Monday, June 11, 2012

Common Carriers, Eminent Domain, and Pipelines

In Texas, we have pipelines. Lots of them.  Normally, the process works like this to put them in the ground:

Big Company wants to lay a pipe. They come ask your permission, and offer to pay you for your trouble. You can accept, haggle, or say no. However, no doesn't always mean the company will take no for an answer.

Enter eminent domain. Eminent domain is the power of the government to buy your land from you, even if you say no. The best examples are highways, railroads, and utilities, like pipelines. Is it "fair?" Sometimes no, but we all like highways, railroads, and utilities, so we deal with it as a society. And normally, there are appeals processes and ways to make sure you get what you are due.

Normally, it is difficult for a private company to be awarded this power. It is usually reserved to the federal government, states, and municipalities. And pipeline companies. 

The first successful challenge of a pipeline companies unfettered right to claim "common carrier" status is  Texas Rice Land Partners Ltd. v. Denbury Green Pipeline-Texas LLC (No. 09-0901). Until recently, all a pipeline company had to do was check a box on a form, and they could condemn your land.  Some pipelines are legitimately used for a public purpose, or as "common carriers" defined per the Texas Natural Resources Code (Section 111.002(6)) as a company that “owns, operates, or manages, wholly or partially, pipelines for the or for the public for hire...” This is fine.  However, other companies have used and abused this process when it was convenient for them. 

The tricky part is that the pipeline in the case was a CO2 pipe. The Texas oil and gas industry tried to get the case re-heard to clarify the perceived "bad law," in their favor but that attempt was denied. Will the ruling apply to other types of pipelines? The ruling itself makes reference to an oil and gas pipeline in a hypothetical. I think it is clear that the Supreme Court meant "all" pipelines, but it will probably require more litigation to hash that out. 

I think this is the correct ruling. I've tried to tangle with the Texas Railroad Commission before (the entity that approves pipeline paperwork), and, although helpful, they are simple a ministerial agency, not an investigative one. The Denbury case provides landowners a review process that was simply not available before. 

What will this mean? Some are already challenging the Keystone XL pipeline relying on the Denbury decision. For others, maybe your family farm or backyard is in the path of a proposed pipeline. If you or someone you know is dealing with a pipeline company who wishes to cross your land, consult an attorney who knows the law and how to protect your interests. 

I've worked for a pipeline company, and I've negotiated against one. There is a middle ground to be had, that is fair to all parties. The Denbury case helps the landowner get there a little easier. 

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