Texas is a state that prides itself on its independent spirit and rugged individualism, particularly the rights of landowners to use their land as they please. But it’s also a state that has a long history of drilling for oil and gas and a tradition of cooperation with the industry. Where the two traditions intersect, and at times collide, is when the oil and gas industry needs private land for their projects. That’s been the case in two instances recently, both involving pipelines and farmers.
One involves a rice farmer that didn’t want a carbon dioxide pipeline on his land, which went all the way to the Supreme Court of Texas. They sided with the landowner in that case. In the other, a farmer in northeast Texas is fighting an eminent domain claim by the company behind the Keystone XL pipeline. That pipeline would go through her farm, and today the head of the company behind it, TransCanada, announced that they intended to start construction as early as this spring on the section from Cushing, Oklahoma to Port Arthur, Texas.
In both cases, the companies claimed they had eminent domain to build their pipelines on the respective properties because they were “common carrier” pipelines, which would be used to transport oil and gas from other companies in addition to their own.
But who decides if the pipeline deserves that status? In essence, the companies do.
In a simple one-page form, titled T-4, a company simply checks a box to indicate that they are a “common carrier.” The form is then submitted to the Railroad Commission of Texas, which oversees oil and gas drilling in the state. Once the form is approved, they can then use that status to claim eminent domain.
Let’s take a look at the form:
The form has a question for the companies: If the pipeline is for something “other than natural gas, will the pipeline be operated as a common carrier or as a private line?” (A similar question is asked if its for natural gas, whether it will be for a public utility or a private line.) The other question asked is, “will the pipeline carry only the gas and/or liquids produced by pipeline owner or operator?” All the company has to do is check “Yes” for the first and “No” for the second question, and voilà, they’re now able to use eminent domain.
But while the Railroad Commission of Texas issues “common carrier” status, they don’t regulate the use of eminent domain, as we’ve reported earlier. “Eminent domain issues are a private party issue,” John Tintera, executive director of the commission, told StateImpact Texas in February. “Beyond that ‘common carrier‘ declaration, the role of the Railroad Commission is limited after that.”
The situation may not stay this way for long. Under that recent ruling by the Supreme Court of Texas, which was denied a rehearing last week requested by various industry interests, the Court sided with landowners. Referring to the Denbury decision, as it’s come to be known, the court stated “private property is constitutionally protected, and a private enterprise cannot acquire condemnation power merely by checking boxes on a one-page form.”
As we reported earlier, the decision could have big implications for landowners fighting eminent domain claims in Texas. In one of the petitions filed requesting a rehearing of the opinion by the Texas Oil and Gas Association (TXOGA), the court wrote that it could have “a devastating impact on an industry that serves as the economic engine for the State’s economy.”
In the case of the farmer vs. the Keystone XL pipeline, an appeal of the company’s use of eminent domain is scheduled for trial on April 30th.