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.