Supreme Court to Rehear Exxon Case. Yes, That Exxon Case.
Relatively big news: The Texas Supreme Court said yesterday that it would rehear the case pitting ExxonMobil against the O’Connor family in South Texas and the new operator on their lease. From the AP:
The Texas Supreme Court on Friday said it will again hear arguments in the nearly 15-year legal battle over accusations that Exxon Mobil Corp. loaded abandoned wells with junk, sludge and even explosives to keep other companies from drilling there.
A small drilling company that tried to enter the wells near Corpus Christi, and the land owners, accused the world’s largest publicly traded oil company of intentionally wrecking the wells.
The plaintiffs won at trial in 1999, but the Texas Supreme Court reversed the finding in March. That ruling from the state’s highest civil court sparked a campaign to rehear the case led by the Texas land commissioner and state comptroller.
If this sounds familiar to you it may be because of the no-stone-unturned, 9,000-word story about the case by Mimi Swartz that we published in our November issue, you know, the issue with Bonfire on the cover. Now, far be it from me to say that Mimi’s masterful bit of legal reporting had anything to do with the court’s decision. Of course not. That’s preposterous! But there are some passages in the piece–which has been sitting on newsstands for the past 30 days–that, um, don’t look so good for the court. Like this one:
This particular case seemed to be a very difficult one for the justices to grasp, especially when it came to Emerald’s and the O’Connors’ claims. In the past, the Texas Supreme Court had been extremely familiar with oil and gas law, but not anymore. Justice Nathan Hecht asked whether Exxon’s damage to the wells—cutting the casing, pouring contaminants in a flowing well, depositing junk in the hole—meant that the oil was lost forever or just harder to get at. (Answer: lost forever.) Hecht also asked why the operator couldn’t just “move over ten feet and drill another well.” (Answer: because the spacing of wells is regulated by the Railroad Commission—and besides, drilling a new one costs a fortune.)
Justice Dale Wainwright needed a definition of “junk,” which is a term of art in oil and gas law. “If there weren’t paper cups in the hole, what was in the hole?” he asked. Chief Justice Wallace B. Jefferson asked whether there were regulations that govern how a well is plugged. (Answer: uh, yes.) Various justices seemed dumbfounded to learn that in Texas law there are two kinds of waste: physical waste (something happens to the reservoir that makes it impossible to produce the minerals) and economic waste (the minerals are not efficiently developed or the reservoir is left in a condition that makes it unreasonably expensive to produce the minerals). Though in this case both kinds of waste were at issue (and often difficult to distinguish between), the justices still seemed out of their depth.
Justice David Medina seemed unclear on the long, brutal history of oil field tactics, asking O’Neill, “What interest would Exxon or any other party have to deliberately sabotage the well hole?” Even though the Supreme Court is not supposed to reweigh the facts of a case—only what the law is and whether it was correctly applied—the justices repeatedly got bogged down in or conflated particular dates and events.
What happens next will be very interesting. It’s entirely possible that the court will rule the same way and this is just an opportunity for it to refine its opinion. We’ll see. But I find it amazing how this case just refuses to die. Mimi has a theory about that. As we put it in the display type: Since 1996, a legal battle has raged between ExxonMobil and a powerful South Texas ranching clan that believes the oil company sabotaged wells on the family property. Even after a ruling by the state Supreme Court earlier this year, the bitter feud shows no signs of letting up. Maybe that’s because it’s about something far more important than money.
Tagged: Exxon, O’Connor, Supreme Court.





