The site of the West Fertilizer Plant explosion is nearly cleared of debris from the deadly blast that left hundreds homeless and injured, and killed 15 people in West, Texas in April 2013. A fence still circles the property along the railroad tracks. (Mona Reeder/The Dallas Morning News)
As we reported on Sunday, more than half of all facilities licensed last year by Texas to carry ammonium nitrate lacked either secure fencing or locked storage areas for the potentially explosive chemical compound.
The state didn’t consider them a security risk, though. A 2007 law designed to keep ammonium nitrate secured from would-be terrorists says a facility must be “fenced or otherwise enclosed and locked when unattended.”
The agency in charge of regulating those facilities – the Office of the Texas State Chemist – says a facility fails an annual inspection if it lacks both secure fencing and locked storage areas.
Now, an Austin attorney and a real estate appraiser are questioning whether the law’s lax standards may pose liability risks for fertilizer facility owners that handle ammonium nitrate.
In an article published in the newsletter of the California-based Forensic Expert Witness Association, attorney Joe K. Longley and appraiser Rudy R. Robinson III raise two issues about the consequences of April’s tragedy in the Central Texas farming town of West.
Can a property owner near a fertilizer facility that handles ammonium nitrate recover monetary damages, including any drop in their property value, in a lawsuit filed against the facility?
Could that same property owner also be required to disclose that potential danger to prospective buyers?
The blast in West killed 15 people and injured more than 300 when ammonium nitrate exploded. Similar facilities are all over Texas, mostly in rural areas. Many of them, as in West, are close to homes, schools, and other structures where the human toll could be high in the event of an explosion.
For over a century, Texans have had grounds for suing to recover damages caused by a permanent or temporary nuisance, Longley and Robinson wrote.
“ ‘Nuisance’ has been defined as ‘a condition that substantially interferes with the use and enjoyment of land by causing unreasonable discomfort or annoyance of persons of ordinary sensibilities attempting to use and enjoy it,” they wrote.
The Texas Supreme Court last year ruled that if a nuisance is permanent, the property owner may recover the property’s lost market value, based on a comparison of values with and without the nuisance.
“The very existence of any Texas facility storing ammonium nitrate on an ongoing basis” could result in lower property values near a facility, Longley and Robinson wrote. Longley said he’s not aware of any such nuisance lawsuits in Texas that involve ammonium nitrate fertilizer facilities.
The property owner’s potential right to recover damages against the facility’s owner also has a “flip side,” Longley and Robinson wrote.
In 1995, the state Supreme Court ruled that in a commercial real estate transaction, there was no duty to disclose unknown facts between “sophisticated parties,” such as those who are savvy investors.
But the court left open the question about disclosure requirements if a deal involves unsophisticated purchasers entering into “boiler plate” contracts, as commonly used in real estate deals.
The high court said in those cases, “the totality of the circumstances surrounding the agreement must be considered.”
In the wake of the West explosion, according to Longley and Robinson, it is unlikely that the disclosure requirement would not cover a real estate sale within half a mile of a fertilizer facility handling ammonium nitrate.
Longley said he anticipates people who live near those facilities will urge state legislators in 2015 to tighten the 2007 ammonium nitrate security law “to make sure these places are being fenced and locked, so these facilities would not cause the loss of life and maiming; and the property damage you saw in West.”
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