Monthly Archives: March 2014

Eyes in the Sky – What drones are allowed to see in Texas

While Amazon may simply want to deliver packages to your home using drones, a vast field of public (law enforcement, military) and private (mapping, surveying, inspecting) uses for such unmanned aircraft is developing.  On September 1, 2013, the Texas Privacy Act (Tex. Gov’t Code Ch. 423) became law and set ground rules for the lawful (and unlawful) capture of images by drones.  Interestingly, though titled the “Privacy Act,” the statute details nineteen broad categories of activity that drones are permitted to capture images of, including:

  • an electric or natural gas utility that is inspecting its facilities (Tex. Gov’t Code 423.002(a)(5));
  • with the consent of the individual who owns or lawfully occupies the real property captured in the image (Tex. Gov’t Code 423.002(a)(6));
  • of public real property or a person on that property (Tex. Gov’t Code 423.002(a)(16)); and,
  • in connection with oil pipeline safety (Tex. Gov’t Code 423.002(a)(18)).

If the use does not fall within one of the nineteen exceptions, then it can be prosecuted as a misdemeanor and the owner or tenant of the property photographed can seek civil penalties of $5,000 per episode or $10,000 per episode if the images were disclosed, displayed, or distributed to others.  However, a person can escape criminal prosecution if they destroy the image as soon as they have knowledge that the image was captured in violation of the statute.

Given that the statue already permits so many uses, it is likely that drones will become an increasingly popular commercial tool.  So, keep your eyes on the sky and smile for the camera.

Risks of Electronic Contracting

How easy is it to enter into a multi-million dollar (or more) contract via e-mail?  As easy as clicking “send” on an e-mail, it would seem.

Under the Texas Uniform Electronic Transactions Act (UETA), parties can enter into a legally binding agreement by e-mail or other electronic communications, even for matters that traditionally were required to be in writing, such as agreements to purchase real property, including oil and gas interests.  Under UETA, if the parties intend to enter into an agreement electronically, an otherwise enforceable agreement will not be unenforceable solely because it was entered into electronically.

A recent court case, 2001 Trinity Fund, LLC v. Carrizo Oil & Gas, Inc., which was decided by a Texas state appeals court in Houston, illustrates the danger of negotiating the terms of a business transaction over e-mail.  In that case, the trial court analyzed a series of e-mail messages between two oil and gas companies and concluded that the e-mails collectively constituted a binding legal agreement to amend and revive their existing participation agreement.  The e-mails including statements such as:

• “I agree in principle, but need to have this interest flow directly back to me.”

• “[i]f you are in agreement in principle, then I’m assuming we can work out the mechanics.”

• “That will work.  I will call before the day is over and give you an exact time.”

• “Yes, has been my final answer.  I will give you the final date ASAP.”

• “As I told you before, I intend on being involved in the drilling program.”

The trial court initially awarded one of the parties over $10 million in damages for the other party’s breach of the alleged electronic agreement. That trial court verdict was later overturned on appeal when the appellate court reached the opposite conclusion, finding that the evidence was legally insufficient to support the jury’s conclusion that an electronic agreement existed.

Nonetheless, the takeaway is obvious.  When in discussing a business transaction via e-mail or other electronic means, one should make sure it is crystal clear whether or not the party desires or intends to enter into an electronic agreement, or if the party does NOT have such desire or intent.  Otherwise, courts may be deciding whether or not an electronic agreement exists, and you may not like its decision.

The Eminent and Inverse Environment – Interplay Between Environmental Issues and Condemnation

“THE EMINENT AND INVERSE ENVIRONMENT – The Interplay Between Environmental Issues and Condemnation” was presented to the Tarrant County Bar Association, Environmental Law Section in Fort Worth, Texas on February 27, 2014, by Mary Colchin Johndroe, 817-877-2810mjohndroe@canteyhanger.com.  The following summary contains highlights of the presentation.

In a statutory condemnation, the condemnor compensates the property owner before appropriating property.  If the government appropriates property without first paying adequate compensation, the property owner may bring a claim for inverse condemnation to recover resulting damages.  In both, statutory and inverse condemnation, a pivotal issue is compensation due to the landowner – which is typically measured by the difference in fair market value of the affected property before and after the taking. 

In Texas condemnation law, market value generally reflects all factors that buyers and sellers would consider in arriving at a sales price.  Environmental contamination, costs of remediation, and perception in the marketplace most assuredly can influence the value of a property.  

Texas courts have not yet decided if evidence of environmental contamination, potential liability for contamination, and remediation costs is admissible as relevant to market value of property taken by condemnation.  Although Texas case law has not specifically addressed these issues in the context of eminent domain, courts in at least thirteen (13) other states have determined the admissibility of evidence of environmental contamination and remediation of property taken in condemnation.  

The majority of courts follow an “inclusion approach,” holding that evidence of environmental contamination and the costs of remediation is relevant to fair market value and, therefore, relevant to a determination of just compensation in eminent domain proceedings.  Some courts follow an “exclusion approach,” with some excluding all evidence of contamination, while others have held that evidence of remediation costs is inadmissible, but property taken should be valued as remediated, as opposed to being clean and never contaminated.  The latter approach holds that evidence of the reduction in value of property caused by stigma attributable to environmental contamination is admissible.

In November of 2012, the Fourteenth Court of Appeals in Houston affirmed stigma  damages awarded for loss in market value resulting from prior  contamination  which  had been remediated. However, this was not a condemnation case. 

An inverse condemnation may occur when the government physically appropriates or invades the property, or when it unreasonably interferes with the landowner’s right to use and enjoy the property, such as by restricting access or denying a permit for development.  

The Texas Supreme Court has held that landowners have a constitutionally-protected, compensable property interest in groundwater and that State regulations cannot “unjustifiably” deprive landowners of the groundwater beneath their land.  At least one governmental entity has been held liable in inverse condemnation for denying permits for groundwater pumping and usage for irrigation. 

Moreover, Texas courts have allowed a claim by one private party against anotherfor trespass based on subsurface migration of water injected in a well permitted by TCEQ.  Regardless of a private party’s tort liability, constitutional concerns remain.  

Might governmental entities tasked with regulating groundwater or wastewater injection wells who issue permits resulting in migration onto other property and contamination of its water supply be liable for inverse condemnation?