Texas

Energy and Environment Reporting for Texas

Texas Supreme Court Reinforces Denbury Decision, Favors Landowners

Photo by Flickr user Stuck in Customs/Creative Commons

Pipeline companies are finding themselves with a new obstacle: defenders of private property rights.

Dave Fehling of StateImpact Texas contributed reporting to this article.

The Texas Supreme Court sure is busy as of late. Today they released an updated opinion in the Texas Rice Land Partners v. Denbury Green Pipeline-Texas case that could have big implications for the oil and gas industry and private landowners in Texas. The bottom line is this: the court reinforced their original ruling today and denied a request to hear the case again, and that’s unwelcome news for the pipeline industry in Texas.

The decision was originally made last fall. At issue was who decides whether or not a pipeline is a “common carrier,” i.e. one that can be used by other companies and is therefore considered a public project. If a pipeline company can justify that it’s a public project, that allows it to use eminent domain to construct and operate pipelines on private property, regardless of how the landowner affected may feel about it. (Read more on the case in our earlier story, Pipeline Companies Fight for Right to Take Property.)

In the Denbury decision, as it’s come to be known, the Texas Supreme Court sided with landowners, stating that “private property is constitutionally protected, and a private enterprise cannot acquire condemnation power merely by checking boxes on a one-page form.” That one-page form is what pipeline companies send to the Railroad Commission of Texas in order to get “common carrier” status, which is what they use to justify their use of eminent domain.

Today’s opinion strengthens the court’s siding with landowners.

In a few additional footnotes to the original opinion, the court said today that a CO2* pipeline “cannot wield eminent domain to build a private pipeline, one limited in [its] use to the wells, stations, plants, and refineries of the owner. A common carrier transporting gas for hire implies a customer other than the pipeline owner itself,” they wrote. And that “to qualify as a common carrier with the power of eminent domain, the pipeline must serve the public; it cannot be built only for the builder’s exclusive use.”

“I can’t discern this changes anything of importance,” Amy Warr, an attorney for the Texas Riceland Partners, told StateImpact Texas. “We’re happy.”

Keith Strama, counsel for the Texas Oil & Gas Association, is less pleased. His group petitioned the court to re-hear the case.

“We’re concerned it will mean more case-by-case litigation” of pipeline eminent domain disputes,  he told StateImpact Texas, “imperiling the development of the state’s pipeline infrastructure to meet growing demands of oil and gas production. But we think it is limited to only CO2 and hydrogen” pipelines, he said.

Strama also told StateImpact Texas that he believes the ruling won’t affect the ongoing battle between a farmer and the Keystone XL pipeline in northeast Texas. In that case, a private landowner is questioning the company’s claim of eminent domain to route the pipeline through her farm. There should be “no impact from the ruling or the order on the Keystone pipeline, it is not relevant to [it],” he told StateImpact Texas. He said that the Denbury decision has to do with the issue of private vs. public use, and that Keystone XL “is clearly a pipeline that will have multiple users, making it public and qualifying it for eminent domain under Texas law.”

In an earlier comment to StateImpact Texas, TransCanada, who will own and operate the Keystone XL, said that the pipeline will be available “for hire” to any company that wishes to use it, “as long as the product meets specs.”

Warr, who represents the landowner side of the dispute, says it isn’t clear whether the ruling applies to pipelines other than those for natural gas. “It left the issue hanging,” she told StateImpact Texas, “to be decided another day, possibly by a court or by legislature.”

As for the farmer battling the pipeline, Julia Trigg Crawford, she intends to continue fighting her case. In late April she sees TransCanada in court, despite losing a restraining order against the company last week. “The burden of proof is now on the pipeline after Denbury,” she told StateImpact Texas recently. “That’s the one glimmering light in Texas law right now that gives any power to us.” Days after she lost her restraining order, TransCanada announced they intended to start construction this year on a section of the Keystone XL pipeline from Cushing, Oklahoma to refineries in Port Arthur, Texas.

Read the full opinion by the Texas Supreme Court from today here:

*This sentence originally stated a “natural gas” pipeline, which is incorrect. It is a CO2 pipeline. We regret the error.

Comments

  • MikePB

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    Coincidentally, the U.S. House just passed the “Property Rights Protection Act” (H.R. 1433) in a bipartisan vote.  This is a start on
    correcting the abuses of eminent domain — but only a start, because it
    addresses part of the problem referred to as “economic development takings.”

     

    Let’s now address eminent domain abuse which falls under the
    category of “natural resource development takings.”  This is where government and energy
    companies combine to seize private property rights (surface and/or subsurface)
    for gas/oil pipelines, compressor stations, underground nat gas storage
    reservoirs and more.

     

    As a former gas lease holder in Pennsylvania, I ended up
    fighting eminent domain for two years after we and others were sued by Spectra
    Energy, a Texas gas company, for our property rights (surface and/or
    subsurface) backed by the Federal Energy Regulatory Commission. It is the
    sleeper issue for many — even if you’re a gas leaseholder. Eminent domain
    “taking” can only occur under the badge of government — whether it
    is federal, state or local.

     

    It is a nasty experience in the exercise of power over
    private property owners. Citizens do not stand on a level playing field
    politically, legally or economically. It is not stretching a point to say that
    eminent domain puts landowners in a face-off with the equivalent of a cartel
    comprised of energy companies and government, because the power of eminent
    domain allows corporations — backed by government — to control pricing and
    competition (i.e., “just compensation” and what constitutes
    “public interest”). By definition, that is a cartel.

     

    Private property owners do not have much, if any, leverage
    to speak of when it comes to negotiating “just compensation” (hear
    the sound of laughter — it’s coming from the energy companies). But one
    benchmark that is worth looking into is the agreements energy companies quickly
    reach with government. Check out “lease” agreements with the PA Game
    Commission, for example. It is much better than anything you’ll see among
    private property owners — and don’t give us that argument that the government
    has more acreage. The terms are fundamentally different. Government power –
    regulation — makes energy companies more respectful in their
    “negotiations” with government.

     

    For more information, check out this reference: Sweet Lease
    1 — http://www.spectraenergywatch.com/blog/?p=504

    This power of “taking” is why energy companies
    want “forced pooling” in Pennsylvania; and why New York State has
    “compulsory integration.” Texans who value their property rights must
    deal with “Rule 37.” Conservative Texans I know don’t have a lot of
    “back up” in them; and its nice to see them pushing back on Big
    Government and Big Business — both are used to having their way with private
    property owners.

     

    As Founding Father John Adams emphasized, private property
    rights are fundamental to freedom. Walter Lippman said it pretty well in 1933,
    when he wrote: “Private property was the original source of freedom. It
    still is its main bulwark.” Don’t kid yourself, it is under threat.

  • Carolyn

    Our family just received a certified letter from a gas pipeline company notifying us they will be contacting us to survey our property for a new pipeline next to the current one on our property.  The propsed gas line is scheduled to be completed this same year per their website.The haste to run us over is the  Eagle Ford Shale production in our area of S. Texas.  This ruling gives us hope that if we can’t stop it at least we have a chance to negotiate reasonable protections for ourselves & our property.  The going rate for the havoc they cause to landowners and mess they leave behind, not to mention the coming & going on your land forever, is less than $100 per rod.  I had to look that one up and I am disgusted that the companies have so little respect & disregard for our land that we worked, struggled and strived for.  You really feel violated when people are trying to take away something precious.  There is nothing public about these pipelines. 

  • Cuku Kenivel

    The Right of Private Property Ownership, Southwest Gulf Railroad,
    and the State of Texas

    Farmers, ranchers, and all land owners in the state of Texas should be concerned when they learn about the action taken in Medina County Texas, on Tuesday, February 2, 2016, by Southwest Gulf Railroad, a wholly-owned subsidiary of Vulcan Materials Company (“Vulcan”). Vulcan, a Fortune 500 multinational materials company, is based in Birmingham, Alabama.

    Attorneys for Southwest Gulf Railroad filed a Petition in Condemnation in the Medina County Court on 43 properties belonging to farmers, ranchers and other landowners in northeast Medina County, for a nine-mile long rail line easement. This is the first step in the process of forced taking of land by eminent domain.

    What separates this case is that eminent domain is being abused by a private corporation, solely for its own benefit. For over 16 years, since 1999, Vulcan has been trying to build a rail spur from a 1700 acre site Vulcan Materials leased. Vulcan plans to develop the 1700 acres as a quarry, to connect with the Union Pacific rail line 7 miles south at US Hwy 90.

    In 2000, area landowners organized and formed the Medina County Environmental Action Association, Inc., (MCEAA) to study all the impacts of the proposed quarry and rail line. In the 16 years since, there have been between 93 to 150 member households. MCEAA has been successful in getting federal and state agencies to move the rail line to avoid sensitive historic areas and floodways and mitigate some impacts, but permits for construction have still been granted.

    A restrictive covenant barring rail construction binds 9,622 acres, on 56 separate properties with 108 signatories, along Vulcan’s proposed rail line. Only condemnation using the power of eminent domain would extinguish these restrictive covenants and remove them. But such power can only be validly exercised by a common carrier, which Vulcan’s paper railroad, Southwest Gulf Railroad, plainly is not.

    A true common carrier transports goods for other companies as well as for themselves. There are no other companies that will have goods on this proposed 9 mile rail spur to transport at this time, or likely ever, due to the restrictive covenant. Yet now Vulcan, not the landowners, seeks the power to control future land use in northeast Medina County, Texas.

    Texans are very proud of their land, and their land is very dear to them. For generations Texas farmers and ranchers have produced abundant crops and livestock and strong families. The right to private property ownership is the cherished heritage passed down to us by the early settlers of the Republic of Texas and is the bedrock of our unique way of life in Texas.

    If Texans allow this outrage of confiscation of private property by a private company for their own use to happen in Medina County Texas, no landowner in the entire state of Texas is safe from seizure of their property. Any company, even an out-of-state company, can come in and seize property for private gain, if this case is ruled in favor of Vulcan and its paper railroad.

    It is most important to recognize that this case is potentially precedent-setting. How the courts handle this case will establish the law in all future court cases in Texas involving the taking of private property by private companies for their own use. No one’s land is safe from confiscation if Vulcan and its paper railroad prevail. Landowners, farmers and ranchers across the state should rise in protest and outrage.

    Alyne Fitzgerald,
    afitzgerald100@gmail.com
    830-741-1295
    830-538-9745
    166 PR 4664
    Castroville, TX 78009

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