Property rights advocates seek clarity on eminent domain use by private pipeline companies

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Property rights activists seek clarity on eminent domain use by private entities

By Terri Hall
July 24, 2012

"Why is it my responsibility as a Texas landowner to make a foreign corporation prove it has legally obtained the power of eminent domain in Texas?" asked Julia Trigg Crawford, a farmer in East Texas locked in a legal fight with Canadian company TransCanada over the use of eminent domain to acquire land for its Keystone XL Pipeline. Crawford and other property rights advocates addressed the House Land and Resource Management Committee hearing yesterday at the Texas Capitol in Austin, asking lawmakers to exercise greater oversight over private companies’ use of eminent domain authority.

“Rather than mending fences and tending to crops, I’m here in Austin today fighting to protect my land,” Crawford pointed out.

This should not be.

Clayton Henry of Texas and Southwestern Cattle Raisers Association as well as Regan Beck with Texas Farm Bureau noted the Texas Constitution expressly prohibits eminent domain for a private purpose. The Texas Supreme Court emphasized in its Texas Rice Land Partners v. Denbury Green Pipeline decision that the Texas Constitution safeguards property rights: “no taking of property for private use.”

The Court also ruled: “Accordingly, the Natural Resources Code requires so-called ‘common carrier’ pipeline companies to transport carbon dioxide ‘to or for the public for hire.’ In other words, a CO2 pipeline company cannot wield eminent domain to build a private pipeline’ (emphasis theirs).

Herein lies the battle over pipeline companies’ use of eminent domain. In both the Denbury case and with TransCanada, the pipeline companies merely checked a box claiming to be a ‘common carrier’ on a one page form, called a T4 application, at the Texas Railroad Commission and claimed eminent domain authority. However, the Constitution and the Court are clear: “Private property is constitutionally protected, and a private enterprise cannot acquire condemnation power merely by checking boxes on a one-page form.”

The Court continues: “The Denbury Green pipeline would not serve a public purpose if it were built and maintained only to transport gas belonging to Denbury from one Denbury site to another...If Denbury consumes all the pipeline product for itself, it is not transporting gas ‘to . . . the public for hire.’”

Both Denbury and TransCanada are merely transporting gas belonging to itself from one of its sites to another. Therefore, their pipelines do not serve a public use or meet the statutory requirements of a common carrier, and hence do not have the legal authority to exercise eminent domain.

Debra Medina, Director of We Texans, rightly asked, “...why would the legislature allow a company (TransCanada) merely passing through our state to forcibly take property from Texas landowners?”

No oversight
The Railroad Commission Attorney, Lindil Fowler, confirmed that as a matter of existing law, if a company self-certifies that it’s a ‘common carrier,’ agrees to subject itself to the authority of the Railroad Commission, and fills out the T4 application, they get approval. Fowler also testified that the granting of a permit does not confer eminent domain authority on any company.

So what does? Basically, the conclusion drawn from the testimony is the statute itself confers authority, and that by a company merely believing itself to meet the legal requirements, in effect, is the only current measure of whether or not a pipeline is a common carrier unless, under Denbury, a landowner directly challenges that claim in court.

Committee member Rep. George Lavender asked “if they (pipeline companies) declare themselves a common carrier, no one checks or verifies they actually are?” The answer is clearly ‘No.’ But Fowler basically dodged giving a direct answer and pointed out that the T4 application is a permit to operate a pipeline, not a permit to build one. He emphasized that if a company falsifies the application it’s a felony offense.

Which begs the question, if no one is actually verifying whether or not a company meets the statutory requirements of a common carrier, what real effect can a criminal penalty such as a felony have in deterring the falsification of an application? Most landowners do not have the financial resources to take pipeline companies to court on their own dime to do what the State should be doing -- enforcing the law.

Medina summarized it best in her testimony: “It’s been said that today the fox is guarding the henhouse, I’d submit nobody is guarding the hen house.”

Pipeline companies resist judicial review
Naturally, the pipeline company associations and representatives that testified before the Committee opposed the Denbury decision, and expressed concern that landowners can now challenge their use of eminent domain in courts all along proposed routes. There could even be conflicting court decisions to iron out. So several suggested the Railroad Commission be given the authority through an administrative hearing process to determine whether a pipeline company meets the statutory requirements of a ‘common carrier,’ and if landowners disagree with the decision, they could still seek redress in the courts.

Among the property rights advocates who called for the hearing, Independent Texans, Public Citizen, Texans for Accountable Government, Texans Uniting for Reform and Freedom, and We Texans, there seemed to be a consensus that the Railroad Commission would not be the preferred entity to determine common carrier and eminent domain issues, especially since it has never denied a pipeline company a T4 permit in its history. Committee Chairman Rep. Rene Oliveira suggested another option could be the State Office of Administrative Hearings (SOAH).

“It’s been a rubber stamp process at the Railroad Commission,” concludes Medina.

Crawford pointed out that we don’t have to check if our sheriff has the authority to make an arrest, because he went through a process to receive his badge. She went on to say even a hairdresser has to display a license in order to prove she has the legal authority to cut hair. Yet, private pipeline companies are wielding the power of eminent domain that forcibly confiscates another’s private property for which there is no remedy once the harm is done, and no one checks to verify that the company even has the legal authority to do so.

No public testimony was allowed at yesterday’s hearing, but Oliveira said the Committee is looking into the logistics of holding hearings or Town Hall-style meetings in East Texas so lawmakers can hear directly from landowners impacted by the Keystone Pipeline -- which apparently can’t come soon enough.

Eminent domain abuse lurks elsewhere
Eminent domain abuse doesn't stop with pipeline companies. The Texas Department of Transportation (TxDOT) just released a Request for Information, June 22, seeking assistance from developers to build ancillary facilities inside the SH 130 tollway in Travis County, including a gas station, garage, store, hotel, restaurant, railroad tracks, utilities, and telecommunications facilities and equipment.

In fact, the deadline for interested developers is Wednesday, July 25. Though the Legislature thought it took care of this by removing the Trans Texas Corridor from statute last year, Section 228.053 lives on and grants TxDOT the same ability to lease out the public's right-of-way for a private, commercial use.

The naturally occurring economic development alongside our interstate freeways will disappear if the state gets away with picking the winners and losers and monopolizes all the economic development by containing it within public rights-of-way on tollways rather than among private landowners.

Particularly when eminent domain is involved, landowners suffer irreparable harm since once their land is taken, it's permanent. There is no way to restore what's been lost.

For a state whose politicians recognize private property rights are held sacred by its citizens, Texans deserve to have their Constitutional protection of private property properly enforced.

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