FPL Farming, Ltd. v. Texas Natural Resource Conservation Commission and Environmental Processing Systems, L.C. ( 2003 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-02-00477-CV
FPL Farming, Ltd., Appellant
v.
Texas Natural Resource Conservation Commission and
Environmental Processing Systems, L.C., Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT
NO. GN101481, HONORABLE F. SCOTT MCCOWN, JUDGE PRESIDING
MEMORANDUM OPINION
Appellant FPL Farming, Ltd. appeals from a district court judgment affirming an order of
the Texas Natural Resource Conservation Commission. 1 In the order, the Commission issued two amended
injection well permits, allowing appellee Environmental Processing Systems, L.C. (AEPS@) to inject greater
volumes of nonhazardous wastewater into a deep subsurface saltwater formation. In two issues, FPL
1
By statute effective September 1, 2001, the legislature changed the name of the Texas Natural
Resource Conservation Commission to the Texas Commission on Environmental Quality, to be effective
January 1, 2004. The statute granted the TNRCC authority to adopt a timetable for phasing in the change
of the agency=s name, so that until January 1, 2004, the agency may perform any act authorized by law
under either title. See Act of April 20, 2001, 77th Leg., R.S., ch. 965, ' 18.01, 2001 Tex. Gen. Laws
1985. On September 1, 2002, the agency began using its new name, while continuing to recognize the
former. In this opinion, we will refer to the agency as the Commission.
Farming, which owns land near EPS=s well facility, contends that the grant of the amended permits
exceeded the Commission=s statutory authority and authorized an unconstitutional physical taking of its
property. Finding that the Commission acted within its statutory authority and that it did not authorize an
unconstitutional taking of FPL Farming=s property, we affirm the judgment of the district court.
FACTUAL AND PROCEDURAL BACKGROUND
2
In 1996, EPS applied for permits to construct two injection wells in Liberty County that
would inject commercial, nonhazardous industrial waste approximately 7,350 to 8,200 feet below the
surface into the Frio saltwater formation.2 The proposed wells were located near two tracts of land owned
by FPL Farming,3 one approximately 875 feet and the other approximately 2,000 feet from the proposed
well facility. The Commission requires that injection well permit applications contain ten-year and thirty-
year projections for how far injectate will migrate from a well. Here, FPL Farming as a potentially
interested party received notice of the permit applications and learned that the underground waste plume
from the proposed wells was projected to reach the subsurface of its closer property within ten years. FPL
Farming then requested a contested case hearing in opposition to the permit applications. In September
1996, Ato avoid the delay and the expense of a hearing,@ FPL Farming settled with EPS for $185,000.
FPL Farming withdrew its request for a contested case hearing, and the Commission issued an order
granting the permits.
2
To date EPS has constructed only one of the two permitted wells.
3
At that time, the property was owned by FPL Farming=s predecessor-in-interest, J.M. Frost, III.
For convenience, we will refer to the owners collectively as FPL Farming. Neither FPL Farming nor its
predecessor-in-interest has owned the oil, gas, or sulphur interests associated with the property.
3
In 1999, EPS filed applications to amend the permits, increasing the maximum injection rate
from 96 gallons per minute to 660 gallons per minute. FPL Farming filed a request for a contested case
hearing, which was held before an administrative law judge (AALJ@) at the State Office of Administrative
Hearings. The ALJ who presided at the hearing and another ALJ who read the record issued a proposal
for decision with proposed findings of fact and conclusions of law, recommending that the Commission issue
an order granting the amendments. Included in their findings was that, assuming the maximum injection rate,
the waste plume would radiate 3,021 feet from the well facility after ten years. They further concluded that
FPL Farming did not have an absolute right to exclude others from the deep subsurface below its property,
that it did not own the oil and gas mineral interests associated with its property, that its existing rights would
not be impaired by the proposed amendments, and that operation of the wells under the amended permits
would not be an unconstitutional taking. The Commission=s order, adopting the ALJs= findings of fact and
conclusions of law, granted the amended permits.
FPL Farming appealed the Commission=s order to a Travis County district court, which
affirmed the Commission=s actions. In two issues, FPL Farming contends that the Commission exceeded its
statutory authority by improperly interpreting and applying the Injection Well Act (AAct@) and that the
Commission=s grant of the amended permits causes a permanent physical invasion of FPL Farming=s
property and thus is an unconstitutional taking.
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ANALYSIS
In its first issue, FPL Farming contends that the Commission acted outside of its statutory
authority by granting the amended permit when it knew that the waste plume would migrate onto the deep
subsurface of FPL Farming=s property. FPL Farming argues that the Commission improperly and
unreasonably interpreted and applied the Act, contrary to its plain meaning. FPL Farming further alleges
that the Commission improperly placed the burden on FPL Farming to establish impairment of its existing
rights.
Statutory construction is a question of law, which we review de novo. Texas Dep=t of
Transp. v. Needham, 82 S.W.3d 314, 318 (Tex. 2002). In construing these statutes, we are mindful
of the rules of statutory construction. One of the cardinal rules is that we must ascertain and give
effect to the legislature =s intent for the provision we are construing. See Fleming Foods v.
Rylander, 6 S.W.3d 278, 284 (Tex. 1999); Union Bankers Ins. Co. v. Shelton, 889 S.W.2d 278,
280 (Tex. 1994); Calvert v. Texas Pipe Line Co., 517 S.W.2d 777, 780 (Tex. 1974). The
legislature =s intent should be determined by reading the language used in the particular statute
and construing the statute in its entirety. See In re Bay Area Citizens Against Lawsuit Abuse,
982 S.W.2d 371, 380 (Tex. 1998); Taylor v. Firemen=s & Policemen=s Civil Serv. Comm=n, 616
S.W.2d 187, 190 (Tex. 1981). Further, we should read every word, phrase, and expression in a
statute as if it were deliberately chosen, and presume the words excluded from the statute are
done so purposefully. See Gables Realty Ltd. P=ship v. Travis Cent. Appraisal Dist., 81 S.W.3d
869, 873 (Tex. App.CAustin 2002, pet. denied); City of Austin v. Quick, 930 S.W.2d 678, 687
5
(Tex. App.CAustin 1996) (citing Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 540 (Tex.
1981)), aff=d, 7 S.W.3d 109 (Tex. 1999); see also 2A Norman J. Singer, Sutherland Statutory
Construction ' 47.25 (6th ed. 2000) (stating that there is generally an inference that omissions
from a statute are intentional).
Furthermore, we give serious consideration to an agency=s construction of a statute, as long
as the construction is reasonable and does not contradict the plain language of the statute. Tarrant
Appraisal Dist. v. Moore, 845 S.W.2d 820, 823 (Tex. 1993); see Ford Motor Co. v. Motor Vehicle
Bd., 21 S.W.3d 744, 762 (Tex. App.CAustin 2000, pet. denied). In ascertaining the scope of an agency=s
authority, we give great weight to the contemporaneous construction of a statute by the administrative
agency charged with its enforcement. Tarrant Appraisal Dist., 845 S.W.2d at 823. We recognize that
the legislature intends an agency created to centralize expertise in a certain regulatory area Abe given a large
degree of latitude in the methods it uses to accomplish its regulatory function.@ Reliant Energy, Inc. v.
Public Util. Comm=n, 62 S.W.3d 833, 838 (Tex. App.CAustin 2001, no pet.) (citing State v. Public
Util. Comm=n, 883 S.W.2d 190, 197 (Tex. 1994)).
We will first examine the overall scheme of the Act, which governs the issuance of injection
well permits. See Tex. Water Code Ann. '' 27.001-.151 (West 2000 & Supp. 2003). The policies and
purposes of the Act include maintaining Athe quality of fresh water in the state to the extent consistent with
public health and welfare and the operation of existing industries, taking into consideration the economic
development of the state, to prevent underground injection that may pollute fresh water.@ Id. ' 27.003
(West Supp. 2003). Under the Act, the Commission may issue an injection well permit if it finds that
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$ the use or the installation of the injection well is in the public interest;
$ no existing rights, including, but not limited to, mineral rights, will be impaired; and
$ with proper safeguards, both ground and surface fresh water can be adequately
protected from pollution.
Id. ' 27.051 (West Supp. 2003) (emphasis added). The Act does not define either Aexisting rights@ or
Aimpaired.@
FPL Farming contends that the Commission improperly interpreted the Act by focusing on
FPL Farming=s intended uses of the property instead of its existing property rights.4 The Commission
counters that the intent of the Act is to protect landowners= Alegitimate existing and foreseeable reasonable
uses of the deep subsurface.@ It further argues that adopting FPL Farming=s interpretation would effectively
ban the use of injection wells because any landowner within the projected radius of a waste plume could
show impairment merely from migration onto the deep subsurface of its land.
FPL Farming further argues that the Commission incorrectly concluded that it did not have
an absolute property right in the deep subsurface beneath its land, at least as deep as the level of the waste
plume. Here FPL Farming invokes the ad coelum doctrine, an abbreviation of the maxim cujus est solum,
4
FPL Farming also asserts that the Commission in this case is going against its own precedent from
another permit application, in which it found that existing rights would not be impaired because a waste
plume would not migrate onto nearby properties after ten years. See Tex. Natural Res. Conservation
Comm=n, Applications of Loving County Disposal, Inc., Permit Nos. WDW-275, WDW-276, and
HW-50313-001 (Feb. 4, 1994) (final order granting permits). That case is distinguishable in that the
Commission examined the possible impairment of oil and gas rights. Here, FPL Farming has no oil and gas
rights and makes no claim for impairment of same.
7
ejus est usque ad coelum et ad inferos, which means that property rights extend to the sky and to the
depths. Black=s Law Dictionary 1628 (7th ed. 1999). The Commission
counters that the trend in the law is that property owners do not have the right to exclude deep subsurface
migration of fluids. See United States v. Causby, 328 U.S. 256, 260-61 (1946) (the ad coelum doctrine
Ahas no place in the modern world@ concerning air space); Railroad Comm=n v.
Manziel, 361 S.W.2d 560, 568-69 (Tex. 1962) (subsurface migration of salt water in secondary recovery
of natural resources was not a trespass); see also Raymond v. Union Tex. Petroleum Corp., 697 F.
Supp. 270, 274-75 (E.D. La. 1988) (subsurface migration of salt water was not actionable without showing
of harm); Chance v. BP Chems., Inc., 670 N.E.2d 985, 991-92 (Ohio 1996) (subsurface rights depended
on use and thus were not absolute). Assuming without deciding that FPL Farming has Aexisting rights@ in the
deep subsurface beneath its land, FPL Farming=s argument then turns on whether the Commission=s grant of
the amended permits caused Aimpairment@ of those existing rights.
Given that the Act does not define impairment, we will examine the ordinary meaning of the
term. See Hopkins v. Spring Indep. Sch. Dist., 736 S.W.2d 617, 619 (Tex. 1987). To impair is to make
worse; to diminish in quantity, value, excellence, or strengthCsynonymous with damage or injure.
Webster=s Third New International Dictionary 1131 (1986). FPL Farming contends that the migration
of the waste plume will impair its existing rights to exclude, possess, control, and use the deep subsurface,
regardless of whether it intends to exercise those rights. In essence, FPL Farming argues that a trespass
alone will impair FPL Farming=s existing rights. We disagree, concluding as the ALJ did that some measure
of harm must accompany the trespass for there to be impairment.
8
Although finding of fact fifty-nine stated that AFPL . . . has not identified a specific
reasonable or foreseeable intended use of the deep surface where EPS=s injectate may migrate,@ the order
contained the conclusion of law that A[n]o existing rights will be impaired by the construction or operation of
the injection wells.@ Further, the Commission fulfilled all of the requirements of section 27.051, determining
that the injection wells would be in the public interest, that no existing rights would be impaired, and that
fresh water would be properly protected from pollution. See Tex. Water Code Ann. ' 27.051. We defer
to the Commission=s interpretation because of its expertise in the geological effects of subsurface migration
of injectates. See Reliant Energy, 62 S.W.3d at 838. Therefore, we conclude that the Commission did
not improperly interpret the Act in its focus on FPL Farming=s intended uses and that this interpretation was
reasonable.
The amended permits do not impair FPL Farming=s existing or intended use of the deep
subsurface. An FPL Farming representative testified at the contested case hearing about possible uses:
[ATTORNEY] Mr. Frost, let=s talk a minute about this right to exclude that you talked
about earlier. What damages do you believe FPL property suffers
as a result of this infringement of your right to exclude, if any?
[MR. FROST] You know, damages are really hard toClike that are hard to quantify . . . .
for example, let=s say that we wanted to produce saltwater.
***
[ATTORNEY] What other damages can you think of that would arise as a result of an
infringement on this right to exclude?
[MR. FROST] Well, let=s say that we decided that we wanted to go to the same
problems of acquiring a permit to store waste on our property like
y=all are doing.
9
But there is no evidence that the amended permits hamper FPL Farming=s right to use the deep subsurface
in this manner. It could apply for a permit as EPS has done.
FPL Farming then asserts that the Commission improperly placed the burden on FPL
Farming to demonstrate impairment of its existing rights. We disagree. In contested case hearings involving
the Commission, the Aburden of proof is on the moving party by a preponderance of the evidence.@ 30 Tex.
Admin. Code ' 80.17 (2000). EPS had the burden to show that its amended permits would not impair
FPL Farming=s existing rights. It did so by demonstrating that its facility was in a Ageologically suitable
location,@ that the location would prevent migration of fluids to an underground source of drinking water,
that there would be no adverse impact on public health or the environment, that oil and gas interests in the
area would not be impaired, and that the well design included proper safeguards. It was then FPL
Farming=s burden to produce some evidence to refute EPS=s evidence. It failed to carry that burden.
Therefore, we hold that the Commission=s grant of the amended permits did not impair FPL
Farming=s existing rights in the deep subsurface of its property and that the Commission acted within its
statutory authority in granting the permits. We overrule FPL Farming=s first issue.
In its second issue, FPL Farming contends that the Commission=s grant of the amended
permits is an unconstitutional physical taking by allowing the waste plume from EPS=s well facility to migrate
into the subsurface of its private property. See U.S. Const. amend. V (prohibiting Aprivate property [to] be
taken for public use without just compensation@). The Just Compensation Clause of the Fifth Amendment
applies to the states through the Fourteenth Amendment. Williamson County Planning Comm=n v.
10
Hamilton Bank, 473 U.S. 172, 175 n.1 (1985). FPL Farming claims a physical taking, which occurs
Awhen the government authorizes an unwarranted physical occupation of an individual=s property.@
Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 933 (Tex. 1998) (citing Yee v. City of Escondido,
503 U.S. 519, 522 (1992)).
A permanent physical occupation occurs when government action permanently destroys the
three rights associated with the ownership of property: the power to possess, use, and dispose. Loretto v.
Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982). FPL Farming argues that it has lost
its right to possess the subsurface because the amended permits hamper its right to exclude EPS=s waste
plume, which is projected to migrate onto its property within the next ten years. It further contends that it
has lost the right to use the property because the migration of the waste plume will prevent it from engaging
in a brine mining operation or constructing its own injection well. The speculative nature of FPL Farming=s
plans to engage in these operations notwithstanding, FPL Farming has not demonstrated that it has been
denied the opportunity to apply for a brine mining or injection well permit.5 Furthermore, FPL Farming did
not address the issue of any impairment of its right to sell its land. Therefore, FPL Farming has not met the
test for a permanent physical occupation set forth in Loretto. 458 U.S. at 435.
FPL Farming has also not demonstrated that the granting of the amended permits constitutes
a public taking. In fact, the Aissuance of a permit [under the Act] does not authorize any injury to persons or
5
Brine mining also requires a permit under the Act. See Tex. Water Code Ann. '' 27.036-.037
(West 2000).
11
property or an invasion of other property rights.@ 30 Tex. Admin. Code ' 305.122(c) (2000). We
recognize that A[a] compensable regulatory taking can . . . occur when governmental agencies impose
restrictions that either (1) deny landowners of all economically viable use of their property, or (2)
unreasonably interfere with landowners= rights to use and enjoy their property.@ Mayhew, 964 S.W.2d at
935 (citing Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015-19 & n.8 (1992)). But the
Commission=s grant of the amended permits to EPS does not impose such a restriction. We also note that
should the waste plume migrate to the subsurface of FPL Farming=s property and cause harm, FPL Farming
may seek damages from EPS. See Tex. Water Code Ann. ' 27.104 (West 2000) (receiving a permit does
not relieve a party from civil liability). Because its takings claim must fail, we overrule FPL Farming=s
second issue.
CONCLUSION
We hold that the Commission acted within its statutory authority in granting the amended
permits to EPS and that the grant of the permits did not impair FPL Farming=s existing rights in the deep
subsurface of its property. We further hold that the grant of the permits was not an unconstitutional taking
of FPL Farming=s property. Accordingly, we affirm the judgment of the district court in all respects.
__________________________________________
Jan P. Patterson, Justice
Before Justices Kidd, Yeakel and Patterson
Affirmed
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Filed: February 6, 2003
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