New 'common carrier' rules could affect Jefferson County landowners' suit

Marilyn Tennissen Dec. 5, 2014, 12:36pm


New rules defining the “common carrier” status of oil and gas pipelines in Texas may help Jefferson County landowners in an ongoing battle over eminent domain.

The Texas Railroad Commission has approved modification to the rules governing what pipeline operators must do to become common carriers and get the power to condemn land for their projects. 

Previously, a pipeline company needed only to check a box stating that it is a common carrier on the T-4 Permit to Operate.

The new guidelines will ask companies for additional information about the project and require that the information be accompanied by a sworn statement to its accuracy, according to a press release from the Railroad Commission on Dec. 3.

The Holland family has been asking for at least that level of clarification in its fight against the Denbury Green Pipeline-Texas LLC.

Texas Rice Land Partners Ltd., James Holland, David C. Holland and Mike Latta have been involved in a suit in Jefferson County since July 2008.

Texas Rice and the Hollands own about 3,800 acres in Jefferson County, and Latta leases the property for rice farming. Some of the land is located along the Green pipeline route

On Dec. 18, the Court of Appeals for the Ninth District of Texas will hear oral arguments in the case in its Beaumont courtroom.

Case Background

The case began when Denbury Green wanted to survey Texas Rice’s property for its proposed pipeline route and argued that it was a common carrier with the power of eminent domain.

On Jan. 5, 2009, Jefferson County District Court Judge Donald Floyd, 172nd District Court, ruled Denbury Green met common carrier status.

The company used its eminent domain powers to build on Texas Rice’s land, and pipeline construction was completed in 2010. It began delivering CO2 from the Jackson Dome to the Hastings Field, and is currently in use.

The Ninth District appeals court affirmed Floyd’s decision, but the Texas Supreme Court reversed it.

In deciding the case, the Supreme Court adopted a new standard for determining common carrier status. 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."

Denbury Green submitted new evidence that it claimed supported the court's new standard and again Judge Floyd granted Denbury Green’s second motion for summary judgment.

The landowners appealed, claiming that at the time it was planning to build the pipeline, Denbury Green did not have a third party to use the end product that was not an affiliate.

However Denbury Green claims that it has had Airgas as a CO2 customer since the beginning, and that Airgas is not an affiliate.

The company also claims that under the Texas Business Operations Code, a pipeline is a common carrier “if it holds itself out to the public for hire.”

The Hollands assert that Denbury Green’s original T-4 Permit stated it was an “intrastate” pipeline, and only later changed it to “interstate," and has made false statements about its customers.

Next week the landowners will be asking the appeals court to reverse and remand the case for trial.

Jefferson County Case No. E181-923

Appeals Court Case No. 09-14-00176-CV

 

The Adopted Rule Amendments approved by the Railroad Commission will take effect on March 1 and include the following requirements:


  • permit applications must now include additional information including requested classification and purpose of the pipeline or pipeline system as a common carrier, a gas utility or private line operator;

  • permit applications must include a sworn statement from the pipeline applicant providing the operator’s factual basis supporting the classification and purpose being sought for the pipeline;

  • if applicable, the pipeline operator must submit documentation such as a contract or tariff for third-party transportation in the case of a common carrier, along with any other information requested by the Commission;

  • the pipeline T-4 permit, if granted, shall be revocable at any time after a hearing if the Commission finds that the pipeline is not being operated in accordance with state laws and Commission rules and regulations.

  • the applicant must acknowledge the eminent domain provisions in the Texas Landowner’s Bill of Rights.


 

 

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