Judge Floyd rules Denbury Green Pipeline can use eminent domain, despite previous reversal from Texas Supreme Court

For the second time, Jefferson County District Court Judge Donald Floyd has declared the Denbury Green pipeline to be a common carrier with the power of eminent domain, despite the fact that the Texas Supreme Court has already overturned that decision once.

At issue since June 2008, the case involves Southeast Texas landowners, known as the Texas Rice Land Partners Ltd., and plans by Denbury Green Pipeline Texas LLC to construct a pipeline for transporting carbon dioxide.

The pipeline company tried to take the farmers’ land under the doctrine of eminent domain, stating it had been given status as a common carrier by the Texas Railroad Commission.

In Jefferson County, Judge Floyd ruled Denbury Green was a common carrier with the power of eminent domain. The case has been appealed all the way to the Texas Supreme Court and then sent back to Floyd’s court.

Denbury Green’s latest motion for summary judgment was argued before Floyd on Feb. 7.

Floyd approved, signed and filed on Feb. 18, but counselors were not aware of the order or provided copies of the signed order until they arrived at a status conference on March 24.

In a telephone interview, defense attorney Terry Wood of Beaumont said the Texas Rice Land Partners “definitely” planned to appeal, again.

Case History

In 2008, the TRLP tried to stop the construction through injunction, and the pipeline company hit back with a lawsuit to prevent them from interfering with work.

In January 2009, Floyd ruled that Denbury Green was a common carrier with the power of eminent domain. Eminent domain is the power of government to take property and convert it into public use.

The rice farmers appealed to the Texas Ninth District Court of Appeals in Beaumont, arguing that Denbury Green planned to use the pipeline for its own CO2, without making the pipeline open to other shippers. 

The appellate justice upheld Floyd’s decision in September 2009. Justices Charles Kreger and Steve McKeithen wrote the decision. Justice David Gaultney dissented, stating that Floyd and the other justices gave too much weight to the findings of the Texas Railroad Commission.

When the case went to the Texas Supreme Court in 2011, the justices agreed with Gaultney, and reversed and remanded the case back to Judge Floyd.

Denbury Green wanted the Supreme Court to rehear the case, and asked the court to "modify its opinion to remove the prohibition against common carrier status where a pipeline company transports gas for its affiliates"

“Without explanation, the Court’s opinion declares that a CO2 pipeline owner is not a common carrier if the pipeline’s only user is the owner itself 'or an affiliate',” Denbury Green argued. “This holding disregards the legally separate character of affiliates under Texas law, departs from the Court’s own precedent, and creates confusion on an issue of great importance to Texas business.”

The company also argued that the Supreme Court cited no authority when it stated that “[a] pipeline does not serve a public use if it only transports gas for a corporate parent or affiliate. . . . Transporting gas solely for the benefit of a corporate parent or other affiliate is not a public use of the pipeline.”

The Supreme Court reversed and remanded the case to Floyd on Aug. 26, 2011.

Meanwhile, Wood said the case continued to move along with additional discovery.

Almost two dozen amicus curiae letters were submitted to the Texas Supreme Court in 2011 and 2012, including briefs from other pipeline companies and the Texas Railroad Commission asking the court to rehear the case. The high court denied a rehearing.

This year, the pipeline company argued for summary judgment again on Feb. 7, and Floyd took the matter under advisement. He made his decision on Feb. 18.

“Upon due consideration, the court concludes that there are no genuine issues  as to any material fact and that Plaintiff is entitled to judgment as a matter of law,” Floyd wrote. “It is further ordered that Plaintiff is, as a matter of law, a common carrier with the right of eminent domain.”

In addition to Wood, the Texas Rice Land Partners were represented by William Christian of Graves, Dougherty, Hearon & Moody PLLC in Austin.

Denbury Green was represented by Thomas Zabel of Zabel Freeman in Houston, George Murphy of Vinson & Elkins in Houston and Harry Wright of Wright & Pitre in Port Neches.

 

Jefferson County Case No. E181-923

Ninth Court of Appeals Case No. 09-0900002-CV

Texas Supreme Court Case No. 09-0901