Saul Elbein, Texas Observer, August 22, 2012
Landowners have little recourse when a pipeline company uses eminent domain authority.
In Texas, property rights are sacred. It's encoded into our ethos—in this state, your ranch is your kingdom. If you catch a strangers inside your fenceline, by golly, you can shoot them. No one can infringe on your land.
Unless it happens to be a pipeline company. Then pipeline operators can do pretty much what they want. Even, it turns out, if that pipeline company is Canadian.
TransCanada is the Canadian multinational behind the proposed Keystone XL pipeline, a plan to ship bitumen—a low grade, asphalt-like petroleum product— from the tar sands of Alberta, Canada, to the Texas Gulf Coast, where it would be refined into crude oil. In trying to secure the pipeline's route through Texas, TransCanada had to gain consent from thousands of landowners along the way. Where landowners have refused to sign, TransCanada has gone to court and seized control of their land through eminent domain.
It appears that pipeline companies in Texas can seize whatever land they want and that no one is regulating the process.
Thanks to a loophole in the eminent domain laws, certain types of pipeline companies can take over private land. In theory, this process is supposed to be supervised, but it's not clear that anyone in the state of Texas actually audits a pipeline's eminent domain claim. There is no place where the buck stops—no one whose job it is to make sure a pipeline company's request for land seizure is reasonable.
If you’ve never had the particular delight of a pipeline company seizing your land, this is how the process works: A company representative comes to you. (We'll say he's from TransCanada, because that's timely, but really, it could be any of them.) He offers you money to let his line cross your land.
With this deal, of course, come restrictions on how you can use your land. You won't be able to develop the land; you may not even be able to drive over the pipeline with heavy equipment. There's also the threat of a spill. Rather than conventional oil, the Keystone XL pipeline carries a cocktail of bitumen—a semisolid petroleum product—mixed with liquefied natural gas [Correction: this statement is flat-out wrong. Actually, the "diluent" consists of light hydrocarbon liquids, generally byproducts which have condensed (hence, they are referred to as "condensate") out of the processing of natural gas.]. If there's a spill, as happened in 2010, to a similar pipeline the Kalamazoo River, the natural gas boils off as carcinogenic vapor and the bitumen sinks to the bottom of the water table, coating everything.
If you say no to the company—perhaps you don't like the contents of the pipeline; don't like the restrictions that come with it; maybe you just don't like the cut of the land man's jib; the company can go to a judge and get your land awarded to it through eminent domain.
“In Texas, we have what are called 'quick takes,'” says Debra Medina, a 2010 Republican candidate for governor who has become, in recent months, a leader of rural resistance to TransCanada's land seizures. “The company basically goes to the court, files condemnation petitions, says: ‘We are common carrier, have the power of eminent domain, we are taking this property.’ And that's all there is to it.”
You, the landowner, will not be invited to that hearing. You will find out afterward whether the judge has decided to assign some of your land to the pipeline company. At that point, you will be invited to a valuation hearing, where a three-member panel of fellow county landowners will decide on a price the company will pay for the condemned land.
You can fight this, if you want. But you're going to fight it on appeal. When the judge grants the condemnation request, the ownership of the land gets transferred to the pipeline company. If you want to keep control of your land, you have to convince a court to give it back. Which means you have to pay for a lawyer, and spend a lot of time in court.
Where it hasn't gained consent, TransCanada has taken landowners to court, and the court has awarded the company the land. One of these people was Julia Trigg Crawford, who runs a farm up near Paris, Texas. In 2011, TransCanada wanted her to give it permission to let the Keystone cross her pasture. Crawford refused; she was worried, she said, about a number of issues, ranging from pollution of the farm's water supply; destruction of Indian artifacts on the land; and her desire to keep the pasture available for future development. None of that mattered. TransCanada applied to seize her land and won. It was that easy. The company didn't even have to go to court.. (Crawford is appealing this decision.)
TransCanada's ability to do this was based on its assertion that the company is what's called a “common carrier” – a pipeline that will carry competitor's product at set, published rates. Under the Texas Natural Resources code, a “common carrier” can apply to seize land using eminent domain.
“I want to stress that we've done this in the vast, vast minority of cases,” David Dodson, a spokesperson with TransCanada's Gulf Coast Project (the renamed southern section of the Keystone XL) said. “Our preference is always to negotiate for easements with landowners. We negotiate in good faith. When those negotiations fail, we are allowed under Texas law to apply for eminent domain proceedings. Under clear language of statute, we are a common carrier—we transmit crude oil on behalf of others.”
This may well be true. The problem is, there is no governmental body that's going to audit TransCanada's claim that it's a common carrier. According to TransCanada, the common carrier designation was given by the Texas Railroad Commission—which oversees pipelines—via the T-4 permit form. On the permit form (see picture below), there's a place where the company lists whether the pipeline will be “private” – for use only by that company — or “public,” a common carrier.
But as the Texas Supreme Court ruled last year in the Texas Rice Land Partners vs. Denbury Green Pipeline case, the Railroad Commission doesn't check that a company's claim is, per se, true. Instead, the court found, the commission just relies on what the company put on the T-4 form.
“We have no authority over granting eminent domain—that's a private-property issue,” said Ramona Nye, spokesperson for the Railroad Commission. “The T-4 permit is just a registration process—it's not a permit to develop and construct a pipeline. So when a pipeline classifies themselves as a common carrier, we classify them as that based on the information that they provide to us. That will stand unless it's challenged in court.”
What if a landowner thinks a company has misused its authority? “They'll have to challenge it in Texas district court,” Nye said.
In other words, when an multinational pipeline company says it needs your land, that claim will be judged as reasonable until you can prove otherwise in court. This is the position Julia Trigg Crawford found herself.
In response to widespread outcry over the use of eminent domain, the state House Land and Resource Management Committee has been holding hearings. On August 17, Chairman Rene Oliveira, a Brownsville Democrat, announced that the committee would be addressing the need for a universally agreed upon standard, and a body to enforce it. “There seemed to be a consensus from both industry and property rights advocates that the Legislature should set the evidentiary standard for common carrier status, and determine the agency that will verify compliance before a company exercises eminent domain powers. Establishing such a standard will help property owners and the industry.”
It's true that eminent domain seizures are vastly outnumbered by consensual lease agreements. Debra Medina has found court records for 89 cases, which is a tiny fraction of the more than 1,400 properties the line would cross.
But the ease with which TransCanada can take land, and the resources of its legal department, gives the company a way to intimidate landowners into settling. Julia Trigg Crawford told me that when TransCanada first threatened eminent domain proceedings, she was so frightened that she said she was willing to sign—only to find that the company initiated eminent domain proceedings anyway. Mike Haythorn, who runs a tree farm in East Texas, said that he and his partners eventually signed with the company because they didn't have the money to fight anymore.
This use of eminent domain isn't unique to TransCanada—it's happened all over the oil patch.
“If you went through the average process with the average property owner, you'd think it was in a third world country. You really just don't have any freedoms.” said Calvin Tillman, the former mayor of DISH, Texas, who has become known as an anti-fracking activist. Tillman is critical of what he sees as abusive tactics by oil and gas companies. “We saw this in DISH—the pipeline people come in, blow smoke up your butt, tell you about all the money. And then you ask the wrong question, and they immediately turn around and start threatening. They say, ‘sign, or we'll just come and take it.’ A lot of people just fold."