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The Steam Pipeline

Denbury Pipeline. Photo Courtesy of StateImpact.NPR.org.

According to the Fifth Amendment of the U.S. Constitution and Article I, Section 17 of the Texas Constitution, applications of the eminent-domain power must be for public use. Jurisdictions have developed legal and administrative structures which allow private interests limited uses of the power. For Texas pipelines, the granting of eminent-domain authority can only take place when a project fulfills certain requirements. Chief among these is the ability to prove that the pipeline has a public use, meaning it is not being built exclusively for and used only by the entity condemning the land. Statewide, the common-carrier definition, and the derivative test determining whether the definition can describe a given pipeline, is used to establish and enforce the public use requirement.

In the recently decided Denbury Green Pipeline – Texas, LLC v. Texas Rice Land Partners, Ltd., the Texas Supreme Court clarified the access conditions for common-carrier status. In 2015, an appellate court established two additional barriers to common-carrier status. First, it held that a pipeline’s common carrier status must result from an examination of the intent of the constructing party to use the pipeline for public benefit at the onset of the project’s contemplation. Second, the pipeline’s use must serve a “substantial” public interest. The Supreme Court decision reversed these two holdings, the first on the grounds that it misinterpreted case law, and the second because it proceeded beyond the limits of precedent. The Supreme Court also held that Denbury’s post-construction product transportation contracts with third parties, and the fact that certain third parties would retain product title, was sufficient to evidence public use and therefore common-carrier status after the pipeline is built. This opinion is a significant blow to Texas landowner rights.