Texas is one of the oil and gas producing states where mineral interests can be severed from the surface estate. As a result, property owners in that situation find themselves with oil and gas production activities on or near their property without sharing in the benefits associated with that production. The mineral estate is dominant, so the mineral owner has the right to freely use the surface estate to the extent reasonably necessary for the exploration, development and production of oil and gas on the property. That includes activities such as building roads, drilling wells and transporting equipment and personnel.

Frustrated property owners are increasingly bringing nuisance claims based on bright lights, loud noises, traffic, dust, odors, wastewater and other effects of these activities. A nuisance is a condition that substantially interferes with the use and enjoyment of land by causing unreasonable discomfort or annoyance to persons of ordinary sensibilities. These lawsuits have had varying rates of success—many settle, some result in little or no liability but at least one case led to a headline-grabbing multi-million dollar verdict. Regardless of the outcome, these cases present a question facing the oil and gas industry as to whether the costs of such nuisance claims are covered by insurance.

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