Justices strike down Judge Floyd’s ruling granting Denbury common carrier status

Unlike their decision six years ago, on Thursday justices seated on the Ninth Court of Appeals reversed a Beaumont judge’s ruling recognizing Denbury Green Pipeline-Texas as a common carrier.

The case has been in the courts for seven years, and began when Jefferson County landowners James E. Holland and David C. Holland, their business Texas Rice Land Partners and their tenant Mike Latta were approached by Denbury Offshore to conduct a survey on their land. Denbury had plans to build a gas pipeline through the Hollands’ property.

When the landowners declined, Denbury claimed the pipeline would be for public use, exercising the right of eminent domain – the legal authority for a government entity or a private entity authorized by the government to take private property for public use.

Since then, the case has worked its way through Jefferson County District Court, the Ninth District appeals court and the Texas Supreme Court.

In 2008, Judge Donald Floyd, 172^nd District Court, ruled Debury was a common carrier, and the appeals court agreed, but the Supreme Court reversed and remanded the case back to Jefferson County.

There Judge Donald Floyd once again said the pipeline met common carrier status, prompting another appeal from the landowners.

This time around, justices considered a new standard for determining common carrier status that was developed by the Supreme Court when it heard the Denbury Green case.

The standard requires evidence that there is a “reasonable probability that at some point after construction the pipeline will serve the public by transporting gas for at least one customer who uses the pipeline to transport CO2 that the customer either keeps or sells to someone other than an affiliate of the pipeline company.”

During oral arguments, TRLP attorney William Christian told justices the case revolves around the intent of Denbury at the time it planned to build the pipeline. He said they have evidence to show that the company wanted the pipes to carry its own CO2 for its own use, which means it is not a “common carrier” and Denbury had no right to use eminent domain to take the Hollands’ land.

In their Feb. 12 opinion, the Ninth Court found a question remains on whether the pipeline would serve the public, reversing Floyd’s ruling and remanding the case for further proceedings.

Denbury Green, represented by Marie Yeates of Vincent & Elkins LLP in Houston, argues it has several contracts that will show the company is not the end user of the CO2.

Appeals case No. 09-14-00176-CV

Trial case No. E181-923