A dispute between the City of Port Arthur and a property owner over the use of a city street to transport heavy loads of pipeline equipment and oil and gas drilling mud has survived a plea to the jurisdiction.
City of Port Arthur, Texas and Alberto Elefano, In His Official Capacity vs. Kirk C. Thomas (No. 09-21-00111-CV) involves claims by Thomas, whose property contains numerous pipeline rights-of-way and for which he obtained a permit from the Railroad Commission for a landfarming operation, against the City based on its enforcement of a city ordinance limiting truck weights on a residential street. Responding to nearby residents’ complaints about heavy truck traffic on their street, the City’s Director of Public Works, Elefano, sought to enforce the ordinance, which required Thomas to apply for a permit for overweight trucks and post a bond for street repair. Thomas alleged that enforcement of the ordinance was pre-empted by § 81.0523, Natural Resources Code, which gives the state exclusive jurisdiction over oil and gas operations. The statute, however, does not pre-empt municipal ordinances that regulate only aboveground activity, including fire and emergency response, traffic, lights, or noise, as long as the ordinance is commercially reasonable and does not effectively prohibit an oil and gas operation conducted by a reasonably prudent operator. Thomas asserted that the City’s enforcement of the ordinance was not commercially reasonable and effectively prohibited his landfarming operation, and that Elefano acted beyond his authority in denying him a permit. The trial court agreed and denied the City’s plea to the jurisdiction. The City appealed.
The court of appeals affirmed as to Thomas’s ultra vires claim. It determined that a fact issue existed with respect to pre-emption, specifically whether the City’s enforcement of the ordinance was commercially reasonable and whether Thomas was a reasonably prudent operator. The evidence suggested that while reducing the weight of the loads to meet the ordinance’s requirements would make commercial operations financially infeasible (and increase traffic on the road), there were two other access points to Thomas’s property that he had previously used to accept heavy loads, one of which could theoretically still be used although it had a steep grade that crossed a railroad track. There was also evidence of the neighborhood’s complaints and the deterioration of the condition of the street. Further, Thomas had previously received a temporary permit from the City for the landfarming operation, but when the City tried to collect on the required bond in order to repair the street, the bonding company refused to pay. At that point the City updated its permit application to require more information about the duration of projects. Thomas was the first to use the new form, but he crossed out the weight limits and did not specify the duration of his project. Based on this record, the court sent the case back to the trial court for a trial on the pre-emption claim. If the City’s enforcement of the ordinance is ultimately found to be pre-empted, Elefano will have acted beyond his legal authority.
The court of appeals likewise affirmed the trial court’s denial of the City’s plea to the jurisdiction as to Thomas’s declaratory judgment action. Because Thomas did not challenge the validity of the ordinance itself, however, the City retained its immunity against the declaratory judgment claim. As to Elefano, however, the trial court properly denied the plea because of his alleged ultra vires acts in enforcing the ordinance. Thomas also raised constitutional due process and inverse condemnation and regulatory taking claims. With respect to the due process claims, the court held that Thomas “failed to meet his burden to demonstrate the City and Elefano’s actions were not rationally related to legitimate government objectives.” It rejected the inverse condemnation and regulatory taking claims based on SCOTX authority holding that “[P]roperty damage due to civil enforcement of an ordinance unrelated to land use, standing on its own, is not enough to sustain a regulatory taking claim” (quoting City of Baytown v. Shrock, 645 S.W.3d 174, 180 (Tex. 2022)).
This case, should it go to trial, seems highly likely to end up back before the court of appeals. Judging by the facts cited in the opinion, it could go either way and may ultimately invite SCOTX review of the construction of § 81.0523, Natural Resources Code. In any event, as oil and gas operations come into increasing contact with growing urban and suburban areas, the line between “commercially reasonable” ordinances that “do not effectively prohibit an oil and gas operation conducted by a reasonably prudent operator” may become harder to identify.