Texas Business Court Holds Legislative Reduction of Amount-in-Controversy Threshold Constitutes 'Fact' Permitting Second Removal
The Business Court of Texas held that House Bill 40's reduction of the jurisdictional threshold from $10 million to $5 million constituted a discoverable 'fact' under Section 25A.006(f)(1)(B), permitting EOG Resources to remove a breach of contract action two days after the statute's effective date despite the Court having previously remanded the case for failure to meet the higher threshold. OWL AssetCo, a water services provider seeking indemnification for produced water contamination damages in Eddy County, New Mexico operations, argued the statutory change was not a 'fact' and that EOG's removal was untimely.
Background and Procedural History
OWL AssetCo I, LLC provides water-related services to oil and gas producers across multiple basins, including the Permian and Delaware Basins. In December 2019, OWL entered into a contract with EOG Resources, Inc. concerning transportation and disposal of produced water in Eddy County, New Mexico. OWL filed suit in Harris County District Court in April 2025, alleging EOG breached the contract by failing to ensure produced water met contractual specifications, seeking approximately $8.22 million in oil-spill remediation damages and indemnification for associated property damages.
EOG initially removed the case to the Business Court in May 2025 under the then-existing $10 million amount-in-controversy threshold. The Business Court granted OWL's first motion to remand on July 25, 2025, finding OWL's claims did not satisfy the jurisdictional minimum. However, after the Texas Legislature enacted House Bill 40 on June 1, 2025—reducing the threshold to $5 million for actions arising from qualified transactions under Section 25A.004(d)(1), effective September 1, 2025—EOG filed a second removal notice just two days after the effective date.
The Jurisdictional Dispute
OWL challenged the second removal on two grounds: first, that a change in law does not constitute discovery of 'facts establishing the Business Court's jurisdiction' under Section 25A.006(f)(1)(B); and second, that EOG had long known the amount in controversy exceeded $5 million, making the removal untimely. The case presented a novel question of statutory construction regarding whether legislative amendments to jurisdictional thresholds can serve as newly discovered 'facts' triggering the 30-day removal window.
The Court's Statutory Analysis
Judge Jerry D. Bullard, sitting by assignment, applied fundamental principles of statutory construction, emphasizing that courts must
rely on the plain meaning of the statute's words to discern legislative intentand that
the truest manifestation of what lawmakers intended is what they enacted because the Legislature expresses its intent by the words it enacts and declares to be the law.The Court examined Section 25A.006(f)(1)(B), which requires a contested removal notice to be filed within 30 days after a party 'discovered, or reasonably should have discovered, facts establishing the Business Court's jurisdiction.'
The Court concluded that the legislature's reduction of the threshold amount constituted a 'fact' sufficient to establish jurisdiction. Critically, the Court reasoned that no set of facts could have established the Business Court's jurisdiction over the action before implementation of the reduced threshold amount, and that EOG could not have discovered the fact of the threshold reduction until its enactment. Finding that EOG filed its removal notice two days after H.B. 40's effective date, the Court held the removal was both proper and timely under Section 25A.006(f).
Implications for Business Court Practice
This decision establishes important precedent for removal practice in the Texas Business Court, particularly as the Legislature continues to refine the Court's jurisdictional parameters. The holding clarifies that legislative changes affecting jurisdictional prerequisites can restart the 30-day removal clock, even for cases previously remanded under prior law. For oil and gas practitioners, this ruling is particularly significant given the prevalence of contract disputes involving amounts that fall between the old and new thresholds—precisely the range where many water services, midstream, and oilfield services disputes are valued.
The decision also demonstrates the Business Court's willingness to apply traditional canons of statutory construction to resolve novel procedural questions, emphasizing plain meaning over formalistic distinctions between 'facts' and 'law.' Parties opposing removal on similar grounds should anticipate courts will focus on whether jurisdiction could have been established under any set of facts prior to the legislative change, rather than on semantic arguments about whether statutory amendments constitute discoverable 'facts.' The ruling effectively permits defendants a second bite at removal when the Legislature expands Business Court jurisdiction to encompass previously non-qualifying disputes.