July 07, 2015 Article

Texas's Yellow-Brick Road to Acquiring Common-Carrier Status

A recent case in the Lone Star State presents a more stringent barrier to oil companies seeking eminent domain powers

by Justin Hodge and Ayla Syed

The Texas Rice Land Partners case marks a significant change in a Big Oil state’s protection of landowner rights as pipeline companies in Texas must now more definitively provide proof of their “public use.” This recent Texas case involves the ability of a for-profit oil company to invoke the power of eminent domain for an alleged “public” purpose: construction of its multistate carbon dioxide pipeline. Rather than assuming that constructing a pipeline to transmit fuel constitutes a public purpose, the case of Texas Rice Land Partners Ltd. v. Denbury Green Pipeline-Texas, LLC, digs into the question of whether a private oil company serves a “public” purpose or simply transports product for private gain. 363 S.W.3d 192 (Tex. 2012); see also 381 S.W.3d 465 (Tex. 2012). With the Keystone Pipeline consistently in the headlines for the past five years, eminent domain laws have been under increasing public scrutiny in all states. Many are questioning how a private Canadian company can condemn land in the United States and what constitutes public use in the context of takings by oil companies. Other Big Oil states, such as Louisiana, take a less protective approach for landowners and assume these pipelines have an inherent public-use nature because of the economic benefits the pipeline may bring to the state regardless of how many parties or people use the line. See Collins Pipeline Co. v. New Orleans E., Inc., 250 So. 2d 29, 35 (La. Ct. App. 1971), writ refused.

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