A Texas oil-and-gas lawyer who probably figured he was using a crafty defense technique during a recent deposition may have shot his whole industry — or local governments — in the foot.
Decatur resident Tim Ruggiero sued Aruba Petroleum after the company drilled on his 10-acre property and spewed so many toxins that Ruggiero says it made family members sick and reduced their property’s value from $300,000 to $78,000. When Ruggiero sued for damages, the gas company attorney argued that the property should never have been valued at $300,000. His reasoning: The land should have been valued at $78,000, because the owner didn’t own the mineral rights and the land was therefore vulnerable to drilling. In other words, a gas company could have come along and drilled on the property at any time, so the property value should have reflected that.
Ruggiero wrote to State Sen. Wendy Davis and to Rep. Lon Burnam, both of Fort Worth, proposing a law to address those concerns. If that’s the case, he said, then tax appraisals should have to reflect the fact that some properties can be quickly and vastly diminished in value if drillers come along and start releasing toxins underground, onto the surface, and into the air.
“The enactment of such a law would result in full disclosure for all parties concerned in the transaction;:the person or persons selling the property, the potential buyer as well as any Realtor and their respective agency, and the financial institution issuing the mortgage,” he wrote. “The law would protect all parties involved.”
Of course it could also greatly reduce the value of property across North Texas and put counties and cities into a tailspin because of the reduced property tax collections.
Ruggiero didn’t send the letter until the end of the legislative session, so his proposal never got introduced as a bill. And the chances of it being added into a bill during the special session are tiny since that would require approval by Gov. Rick Perry, and “Gov. Perry is part of the problem,” Burnam said.
But Burnam likes the idea of adjusting property values to reflect their vulnerability to drillers. “It’s a very interesting concept,” he said. “ If we’re going to exploit the Barnett Shale natural gas, we can do it in a safe and sound and responsible manner or we can let the industry control the regulatory process in their interest rather than in the public interest. It’s not going to change until people rise up and demand it.”