turn to the parties' dispute.

The Controversy

In 2004, Betty Eyhorn acquired the surface estate of 1,280 contiguous acres of

dry farm land in Hidalgo County. Boston Texas Land and Trust owns the mineral estate of the

1,280 acres, and SWEPI is the owner and operator of an oil and gas lease with Boston Texas Land

and Trust that encompassed this acreage. SWEPI has operational wells producing gas on portions

of the acreage.

In 2006, Eyhorn recorded plats in the real property records of Hidalgo County (3) and

filed two applications accompanied by the recorded plats with the Commission for "qualified

subdivisions" of 640 acres each on her land. See Tex. Nat. Res. Code Ann. §§ 92.002 (3), .004;

16 Tex. Admin. Code § 3.76 (a)(4), (c). The plats show proposed locations for oil and gas operations

sites and road and pipeline easements. See Tex. Nat. Res. Code Ann. § 92.004 (a); 16 Tex. Admin.

Code § 3.76 (c)(4). At that time, Hidalgo County had an option to purchase the 1,280 acres from

Eyhorn and planned to use the acreage for constructing and operating a landfill. The Commission

notified SWEPI as an owner of possessory mineral interests, and SWEPI opposed approval of both

applications. See Tex. Nat. Res. Code Ann. § 92.004 (b); 16 Tex. Admin. Code § 3.76 (d). The

two applications were considered in consolidated hearings. (4)

In September 2006, SWEPI filed this cause, requesting that the district court enjoin

the Commission from holding the hearings because the Commission did not have authority to

approve the applications. After a hearing, the district court denied SWEPI's request and abated this

cause until the Commission entered its final orders. (5)

The consolidated hearings were resumed and heard on January 21 and February 22,

2007. (6) The hearing examiners issued a proposal for decision on November 1, 2007, recommending

approval of both applications. The evidence was then reopened in January 2008 to receive evidence

of a new well that SWEPI drilled after the proposal for decision was issued. The new well was at

a surface location outside of the proposed operations sites on one of the subdivisions. Eyhorn

provided a revised plat for that subdivision which was admitted into the record. The revised plat

provided an additional operations site around the location of the new well.

The hearing examiners thereafter issued an amended proposal for decision, addressing

the new well and continuing to recommend approval of both applications. In February 2008, the

Commission adopted and incorporated the examiners' conclusions of law and relevant findings of

fact and entered separate final orders approving the two applications. The final order for each

qualified subdivision attached and incorporated a metes and bounds description of the subdivision

and the revised plat depicting the location of the oil and gas operations sites and easements. SWEPI

filed a motion for rehearing on both applications, which motions the Commission overruled.

In May 2008, SWEPI filed an amended petition in this cause, seeking judicial review

of the Commission's final orders under the Texas Administrative Procedure Act. See Tex. Gov't

Code Ann. §§ 2001.001 -.902 (West 2008 & Supp. 2009) (the "APA"). SWEPI also sought

declarations that the Commission's final orders were in excess of the Commission's statutory

authority and interfered with and impaired a legal right or privilege of SWEPI or, in the alternative,

declarations construing SWEPI's rights under the Commission's final orders. See id . § 2001.038

(West 2008); Tex. Civ. Prac. & Rem. Code Ann. §§ 37.001 -.011 (West 2008) (Texas Uniform

Declaratory Judgments Act) (the "Act"). After Eyhorn sold her land to Hidalgo County, Hidalgo

County intervened and Eyhorn withdrew as a party to this cause.

In March 2009, the Commission filed a plea to the jurisdiction on SWEPI's claims

for declaratory relief and, in April 2009, the district court held a hearing on the administrative appeal

and the Commission's plea to the jurisdiction. Following the hearing, the district court affirmed the

Commission's final orders and granted its plea to the jurisdiction. This appeal followed.

ANALYSIS

In five issues, SWEPI contends that the district court erred by affirming the

Commission's final orders and by granting the Commission's plea to the jurisdiction. SWEPI urges

that the Commission exceeded its statutory authority because chapter 92's plain language does not

authorize the Commission to consider or approve two contiguous 640-acre qualified subdivisions

on a single parcel of land for the single purpose of landfill operations. As to its declaratory claims,

SWEPI contends that the district court had jurisdiction to interpret chapter 92 and rule 76 or, in the

alternative, to declare SWEPI's rights under the Commission's final orders.

Administrative Appeal of Commission's Final Orders

In its first three issues, SWEPI challenges the Commission's final orders under the

APA. SWEPI urges that the Commission acted outside of its authority by approving Eyhorn's

applications of two contiguous 640 acres for the "same development on a single parcel of land."

SWEPI also urges that the Commission acted outside its authority by approving the subdivisions

because they "had not been subdivided for 'residential, commercial or industrial use'" but for

Hidalgo County to construct and operate a landfill. SWEPI further urges that the Commission

improperly interpreted and applied rule 76 in a manner that interferes with or impairs a legal right

or privilege of SWEPI.

A) Scope and Standard of Review

We may reverse a state administrative agency's decision that prejudices substantial

rights of the complaining party if the decision is in violation of a constitutional or statutory

provision, in excess of the agency's authority, made through unlawful procedure or affected by other

error of law, not reasonably supported by substantial evidence, or arbitrary or capricious or

characterized by an abuse of discretion. Tex. Gov't Code Ann. § 2001.174 (2)(A)-(F) (West 2008);

Railroad Comm'n v. Torch Operating Co. , 912 S.W.2d 790, 792-93 (Tex. 1995). SWEPI limits its

challenge to the Commission's authority to consider and approve the final orders. See id.

§ 2001.174(2)(B).

An administrative agency "has only those powers that the Legislature expressly

confers upon it" and "any implied powers that are reasonably necessary to carry out the express

responsibilities given to it by the Legislature." See Public Util. Comm'n v. City Pub. Serv. Bd. ,

53 S.W.3d 310, 315 (Tex. 2001). The issue then is the scope of the Commission's authority under

chapter 92, and the starting point for construing chapter 92 is the language of the statute itself. See

In re City of Georgetown , 53 S.W.3d 328, 331 (Tex. 2001).

We consider questions of statutory construction de novo . See City of San Antonio

v. City of Boerne , 111 S.W.3d 22, 25 (Tex. 2003). When construing a statute, our primary goal is

to determine and give effect to the legislature's intent. Id. ; see also Tex. Gov't Code Ann. § 312.005

(West 2005). To determine legislative intent, we look to the statute as a whole, as opposed to

isolated provisions. City of San Antonio , 111 S.W.3d at 25 (citing State v. Gonzalez , 82 S.W.3d 322 ,

327 (Tex. 2002)). We begin with the plain language of the statute at issue and apply its common

meaning. Id. Where the statutory text is unambiguous, we adopt a construction supported by the

statute's plain language unless that construction would lead to an absurd result. Fleming Foods of

Tex., Inc. v. Rylander , 6 S.W.3d 278, 284 (Tex. 1999).

We construe administrative rules in the same manner as statutes. See Rodriguez

v. Service Lloyds Ins. Co. , 997 S.W.2d 248, 254 (Tex. 1999). Unless the rule is ambiguous, we

follow the rule's plain language, and our primary objective is to give effect to the agency's intent.

See id. For this reason, we give deference to an agency's interpretation of its own rules unless that

interpretation is clearly erroneous or contrary to the plain language of the rule. See Public Util.

Comm'n v. Gulf States Utils. Co. , 809 S.W.2d 201, 207 (Tex. 1991); Cities of Dickinson v. Public

Util. Comm'n , 284 S.W.3d 449, 453 (Tex. App.--Austin 2009, no pet.).

B) 640-acre Limit for a Qualified Subdivision

In its first two issues, SWEPI contends that the Commission exceeded its

statutory authority under chapter 92 and improperly interpreted and applied rule 76 by approving

two contiguous qualified subdivisions that are in excess of 640 acres combined on a single parcel

of land. SWEPI urges that the plain meaning of "not more than 640 acres" in the definition of

"qualified subdivision" in section 92.002(3) and rule 76(a)(4) is as a statutory cap or "absolute limit"

on the amount of acres that can be approved as a qualified subdivision on a single parcel of land.

See Tex. Nat. Res. Code § 92.002(3); 16 Tex. Admin. Code § 3.76 (a)(4). SWEPI focuses on the use

of the indefinite article "a" in the definition of "qualified subdivision" in the statute and the rule--" a

tract of land of not more than 640 acres"--and in the phrase in section 92.003 that "[t]he surface

owners of a parcel of land may create a qualified subdivision on the land . . . ." See Tex. Nat. Res.

Code Ann. §§ 92.002 (3), .003; 16 Tex. Admin. Code § 3.76 (a)(4) (emphasis added). (7) Based upon

the use of "a" in the phrases "a tract of land of not more than 640 acres," "a parcel of land," and "a

qualified subdivision," SWEPI contends that the plain meaning of this language only supports

a single 640-acre qualified subdivision per parcel of land. SWEPI argues that to construe chapter

92 and rule 76 to authorize the Commission to approve multiple applications for contiguous

qualified subdivisions on a single piece of property, as long as no single application exceeds

640 acres, would give no meaning to the inclusion of "no more than 640 acres." See City of

San Antonio , 111 S.W.3d at 29 (effect must be given to each word and clause so that none are

rendered meaningless); see also Tex. Gov't Code Ann. § 311.021 (2) (West 2005) ("[T]he entire

statute is intended to be effective.").

The Commission's interpretation of chapter 92 and rule 76, however, conforms with

the common meaning of the language in both the statute and rule. In drafting statutes, the singular

tense includes the plural and the plural tense includes the singular "unless expressly provided

otherwise." Tex. Gov't Code Ann. § 312.003 (b) (West 2005); see id . § 311.012(b) (West 2005)

("The singular includes the plural and the plural includes the singular."); Frenship Rural High Sch.

Dist. v. Central Educ. Agency , 404 S.W.2d 41, 43-44 (Tex. Civ. App.--Austin 1966, writ ref'd

n.r.e.) (discussing and applying rule that singular includes plural). Here, the legislature did not

provide otherwise.

Although the legislature limited a qualified subdivision to "a tract of land of not more

than 640 acres," the legislature did not expressly provide that only one 640-acre qualified subdivision

was authorized for a landowner of more than 640 acres. Nor did the legislature expressly require the

Commission to consider applications for qualified subdivisions based upon their relation to other

proposed subdivisions, such as joint proposed development and relative locations. "Only when it

is necessary to give effect to the clear legislative intent can we insert additional words or

requirements into a statutory provision." Cameron v. Terrell & Garrett, Inc ., 618 S.W.2d 535, 540

(Tex. 1981); see City of Rockwall v. Hughes , 246 S.W.3d 621, 629 (Tex. 2008) (declining to read

additional words into statute in construing statute).

In contrast to the Commission's interpretation, SWEPI's proposed interpretation

would require this Court to add additional requirements to the statute that are not contained in its

plain language. See Cameron , 618 S.W.2d at 540 . We would have to add requirements that would

limit a landowner of more than 640 acres to one qualified subdivision on her land even if she

planned to develop her entire tract for the same purpose. If the legislature had intended to place such

restrictions on qualified subdivisions, it could have written such restrictions into the statute. See id.;

see also Presidio Indep. Sch. Dist. v. Scott , No. 08-0958, slip op. at 7 (Tex. April 23, 2010),

available at http://www.supreme.courts.state.tx.us/historical/2010/apr/080958.pdf ("Courts must not

give the words used by the Legislature an 'exaggerated, forced, or constrained meaning.'" (quoting

City of Austin v. Southwestern Bell Tel. Co. , 92 S.W.3d 434, 442 (Tex. 2002)) . Likewise, if the

legislature had intended to effect a cap, it would likely have said so. We may not presume that when

the legislature chooses, it opts for opacity. The purpose of the law shall not be sacrificed to a literal

interpretation of the article "a."

The Commission's interpretation of chapter 92 and rule 76 also conforms with the

title and stated purpose of chapter 92. See Tex. Gov't Code Ann. § 311.023 (1), (7) (West 2005)

(when construing a statute whether or not ambiguous on its face, courts may consider the "object

sought to be obtained" and "title"); McIntyre v. Ramirez , 109 S.W.3d 741, 745 (Tex. 2003). Chapter

92 is entitled "Mineral Use of Subdivided Land." "Subdivide" commonly means "to further divide

(what has already been divided)." Webster's Third New International Dictionary 2274 (2002).

Section 92.001 states the legislative purpose behind the enactment of chapter 92:

It is the finding of the legislature that the rapidly expanding population and

development of the cities and towns of this state and the concomitant need for

adequate and affordable housing and suitable job opportunities call for full and

efficient utilization and development of all the land resources of this state, as well as

the full development of all the minerals of this state . In view of that finding, it is the

intent of the legislature that the mineral resources of this state be fully and effectively

exploited and that all land in this state be maintained and utilized to its fullest and

most efficient use. It is the further finding of this legislature that it is necessary to

exercise the authority of the legislature pursuant to Article XVI, Section 59, of the

Constitution of the State of Texas to assure proper and orderly development of both

the mineral and land resources of this state and that the enactment of this chapter will

protect the rights and welfare of the citizens of this state.

Tex. Nat. Res. Code Ann. § 92.001 (italics added). The Commission's interpretation is consistent

with the plain language of the title and the stated purpose that the legislature intended to address the

mineral use of land that has been subdivided and to maximize the development of both the surface

and the mineral resources on the subdivided land. Id .

As the hearing examiners explain in the amended proposal for decision concerning

the legislature's intent in enacting chapter 92,

Considering that the stated purpose of the enactment of Chapter 92 of the Code was

to achieve full and efficient utilization and development of all the land resources of

the state, as well as full development of the minerals of the state, it appears to the

examiners implausible that it was intended that the surface owner of a 1,280-acre

housing or mixed use development, for example, [would] be prohibited from

obtaining the protections of § 92.005 for more than 50% of his development. The

definition in § 92.002(3) suggests that the Commission may not approve a distinct

subdivision containing more than 640 acres, but it does not expressly forbid approval

of two contiguous 640-acre subdivisions created out of a single parcel of contiguous

acreage. A more plausible interpretation is that the 640-acre limitation in the

definition of "qualified subdivision" was intended to require the surface owner to

reserve operations sites and road and pipeline easements for each distinct 640 acres

or less and to require independent analysis by the Railroad Commission of the

adequacy of such operations sites and easements for the full and efficient exploitation

of mineral resources for each distinct 640 acres or less.

The Commission's interpretation to allow contiguous qualified subdivisions that exceed 640 acres

combined for a single proposed development satisfies the legislative intent to balance the competing

interests between the surface and mineral estates and serves the legislative intent "that all land in this

state be maintained and utilized to its fullest and most efficient use." Id . (emphasis added).

Chapter 92 as a whole also supports the Commission's interpretation of the statute

and its rule that allows contiguous qualified subdivisions that exceed 640 acres combined for a

single proposed development. See City of San Antonio , 111 S.W.3d at 25 . Chapter 92 balances the

future development of the surface estate against the subsurface mineral resources by requiring the

Commission independently to consider the "adequacy of the number and location of operations sites

and road and pipeline easements" for each distinct application and by providing minimum

requirements for the size and location of the operations sites. See Tex. Nat. Res. Code Ann.

§ 92.004 (b). Each operations site must have at least two acres and each separate 80 acres must have

at least one operations site. See id . § 92.002(1), (3)(C); 16 Tex. Admin. Code § 3.76 (a)(2), (4)(C).

Additionally, after considering the evidence, the Commission must "approve, reject or amend the

application to ensure that the mineral resources of the subdivision are fully and effectively

exploited." See Tex. Nat. Res. Code Ann. § 92.004 (b); 16 Tex. Admin. Code § 3.76 (d). Chapter

92 ensures that the interests of owners of possessory mineral interests are protected for each distinct

qualified subdivision that the Commission approves.

The Commission's interpretation of chapter 92 and rule 76 is reasonable and

consistent with the legislative history of chapter 92. See Tarrant Appraisal Dist. v. Moore,

845 S.W.2d 820, 823 (Tex. 1993) ("Construction of a statute by the administrative agency charged

with its enforcement is entitled to serious consideration, so long as the construction is reasonable and

does not contradict the plain language of the statute."); Public Util. Comm'n , 809 S.W.2d at 207 ;

Railroad Comm'n v. Coppock , 215 S.W.3d 559, 563 (Tex. App.--Austin 2007, pet. denied); see also

Tex. Gov't Code Ann. § 311.023 (3), (6) (West 2005) (whether or not statute ambiguous, court may

consider administrative construction of statute and legislative history). (8) The legislative history is

silent on any intent to place an absolute limit on the number of contiguous qualified subdivision

applications that the Commission could consider and approve or the number of applications that a

single property owner could file and have approved for a proposed development based upon an

absolute limit or statutory cap of acreage.

SWEPI relies upon the amendment in 1987 to section 92.002(3) that increased the

acreage for a qualified subdivision from 160 to 640 acres. See Act of June 11, 1987, 70th Leg., R.S.,

ch. 274, § 1, 1987 Tex. Gen. Laws 1616 , 1616. (9) SWEPI contends that the Commission's

interpretation makes the amendment from 160 to 640 acres meaningless because, without the

amendment, a party could have filed four applications to reach 640 acres of qualified subdivisions.

Increasing the size for qualified subdivisions to 640 acres, however, provides certainty and

protection for the parties and promotes efficiency by reducing the number of applications required

for larger developments. (10)

Moreover, were we to accept SWEPI's interpretation of the language in chapter 92

and rule 76, such an interpretation would lead to absurd results. Rylander , 6 S.W.3d at 284 . For

example, an owner of a 1,000-acre property that the owner wanted to develop as a residential

subdivision would be limited to an area of 640 acres for qualified subdivisions, without any

consideration or balancing between the competing interests of the mineral and surface estates and

the "fullest and most efficient use" of the 1,000 acres. See Tex. Nat. Res. Code Ann. § 92.001 ; see

also Tex. Gov't Code Ann. § 311.023 (5) (West 2005) (whether or not statute ambiguous, court may

consider "consequences of a particular construction"); Scott , slip op. at 7 (court must not give words

"exaggerated, forced, or constrained meaning").

SWEPI analogizes Eyhorn's two contiguous applications that exceeded 640 acres

combined to plaintiffs who attempt to "escape the Legislature's statutory scheme by artful pleading."

See Murphy v. Russell , 167 S.W.3d 835, 838-39 (Tex. 2005) (plaintiff's claim of battery dismissed

because substance was medical malpractice claim and, therefore, statutorily required to file expert

report); see also In re Merrill Lynch Trust Co. FSB , 235 S.W.3d 185, 190 (Tex. 2007) (orig.

proceeding) ("[A]rbitrability turns on the substance of a claim, not artful pleading."); Baylor Univ.

v. Sonnichsen 221 S.W.3d 632, 636 (Tex. 2007) (focus of "legal treatment of claims [is] on the true

nature of disputes rather than allow artful pleading to morph contract claims into fraud causes of

action to gain favorable redress under the law"). We do not find these cases analogous as they focus

on a plaintiff's improper re-characterization of a cause of action into a different cause of action. In

contrast, Eyhorn complied with the procedures in chapter 92 and rule 76 by filing two separate

applications for 640 acres, and she fully informed the Commission and SWEPI of Hidalgo County's

option to buy her land and its plans for developing the two contiguous subdivisions.

Consistent with the powers that the legislature expressly conferred on it, the

Commission independently analyzed Eyhorn's applications, considered the adequacy of the proposed

operations sites and easements for each proposed qualified subdivision, and determined that the

minerals would be "fully and effectively exploited" on the land comprising the two distinct

subdivisions. See Tex. Nat. Res. Code Ann. §§ 92.001 , .004(b); 16 Tex. Admin. Code § 3.76 (d);

Public Util. Comm'n , 53 S.W.3d at 315. (11) Applying the plain language of chapter 92 and rule 76,

we conclude that the Commission did not exceed its statutory authority under chapter 92 and did not

misinterpret or misapply rule 76 by approving the two separate applications for 640 acres each in its

final orders. (12)

We overrule SWEPI's first and second issues.

C) Landfill as "Industrial" Use

In its third issue, SWEPI contends that the Commission exceeded its statutory

authority by approving the applications because Eyhorn's land was not "subdivided in a manner

authorized by law by the surface owners for residential, commercial, or industrial use." See Tex.

Nat. Res. Code Ann. § 92.002 (3)(B); 16 Tex. Admin. Code § 3.76 (a)(4)(B); see also Tex. Gov't

Code Ann. § 2001.174 (2)(B). (13) SWEPI specifically urges that the proposed use of a landfill is not

an "industrial use" within that term's common meaning.

SWEPI challenges the Commission's adoption of the hearing examiners' finding of

fact number 6 and conclusions of law numbers 2 and 3:

6. Each of the proposed qualified subdivisions has been subdivided in a manner

authorized by law by the surface owner for industrial use.

a. Eyhorn is the owner of the surface estate of the acreage included in

each of the proposed qualified subdivisions.

b. Eyhorn has filed plats of each of the proposed qualified subdivisions

with the Railroad Commission showing subdivided lots and the

proposed locations of operations sites for exploration, development,

and production of minerals and road and pipeline easements

necessary to use the operations sites.

c. Under Hidalgo County subdivision rules, approval of the

Commissioner's Court of Hidalgo County of qualified subdivision

plats is not required prior to Railroad Commission approval. Under

these subdivision rules, a parcel of land is considered subdivided for

residential, commercial, or industrial use when a plat delineating tract

boundaries, oil and gas operations sites, pipeline easements, road

easements or other boundaries is filed with the Railroad Commission

as a part of an application for approval of a qualified subdivision.

d. The acreage covered by the two proposed qualified subdivisions is

subject to an option to purchase contract between Eyhorn, as current

surface owner, and Hidalgo County, as purchaser.

e. Hidalgo County proposes to use each of the proposed qualified

subdivisions for a landfill and associated landfill facilities.

* * *

2. All things necessary to the Commission attaining jurisdiction over the subject

matter and the parties in these dockets have been performed or have occurred.

3. Each of the applications for approval of qualified subdivisions in these

dockets meets and complies with all requirements for approval of Chapter

92 of the Texas Natural Resources Code and Railroad Commission Statewide

Rule 76.

SWEPI urges that the legislature did not intend landfill operations as the type of use

it was trying to protect in enacting chapter 92. SWEPI focuses on references in the legislative history

to "buildings," "developing urban areas," and "real-estate development." (14) SWEPI urges that the

"focus in adopting the statute was in reconciling the land use needs of local urban real estate

development with full and effective development of the state's mineral resources." The legislative

history, however, is silent on what constitutes an "industrial use." And the Commission's

interpretation that a landfill is an industrial use within the meaning of section 92.002(3)(B) is

reasonable and does not contradict the plain language of the statute. See Moore, 845 S.W.2d at 823 ;

Coppock , 215 S.W.3d at 563 . The common meaning of "industrial" when used as an adjective

means "of or belonging to industry." Webster's Third New International Dictionary 1155 (2002). (15)

That the legislature intended for residential subdivisions or commercial or industrial

office parks to fall within the types of uses allowed under the statute does not preclude other uses,

such as landfill operations, from also falling within the types of uses allowed. Section 92.002(3)(A)

expressly defines the counties in which a qualified subdivision may be created based upon the

population of the county: the tract of land must be "located in a county having a population in excess

of 400,000, or in a county having a population in excess of 140,000 that borders a county having a

population in excess of 400,000." See Tex. Nat. Res. Code Ann. § 92.002 (3)(A). (16) Other than the

population requirement, there is no expressed restriction that a qualified subdivision only be in urban

areas or for development that includes buildings. See id. ; Cameron , 618 S.W.2d at 540 .

SWEPI relies upon subsection (c) of section 92.005 to support that the legislature did

not intend for a landfill to be an "industrial use." See Tex. Nat. Res. Code Ann. § 92.005 (c). Section

92.005(c) provides the circumstances when the restrictions on an owner of a possessory mineral

interest in a qualified subdivision cease to apply:

(c) This section ceases to apply to a subdivision if, by the third anniversary of the

date on which the order of the commission becomes final:

(1) the surface owner has not commenced actual construction of roads or

utilities within the qualified subdivision; and

(2) a lot within the qualified subdivision has not been sold to a third

party.

See id. SWEPI focuses on the requirement in subsection (c)(2) that a lot be sold to a third party to

support that the uses intended were "urban real estate development, like residential subdivisions and

commercial or industrial office parks." But the plain language of subsection (c) is that both

subsections (1) and (2) must apply for the restrictions on the owner of the possessory mineral interest

to cease. If construction of roads or utilities is commenced within three years of the order from the

Commission becoming final--whether or not a lot is sold to a third party--section 92.005(c) does

not apply. See City of San Antonio , 111 S.W.3d at 25 . Section 92.005(c) does not support limiting

"industrial use" as SWEPI proposes.

Applying the common meaning of "industrial use," we conclude that the Commission

did not exceed its statutory authority by interpreting "industrial use" to include landfill operations. (17)

See Tex. Nat. Res. Code Ann. § 92.002 (3)(B); 16 Tex. Admin. Code § 3.76 (a)(4); City of

San Antonio , 111 S.W.3d at 25 . We overrule SWEPI's third issue.

Declaratory Relief

In its fourth and fifth issues, SWEPI contends that the district court erred in granting

the Commission's plea to the jurisdiction as to its declaratory claims under the Act and under section

2001.038(a) of the government code. Alternatively, SWEPI contends that the district court erred in

granting the Commission's pleas as to its alternative requests for declaratory relief concerning the

meaning of the Commission's final orders.

In its plea to the jurisdiction, the Commission contended that the district court did not

have jurisdiction of SWEPI's declaratory claims because those claims were redundant of its claims

challenging the Commission's final orders under section 2001.174 of the APA and that full relief

was available to SWEPI as part of its suit for judicial review of the Commission's final orders.

SWEPI urges that it pled and proved that its requests for declaratory relief did not duplicate its

administrative appeal but were broader because a decision on the administrative appeal "[did] not

necessarily settle the underlying dispute between the parties over the scope of the Commission's

authority." See Texas Mun. Power Agency v. Public Utility Comm'n , 253 S.W.3d 184, 200 (Tex.

2007) (remanding declaratory claims that are "distinct from and not duplicative of the claims for

judicial review of Commission orders").

We review the trial court's ruling on a plea to the jurisdiction de novo . Texas Dep't

of Parks & Wildlife v. Miranda , 133 S.W.3d 217, 228 (Tex. 2004). A plea to the jurisdiction is a

dilatory plea that contests the trial court's authority to determine the subject matter of the cause of

action without regard to whether the claims asserted have merit. Bland Indep. Sch. Dist. v. Blue ,

34 S.W.3d 547, 554 (Tex. 2000).

Section 37.004(a) of the Act provides that a person "whose rights, status, or legal

relations are affected by a statute . . . may have determined any question of construction or validity

arising under the . . . statute . . . and obtain a declaration of rights, status, or other legal relations

thereunder." Tex. Civ. Prac. & Rem. Code Ann. § 37.004 (a). Section 2001.038(a) of the

government code provides, "The validity or applicability of a rule . . . may be determined in an action

for declaratory judgment if it is alleged that the rule or its threatened application interferes with or

impairs, or threatens to interfere with or impair, a legal right or privilege of the plaintiff." Tex. Gov't

Code Ann. § 2001.038 (a).

A declaratory judgment claim "will not lie" when it is "redundant" of a parallel

administrative appeal and the "remedy under the APA is the same as that provided under the

[Act]"--reversal of the agency's final order. Texas Mun. Power Agency v. Public Util. Comm'n ,

260 S.W.3d 647, 651 (Tex. App.--Austin 2008, no pet.) (citing and quoting Texas Liquor Control

Bd. v. Canyon Creek Land Corp ., 456 S.W.2d 891, 895 (Tex. 1970)); see also Young Chevrolet, Inc.

v. Texas Motor Vehicle Bd. , 974 S.W.2d 906, 911 (Tex. App.--Austin 1998, pet. denied) ("When

a statute provides a method for attacking an agency order, a declaratory judgment action directed at

that order will not lie."); Texas Dep't of Transp. v. Texas Weekly Advocate , No. 03-09-00159-CV,

2010 Tex. App. LEXIS 566 , at *8 (Tex. App.--Austin Jan. 29, 2010, no pet.) (mem. op.) ("A

[declaratory judgment] action cannot stand if there is a pending action that resolves the exact issues

raised under the [Act].") (citing and quoting Texas Liquor Control Bd. , 456 S.W.2d at 895 ).

Here it is clear that SWEPI's declaratory claims duplicate its claims and available

remedies under its administrative appeal of the Commission's final orders. SWEPI sought the

following declarations in its pleadings:

•Section 92.002(3) of the Code and Statewide Rule 76(a)(4) limit the

Commission's authority to consider and/or approve applications for

"qualified subdivisions" to no more than 640 acres;

•The Commission had no authority to consider or approve the Applications,

because to do so was tantamount to considering and approving a "qualified

subdivision" of more than 640 acres;

•The Commission exceeded its statutory authority and violated its own rule by

considering and approving the Applications;

•The Commission exceeded its statutory authority and violated its own rule

when it refused to dismiss the Applications upon [SWEPI]'s motion;

•The Commission exceeded its statutory authority and violated its own rule

when it adopted the orders . . . , effectively granting "qualified subdivision"

status to a tract of more than 640 acres; and

•The Commission has applied Statewide Rule 76 in a manner that interferes

with or impairs a legal right or privilege of [SWEPI].

* * *

•The words "residential, commercial and industrial use" as found in the

definition of "qualified subdivision" in Tex. Nat. Res. Code § 92.002(3)(B),

do not include a use as a landfill within the meaning of these terms.

•The words "residential, commercial and industrial use" as found in the

definition of "qualified subdivision" in Statewide Rule 3.76(a)(4)(B), do not

include a use as a landfill within the meaning of these terms.

SWEPI's declaratory claims are based upon the same statutory construction

arguments that it made at the consolidated hearings before the Commission and that it made to the

district court in its administrative appeal of the Commission's final orders. An available remedy in

its administrative appeal was the reversal of the Commission's orders if the orders were "in excess

of the agency's statutory authority." See Tex. Gov't Code Ann. § 2001.174 (2)(B). The district court

necessarily decided the substance of SWEPI's declaratory claims when it affirmed the Commission's

final orders--interpreting chapter 92 and rule 76 to authorize the Commission to approve Eyhorn's

two applications for contiguous qualified subdivisions of 640 acres each and for development as a

landfill. See id . SWEPI's declaratory claims would provide no additional relief.

SWEPI cites City of Waco v. Texas Natural Resource Conservation Commission ,

83 S.W.3d 169 (Tex. App.--Austin 2002, pet. denied), to support the district court's jurisdiction to

consider its declaratory claims. We find the analysis in City of Waco inapplicable here. In that case,

this Court held that the district court had jurisdiction to consider the city's request for a declaration

that the TNRCC could not grant additional permits in a watershed area until the city complied with

federal regulations that were incorporated into state law. Id . at 173. Unlike here, the City was not

attacking an agency order or rule, and the only ground for dismissal that the TNRCC raised was one

of ripeness--"that the controversy [was] hypothetical and not ripe for adjudication apart from a

specific permit application." Id . at 178. This Court made clear that "[t]he City [was] not appealing

from a specific agency action and [was] not challenging the validity or application of an agency

rule," but rights it alleged it was afforded under federal regulation. Id . In that context, this Court

held that the district court had jurisdiction to consider the city's request for declaratory relief "on a

purely legal issue." Id . at 178. (18)

As to SWEPI's alternative claims for declarations of its legal rights, status, and

relations under the Commission's final orders, SWEPI contends that there is confusion surrounding

the restrictions placed on SWEPI because it is not clear if SWEPI is subject to the original plats filed

and approved by Hidalgo County or if the revised plats that the Commission approved and

incorporated into its final orders replaced the plats originally filed in Hidalgo County. SWEPI's

complaint focuses on alleged uncertainty created by Eyhorn's filing of amended plats for the

subdivisions during the pendency of the applications before the Commission and concerns that

Hidalgo County may impose restrictions on SWEPI in the future based upon the original plats.

Section 92.004(a) specifies that applications must be accompanied by a plat of the

subdivision showing the proposed locations of operation sites and easements. See Tex. Nat. Res.

Code Ann. § 92.004 (a). But section 92.004(b) authorizes the Commission itself to amend a plat

prior to approval and section 92.006 expressly allows a surface owner to abandon, replat, or amend

any portion of a subdivision as long as the amendment or replatting is approved by the Commission.

See id . §§ 92.004(b), .006. Section 92.006 further protects the owner of possessory mineral interests

because an amendments or replat "may not alter, diminish, or impair the usefulness of an operations

site or appurtenant road or pipeline easement unless the amendment or replat is approved by the

commission in accordance with Section 92.003 of this Code." See id . § 92.006. Here Eyhorn's

revisions to the plats were made in part to provide more surface area for SWEPI's oil and gas

operations sites and to accommodate the new well that SWEPI drilled on one of the subdivisions

during the pendency of the applications before the Commission.

In any event, the Act may not be used to obtain an impermissible advisory opinion

to interpret the Commission's final orders. (19) See Texas Ass'n of Bus. v. Texas Air Control Bd. ,

852 S.W.2d 440, 444 (Tex. 1993) (Act "merely a procedural device for deciding cases already within

a court's jurisdiction rather than a legislative enlargement of a court's power, permitting the

rendition of advisory opinions"); Alamo Express, Inc. v. Union City Transfer , 309 S.W.2d 815,

827-28 (Tex. 1958) (request for a declaratory judgment of meaning of agency order and its various

provisions seeking impermissible advisory opinion).

We conclude that the district court did not err in granting the Commission's plea

to the jurisdiction concerning SWEPI's declaratory claims. We overrule SWEPI's fourth and

fifth issues.

CONCLUSION

Having overruled SWEPI's issues on appeal, we affirm the district court's judgment,

affirming the Commission's final orders and granting the Commission's plea to the jurisdiction on

SWEPI's declaratory claims.

__________________________________________

Jan P. Patterson, Justice

Before Justices Patterson, Puryear and Henson

Affirmed

Filed: May 11, 2010

1. See Tex. Civ. Prac. & Rem. Code Ann. §§ 37.001 -.011 (West 2008) (Texas Uniform

Declaratory Judgments Act) (the "Act"); Tex. Gov't Code Ann. §§ 2001.001 -.902 (West 2008

& Supp. 2009) (Texas Administrative Procedure Act) (the "APA").

2. "'Possessory mineral interest' means a mineral interest that includes the right to use the

land surface for exploration and production of minerals." Tex. Nat. Res. Code Ann. § 92.002 (2)

(West 2001).

3. The subdivision plats bear the signature of the county judge and attestation by the county

clerk that the Hidalgo County Commissioner's Court reviewed and approved the plats for the

two subdivisions in February 2006.

4. In September 2006, Eyhorn provided SWEPI and the Commission with revised plats for

both subdivisions and advised them that the revised plats would be the basis for Eyhorn's case at the

consolidated hearings. Among the revisions, these plats increased the size of the proposed oil and

gas operations sites. The revised plats designate approximately 140 acres and 139 acres for oil and

gas operations sites in the two subdivisions respectively.

5. SWEPI filed an accelerated appeal from the district court's denial of its request for

injunctive relief with this Court, but it was dismissed for want of prosecution in June 2007. SWEPI

LP v. Railroad Commission , No. 03-06-00599-CV (Tex. App.--Austin June 18, 2007) (mem. op.),

available at http://www.3rdcoa.courts.state.tx.us/opinions/Opinion.asp?OpinionID=15959.

6. Prior to the hearing in January 2007, Hidalgo County amended its subdivision rules to

address qualified subdivisions for purposes of chapter 92. Although SWEPI challenged the

amendments in the district court, SWEPI does not challenge them on appeal.

7. Section 92.003 addresses who may create a qualified subdivision, limiting creation of

a subdivision to "the surface owners of a tract of land." See Tex. Nat. Res. Code Ann. § 92.003

(West 2001).

8. Prior to the approval of the final orders here, the Commission simultaneously had approved

applications for contiguous qualified subdivisions that exceeded 640 acres combined. See Texas

Railroad Comm'n, Application of Affiliate Crown Development, Ltd. to Consider Approval of a

Qualified Subdivision Pursuant to Statewide Rule 76 for a 407.40 Acre Tract Subdivision in

Montgomery County, Texas , Docket No. XX-XXXXXXX (January 24, 2006) (final order granting

application); Texas Railroad Comm'n, Application of Affiliate Crown Development, Ltd. to Consider

Approval of a Qualified Subdivision Pursuant to Statewide Rule 76 for a 535 Acre Tract Subdivision

in Montgomery County, Texas , Docket No. XX-XXXXXXX (January 24, 2006) (final order granting

application).

9. The legislature also amended section 92.002(3) by requiring the designation of two or more

acres as an operations site for each separate 80 acres within a qualified subdivision and by allowing

qualified subdivisions on barrier islands. See Act of June 11, 1987, 70th Leg., R.S., ch. 274, § 1,

1987 Tex. Gen. Laws 1616 , 1616. Prior to the amendment, a qualified subdivision had to contain

two or more operations sites within the 160 acres. See id.

10. For example, prior to the 1987 amendment, a developer with two 640 acre tracts would

have to file and pursue eight qualified subdivision applications with the Commission, increasing the

expense for the applicant and any contestants and risk to the applicant that one application will fail

and jeopardize the entire project. See id .

11. SWEPI does not challenge the hearing examiners' conclusion of law number 4 that was

adopted by the Commission in its final orders. The hearing examiners concluded: "Approval of

each of the applications in these dockets will ensure that the mineral resources of each of the

qualified subdivisions are fully and effectively exploited and developed."

12. SWEPI contends that chapter 92 should be strictly construed because it deprives SWEPI

of its common law right to use as much of the surface as reasonably necessary in order to develop

the minerals. SWEPI urges that a larger subdivision more severely limits oil and gas operations

because there is a larger area that cannot be reached. If a statute "deprives a person of a common

law right, the statute will be strictly construed in the sense that it will not be extended beyond its

plain meaning or applied to cases not clearly within its purview." Satterfield v. Satterfield ,

448 S.W.2d 456, 459 (Tex. 1969). Given our conclusion that the plain language of the statute

supports the Commission's interpretation, it follows that the interpretation does not extend the

statute "beyond its plain meaning." See id .

13. Without providing additional argument or authorities, SWEPI contends that the

Commission's final orders also are "arbitrary or capricious or characterized by abuse of discretion

or clearly unwarranted exercise of discretion." See Tex. Gov't Code Ann. § 2001.174 (2)(F) (West

2008). For the same reasons that we conclude that the Board did not exceed its statutory authority,

we also conclude that the Commission's orders were not arbitrary or capricious or characterized by

abuse of discretion or clearly unwarranted exercise of discretion. See id .

14. The House Committee on Energy in its bill analysis references by way of background that

"cities are expanding out over adjacent farm and ranch land to meet the needs of the people for

residential, commercial, and industrial buildings." House Comm. on Energy, Bill Analysis,

Tex. S.B. 946, 68th Leg., R.S. (1983). The bill analysis from the senate natural resources

committee states in the background section that "bank[s] or other lending institutions are reluctant

to lend construction capital if there is a possibility that the building they finance, such as a

warehouse, might later be demolished by the subsurface mineral owners in order for the minerals to

be brought to the surface." Senate Comm. on Nat. Res., Bill Analysis, Tex. S.B. 946, 68th Leg., R.S.

(1983). The House Research Organization noted that chapter 92 was passed to allow "both

real-estate development and mineral exploration." House Research Organization, Daily Report for

May 20, 1987.

15. Interpreting "industrial use" to include landfill operations is consistent with traditional

zoning concepts of "industrial use districts." See Robert M. Anderson, 2 American Law of Zoning

3d § 9.44 (1986) ("Industrial districts traditionally have been the receptacle into which all uses are

placed after those worthy of protection have been provided for. Not infrequently these zones have

been denominated 'unrestricted,'. . ."); Patrick J. Rohan, 7 Zoning and Land Use Controls § 39.06

(2009) ("Traditional zoning schemes place industrial uses at the bottom of the hierarchy of uses.

Thus, beginning with what is considered the highest, most sensitive use of property, the single-family

detached home, zoning codes typically move down through high density residential uses and

commercial uses before they reach the lowest classification, industrial use.").

16. A surface owner also may create a qualified subdivision on a tract of land on a barrier

island. See Tex. Nat. Res. Code Ann. § 92.002 (3)(A) (West 2001).

17. Prior to Eyhorn's applications, the Commission had considered and approved a qualified

subdivision application for landfill operations. See Texas Railroad Comm'n, Application of E&D

Waste Systems, Inc. for Approval of a Qualified Subdivision Pursuant to Statewide Rule 76 for a

99.9733 Acre Tract of Land in Abstracts Nos. 601 and 607, Galveston County, Texas , Docket No.

3-84,416 (Oil & Gas Div'n August 19, 1985) (final application approving qualified subdivision for

use as a landfill).

18. SWEPI's reliance on El Paso Hospital District v. Texas Health and Human Services

Commission , 247 S.W.3d 709 (Tex. 2008), and City Public Service Board of San Antonio v. Public

Utility Commission , 96 S.W.3d 355 (Tex. App.--Austin 2002, no pet.), is similarly misplaced.

Neither case addressed the issue raised by the Commission here--whether asserted declaratory

claims were redundant of the issues and available remedies in a parallel administrative appeal. In

El Paso Hospital , the issue was whether the agency's method of calculating certain rates was an

agency rule and, if so, if it was valid. 247 S.W.3d at 711 . And in City Public Service , this Court

addressed the direct appeal provisions of the public utilities act. 96 S.W.3d at 356 .

19. Eyhorn initially filed a proposed subdivision plat, a metes and bounds description and use

restrictions, and a "map of topograph and drainage" with Hidalgo County for both subdivisions. The

revised plats that were approved by the Commission consist of one page per subdivision depicting

the location of the oil and gas operations sites and easements.