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Texas Supreme Court takes on energy company nuisance liability

This summer, the Texas Supreme Court issued a unanimous decision shedding light on a complex subject: the nuisance claim. The case of Crosstex North Texas Pipeline, L/P. v. Gardiner concerned a lawsuit by a ranch owner who had sold land to an energy company that built a compressor station along a natural gas line next to the landowner's remaining land. The landowner sued the company for allegedly creating a nuisance based on noise and vibration from the compressor.

What is a nuisance that creates legal liability in Texas?

The court used the decision to comprehensively clarify what a nuisance is in Texas that results in liability to a neighbor for "interference with the use and enjoyment of real property." The court held that there can be three kinds of conduct that cause the legal injury:

  • Intentional nuisance
  • Negligent nuisance
  • Nuisance as the result of "abnormally dangerous or ultra-hazardous activities," creating strict liability

The opinion clarified that for a legal injury to qualify as a nuisance, there must be substantial interference with the use and enjoyment of land that causes unreasonable "discomfort or annoyance." Whether discomfort is unreasonable is an objective test that asks whether it would unreasonably disturb a person of normal sensibility, not an abnormally sensitive person.

Determination of whether the definition of nuisance is met requires the balancing of many things, depending on the particular circumstances of the dispute. The court lists many potential factors that could inform the question such as the nature of the neighborhood, the magnitude of the interference, the defendant's motives, community interests and many more.

If a nuisance is found to exist, the creator of the nuisance may be liable in money damages, the court may order the problem behavior to cease or change, or the plaintiff may be allowed "self-help abatement." In this case, the Supreme Court sent the case back for a new trial guided by the newly clarified nuisance principles in the opinion.

Legal questions facing energy companies

These kinds of legal claims are likely happening across the state given the size and scope of the energy industry present in the state. Texas boasts some of the top oil and gas fields in the country:

  • Eagle Ford Shale
  • Spraberry Trend
  • Wasson Field
  • Barnett Shale
  • Carthage
  • Hugoton
  • And many others

This rich natural asset has brought extensive commercial activity into the Lone Star State, including that of many energy companies of various sizes, composition and target markets. What they have in common when they conduct oil and gas business is that they will naturally encounter many legal challenges, one of which concerns an array of land and property issues like the nuisance case such as real estate purchases and sales, leases, rights of ingress and egress, easements, royalties, pollution and water contamination, eminent domain and many more.

This case illustrates how an energy company can face potential liability in Texas related to property rights, but oil and gas companies also confront many other kinds of legal matters, including contracts, personal injury, pollution, insurance and regulatory compliance. It is extremely important to have legal counsel on board who is intimately knowledgeable about applicable law, the energy business and the local landscape.

When an oil or gas company faces a lawsuit, the solution may be satisfactorily negotiated with the other party with the assistance of an able lawyer who understands what is at stake for the company. When resolution of a dispute is not possible through settlement, an oil and gas attorney who is familiar with Texas law and practice can vigorously advocate for the business in court.

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