Ilya Somin • September 3,
2011 6:33 pm
In a
potentially important recent decision, Texas Rice Land Partners v. Denbury Green Pipeline the Texas Supreme Court has invalidated the use
of eminent domain for a private pipeline to be owned by an oil company. Gideon Kanner has some good commentary on the decision here.
In Texas and many other
states, public utilities and other “common carriers” have the power to use
eminent domain to acquire land for their operations. In this case, however, Denbury, an oil company, sought to use eminent domain for a
pipeline that would only transport carbon dioxide to and from its own
facilities, without providing any service to the general public. In theory, the
public would have the right to use the pipeline, but in practice no one but Denbury would have any reason to do so. The Texas Supreme Court
quite rightly concluded that a “common carrier” taking must actually serve the
general public, not just the carrier itself:
To qualify
as a common carrier with the power of eminent domain, the pipeline must serve
the public.... [E]xtending the power of eminent
domain to the taking of property for a private use cannot survive
constitutional scrutiny. The Denbury Green pipeline
would not serve a public purpose if it were built and maintained only to
transport gas belonging to Denbury from one Denbury site to another. As a constitutional matter, we can
see no purpose other than a purely private one in such circumstances....
We
accordingly hold that to qualify as a common carrier of CO2 under Chapter 111
[of Texas law], a reasonable probability must exist, at or before the time
common-carrier status is challenged, that the pipeline will serve the public by
transporting gas for customers who will either retain ownership of their gas or
sell it to parties other than the carrier.
The case has
been remanded for the trial court. In order to prevail there, Denbury would have to prove that its pipeline will
transport carbon dioxide for the general public and not just its own use.
Some press commentary suggests that this decision
will have a major impact on future pipeline takings in Texas. That may be so. But Texas eminent domain law contains several
other loopholes that make it easy for private interest groups to get government
to condemn property for their own benefit. As I discuss in this article
and here, Texas’
post–Kelo eminent domain reform law includes
a very broad definition of “blight” that enables almost any property to be
declared blighted and transferred to private parties. Oil companies and others
seeking to use eminent domain for private pipelines might be able to get the
land they want by having it declared blighted. This might require greater
political clout than the direct private exercise of eminent domain under
Chapter 111. The oil company in question would have to lobby the local
government or redevelopment agency. However, Texas oil companies certainly have plenty of
political influence.
UPDATE: I
have not been able to find a link to the decision online. It is, however,
available on Westlaw and Lexis.
UPDATE #2: I
have corrected some minor errors in the initial version of this post. Because I
made the corrections within a few minutes of the original posting, I am not
going to describe them in detail, since I don’t think there was any time for
the mistakes to influence public discourse on the case.
http://volokh.com/2011/09/03/texas-supreme-court-forbids-taking-of-land-for-private-oil-pipeline/