In 2015, Texas’ 82^nd Legislature passed Senate Bill 18, which required all entities claiming the power of eminent-domain to register in a database. Since the establishment of the database, over 5,000 local governments and private entities claim to have been granted the power in the last two centuries. The rate at which new entities are granted this power seems to be increasing. The number of entities receiving the power has risen steadily since 1830, from a few dozen per decade, to 902 between 2000 and 2010. Since 2011, 531 entities have already received the power, putting this decade on track to top the last.

The data also suggests that there is a heavy concentration of eminent-domain holders in Harris County which is home to the City of Houston. At this time of writing, 1,227 eminent-domain holding authorities are registered in Harris County, with second place going to Dallas County with 239. This disparity in concentration could be attributable to three things, the use of Municipal Utility Districts (MUDs), the presence of pipelines, and the considerable presence of eminent-domain law firms in Houston. MUDs are small scale elected governments. They have the power to levy taxes, take private land, and account for a third of eminent-domain use statewide. Nearly two-thirds of all MUDs are registered in Harris County. Another significant portion of eminent-domain holders are pipeline companies, many of which are headquartered in, or have a Houston office. Along with the MUDs and pipeline companies, come the law firms that represent them. Harris County has many law firms that focus in assisting entities with eminent-domain power. One prominent firm represents 284 entities alone.

All of this suggests that the likelihood of eminent-domain related land acquisitions has increased dramatically for Texas property owners, which if you believe in protection of private property rights, is not positive news.

To view the eminent-domain database, click here.

A group of Texas land associations is hosting a series of Eminent Domain meetings from October 27 through November 17. The meetings will address land owner questions and concerns, and discuss upcoming legislation intended to enhance legal protections for landowners. The first meeting will be held Thursday, October 27, 2016 at the Cowboy Fellowship of Atascosa County which is located on 561 FM 3350 Jourdanton, Texas 78026. The meeting will be from 6 p.m. to 7 p.m.

The following organizations are participants in this meeting series:

Texas Farm Bureau, Texas and Southwestern Cattle Raisers, Texas Wildlife Association, Texas Forestry Association, South Texans’ Property Rights Association, Texas Poultry Association, Texas Sheep and Goat Raisers Association, Independent Cattlemen’s Association, Texas Grain Sorghum Association, Plains Cotton Growers, Inc. and Texas Land & Mineral Owners Association.

For the press release and complete meeting schedule, click here.

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 have 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 have 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.”

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.

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.