Mandatory Real Property Venue Trumps Forum-Selection Clause in Wastewater Disposal Dispute
Read the Court's Opinion (PDF)
Judge Grant Dorfman
In NGL Water Solutions Permian v. Lime Rock Resources V-A, the Business Court granted transfer to Loving County under Section 15.011's mandatory venue provision for actions to recover damages to real property, finding that the dispute's essence concerned alleged wastewater migration damage to oil and gas wells and mineral interests located in Loving County. The court held that the mandatory real property venue statute prevailed over NGL's reliance on a Harris County forum-selection clause in the parties' Shut In Agreement.
Court Staff Summary
Granting a motion to transfer venue arguing mandatory venue because the suit arises out of damages to real property and considering the applicability of a venue-selection agreement. Dismissing the case because the court granted a motion to transfer venue to a county outside the Business Court divisions and the non-movant fails to make an election under section 25A.006(b) or (c).
Background: Permian Basin Wastewater Disposal Dispute
NGL Water Solutions Permian operates wastewater disposal wells in the Permian Basin, including wells in Loving County, Texas. The Permian Basin accounts for nearly 40 percent of U.S. oil production and 15 percent of natural gas production, with water produced as a byproduct that must be properly disposed of through reinjection into geological formations using disposal wells. Defendant LRR Pecos Valley holds leasehold mineral rights and owns and operates oil and gas wells in the vicinity of NGL's Colt McCoy SWD No. 3 well in Loving County.
In October 2024, Pecos Valley sent a demand letter to NGL alleging that NGL's injected wastewater had escaped confinement and damaged Pecos Valley's wells and mineral interests. Pecos Valley stated it had "reached the inescapable conclusion that water could only have come from NGL's Colt McCoy Disposal Wells," and that water had "migrated to and watered out the upper portion of the Bone Spring formation" resulting in a "complete loss of hydrocarbons that would otherwise have been produced." Pecos Valley attached a draft petition it intended to file in Loving County District Court, but proposed the parties first meet to explore resolution short of litigation.
The Venue Motion
The Business Court heard Defendants' Motion to Transfer Venue, Motion to Dismiss for Lack of Subject-Matter Jurisdiction, and Rule 91a Motion to Dismiss at an oral hearing on April 28, 2025. Upon consideration of the motions, responses, pleadings, evidence presented, arguments of counsel, and applicable law, the court found that the Motion to Transfer Venue was meritorious and should be granted. Because venue transfer was granted, the court did not address the two motions to dismiss.
The Court's Ruling
The court granted Defendants' motion to transfer venue to Loving County. The memorandum opinion indicates that the dispute centers on allegations that NGL's wastewater disposal operations caused damage to Pecos Valley's wellbores and mineral interests located in Loving County, Texas. The case involves the intersection of mandatory venue provisions for real property damage claims and contractual forum-selection clauses in the context of Permian Basin oil and gas operations.