Forest Oil Corporation, Now Known as Sabine Oil & Gas Corporation v. El Rucio Land and Cattle Company, Inc., San Juanito Land Partnership, Ltd., McAllen Trust Partnership, and James Argyle McAllen

Summary

The Supreme Court of Texas held that the Railroad Commission does not have exclusive or primary jurisdiction over common-law and contractual claims concerning environmental contamination from oil and gas operations. The Court also upheld the arbitration award against challenges based on arbitrator evident partiality, excess of authority, and alleged expanded judicial review of exemplary damages. The court of appeals’ judgment was affirmed.

Holdings

1. The Railroad Commission did not have exclusive jurisdiction over McAllen's common-law environmental-contamination claims because the cited statutes did not clearly express or necessarily imply legislative intent to abrogate those common-law rights.
2. The primary-jurisdiction doctrine did not require abatement of the claims or vacatur of the arbitration award because the claims were inherently judicial in nature and the Railroad Commission's authority did not oust courts or arbitrators from deciding them.
3. The arbitrator's failure to disclose that the opposing party had objected to his serving as a mediator in another matter did not establish evident partiality requiring vacatur.
4. The arbitration panel did not exceed its powers by determining the damages permitted by Texas law or by issuing declarations concerning Forest's remediation obligations.
5. The parties did not clearly agree to expanded judicial review of the exemplary-damages award merely by authorizing the arbitrators to award punitive damages where permitted by Texas substantive law.

Questions Presented

1. Whether the Railroad Commission had exclusive jurisdiction over the environmental-contamination claims, thereby requiring exhaustion of administrative remedies and precluding judicial or arbitral relief.
2. Whether the Railroad Commission had primary jurisdiction requiring abatement of the arbitration or deferral of the claims.
3. Whether an arbitrator's nondisclosure established evident partiality requiring vacatur of the arbitration award.
4. Whether the arbitration panel exceeded its powers by awarding damages and issuing declarations concerning remediation obligations.
5. Whether the parties clearly agreed to expanded judicial review of the exemplary-damages award.

Disposition

affirmed