Tag Archives: politics

Texas Supreme Court Pipeline Ruling Sets back Texas Land Owner Rights

03 Friday Feb 2017

Posted by in common-carrier status, Denbury, Environmental Permitting, Landowner Rights, Pipelines, Politics, Property Rights, Supreme Court, texas condemnation, texas condemnation lawyer, texas eminent domain, Texas Eminent Domain Attorney, Uncategorized

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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.

Supreme Court Rules California Raisin Reserve Requirement is a Taking

17 Friday Jul 2015

Posted by in Politics, Property Rights, Supreme Court, texas condemnation, texas condemnation lawyer, texas eminent domain

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In its most recent round of decisions, the Supreme Court ruled in favor of our favorite raisin farmers in Horne v. USDA and determined that the raisin reserve requirement mandated by the California Raisin Marketing Order did indeed constitute a taking under the Fifth Amendment (read our previous blog on Horne v. USDA here). This ruling is a welcome move in the right direction to better protect individual property rights.

Chief Justice Roberts delivered the Court’s 8-1 opinion in which Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas, and Samuel Alito concurred in full and Justice Stephen Breyer, joined by Justices Elena Kagan and Ruth Bader Ginsburg, concurred in part and dissented in part. Justice Sonia Sotomayor wrote a solo dissent.

“The reserve requirement imposed by the Raisin Committee is a clear physical taking,” Roberts wrote in the majority opinion. “Actual raisins are transferred from the growers to the Government. Title to the raisins passes to the Raisin Committee.”

As with almost any government taking, the original property owner is entitled to just compensation for his or her property. The Supreme Court majority determined the amount initially assessed by the government as a fine for the Horne’s withholding their raisins from the reserve constituted the fair-market price for the Horne’s raisins.

“The Government has already calculated the amount of just compensation in this case, when it fined the Hornes the fair market value of the raisins: $483,843.53,” Roberts wrote. “There is accordingly no need for a remand; the Hornes should simply be relieved of the obligation to pay the fine and associated civil penalty they were assessed when they resisted the Government’s effort to take their raisins. This case, in litigation for more than a decade, has gone on long enough” (citations omitted).

This point of the ruling garnered a dissent in part by Breyer, who reasoned that a lower court should be the proper venue for determining compensation for the Hornes.

In her dissent, Sotomayor reasoned that the marketing order does not constitute a per se taking and was, instead, a reasonable government regulation on partaking in the raisin market. Sotomayor also construed the marketing order as a regulatory taking rather than a total, per se taking because the Hornes held a residual interest in the reserve raisins. She reasoned they would receive a portion of the proceeds if the government sold those raisins and, therefore, had not lost all of their property rights to those raisins.

Her reasoning did not prevail in this case, and the Supreme Court’s ruling in Horne v. USDA sets a precedent that will help better protect property owners from unjust takings.

Marvin Horne, who has been entangled with this matter for more than a decade, said he was astounded by this victory, the LA Times reported.

“It’s been 11 years, and a lot of water over the dam,” he said.

Co-authored by Justin Hodge and Ayla Syed.

The Eminent Domain Reforms that Could Have Been

19 Friday Jun 2015

Posted by in Politics, Property Rights, texas condemnation, texas condemnation lawyer, texas eminent domain

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As Texas’ 84th Legislative Regular Session closed on June 1, several bills pertinent to eminent-domain reform were sent to the political junkyard where other legislative “almosts” and “could-have-beens” also reside.

Senate Bill 1601, which would have excluded high-speed rail from using eminent domain and thwarted the development of the Texas Central High-Speed Railway between Dallas and Houston, never made it out of the Senate Transportation Committee. The bill was initiated by Senator Lois Kolkhorst, R – Brenham, who filed it with the Texas Senate on March 12 this year in order to better control the use of eminent domain by private companies. To read more about this bill, please read our blog.

Senator Kolkhorst also initiated Senate Bill 474, which died in the Texas House of Representatives after passing through the Senate by a 25-6 vote. In an effort to encourage fair initial offers, the bill would have required those seeking to acquire property to reimburse landowners for their attorneys’ fees if a panel of special commissioners, judge or jury determined the value of the land to be at least 20 percent higher than the amount offered by the condemnor during a condemnation proceeding. The bill initially required compensation only if the value exceeded the offer by at least 10 percent, but that number was changed to 20 percent in the Senate Committee on State Affairs. The House Land and Resource Management Committee left the bill pending. To read more about SB 474, please read our blog.

Senate Bill 479 faced a fate similar to SB 474’s as it made its way out of the Senate in a 29-1 vote only to be left perpetually pending in the House Business and Industry Committee. The bill, authored by Senator Charles Schwertner, R – Georgetown, would have more narrowly defined the phrase “actual progress.” In Texas, a landowner can repurchase his or her land if the condemning party has not made “actual progress” toward the intended use of the property within 10 years of the taking. “Actual progress,” however, can be difficult to define, and SB 479 would have helped remediate that ambiguity. To read more about SB 479, please read our blog.

Co-authored by Justin Hodge and Ayla Syed.

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

Private Toll Company Takes a Toll

24 Friday Apr 2015

Posted by in Property Rights, texas condemnation, texas condemnation lawyer, texas eminent domain

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State Representative Cindy Burkett, R-Sunnyvale, filed a bill to strip the Texas Turnpike Corporation of its power of eminent domain, so it would no longer have the authority to condemn and take land. Currently, Texas Turnpike Corp. may be the only private entity that can still condemn land to build toll roads. In 1991, the State of Texas repealed a law that gave private toll companies the power of eminent domain, but Texas Turnpike Corp. was grandfathered.

House Bill 565 sponsored by Representative Burkett was sparked by public outcry over the Texas Turnpike Corp.’s attempt to build the State’s only private toll road northeast of Dallas. The company had originally intended to build the road as part of its Northeast Gateway project, which aims to create an alternative to nearby Interstate 30. However, after intense opposition from cities and residents on the road’s path, the company backed down from building it.

Texas Turnpike Corp. has been searching for a project to develop for a while. When the company’s chief executive, John Crew, was asked how many projects the company had completed in its more than 20-year history, Crew responded “we haven’t done any.” Last year it eventually focused on the Northeast Gateway project.

Neal Barker, a spokesman for the corporation, said the facility offered by the project is “a reliever to 30 and a time saver.” Crew added that the company is just trying to build projects that the state and others can’t afford.

Contrastingly, landowners and residents in the path of the toll road were overwhelmingly opposed to building the road. Christopher Kurinee, a Hunt Country resident, claimed the Texas Turnpike Corp. was “a private company trying to take private land.”

Allowing private companies the power of eminent domain for “public use” continues to be a contentious issue in Texas as private companies can generate profits from their projects. According to Representative Burkett, “the eminent-domain process should begin and end with officials who are directly accountable to the voters, not to corporate shareholders.”

House Bill 565 was referred to the House Committee on Transportation and approved as substituted. It will likely be placed on the calendar for consideration by the full House of Representatives.

See the bill here.

Co-authored by Justin Hodge and Maithili Bagaria.

If you have any questions about HB 565, feel free to contact Justin Hodge at jhodge@jmehlaw.com

High-Speed Train Between Houston and Dallas May Not Come So Fast

11 Saturday Apr 2015

Posted by in Dallas, Houston, Politics, Property Rights, texas condemnation, texas condemnation lawyer, texas eminent domain

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The anticipated high-speed passenger rail line that would travel between Houston and Dallas may not come to fruition if the Texas Senate passes a bill proposed to limit the eminent-domain powers of companies that own such lines.

The proposed bill, initiated by Senator Lois Kolkhorst, R – Brenham, defines a high-speed rails as an “intercity passenger rail service that is reasonably expected to reach speeds of at least 110 miles per hour” and excludes companies that own such rail systems from exercising the power of eminent domain for those projects. The Texas Senate Transportation Committee voted Senate Bill 1601 out of committee on April 8, according to The Texas Tribune.

Texas Central High-Speed Railway, the private company developing the $12 billion train line, has maintained that it has private funding for the entirety of the project and would be able to compensate landowners for the property needed to complete the project more than the government typically can during condemnation.

“We have the ability to pay more because it’s not taxpayer dollars,” Texas Central President Robert Eckels said. “We, in fact, can pay more as a private company and expect that we will be paying more.”

Proponents of the proposed bill argue that the private company should not have the authority to use eminent domain for its own profits.

“Eminent domain is probably the most horrific power that the government has, and to dole that out to individual companies that can misuse that or use it for projects that result in profits, we have to be very careful about doing that,” said Senator Bob Hall, R – Edgewood.

Representatives of Texas Central, however, feel that the company is being singled out as hundreds of private firms are currently authorized to use eminent domain in Texas, according to the Texas Tribune.

“All that we ask is that this train be treated like any other private train in Texas,” said Richard Lawless, Texas Central chairman and CEO. “It does not seem fair to us that this train should be prohibited in Texas just because it goes faster than other trains.”

While the state government may not authorize the use of eminent domain to develop this project, Texas Central has proposed its route to the Federal Railroad Administration.

“Quite honestly, I’d rather do this as a Texas project,” Eckels said.

The train is expected to travel to Dallas from Houston in less than 90 minutes, making one stop in College Station. The company hopes to complete the project by 2021, but a few legislative road blocks may slow its progress.

Read the proposed SB 1601 here.

Co-authored by Justin Hodge and Ayla Syed.

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

JMEH Partners Testify in Front of Senate Committee, Advocate for Bill to Stop Eminent-Domain Abuse

27 Friday Mar 2015

Posted by in Politics, Property Rights, texas condemnation, texas condemnation lawyer, texas eminent domain

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Marrs Ellis & Hodge, LLP, partners Justin Hodge and Luke Ellis testified in front of the Texas Senate Committee on State Affairs on March 9, 2015, in favor of a bill that would better protect landowners in eminent domain proceedings and help ensure that the fear of legal fees would not prevent landowners from seeking just compensation for their property.

Senate Bill 474, proposed by Senator Lois Kolkhorst, R — Brenham, would require those seeking to acquire property to reimburse landowners for their attorney’s fees if the award by the special commissioners exceeds the condemnor’s offer for the property prior to the proceedings by at least 10 percent.* The bill would also require reimbursement of attorney’s fees if the case moves beyond the special commissioners’ hearing to court and the award exceeds the condemnor’s offer prior to the proceeding by at least 10 percent.

Luke Ellis

Luke Ellis

Ellis and Hodge were the first among the five individuals
invited to testify in front of the Texas Senate Committee on State Affairs. Ellis opened the testimonies by describing a situation in which a landowner purchases a piece of land for $300,000. The landowner then builds a home on the land and spends $200,000 on construction, bringing the landowner’s total cost to $500,000.

An entity wants to use that land for a project that would serve some public purpose, and that entity offers the landowner $300,000. The landowner, knowing the amount he or she has spent on the property, then seeks legal counsel from an attorney. The attorney fights the case for a period of one to four years, at the end of which a jury awards the landowner $500,000.

“Has that landowner recovered in full for the benefit that [his or her] land has provided to our entire community?” Ellis asked the committee after setting up his example. “The answer, under the Texas system as it exists today, is a very definitive no.”

Ellis stated that the landowner does not recover in full in this process because of the attorney’s fees and legal costs required to combat low offers in court, especially when the landowner has to pay for experts and appraisals to counter the condemnor’s experts and appraisals. Ellis then went on to read the language in both the 5th Amendment of the U.S. Constitution that requires condemning authorities to give landowners just compensation for their properties and Article 1, Section 17 of the Texas Constitution that requires adequate compensation.

“But, in Texas, as the system exists, you don’t get just compensation or adequate compensation,” Ellis said. “You get adequate compensation less the cost it takes you to achieve adequate compensation, and that’s not a fair system for Texas landowners.”

SB 474 graphic2

This graphic is not representative of every path a condemnation case can follow and does not in any way offer legal advice. This graphic simply presents a the number of paths a hypothetical case could follow in context of SB 474.

The debate on SB 474 centers on whether the bill would have a fiscal impact on the government and increase the cost of condemnation. When presenting her bill, Senator Kolkhorst stated that the bill would not significantly increase costs to the government, and Ellis agreed with this in his testimony. Ellis said this bill would decrease litigation as it would incentivize condemning authorities to make a fair offer that landowners would want to accept initially.

“Condemnors have absolutely no incentive to treat landowners fairly. They’re a business. There is no penalty to make low offers to start,” Ellis said of the current system, adding that condemning entities often make low offers to “wash away” those afraid of a legal battle.

Ellis also described the abuse of power that often occurs in these legal battles as condemnors who can afford to run up legal costs and/or expert fees often do so to tire the landowner’s financial resources and ability to fight low offers.

“We believe [SB 474] is the first and a very strong step in trying to balance the scale,” Ellis said.

Hodge also testified and gave a personal testimony of his family’s experience in an eminent-domain proceeding. His family owned a ranch near the Bell-Williamson county line, and his grandfather had spent his lifetime drilling more than 70 water wells on that ranch looking for water to feed their livestock.

Hodge’s grandfather passed away, and Hodge’s father found seven commercial-grade water wells on the property. Hodge’s family contracted with local communities to make use of those water wells until the State of Texas, through the Department of Transportation (“TxDOT”), decided to build a safety rest stop on the ranch in 2006.

“They wanted 28 acres, and, in fact, they were taking the property where six of those seven commercial water wells existed,” Hodge said. “That was a shock to us. We begged and pleaded with TxDOT to move the safety rest stop.”

TxDOT did not move the location of the rest stop. Hodge’s family fought the state’s $350,000 offer for six years. The state did not include any compensation for the water underneath their property in its offer and argued that the water underneath the property did not belong to the landowners, a position that Hodge said ran contrary to nearly a century of case law in Texas.

The Hodge family case went in front of a jury of six people in Bell County, who awarded the family $5.8 million as just compensation for their loss of the water and land.

“You’re probably asking, ‘Well, aren’t you made whole? Isn’t your family made whole in that situation?’ And, the answer is no,” Hodge said to the committee. “We had to pay, as a family, more than $2 million in attorney fees to get that $5.8 million, and that doesn’t include expert costs associated with [the legal battle]. That was money my grandfather had worked hard for to pay for college educations for his great grandchildren, my father’s grandchildren, and my children.”

“This is a bill that will help landowners like my family, landowners…who have to bear a huge cost for the community” Hodge added. “[SB 474] stops abuse.”

Senator Kolkhorst modeled the bill after similar bills in effect in other states in an effort to help stop this abuse.

“The spirit of SB 474 is just to say, if you need to, you can access the courts,” Kolkhorst said. “And, if you were wronged, those fees will be paid by those who wronged you.”

SB 474 is currently pending in the Texas Senate Committee on State Affairs. If passed as currently written, the bill would go in effect September of 2015.

*In Texas, if a landowner and the condemning authority cannot agree to an amount for the property, a panel of three court-appointed special commissioners will determine an award for the property.  If either party objects to the award, the case then proceeds to a court where a judge or jury determines the fair-market value of the property in question.

If you want to hear Ellis and Hodge’s testimonies, please visit  http://youtu.be/H9psHmXLexw. If you have any questions about SB 474, please feel free to contact Justin Hodge at jhodge@jmehlaw.com.

Co-authored by Justin Hodge and Ayla Syed.

Abbott Boosts Road Budget by $4 Billion

21 Saturday Feb 2015

Posted by in Bryan, Houston, Navasota, Politics, Property Rights, texas condemnation, texas condemnation lawyer, texas eminent domain, TxDOT

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Governor Greg Abbott made public roads a focal point during his first State of the State Address earlier this week and included it as the third of five emergency items Texas will tackle this year.

The new governor’s budget includes an additional $4 billion for Texas roads. The governor attributed this increase in budget to funding from Proposition 1 (read more here), the current State Highway Fund, and the reallocation of half of the state’s new and used vehicle sales taxes outlined in Senate Bill 5 (read more here).

As evident from the governor’s State of the State Address, transportation will remain at the forefront of politics this year. The Texas Department of Transportation (TxDOT) has a number of projects already in motion already and announced a list of potential projects earlier this year (read more here).

One of the projects picking up speed right now is the Aggie Expressway, expected to be completed within the next few years. This project will extend State Highway 249 from Houston to Navasota, where it will connect to Highway 6 in Grimes County. The expressway could also require up to nearly 600 acres of right-of-way acquisitions.

While a less congested path to Aggieland, or College Station, will certainly help fans commuting on game days, this path will come at a cost to many local land owners.

If you have any questions regarding this or any other road projects, please feel free to contact Justin Hodge (jhodge@jmehlaw.com). To read Abbott’s full Address, click here.

Coauthored by Justin Hodge and Ayla Syed.

With the Keystone decision looming, will the President propose a quid pro quo?

03 Monday Jun 2013

Posted by in Pipelines, Politics

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To many, the ultimate approval of the Keystone XL pipeline project is inevitable. Environmentalists and oil and gas advocates have long been engaged in a heated debate that has narrowed its focus to TransCanada’s Keystone XL pipeline.

Here are a few of President Obama’s options: a) approve the pipeline and offer an energy-efficient tax incentive or alternative energy goal proposal for the future; b) approve the pipeline and disregard the cries of environmentalists; c) strike the pipeline and disregard upset oil and gas investors that are likely to pursue the pipeline’s construction anyways; d) strike the pipeline and offer some kind of proposal to alleviate what to advocates of traditional energy forms would seem like an utter crisis; e) indefinitely postpone the decision entirely. The problem with creating an additional proposal to his decision to strike or approve the pipeline is that it would require approval from Congress, which we all know has been facing much difficulty seeing eye to eye. Regardless of the path President Obama chooses, someone is bound to be upset; such is the nature of dramatic once-in-a-term decisions like this. Because of the opportunity’s rarity, the decision to keep or remove the contentious pipeline will leave a lasting impact on how the Obama legacy will be perceived. What is left undeciphered now is through which lens the President’s term will be remembered – will he be envisioned as the environmental advocate or the oil and gas subjugate?

To read about additional possible outcomes of this contentious debate, please click here.

Inside Out: A New Way of Looking at the 2012 Presidential Debate

04 Thursday Oct 2012

Posted by in Politics

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“All of the increase in natural gas and oil has happened on private land, not on government land. On government land [Obama’s] administration has cut the number of permits and licenses in half. If I’m president, I’ll double them and bring the oil offshore from Alaska and I’d bring that pipeline in from Canada … I want to make America, North America, energy independent so we can create jobs.” Among the many contentious points of discussion during last night’s presidential debate was TransCanada’s Keystone XL pipeline. Obviously, a number of questions and criticisms arise in response to last night’s debate on these issues.

However, in speaking for or against these issues of progress versus sustainability, one particular player in the game was left unnoticed: the landowners. Not once in the debate did either Governor Romney or President Obama mention the property rights of land and business owners who face the real consequences of these projects. Furthermore, only a select few social media outlets even mention this controversial subject. Instead, we speak of tax reforms and the structure of the economy. We speak of health care and education. Don’t get me wrong; all of these issues are important, but how does anyone successfully solve a problem by looking at it only from the outside in? Our political leaders need to address the issues that concern our nation by pressing past the barriers of the outside perspective. Looking inside out, we find how cuts or increases in taxes can affect asset value, interest rates, and incentives to invest. We see how the trickle-down effect of the economy never reaches the average middle class landowner. Changes in health care policies may affect how landowners respond to oil spills, like the 12 suffered by Keystone XL just last year.

There is no right way to make policies, but there is a way to ensure the basic rights of property owners. The answer is a middle ground. We must abandon partisan bias and focus on the real issues at hand with an eye that sees from the inside out rather than the outside in. In the end, it is the landowners’ rights that must be protected.

Public Versus Private – A Political Affair

08 Wednesday Aug 2012

Posted by in Politics, Property Rights

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Owning property is a private affair. One of the primary benefits of owning property is the right to exclude others from your land. If the government or a private company with the power of eminent domain condemns your land, you lose the right to exclude. Learn more about how to fight back when your land is condemned.

Read more at the DallasMorningNews.