Denbury asks appeals court for rehearing in common carrier case

In February, the Texas Ninth Court of Appeals reversed a Beaumont judge’s ruling recognizing Denbury Green Pipeline-Texas as a common carrier.

Believing the opinion “will have widespread impact throughout the pipeline industry,” Denbury filed a motion for rehearing on March 16 asking justices to “reconsider the standards it applies to the common carrier determination and the uncontroverted evidence that demonstrates Denbury Green’s common carrier status under the Supreme Court’s new Texas Rice test.”

For seven years, the case has bounced between courts 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.

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

Once back in his court, Floyd once again said the pipeline met common carrier status, prompting another appeal from the landowners.

When the case came before them again, 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.”

TRLP has argued that Denbury will use the pipes to carry its own CO2, which means it is not a “common carrier” and Denbury had no right to use eminent domain to take the Hollands’ land.

In their motion for rehearing, Denbury argues the Ninth Court measures common carrier status at the wrong point in time, maintaining the degree of public use is not an issue so long as there is some public use.

“Based on these misreadings of the Supreme Court’s new test, this Court wrongly holds that the evidence of public use in this record fails to satisfy the Supreme Court’s new common carrier standard,” the motion states.

“This Court’s opinion creates uncertainty in the pipeline industry and erroneously denies Denbury Green common carrier status. Denbury Green asks the Court to reconsider.”

In the 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 is represented in part by Marie Yeates of Vincent & Elkins LLP in Houston.

TRLP is represented in part by attorney William Christian.

Appeals case No. 09-14-00176-CV

Trial case No. E181-923