JMEH Partner Justin Hodge Speaks to Texas Lawyer on Trump’s Eminent Domain Impact

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Image of current border fence. Courtesy of The Independent.

In an interview with Texas Lawyer, attorney Justin Hodge discussed the possible impact of Trump’s border wall and other infrastructure policies on the eminent domain industry. He noted that highway projects have historically been the largest cause of eminent domain use, and considered the effect of increased federal funding on project frequency. On the border wall, Mr. Hodge drew the distinction between Federal and State court cases, suggesting that State court cases, being more frequently brought, tended to resolve more rapidly. He also noted that State procedures guaranteed a jury trial, in contrast to Federal cases. Justin Hodge is a Partner at Johns Marrs Ellis & Hodge LLP. He represents landowners exclusively, and is based in Houston.

 To read the full interview, click here.

Kinder Morgan Pipeline Explosion in Refugio Texas

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Refugio explosion from a distance. Photo courtesy of KOAA News.

At approximately 1:00 am on Wednesday morning, a Kinder Morgan pipeline exploded in Refugio Texas. The explosion produced a fireball stretching 200 feet into the night sky, illuminating the area. Though there were no injuries, the blast was felt and heard as far as 60 miles away, and woke residents in the area.

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A still taken from a video shot by the dashboard camera of a responding Officer. Courtesy of ABC Local.

 

Incidents like these highlight the latent danger that landowners are exposed to when pipelines are constructed on their property.

The entire video can be found here.

Texas Supreme Court Pipeline Ruling Sets back Texas Land Owner Rights

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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.

Texas Land Associations form Texas for Property Rights Coalition

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Larry Joiner, Director of the Texas Farm Bureau, Speaks at a Texans for Property Rights Meeting in Lufkin.

Fifteen Texas Organizations launched the Texans for Property Rights coalition with the objective of enhancing landowner protections against condemning authorities. These organizations recognize that Texas’ continued population growth will lead to an increase in the construction of infrastructure required to service these populations. Pursuant to their mission, they will be holding a series of meetings to inform landowners about the condemnation process, and address their concerns regarding eminent domain use. Luke Ellis, an Eminent Domain Partner at Johns Marrs Ellis & Hodge, is a featured speaker at many of these events.

As 95 percent of all land owned in Texas is held privately, many construction projects require the taking of private land, which invariably causes conflict. Though it is possible for builders to acquire the necessary land without eminent domain, purchase negotiations for private property often fail because a willing buyer-willing seller environment is non-existent. In cases where a purchase cannot be made, the builders resort to eminent domain to dispossess the landowner of their property. Often, the projects for which the land is being taken are unsolicited by the landowner, and can damage the property in a manner inconsistent with the land’s current or intended use. All these factors serve to add monetary, emotional, and time costs to such transactions.

The following organizations are coalition members:

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.

The Texans for Property Rights website can be found here.

No Holds Barred: Admitting or Excluding The Lowball Offer @ALI_CLE Eminent Domain Conference

Justin Hodge, a Partner at Johns Marrs Ellis & Hodge, will present “Eminent Domain and Land Valuation” at the American Legal Institute’s Continuing Legal Education Conference on Eminent Domain. The Course will take place on January 27, 2017 in San Diego, California, and presents an excellent opportunity to receive expert instruction in this area of law. In addition to an advanced course, there is a “Condemnation 101” course offered for newer attorneys. We hope to see many of our eminent-domain colleagues at the conference.

To get Twitter updates, follow the American Law Institute: @ALI_CLE

To learn more or register, click here.

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Eminent Domain Power is Spreading Rapidly

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Pipeline under construction. Photo courtesy of PLH Group Inc.

In 2015, Texas’ 82nd 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.

Eminent Domain Meeting Series to be hosted by Texas Land Associations

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Pipeline Construction. Photo Courtesy of MotherJones.com.

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.

Kinder Morgan Prevented from Using Eminent Domain by Ohio Court

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Pipeline under construction. Photo courtesy of The Intelligencer.

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.”

Powerline Condemnation Likely in Guadalupe County, Texas

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Power lines during Sunset. Photo courtesy of Colorado Wire and Cable.

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.

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“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.