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Beaumont justices hear oral arguments in pipeline 'common carrier' case

By Marilyn Tennissen | Dec 19, 2014

Appellate judges in Beaumont are considering a case against a pipeline company that could more clearly define how Texas law defines a common carrier. 

Attorneys for Texas Rice Land Partners Ltd. and the Denbury Green Pipeline-Texas presented oral arguments to justices on the Texas Ninth District Court of Appeals in Beaumont on Dec. 18.

The case has been in the courts for more than six 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.

The property owners balked at allowing the survey, and the matter became a legal fight. Eventually, Denbury took the land anyway and built the pipeline, claiming the pipeline would be for public use and gave the company the right of eminent domain. Eminent domain is 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 been through Jefferson County District Court, the Ninth District appeals court and the Texas Supreme Court.

The district court ruled it 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, and the company is seeking summary judgment.

However the landowners say the case has yet to be heard by a jury, and they want the appeals court to send it back to Judge Floyd for a trial.

The appellate judges have to consider 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.”

For Texas Rice Land Partners, attorney William Christian of Graves Dougherty Hearon & Moody in Austin 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.

The company went back later and entered into a contract with Air Gas, Christian said, and called it a ruse because it was a buyer/seller relationship, not a shipping contract.

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.

Yeates said that includes a contract Denbury has with the federal government to capture CO2 by-products from industrial facilities and sequestering it into underground storage.

She said the landowners are trying to make Denbury look like the “bad guys” and are misinterpreting the law.

The oral arguments were heard by Justice Steve McKeithen, Charles Kreger and Hollis Horton.


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