The Exhaustion Of Administrative Remedies Defense Takes Another Hit

• Published date: 09 November 2022
• Subject Matter: Energy and Natural Resources, Energy Law, Oil, Gas & Electricity
• Law Firm: Adams and Reese
• Author: Mr Alexander Bondurant, Philip N. Hollimon and Jeff Trotter

The Supreme Court of Mississippi recently held in Tiger Production Company, LLC v. Pace, 2021-IA-00315-SCT, 2022 WL 11555295 (October 20, 2022) that surface owners are not necessarily required to exhaust administrative remedies prior to bringing claims of negligence, nuisance and trespass against oil and gas operators in trial court. This opinion continues a growing judicial trend trimming back the exhaustion defense to allow landowner's common law claims against operators to go forward in court.

Case Facts

In this suit, surface owners John Webb Pace, Jeannette Pace, and John Gregory Pace (collectively 'Pace') owned 103 acres of land in Wayne County, and Tiger Production Company, LLC ('Tiger Production') was the designated operator by the Mississippi Oil and Gas Board ('MSOGB') of several oil wells, saltwater disposal wells and associated pipelines on and in proximity to the Pace property. Following a disposal line leak and non-closure of an existing drilling reserve pit, Pace alleged suffering numerous damages pertaining to real property and livestock operations upon those grounds. Pace brought suit against Tiger Production in Wayne County trial court seeking compensatory and punitive damages on claims of negligence, nuisance and trespass. Tiger Production sought to dismiss the claims for failure to first seek remedy through the MSOGB, the administrative agency that governs and regulates oil and gas activities in the State of Mississippi.

The trial court denied Tiger Production's motion to dismiss, and held that the common law claims of negligence, nuisance and trespass did not relate to administrative remedies and that the MSOGB lacked jurisdiction over such claims.

Supreme Court Review

Tiger Production sought interlocutory appeal to the Mississippi Supreme Court to determine whether the trial court correctly held that Pace was not required to exhaust administrative remedies regarding the claims.

During the pendency of Tiger Production's appeal, the court decided a...