Supreme Court Rejects Railroad Commission Approval of Common Carrier Status in Condemnation Cases

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On August 26, 2011, the Texas Supreme Court reversed and remanded a decision by the Ninth Court of Appeals to affirm the common carrier status and the eminent domain authority of a carbon dioxide (CO2) pipeline company, Denbury Green Pipeline-Texas LLC ("Denbury Green").1 The Appellate Court had determined that Denbury Green had established its common carrier status as a matter of law because it had filed an application for a T-4 Permit with the Texas Railroad Commission (the"TRRC") which the TRRC had accepted.

In reversing the Appellate Court's decision, the Supreme Court held that merely filing the paperwork and offering to make the pipeline available for public use does not make the pipeline a "common carrier" with the power of eminent domain. Instead, the Supreme Court held that the pipeline also must show that a reasonable probability exists, at or before the time common carrier status is challenged, that the pipeline will serve the public by transporting gas for customers who will use the gas themselves or sell it to another party other than the carrier.

This holding will make it more difficult for pipeline companies to obtain and utilize the power of eminent domain to develop pipeline systems that serve only the affiliates of the pipeline.

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