Advances in Pipeline Technology Give Rise to New Threat: Cyberattacks


Image Courtesy of the U.S. Government Accountability Office

There are currently some 2.7 million miles of pipeline transporting hazardous substances across the United States. These pipelines often run through multiple states and expose both remote areas and highly populated urban areas to accidents, operating mistakes, and intentional harm caused by hostile actors. Threats falling in the last category have traditionally been limited to physical attacks on pipeline integrity in attempts to cause harmful breaches. However, the high technology age has given rise to a new spectrum of technologically driven threats that can be initiated through purely electronic means. Safeguarding the nation’s pipeline infrastructure against these threats is an ongoing task requiring methodical and meticulous analysis.

In addition to being a vital part of the US economic system, the energy sector is a popular target for hostile factions seeking to harm the United States and her interests. Between 2013 and 2015, attacks on the Energy Sector accounted for 35% of a total 796 reported critical infrastructure cyber incidents. The task of providing oversight of the various government agencies, pipeline operators, and third-party security elements that constitute the nation’s pipeline security system falls to the Department of Homeland Security’s (“DHS”) Transportation Security Administration (“TSA”). The TSA administrates oversight through its Pipeline Security Program (“PSP”), the nation’s effort to monitor the overall status of pipeline security.

Operators of interstate pipelines transporting hazardous substances such as oil and natural gas must follow TSA guidelines to prepare against physical and cyber threats. Troublingly, a 92-page report published on December 18, 2018 by the US Government Accountability Office (“GAO”) has highlighted a number of weaknesses in the TSA’s current security scheme. The report also provided a number of recommended improvements that, if implemented, could enhance the program’s effectiveness. The report was inspired by the data-driven realization that pipelines increasingly utilize networked computer systems in their operation. These computer systems, like most others, are vulnerable to cyberattack, providing potential pipeline saboteurs an additional avenue of attack.

One area of weakness the report identified in the current guidelines is ambiguity in the definitions used to describe critical pipeline facilities. A pipeline system is often made up of multiple component parts. In addition to the pipeline itself, a system may include pump stations, refineries, and storage facilities. In theory, critical facilities, facilities essential the operation of the system, should be identified and reported for further risk analysis. The GAO report found that under the current guidelines, 34 of America’s top 100 critical pipeline systems deemed as “highest risk” have not identified any critical facilities. The report attributes this shortcoming in reporting outcomes to the guidelines’ inability to precisely define critical facilities. Therefore, the current analysis of risk and vulnerability of critical facilities is incomplete.

The GAO report also found that the TSA, which conducts pipeline security reviews, has not conducted these reviews in a methodical or consistent manner since 2010. Rather, the reporting frequency of the TSA fluctuates wildly from 2010 to present day. The GAO report generally attributes the TSA’s failure to consistently administrate security reports to shortcomings in staff. Between 2010 and 2018, the number of staff members in the TSA’s pipeline security branch has fluctuated between 1 and 14 members. The report also discussed a failure to update risk assessment methodology since the metrics were first established in 2014. As a result, the metrics are out of date and fail to reflect current threats to pipeline operators.

Understandably, the last few points may read as a lot of ruckus over what sounds intangible. How does the secure operation of pipelines link with academic distinctions in reporting systems? The significance of these shortcomings becomes easier to place if we remember to think of the threat to pipeline security as being digital, as well as physical. Even a few years ago, before computers were so heavily integrated into pipeline systems, attacks on America’s energy supply by hostile factions had to be physical. Security was therefore a matter of preventing criminals from cutting open pipes with blowtorches or from shutting down a pump station by cutting the powerline. Now, attacks can be launched against pipeline computers from remote locations at any time. For example, a hostile foreign power could hack into a US pipeline terminal and disrupt energy delivery from thousands of miles away.

Thus, dealing with these threats is more complicated than setting up barbed-wire fencing and conducting regular car patrols. Successfully stopping attacks on pipelines in the digital age requires the implementation of a robust security system, built from reliable data, and maintained with meticulous and regular updates. That’s why definitions and reporting frequency are crucial. As the GAO points out, the governmental agencies in charge of this security have plenty of work ahead of them to make these systems fully effective in the age of cyber-attacks.

For landowners whose property is already burdened with a pipeline, or for landowners facing the prospect of a pipeline being installed on their land, the GAO report highlights the very real evolution in the threats that pipelines are vulnerable to. The digital revolution, with all it’s marvelous advances, has provided terrorists, environmental extremists, and hostile foreign powers a new channel through which they can sow chaos and destruction by attacking America’s energy systems. Landowners forced to bear this additional risk should ensure they are adequately compensated for their burdens.


Written by Christopher Chan

Save the Butterflies: The Border Wall’s Unusual Foe

Though the prolonged government shutdown failed to produce the funding necessary to construct the entire border wall, a pre-existing allocation of $1.6 billion will fund 33-miles of border barrier, with a portion of the barrier built in Texas. Construction of the partial border barrier will be split between Federal and private lands. The pre-construction efforts of the Texas portion have given rise to an unusual opponent, the National Butterfly Center.

The National Butterfly Center (“Center”) is a nonprofit organization which owns roughly 100 acres of land in the City of Mission in Hidalgo County, South Texas. It purchased the land to create a preservation corridor for endangered species. The Center’s land is adjacent to the US-Mexico Border and is home to as many as 200 different butterfly species that migrate through the area at various times of the year. It is also home to roughly 400 different bird species, and a variety of land animals. The center has a variety of hiking trails for visitor use.

Maps produced by U.S. Customs and Border Protection place the wall on top of a pre-existing levee. As such, six miles of the wall will separate the Center’s land effectively slicing it into two distinct portions of 70-acres and 30-acres. The larger 70-acre portion of the property will be cut off from the rest of the center. In other words, 70% of the Center’s property will be behind the border wall. The latest design has the wall at 36 feet high, with an 18-foot concrete base augmented by 18 feet of steel bollards. The Center estimates that the government will bulldoze 200,000 square feet of land for the construction. The wall includes a 150-foot paved enforcement zone and will be fitted with cameras and flood lights. U.S. Customs and Border Protection and the Army Corps of Engineers have awarded a $145 million contract to SLSCO, a Galveston firm, to build the first installment.

The Center predicts that the construction will vastly disrupt the operation of its conservation efforts. In addition to the gross reduction in conservation land, the Center believes the wall will harm land animals in particular, who depend on their ability to freely move around the acreage for foraging and reproduction. However, some avian species, including the Ferruginous Pygmy Owl that only flies 6 ft. in the air, will also be impacted by the wall. The Center also believes the wall will create a flooding hazard by reducing the ability of water to drain, which could reduce the lands viability as a habitat. It has also expressed concern that the wall’s flood lights will affect nocturnal animal’s day-night cycles.

So far, the Center has been subjected to government surveyors who are measuring the land in preparation for construction. The Center was not given advance notice of workers entering the property, nor were they given notice that the contractors would begin cutting down trees. Though landowners do have protections regarding land seizures, Federal Law allows the Department of Homeland Security to bypass environmental restrictions. In fact, the current Administration waived the National Environmental Policy Act, the Endangered Species Act, and 26 other environmental statutes in order to expedite construction of the wall. Federal law also permits the Federal Government to take private property via eminent domain for public use. The resolution of these lawsuits can take years. Indeed, a number of eminent domain actions initiated by the Bush administration against private landowners for the first border wall project over a decade ago are still active. However, it should be pointed that the issue of possession, whether the government may be granted legal access to the property it seeks to acquire and begin construction,  is typically resolved within a matter of weeks after the filing of the lawsuit. The continued existence of outstanding lawsuits is largely due to issues over the amount of compensation owed, not whether the project itself can be built. In many cases, the project’s construction is completed long before the compensation amount owed is resolved.

The Center regards the possible use of eminent domain to build the wall as unconstitutional as well as contrary to its environmental aims and is determined to fight the government as long as they can. Because they are a non-profit organization, the Center has relied on volunteers and crowdfunding as a means to raise money for legal fees and have so far received ~$80,000 out of a target $100,000. The Center entered the legal battlefield against the Federal Government in December 2017 after contractors arrived on the Center’s property with chainsaws and heavy machinery. Over a year later, on February 12, 2019, the Center filed a restraining order against the Federal Government.

On February 14, 2019, U.S. District Court Judge Richard Leon ruled against the National Butterfly Center and dismissed its suit against the Federal Government. This ruling effectively renders the Center’s request for a temporary restraining order moot. Judge Leon found that the due process rights of the Center were not violated by the Federal Government’s actions.

Despite this major blow to the Center’s fight against the Federal Government, not all hope is lost. In the recently passed compromise spending bill, U.S. Representative Henry Cuellar added language protective of the Center. The compromise spending bill includes $1.375 billion for 55 miles of border wall but renders five cultural sites in the Rio Grande Valley “off limits” to construction of the border wall. These five cultural sites include the National Butterfly Center, the Bentsen-Rio Grande Valley State Park, the Santa Ana National Wildlife Refuge, La Lomita Catholic Church, and the tract of land soon to be home of the SpaceX commercial spaceport. Should President Trump sign the spending bill, the National Butterfly Center may be able to rest easy.

Written by: Christopher Chan and Graham Taylor

Update: The Permian Basin Fracking Boom is Here to Stay

Advances in hydraulic fracturing, known more commonly as fracking, have given rise to a domestic energy revolution with global economic and geopolitical impact. As has been widely reported, the US has become a major exporter of oil for the first time in decades. Indeed, the US is now the world’s top producer, with a national production of just under 12 million barrels per day, an increase of 2 million barrels per day since last year.

For those unaware, fracking is the process of using a mixture of highly pressurized water and sand to break apart oil-rich shale deposits so that the oil can be pumped to the surface. Shale deposits have long been known to exist in the continental United States. However, the technology required to access these deposits has only recently become cost effective. Massive cost reduction initiatives on the part of shale oil producers has dropped the breakeven cost per barrel by ~50%, from about $60 per barrel to around $30 per barrel.  As a result, fracked oil is now cost competitive to liquid crude across a wide range of price levels, cementing America’s foothold in the modern global energy economy.

At the heart of America’s newly accessible supply is a massive shale deposit in Texas known as the Permian Basin. This region—roughly the size of South Dakota—has become a key pillar in this new era of American energy production. In addition to the sheer size of the deposit, the Permian benefits from certain geological properties that make it uniquely able to benefit from low-cost fracking techniques. First, the Permian’s shale deposits are often several layers thick, with some layers as thick as 1000 feet. This geology helps to make Permian deposits more robust and gives the region a natural counterbalance to one of the downsides of the fracking process, which is that deposits dry up quickly. Second, the Basin is conveniently located near the Gulf of Mexico. This gives Permian producers easy access to coastal refineries as well as the port, where the product can be loaded onto ships for international export.

The rise of the Permian has also had profound geopolitical impacts, enhancing America’s capabilities and relationships with both allies and adverse interests. America’s vast production has allowed it to be less dependent on foreign oil, thus increasing energy security. It has also made new tools available to the government to achieve its political ends. Sanctions on Iran and Venezuela, two oil producing nations, have not affected US consumers, who are insulated by the Permian’s robust supply. The Permian has also driven down global prices, a benefit to consumers. What amplifies the Permian’s impact on global markets is the fact that OPEC never anticipated that the fracking revolution would develop to this scale. For decades, the Cartel occupied a comfortable position as the world’s major supplier, but the fracking boom has disrupted years of conventional thinking. The size of the Permian Basin, both in terms of production rate and reserves, rivals entire nations in terms of output. In fact, if the Permian Basin were made the 15th member of OPEC, it would be the Cartel’s third largest member nation, behind Saudi Arabia and Iraq. Experts expect it could surpass the world’s current number one field, Saudi Arabia’s Ghawar field, in three years or less.

The rate of buildup in Permian production is immense. Just in the last year, the Basin’s production rose by roughly 1 million barrels per day. The buildup has fueled a construction frenzy, not only of the production facilities themselves, but of the pipeline infrastructure necessary to move the product to refineries, and ultimately, markets. Over a dozen construction projects of pipelines terminating in the Gulf coast are expected to be completed by mid-2020. These pipelines are known as gathering lines and are used to transport fracked product to the coast for refinement and sale. They are large diameter installations which can transport hundreds of thousands of barrels per day. The aggregate value of these projects is in the billions.    [Add a couple sentences about resulting State-wide condemnation and eminent domain here].  The carrying capacity provided by these pipes alone could cause US exports out of the Gulf coast region to quadruple. Accompanying this explosive growth is a booming labor market, which has its own economic consequences. The huge influx of people into the region has raised apartment rents through the roof. The demand for workers is so high that restaurants have even begun advertising their wages on billboards to attract wait staff who are deeply tempted to pursue other opportunities as energy workers. Because population growth has outstripped available housing, huge numbers of trailers have been moved into the region to house the workers. Traffic has become clogged with production vehicles, dump trucks hauling sand, and workers commuting to drill sites.

Hopefully, readers now have a clearer understanding of just how profoundly impactful the Permian Basin’s growth has been, not just domestically, but globally. This pattern of development is expected to continue into the foreseeable future.  Landowners with property located between the Permian Basin and the Gulf Coast are advised to stay current on projects which may affect them.

Written by Christopher Chan

Prout v. Caltrans: A Lesson in Legal Timing

As we know, the private property rights in the United States, though extensive, are not absolute. Using the power of eminent domain, the government can forcibly seize private property for public purposes, if they provide the Constitutionally mandated compensation. Going a little deeper, it’s important to mention that there are three main sub-types of eminent domain. These are physical takings, regulatory takings, and inverse condemnation.

In physical takings, the government performs some action that results in the occupation of private land. In regulatory takings, the government imposes a legal burden so expansive that it deprives the landowner the use of their property. An example might be environmental regulation that prohibits any kind of land developments. If the regulation deprives the land of all economically beneficial uses, it would essentially make the land worthless. Finally, inverse condemnation is a situation where a landowner has brought a claim against the government for compensation. In these cases, the landowner is alleging that government action has resulted in the taking of their land or has caused uncompensated property damage to occur.

There are exceptions to inverse condemnation, however. In a recent California case, Prout v. California Department of Transportation, the Court held that the California Department of Transportation (“Caltran”) did not have to pay the landowner compensation even though it physically occupied the landowner’s property. The exception turned on the fact that the property was legally subject to “dedication.”

Approximately twenty years before the case, the land owner, Loren Prout, dedicated a small strip of land to the state. Briefly, dedication is the donation of private property for public use. This dedication went unaccepted by the government for approximately two decades. Then, in 2010, Caltrans began physically occupying the dedicated strip as part of its work to modify a highway. They did not compensate the landowner for this use.

The landowner sued for inverse condemnation, arguing that Caltrans’ behavior amounted to a physical taking of his property. During its analysis of case documents, Caltrans discovered the twenty-year-old dedication, and argued that there was no taking because Prout had already dedicated the land to the government. Prout countered by pointing out that the government had failed to formally accept the dedication, even though the dedication was offered two decades ago.

The Court held against the landowner on two counts. First, it decided that the government had accepted the dedication by implication. The basis for the implied acceptance was the fact that Caltrans began using the land for its construction process. Second, the Court held that Prout had failed to voice his grievances with the terms of the dedication in a timely manner. The Court pointed out that Prout could’ve objected to the dedication before the onset of this case but failed to do so. Therefore, the Court held for the government.

The case is a lesson for both governments and private property owners on the importance of timeliness in the legal process. Though two decades seems like a generous period, neither the government nor the land owner managed to act in their own interest within that time. If they had, the outcome of the case might very well have been different, particularly from the landowner’s perspective. In fairness to the landowner, knowledge on matters of legal timing, particularly as it concerns niche real estate issues such as dedication, are not common knowledge. Landowners may wish to be conscientious about obtaining qualified legal advice if they have uncertainty, particularly when the government’s ability to occupy their land is at stake.

Written by Christopher Chan

Quoting Dr. Seuss, Federal Court Rejects Pipeline Permit

The 4th U.S. Circuit Court of Appeals recently revoked Dominion Energy’s (“Dominion”) permit to construct its Atlantic Coast Pipeline project. The proposed project would begin in West Virginia and cross Virginia and North Carolina. The project would’ve required the deforestation of a 125-foot wide easement through the national forests, the excavation of a pipeline trench, and the explosive reshaping of mountain ridgelines.

The environmental approval permit was originally granted by the U.S. Forest Service (“Forest Service”), the government agency responsible for analyzing the environmental impact that pipeline projects will have on national forests. The Court found that the Forest Service’s granting of the permit violated both the National Forest Management Act (“NFMA”) and the National Environmental Policy Act (“NEPA”). It also found that the Forest Service lacked the authority necessary to permit pipeline access across the Appalachian Trial. Further, the Court revealed that its decision “is particularly informed by the Forest Service’s serious environmental concerns that were suddenly, and mysteriously, assuaged in time to meet a private pipeline company’s deadlines.” In demonstrating its disapproval, the Court quoted from The Lorax, a conservation themed children’s book by Dr. Seuss: “We trust the United States Forest Service to speak for the trees, for the trees have no tongues.”

This decision means that Dominion cannot begin construction on its pipeline project, at least on the current specifications. However, this setback does not mean that Dominion is prevented from resubmitting revised specifications for approval later. Indeed, Dominion is hardly the first pipeline company to attempt construction through protected national forests. As it stands, the Appalachian Trial is crisscrossed by fifty-six oil and gas pipelines whose owners have successfully navigated the approval process. Only time will tell whether Dominion’s Atlantic Coast project will one day be among them.

Written by Christopher Chan

Living in the Shadows: No Compensation for Property Owners Next to Powerlines, Justin Hodge Quoted in Houston Chronicle.

Residents of Silverlake, a subdivision of Pearland, are rightfully outraged at CenterPoint Energy for a construction project that will impose high-voltage electrical towers on their previously clear skyline. CenterPoint’s project will span for 3-miles and is part of a 14-mile transmission project that will result in a string of immense steel electrical towers stretching from Pearland to Friendswood.

Homeowners were attracted to the area not only by quality schools, but also by Silverlake’s underground electrical system, which they viewed as having great aesthetic and safety benefits. Now they are worried, not only about the declining value of their property, but the dangers of living near high-voltage towers. Many families have young children, who may not understand the warning signs that caution passerby about the presence of high voltage electricity. Additionally, the presence of towers creates a risk of catastrophe during hurricane season. A particularly powerful wind could knock the towers over. In another point against landowners, Texas law does not require utilities to notify landowners if the carrying capacity of the powerlines do not exceed 230 kilovolts. Silverlake residents therefore had no warning about the impending construction.

This type of story is not unique in Texas. Indeed, pipeline builders, utility companies, and the State’s transportation department have a long history of conflict with landowners whose properties they have seized and damaged via eminent domain for various construction projects. What separates the residents of Silverlake from those other cases, is that this time, no compensation will be paid to the landowners.

The reason for the lack of compensation is that in the view of the existing law, no taking has technically occurred. Texas law permits private entities such as pipeline and utility companies to seize property through eminent domain. Both the U.S. Constitution and the Texas Constitution state that a condemnor must pay the landowner just compensation. However, the condemnor is not required to compensate landowners whose properties merely abut the taken land. Further, condemnors are not required to compensate the broader community for any damages that the taking may have caused. This is made possible by a Texas Supreme Court decision which held that businesses damaged by a highway widening were ineligible for compensation even though eminent domain was used.

Development of the Silverlake residential community began in the 1950s. It was also around that time that an 80-foot easement for powerline construction was created. Because CenterPoint would owe Silverlake residents compensation if their electrical towers were to intrude on their land, the company has found a way to fit its construction wholly within the 80-foot easement width. What’s worse is that the easement follows a path through the center of the Silverlake community, and even cuts across the local golf course. This means that when CenterPoint is finished building, homeowners will be forced to live in the shadows of massive high voltage utility lines. The unluckiest residents will have towers located as few as fifty feet from their homes.

Landowners believe that, contrary to the current legal treatment, the mere proximity of the towers has damaged the value of their land. Silverlake residents looking to sell their properties have already had to lower their prices to attract buyers, who find the prospect of living near powerlines distasteful. The plight of Silverlake residents has been reported in the Houston Chronicle. Justin Hodge, an eminent domain attorney who represents landowners, argues that abutting landowners are indeed damaged by such construction projects. He hopes that the Texas Legislature will do something to help landowners in this predicament during the 2019 legislative session, but lawmakers in the past have rejected these proposals.

The full article appearing in the Houston Chronicle can be found here.

Opponents of Texas Bullet Train Want More State Oversight of the Project

In response to landowner requests, a handful of Texas politicians are looking for ways to increase the State’s control over Texas Central’s planned Houston to Dallas high-speed rail project (“HSR”). These landowners, who own property in the path of the proposed train, are motivated primarily by their concerns that Texas Central will use the power of eminent domain power to seize their land. They also hope that an increase in government oversight will provide a greater measure of transparency and accountability.

Though landowner response to the project is mixed, the general tilt is negative. Admittedly, there are a few landowners who are happy for the opportunity to sell their land. Because the HSR’s route was designed to parallel existing high voltage utilities, its proposed path closely follows existing electrical power transmission corridors. Several of the properties along the route are therefore already encumbered by multiple electrical towers. These installations dramatically lower the land’s value, making it unattractive to buyers. Owners of these parcels are all too happy to take what little Texas Central will give them. The remaining landowners, however, are not so happy.

So far, Texas Central has reportedly acquired ~30% of the necessary land through voluntary sale. Many of the remaining parcels are owned by hold outs who refuse to part with their land for any price. Most of these holdouts are ranchers and farmers, who make their living off the land, land which has been passed down from generation to generation. The historical and sentimental value of the property, therefore, cannot be measured in currency. Attachments can run deep; several of the landowners even have family burial sites on the land.

Texas Central has publicly expressed a desire to avoid using eminent domain, and so far, it has been successful. Indeed, a question still exists as to whether the eminent domain power is even available to them. One court in Harris county has said yes, but landowners and their attorneys remain unconvinced, and are committed to disputing that finding in other counties.

One semi-recent Texas legislative story is partially responsible for this ambiguity. In 1989, the State legislature established the Texas High-Speed Rail Authority (“Authority”). This agency was responsible for exploring the possibility of bringing a high-speed rail to Texas and finding a contractor to build it. The Authority also had the power to exercise eminent domain if it could show that the use of eminent domain was in the public interest.

After a research period, the Authority granted a contract to the Texas TGV Consortium, which was tasked with building and operating a high-speed rail in Texas. However, the plan fell through for financial reasons and in 1994, the Authority was abolished by the legislature. The termination of the Authority created a regulatory vacuum regarding the issue of eminent domain use for high-speed rail that endures to this day. More recent attempts to effect regulatory change in the legislature have failed. As of 2017, 20 proposed bills regarding the HSR have failed to pass.

Despite the legislature’s somewhat unhelpful history on the issue, landowners who wish to see State involvement materialize have reason to hope. A handful of Texas politicians are of the opinion that a formalized State oversight mechanism could be of great benefit for landowner interests. For example, Representative Ben Leman, a Republican from Anderson, believes that a state agency of some kind will add clarity and equity to the eminent domain process. Representative Cecil Bell, Jr., the vice chair of the House Committee on Land and Resource Management is likewise of the opinion that oversight could benefit landowners, though he has stated that the solution might be to task an existing agency with oversight, rather than establish a new office.

Whatever the legislative outcomes, affected landowners are encouraged to stay current on all developments regarding this project. If eminent domain is used, property owners who find themselves in the crosshairs of Texas Central are reminded that the U.S. Constitution and Texas Constitution both state that compensation must be paid to the property owner if land is forcibly seized via eminent domain. Landowners are further reminded that they can dispute a condemning authority’s offer via the courts, and are encouraged to seek counsel at the appropriate time.

Hurricane Protection: The Coastal Spine Project May Come with Eminent Domain

Eminent domain jitters are beginning to affect the residents of southeast Texas who are apprehensive about the government’s proposed Coastal Spine project. The Coastal Spine, also referred to as the Coastal Barrier, is a proposed system of sea gates and levees that will span 71 miles in length according to the most recent designs.

The system would begin on the high ground north of High Island and will span the entire length of the Bolivar Peninsula. From there, it would bisect the entrance of the Galveston Bay and continue along the entire length of Galveston Island where it would merge with the Galveston seawall. Current plans have the system terminating at the San Luis Pass.

The cost of the project is estimated to be between $23 billion and $31 billion. The estimate purportedly includes the cost for environmental repairs, but critically, does not include the appraisal value of the land that the state would likely have to acquire to build the project.

The Texas General Land Office (“GLO”) is tasked with acquiring the land necessary to construct the Coastal Spine. The GLO has stated that right of entry easements could be a partial solution to avoiding eminent domain, but the U.S. Army Corps of Engineers (“Army Corps”) has stated a preference for landowner buyouts. The Army Corps is optimistic that landowners will willingly sell their land for the project but confirmed that eminent domain will be used if necessary.

The Army Corps is leading the design effort and recently held a public meeting at its Galveston district office with the GLO in an effort to persuade landowners that the use of eminent domain is a last resort. The GLO and the Army Corps will serve as joint project managers. The Army Corps has stated that the final alignment for the coastal barrier has not yet been decided, though a draft plan was released on October 26.

Currently, the project is in a 75-day public comment period, an attempt by the project managers to solicit public feedback. Both the GLO and the Army Corps have expressed a desire to minimize the economic and environmental impact of the proposed construction.

Residents of affected areas are worried about the impact that the project will have on their homes and businesses.There is substantial landowner concern that the state and federal governments may subject them to the forced seizure of their land via the power of eminent domain.

Though the GLO and the Army Corps are both open to public feedback, they played down the suggestion that public opposition would scrap the plan altogether. Nevertheless, they have hinted at an alternative for the coastal spine currently referred to as the“bay rim” construction. The bay rim project is thought to be less ambitious. It would add sea gates at San Jacinto, passing through West Galveston Bay, and terminate at the Texas City Dike. This plan, with current estimates placing its cost between $18 billion and $23 billion, would be a slightly cheaper alternative to the Coastal Spine. However, the coastal spine is thought to have a superior cost to benefit ratio and is preferred for that reason.

Ultimately, funding questions will have to be decided by Congress. Current thinking sees a 65/35 split between federal and state funding. The state would also be responsible for facilitating operations and maintenance through the GLO. Should the project receive funding, current estimates project a 2-5 year design phase, and a 10-15 year construction phase.

Time is of the Essence: Federal Court Rules in Favor of Immediate Possession for Pipeline Companies

In Transcontinental Gas Pipe Line Company, LLC v. Permanent Easements for 2.14 Acres in Conestoga Township, Lancaster County, Pennsylvania (“Transcontinental”), the Federal Court for the Third Circuit held that courts have the ability to grant possessory injunctions to condemning authorities once the substantive right to possession is established.

Put simply, once the court says the condemning authority can legally take possession of a property, the court can give the condemning authority immediate possession. One consequence of this decision for landowners is that they are no longer guaranteed their Constitutionally mandated just compensation prior to possession being given to the condemning authority. As long as the power to condemn has been properly established, the court may grant immediate possession to the condemning authority.

Before diving deeper into the Transcontinental decision, it should be clarified that this decision applies only to eminent domain cases arising under the jurisdiction of the Natural Gas Act (“NGA”). In other words, Transcontinental only affects pipeline projects falling under federal jurisdiction. The ability of a condemning authority to immediately possess a landowner’s property will vary case to case and will partially depend on the specific kind of project at issue as well as whether the case falls under federal law or state law.

When pipeline constructors operating under the jurisdiction of the NGA seek to condemn a property owner, they first must obtain the right use the power of eminent domain as a private entity. Under the NGA, a private pipeline company wishing to construct a pipeline may be granted the power of eminent domain for a specific project if they meet certain requirements. The three requirements are laid out under §717(h) of the NGA, and are as follows:

(1) The gas company must demonstrate that it holds a Certificate of Public Convenience and Necessity, which is issued by the Federal Energy Regulatory Commission (“FERC”);

(2) the company was unable to obtain the land via negotiation with the landowner;

(3) that the amount claimed by the owner of the owner of the property exceeds $3,000.

This is step one for any private pipeline constructor wishing to condemn. However, paths can diverge after step one as there is more than one “flavor” of eminent domain. The first is “standard” eminent domain, the ability of the pipeline to condemn an unwilling property owner. In standard cases, the title to the land passes, and the right to possess (occupy) the land vests after a final judgment and the determination of just compensation. In “quick take” condemnation, the condemning authority files a “declaration of taking” document. This document states the legal authority for the taking, the public use the project will have, and an estimate of compensation. Upon depositing the estimate compensation, title vests immediately with the condemning authority. For those who know how the Texas procedure for eminent domain functions, the “quick take” brand of eminent domain may seem somewhat familiar. However, the NGA authorizes “standard” eminent domain, but not “quick take” eminent domain. This distinction becomes important when discussing the landowner’s arguments.

But what if the condemnor wishes to take immediate possession of the land? Again, the NGA only provides for standard condemnation, not quick take condemnation. That’s where the Transcontinental decision comes in. The Court in this case held that if a condemnor could show that they validly possess eminent domain power under the three-part test given above, they can then ask the court to grant a preliminary injunction which will allow them to take immediate possession of the landowner’s property, even if just compensation has yet to be paid. There are four elements that a party must prove in order to obtain a preliminary injunction. They are as follows:

(1) There is a reasonable probability of success on the merits;

(2) there will be irreparable harm on the movant in the absence of relief;

(3) that granting the injunction will not result in greater harm to the nonmoving party; and

(4) public interest favors granting the injunction.

Upon meeting these two tests, one to prove a valid exercise of eminent domain power, and second, to show a need for a preliminary injunction, a condemning pipeline company can immediately possess the landowner’s property.

In Transcontinental, the Defendants were property owners whose land was being condemned by a private entity, the Transcontinental Gas Pipe Line Company, LLC (“Transco”), so that they could construct a liquid natural gas pipeline, the Atlantic Sunrise Expansion Project (“Atlantic Sunrise”).

The Court noted, regarding the validity of the process through which Transco obtained its status as a valid holder of eminent domain power, that Transco met all three requirements. The administrative review began in 2014 and took three years to complete. On the first element, FERC’s issuance of certificate in February of 2017 was proper. The second and third elements were met when the landowner rejected Transco’s purchase offers, which exceeded the $3,000 requirement.

In June of 2017, Transco asked the court for a preliminary injunction which would allow them to immediately possess the land. The request was granted in August of 2017 because the court found that each of the four elements of the preliminary injunction were satisfied. On the first element, the court found that Transco had already succeeded on the merits. It relied on a previous case Columbia Transmission, LLC v. 1.01 Acres as precedent. In that case, a grant of injunction in condemnation was proper because there was no outstanding merits issue. The second element regarding harm was met when Transco successfully showed that irreparable harm would result to the project’s construction schedule if access to the land was not swiftly granted.

The third element was met when the court found that greater harm would not result to the landowners as a result of the injunction being granted. Their reasoning was that Transco already had a substantive right to possession because the court already established that Transco validly held the power of eminent domain. Therefore, there was no harm to the landowner, and the issue of whether Transco could possess the land now or later was simply a timing issue. Finally, on the fourth element, the court held that the public interest favored the injunction because the construction of the pipeline would greatly benefit citizens of the state.

The landowners were not pleased with the court’s decision and appealed. They presented two arguments for the higher Court’s consideration: 1) That the injunction is unconstitutional because it amounts to a quick take condemnation, a deviation from the standard variety of condemnation provided for by the NGA, and 2) that even if the injunction did not technically constitute a quick take, it amounted to one for all intents and purposes because it had roughly the same effect.

The appeals court rejected both arguments, and affirmed the decision of the lower court, stating that the injunction allowing Transco to immediately possess the property owner’s land was valid. On the first argument, the Court said that the landowners had confused the issues. The real issue was whether Congress, in passing the NGA, intended to remove the Court’s ability to grant injunctions to enforce a validly established substantive right, in this case, the right to take. In other words, did Congress intend to prevent Transco’s immediate possession of the landowner’s property when it provided only for standard condemnation in the NGA?

The Court said no, adding that this case was strictly distinguishable from a formal quick take action for the following reasons: 1) Transco had validly established its substantive right of possession, and injunctive relief was granted only after the establishment of this right; 2) Transco followed proper form when it posted bond for three times the value of the land; 3) Transco does not formally posses title, but will only receive it after just compensation is finally determined and paid, and, if this were a quick take action, title would’ve vested in Transco immediately; and 4) The landowners had the opportunity to, and did, participate in the injunction hearings, something they would’ve been unable to do were this an actual quick take action.

On the landowner’s second argument, that the injunction amounted to a quick take regardless of whether it formally constituted one, the Court rejected this argument as well. The Court pointed out that this was not technically a quick take, and that meaningful distinctions in law existed between the present case and cases where a quick take actually occurred. Additionally, the Court pointed out that the mere existence of quick take condemnation does not mean that other kinds of immediate access are unavailable.

In short, the Third Circuit held that pipeline companies operating under the NGA can, in certain circumstances and after satisfying certain conditions, immediately possess the landowner’s property regardless of whether just compensation has been determined and paid to the landowner.

Written by Christopher Chan

Texas Values v. High-Speed Infrastructure

Despite persistent controversy, Texas Central Partners LLC (“Texas Central”) continues development of its high-speed railway between Dallas and Houston. Although construction has not formally begun, the administrative ramp up that precedes major infrastructure projects like this one has already ruffled some feathers. For those unfamiliar with the project, Texas Central plans to connect the two metropolitan areas with a 240-mile high-speed train route. Early estimates predict that the train ride will take only 90 minutes, a significant time saving when compared with the alternative four-hour journey via car. Project advocates claim that the rail system will boost economic growth in the two regions by cutting down on travel time, while opponents assert that the project will burden landowners with an improper use of eminent domain power.

The current construction plan is to build a substantial portion of the train parallel to an existing powerline right of way. Texas Central has been silent regarding how much of the necessary land they have already acquired, as well as amount of essential land that has still gone unpurchased. This continues a pattern of Texas Central being tight-lipped with respect to its progress with landowners, implying that many acquisitions still remain, and that efforts to acquire the necessary land have not proceeded smoothly. Progress has been further frustrated by a large number of landowners who are actively opposing the project. Indeed, many of these landowners have come together to form a grassroots opposition group called Texans Against High-Speed Rail. The organization is led by Kyle Workman, and seeks to stop the project dead in its tracks. So far, they have been unsuccessful.

The primary concern of project opponents is whether private companies, such as Texas Central, can use eminent domain. A face value examination of current Texas laws suggests that railroads can use eminent domain to take land for public projects. In 2012, Texas Central registered themselves as a foreign limited liability corporation (LLC), with plans to “own, develop, build and operate a railroad.” Despite the Texas Secretary of State’s approval of this business purpose, landowners have argued that Texas Central doesn’t qualify as a railroad since it’s not currently operating any trains. In response, Texas Central, claims that the $125 million dollars they have raised and spent on the design and development of a railroad qualifies them as a railroad operator. They further point out that they’ve received federal approval of their activities. In addition to the funds already spent, the company announced earlier this year that it had raised an additional $300 million in loans from Japanese lending entities.

Landowner grievances however, go far beyond the issue of whether a private company’s use of eminent domain is permissible. Many property owners have expressed concerns about the long-term effects that the project may have on their lands and livelihoods. For instance, most of the high-speed rails will be elevated on earthen berms to avoid stopping for intersecting roadways and other tracks. Many of the landowners potentially affected by this project are ranchers, passionate about their way of life, and determined to continue living it. Some have been on their land for generations; they were raised on it, and intend to raise their children on it. Their lives are rich with heritage and tradition, inextricably tied to the land they currently inhabit. These landowners worry about the berms in particular because they will form inaccessible barriers for livestock, tractors and other farm equipment. As a response, the company has promised to add pass-through culverts in portions that will be bermed. Another argument is that building a berm through the property will hurt its value by splitting it into two separate tracts. Others worry on how they will be able to pass down the land to their families.

Texas Central has begun to sue landowners who wouldn’t agree to let the company survey their properties. More than 20 of those cases have settled and over a dozen others have dropped. To date, no court has rule definitively on the issue of whether Texas Central actually has condemnation power. While both parties await a decision, Texas Central continues their plan for land acquisition.

Texas state officials side with Texas Central since the state’s transportation budget hasn’t kept pace with the developing areas. State leaders have thus welcomed private investment into mass transportation. Additionally, Texas Central’s promise that their project will provide jobs and spur economic development, has helped solidify support from government officials and business leaders.

The legislature may be the most visible battleground where the fight between the high-speed rail and private property values is taking place. On the one hand, the rail is a privately funded transportation infrastructure, the product of a robust and unrestrained free-market economy. On the other, it is an instance of free market activity which runs in direct opposition to another of Texas’ cornerstone values: private property rights, the ability of a landowner to enjoy the use of their land to the fullest and freest extent. What therefore, could be more contrary to private property rights than the forcible seizure of land? For two legislative sessions running, the free market has emerged the victor. Bills initiated by project opponents, designed to slow or eliminate the project, have suffered proverbial derailment, for now leaving the project clear to proceed, full steam ahead.

Whatever the fate of Texas Central’s HSR project, it has become clear by this point that the project, and with it, the specter of eminent domain, will not be going anywhere anytime soon. Affected landowners may wish to begin familiarizing themselves with their legal options. Short of legislative intervention or some other such response, a strategic assertion of their legal rights may be the landowners’ best chance of ensuring fair treatment in the face of this difficult process.

Written by Monica Kim and Christopher Chan