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Legislators Hone Question of Eminent Domain

The Texas House Committee for Land and Resource Management heard testimony Monday regarding the use of eminent domain by oil and gas companies to build on private land for what they say is the public good.

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Instead of spending her days harvesting crops, Texas farmer Julia Trigg Crawford told lawmakers that she is now "a farmer locked in legal battle" to protect her family land.

Last year, Canadian company TransCanada said that it had the right to run its Keystone XL pipeline through her property. The company argued it was a "common carrier" with the right to exercise eminent domain to build on private land. But Crawford would have none of that, and she contended that the Native American artifacts and water on her farm needed to be protected. 

The Texas House Committee for Land and Resource Management on Monday heard testimony from Crawford and others concerned about companies that are using eminent domain to install pipelines on private property. While Crawford and others criticized the companies self-asserted right to the land, the companies contend that the pipeline they are installing is a "public good."

Under the current procedure, pipeline operators must obtain a “T-4” permit from the Texas Railroad Commission if they plan to build a new pipeline, to add to an existing pipeline, to delete a portion of the pipeline or to change operators for the pipeline. In this form, the pipeline operator — not the TRC — designates whether the line will be operated as a common carrier, gas utility or a private line, said general counsel for the TRC Lindil Fowler. Operators who are found to have lied, are subject to potential felony charges.

If a pipeline is classified as a common carrier, the operator can use eminent domain to build on private property. But the designations are at the center of disputes in several lawsuits by Texas landowners, including Crawford. 

The committee discussed whether operators themselves should be able to decide whether they are "common carriers" with the right to use eminent domain or whether the state should have more oversight in the process.

Committee chairman, state Rep. Rene Oliveira, D-Brownsville, asked at the start of testimony, should the legislature set a standard to better define how a pipeline can qualify as a common carrier? Or should the decision be left for the courts?

Crawford said the current “honor system” does not work.

“It appears the burden now falls on citizens” Crawford said. “We feel we are the victims of an energy industry allowed to go a bit rogue.” 

Both James Mann, a lawyer for the Texas Pipeline Association, and Phil Gamble, who represents the Texas Gas Processors Association, said the Legislature could centralize the process by instructing the TRC to evaluate and designation which operators are common carriers. 

“The energy industry in Texas is dependent on a predictable, regulatory environment,” Gamble said.

Mann suggested the TRC use existing market studies or research done by investors to determine whether the pipeline would be used widely enough to be considered a public good. 

But Josiah Neelay, an analyst for the Texas Public Policy Foundation, worried the burden of proof to be considered a common carrier would be too high for operators. 

“If the Keystone pipeline doesn’t classify as a common carrier, it's hard to see how any pipeline could,” Neelay said.

Greg Schnacke, executive director of government relations with Denbury Resources, a pipeline operator being sued in Texas, also warned that changing the approval process for a common carrier “could severely impede the development of pipelines in the state.”

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