In booming, growing Texas, an inherent tension exists between the government’s need to build and expand public infrastructure and the need to protect fundamental property rights under the U.S. and Texas constitutions. Texas’ population growth, its thriving oil and gas economy, and its shared border with Mexico have created interesting eminent domain issues in both federal and state courts.
In the aftermath of Hurricane Harvey, hundreds of federal inverse condemnation lawsuits were filed in the Court of Federal Claims. The lawsuits assert that the U.S. Army Corps of Engineers intentionally flooded properties upstream and downstream of the Addicks and Barker reservoirs in western Houston in order to protect other areas of Houston from flooding if the reservoirs were breached. Judges Susan Braden (downstream) and Charles Lettow (upstream) of the U.S. Court of Federal Claims are managing these suits akin to multidistrict litigation cases with a handful of test properties set to go to trial in 2019. These cases will likely rely heavily on precedent from the latest U.S. Supreme Court case focusing on temporary floodings as takings, Arkansas Game and Fish Comm’n v. United States in 2012. In that 8-0 decision, Justice Ruth Bader Ginsburg held that government-induced temporary flooding is not exempt from the takings clause.
In addition to disputed issues of value, these inverse condemnation cases are likely to focus on other hotly-contested legal issues. Those include whether there is merit to the government’s position that one flood is not enough to create a taking and whether the government can escape liability through the exigent circumstances of a hurricane.
The border wall also will impact federal eminent domain practice in the future. Many predicted the government would file numerous eminent domain cases in 2018 to build President Donald Trump’s “big, beautiful wall,” although the anticipated volume of federal condemnation cases has not materialized. Instead, the small number of existing federal border wall condemnation matters were filed after President George W. Bush signed the Secure Fence Act of 2006. During his presidency and that of President Barack Obama, the government built almost 700 miles of wall and fencing, mostly in New Mexico, Arizona and California where the federal government controls a 60-foot-wide strip of land adjacent to the border.
Fencing in Texas is more problematic; Over 95 percent of Texas is privately owned, so the existing fence has huge gaps between segments and often sits far back from the border. Much of the fencing in Texas that currently exists is located in populated areas, such as Brownsville and El Paso. There will be several legal and appraisal hurdles to overcome if new border wall condemnation lawsuits are filed. For example, determination of the land’s highest and best use and value after a taking when large portions of the property are located south of the border fence can be difficult. Access to the property south of the border wall creates other logistical and legal headaches that equate to significantly reduced market value.
Texas also has seen a great surge in state condemnation cases from oil and gas pipelines in 2018. This year, for the first time ever, Texas exported more crude oil than it received and is on track to become the biggest oil producer after Russia and Saudi Arabia. And it doesn’t look like Texas will be slowing down in 2019. Pipelines are being built at such a frenetic pace from the Permian Basin down to the Houston shipping channel that many property owners are wondering whether their land has been unwillingly converted into a pipeline corridor. These great highway-sized pipeline corridors have prompted eminent domain attorneys to consider alternative valuation models for their clients. For example, if a property has been crossed with multiple oil and gas pipelines, is the new highest and best use of that property now a pipeline corridor? This valuation analysis could lead to a legitimate recovery of just compensation for property owners who begrudgingly now play a vital role in Texas’ oil and gas future.
Lastly, a new 2018 case out of the Texas Supreme Court is positive for landowners in valuation disputes. In Morale v. State, the Texas Department of Transportation sought to expand an existing road in Denton County, but that project required demolishing a portion of a vehicle repair business owned by Stephen and Kimberly Morale. The court held that the state’s previous, but revoked, designation of the Morales’ property as “displaced” was relevant in determining the property’s highest and best value. Displacement, according to the Texas Administrative Code, is a status assigned to a landowner when a state highway project forces them to relocate. The government’s displacement designation was favorable to the landowners, who used it to support one of their valuation theories, resulting in higher compensation.
All of these developing issues illustrate how Texas and U.S. eminent domain law may evolve at a time of great population and economic growth in the Lone Star state.
Luke Ellis and Justin Hodge are eminent domain lawyers with Marrs Ellis & Hodge LLP. Ellis and Hodge represent only property owners, typically against roadway, pipeline and powerline takings. The firm also represents Houston-area property owners in litigation involving flooding from the Addicks and Barker reservoirs following Hurricane Harvey.