In a recent case decided by the Eastland Court of Appeals in Texas, Foote v. Texcel Exploration, Inc., the Court held that the operator of an oil well was not liable for cows apparently killed by an oil and salt water spill.
The Plaintiff leased property for grazing 650 head of cattle. Texcel Exploration Inc. operated an oil and gas lease on the property. The lease did not require Texcel to fence off the well and associated equipment, however Texcel had installed an electric fence around the tank battery (where produced oil and gas and salt water produced along with the oil and gas were stored). There was evidence that the cattle were breaking the fence each day and getting inside the fenced area and ultimately broke a PVC pipe on one of the tanks. Salt water and oil was found on the cows and eventually 132 cows died. The Plaintiff requested reimbursement for the value of the 132 dead cows, veterinary bills, special feed costs, shipping cost to relocate cattle, and lost profits from the surviving cattle being sold under expected weight.
The Court first sets out what is pretty well settled law in Texas for this situation: “[T]he owner/lessee of the surface estate in order to recover against the mineral lessee or operator for injury to his cattle must plead, prove and obtain a jury finding on one of the following:
• That the lessee/operator intentionally, wilfully or wantonly injured the cattle; or
• That the lessee/operator used more land than was reasonably necessary for carrying out the purposes of his lease and that as a result of some negligent act or omission on his part, he proximately caused an injury to the surface owner/lessee’s cattle.”
Oddly, the Plaintiff did not plead or prove either of these elements. Instead he sought to recover on claims of premises liability, negligence and unreasonable use of the property by Texcel and negligent undertaking by failing to keep in electric fence in working order.
The Court held that the cows are not invitees so there was no premises liability and that there was no evidence of negligent and unreasonable use of the property by Texcel. Regarding the claim 0f negligent undertaking, the Court held that Texcel had no duty to put up the fence in the first place and that it wasn’t the fence that injured the cows anyway.
This case has a clear lesson for landowners who graze cattle in the vicinity of an oil and gas well or who intend to enter into a grazing lease where a well is located: the lease must contain appropriate language obligating the oil company to construct a fence capable of turning cattle around its operations. It would also be a good idea to provide that the oil company indemnify the cattle owner from damages due to harm to the cattle and all costs to remediate that harm, such as vet bills. Finally, it would be helpful for the lease to contain a measure of damages for cows that die, such as current market value.