Texas pipeline condemnation can be a complex and tricky proposition. Modern condemnation actions are primarily governed by Texas Property Code Chapter 21, with recent legislation adding some new wrinkles. In addition, a body of interpretive common law has arisen to help guide litigants. This article briefly walks through a typical pipeline condemnation proceeding.
Broadly speaking, condemnation is a formal determination and judicial declaration that certain property will be taken from its present owner for the public’s use. The right to condemn property lies in the government’s inherent power of eminent domain. Texas Constitution Article I, §17 provides for “adequate compensation” when private property is taken, damaged or destroyed for public use.
“Public use” is a question of law, and any legislative declaration on public use is binding on the courts unless the use is clearly and palpably private.
Most condemnations occur due to public necessity for public projects. Typical examples include roads, transmission lines, rail lines, municipal buildings and hydrocarbon pipelines. The state of Texas may delegate the power of eminent domain to other entities, such as municipalities, university systems, hospital districts, sports authorities and common-carrier pipeline companies.
If a pipeline operator is classified as a common carrier, it may condemn private property. Generally, the pipeline operator obtains and files a Form T-4 permit from the Texas Railroad Commission when it plans on building, adding to or removing a pipeline. Typically, the majority of pipeline condemnations are mere easements to construct and operate, not complete takings of property.
Form T-4 requires, among other things: 1. the name of the pipeline owner; 2. a statement of whether the pipelines are interstate or intrastate; 3. the type of fluid transported; 4. the classification (common carrier or private line); and 5. the purpose (transmission, gathering, gas injection, terminal storage, gas plant). A lawyer filing a Form T-4 must attach a detailed plat.
Long before an attorney files any petition in state court, a pipeline condemnation procedure typically begins with project planning by the pipeline operator. Sometimes the operator holds public hearings, during which affected landowners provide input. After finalizing the pipeline’s mapped location, the pipeline operator must make a formal declaration of public necessity and notify all property owners whose land is affected.
The condemning entity then makes a bona fide offer to the property owners, which is a prerequisite to filing suit. The offer must disclose all appraisal reports produced or acquired by the condemning entity for the specific property within the previous 10 years. In turn, the landowner must disclose all appraisal reports produced or acquired by the owner that relate to the property and were used in determining the owner’s opinion of value.
Courts must liberally construe protections of the Texas statutory condemnation procedures for the benefit of the landowner. The condemning entity may not include any confidentiality provisions in its offer or agreement to acquire the property, and it must inform the landowner that she has the right 1. to discuss with others any offer or agreement regarding the proposed acquisition and 2. to keep the offer or agreement confidential, unless the offer or agreement is subject to open government laws.
In 2011, the Legislature enacted Chapter 2206 of the Texas Government Code, the Truth in Condemnation Procedures Act. The act requires, inter alia, that before a governmental entity initiates a condemnation proceeding, that entity must authorize the initiation of the proceeding at a public meeting by recorded vote and include as an agenda item in the public meeting notice that officials will consider use of eminent domain to condemn property.
The condemning entity also must provide a bill of rights statement to the landowner. This should include various statutory notices, such as: 1. notice of the proposed acquisition; 2. notification that the condemning entity is required to negotiate in “bona fide good faith”; 3. an assessment of damages to the owner resulting from the taking; 4. right to a hearing; 5. the owner’s options during a condemnation; and 6. the condemning authority’s obligations to the property owner. If the parties cannot agree on the property’s value, the condemning entity usually will begin condemnation proceedings.
District courts and county courts-at-law have concurrent jurisdiction in eminent domain cases. Generally, the lawyer for the condemning entity will file the petition in the situs county.
The petition must include: 1. a description of the targeted property; 2. a statement of the intended public use; 3. the name of the property owner or owners; 4. an averment that the parties are unable to agree on damages; 5. a statement that the condemning entity provided the Landowner’s Bill of Rights, if applicable; and 6. an averment that the condemning entity made a bona fide offer. Condemnation petitions also should list any lienholders with an interest in the property. Further, good practice counsels lawyers to include in the petition the pipeline company’s authority to condemn the property.
Once the lawyer files the petition, the trial judge appoints three special commissioners who conduct an administrative hearing and assess damages. During this hearing, the special commissioners consider evidence regarding the property’s value, property injury due to condemnation, benefits resulting to the remainder of the property and actual use of the condemned property. The commissioners then rule and file their written decision with the trial court, which notifies the parties.
Any party objecting to the commissioners’ ruling must file specific, written objections. Objections include abuse of discretion, an absence of public necessity for the condemnation, lack of authority to condemn, failure to use proper measure of damages, inadequate damages or excessive damages. If no objections are filed, the court will adopt the commissioners’ findings. However, a timely objection from either party nullifies the award and converts the administrative proceeding into a civil action in which the court will try all issues de novo. Injunctive relief is available. The appeal of the court’s judgment is as in other civil cases.