New Texas Law Causes Energy Companies to Increase Lawsuits Against Land OwnersAugust 26, 2011
According to recent reports, lawsuits by energy companies against south Texas landowners have steadily been on the rise. Sources say the lawsuits have resulted in wake of the energy companies' desire to build more pipelines to keep pace with surging oil and gas production from recent oil and gas discoveries in places like the Eagle Ford shale. Under Texas law, energy companies have the power of eminent domain and can use it to acquire access to a landowner's property, even in cases where the landowner opposes the access. Landowners have the opportunity to negotiate for compensation for the use of their land. However, sources say that when these negotiations break down, the energy companies often file lawsuits and get what they want in the courthouses.
Reportedly, in 2011 alone, energy companies have filed at least 184 lawsuits against landowners in four South Texas counties, compared with 28 all of last year. Many critics of the companies say the surge in lawsuits is a result of a change in Texas law beginning September 1, 2011. The law will make it harder for energy companies to gain access to propertyowners' land to build pipelines.
Sources say lawsuits to gain access to land for pipelines have risen in other communities where production of oil and gas has risen as well such as Dewitt County, Maverick County, LaSalle County, Dimmit County, McMullen County, Bee County, Lavaca County, Karnes County, and Live Oak County. According to reports, pipeline companies in Pennsylvania, where similar shale discoveries have been made, filed 61 lawsuits in 2009, compared with 16 in 2008.
According to reports, the push for new pipelines is very intense in south Texas's Eagle Ford shale, a 250 foot thick layer of rock rich with oil and gas. The state of Texas reports that natural gas production at the Eagle Ford shale has almost quadrupled, and oil production has increased ten-fold from 2009 to 2010. Sources say the oil and gas boom has brought both a boost to the economy and unwanted pipelines across property of ranchers and farmers as well as homeowners.
Reportedly, many of the landowners the pipelines affect are angry because of diminished value damages to property that pipelines can cause, as well as potential problems in the future and restrictions on use of the property. Sources say that if it is apparent a deal for access to the property will not be reached, the companies lower their offer and then sue the landowner for access. However, the energy companies contend they offer market value before seeking judicial intervention.
Sources say the new Texas eminent domain law, which allegedly has spurred the increase in litigation for pipelines, will require the energy companies to make good faith offers before filing suit and allow the landowners more time to respond to their offers for access to build pipelines on the property.