Articles Posted in Eminent Domain

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The US Supreme Court has agreed to hear Devillier v. State of Texas, Docket No. 22-913, a suit by the Devilliers and others to recover for damages to their land caused by the State.

The facts are described in the Devillier’s Petition for Writ of Certiorari:

This case arises out of a series of inverse-condemnation cases filed in Texas state courts, all alleging that a Texas highway project had caused widespread flooding. The flooding was no accident: In an effort to make sure that the eastbound lanes of Interstate Highway 10 (“IH-10”) would be available as an evacuation route in the event of a flood, the Texas Department of Transportation raised the highway’s elevation, added two additional lanes, and installed a nearly three-foot “impenetrable, solid concrete traffic barrier on the highway’s centerline.” The median barrier worked as intended, creating a weir that barricaded rainfall on the north side: water that would otherwise have flowed south into the Gulf of Mexico stopped deat at Highway 10. Texas’s plan worked, at least in that it ensured that part of the road remained navigable even in flood conditions. But it was not without cost. Keeping the south side of IH-10 dry meant keeping the north side of IH-10 wet and, in times of heavy rainfall, flooded entirely.

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In 2014 the City of Denton banned drilling of wells within its city limits. In response the Texas Legislature quickly passed HB 40, giving the Texas Railroad Commission exclusive jurisdiction to issue drilling permits within municipalities and allowing cities to regulate oil and gas activity only if their ordinances relate to “aboveground activity .. at or above the surface of the ground, including … fire and emergency response, traffic, lights, or noise, or imposing notice or reasonable setback requirements,” are “commercially reasonable,” and “do not effectively prohibit an oil and gas operation conducted by a reasonably prudent operator.”

The hubbub over drilling in municipalities arose after companies developed the technology to tap the Barnett Shale, which underlies the cities of Dallas and Fort Worth, as well as Denton. Dallas did not prohibit wells in its limits but required operators to obtain a city permit for a well. Dallas also owns substantial lands within its limits and in 2007 issued a request for proposals to lease municipal lands owned by the City. The City eventually leased more than 2,000 acres to Trinity East Energy in 2008, receiving a $19 million bonus; the lease designated potential drillsites from which multiple horizontal wells could be drilled.

By March 2010 Trinity was ready to start drilling and in 2011 it submitted applications for drill site locations on two sites identified in the City’s lease. The City Planning Commission considered those applications and denied them in December 2012. Trinity appealed to the City Council, but it failed to reverse the Planning Commission’s denial. Trinity then sued the City, alleging a “regulatory taking.” The trial court ruled that the City’s denial of the permits resulted in a regulatory taking; the amount of damages was submitted to a jury which found the City liable for $33,639,000 in damages. The City appealed, and last year the Dallas Court of Appeals affirmed that judgment. 2022 WL 3030995. This week the Texas Supreme Court denied the City’s petition for review.

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A recent Texas Supreme Court decision on pipeline eminent domain, Hlavinka v. HSC Pipeline:

The Hlavinka family own some 13,000 acres in Brazoria County, Texas, situated near the Texas Gulf Coast directly between refinery and industrial centers. The family originally acquired this land because there are multiple existing pipelines crossing the property, for the opportunity to make money granting additional pipeline easements. At the time of trial, the land had about twenty-five pipeline easements on it, including at least two the family negotiated with other pipeline companies in recent, arms’ length transactions; the family received $3.45 million for one pipeline easement and $2 million from other pipeline companies in private sales.

In 2016, HSC reached out the Hlavinkas about acquiring an easement. After the Hlavinkas rejected HSC’s offer, HSC initiated condemnation proceedings. HSC sought to condemn a total of 6.41 acres of the Hlavinkas’ property for an easement 30 feet wide and about 1.8 miles long. The Hlavinkas sought dismissal of HSC’s suit, challenging its power to exercise common-carrier eminent domain authority.

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HB 3794

This bill, signed by the Governor, fixes a problem with the provisions of the Texas Business and Commerce Code that grant a security interest in oil and gas production and proceeds to secure the payor’s obligation to pay royalty owners. I have written about this problem before. Previous bankruptcy court decisions held that this provision did not protect royalty owners when the payor was a company not organized in Texas.

SB 1259

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The First Court of Appeals in Houston agreed with the Hlavinkas that HSC Pipeline Partnership, an Enterprise Products company, had failed to prove it has authority to condemn a pipeline easement across their land in Brazoria County. Hlavinka v. HSC Pipeline Partnership, No. 01-19-00092-CV.

The  Hlavinkas purchased 15,000 acres in 2002-2003 “for the primary purpose of generating income by acquiring additional pipeline easements.” When they purchased the land there were more than twenty-five pipelines traversing the property. HSC proposed to acquire an easement across the land for a pipeline from Texas City to a plant in Brazoria County owned by Braskem America which would carry propylene. Propylene is a product of refining crude oil. Enterprise purchases refinery-grade propylene from various refineries and further refines it into polymer grade propylene (PGP) at its facilities in Mont Belvieu.  HSC contracted with Braskem to sell it propylene at Mont Belview, and then to ship it for Braskem to Braskem’s plant in Brazoria County.

The Hlavinkas and HSC could not agree on terms for an easement, so HSC sued to condemn the easement. The Hlavinkas challenged HSC’s right to condemn on various grounds, which the trial court overruled. The trial court also excluded testimony of Terrance Hlavinka related to damages and valuation of the easement. After trial, the Hlavinkas were awarded $132,293.36, representing $108,957.35 for crop and surface damages and $23,326 for the easement. The Hlavinkas appealed.

The Court of Appeals ruled in favor off the Hlavinkas on two issues: first, it held that HSC did not prove as a matter of law that it was a common carrier with the power of eminent domain, and that a fact issue was raised on that point by the evidence presented. Second, it held that the trial court should not have excluded Terrance Hlavinka’s testimony on the value of the easement. Continue reading →

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Senate Bill 421, reforming how pipelines exercise the power of eminent domain to condemn right-of-way, died at the end of the Texas legislative session after Rep. Tom Craddick sought to make amendments opposed by its author, Sen. Lois Kolkhorst. Kolkhorst said Craddick “seized the legislation” from its house sponsor and severely weakened the bill. The bill would have prevented low first-time offers for easements, improved easement terms and set mandatory meetings with property owners to explain the eminent domain process.

“The language of the House version would have turned back the clock for landowners and greatly harmed them,” Kolkhorst said in a statement Sunday. “I cannot agree to the Craddick proposal, which would do the opposite of what we set to do: help level the playing field for landowners in the taking of their property.”

This is the third legislative session in which Kolkhorst’s efforts to reform eminent domain have failed. Kolkhorst said she isn’t giving up. “This issue will and must remain a top state legislative priority,” she said.

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Hays County and the City of Kyle, and private landowners, have sued Kinder Morgan, the Texas Railroad Commission and its commissioners over the route for Kinder Morgan’s Permian Highway Pipeline, a gas pipeline 42 inches in diameter, set to cross through the Texas hill country and Hays County.  KM-Permian-PL-routeKM-permian-PL-route-Hays-CoTexasBarToday_TopTen_Badge_SmallThe suit claims that the RRC has failed to establish regulations that implement the Legislature’s requirement, imposed by Section 121.052 of the Texas Utilities Code, to “establish fair and equitable rules for the full control and supervision of the pipelines … in all their relations to the public” and to “prescribe and enforce rules for the government and control of pipelines … in respect to transporting … facilities.”  The petition explains that, to obtain the right to condemn a pipeline easement, the pipeline company only needs to file a form T-4 with the RRC. The Commission “conducts no investigation, evaluates no alternative routes, entertains no adversarial inquiry, provides no notice, allows no hearing, and considers no evidence.” “The pipeline’s chosen route crosses some of the most sensitive environmental features in Central Texas and the Texas Hill Country, including the recharge zones of the Edwards and Edwards-Trinity Aquifers (which provide the drinking water supply for towns and cities such as Fredericksburg and Blanco) and endangered species habitat.”

The suit asks the court to find that the RRC has unconstitutionally delegated to Kinder Morgan the legislative and constitutional requirement that a government entity review and determine the necessity for the pipeline route, and enjoining Kinder Morgan from proceeding with condemnation until that has been accomplished.

Plaintiffs are represented by Richards Rodriguez & Skeith, LLP and Renea Hicks. The suit is No. D-1-GN-19-002161, in the 345, District Court of Travis County. A copy of the petition can be seen here:  01-OrigPet-Sansom

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Tiffany Dowell, author of the Texas Agriculture Law Blog, has a great post providing resources for landowners faced with a pipeline wanting to cross their land. You can view it here. She also has a good checklist for landowners negotiating pipeline easements, which you can download here. And you can listen to her interview with eminent domain lawyer Zach Brady here.

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