The Texas Department of Public Transportation (“TxDOT”) will hold a two hour public meeting this Tuesday, Sept. 29 at the Lake Jackson Civic Center to discuss proposed expansion plans to State Highway 332. The plans would expand the highway from FM 521 to State Highway 288 in Brazoria County, according to a TxDOT announcement.

“The proposed project would reduce traffic congestions, accommodate population growth and improve mobility,” said Danny Perez, a spokesperson for the department. “Further, expanding the roadway would provide the needed capacity during hurricane evacuations.

The project would also replace bridges at Buffalo Camp Bayou, as well as the diversion channel east of the bayou. It would also add a drainage channel running south of the highway and into the Brazos River. Finally, the project would add walkways running alongside the highway to aid pedestrian transit.

Residents of Brazoria County should be aware that, should this proposal continue forward, the power of eminent domain will likely be used to acquire the land parcels needed for the project. Preliminary diagrams released by TxDOT have indicated that the taking of additional “right of way” will be necessary to accommodate the expansions.

If approved by Texas voters, Proposition 7 will reallocate billions of dollars to the State Highway Fund for new highway expansion projects – which will very likely lead to more condemnation and eminent-domain cases throughout the State of Texas. The proposition, which will be on the ballot on November 3, 2015, will redistribute tax revenue from two sources, the general sales and use tax, and the motor vehicle sales and rental tax.  The proposition reallocates all annual sales tax revenue that exceed $28 billion from September 1, 2017 to September 1, 2032 to the State Highway Fund, up to $2.5 billion per year. Additionally, 35% of all annual vehicle sales and rental tax revenue above $5 billion from September 1, 2019 to August 31, 2029 will be directed to the State Highway Fund.

Senator Robert Nichols, co-author of the bill, had the following to say: If voters pass the proposition, it “would be the largest single increase in transportation funding in Texas history.” The additional funding will finance miles of new roads and highways.  Texas property owners should educate themselves on the upcoming vote because the additional funding will no doubt lead to more condemnation and eminent-domain cases.

To view the bill please click here.

In a move that should alarm local residents, the Federal Railroad Administration (FRA) recommended the “Utility Corridor” route for the proposed high-speed rail that would run between Houston and Dallas. In its August 10, 2015 report, the FRA noted that the utility corridor route passed its “…Physical Characteristics, Operational Feasibility, and Environmental Constraints screening criteria.” The Utility Corridor is a path that runs extremely close to existing high-voltage power lines. Use of the corridor will require the taking of private land.

While the route recommendation constitutes a concrete step toward realizing the high-speed rail project, the FRA must complete an environmental impact study before the route is confirmed. The FRA’s recommendation does not establish a definite path within the corridor. Rather, the final location of the line will be selected from possible alignments within the corridor. However landowners along the route should be concerned about possible conflicts between high-voltage transmission lines and the rail.

As far as finance is concerned, it is a known fact that Texas Central, the rail’s constructor, has been denied government funding. As a result they have turned to private sources, both domestic and foreign. All in all, the rail project will require approximately $12 billion to complete. So far, domestic funding attempts have produced a meager $75 million. But rail opponents should not rest easy. Recent developments have given Texas Central reason to expect that at least half of the necessary funds will come from a foreign loan issued by the Japanese Bank of International Cooperation. The bank, operating under the direct control of the Japanese Government, helps provide funding for projects as part of its agenda to create a Japanese-favorable export balance with the United States. This time, the exports in question are Shinkansen locomotives and passenger cars, both sold by the Central Japan Railway Company.

“People think that there’s nothing out here, but people out here ranch and farm,” said Kyle Workman an original member of Texans Against High-Speed Rail to HoustonPress. “They use this land, and the bullet train is going to plow right over them.”

Texas Central now has a stronger sense of which landowners they may engage with for future land acquisition deals. “Now, they can focus on one [route] and they can go out and meet with landowners and get out in the field and start talking to communities and stakeholders about where the line will actually go,” a Texas Central spokesman said to the HoustonPress.

Photo courtesy of RaillyNews.com.

Coauthored by Christopher Chan and Justin Hodge.

The United States Supreme Court, in midst of considering cases on same-sex marriage and the death penalty, recently heard oral arguments in a matter that the Wall Street Journal has called the “Incredible Raisin Heist.”

Horne v. USDA centers on a federal program designed to stabilize the market price of raisins by requiring some raisins to stay off the market. Marvin and Laura Horne, two raisin farmers in Fresno, California, claim that this constitutes a federal taking of property and, thus, triggers the “just compensation” requirement under the Fifth Amendment of the U.S. Constitution.

The program, which dates back to the Great Depression, has its roots in the Agricultural Marketing Agreement Act of 1937 (“AMAA”) that granted the U.S. Department of Agriculture (“USDA”) the authority to regulate the sale of agricultural produce through marketing orders. The California Raisin Marketing Order of 1949 being one of those orders. This marketing order created the Raisin Administrative Committee (“RAC”) and required raisin handlers – not producers – to retain a certain amount of raisins in reserve, effectively controlling the supply of raisins on the market in order to bolster the market price of the product.

“The way the order operates is that the producer submits the raisins to the handler,” explained Edwin Kneedler, the lawyer for the federal government, during oral arguments to the Supreme Court on April 22. “The handler then divides them into two categories. The handler is required by the order to maintain and separate the reserve raisins, which can be later sold by the RAC. The proceeds of those sales are pooled and distributed back to the producers.”

The reserve amount varies from year to year depending on the market. Raisin handlers have had to reserve more than 30% of their raisins some years and no raisins at all other years. The California raisin industry accounts for 99.5% of the domestic supply of raisins and 40% of the world’s supply, according to the government’s brief. the agricultural industry in this country was in serious trouble. And particularly in California, prices were below costs of production,” said Kneedler.

The Hornes complied with the marketing order for decades until they decided to try to find a way around the program in 2002. That year, they changed the structure of their business to eliminate a third-party raisin processor, and, instead, found a way to package their own products for sale in an effort to circumvent the RAC reserve requirement, which applies only to raisin handlers. Despite this scheme, The RAC categorized the Hornes as handlers rather than producers. Consequently, the Hornes were fined nearly $700K for refusing to turn over their raisins.

The Hornes appealed this enforcement action to an Administrative Law Judge, who upheld the fine and classified them as raisin handlers. The Hornes then appealed their case to a federal district court, which granted summary judgment in favor of the USDA. They appealed again to the 9th Circuit Court of Appeals, which found the Hornes liable for defying the California Raisin Marketing Order but ruled that it did not have the authority to determine whether the marketing order reserve requirement constituted a taking under the Fifth Amendment. The Ninth Circuit court reasoned that takings claims against the federal government must first go through the Court of Federal Claims. The Supreme Court reversed this decision in 2012 and ruled that the circuit court did have jurisdiction over the takings claim and that the Hornes’ case must be considered in their capacity as handlers, not producers.

Three years later, the Hornes have again made their way to the U.S. Supreme Court, but, this time, the Court will be deciding on the substance of their takings claim. The Ninth Circuit most recently ruled that the Hornes’ case does not trigger the “just compensation” requirement of the Fifth Amendment. The court classified the raisins as personal property and reasoned that just compensation clause applies mostly to real property, not personal property (real property being land and/or permanent-to-semi-permanent fixtures on that land and personal property being everything else that is relatively more “movable”). The court analyzed the marketing order as a constitutional use restriction, rather than a taking, but still discussed the bolstered price of raisins that may have resulted from the marketing order as a form of compensation for a taking if there had been one.

During oral arguments to the Supreme Court in April, the justices seem to have explored this line of reasoning as well.

“The Constitution doesn’t forbid takings. It says what you have to do is pay just compensation,” Justice Stephen Breyer said. “Now, we’ll give you what it cost you to take your raisins. What it cost you is, in fact, the difference between what you receive given the program and what you would receive without the program. That difference works in your favor. It gives you money. It doesn’t take money. So there is no compensation due. In fact, if we were to have compensation, you should pay us, the government.”

To that comment, the Hornes’ attorney, Michael McConnell, responded with what he called a practical point and a conceptual point. His “practical” point referenced a price analysis in order to show that the Hornes could have made more money from the sale of their raisins without the marketing order than with it during the years the Horns were in violation of the marketing order.

McConnell also added, “Now, the conceptual point is that this is a per se taking. And it’s if…if there were benefits, such as I don’t believe that there were, if there were, that would at most go to whether there was implicit in-kind compensation for the taking, which would go to the question of compensation.”

Kneedler argued that the raisin marketing order does not constitute a taking because the order requires only raisin handlers to put raisins on reserve. The raisin producers, he said, voluntarily choose to enter those raisins into the stream of commerce by sending their raisins to a handler. Those raisins, therefore, can be subject to regulations that govern the stream of commerce, according to Kneedler’s argument.

“I think the government can attach reasonable conditions on entering a stream of commerce,” he said.

This point did not seem to bode well with the justices.

“Is there any limit to that argument? There are some examples in the briefs that are pretty startling,” Justice Samuel Alito said. “Could the government say to a manufacturer of cellphones, you can sell cellphones; however, every fifth one you have to give to us? Or a manufacturer of cars, you can sell cars in the United States, but every third car you have to give to the United States.”

Kneedler retorted that those examples differ from the Hornes’ case because the marketing order is part of a comprehensive federal regulatory program, and his response spurred another round of questions from the justices.

“The rationale, I mean, the government can come up with a rationale to justify those examples really easily,” Chief Justice John Roberts said, implying that the marketing order ultimately serving the “good of the people” does not necessitate the physical taking of raisins. “And, you can do what you’ve done in most other marketing orders, which is not take their raisins. Instead, say, look, you can only plant, you know, 63 percent of your acreage this year, or you can only produce, you know, 28 tons. That’s how most of them work…This is different. This is different because you come up with the truck and you get the shovels and you take their raisins, probably in the dark of night.”

Kneedler responded by reiterating the comprehensiveness of the program, but his point did not seem to have resonated among the justices.

“Central planning was thought to work very well in 1937,” Justice Scalia said. “And, Russia tried it for a long time.”

The justices posed some poignant questions during oral arguments, and a decision on whether the Raisin Marketing Order constitutes a federal taking is expected by June.

Co-authored by Justin Hodge and Ayla Syed.

If you have any questions about this blog, please feel free to contact Justin Hodge at jhodge@jmehlaw.com

As part of the Northern Houston Highway Improvement Project, the Texas Department of Transportation (TxDOT) has proposed a large-scale plan to add lanes along Interstate 45 (IH-45) and reconfigure downtown freeway access. The proposed changes could make up the largest freeway rebuilding project ever undertaken in the Houston area.

The restructuring of IH-45 has been under consideration for several years because of traffic congestion, high rate of accidents, expected area population growth and unmet safety standards. In an August 2013 study by the Texas A & M Transportation Institute, the section of IH-45 through Downtown was ranked one of the the twelve most congested highways in the state.

The freeway rebuilding project divides the IH-45 into three segments: Beltway 8 to IH-610, IH-610 to IH-10 and IH-10 to the intersection of US-59 and SH-288, including the Pierce Elevated. TxDot has proposed various ways to restructure all the segments, but the third segment, in the heart of Downtown has received the most attention because of the Pierce Elevated’s possible demolishment.

Three options have been proposed to reconstruct the Downtown segment, two of which involve the partial or full removal of the Pierce Elevated.The first alternative is to widen the elevated portion of IH-45 from six to ten lanes, reducing the lane count of Pierce Street and add four elevated express lanes to IH-10. The second alternative is to reroute IH-45 northbound and southbound lanes to the east along US-59, adding six elevated lanes behind the George R. Brown Convention Center as well as six elevated lates to IH-10, with the Pierce Elevated removed and surface streets used for Downtown and inner-city access. The third alternative is to keep the four elevated southbound lanes, turn the rest of Pierce Elevated into a parkway and add four elevated northbound lanes each to IH-10 and US-59.

Certain members of the Houston community have received the removal of the Pierce Elevated positively. Architects are suggesting that instead of tearing down the Pierce Elevated at an enormous cost, the freeway structure can become a base for an elevated linear park–a Houston version of New York’s High Line. Three architects at Page Southerland Page envision the parkland to be 1.97 miles long and cover 37.7 acres. The space can be used for pedestrian and bike paths and perhaps even grander attractions, such as a golf range or a bike-in theater. Essentially, Pierce Elevated’s removal could offer Houston the opportunity to create something significant.

Public meetings were held to present information on the proposed options of the North Houston Highway Improvement Project and receive public feedback on highway improvements. TxDOT says it plans to present the results of an environmental study in early 2016.

Co-authored by Maithili Bagaria and Justin Hodge.