Steps in the Texas Eminent Domain Condemnation Process (Pipelines)
Notice: This material is not legal advice, and is not a substitute for credentialed, qualified, legal counsel, licensed to practice law in Texas. Any property owner who is negotiating an easement agreement should retain, and consult qualified legal counsel. Although no lawyer is required to negotiate an easement agreement, Texas property codes, taxation issues, and other civil statutory matters associated with utility, oil & gas, pipeline and similar matters are legally complex, and require specialized knowledge in this practice area. Property owners would likely be best served by engaging appropriate legal counsel. This material is provided for informational purposes only.
When common carrier or private pipelines, transmission lines, communications lines, railroads, roads, and similar infrastructure systems cross private property, an “easement” is required. This material specifically covers potential exercise of eminent domain condemnation, for easements associated with pipeline systems.
An easement is a legal right to use another’s land for a specific, limited purpose. There are many types of easements. With respect to easements associated with pipelines, they are also known as right-of-way, sometimes abbreviated as ROW, or R-O-W. A pipeline easement is created by a land or property owner, the Grantor, to a pipeline operating company, or Grantee.
The easement is a legal, contractual agreement, and it specifies the Grantor, and Grantee’s rights with respect to the easement. An easement does not confer, or transfer absolute ownership from the Grantor to the Grantee, it provides a right to use, specific to pipeline easements, a right-of-way to allow the Grantee to cross private property.
A pipeline easement, for right-of-way, is classified as an “appurtenant” easement, said to “run with the land.” As such, it becomes part of the property ownership, and any easement agreement in force transfers with the sale, or transfer of the property as part of an estate or trust.
Every landowner contemplating grant of an easement has the the ethical, and legal right to fair treatment, equitable negotiations, and clear answers to questions about the easement agreement terms.
State law in Texas requires the following:
the landowner must be presented with a Landowner’s Bill of Rights, a specific document prepared by the State of Texas, that enumerates the landowner’s legal rights with respect to easements. Here is a link to that document:https://www.texasattorneygeneral.gov/agency/landowners-bill-of-rights
Prior to the grantee’s final offer, the easement agreement must include a copy of the certified appraisal used to generate the compensation, or offer proposed in the agreement. The Grantee, or Grantee’s agent contracted this appraisal, so it is not independent, or neutral. The appraisal may, or may not reflect the actual value of the property affected by the easement. Landowners will want to obtain their own independent appraisal, or conduct their own research for comparative purposes in determining if the Grantee’s offer is fair.
The offer for the easement agreement must be a “bona fide offer”, as described in Texas Property Code, Chapter 21, Section 21.0113, as referenced in the following link:http://www.statutes.legis.state.tx.us/Docs/PR/htm/PR.21.htm
The Landowners Bill of Rights, and the Texas Property Code, Chapter 21 can be alarming to read, as both reference eminent domain, and eminent domain condemnation. Eminent domain condemnation is the process by which a “taking” of private property occurs, should the landowner, and pipeline company be unable to reach an agreement.
In this instance, there are two primary considerations:
a landowner is classified as a “willing seller,” who may desire to grant an easement. In this case, the negotiation may proceed favorably for both the landowner, and the Grantee, resulting in a mutually agreeable offer, and easement terms, and a signed easement agreement. In this scenario, taking by eminent domain condemnation is avoided. Another possibility is that negotiations fail, either based on the compensation in the offer, or terms, and no easement agreement is completed. In this outcome, an impasse exists, and the formerly “willing seller” transitions into the position, and role of “unwilling seller.”
a landowner is classified as an “unwilling seller,” when one of two conditions occur – as outlined in the prior paragraph, a landowner may transition from “willing seller” to “unwilling seller” due to the inability to reach an acceptable offer, either based on compensation, and/or terms. The other case is the landowner may be unwilling, at any price and/or terms, to consider granting an easement for right-of-way. In this case, the landowner for whatever reason is not interested, or willing, to grant an easement on his, or her property. As such, the landowner is categorized as an “unwilling seller.”
The “taking,” or eminent domain condemnation proceeding forces, through the courts, the grant of easement to the condemnor, and compensates the landowner, for the “taking” of the property associated with the easement. In this case, the landowner loses the ability to negotiate any terms of the easement agreement – a special commission, appointed by a judge decides on some basis, the compensation due the landowner, and the pipeline operating company proceeds to take the property, and puts in place their notion of a “standard form” easement document, which does not allow the landowner any negotiated terms. This is generally unfavorable to a landowner.
A taking, through eminent domain condemnation may only occur under certain circumstances. A taking through eminent domain condemnation may only occur by actions of the government (in this case State), an agency of the State, or by an entity that has been granted statutory authority for exercise of the powers of eminent domain, for example certain kinds of common carriers – utility companies, gas distribution companies, railroads, or common-carrier pipelines, which include in certain cases pipelines used for transport of crude petroleum, crude petroleum products, natural gas liquids, or compressed natural gas. The courts make the determination regarding common carrier status. Any landowner who falls into the unwilling seller category is strongly urged to seek qualified, specialty legal counsel.
This document has two purposes; one, to help you, the landowner understand the steps associated with Eminent Domain Condemnation in Texas, and two, as an aid to help you make choices about how to fight the process, if you are opposed to granting an easement to the pipeline company or fall into the category of “unwilling seller” for any reason.
There are two classes of participant landowners in the acquisition of easement, or right-of-way, for a pipeline project. The first is the willing-sale participant. This is a landowner who wishes, willingly, to negotiate with the pipeline company to grant an easement through his, or her private property. The second is the unwilling-sale participant – in this case, the landowner does not wish to grant an easement on his,or her private property, or negotiate with the pipeline company for access. The unwilling- sale participant then becomes the potential target for an eminent domain condemnation proceeding, brought by the pipeline company, to take, for a price, a one-time damage payment, the requested easement.
If you are being approached by a pipeline company, or its affiliate agents, including surveyors, land-men, or other parties, and you do not wish to negotiate an easement, there are steps you can take to protect your private property.
Recent developments in the courts have changed the landscape, balancing it with landowner’s private property interests, and the use of eminent domain condemnation by private companies, like pipeline operators.
There are fourteen (14) steps in the process of Eminent Domain Condemnation in the State of Texas. Recent court outcomes have enabled challenge to eminent domain condemnation action at Step 3 of this process, whereas prior to August of 2011, the first opportunity to challenge condemnation in court would have been at Step 13, typically after the point in the process in which the pipeline company would have taken possession of a landowner’s property.
The following table outlines the fourteen steps in the process of eminent domain condemnation, the process by which a government, or in this case, a private company acquires the use of a landowner’s private property for purposes of an easement.
- Certificate of Public Convenience and Necessity determined by condemnor.
- Condemnor files a T-4 form with the Railroad Commission of Texas and checks the box for a common carrier.
- Advance survey crews may enter condemnee’s land.
- Landowner contacted by right-of-way agent for proposed easement.
- If parties are unable to agree, condemnor must comply with TPC Section 21.0113 and have the proposed easement appraised by a certified appraiser before a final offer can be made.
- The final offer must be at least the amount of the certified appraisal, and at least 30 days must transpire between the initial offer and final offer.
- The landowner has 14 days to reject or accept the final offer. If rejected, the condemnor petitions the court for the appointment of special commissioners.
- A three-person special commission is appointed by judge to conduct informal hearing on compensation due landowner.
- Special commissioners send a 20-day notice of hearing to all interested parties.
- Hearing conducted.
- Special commissioners determine and post compensation due landowner with judge. (Two of three special commissioners must concur.)
- Condemnor can take possession of land by posting proper security with court.
- The landowner or condemnor may appeal special commissioners’ award before the first Monday following the 20th day after the special commissioners’ award is filed.
- If appealed, a formal court trial is then conducted. A six-person jury may be asked for to determine the facts in the case.
These fourteen steps represent the complete path through the eminent domain condemnation process from beginning to end.
In the both Brewster, and Presidio County, the term court refers to the District Court, as there are no county courts in these regions. The term condemnor refers to the entity attempting to gain access, and easement, through the power of Eminent Domain Condemnation, in this case, the pipeline company. The term condemnee refers to the person or entity being targeted by the condemnation proceeding, usually a land or other property owner.
There are some important nuances associated with the eminent domain condemnation process.
In the usual sense, pay particular attention to the notion that in Step 12, the condemnor may take possession of a landowner’s property, before the landowner has ever had the opportunity to challenge the condemnor in a court of law.
The hearing conducted in Step 10 is extra-judicial – it happens outside a court of law, and is conducted by three Special Commissioners, appointed by the District Court judge.The requirements for a Special Commissioner are:
he, or she must be a resident of the county in which the eminent domain condemnation action is occurring
he, or she must be a landowner in that county
There are otherwise no special requirements.
The Special Commissioners are responsible for evaluating only the value of the damage payment, a one-time monetary payment, associated with granting of the easement.The Special Commissioners are able only to make a determination of the fair market value of that easement – they have no role in determining the status of the condemnor, i.e. whether or not they are entitled to exercise eminent domain condemnation.
The damage payment associated with the easement is a one-time, non-recurring payment. The terms of an easement granted through exercise of eminent domain condemnation are whatever the condemnor (the pipeline company) dictates –the landowner has no say in the easement terms and conditions, if the easement is granted through eminent domain condemnation.
The first opportunity a landowner has in the usual case, to contest eminent domain condemnation, known as an appeal, is at Step 13 of the process. The appeal is filed in the District Court. In most cases, the appeal will then proceed to a six-person jury trial in the District Court.
At the final step, Step 14 in the process, the landowner may then challenge the condemnor’s right to access the power of Eminent Domain, through the condemnation process. This challenge is usually made on the basis of the company’s status as a gas utility (natural gas pipeline), or common-carrier (hydrocarbon liquids pipeline),as opposed to a private pipeline.
If the court finds in favor of the condemnee’s appeal, the granting of the easement is reversed. If the court finds for the condemnor, the easement stands as granted.
Again, note that the damage has generally already occurred – the condemner takes possession of the landowner’s private property in Step 12, long before there is ever any chance to challenge the process. If the landowner prevails in his, or her appeal, the court will grant damage payments, reimbursement for legal fees, and typically a punitive component, to the condemnee. If the court finds for the condemnor (pipeline company), the landowner/condemnee will be responsible for both parties court costs.
On Aug. 26, 2011, the Supreme Court of Texas issued its opinion in Texas Rice Land Partners Ltd. v. Denbury Green Pipeline-Texas LLC (No. 09-0901), which provides landowners another avenue of challenging an Eminent Domain Condemnation proceeding.
This is of critical importance, if you, the landowner do not wish to grant an easement to the pipeline company.
The Texas Rice Land Partners Ltd. v. Denbury Green outcome allows a landowner to refuse survey access to his, or her property, at Step 3. If the pipeline company challenges, through a lawsuit in the court, for survey, and attempts to obtain a court order for survey access, the landowner may challenge this in the court.
It requires highly specialized legal knowledge, experience, and expertise to correctly exercise this challenge at Step 3 of the eminent domain condemnation process.
The significant benefit related to the Texas Rice Land Partners, Ltd. v. Denbury Green case is that it allows the landowner to challenge, and possibly stop the eminent domain condemnation action much, much earlier in the 14-step process, and if the landowner is successful in court, it will avoid the taking of his or her private property entirely.