Case Information

*0 FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 1/21/2015 8:13:12 PM JEFFREY D. KYLE Clerk No. 03-12-00247-CV THIRD COURT OF APPEALS 1/21/2015 8:13:12 PM JEFFREY D. KYLE 03-12-00247-CV AUSTIN, TEXAS *1 ACCEPTED ^[3853909] CLERK I N THE C OURT OF A PPEALS F OR THE T HIRD J UDICIAL D ISTRICT OF T EXAS A T A USTIN

ROLAND OIL COMPANY Appellant, v.

RAILROAD COMMISSION OF TEXAS, Appellee.

Appeal from the 353 rd 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 *2 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 *3 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 iii

No. 03-12-00247-CV I N THE C OURT OF A PPEALS F OR THE T HIRD J UDICIAL D ISTRICT OF T EXAS A T A USTIN

ROLAND OIL COMPANY Appellant, v.

RAILROAD COMMISSION OF TEXAS, Appellee.

Appeal from the 353 rd 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. *5 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

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

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

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

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

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

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 !