News Column

Texas Property Rights Upheld in Pipeline Ruling

May 24, 2013

A company seeking to run a pipeline across East Texas instead crossed the wrong Texan, and now a state appeals court ruling in the dispute could make it harder to condemn land and snatch private property for future pipelines.

Private property right advocates cheered an opinion issued Thursday by the Ninth Court of Appeals in Beaumont in a case involving wealthy East Texas landowner -- and storied trial lawyer -- Wayne Reaud, who challenged the company that insisted it could take his land through the power of eminent domain.

"It stood up for individual property rights, which is something that Texas has always valued," Reaud said of the court.

Reaud's fight began late 2011 when Crosstex NGL Pipeline L.P. told him it was going to run a pipeline across Reins Road Farms, a piece of land in Jefferson County Reaud said he bought for his children to develop someday.

Reaud told the company he wasn't interested in selling and later refused to give surveyors access to the property, he said.

Reaud recalled the company saying it could exercise eminent domain because it is a "common carrier," a status it claimed by checking a box on a form with the Railroad Commission.

State law gives common carriers eminent domain powers for pipelines that are public -- available for use by other companies -- but not private lines. In the past, some companies have claimed common carrier status so they could condemn land when obstinate landowners refused to sell.

"There was arrogance, and there was mean-spiritedness in these people," Reaud said. "At that point, I lost my temper."

Crosstex didn't respond to an interview request.

Reaud, who made tens of millions suing big tobacco companies, refused to back down. The parties ended up in district court, where Reaud argued that the Crosstex wasn't really a common carrier and shouldn't have the right to condemn and take his land.

The judge agreed with Reaud, and Crosstex appealed the case.

On Thursday, the appeals court said in an opinion that there is evidence that Crosstex's pipeline "will not actually be used by the public."

The case now goes back to the district court, where a judge will examine Crosstex's status as a common carrier, said DeWayne Layfield, the lawyer for Reins Road Farms.

The opinion will empower people who don't want to lose their property to a pipeline, said Layfield.

"It's helpful to a landowner or citizen who is trying to figure out if a pipeline is common carrier or not," Layfield said.

Jason Skaggs, executive director of government and public affairs for the Texas & Southwestern Cattle Raisers Association, said honest pipeline companies won't be affected by the opinion, but it sends a clear message to pipeline companies: "You better be who you say you are."

Skaggs, and Texas Farm Bureau President Kenneth Dierschke, pointed out another opinion Monday from the same court finding that TransCanada's Keystone XL pipeline is a common carrier.

"These decisions mean that pipeline companies cannot have a free rein with no accountability to the landowners they affect. Bad actors will have to defend themselves in court," Dierschke said in a statement. "Those who operate in good faith and respect property rights will continue to build Texas' energy infrastructure."

Thure Cannon, president of the Texas Pipeline Association, said Thursday evening his association is "analyzing the potential impacts of these opinions and how these opinions might affect the plans to construct pipelines and new facilities."

Thursday's opinion comes as the Legislature engages in a hushed battle over common carriers.

The conflict has played quietly, as two of the nation's richest families -- the powerful Bass family from Fort Worth and the Koch brothers of Kansas and New York -- are pitted against one another over energy companies' ability to condemn and take private land.

The Bass family, which controls one of the nation's largest privately held oil businesses in Bass Enterprises Production, has sided with landowners who want protection from companies that pose as common carriers to take advantage of eminent domain laws.

Meanwhile, the Koch family -- which runs Koch Enterprises, a multinational conglomerate with petroleum interests -- has taken the position along side the energy companies to support streamlined laws letting the Railroad Commission and Travis County courts handle all challenges to common carrier status, not individual courts in the counties of the disputes.

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Source: Copyright Austin American-Statesman (TX) 2013


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