production>“). Basic would rely on a more restrictive use of the term, which limits the meaning
of “production” to the actual extraction of oil and gas—something that Basic does not do.
Finding no clear common meaning dictionary definition, we turn to how the term
“production” is used in the statutory framework. See Texas Med. Ass’n, 511 S.W.3d at 34–35
(looking to how term “diagnosis” is used in the relevant statutory scheme). And there, we note the
use of the term “production” in other sections of the Natural Resources Code is used in both a
narrow and broader sense. The term “production” and “produce” appear in the several titles and
textual sections of the Natural Resources Code. For instance, in multiple sections, “production”
refers to the quantity of oil or gas actually extracted from a well. See § 111.091 (prohibiting
discrimination in purchase of “allowable production”); § 91.402 (setting payment deadlines for the
“proceeds derived from the sale of oil or gas production from an oil or gas well); § 85.046(10)
(defining one form of waste as “production of oil in excess of transportation or market facilities or
reasonable market demand”); § 53.154 (authorizing the board to “set the royalty rate on production
of sulphur, coal, lignite, salt, and potash”). That use of the word, however, does not make sense
for § 85.045 because it is not referring to a quantifiable measure of oil or gas. And in other sections,
it is used in the broader context of the act of extracting hydrocarbons. See § 85.046(b) (“[T]he
commission may permit production by commingling oil or gas or oil and gas from multiple
stratigraphic or lenticular accumulations[.]”) (emphasis added); § 85.041(a) (“The purchase,
acquisition, or sale, or the transporting, refining, processing, or handling in any other way, of oil
or gas, produced in whole or in part in violation of any oil or gas conservation statute of this state
or of any rule or order of the commission under such a statute, is prohibited.”) (emphasis added);
§ 85.202(a)(1) (stating Commission rules and orders shall “prevent waste, as defined in Section
85.046 of this code, of oil and gas in drilling and producing operations and in the storage, piping,
8 and distribution of oil and gas[.]”) (emphasis added). So contextual use of the term “production”
in the Natural Resources Code does not provide a clear answer to its meaning in § 85.045.
Looking to the overall structure of the Natural Resources Code, we find that it does regulate
wastewater from oil and gas production. Section 122.001 defines “[f]luid oil and gas waste” to
include “flowback water, produced water, or other fluid that arises out of or is incidental to the
drilling for or production of oil or gas.” Tex. Nat. Res. Code Ann. § 122.001(2). Section 122.004
authorizes the Commission to issue rules “to govern the treatment and beneficial use of oil and gas
waste” including “fluid oil and gas waste.” And § 122.002 defines who owns (in the absence of an
agreement) fluid oil and gas waste as it works its way through the process of treatment and
disposal. More specifically, under Commission rules, Basic must account for any “identifiable
liquid hydrocarbons” in the wastewater that it handles. 16 Tex. Admin. Code § 3.56 (2007)
(Tex. R.R. Comm’n, Oil & Gas Div.).
Basic needed to obtain a permit for its disposal well. “Unless the activity is subject to the
jurisdiction of the railroad commission” an entity must obtain its disposal well permit from the
Texas Commission on Environmental Quality. Tex. Water Code Ann. § 27.011; § 27.002. But the
Water Code makes the Railroad Commission “solely responsible for the control and disposition of
waste and the abatement and prevention of pollution of surface and subsurface water resulting
from . . . activities associated with the exploration, development, and production of oil or gas or
geothermal resources, including . . . activities associated with the drilling of injection water source
wells which penetrate the base of useable quality water[.]” Id. § 26.131(a)(1)(A) (emphasis added).
Thus, Basic needed its permit from the Railroad Commission. Id. § 27.031.
The Railroad Commission’s rules for injection well permitting are found in the Texas
Administrative Code in Chapter 3 (Oil & Gas Division). If the party intends to dispose of fluids
into formations that are not productive of oil and gas, they are responsible for complying with the
9 Water Code and “Title 3 of the Natural Resources Code.” 16 Tex. Admin. Code § 3.9 (2007)
(Tex. R.R. Comm’n, Oil & Gas Div.). If they engage in “fluid injection operations in reservoirs
productive of oil, gas, or geothermal resources” they must obtain a permit which will issue only
“when the injection will not endanger oil, gas, or geothermal resources or cause the pollution of
freshwater strata unproductive of oil, gas, or geothermal resources.” 16 Tex. Admin. Code
§ 3.46(a) (2007) (Tex. R.R. Comm’n, Oil & Gas Div.).1
We are also tasked with looking to existing court decisions to determine a term’s meaning.
See Brown v. City of Houston, 660 S.W.3d 749, 752 (Tex. 2023) (stating court precedents “can
provide authoritative and binding construction” of statutes). Here the cases discussing § 85.045
are instructive, but not controlling. Basic relies on Foshee Ref. Co. v. State, 73 S.W.2d 1098
(Tex. App.—Texarkana 1934, no writ). In Foshee, the court held an oil refinery operator was not
engaged in “production, storage, or transportation” of oil based on the general rule of statutory
construction that “the express mention or enumeration of one person or thing or consequence is
tantamount to an express exclusion of all others.” Id. at 1100. In other words, refining is not
production, storage, or transportation. 2 Similarly, a federal district court has held that the
“production, storage, or transportation” of oil does not include efforts to “kill” a “wild cratered or
burning oil well.” Ivey v. Phillips Petroleum Co, 36 F.Supp. 811, 814 (S.D. Tex. 1941). 3 But
1 Basic urges that this part of the Administrative Code provides its own remedy: cancellation of the permit by the Railroad Commission, which obviates the need for any other remedy. But permit-related requirements are not necessarily inconsistent with civil liability. See FPL Farming Ltd. v. Env’t Processing Sys., L.C., 351 S.W.3d 306, 314 (Tex. 2011) (“[T]he mere fact that an administrative agency issues a permit to undertake an activity does not shield the permittee from third party tort liability stemming from consequences of the permitted activity.”). 2 The Legislature made that point clear in former Tex. Rev. Civ. Stat. Ann. art. 6014a that provided “The commission shall have no authority to make any rule, regulation or order in any wise determine or hold that any mode, manner, or process of refining crude petroleum oil constitutes waste.” Act of April 8, 1935, 44th Leg., R.S., ch. 76, § 3, sec. 2, 1935 Tex. Gen. Laws 180, 183 (codified at Tex. Civ. Stat. Ann. art. 6014a) (repealed by Act of May 24, 1977, 65th Leg., R.S., ch. 871, § 2, 1977 Tex. Gen. Laws 2345, 2689). 3 Ivey reasoned that § 85.045’s predecessor, which similarly prohibited the production, storage, or transportation of
10 neither Foshee nor Ivey—nor any other authority cited by Basic—address whether the disposal of
oil and gas byproducts from production might, like the refining of oil or the killing of wild wells,
stands apart from “the production, storage, or transportation” of oil and gas.4
PPC focuses on other authorities to support its contention that disposal well operators are
involved in “the production, storage, or transportation” of oil and thus subject to § 85.045’s
prohibition against “waste.” First, PPC argues that the only case to have considered a similar issue
“rejected an attempt to artificially limit liability for waste in the conduct of operations that are
necessarily incidental to oil and gas production,” citing Exxon Corp. v. Miesch, 180 S.W.3d 299,
318–19 (Tex. App.—Corpus Christi 2005), aff’d in part & rev’d in part on other grounds, 348
S.W.3d 194 (Tex. 2011). In Miesch, Exxon requested a royalty reduction on producing wells in a
particular field. 180 S.W.3d at 311. When negotiations failed, Exxon plugged and abandoned its
own wells. Id. at 312. In the reentry process, the subsequent mineral lessee encountered “numerous
unexpected obstacles,” including “tubing, refuse, and junk in some of the wellbores.” Id. When
Exxon was sued for “waste,” it argued that § 85.045 “only prohibits waste in the ‘production,
storage, or transportation’ of oil or gas,” while the plaintiff complained only of “waste in
plugging.” Id. at 318–19.
The court disagreed with Exxon’s “narrow reading,” holding that, “[b]ased on the plain
language of the [Natural Resources C]ode and long-standing precedent from the Texas Supreme
Court,” § 85.045 “prohibits all waste of oil or gas, including the type of waste caused by Exxon in
oil or gas in such a manner as to constitute “waste,” dealt “only with the general operation of wells and leases,” and “[c]learly, it seem[ed] to [the court], it would be a strained construction of the statute to hold that defendant, by reason of any of the acts or omissions charged against it, [came] within [the statute].” 36 F.Supp. at 814. Ivey also held that “The burden of proof was upon the plaintiff,” who “wholly failed to show any facts bringing the defendant under the provisions of the Texas conservation statutes.” Id. at 818. 4 On this point, as Basic points out, 38 AM. JUR. 2D Gas and Oil § 140 (2024) expressly states, without citing any legal authority, that “[t]he legislation concerning the inappropriate waste of oil or gas does not . . . include the disposal of materials from oil or gas production” (emphasis added by Basic).
11 the instant case.” 180 S.W.3d at 319 (citing R.R. Comm’n v. Shell Oil Co., 206 S.W.2d 235, 240
(1947) (discussing similar language in precursor statute regarding production, storage, or
transportation as “sweeping language . . . by which all waste in the handling of oil and gas was
declared unlawful”)).
Basic counters that Miesch is inapposite because Exxon was sued for “wrongful conduct
in the development . . . of oil and gas wells,” and “a deliberate pattern of sabotage[e]” to “thwart
competition.” And Miesch proceeds on the assumption that Exxon is primarily in the business of
producing oil and gas, and not the ancillary business of plugging wells. In contrast, Basic does not
produce any oil and gas. See Foshee, 73 S.W.2d at 1100 (holding that, to be subject to the
predecessor to § 85.045, a party “must be principally engaged in the business of [producing,
storing, or transporting] oil”) (emphasis added).
PPC also argues that this Court and Eastland Court of Appeals have already held that
Chapter 85’s prohibition against waste applies to injection well operations (citing Ring Energy v.
Trey Res., Inc., 546 S.W.3d 199, 207 (Tex. App.—El Paso 2017, no pet.) and Discovery Operating,
Inc. v. BP America Production Co., 311 S.W.3d 140, 145, 161–63 (Tex. App.—Eastland 2010,
pet. denied)). Still, the injection well in Ring was used as “part of a secondary recovery method to
enhance oil production.” See 546 S.W.3d at 204 (noting that “injection wells used for secondary
recovery . . . are at issue here”). And Discovery did not analyze the scope of the statutory categories
of “production, storage, and transportation” of gas, but merely mentioned the phrase once in
passing. 311 S.W.3d at 159.
Finding no clear answer in dictionaries, use of the term in the Code, or in prior case law,
we turn to the statutory history and the context in which the term appears. By statutory history, we
mean only the evolution of the relevant provisions using the term over time. See Brown v. City of
Houston, 660 S.W.3d 749, 755 (Tex. 2023) (distinguishing statutory history (progression of a
12 statute’s text over time) from legislative history (extrinsic aides, such as legislative reports and the
like)). And by “context” we mean only that “the disagreement in this case is not over words and
cannot be resolved with dictionaries. It is over consequences and can only be settled by examining
how the statutory provisions fit in the context of the [] Act as a whole.” Entergy Gulf States, Inc.
v. Summers, 282 S.W.3d 433, 451 (Tex. 2009) (Hecht, C.J., concurring). For context here, we
examine the overall regime of the Natural Resources Code for preventing waste.
The Texas Constitution was amended in 1917 to declare the conservation and development
of the natural resources of Texas a public right and duty—and directs the Legislature to “pass all
such laws as might be appropriate” to these ends. Tex. Const. art. XVI, § 59(a). The Texas
Legislature responded quickly, passing S.B. 350 in 1919 that stated: “Natural gas and crude oil or
petroleum shall not be produced in the State of Texas in a such a manner and under such conditions
as to constitute waste.” Act of March 17, 1919, 36th Leg., R.S., ch. 155, art. 1, 1919 Tex. Gen.
Laws 285. The parties responsible for preventing waste was broadly stated in 1919 to include all
operators, contractors, drillers, pipeline companies and gas distributing companies that drill or
produce oil or gas—language carried forward in our current Code. Id. at 286 (originally codified
at Tex. Rev. Civ. Stat. Ann. art. 6015, now Tex. Nat. Res. Code Ann. § 91.015).
That same 1919 enactment also defined waste to include “drowning with water of a gas
stratum capable of producing gas in commercial quantities.” Id. By 1929, the provision was
expanded to outlaw waste in the production, transportation, and storage of oil and gas, and also
expanded the definition of waste to include drowning out of oil wells. Act of March 29, 1929,
41st Leg., R.S., ch. 313, § 2, art. 6014, 1929 Tex. Gen. Laws 694. This statutory history at least
tells us that the flooding of oil wells has been a longstanding concern of the Legislature. It also
tells us that the prohibition of waste in production was viewed broadly—it applied both to the
“manner” and “conditions” of production (language still found in § 85.045 today) and applied to
13 diverse players connected to the industry. See Corzelius v. Harrell, 186 S.W.2d 961, 963
(Tex. 1945) (These statutory schemes governing waste in production “must be considered in light
of Article XVI, Section 59a of the Constitution”).
We have stated that “produced water is more accurately classified as a waste byproduct of
oil and gas production.” Cactus Water Servs., LLC v. COG Operating., LLC, 676 S.W.3d 733, 739
(Tex. App.—El Paso 2023, pet. filed). And the problem of what to do with wastewater from oil
and gas production is hardly a new phenomenon. See Teel v. Rio Bravo Oil Co., 104 S.W. 420,
421 (1907, no writ) (resolving landowner’s suit for damages to his property from saltwater
emanating from an oil well); Producers’ Oil Co. v. Bean & Markowitz, 147 S.W. 1166, 1167
(Tex. App.—Fort Worth 1912, no writ) (same); Magnolia Petroleum Co. v. Aiken, 289 S.W. 152,
153 (Tex. App.—Eastland 1926), modified sub nom. Magnolia Petroleum Co. v. Akin, 11 S.W.2d
1113 (Tex. [Comm’n Op.] 1928) (same); Texas Pac. Coal & Oil Co. v. Taylor, 47 S.W.2d 1110,
1111 (Tex. App.—Eastland 1932, no writ) (same); Nash & Windfohr Oil Corp. v. Johnson, 81
S.W.2d 749, 750 (Tex. App.—Fort Worth 1935, writ dism’d) (same). Perhaps not surprisingly, the
widespread use of injection wells to dispose of saltwater generated from oil and gas wells began
in earnest in the 1930s.5
Understanding the Legislature’s concerns with waste, the Texas Supreme Court more than
half a century ago provided guidance on interpreting the legislative waste provisions: “Whatever
5 EPA, “General Information About Injection Wells” https://www.epa.gov/uic/general-information-about-injection- wells (last visited October 18, 2024) (“Widespread use of injection wells began in the 1930s to dispose of brine generated during oil production. Injection effectively disposed of unwanted brine and preserved surface waters; J.E. Clark, D.K. Bonura, F.F. Van Voorhees, An Overview of Injection Well History in the United States of America, 52 DEVELOPMENTS IN WATER SCIENCE, 3–12 (2005) (“Disposal of liquids into underground formations through injection wells was started in the 1930s by the U.S. petroleum industry, which, as a common practice, disposed of produced brine in this manner.”); see also Magnolia Petroleum Co. v. State, 218 S.W.2d 855, 859 (Tex. App.—Austin 1949, writ ref’d n.r.e.) (noting the use of injection wells to dispose of produced saltwater); Alliston v. Shell Petroleum Corp., 55 P.2d 396, 403 (Kan. 1936) (describing claim where injected saltwater polluted freshwater stratum); W. Edmond Hunton Lime Unit v. Lillard, 265 P.2d 730, 731 (Okla. 1954) (suit by holder of oil and gas lease against operator of saltwater injection well for destroying productivity of oil and gas wells).
14 the dictates of reason, fairness, and good judgment under all the facts would lead one to conclude
is a wasteful practice in the production, storage or transportation of oil and gas, must be held to
have been denounced by the legislature as unlawful.” Shell Oil Co., 206 S.W.2d at 240. And almost
half a century later, the Texas Supreme Court remained consistent, stating, with regard to the
Railroad Commission’s authority, “[a]s general and all-inclusive authorization as can be pictured
is presented not only by the language of this subsection, but generally by the statutes under
consideration.” Railroad Comm’n of Texas v. Lone Star Gas Co., a Div. of Enserch Corp., 844
S.W.2d 679, 687 (Tex. 1992) (referencing the statutes under consideration as including
Article 6014 (now §§ 85.045–.047, 85.125 and 85.203 of the Natural Resources Code)). We are
reminded that “[i]t is the plain duty of the courts to give them, within constitutional bounds, a
scope no less broad and effective than the legislative intent they so evidently manifest.” Id.
Wastewater is inherent to the production process. Flooding out of producing strata is a
long-recognized form of waste. The Railroad Commission is given specific jurisdiction over and
should not approve an injection well that endangers oil, gas, or geothermal resources. 16
Tex. Admin. Code § 3.46 (Tex. R.R. Comm’n, Oil & Gas Div.). And “[i]t is utterly impossible for
the Legislature to meet the demands of every detail in the enactment of laws relating to the
production of oil and gas.” Corzelius, 186 S.W.2d at 964. It would be incongruous to the policies
embedded in the Natural Resources Code to divorce wastewater’s disposal from the Code. That is,
it would be an odd result if the Legislature intended for a company whose sole business is injecting
wastewater into the strata of an oil and gas field to have more freedom in committing waste than
an oil and gas operator that disposes of its own wastewater. The “sweeping”6 statutory prohibitions
6 Texas R.R. Comm’n v. Shell Oil Co., 206 S.W.2d 235, 240 (Tex. 1947):
The second sentence of Article 6014 significantly prefaces an enumeration of ten specific wasteful
15 against statutory waste could be thwarted by simply outsourcing the disposal of wastewater to a
stand-alone injection well business.7
We conclude that the waste prohibition in § 85.045 as it pertains to production of oil and
gas includes the handling of wastewater or produced water from oil and gas production. That
provision thus applies to Basic.
D. Was Basic entitled to the reasonable operator instruction?
But also as part of the statutory scheme, an operator may defend an allegation of waste by
showing that it acted as a reasonably prudent operator. The very section that gives PPC a right to
sue for waste, also allows for a reasonably prudent operator defense. Tex. Nat. Res. Code Ann.
§ 85.321 (“Provided, however, that in any action brought under this section or otherwise, alleging
waste to have been caused by an act or omission of a lease owner or operator, it shall be a defense
that the lease owner or operator was acting as a reasonably prudent operator would act under the
same or similar facts and circumstances.”). Basic pleaded the defense and submitted a charge
instruction tracking the statutory language, which the trial court denied.
PPC’s objection to the instruction below, and now on appeal, is that Basic submitted no
evidence to support the submission of the instruction. More specifically, PPC contends that Basic
practices with the declaration that waste among other things should specifically include the practices there interdicted. That language must have been deliberately selected to avoid narrowing the sweeping language in the first sentence of the article, by which all waste in the handling of oil and gas was declared unlawful and prohibited, as well as to preserve the wide scope of Article 6015, which was aimed with the utmost generality at the prevention of waste. . . . The constitution had vested in the lawmaking body the duty of preventing waste, not of part but of all the natural resources of this State, and it must not be considered that the legislature meant by its enactments to discharge less than the full duty which was thus entrusted to it. 7 We recognize that even if the Natural Resources Code waste provisions were not to govern Basic, it would still be subject to ordinary negligence liability. The ultimate question here is who carries the burden of proof at trial on an essential element of the liability question. Under the Natural Resources Code, Basic is liable if PPC carries its burden to show Basic drowned out a productive stratum, and Basic is unable to show that it acted as a reasonably prudent operator. The Pattern Jury Charge incorporates these split burdens asking in one question if the defendant committed waste, and then in a separate question whether the defendant acted as a reasonably prudent operator for the conduct described in the previous question. State Bar of Tex., Texas Pattern Jury Charges—Oil and Gas, PJC 302.8 and 302.9 (2022).
16 needed to offer expert testimony on the duty of care for a reasonably prudent operator and some
evidence that it met the burden. A trial court must submit those instructions authorized by law and
which find some support in the evidence. Tex. R. Civ. P. 278 (“The court shall submit the
questions, instructions and definitions . . . which are raised by the written pleadings and the
evidence.”); United Scaffolding, 537 S.W.3d at 469. So the question before us is whether the record
contains more than a scintilla of evidence that supports submission of the instruction. See Elbaor
v. Smith, 845 S.W.2d 240, 243 (Tex. 1992) (“To determine whether legally sufficient evidence
supported Dr. Elbaor’s contributory negligence submission, we must examine the record for
evidence supporting Dr. Elbaor’s question and ignore all evidence to the contrary.”). We conclude
that it does.
At trial, Basic conceded that its injection of wastewater caused some of the flooding of
PPC’s wells. It did not, however, concede that it was negligent. It relied on several arguments with
evidence to contest negligence.
(1) Basic presented evidence that it exercised some care in selecting the site for the Orla-Kessler No. 1 well.
Gary Prichett oversaw operating Basic’s Permian Basin disposal wells. He testified that
Basic hired a geologist, Robert Fedro, to assist in the selection of the Orla-Kessler well-site who
gave it his “stamp of approval.” Fedro, a licensed petroleum geologist with 41 years of experience,
performed the location study for Basic in 2011. His work had focused for the past 30 years on the
Delaware Basin where these wells are located. Fedro looked at a nine-section area and available
well logs for those sections to understand the porosity of the geology. He acknowledged he was
aware of PPC’s wells to the east and north of the Orla-Kessler site. But he did not think that the
17 injection well posed any “risk at all” to PPC’s wells.8
James Newman, Basic’s executive vice-president of operations, testified that Basic
selected the Orla-Kessler No. 1 location because it was “isolated” and the only well on that section
of land. Other disposal operators were already injecting into the Delaware Mountain Group.
(2) Basic complied with the Railroad Commission’s permitting process for the Orla Kessler No. 1, which would not issue if it would endanger oil, gas, or geothermal resources.
To obtain a saltwater disposal permit, Basic had to meet several requirements imposed by
the Texas Railroad Commission. First, Basic must have been a registered operator with the State.
It had to post a plugging bond for all its operational wells. Basic needed to determine the depth for
any freshwater. It had to obtain a drilling permit and needed to develop a wellbore design. It had
to notify adjacent surface owners, and offset operators in the area. It also had to post notice in the
local newspaper. Basic presented some evidence that it complied with each of these requirements
in obtaining its permit.
The jury heard testimony from PPC’s regulatory expert, Robert Henkhaut, that under Texas
Railroad Commission rules, it should not issue a permit for saltwater disposal injection if to do so
would endanger existing oil and gas resources.9 He agreed that the Railroad Commission did its
“job” in issuing this permit. He also agreed that he had no evidence that Basic or the Railroad
Commission knew the Orla Kessler No. 1 might endanger existing production.
(3) Basic operated the Orla Kessler No. 1 within its permit parameters from 2014 through 2019 without any complaints.
8 That said, Fedro was not aware of the volumes of water that Basic would be injecting, he is not a reservoir engineer, and this was his first saltwater injection well consult. By setting out the evidence supportive of the charge instruction, we do not discount that PPC presented evidence to the contrary. 9 That is a correct statement of law. See Ring Energy v. Trey Res., Inc., 546 S.W.3d 199, 204. (Tex. App.—El Paso 2017, no pet.) (“The permit will only issue if the ‘injection will not endanger oil, gas, or geothermal resources or cause the pollution of freshwater strata unproductive of oil, gas, or geothermal resources.’”); 16 Tex. Admin. Code § 3.46(a) (2007) (Tex. R.R. Comm’n, Oil & Gas Div.) (same).
18 The permit limited Basic to injecting no more than 20,000 barrels a day. During the life of
the well, Basic was injecting much less—just under 5,000 barrels a day. The well injects water
into a specified “interval” which Basic adhered to. Its permit was never suspended or revoked by
the Commission. The well never failed an inspection and Basic met all its annual reporting
requirements to the State. PPC’s expert, Robert Henkhaut, conceded that from 2011 to 2019, Basic
operated its well in accordance with the permit’s parameters. This lawsuit was the first instance
that Basic’s employees could recall where one of its wells impacted existing production.
(4) If expert testimony for the standard of care is required, the record contains some evidence for the standard and some evidence of compliance.
Assuming without deciding that PPC is correct that only expert testimony can establish the
standard of care, we find some evidence of the standard, and compliance with the standard in the
trial record. PPC’s expert, Robert Henkhaut, was asked what due diligence a reasonably prudent
operator should have exercised before drilling and injecting the Orla-Kessler No. 1 Well. He
testified the proper course would be to identify the production wells in a two-mile radius and do
enough geology work to understand where the injected water will go, to determine whether there
is a “realistic possibility” that the wastewater injection could flood out offsetting oil production.
And if the well is already drilled, “it needs to be reviewed to see if there’s a potential for something
happening once it’s known and became aware of this.” He agreed that injecting wastewater into
the Delaware Mountain Group was a common practice. Henkhaut agreed the standard he described
is not written in a book, but a “reasonable mind should . . . look forward as far as they can, but
necessarily backwards.” He concluded that “a reasonable operator could look forward and see that
there was a [possible] risk of such happening, and that risk may have been above their tolerance
level and maybe they should go do something else instead.”
19 Accepting this as the standard, Basic presented some evidence that it met the standard.
When the Orla Kessler No. 1 was drilled in 2014, Fedro looked one-quarter to one-half of a mile
from the proposed well site, based on what he understood the Railroad Commission required at
the time. Even at that, he had pulled drilling records for a nine-section area that would have
encompassed at least a 2-mile radius of the proposed well, including PPC’s wells. In 2017, Basic
investigated drilling a second deeper well at pad site and employed Fedro to review that proposed
well (which ultimately was never drilled due to market conditions). By that time Fedro made it his
practice to look two miles out from the proposed site. And he still felt comfortable that the fluid
injection was far enough away to avoid impacting existing production.
The court in Miesch, concluded that an operator failed to prove as a matter of law that it
acted as a reasonably prudent operator by not complying with Railroad Commission requirements
or industry standards, and acting in variance with others were doing in plugging wells. Miesch,
180 S.W.3d at 323–24. It would equally follow that complying with Railroad Commission rules
and procedures, and acting as others in the same industry would at least be some evidence of
meeting the standard. We conclude it was error to omit an instruction on a reasonably prudent
operator.
E. Omission of the reasonably prudent operator instruction was reversible error
We will not reverse a judgment for charge error unless it “probably caused the rendition of
an improper judgment” or “probably prevented the appellant from properly presenting the case [on
appeal].” Thota, 366 S.W.3d at 687; Tex. R. App. P. 44.1(a). Stated otherwise, “when a trial court
refuses to submit a requested instruction that is otherwise proper, the question on appeal is whether
the request was reasonably necessary to enable the jury to render a proper verdict.” Gunn, 554
S.W.3d at 675.
20 “To determine whether the instruction probably caused an improper judgment, we examine
the entire record.” Quantum Chem. Corp. v. Toennies, 47 S.W.3d 473, 480 (Tex. 2001); see also
Matter of Estate of Poe, 648 S.W.3d 277, 285–86 (Tex. 2022). And in reviewing the record,
“charge is generally considered harmful if it relates to a contested, critical issue.” Columbia Rio
Grande Healthcare, L.P. v. Hawley, 284 S.W.3d 851, 856 (Tex. 2009). Additionally, an improper
instruction is especially likely to cause an improper judgment when “the trial is contested and the
evidence sharply conflicting.” Quantum Chem. Corp., 47 S.W.3d at 480.
Here, we can say with certainty that the charge as given made Basic’s negligence a
foregone conclusion. The charge told the jury that flooding a productive stratum with water is
negligence, “however caused.” While Basic originally believed its well did not flood PPC’s
productive strata, by the time of trial, additional expert review convinced it otherwise, and it
conceded that fact to the jury. So PPC’s counsel was able to make this argument in closing:
Now, the judge in this lawsuit has included in his instruction that it is negligence to commit waste. You heard Mr. Henkhaut say that Basic has committed waste. The term “waste” means the drowning with water a stratum -- that means the rock -- or part of a stratum that is capable of producing oil and gas or both in paying quantities. That’s exactly what happened here. You heard it from Tim Smith. You heard it from Dr. Wiggins. Basic drowned Mr. Priest’s well and the rock from which they produced with its wastewater. That is negligence and that’s instructed.
Two related questions dictate the harm analysis. Was the jury’s “yes” answer to question
based only on its first paragraph—the negligence/ordinary care instruction? And if not, would the
jury have been able to find that Basic acted as a reasonably prudent operator based on the evidence
at trial. Both these questions turn on how closely contested was the evidence of Basic’s adherence
to the standard of care. To be sure, PPC expert testified that Basic did not meet the reasonably
prudent operator standard as he described it. He believed that after identifying producing wells
within a two-mile radius, a reasonably prudent operator “probably would have chosen a different
interval.” If a well had already been drilled, a reasonably prudent operator should review it “to see
21 if there’s a potential for something happening once it’s known and became aware of this.” And he
believed that Basic’s injected water was migrating outside its proper interval, requiring Basic to
suspend its injections.
Yet as we detail above, Basic had some answers to these claims. It hired an expert
knowledgeable in the Delaware Mountain Group to verify its well site. It obtained a permit from
the Railroad Commission that is charged with approving the permit only if it would not threaten
surrounding production. It operated the well at well below its permitted capacity. Neither Basic,
nor the Railroad Commission had knowledge that injected water was escaping its interval. Years
after its well began operation, Basic investigated the possibility of drilling a deeper well, and its
expert again reviewed surrounding production wells, including PPC’s, and believed a new well
would not threaten production. The jury is the ultimate purveyor of this conflicting testimony. City
of Keller v. Wilson, 168 S.W.3d 802, 819 (Tex. 2005) (“Jurors are the sole judges of the credibility
of the witnesses and the weight to give their testimony.”). Yet without the reasonably prudent
operator instruction, Basic had no chance of prevailing on liability. With the instruction, it could
put the evidence to the test of weight and credibility which only a fact-finder can do. We conclude
that the reasonably prudent operator submission was “reasonably necessary to enable the jury to
render a proper verdict.” See Gunn, 554 S.W.3d at 675. It relates to a contested critical issue in the
trial, and its omission distorts the legislative scheme defined by § 85.321 and § 85.045 of the
Natural Resources Code. The omission constitutes harmful error and requires a new trial. Tex. R.
App. P. 44.1(a).
IV. REMAINING ISSUES In its second issue, Basic contends that the trial court erred in failing to strike PPC’s expert
who testified to apportionment of fault and damages. We decline to opine on an expert who may
or may not offer the same testimony in the next trial. Likewise, we decline to rule on Basic’s third
22 issue—factual insufficiency of the record to support the verdict—as it seeks only a new trial which
we have already granted.
V. CONCLUSION For the reasons stated above, we reverse the trial court’s judgment and remand the case for
a new trial.
JEFF ALLEY, Chief Justice
December 27, 2024
Before Alley, C.J., Palafox and Soto, JJ. Palafox, J., dissenting