This is part two of a three-part series devoted to looking at efforts to overhaul eminent domain in Texas and what may come next for landowners, pipeline companies, and the oil and gas industry. Read Part One here.
At the outset of this year’s regular legislative session, lawmakers on both sides of the aisle filed a handful of bills to change how pipeline companies can take land in Texas. While the bills tackled the issue differently, they had one thing in common: they sought to move some of the debate over a pipeline’s use of condemnation from county courthouses to state agencies. In the end it was that commonality that became a sticking point in the debate over Texas land rights.
Along the way, some very big names in politics and industry got involved.
Right now, a company that wants to lay a pipeline in Texas can check a box on a form declaring itself a “common carrier.” The idea is that it will provide its services for hire to transport oil and gas. It’s that role – which some say makes it similar to a utility – that gives it the right to take land.
But in Texas, there’s no test to make sure the pipeline will act like a common carrier.
If a landowner wants a company to prove its right to take land, he or she must challenge the pipeline in court. It’s costly and time consuming for the landowner, and puts pipelines in a legal limbo, where they may need to litigate their right to condemn land numerous times down the route of a pipeline.
The bills filed this year proposed new processes to determine whether a pipeline can call itself a common carrier at the outset.
One bill, authored by state Rep. Tryon Lewis (R-Odessa), found favor with pipeline companies.
“From the pipelines’ point of view, it allowed us to get a determination before we started down the construction path to make sure we knew what the legal consequences were going to be early on in the process,” said James Mann, a lawyer for the Texas Pipeline Association.Lewis’s bill began its life as a half-page piece of legislation that called for hearings to determine common carrier statutes at the state’s oil and gas regulator, the Railroad Commission of Texas. By the time it was ready for a vote, the document was five pages, the product of an intense back-and-forth from key players.
“We did some serious horse-trading in terms of provisions that were in that bill,” Norman Garza who worked on the issue with the Texas Farm Bureau, told StateImpact Texas.
But Garza said late in the process the Farm Bureau found itself frozen out of those negotiations. It decided to oppose the bill, which died on a point of order.
Another bill, by state Rep. Rene Oliveira (D-Brownsville), found a bit more support from landowner groups, but, he says, was rejected by the industry.
“I would have tried to find common ground and solve the problem because it still needs to be solved,” Oliveira told StateImpact Texas.
By session’s end, none of the bills had bridged the divide. And the reason goes back to the role of the courts. As James Mann pointed out, pipelines want to ensure they can’t be sued by every landowner along a route. They want one determination to take land and then to carry on building pipelines.
“No sane person wants serial litigation,” Mann told StateImpact Texas. “Well, I take that back. Certainly lawyers benefit from serial litigation,” he added dryly.But many landowner groups say the right to challenge pipelines at the county courthouse, a right that landowners have always had, was exactly the thing they would not give up.
“They never came up with anything at the Railroad Commission that was better than the local courthouse for the affected landowners,” Billy Howe with the Texas Farm Bureau told StateImpact Texas. For groups like the Texas Farm Bureau, the defeat of the bills amounted to a victory for landowners.
Landowner advocates argued that having one process at a state agency to determine if a pipeline company is on solid legal footing, and keeping the right to challenge the company in county court could work well for both pipelines and landowners. After all, if a state agency had granted the right of condemnation to a company, they would likely prevail in any court case, the logic went.
If the gap between the two didn’t appear insurmountable already, the arrival of lobbying groups including trial lawyers and tort reform groups added to the impasse at the capitol. Things became even more complicated when two powerful oil and gas families entered the fray.
“The Bass family out of Fort Worth was a power player,” Mann told StateImpact Texas. “It would be my guess. It’s only my guess. That it was that particular group that managed to get Judge Lewis’ bill killed on a point of order.”
The Bass brothers control one of the country’s largest privately held oil and gas companies. They are also large landholders and advocates for private property rights. But they weren’t the only big names to enter the fray.
Supporting Tryon Lewis’ bill was another family flush with oil and gas money: The Koch brothers out of Wichita, Kansas.
“I was informed that the Koch brothers had six or seven lawyers for a few weeks prior to the legislation being considered and that they were still trying to find ways to add little amendments here and there to bills that would try to solve the problem,” Rep. Oliveira told StateImpact Texas.
The battle between the two powerful families prompted Rep. Tryon Lewis to say it felt like there were “a bunch of huge elephants out there bumping into each other” over the issue.
“You had these two very large family interests,” Tom “Smitty” Smith, with Texas Public Citizen told StateImpact Texas. “The pipeline-owning Koch brothers and the landowners and oil-and-gas company Bass brothers. Fighting each other over both issues of principle and probably a significant amount of money.”
An attempt to get a representative of the Bass family to speak on the record was unsuccessful. But a spokesperson for Koch Pipelines (a company owned by that family) did email a reply to StateImpact Texas.
“The legislation you cite was aimed at clarifying that the regulation of common carrier pipelines falls within the jurisdiction of the Texas Railroad Commission and the local courts,” wrote Jake Reint, director of public affairs for the company. “As the record shows, it was broadly supported by industry and not the product of any one company.”
Members of both families are large donors to GOP politics, and Rep. Oliveira, who is a Democrat, said their differences of opinion mirror a division among conservatives between those who want to strengthen the oil and gas industry and those who want robust private property rights.
“There were many Republicans that were not going to vote for Lewis’s bill. So it was a very strange coalition of members that aligned on both sides, and I think that coalition is going to remain,” he said.
He said as all sides in the debate have “dug in their heels,” that there’s little hope that lawmakers will be able to rewrite the rules of eminent domain. Oliveira predicts that failure to reach an accord could have a negative impact on the Texas economy as more and more pipelines are challenged in court just as the oil and gas sector is booming.
But even if lawmakers can’t act, that doesn’t mean the courts won’t.
COMING TOMORROW: How, in the absence of a legislative solution, the courts are changing the face of property rights in Texas.
Read Part One of this series here.