TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-05-00097-CV
Railroad Commission of Texas and Dos Republicas Resources Co., Inc., Appellants
v.
Theodosia Coppock, Juanita Alvarado, Guadalupe Davila, and Kickapoo Traditional Tribe of Texas, Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT NO. GN401227, HONORABLE SCOTT H. JENKINS, JUDGE PRESIDING
OPINION
Dos Republicas Resources Co., Inc. (“Dos Republicas”) asked the Railroad
Commission of Texas (the “Commission”) to extend its surface coal mining permit under the
provisions of the Texas Surface Coal Mining and Reclamation Act codified in the natural resources
code, but Theodosia Coppock, Juanita Alvarado, Guadalupe Davila, and Kickapoo Traditional Tribe
of Texas (the “appellees”) opposed the extension. Ultimately, the Commission granted the
extension, and the appellees appealed the Commission’s decision. The district court concluded that
the Commission’s basis for granting the extension, namely the lack of a market for Dos Republicas
to sell its coal, was not authorized under the natural resources code. See Tex. Nat. Res. Code Ann.
§ 134.072 (West 2001). Dos Republicas and the Commission appeal the district court’s judgment,
and we will reverse the court’s judgment. BACKGROUND
In 1992, Dos Republicas applied to the Commission for a permit to allow it to engage
in coal mining on a 2700-acre tract in Eagle Pass, Texas, and the Commission approved the permit
in 1994. However, Dos Republicas did not request that the permit be issued at that time.
For years, Dos Republicas attempted to enter into an agreement to sell its coal to the
Comision Federal de Electricidad (“CFE”), a state-owned electricity provider in Mexico that operates
two coal-fired plants near Eagle Pass. In 1999, CFE became concerned about the financial security
of the mining company that had been its coal supplier. As a result, it alerted Dos Republicas that,
in early 2000, it would be issuing a request for proposals asking companies to submit bids offering
to supply CFE with coal and asked Dos Republicas to issue a bid. To ensure that it would have a
supply when necessary, Dos Republicas asked the Commission to issue the permit it had previously
approved, and the Commission issued the permit in April 2000.
Due to a number of political changes and pressure from various interested parties,
CFE never issued its request for proposals. Employees from mines in Mexico complained that
importing coal from Texas might eliminate their jobs. In addition, during this time, the governing
political party in Mexico changed, and the leaders of CFE were replaced.
Dos Republicas continued its efforts to enter into an agreement with CFE, and, in
2001, CFE again indicated that it would issue a request for proposals. However, as had happened
previously, no request was ever issued. Instead, CFE entered into a long-term supply contract with
a Mexican mining company, Coahuila Industrial Minera (“Coahuila”).
2 Prior to and after CFE entered into a contract with Coahuila, Dos Republicas
unsuccessfully attempted to find other market options for selling its coal. Even though Dos
Republicas asked the Commission to issue it a mining permit, it never began mining coal at the
Eagle Pass mine and, eventually, filed an application with the Commission seeking to terminate its
permit. Although Dos Republicas asked that its permit be terminated, the natural resources code also
contains an early termination provision mandating that a mining permit will expire within three years
of its issuance if the permit holder has not begun “surface coal mining” operations by that date. Tex.
Nat. Res. Code Ann. § 134.072(a);1 see also id. § 134.004(20) (West 2001) (definition of “surface
coal mining operations”). Dos Republicas filed its application to terminate its permit shortly before
the three-year termination date.
Just before the three-year termination deadline passed, Coahuila contacted Dos
Republicas and indicated that it was interested in purchasing the Eagle Pass mining operation.
Consequently, Dos Republicas filed a request to withdraw its application to terminate the permit and
also filed a request to extend its permit beyond the three-year deadline. The natural resources code
allows the Commission to grant “reasonable extensions” if it is shown that the extensions are
necessary because of:
1 Subsection 134.072(a) reads as follows:
A permit terminates if the permit holder has not begun the surface coal mining operation covered by the permit on or before the third anniversary of the date on which the period for which the permit is issued begins.
Tex. Nat. Res. Code Ann. § 134.072(a) (West 2001).
3 (1) litigation that precludes the beginning of operations or threatens substantial economic loss to the permit holder; or
(2) conditions beyond the control and without the fault or negligence of the permit holder.
Id. § 134.072(b).2
The Commission referred the matter to a hearings examiner. Coppock, a landowner
near the Eagle Pass property, opposed the extension.3 She claimed that, because the three-year
2 The administrative rule interpreting section 134.072 contains nearly identical language. It provides:
(b) Automatic termination shall occur as follows:
(1) a permit shall terminate, if the permittee has not begun the surface coal mining and reclamation operation covered by the permit within 3 years of the issuance of the permit;
(2) the Commission may grant reasonable extensions of time for commencement of these operations, upon receipt of a written statement showing that such extensions of time are necessary, if:
(A) litigation precludes the commencement or threatens substantial economic loss to the permittee; or
(B) there are conditions beyond the control and without the fault or negligence of the permittee
16 Tex. Admin. Code § 12.219(b) (2006). Because the rule is nearly identical to the statute, we will limit our discussion to the statute. 3 Coppock owns a cattle ranch near Dos Republicas’s proposed mine site. She opposed the extension because she was concerned about how mining operations might affect the groundwater under her ranch. The remaining appellees— Juanita Alvarado, Guadalupe Davila, and Kickapoo
4 deadline had passed by the time of the hearing, the Commission had no authority to grant an
extension. Alternatively, she argued that the Commission should deny the extension because the
conditions allowing for an extension found in section 134.072 were not satisfied. Specifically, she
asserted that the absence of a market in which Dos Republicas could sell its coal could not
justify an extension.
The hearing examiner concluded that the Commission had jurisdiction to consider
the request for an extension because the request for an extension was filed prior to the three-year
deadline. Further, she concluded that the Commission should grant the extension because Dos
Republicas’s failure to begin mining was due to the absence of a market for the coal and that the
market condition was “beyond the control and without the fault or negligence” of Dos Republicas.
The Commission adopted the examiner’s proposal for decision and granted the extension.
The appellees appealed the Commission’s order to the district court. See Tex. Gov’t
Code Ann. § 2001.171 (West 2000) (person who has exhausted all administrative remedies and is
aggrieved by final agency decision is entitled to judicial review). In its judgment, the district court
concluded that the Commission had jurisdiction over the extension request because the Commission
has authority over a request as long as it is filed within three years of the permit’s issuance.
However, the court also concluded that “[s]ubsection 134.072(b) does not authorize the Commission
to grant an extension based upon the absence of a market or other economic, political, or social
Traditional Tribe of Texas—did not intervene until after the hearing examiner’s proposal for decision was issued.
5 conditions that are beyond the control of and without the fault or negligence of the permit holder.”
Dos Republicas and the Commission appeal the district court’s judgment.
STANDARD OF REVIEW
In addressing the issues raised in this appeal by the appellants and the appellees, we
must necessarily construe the relevant provisions of the natural resources code. Statutory
construction is a question of law, which we review de novo. State v. Shumake, 199 S.W.3d 279, 284
(Tex. 2006). In determining the meaning of a statute, our primary purpose is to determine the
legislature’s intent when enacting the statute, and we begin with the language used in the statute.
Id. Every word in a statute is presumed to have been used for a purpose and every word excluded
is presumed to have been excluded for a purpose. Laidlaw Waste Sys., Inc. v. City of Wilmer, 904
S.W.2d 656, 659 (Tex. 1995). Further, we look to the entire act and do not look at a single provision
isolated from the remainder of the act. Watts v. City of Houston, 126 S.W.3d 97, 100 (Tex.
App.—Houston [1st Dist.] 2003, no pet.); see also Tex. Gov’t Code Ann. § 311.021(2) (West 2005)
(presume that entire statute was meant to be effective). We should not adopt a construction of a
statute that will render the statute meaningless or lead to absurd results. See Watts, 126 S.W.3d at
100; see also Tex. Gov’t Code Ann. § 311.021(3) (West 2005) (in construing statutes, we presume
that just and reasonable result was intended). Finally, the 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. Tarrant
Appraisal Dist. v. Moore, 845 S.W.2d 820, 823 (Tex. 1993); Anderson-Clayton Bros. Funeral
6 Home, Inc. v. Strayhorn, 149 S.W.3d 166, 178 (Tex. App.—Austin 2004, pet. denied) (even if there
are other reasonable interpretations, we will accept agency’s construction of statute if it is consistent
with language and purpose of statute); see also Tex. Gov’t Code Ann. § 311.023(6) (West 2005) (in
construing statutes, courts may consider administrative construction of statute regardless of whether
statute is considered ambiguous). This is particularly true when the statute involves a complex
subject matter. Buddy Gregg Motor Homes v. Motor Vehicle Bd., 156 S.W.3d 91, 99 (Tex.
App.—Austin 2004, pet. denied). However, for nontechnical questions of law and other questions
not lying within an agency’s expertise, courts do not defer to an agency’s interpretation. Id.
DISCUSSION
On appeal, the Commission and Dos Republicas contend that the district court erred
when it reversed the Commission’s order granting Dos Republicas’s extension because the extension
was authorized by the natural resources code. In response, the appellees assert that the extension was
not authorized by statute and that the Commission did not have the authority to grant the extension
after the three-year deadline.
The Commission Possessed Authority to Address Dos Republicas’s Extension Request
On appeal, the appellees assert that the Commission lacked the authority to grant the
permit extension because the three-year deadline specified in the statute had expired. Before we
address this issue, we note that there is some question about whether the appellees may make this
cross-claim without first filing a notice of appeal. The Commission and Dos Republicas contend
7 that the appellees may not bring this cross-claim on appeal because they failed to file a notice of
appeal. See Tex. R. App. P. 25.1 (party who seeks to alter trial court’s judgment must file notice of
appeal), 26.1 (specifying deadlines for filing notices of appeal). The appellees, on the other hand,
insist that this issue may be considered on appeal. Specifically, they assert that it was unnecessary
for them to file a notice of appeal because they are not seeking more favorable relief than that
granted by the district court. See First Gen. Realty Corp. v. Maryland Cas. Co., 981 S.W.2d 495,
503 (Tex. App.—Austin 1998, pet. denied) (because appellees’ arguments did not ask for relief
greater than that granted by trial court, appellees were not required to file notice of appeal). Rather,
they argue that they are simply seeking to affirm the final judgment of the district court and that they
raise this issue merely as an alternative ground for affirming the district court’s judgment. See
Helton v. Railroad Comm’n, 126 S.W.3d 111, 119-20 (Tex. App.—Houston [1st Dist.] 2003, pet.
denied) (noting distinction between cross-points that require separate notice of appeal and claims that
merely seek to raise alternate grounds opposing recovery by appealing party). In the interests of
justice, we will address their argument.
The appellees insist that Dos Republicas’s permit terminated automatically on April
11, 2003, because Dos Republicas had not commenced surface mining and had not obtained an
extension by that date. In support of this assertion, the appellees contend that nothing in the natural
resources code provides that requesting an extension within the three-year deadline will toll the
termination deadline or allows for a conditional extension pending a final determination by the
Commission. In response, the Commission argues that it may grant an extension request after the
three-year deadline as long as the request was filed within the three-year cutoff.
8 The Commission’s interpretation of the statute is consistent with the language of the
statute. Nothing in the natural resources code necessitates that the Commission rule on an extension
request before the three-year deadline passes in order for the extension to be effective. See Tex. Nat.
Res. Code Ann. § 134.072. The lack of a Commission deadline for issuing its decision is instructive
given that the code provides specific deadlines for agency action in other contexts. For example,
section 134.080 of the code mandates that the Commission issue a decision regarding a permit
revision filed by a permit holder within 90 days of receiving the application for revision. See id. §
134.080 (West 2001); see also Tex. Gov’t Code Ann. § 2001.146(c) (West 2000) (agency must act
on motion for rehearing within 45 days or motion is overruled by operation of law).
Moreover, the code does not mandate that a permit holder file an extension request
within a given time prior to the termination date in order to allow the Commission to fully consider
the request. The lack of a specific deadline by which a permit holder must file a request is
noteworthy when looking at other code provisions. The section concerning permit renewals
explicitly provides a deadline by which an applicant must file a permit renewal application that is
prior to the permit expiration date. Specifically, section 134.078 provides as follows:
Application for permit renewal must be made not later than the 120th day before the date the existing permit expires.
Tex. Nat. Res. Code Ann. § 134.078 (West 2001); see also 16 Tex. Admin. Code § 12.106(b)(2)
(2006) (requiring permit holder to file permit renewal 180 days before permit expires), (b)(3) (2006)
(requiring permit holder to file permit revision application 180 days before it expects to revise its
operations). The absence of a similarly worded deadline in the extension context supports the
9 Commission’s interpretation, which allows for the filing of an extension request up to the three-year
termination deadline. See Laidlaw Waste Sys., Inc., 904 S.W.2d at 659 (presume that every word
omitted was purposefully excluded).
Furthermore, if the appellees’ interpretation of the statute were correct, applicants
would have the onerous task of estimating how far in advance they would need to file an extension
request in order to allow the Commission time to fully review the application and issue its decision
prior to the expiration of the three-year deadline. In addition, the appellees’ construction would
effectively eliminate extensions for events occurring between the time a permit holder should file
an extension request to ensure that a timely decision is issued and the three-year termination date.
Given that the possible reasons for requesting an extension might vary in complexity, the amount
of time necessary for full consideration of a request will vary, the extension may or may not be
opposed, hearings may or may not be scheduled on the proposed extension, and there is no statutory
deadline for the Commission releasing its decision, this interpretation would lead to unfair results.
For example, under the appellees’ interpretation, a permit holder who files for an extension just prior
to the termination deadline would receive an extension as long as the Commission issued the
extension by the three-year deadline, whereas a permit holder who files a request for an extension
well in advance of the deadline would not receive an extension if the Commission is unable to grant
the extension by the cut-off date.4 We cannot adopt an interpretation that would lead to such
arbitrary results. See Watts, 126 S.W.3d at 100.
4 In this case, almost a year passed between Dos Republicas’s filing for an extension and the Commission’s decision granting the extension.
10 This construction is also supported by the effect of the extension provisions. Cf. Tex.
Gov’t Code Ann. § 311.023(1) (West 2005) (in interpreting statute, courts may consider “object
sought to be attained”). Section 134.072 terminates a permit, regardless of the length of the permit’s
effective term, within three years of the permit’s issuance if the permit holder has not begun mining
operations. Tex. Nat. Res. Code Ann. § 134.072; see also id. § 134.071 (West 2001) (allowing
Commission to issue permits with terms of five years or more). Given that section 134.072 can
shorten the effective term of a mining permit by imposing a three-year deadline, the Commission’s
interpretation that a request for an extension is effective if filed within the three-year deadline seems
logical and equitable.
For all the reasons previously given, we conclude that the Commission’s
interpretation of the statute is reasonable and consistent with section 134.072 and further conclude
that the Commission had the authority to grant Dos Repulicas’s extension request even though the
three-year termination date had passed. Accordingly, we affirm that portion of the district court’s
judgment.
The Statute Allows Extension Requests to be Granted for Market Reasons
In their only issue on appeal, the Commission and Dos Republicas contend that the
district court erred by reversing the Commission’s order. Specifically, they argue that the absence
of a market for the coal present at the Eagle Pass mine was a condition outside of Dos Republicas’s
11 control that occurred “in the absence of any fault or negligence” on behalf of Dos Republicas and
that, therefore, the Commission was authorized by statute to grant the extension.5
The appellees, on the other hand, contend that the district court correctly concluded
that the Commission was not authorized to issue an extension to Dos Republicas. First, the appellees
argue that the language of subsection 134.072(b)(2), which is the subsection relevant in this appeal,
acts as a force majeure provision that prohibits an extension unless the permit holder has physically
been prevented from commencing operations due to “conditions beyond its control and without its
fault or negligence.” Further, the appellees contend that Dos Republicas was not actually prevented
from mining and, therefore, insist that Dos Republicas should not have been given an extension for
its conscious choice not to begin mining.
We disagree with the appellees’ assertion. There is no requirement listed in 134.072
that a permit holder must be “physically” prevented from engaging in mining operations to obtain
an extension. Further, we have been unable to find any case applying the doctrine of force majeure
to the issuance of a permit by a state regulatory authority. The doctrine is designed to protect parties
to a contract and excuses a party’s nonperformance because of events outside the control of the
parties. See Black’s Law Dictionary 445 (abridged 6th ed. 1991); see also Perlman v. Pioneer Ltd.
P’ship, 918 F.2d 1244, 1248 n.5 (5th Cir. 1990) (force majeure describes particular type of event,
which may excuse performance under contract). The scope and applicability of the doctrine is
dependent upon the terms specified in a contract. See Zurich Am. Ins. Co. v. Hunt Petroleum (AEC),
5 Whether the Commission’s order was supported by substantial evidence is not at issue in this case. For this reason, we focus solely on whether the Commission exceeded its statutory authority by issuing the extension.
12 Inc., 157 S.W.3d 462, 466 (Tex. App.—Houston [14th Dist.] 2004, no pet.); see also Perlman, 918
F.2d at 1248 n.5 (should look to language of contract to determine parties’ intent concerning whether
event complained of excuses performance); Sun Operating Ltd. P’ship v. Holt, 984 S.W.2d 277, 282-
83 (Tex. App.—Amarillo 1998, pet. denied) (much of historic meaning of phrase force majeure is
gone and, therefore, scope and application of doctrine is “utterly dependent upon the terms of the
contract in which it appears”); 30 Samuel Williston & Richard A. Lord, A Treatise on the Law of
Contracts § 77:31 (4th ed. 1990 & Supp. 2004) (specific language of clause indicates what events
will excuse performance and typical clause states that party’s performance is subject to “acts of God,
war, government regulation, terrorism, disaster, strikes . . . civil disorder, curtailment of
transportation facilities, or any other emergency beyond the parties control”).
In addition, the cases the appellees refer to in support of their assertion that, under the
doctrine of force majeure, market conditions cannot justify a permit extension are distinguishable.
The appellees refer to Day v. Tenneco, Inc., 696 F. Supp. 233 (S. D. Miss. 1988); Huffines v. Swor
Sand & Gravel Co., Inc., 750 S.W.2d 38 (Tex. App.—Fort Worth 1988, no writ); and Valero
Transmission Co. v. Mitchell Energy Corp., 743 S.W.2d 658 (Tex. App.—Houston [1st Dist.] 1987,
no writ), for the proposition that unfavorable market conditions cannot justify a permit extension
under subsection (b)(2). Although the courts in these cases did conclude that poor market conditions
do not excuse a party’s obligation to perform under a contract, see Day, 696 F. Supp. at 236;
Huffines, 750 S.W.2d at 40; and Valero, 743 S.W.2d at 663, this case does not involve a contractual
dispute or a breach of contract claim. Furthermore, in two of the cases cited, Day and Valero, the
13 contracts at issue specifically contained a force majeure clause that the courts were required to
interpret: there is no comparable provision in this case.6
Second, the appellees analogize the effect of Dos Republicas’s failure to begin mining
operations to the effect of a lessee’s failure to undertake physical efforts to drill under the terms of
an oil and gas lease. Specifically, they contend that, under an oil and gas lease, a lessee’s failure to
engage in physical activity on the leased property will terminate the lease at the end of the lease’s
primary term7 and will not allow for renewal, and they insist that a similar result should apply here.
See Smith & Weaver, Texas Law of Oil & Gas § 4.5 (2000) (“A lessee cannot safely rely upon
activities which do not involve actual physical activity on the land such as . . . applying . . . for a
drilling permit . . . . [T]he reported cases speak in terms of actual physical contact with the leased
premises.”).
However, the appellees have not referred us to cases holding that a permit holder’s
failure to engage in mining activities is equivalent to a lessee’s failure to drill under an oil and gas
lease, and we see no reason to adopt such a rule. The circumstances and expectations surrounding
6 The appellees also assert that in Day v. Tenneco, Inc., the Mississippi court concluded that market conditions cannot be used to excuse a party’s performance under a statute. 696 F. Supp. 233, 235-36 (S. D. Miss. 1988). The statute listed various events that would excuse a party’s nonperformance under a contract and included a catch-all phrase for events “beyond the control of such party.” See id. at 235-36 (citing former Miss. Code Ann. § 75-2-617 (1972)). However, as discussed previously, this case does not involve a contract dispute, and Dos Republicas is not attempting to avoid an obligation by invoking a statute excusing performance under a contract. 7 A primary term is “a period of time at the end of which the [leasehold] estate granted will terminate but which estate may be extended by some other provision, usually one for production.” Fox v. Thoreson, 398 S.W.2d 88, 91 (Tex. 1966); see also Eastern Energy, Inc. v. SBY P’ship, 750 S.W.2d 5, 6 (Tex. App.—Houston [1st Dist.] 1988, no writ) (“primary term of the lease is the maximum period of time for which the lessee can maintain lease rights without drilling”).
14 the issuance of a permit are remarkably different than those present during the formation of an oil
and gas lease. Unlike a mining permit, an oil and gas lease involves two parties to an agreement,
not a single party and a regulatory agency. Because the issuance of a permit by the Commission does
not involve two parties entering into a contract for mutual economic benefit, the need for a
termination due to non-production is not as pressing because the Commission does not receive an
economic benefit from a mining company corresponding to the amount of coal mined. Cf. id. (if
lessee under oil and gas lease does not begin drilling, it is obligated to pay lessor delay rental).
Further, the economic effects of a coal mining company’s actions are only one factor for the
Commission to consider when issuing, extending, or terminating a permit; as highlighted by the
appellees, the Commission is also charged with considering, among other things, the potential
environmental effects from coal mining and the effects on neighboring landowners. See Tex. Nat.
Res. Code Ann. § 134.003 (West 2001).
Third, the appellees urge that, because Dos Republicas was aware that it did not have
a market established when it filed for a permit in 1994 and was aware of the social and political
instability present in Mexico when it asked for the permit to be issued, Dos Republicas assumed
those market risks knowing that it was obligated to begin mining operations within three years or
lose the permit. Accordingly, they contend that the permit should not be extended because the
potential market problems were foreseeable.
We disagree with the appellees’ assertion that the fact that the event was foreseeable
bars invocation of the extension provision. There is no requirement in section 134.072 mandating
that conditions justifying a permit extension must have been unforeseeable to the permit holder. See
15 id. § 134.072. Moreover, many of the conditions that the appellees insist would justify a permit
extension will no doubt be foreseeable to a certain extent, including natural disasters and individuals
filing suit against the company.
Fourth, the appellees note that subsection 134.072(b)(2) does not specifically
authorize an extension for economic reasons but note that subsection 134.072(b)(1) does allow for
extension due to economic concerns. Subsection 134.072(b)(1) allows the Commission to grant an
extension if the permit holder is involved in “litigation that precludes the beginning of operations
or threatens substantial economic loss.” Id. § 134.072(b)(1) (emphasis added). The appellees insist
that if potential economic loss was a factor to be considered under subsection (b)(2), the legislature
would have incorporated that language into the section. Cf. Laidlaw Waste Sys., Inc., 904 S.W.2d
at 659 (Tex. 1995) (when legislature employs term in one section of statute and excludes it from
another, term should not be implied into section it was excluded from).
We cannot adopt the appellees’ construction of section 134.072. Although subsection
134.072(b)(2) does not specifically list “economic conditions” or “the lack of a market” as
permissible reasons justifying a permit extension, the subsection does not list any specific situation
justifying an extension. Instead, the subsection uses very broad language authorizing the
Commission to grant an extension when it believes an extension is necessary due to “conditions
beyond the control and without the fault or negligence of the permit holder.” Tex. Nat. Res. Code
§ 134.072(b)(2); see also Webster’s Seventh New Collegiate Dictionary 235 (7th ed. 1973)
(“condition” means “a restricting or modifying factor”). On its face, this language is broad enough
to justify the Commission’s extension for market conditions that are not caused by the permit holder.
16 Further, we disagree with the appellees’ contention that the inclusion of the phrase
“substantial economic loss” in subsection 134.072(b)(1) and its exclusion in subsection
134.072(b)(2) indicates the legislature’s intent that economic conditions, including the lack of a
viable coal market, cannot be used to justify a permit extension. See Tex. Nat. Res. Code Ann.
§ 134.072(b); see also Mid-Century Ins. Co. of Tex. v. Kidd, 997 S.W.2d 265, 274 (Tex. 1999)
(“doctrine of expressio unius est exclusio alterius is simply an aid . . . . [and] [a]s a rule of reason
and logic, it should not be mechanically applied to compel an unreasonable interpretation”). The
subsections apply in different contexts. Subsection (b)(1) applies only to situations where the permit
holder is involved in litigation that either precludes the beginning of mining or threatens economic
loss to the permit holder regardless of whether the litigation was initiated due to some fault of the
permit holder. Subsection (b)(2) applies when conditions, which are not caused by the permit holder,
are present and warrant an extension. Unlike subsection (b)(1), which is expressly limited to
instances where the permit holder is involved in some type of litigation, subsection (b)(2) applies
to a broader number of situations and provides no express limitation on its applicability except that
the permit holder cannot be the cause of the condition resulting in the failure to mine. Due to the
distinct situations in which these statutes apply, we believe that the legislature’s failure to include
the phrase “economic loss” in subsection (b)(2) is no indication that the lack of a market cannot be
used to justify an extension. The legislature specified that economic conditions are permissible
considerations when determining whether to grant an extension under the first part of subsection
134.072(b). We can discern no reason to exclude economic conditions as permissible factors for the
17 Commission to consider when determining whether to grant an extension under the more broadly
written second part of subsection 134.072(b).
Finally, the appellees refer to federal case law and to the legislative history
accompanying the federal counterpart to the Texas Surface Coal Mining and Reclamation Act as
support for the proposition that market conditions cannot justify an extension. First, the appellees
refer to Shawnee Coal Co. v. Andrus, 661 F.2d 1083 (6th Cir. 1981). In Shawnee, the Office of
Surface Mining, Reclamation, and Enforcement (the “Office”) concluded that Shawnee was in
violation of the Act because it had stockpiles of coal products that released toxic runoff and ordered
Shawnee to comply with the Act and its accompanying regulations. The district court granted an
injunction in favor of Shawnee preventing enforcement of the Office’s orders, but the Sixth Circuit
reversed because Shawnee had not exhausted its administrative remedies prior to filing suit.
Shawnee Coal Co., 661 F.2d at 1092. During a subsequent administrative proceeding, Shawnee
argued that it was unable to comply with the Office’s orders because it could not sell the stockpiled
coal products due to a depressed market. See Coalex Report 305 available at
http://www.osmre.gov/coalex/coalex305.htm (last modified Mar. 24, 1999). The administrative law
judge concluded that Shawnee had to either comply with the regulations in question or no longer
conduct operations. Id.
The appellees’ reliance on this case is misplaced. Shawnee was ordered by the Office
to comply with an environmental regulation relating to surface coal mining and subsequently sought
injunctive relief from having to comply with the order. Dos Republicas has not failed to comply
with nor has it been ordered to comply with a regulation. Further, it is not seeking injunctive relief
18 from compliance with an environmental regulation. Rather, it is attempting to extend the termination
date of its mining permit, which is an action authorized by the natural resources code.
Next, the appellees refer to the legislative history accompanying the Surface Mining
Control and Reclamation Act. Like the Texas statute, the federal statute also provides that a permit
will terminate within three years if no mining activity is undertaken but allows a permit to be
extended for reasons similar to those articulated in section 134.072. See 30 U.S.C.A. § 1256(c)
(West 1986); see also id. § 1253 (West 1986 & Supp. 2006) (states may obtain jurisdiction over
mining if states develop program capable of implementing Act). The Senate Committee’s 1977
analysis of the act recognized that permits may be issued and renewed without operations being
undertaken and specified that one of the reasons for the three-year deadline is to ensure “that no one
will be locked into outdated reclamation requirements” that were in effect when the permit was
issued. S. Rep. No. 95-128, at 74 (1977). Based on the federal legislative history’s emphasis on
maintaining current environmental reclamation standards and the fact that the Texas reclamation
regulations in effect when Dos Republicas first obtained its permit are different from the regulations
in effect now, the appellees insist that Dos Republicas’s permit should not have been extended for
economic reasons. Cf. 30 U.S.C.A. § 1201(d) (expansion of coal mining requires establishment of
“appropriate standards to minimize damage to the environment”), (k) (West 1986) (Act is necessary
to “mitigate adverse environmental effects”).
However, the fact that the federal statute was enacted with a focus on implementing
current environmental reclamation standards does not mandate a conclusion that a permit cannot be
extended for market reasons under the Texas statute. If anything, the focus on reclamation standards
19 indicates the need for agency expertise in determining what standards to enforce and whether a
permit should be extended. Furthermore, the administrative code authorizes the Commission to
review an existing permit and modify the permit’s provisions to ensure compliance with the Surface
Mining and Reclamation Act and the relevant administrative code provisions. See 16 Tex. Admin.
Code § 12.225 (2006). Therefore, the Commission can compel a permit holder to comply with more
recent reclamation requirements prior to the permit’s termination.
Dos Republicas and the Commission’s assertion that the Commission may consider
market conditions when determining whether to grant an extension is also supported by the broad
authority the legislature bestowed upon the Commission. The natural resources code specifies that
the Commission has been granted exclusive jurisdiction over surface coal mining and reclamation
activities, has been charged with enforcing the relevant portions of the code, and has been given the
authority to issue rules pertaining to mining and reclamation activities that are consistent with the
code. See Tex. Nat. Res. Code Ann. §§ 134.011 (Commission given broad powers, including power
to adopt rules, issue and revoke permits, conduct hearings, issue orders requiring miners to take
certain actions, and order cessation of mining activities), 134.012(a)(1) (Commission has exclusive
jurisdiction), 134.013 (West 2001) (Commission required to adopt rules relating to surface coal
mining and reclamation), 134.161-.181 (West 2001) (enforcement powers of Commission). It has
also been specifically charged with determining whether a permit extension should be granted.
Moreover, the two types of circumstances described by section 134.072 as justifying an extension
are broadly written. Accordingly, the Commission’s interpretation of section 134.072 is entitled to
20 judicial respect. See Hammack v. Public Util. Comm’n of Tex., 131 S.W.3d 713, 723 (Tex.
App.—Austin 2004, pet. denied); see also Moore, 845 S.W.2d at 823.
Furthermore, the appellees’ arguments ignore the need for agency expertise in
determining whether a permit extension should be granted. See Hammack, 131 S.W.3d at 723
(legislature bestows powers upon agency with idea that its goals will be more effectively realized
by employing agency’s “specialized judgment, knowledge, and expertise”). The code specifies that
the Commission “may” grant an extension and further states that, in determining whether to grant
an extension, the Commission must consider whether the permit holder’s failure to mine is the result
of events beyond the control of the permit holder and must determine whether granting the extension
is “necessary.” See Tex. Nat. Res. Code Ann. § 134.072(b)(2); see also Tex. Gov’t Code Ann.
§ 311.016(1) (West 2005) (word “may” creates discretionary authority). If the Commission
determines that an extension is necessary, the agency must also determine a “reasonable” extension
time. Tex. Nat. Res. Code Ann. § 134.072(b). These determinations necessarily involve an
assessment of the circumstances surrounding the permit holder’s activities and knowledge of the
factual situations that might justify a permit extension. Cf. State v. Public Util. Comm’n, 883
S.W.2d 190, 195 n.6 (Tex. 1994) (determination of whether something should be considered capital
or expense should be “left to the agency created to centralize expertise in this area and granted broad
authority concerning just such matters”). Accordingly, deference to the Commission’s expertise
regarding the conditions warranting an extension is appropriate.
For all the reasons previously given, we conclude that the Commission’s
interpretation of section 134.072 as allowing for a permit extension due to unfavorable market
21 conditions “beyond the control and without the fault or negligence of the permit holder” is
reasonable and consistent with the plain language of the statute. Accordingly, we conclude that the
Commission did not exceed its authority when it granted Dos Republicas’s extension request because
of unfavorable market conditions. Therefore, we sustain Dos Republicas and the Commission’s
issue on appeal.
CONCLUSION
Having concluded that the Commission had the authority to issue Dos Republicas’s
extension and having sustained Dos Republicas and the Commission’s issue on appeal, we reverse
the judgment of the district court and remand the case for further proceedings consistent with this
opinion.
David Puryear, Justice
Before Justices B. A. Smith, Patterson, and Puryear
Reversed and Remanded
Filed: December 29, 2006