Pipeline Loses Effort To Condemn Private Land

Private property rights advocates scored a big victory in a Texas condemnation case in the ongoing battle between pipelines and landowners over the power of eminent domain. (See our last post for a decision with the opposite result). 

An appeals court in Crosstex NGL Pipeline, LP v. Reins Road Farms, Ltd. denied “common carrier” status for Crosstex, who wanted an injunction to prevent the landowner from interfering with Crosstex’s efforts to survey his property for a gas liquids pipeline.

The court found Crosstex was not a “common carrier” with eminent domain power under either the Texas Natural Resources Code or the Texas Business Organizations Code. Crosstex’s pipeline would transport “natural gas liquids” not “crude petroleum” as that term is defined by the Natural Resources Code, and there was evidence the pipeline “will not actually be used by the public,” a prerequisite to common carrier status under the Business Organizations Code.

The Natural Resources Code confers common carrier status on any person who “owns, operates, or manages a pipeline or any part of a pipeline in the State of Texas for the transportation of crude petroleum to or for the public for hire, or engages in the business of transporting crude petroleum by pipeline[.]” The court did not consider “natural gas liquids” to be “crude petroleum” under the statute.

The finding on the public use question is important to landowners opposing condemnation. Crosstex’s public use T-4 permit from the Railroad Commission did not automatically confer common carrier status. A landowner is still entitled to dispute a pipeline/condemnor’s common carrier status despite the issuance of a RRC T-4 permit. This is consistent with the Texas Supreme Court’s 2012 decision in Tex. Rice Land Partners, Ltd. v. Denbury Green Pipeline-Tex., LLC.

Prior to Denbury, about all the pipeline had to do for common carrier status was fill in a box in its RRC permit application. It’s not that easy anymore.

There are several ways the songsmith could view this case, in the unlikely event that condemnation law is his muse.  One is from this particular pipeline’s perspective. (Landowners who weren’t as lucky as here should like the reference to the six-gun). Another is through the eyes of the landowner.  That’s a stretch here. Nobody accuses the landowner in our case of being in such a tough spot.