in Re BHP Billiton Petroleum Properties (N.A.), LP and BHP Billiton Petroleum (TXLA Operating) Company
14-17-00436-CV
Tex. App.
Dec 12, 2017

Background

  • EF Non-Op LLC (EF) and BHP Billiton are working-interest owners under JOAs for wells in the Eagle Ford Shale; BHP operates the wells and bills EF for its share of costs.
  • BHP’s affiliate, Eagle Ford Gathering, provides gas gathering, compression, and treatment; EF elected to use its pipeline and was charged gathering fees.
  • EF sued BHP asserting multiple JOA breaches, including that BHP (through its affiliate) charged non-competitive, above-market gathering rates (the “Gathering Issues”).
  • BHP filed a plea to the jurisdiction, arguing the Railroad Commission has exclusive original jurisdiction over gas utility rates and services under the Gas Utility Regulatory Act (GURA), requiring administrative exhaustion before suit.
  • The trial court denied BHP’s plea; BHP petitioned this court for mandamus relief to vacate that denial and dismiss claims related to the Gathering Issues.
  • The Fourteenth Court of Appeals denied mandamus, holding the trial court correctly retained jurisdiction over EF’s JOA-based claims.

Issues

Issue Plaintiff's Argument (EF) Defendant's Argument (BHP) Held
Whether Railroad Commission/GURA has exclusive jurisdiction over EF’s Gathering Issues EF: This is a JOA breach claim against BHP for choosing an affiliate and agreeing to life-of-well, non-competitive rates — a private contract/operator duty dispute BHP: Claims implicate the reasonableness of rates and services of a gas utility (Eagle Ford Gathering), so GURA and the Railroad Commission have exclusive jurisdiction Held: No exclusive jurisdiction for GURA — EF’s claim focuses on operator conduct under JOAs and competitiveness of contracts, not direct challenge to a utility’s filed rate
Whether resolution requires determining if Commission‑approved rates are unreasonable EF: Success does not require invalidating or reducing the utility’s filed rate; it requires comparing contract terms and market alternatives BHP: Any inquiry into rate reasonableness is within the Commission’s expertise and exclusive purview Held: Court may decide whether BHP breached its operator duties without deciding reasonableness of a filed utility rate
Whether Tara Partners controls to bar suit EF: Distinguishes Tara Partners because that case sued the utility directly and sought refunds tied to billed rates BHP: Tara Partners shows that contractual claims framed to challenge service or rates are within regulatory jurisdiction Held: Tara Partners is distinguishable; here the defendant is a non‑utility operator and the claim is about operator selection/competitive procurement
Whether mandamus is appropriate relief to overturn denial of plea to jurisdiction EF: Trial court has jurisdiction; mandamus unwarranted BHP: Mandamus proper because trial court ignored GURA’s exclusivity Held: Mandamus denied — trial court did not abuse discretion in denying plea to the jurisdiction

Key Cases Cited

  • In re Nat’l Lloyds Ins. Co., 507 S.W.3d 219 (Tex. 2016) (mandamus standards)
  • In re H.E.B. Grocery Co., L.P., 492 S.W.3d 300 (Tex. 2016) (trial court abuse of discretion in mandamus review)
  • In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379 (Tex. 2005) (mandamus relief principles)
  • Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440 (Tex. 1993) (subject‑matter jurisdiction is essential)
  • Harris Cty. v. Sykes, 136 S.W.3d 635 (Tex. 2004) (plea to the jurisdiction explained)
  • Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) (pleadings construed liberally for jurisdictional questions)
  • Dubai Petrol. Co. v. Kazi, 12 S.W.3d 71 (Tex. 2000) (district courts are courts of general jurisdiction)
  • In re Entergy Corp., 142 S.W.3d 316 (Tex. 2004) (agency exclusivity and mandamus)
  • Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212 (Tex. 2002) (agencies possess only authority granted by statute)
  • Thomas v. Long, 207 S.W.3d 334 (Tex. 2006) (administrative exhaustion where agency has exclusive jurisdiction)
  • Blue Cross Blue Shield of Tex. v. Duenez, 201 S.W.3d 674 (Tex. 2006) (when regulatory scheme indicates exclusivity)
  • Tara Partners, Ltd. v. CenterPoint Energy Res. Corp., 371 S.W.3d 441 (Tex. App.—Houston [1st Dist.] 2012) (distinguished; involved suit directly against a utility)
  • Clint Indep. Sch. Dist. v. Marquez, 487 S.W.3d 538 (Tex. 2016) (failure to exhaust administrative remedies divests courts of jurisdiction)
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