In Petro Harvester Oil & Gas Co., LLC v. Baucum,
No. 2019-IA-01442-SCT, 2021 WL 3418398 (Miss. Aug. 5, 2021), Mississippi
property owners Tay and Deidra Baucum brought an action against Petro Harvester
Oil & Gas Company (“Petro Harvester”) for improper use of its oil-disposal
well located on neighboring land. The Baucums
brought trespass, public and private nuisance, and negligence claims against
Petro Harvester, alleging that for decades the company engaged in systematic
and illegal dumping and disposal of oil field petroleum waste and drilling waste
on Petro Harvester’s property and Baucum’s property.
Before bringing suit, someone associated with the Baucums
requested that the Mississippi State Oil and Gas Board (“MSOGB”), Environmental
Protection Agency (“EPA”), and Mississippi Department of Environmental Quality (“DEQ”)
examine the properties for pollution and naturally occurring radioactive
material. According to an affidavit
filed by a manager for Petro Harvester, none of these agencies found any
violations, nor did they issue any environmental citations.
Petro Harvester filed a Motion to Dismiss, arguing that the
MSOGB held jurisdiction over Petro Harvester’s activities and alleged pollution,
and that the Baucums were required to exhaust administrative remedies through
the MSOGB prior to bringing suit in the Jones County Circuit Court. The Baucums argued that the MSOGB had no
authority over the common-law claims included in the Complaint, and therefore
no adequate remedy existed. At the
hearing, both parties agreed to allow the case to proceed parallel with the
action before the MSOGB.
Two years later, Deidra Baucum filed a second amended
complaint adding a personal-injury claim alleging that the pollution had resulted
in her cancer diagnosis. The Baucums
moved for a status conference in the Circuit Court, and Petro Harvester requested
that the status conference wait until after the MSOGB proceeding.
Concerned about potential res judicata effect on their common-law
claims, the Baucums voluntarily withdrew their MSOGB proceeding and proceeded
with the status conference. The Court
dismissed the Baucums’ claims without prejudice, holding that they must first exhaust
their administrative remedies with the MSOGB and bring suit before the DEQ
before suing privately.
The Baucums filed a bill of discovery in the Chancery Court
to obtain MSOGB’s documents. The Baucums
requested that the stay be lifted, and the Circuit Court lifted the stay as to
the personal-injury claim only.
The Mississippi Supreme Court granted the Baucum’s petitions
for interlocutory appeal, and Petro Harvester cross-appealed on the grounds
that the trial court should not have lifted the stay as to the personal-injury
claim. The Mississippi Supreme Court
noted that although administrative remedies must be exhausted prior to
resorting to the Courts for resolution, where no adequate remedy is provided,
the exhaustion doctrine is not applicable.
While the MSOGB has authority to assess penalties and bring
suits with respect to the conservation of oil and gas, it has no ability to
award the Baucums for the property-damage or personal-injury claims. Therefore, the exhaustion doctrine did not
apply to the Baucums claims. Further, the
Mississippi Supreme Court held that requiring the Baucums to proceed with the
MSOGB would create a preclusive res judicata or collateral estoppel effect,
which could result in irreparable injury.
The Mississippi Supreme Court reversed the trial court, holding that it
was error to decline to remove the stay as to the Baucum’s property-damage
claims.
