House Bill Tackles Pipeline Companies’ Eminent Domain Powers

In a state where property rights are considered to be on par with the right to breathe, pipeline companies can seize private land by invoking the power of eminent domain. In what state Rep. Rene Oliveira (D-Brownsville) deemed “a ridiculous process,” a company merely has to assert that it’s a “common carrier” to gain the power of eminent domain.

This common carrier status, which means the company is carrying competitors’ products as well as its own to serve the public good, grants companies the right to take land without getting landowners’ consent. Oliveira’s House Bill 3547 attempts to set up a process to ensure companies claiming the status are actually common carriers. The House Business and Industry Committee discussed the bill last night.

In Texas, there is currently no process to verify whether a company is actually carrying competitors’ products. All a company has to do is check a box on its permit application to the Texas Railroad Commission.

The commission doesn’t have the authority to ensure the company can claim the status. It does not ask for evidence or otherwise monitor the pipeline. This leaves the door open for companies that want the power of eminent domain free to do so without any oversight. The practice has resulted in a number of lawsuits across the state. Landowners who feel their land was taken unfairly (and sometimes without notice), have sued pipeline companies, and in at least one case the courts have determined that some pipeline companies “game the permitting process” to get eminent domain powers.

With House Bill 3547, Oliveira aims to change the process so that pipeline companies can’t abuse the common carrier designation. It would require the State Office of Administrative Hearings to review the common carrier application and conduct a hearing to determine if a company actually intends to be a common carrier. A company would have to prove a certain percentage of the pipeline’s capacity (the bill stipulates 10 percent, though Oliveira says the number is arbitrary and will likely be changed) was being used to carry a competitor’s fuel. The hearing should include “an aggressive and thorough investigation” before a company is granted the status, Oliveira said at the hearing.

Last night, the majority of witnesses testified in favor of the bill. Supporters included Julia Trigg Crawford, a farmer from Direct, Texas (near Paris) whose legal case against TransCanada, the company behind the Keystone XL pipeline, has gotten a lot of attention in the national media.

“It is gut-wrenchingly refreshing to hear this dialogue at this level with the openness you guys have,” Crawford told the committee. “Because landowners have been screaming at the top of our lungs to elected officials and judges and people at every agency we can find for years with everyone just holding their hands up.”

She went on to say that while the bill–if passed–will not affect the outcome of her case or the fate of her farm, it could prevent other farmers and landowners from experiencing what she has gone through. The judge in her case ruled that Keystone XL is in fact a common carrier, but Crawford appealed the decision.

“Until an energy company provides proof that they really serve the public good, and until they man up and display transparency instead of just talking about it, they do not have more of a right to my land than I do,” she said. “The state and the agencies should be asking these questions, and not the landowners. I think that’s what you’re addressing in your bill.”

James Mann, who represents the Texas Pipeline Association, testified that he agrees with the main goal of the bill, but thinks pipelines should only have to pass the common carrier test once. He echoed industry demands that the bill establish a review process, but bar landowners from appealing a common carrier designation once it is made. He also recommended the industry-friendly Railroad Commission conduct the hearings, rather than the State Office of Administrative Hearings.

The bill would also require pipeline companies to notify landowners who could potentially be impacted by the pipeline. Public hearings would be held in affected counties to give the landowners a chance to present concerns and to learn about pipeline projects. The industry also did not want to have to notify the public, but most advocates supported a mail notification.

The people who registered for and against the bill but didn’t testify were almost evenly split, and many left the room when the committee moved onto its last bill of the day. HB 3547 was left pending before committee.