Please consider attending the Virtual Austin Eminent Domain Conference on April 12-13th. You can register here. Assuming COVID numbers continue to improve, the Houston Eminent Domain Conference is planned to be in person this summer. Dates and location to be announced soon. We hope to see you there!
As most Texans are likely aware, plans to build a high-speed rail between Houston and Dallas have been in the works for several years with little actual progress being made. While Texas Central Partners, the developer of the high-speed rail, has stated construction could begin in 2020, most analysts and those following the project had doubts regarding that timeline even before the Covid-19 outbreak put an effective end to “business as usual.” A primary reason for the doubt surrounding the project is the legal uncertainty regarding whether Texas Central Partners can use the power of eminent domain to condemn the property necessary for the construction of the high-speed rail. As Justin Hodge, partner in the Houston office of Marrs Ellis & Hodge LLP, put it in a recent article published in the Dallas Business Journal, “Texas Central’s right to condemn is a hotly contested issue [and] we don’t know how the Texas Court of Appeals will address Texas Central’s right to take.” If it is ultimately decided that Texas Central Partners lacks eminent domain power, the project has little to no chance of ever being built.
For more details regarding the high-speed rail project and its seemingly uncertain future, please see previous blog posts uploaded to this site as well as the above-referenced Dallas Business Journal article.
Written by: Graham Taylor
Dallas Area Rapid Transit (DART) is planning a new line from DFW terminal to UT Dallas in Plano. As part of that construction, many landowners will be impacted, including businesses that have been operating for decades. Although many of those businesses will be severely damaged by the project, Texas eminent-domain law may not allow recovery under the Texas Supreme Court’s Schmidt “community damages” ruling. This is a “horrific standard” says Justin Hodge, that should be changed to better protect Texas landowners when their property is taken, damaged, or destroyed.
To learn more about this project, you can visit DART’s project page below.
In an end to a court room battle that will surely set back landowners, a Travis County District court recently ruled that the Kinder Morgan can move forward with its Permian Highway Pipeline Project. In the State of Texas, for-profit pipeline companies can use eminent domain to seize private land to build their pipeline projects. As long as the pipeline company follows the mandates of the legislature’s delegation of the power of eminent domain, the for-profit pipeline company can forcibly take landowners’ private property.
The lawsuit was initiated by landowners in response to Kinder Morgan’s Permian Highway Pipeline, which was then in the planning stages. Their legal theory advanced two points. The first was that the TRC was obligated to seek public input with regards to planning route planning. They also argued that the TRC had failed to adequately supervise Kinder Morgan’s route planning process.
Judge Lora Livingston found that no authority existed to support the notion that the TRC had the right to oversee the exercise of these powers. She also granted Kinder Morgan’s request to have the landowner’s suit thrown out of court. Kinder Morgan had argued that the power to change the pipeline permitting process resided with the legislature, not the court.
In light of this decision, Kinder Morgan is now free to proceed with the construction of the Permian Highway Pipeline. Once completed, the project will carry 2 billion cubic feet of natural gas per day a distance of approximately 400 miles. The line connects an origination point in West Texas to the U.S. Gulf Coast and will cost an estimated $2 billion. The project is just one of the latest in a pipeline building wave propelled by the massive uptick in U.S. shale gas production. The current projected production level for July 2019 alone is 81.4 billion cubic feet per day.
Written by Christopher Chan and Justin Hodge
The Pipeline and Hazardous Materials Safety Administration (“PHMSA”), a regulatory agency under the Transportation Department, released a recommendation this month to Congress that increases penalties for certain pipeline protest activities. Specifically, the PHMSA called on legislators to expand an existing law that imposes fines and up to 20 years’ prison time for damaging and destroying pipelines in operation. The PHMSA suggests that Congress widen the law to add vandalism, tampering, impeding, disrupting, or inhibiting pipeline operation or construction, to the list of punishable offenses.
Like so many contemporary issues, reaction to the PHMSA’s proposal has revealed political divides. At least in the immediate short term, the legislation will most likely fail in the Democratic controlled House. However, the issue is more complex. As pipeline construction impacts more landowners, the groups that have a stake in such proposals as the PHMSA’s have become numerous.
The International Center for Not-For-Profit Law, for example, a nonprofit organization concerned with the free speech implications of protest suppressive legislation, has First Amendment related concerns with the PHMSA’s recommendation. Specifically, they are worried about what they perceive as a dangerous combination of vague legal provisions combined with extraordinarily harsh penalties. The fear is that such vague legal language could allow substantially suppressive government action to occur against overly broad categories of individuals. An additional concern is that the punishments themselves are too severe.
Environmental advocates were also less than enthusiastic in their response to the PHMSA’s proposal, as protest actions of various kind have a long history in environmental activism. American Indian tribes, recently affected by the Dakota Access pipeline, also expressed discontent with the proposal.
The PHMSA has asserted that its goal is to deter protestors from causing serious harm by disincentivizing highly destructive activities. They are concerned with specific protestor action such as valve tampering, and other pipeline compromising protest actions. The PHMSA further stated that the recommendations were not intended to infringe on First Amendment rights and expressed a willingness to work with Congress to ensure these rights are protected.
Perhaps predictably, industry groups, such as the American Gas Association and the American Petroleum Institute were supportive of the PHMSA’s overall set of recommendations and expressed approval with the general intent of the proposals. The Interstate Natural Gas Association did not comment directly on the guidelines but have expressed general support of legislation that would strengthen the legal protections of pipeline assets. They cited the dangers that tampering and vandalization of pipelines could manifest and argued that interference with pipeline operations resulting in a breach could have environmental drawdowns.
The law on pipeline safety lapses on September 30th this year, which provides an opportunity for the PHMSA’s proposals to be incorporated into the reauthorization process. Though Congress has not made substantial steps in deciding what changes reauthorization may entail, legal language similar to the kind used in the PHMSA’s proposals has actually cropped up in various state laws. As of this time of writing, Texas has a bill criminalizing pipeline protests and interference, HB 3557, awaiting the governor’s signature.
Landowners should be cautious of this legislative trend. Though nothing concrete either at the Texas State or Federal level has become fully formed, there does seem to be a general trend of tightening up anti-pipeline protest penalties against the protestors. The concern for landowners is that they too may face exposure to penalties under these new laws, even if the pipeline is on their property.
Written by Christopher Chan with Justin Hodge and Kyle Baum
Judge Haywood Gilliam, a U.S. District Court Judge based in Oakland, California put a stopper in the President’s border wall ambitions when he issued a preliminary injunction to stop $1 billion of border wall funding.
The money, which came in the form of a now halted transfer of funds from the Pentagon’s counterdrug funding, would’ve been used to expand and enhance border barriers. Further, though the possibility is untested and therefore speculative, the order may also jeopardize an additional $1.5 billion the administration was planning to divert. So far, the President’s Office had planned to use $8.1 billion for border wall purposes.
Judge Gilliam, an Obama nominee, issued the order on the reasoning that the administration’s diversionary transfer of funds was unconstitutional because its legal authority to use the funds was restricted to addressing “unforeseen” needs. Naturally, the government argued that the need to build the border wall was unforeseen, an argument that Judge Gilliam rejected.
In his decision, the Judge pointed to the numerous requests the administration had made for border wall funding as evidence that the project was anything but unforeseen. He also cited recent news events such as the lengthy government shutdown earlier this year, which resulted in $1.375 billion for border-wall construction. He further opined that permitting the administration to divert counterdrug funds in light of numerous Congressional funding denials would violate fundamental notions of separation of powers.
The President, predictably unhappy with this legal result, vowed that the appeal would be swift.
The ruling was the result of a lawsuit brought jointly by the Sierra Club and the Southern Border Communities Coalition who sought to legally oppose the President’s wall. However, though the order constitutes a setback, there are limits to Judge Gilliam’s decision. For example, the order only prohibits construction operations from occurring at certain border zones in the states of Texas and Arizona. Further, the order does not stop the President’s Office from diverting funding from alternative sources towards border wall construction.
Though the reasoning behind Judge Gilliam’s decision was primarily to ensure the constitutional separation of powers, the order has the short-term effect of halting wall construction which provides relief for landowners whose property will be bisected by the wall. Landowners should be aware that this order does not immediately impair the government’s ability to seize land via eminent domain. Therefore, individuals with property at the border should stay current on legal developments concerning wall construction.
Written by Christopher Chan
President Trump issued two executive orders last month with the intent of speeding up the pipeline permitting process. The orders are the “Promoting Energy Infrastructure and Economic Growth” and the “Issuance of Permits with Respect to Facilities and Land Transportation Crossings at the International Boundaries of the U.S.” The first attempts to stop state governments from prohibiting pipeline development by applying authority created by Section 401 of the Clean Water Act. The second states that the authority to give presidential permits for trans-border pipelines is held by the President and is no longer delegated to the State Department.
The orders appear consistent with the President’s often professed goal of reducing approval times for proposed projects.
Though the Promoting Energy Infrastructure order contains a variety of points designed to promote the Administration’s energy policy, its chief purpose is to curtail the ability of state governments to use Section 401 to block energy projects. Under the section, corporations need state certifications before constructing energy projects such as pipelines within the state’s borders. This need for certification is persists even when federal authority for the project has been granted.
A recent trend involving state activity around Section 401 has been the denial of energy permits on the grounds of water quality. New York state has denied requests to approve several pipelines under 401 for example. A coal export terminal proposed in Washington state was also denied on Section 401 grounds.
Primarily, the order instructs the Environmental Protection Agency (“EPA”) to revise its guidance to states regarding Section 401. Specifically, the order instructs the EPA in the following ways:
– Must consult with states, tribes, and federal agencies concerning existing guidance on Section 401, taking into account appropriate inclusion factors for certification, and the scope of information necessary for states and tribes need to act on a request
– Must issue new guidance within 60 days of the order
– Must publish the proposed revisions within 120 days
– Must finalize new rules within 13 months of the order
– After finalization of the rules, must conduct interagency review with each agency that issues 401 permits
Though the text of the order is unambiguous, and the timelines for revision and implementation are clear and arguably aggressive, it’s still uncertain the extent to which the order can shift existing regulatory processes. The power of the state to review pipeline permits under 401 is statutory. Therefore, neither an executive order or EPA rules can shift the law. Congress can materially affect the statutes which create the power of state review under Section 401, but no legislation currently proposed is likely to interfere with the statute anytime soon.
The full extent of the President’s order will have to be evaluated at a later date. However, landowners in the path of proposed pipelines restricted by state approval under Section 401 may experience a shift in the statute’s implementation fairly soon.
Written by Christopher Chan
As has been widely reported, Texas Central Partners (“TCP”), a privately owned, Dallas based company, has announced ambitious plans to build a 240-mile high-speed rail line (“HSR”) between Houston and Dallas. The project is estimated to cost $15 billion dollars and will use imported Japanese bullet trains to transport passengers between the two cities at airline-competitive speeds of around 300 km/hour. TCP estimates that the project will cut down on congestion and provide $36 billion in economic benefits to the State of Texas, including a $2.5 billion direct tax contribution. However, before any of these purported benefits are to materialize, TCP must acquire the land necessary to build the train, which is where the project has hit a snag.
In order to figure out which pieces of land it must acquire for the project, TCP needs to conduct surveys of various parcels to analyze them for suitability. To do this, it must enter private property along the train’s theoretical route. Landowners understandably, are less than enthusiastic about the prospect of a private company entering their land to size it up for purchase. Their unhappiness only deepens when they realize that if they are unwilling to sell, TCP may be able to use eminent domain to forcibly take the land against their will.
The issue came to a head recently in a Leon County courtroom, when Judge Deborah Evan of the 87th Judicial District Court ruled that TCP and its co-litigant, Integrated Texas Logistics Inc., couldn’t legally be considered a railway company, and therefore, didn’t have the power to survey private property. The ruling was a victory for the landowner-plaintiffs, Jim and Barbara Miles, who sued TCP to stop it from entering their land. Texans Against High-Speed Rail (“TAHSR”), an anti-HSR landowner organization believes the decision is a material setback for TCP. On the other hand, the company, which plans to appeal the decision, maintains that the judgment will not impede the progress of its plans.
Public pronouncements aside, the solution to the problem may not be as clear as each side is making it out to be. The fundamental problem is that two different judges have reached opposite conclusions about the TCP’s right to survey. Even as Leon County rules in favor of landowners, denying TCP the right to conduct surveys on private land, the 334th Judicial District Court in Harris County granted TCP the right to survey private land. The Harris County decision, handed down in 2017, came in the form of a default judgment signed by Judge Steven Kirkland. In it, the court held that TCP was a railroad company and therefore could enter private land for the purpose of conducting surveys.
It’s clear that the ability of TCP to survey land for acquisition, a critical link in its project development, has encountered tangible legal resistance. What this means for the HSR’s construction timeframes, or the fate of the project itself, remains to be seen. With competing rulings from judges in two parts of the State, this survey issue will likely need to be resolved by the courts of appeal, and potentially, the Texas Supreme Court.
For those interested in more details concerning the use of eminent domain in Texas, the annual Houston-based eminent domain conference will be held July 18-19, 2019. For more information concerning location and registration, please see the following link: http://www.cvent.com/d/y6qlr8.
Written by Christopher Chan
Texas landowner advocacy groups are working with State politicians to reform eminent domain. Eminent domain, though a deeply concerning issue for those affected and an important area of law in the context of the oil industry’s importance to the State economy, failed to receive serious treatment to address perceived shortcomings in its administration during the previous legislative session in 2017. A bill proposed by Sen. Lois Kolkhorst, R-Brenham that purported to improve the situation of landowners facing eminent-domain proceedings, ultimately got nowhere.
For 2019, landowner organizations have joined forces with legislators to attempt to bring eminent-domain reform to landowners. The Texas Farm Bureau (“TFB”), an advocacy group that represents the interests of farmers is among them. The TFB’s goal is to obtain meaningful protections for landowners in the current legislative session. Specifically, they have taken issue with deficiencies in the way initial offers for land acquisition, made by entities with the power of eminent domain, are valued. The TFB believes condemning authorities often “low-ball” landowners during the initial offer process, offering a price for the land significantly below fair market value. It would like to see legislation address the problem.
The TFB would also like private entities using eminent domain to obtain land to be required to hold public meetings. When a public entity such as the Department of Transportation uses eminent domain to acquire land for a project, it must also hold a meeting, open to the public, where its representatives will field questions and hear comments on its activities. Private entities are not currently required to adhere to this practice, a purported deficiency the TFB would like to see fixed.
Finally, under the current law, condemning authorities are not required to include minimum protections in their draft documents to obtain easements. Landowners can have these protections included, but they must be the initiating party. Due to a lack of parity in legal experience between condemning authorities and landowners, the net result is often that landowner’s rights are not fully realized in easements. The TFB would like to see legislation passed during this session that would require condemning authorities to include these landowner protections in the documents they draft.
House Bill 99 and Senate Bill 421 being sponsored by Rep. DeWayne Burns, R-Cleburn and Sen. Kolkhorst, represent the legislature’s most current attempt to rectify these concerns. Firstly, the proposed legislation would prohibit a private entity from offering less than fair market value. If a private entity were found to act in a contrary manner, and provide a low-ball offer anyway, then it would be required to pay the difference between that offer and the property’s fair market value back to the landowner. The bill would also require private entities to hold public meetings on their activities, holding them to the same standard as public entities. Finally, the legislation would require condemning authorities to include a set of minimum landowner protections in the easements they draft.
Only time will tell if the Bills pass with these provisions intact. If they survive, however, landowners should consider it a win for their rights.
Written by Justin Hodge and Christopher Chan
The owners of Highland Dairy Farm (“Highland”) in Clovis, New Mexico are being forced to close down due to chemical contamination which has been sourced to a nearby Air Force Base. The farm is owned by Art Schaap, a 54-year-old, 4th generation dairy farmer in CurryCounty. The property was contaminated by a blend of chemical toxins known as PFAS that spread from Cannon Air Force Base. Though PFAS contaminations have been known to occur around military bases, this particular exposure is especially noteworthy because it is the first time PFAS toxins have directly threatened the United States’ food supply.
The widespread nature of the toxic exposure has caused Highland to close its doors. It has had to dispose of 15,000 gallons of milk, a volume roughly equivalent to 240,000 children’s lunch cartons. Its 4,000 cows, which have also been contaminated, cannot be sold for either their milk or beef, and the farm plans to exterminate them. The farm has also been forced to lay off all 40 of its employees, and its contaminated land is thought to be unsellable. More personally, Schaaf has expressed concerned for his health, as well as his wife’s, fearing that they may suffer life threatening consequences from possible exposure.
The Department of Defense (“DoD”) has reportedly known about the issue for years but has failed to make public disclosures. The Air Force also had knowledge of the danger of these chemicals, but likewise, failed to provide adequate warning. PFAS chemicals have been known to be toxic to humans and the environment since 2000. Exposure to these toxins have been linked to cancer, liver problems, thyroid disease, immune system damage, high cholesterol, and many other health problems. Last year, the DOD acknowledged that groundwater around 121 military bases has been contaminated.
PFAS is the abbreviation for a family of family of toxic compounds known as per-and-polyflouralkyl substances. While there are thousands of chemical sub-types within the family, the most widely understood are the perfluorooctanesulfonic acid (PFOS) and perfluorooctanoic acid (PFOA) variants. However, the less common variants are also harmful. What makes the PFAS chemicals so dangerous is their ability to harm a wide variety of biological systems, even if exposure levels are low. The concern is that the environmental harm won’t just end at Highland farms. Also located closeby is the Ogallala Aquifer, the nation’s largest Aquifer, which stretches 174,000 miles and touches parts of eight states. If the contaminants infiltrate the water, the Aquifer’s sheer size could rapidly spread the poison over a large geographic area.
In causing Highland to close, the PFAS contamination has harmed New Mexico’s dairy business, one of the state’s most important economic sectors. Indeed, the dairy industry is the leading agricultural industry in the state and generates more than $1.3bn annually. Curry County, where Highland is located, is home to 25 dairies alone, which make it one of the top 20 counties for milk production in the nation. In turn, these 25 farms host a total of ~82,000 milk cows producing 1.9 billion pounds of milk.
The problem has gained the attention of New Mexico lawmakers. Senator Tom Udall has met with Schaap and other dairy farmers. Governor Michelle Grisham, Congressman Ben Lujan, and Senator Martin Heinrich have called for deeper EPA involvement. Specifically, they want federal regulations and drinking water standards for PFOS and PFOA chemicals developed and enforced. The EPA has stated its plan to regulate the chemicals but has not proposed language that would require immediate cleanup, something which has not gone unnoticed by residents.
Because the government’s action stripped the Schaaps’ dairy of its value, they may have standing to sue the Federal Government for damages. Such a case would proceed under an inverse condemnation theory, a sub-type of eminent domain which applies to instances where the government has taken private property but has failed to pay the just compensation required by the Constitution’s 5th Amendment. It is still unclear how the Schaaps’ will choose to proceed. But given the near-zero salvage value of their farm, an inverse condemnation action may be one of the few options available in the effort to recover some of Highland’s value.
Written by Christopher Chan