Kinder Morgan Prevented from Using Eminent Domain by Ohio Court


Pipeline under construction. Photo courtesy of The Intelligencer.

A recent ruling in the Wood County Court of Common Pleas found that Kinder Morgan, a private energy company, could not use the power of eminent domain to take private property for the construction of a pipeline project. In April of this year, the Texas-based company filed condemnation lawsuits against property owners in Ohio to obtain pipeline easements. The company had been planning the construction of the Utopia Pipeline, which would transport ethane, a fracking product used in plastics manufacturing, through Ohio to Canada.  The pipeline would’ve crossed through Wood County for about 20 miles, entering from the south, and travelling west, north of Bowling Green.

The landowners were represented by the 1851 Center for Constitutional Law, an Ohio based legal advocacy group. They argued that the Utopia Pipeline did not fulfill the “public use” standard for eminent domain required by the Ohio Constitution on the basis of the fact that the pipeline only benefited the private Canadian corporation to whom the product was being transported. The 1851 Center also argued that the taking was not a “public necessity,” that the route was not rigidly set by the government, and could’ve been adjusted by Kinder Morgan to accommodate landowners’ preferences.

Judge Robert Pollex who presided over the case, agreed with the 1851 Center. In his ruling he explained:

  • “The fundamental principles in the Bill of Rights in our Constitution declare the inviolability of private property, and Ohio has always considered the right of property to be a fundamental right.”
  • “‘Economic development’ alone is not sufficient to satisfy public use requirements.”
  • “In this case Kinder Morgan is taking the private property for the purpose of transporting by pipeline petroleum products for the use of one private manufacturer. The manufacturer is not even a United States business, but rather, a Canadian business … there is no anticipated circumstances that would show a benefit to the citizens of Ohio or even for that matter, the United States.”
  • “This project and appropriation is not necessary nor a public use. To the extent that the Ohio statutes authorize a common carrier of Kinder Morgan’s type, the legislation is an unconstitutional infringement upon the property rights of the Defendants.”

Maurice Thompson, executive director of the 1851 Center, issued the following statement:

“The court’s ruling is a substantial victory for private property rights across Ohio, but above all else, this outcome safeguards the dignity and respect to which every Ohioan is entitled. While we fully support the continued development of oil and gas reserves in eastern Ohio, profits margins related to private efforts should not be inflated at the expense of Ohioans’ rights. Just like churches, gas stations, supermarkets and other important private endeavors, pipeline construction can and must move forward without using the governmental power of eminent domain to redistribute land from average Ohioans to wealthy politically-connected cronies and elites.”

Powerline Condemnation Likely in Guadalupe County, Texas


Power lines during Sunset. Photo courtesy of Colorado Wire and Cable.

Eighteen months ago, the Lower Colorado River Authority (LCRA announced plans to connect electrical substations from Zorn to Marion with new transmission lines. The final version of the project, which was presented in late September of this year, has received approval from the Public Utility Commission of Texas (PUC) and details the construction of a 345-kilovolt transmission line to be completed May 2019. The purpose of the project is to boost electricity volume to CPS Energy and San Antonio, and to meet Electrical Reliability Council of Texas (ERCOT) requirements for a 345-kV line by 2019 to prevent existing circuit overload. The line will be 21 miles long, and run through Precincts 2 and 4 of Guadalupe County, Texas. County Commissioner Jack Shanafelt explained: “This is what it boils down to – they’re abandoning the power plant south of San Antonio,” he said. “When that happens, LCRA needs to bring more electricity to CPS and San Antonio and actually, the corridor, the Austin-San Antonio corridor.”

The LCRA has asserted that the current transmissions cannot adequately meet future supply, and that this new line is necessary to meet projections for future electricity demand.


“The demand in this area has been growing, and that growth is expected to continue,” said LCRA public information officer Clara Tuma. “Electric system planning assessments indicate existing transmission lines are not adequate to meet the future demand for electricity, so the additional 345-kV infrastructure is required to serve the future demand for Guadalupe, Bexar, Comal and Kendall counties in a safe and reliable manner. The ERCOT Board of Directors endorsed this project and deemed the Zorn-to-Marion 345kV transmission line critical to the reliability of the electrical grid.”

Citing safety concerns, residents of the city of Marion have requested that the line placement avoid residential areas. LCRA has agreed to work with landowners to incorporate minor route adjustments. Although the LCRA will attempt to acquire all the necessary easements by bona fide offers to landowners without the use of eminent domain, landowners that remain unsatisfied with these offers will likely have to defend themselves in condemnation proceedings.

The “Elbow Room” Dive Bar Closing to Make Way for Dental School


The Elbow Room Bar in Dallas – Photo Courtesy of

For the last few months, the bar’s current operators, Joseph and Rosalie Nagy, have been locked in compensation negotiations with Texas A&M University (TAMU). Due to the still unresolved nature of this dispute, it has become increasingly likely that the school will initiate condemnation proceedings against the Dallas property. TAMU is in the process of developing a new campus for a dental school, and seeks the land occupied by the bar for the school’s construction.

Three years ago, the bar’s owner, Edward Sigmond, encountered tax issues, which forced him to file for bankruptcy. As part of the proceedings, he was allowed to retain the building, providing he held it under an entity other than a bar. Rather than see a neighborhood icon close, the Nagys purchased the lease to the bar, and have been operating it ever since. The Nagys refuse to vacate the premises for the compensation amount initially offered by TAMU. Their refusal relates primarily to a lease issue. In Texas, a leaseholder is be considered an owner of a property interest for purposes of condemnation proceedings. However, this status is subject to the terms and conditions of the lease contract.

“Due to the incorrect wording of our lease with Sigmond, TAMU won’t assist in bar relocation or outstanding debts,” said Rosalie Nagy. “They sent an email stating our 20 year lease ends August 31st, then another saying it may be a few more months,” she said. “Either way, they’ve been very, very difficult and will not respond to us.”

In a statement, Holly Shive, a public relations director for the school, expressed its reluctance to engage in the condemnation process, whilst advancing the case for the school’s community value:

“On April 27, 2016, The Texas A&M University System Board of Regents authorized initiation of eminent domain proceedings, if needed, to acquire two contiguous parcels of improved property in the City of Dallas totaling less than one-fourth acre. Since that time, the A&M System has been negotiating with the property owner in an attempt to acquire the property. If the property cannot be acquired by mutual agreement, eminent domain proceedings will be initiated. The acquisition of this property will allow for construction of a new clinical education building to address the state’s need for additional health care professionals — enabling a 25 percent increase in dental school enrollment—and to expand dental services to the community. The Texas A&M University College of Dentistry is the largest oral health care provider in the region, already serving 100,000 patient visits per year, with an additional 40,000 able to be served in this new facility.”

Though the outcomes are still pending, this example serves as a reminder to those entering into a lease agreement that condemnation considerations should be examined. Knowledge of an impending road expansion or other future construction occurring near or at the boundary of a property could signal condemnation concerns, necessitating careful analysis of lease provisions.

Two New Powerline Projects Make Eminent-Domain Use in Frisco a Real Possibility


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Lattice overhead powerlines. Photo courtesy of WikiMedia Commons.

The Public Utility Commission of Texas (PUCT) recently approved the Final Order for a Brazos Electric Power Cooperative powerline project. The project will run along the west side of FM 423, covering an area from Lebanon Road to Witt Road. It will be a hybrid construction, combining overhead and underground lines, and mixing transmission lines with distribution lines. Transmission lines, typically larger, carry a higher voltage than distribution lines, and are used to connect substations with their respective generation plants. Distribution lines are used to provide electricity directly to homes or businesses, and therefore carry a lower voltage. With the passage of the Final Order, Brazos Electric will likely soon begin construction preparations. This includes acquiring easements from property owners along the powerline’s route.

Meanwhile, CoServ, a Brazos Electric member, has submitted a proposal for the Kittyhawk project, which would place transmission lines along State Highway (SH) 121. The project would require land in Frisco, McKinney, Allen, and Plano, and is still under review in those cities. So far, the response has been mixed. In a June resolution, McKinney’s City Council opposed the location of a substation within McKinney’s city limits. Shortly after, a Plano City Council resolution endorsed the council’s preferred route option. The Frisco City Council has yet to pass a resolution on the project, though it’s Chamber of Commerce Director, Shona Huffman, suggested that the chamber would prefer the shortest and most cost-effective route.

“For Kittyhawk, since there are routes that are cheaper and less invasive to development and residents and businesses, those are the routes that we would prefer,” she said. “We’re researching to see what involvement, if any, we’ll have.”

For both these projects, it is highly unlikely that the compensation offered will be just and adequate as required by the Texas Constitution. For example, the taking of powerline easements after causes damages to the remaining property. Before accepting an offer, landowners should carefully review the offer and consult with their lawyer before reaching an agreement with the powerline company

TxDOT Approves $70.2 Billion Spending Plan


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Commuter traffic on I-35. Photo courtesy of

The Texas Transportation Commission (TTC) recently approved a $70.2 billion spending plan to fund various projects over the next ten years. Though the funds have yet to be designated in their totality, the Commission has set a goal of allocating $38.3 billion, or about half the funds, to specific projects within the next few months. The funds have been assembled from various tax sources. Proposition 7, an amendment to the Texas Constitution approved last November, is responsible for about $21.8 billion, and works by redirecting at least $2.5 billion a year in sales taxes from vehicle sales to TxDOT. Proposition 1, another constitutional change, is expected to account for $6.3 billion over the course of the next decade, and has already provided over $2 billion since taking effect. Finally, $10.2 billion in revenue is expected to come from increases in federal payments, and the elimination of diversions, which re-allocate budgeted funds to other agencies.

Austin District officials suggest that disbursements affecting the District may take the following forms:

  • $4.3 billion to overhaul I-35;
  • $2.6 billion for congestion relief on I-35, U.S. 183, and Loop 360 or RM 620;
  • A portion of $6.4 billion allocated for bridge and safety projects;
  • $1 billion to improve metropolitan mobility; and
  • A portion of $10 billion allocated for strategic property development.

High Speed Rail Number Two


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China High Speed Train

A Chinese bullet train on its way to the Pearl River delta. Photo courtesy of

The Texas Department of Transportation (TxDOT) announced that it is considering the development of a high-speed rail line. The rail line would be the second such project proposed recently, the other being the frequently discussed Dallas to Houston high-speed rail under development by Texas Central Partners, a private firm. The TxDOT train would travel over an 850 mile route, connecting Oklahoma City and the Rio Grande Valley. Though the exact placement of each station has yet to be fully determined, TxDOT has already released a preliminary map with several proposed points. The project would run along Interstate 35, and would assist TxDOT’s ongoing objective to reduce traffic.

“I travel back between Austin and San Antonio a lot, and sometimes it takes three hours and sometimes it takes five hours depending on the traffic,” said Mark Werner, the rail planning director at TxDOT. “It’s just reliability and to provide people another option to travel.”

So far, TxDOT has yet to propose solutions to address the cost and timeline components of such an undertaking. TxDOT is still investigating the feasibility of the project, and is expected to present its findings to the Federal Railroad Administration by the end of the year. If this project receives the green light, it is likely the state would use its powers of eminent domain to acquire private property along the route.

How the Badgers can “Hook the Horns” and Gig the Aggies


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Photo Courtesy of

Typically, Wisconsin happenings impact Texas most greatly in the area of football. However, a recent Wisconsin legal development, now before the Supreme Court, may well have implications for Texas landowners in the area of regulatory takings. Regulatory takings occur when a government regulation limits the potential uses of a property to such a degree that the property is effectively stripped of all economic value. In Joseph P. Murr et al v. Wisconsin, et al., the Murrs, siblings Joseph, Michael, Donna, and Peggy, argued that by prohibiting certain transactions, particular Wisconsin land ordinances had so deprived their property of value that a regulatory taking been inflicted.

In 1960, the Murr’s parents purchased Lot F and constructed a cabin on it. They purchased the adjacent Lot E three years later as an investment for development or sale. Lot E remains undeveloped to this day. In 1994, the Murr’s parents transferred ownership of Lot F to the siblings, followed by Lot E in 1995. As the parcels were adjacent, less than one acre in size, respectively, and now under common ownership, the title transfer triggered a St. Croix County land ordinance which merged the two lots. The same Ordinance also prohibits the sale or individual development of adjacent lots under common ownership unless an individual lot has an area of at least one acre. Several years later, the Murrs attempted to sell Lot E, and sought a variance to use or sell their lots separately. The Department of Natural Resources and county zoning administrators challenged the application, which was formally denied by the St. Croix County Board of Adjustment. The Murrs sought review and the trial court affirmed the Board’s decision. On appeal, the Wisconsin Court of Appeals affirmed the lower court’s decision.

The Murrs then brought action against the State and County, alleging that the Ordinance caused an uncompensated regulatory taking of their property. They argued that by restricting any sale of the parcels to a combination of the parcels only, the Ordinance deprived the Murrs of any value that Lot E might have possessed as an individual parcel. The Court determined that the effect of the Ordinance must be examined on the Murr’s property as a whole. The Court held that taken as a whole, the land still retained significant value even under the Ordinance, and that therefore, the Murrs did not suffer a compensable taking as a matter of law, which the Wisconsin Court of Appeals affirmed. The Supreme Court of Wisconsin declined to hear the Murr’s appeal of the Appellate Court’s decision.

The case has since then been granted review by the United States Supreme Court, and may have a direct impact on Texas landowners who have been denied use of their property by a City or County Ordinance.

“Developers face entitlement woes as self-storage projects rise.”


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LEED Certified Storage Facility. Image Courtesy of

Depending on local regulations, a landowner may need to secure real-estate entitlements before being allowed to develop land. Such entitlements can be difficult to obtain, as the law surrounding them is often dense and complex. In the area of self-storage facility construction, the sheer variety of local regulations can sometimes impose additional administrative costs and thus damage the profit potential of a new development. In this article by Kerry Curry for, Justin Hodge, a Partner at Johns Marrs Ellis & Hodge LLP provides commentary on the barriers facing landowners seeking entitlements.

To read Ms. Curry’s article, click here.

Mitigation Credits as “Highest and Best Use”


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King County mitigation

Mitigation Bank Swampland in King County WA. Photo Courtesy of King County WA.

In Eminent Domain cases, the acquiring entity or condemnor, must compensate the landowner for the property they are taking. Fulfilling this requirement typically raises two questions:

             1) How much should the landowner receive for their land?

             2) How should we determine that amount?

Under Texas law, a landowner is entitled to compensation for an amount to be determined by an application of the “Highest and Best Use” (HBU) principle. The principle requires that the value of the land be established, not merely by evaluating the current use, but by analyzing four factors. Thus, a landowner may receive an amount derived from a potential highest and best use, rather than the current one. Therefore, an application of the HBU principle must operate within the boundaries established by these four limiting conditions. The purported HBU must be:

             1) Legally permissible

             2) Physically possible

             3) Financially feasible

             4) Maximally productive

In short, the HBU attempts to hold the condemnor responsible for the greatest compensation amount that can be sustained by an objective analysis of a respective property.

An interesting application of the principle was attempted recently in the California case of County of Santa Barbara (Plaintiff and Respondent) v. Double H Properties, LLC (Defendant and Appellant). This case was initiated by the County for the purposes of obtaining an easement to serve as a habitat for the endangered California Tiger Salamander. In valuing the land, the owner’s appraiser submitted two theories, one which analyzed the property as rural farmland, and one which calculated the value of the property when used for mitigation credits.

Mitigation credits are a way that a developer can obtain entitlements when a project is likely to impact an environmentally sensitive or protected habitat. To earn these entitlements, the developer can purchase mitigation credits with a mitigation bank. The bank then purchases and preserves another property to offset the environmental impact of the original construction.

The owner’s appraiser argued that, only when the land was valued as mitigation credits, did it fulfill its highest and best use, and obtain the greatest value. Their assessment also exceeded in value the one put forth by the County’s appraiser, who valued the property as farmland. The County moved to exclude the landowner’s valuation, a motion which the Trial Court granted.

The owner took the case on appeal. In reviewing the Trial Court’s dismissal of the owner’s mitigation credit theory, it became apparent to the Appeals Court that the appraiser had never provided any evidence that the land could be entitled for mitigation credits. In other words, the appraiser had failed to show that the use of the land for mitigation credits was affirmatively permissible in the law. The Appellate Court held that the Trial Court did not abuse its discretion in excluding the mitigation credit appraisal.

This will likely not be the last time we see this argument made in regards to a highest and best use analysis in California or elsewhere.

“That’ll Be the Day” – The Accommodation Doctrine and Landowner Dispute Resolution


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“You say you’re gonna leave, you know it’s a lie,

‘Cause that’ll be the day when I die.”

– Lyrics from “That’ll Be the Day,”by Buddy Holly.


Image of Buddy Holly – Courtesy of

In American property law, an ownership distinction can be made between the holders of the surface rights and the mineral rights of a particularly property. In other words, it is possible for the surface of a property and its subsurface, to have separate owners. Predictably, the ability of the law to make this distinction has led to legal conflict. These clashes, over time, have produced what is known as the Accommodation Doctrine, a principle which seeks to govern the relationship between surface interests and mineral interests. It attempts to balance the interests of both parties in a just and proportional manner.

One formulation of the Accommodation Doctrine states that “an oil-and-gas lessee has the implied right to use the land as reasonably necessary to produce and remove the minerals but must exercise that right with due regard for the landowner’s rights.” (Getty Oil Co. v. Jones)  Under this principle, the mineral estate is understood in the law to be dominant. Because a mineral estate would be worthless were it inaccessible, and because surface alterations may be required to ensure access, the mineral estate receives the right to use the surface estate. Therefore, the mineral estate is considered dominant. It is for the same reason that the surface estate is considered servient.

The Texas Supreme Court recently considered the accommodation doctrine in Coyote Lake Ranch, LLC v. The City of Lubbock, in the Supreme Court of Texas. The Coyote Lake Ranch, located in Bailey County, sits atop the Ogallala Aquifer, a water table stretching across multiple states. Over 60 years ago, during a severe drought, the City of Lubbock, Texas purchased the Ranch’s groundwater to provide water to its residents. The deed preserved certain amounts of groundwater for the Ranch to use for domestic purposes, ranching operations, oil and gas production, and irrigation. The deed also granted the City of Lubbock tremendous latitudes to extract water and conduct exploratory drilling operations.

In 2012, the City indicated that it was interested in developing new wells, in addition to the eighteen that it had established since purchasing the groundwater rights. Specifically, the City expressed an intent to drill as many as eighty new wells, and argued that its rights, granted by the deed, permitted these activities. Understandably, the Ranch’s management did not respond with enthusiasm, and attempted to work with the City to find an alternative. Unable to reach an agreement, the City began clearing vegetation from the Ranch to create pathways to potential drilling sites. In response, the Ranch sued the City, successfully in the trial court, to enjoin their actions.

Application of the Accommodation Doctrine seemed the surest way to resolve the conflict of interest between the City and the Ranch. However, uncertainty arose from the fact that the Doctrine had never been applied to cases involving groundwater estates. Upon its examination of the issue, the trial court found that groundwater interests were sufficiently similar to mineral interests, and held the Doctrine applicable.

In light of this finding, the Court ruled that the City had a right to the reasonable use of the surface insofar as the use of the surface was necessary to access and recover the groundwater. The Court found that, by barring the City from damaging the surface vegetation, the trial court’s injunction effectively precluded any possibility for recovery of the groundwater. For these reasons, the Supreme Court upheld the Court of Appeals’ judgment reversing the trial court’s injunction and remanding the case for further proceedings.

As the study of cases like Coyote Lake Ranch, LLC v. The City of Lubbock may suggest, applications of the Accommodation Doctrine rarely produce satisfactory results for all parties. Often, the Doctrine is applied to situations where contract language is unclear or absent on such issues. Perhaps there will one day be a more effective method of resolving these disagreements to the satisfaction of all parties involved, but it seems clear that such a remedy has not yet been found. As Buddy Holly used to say, “That’ll Be the Day…”