City can sue for damages to property values due to nuisance for acts occurring outside ETJ says Amarillo Court of Appeals.

 

Town of DISH, et al v. Enbridge Gathering (North Texas) L.P., et al.,  07-13-00391-CV (Tex. App. – Amarillo, June 1, 2015)

This is a consolidation of three separate cases with multiple parties and multiple defendants with certain procedural complexities. For the government lawyer, the important thing to take away from the case is the ability of the City to sue for damages (lost tax values) due to nuisance and trespass.

Eighteen property owners and the City of DISH sued six different energy production companies (“Energy Defendants”) alleging noise, light, odors and chemical particulates emanating from the facilities constituted trespass and a nuisance and a decrease in property value. Essentially, the facilities were natural gas pipeline compressor stations near the outskirts of DISH. There appears to be no dispute the Energy Defendants were operating within federal and state regulations for production and emissions. Nevertheless, the City and property owners sued due to the damage in property values and loss of enjoyment of property. The trial court granted various motions ultimately dismissing the claims and the City and property owners appealed.

The Amarillo Court of Appeals spent considerable time explaining why odors and particles can constitute trespass and a nuisance. The court then explained that simply because the Energy Defendants complied with regulations on emissions, does not mean they are immune from the consequences those emissions may cause. “Stated another way, just because you are allowed by law to do something, does not mean that you are free from the consequences of your action. … Regulatory compliance or licensure is not a license to damage the property interests of others.”  However the court also held that diminution in future value or a damage of $1,000 per day is more akin to a penalty or future regulation which is preempted by federal and state law. One Energy Defendant argued the City lacked authority to sue for actions taken outside of its extra-territorial jurisdiction (“ETJ”).  The court first noted the City has authority to sue for damages.  That is different than suit to enforce regulations or to attempt to regulate outside of its boundaries. “Here, DISH does not seek to regulate or abate any of Enterprise’s operations but, instead, seeks to recover damages allegedly resulting from lost tax revenues occasioned by the diminution in value of its tax base…” which is permissible. The court made other holdings which were specific to the property owner claims and are not addressed here.

If you would like to read this opinion click here. Panel: Chief Justice Quinn, Justice Hancock and Justice Pirtle. Memorandum Opinion by Justice Pirtle.  The docket page with attorney information can be found here.