Texas Lawyers Publishes Eminent Domain Article Written by Marrs Ellis & Hodge Attorneys

Jun 26, 2019 | Eminent Domain, News

Texas Eminent Domain Reform

Senate Bill 421 was shot down in the Texas Legislature.

By Justin Hodge, John Appel and Luke Ellis

“Texas is experiencing a rapid surge in economic activity, population growth, and infrastructure needs. That growth has meant new oil and gas pipelines, large-diameter water pipelines, roads, railways, and high-voltage-power lines all across the state. But to obtain the land from property owners, pipeline companies, government agencies, and electric-transmission companies rely on the power of eminent domain and the condemnation process.

Eminent domain is the power of the government to take a landowner’s property for a public purpose. Condemnation is the process by which a landowner’s property is taken. Property owners have a constitutional right to just compensation under the constitutions of both Texas and the United States. After the abuse of eminent domain in Kelo v. City of New London, 545 U.S. 469 (2005), substantial reform efforts have been attempted by landowner groups throughout the country and Texas. During the 86th Texas Legislature (2019), Texas once again failed to pass meaningful eminent-domain reform for the third straight legislative session. The proposed reform bills, Senate Bill 421 and House Bill 991, were watered down after coming out of the House Committee. As a result, Sen. Lois Kolkhorst, R-Brenham, and other supporters of the reform efforts, were left unable to support the weakened bills, instead of holding out for meaningful change. How did we get here?

Historically, it is the government that is attempting to take property—for new roads, highways, and other infrastructure projects. However, governments now delegate their power of eminent domain to private, for-profit companies. (See e.g. Kelo, at 480-85.) Texas voters rejected this type of abusive delegation of eminent-domain power and in 2009, amended the Texas Constitution with anti-Kelo protections. (See Tex. Const. Art. I, Section 17 (2009).) The Texas Supreme Court recently addressed this amendment in KMS Retail Rowlett LP v. City of Rowlett, No. 17-0850 (Tex. May 17, 2019).

In City of Rowlett, the city attempted to connect multiple retail and restaurant sites via a road by condemning a property owner’s private road easement. The Texas Supreme Court upheld the city’s condemnation with its private benefit but did not directly consider the 2009 amended Texas Constitution protections. In his dissent, Justice James Blacklock pointed to the anti­-Kelo constitutional amendment, which was overwhelmingly approved by Texas voters, and rejected the majority’s “submissive approach” of “clinging to outdated and confusing judicial constructs derived from a constitutional text the voters deemed inadequate to protect their rights.” (See City of Rowlett, at *15 (Blacklock, J., dissenting).) In response, the majority “welcome[d] the opportunity to further explore [the dissent’s] position in a future case in which the issue is directly presented.”

The Texas Supreme Court’s invitation may bring more challenges to the delegation of eminent domain to pipeline companies. From West Texas to the Gulf of Mexico, there are dozens of new pipeline projects for oil and gas infrastructure on the way. These projects are operated by private, for-profit pipeline companies that rely on the delegation of the government’s power of eminent domain. For example, Kinder Morgan’s “Permian Highway” Pipeline and Enterprise’s “M2E3 Pipeline” stretch across the state and impact thousands of Texas landowners. When a pipeline company wants to build a new pipeline using the power of eminent domain, it files for a permit with the Texas Railroad Commission (RRC). The RRC provides minimal oversight over the pipeline industry and, in most cases, the RRC will approve the permit. The RRC approval is essentially a rubber stamp that fails to protect Texas property owners. Currently, some landowners are challenging the RRC’s oversight by questioning its authority to haphazardly delegate the government’s power of eminent domain. With the expanding need for more oil and gas infrastructure throughout the state, these types of challenges will continue unless there is a legislative solution. Why?

Under Texas law, there are only minimal protections for landowners. The condemnation process can be intimidating. Offers are often well below fair market value because condemning authorities know that the majority of landowners will typically accept the first offer. However, the appraisers paid by the condemning authorities routinely overlook important characteristics of individual properties that would result in a higher valuation. Landowners are left with a difficult choice. If property owners believe the offer undervalues their property, the landowner can reject the offer. But this will mean that the condemning authority will file a lawsuit against the landowner. Although landowners have a constitutional right to a jury trial to determine the fair market value of the property being taken and any damages to their remaining property, they often do not have the same resources as condemning authorities. Moreover, landowners are not entitled to recover their expenses or attorney fees to get just compensation. Therefore, most cases settle before going to trial. Knowing this, Kolkhorst and Rep. DeWayne Burns, R-Cleburne, sponsored Senate Bill 421 and House Bill 991 to provide greater protection for Texas landowners during the offer process. The bills strengthened easement terms to protect landowners impacted in pipeline projects, required private oil and gas companies to hold public meetings for their pipeline projects, and established guidelines for determining damages to property outside the pipeline easement area. Unfortunately, these bills failed with no relief for Texas landowners.

In the future, landowners and the oil and gas industry should find ways to collaborate in meaningful reform to protect Texas property rights. Pipeline companies are also landowners that need to protect their critical infrastructure. That critical infrastructure may become threatened by the proposed border wall or future highway projects. With the growing infrastructure in the energy industry and the surging population, Texas will need eminent-domain reform to not only protect property rights but also its economic future.”

Article originally published by Texas Lawyer (June 12, 2019, at 01:37 PM)

To view the original article, click here