Advances in hydraulic fracturing and drilling technologies have allowed energy companies to produce record amounts of oil and gas from West Texas shale deposits. This surge in production has spurred the need for new pipelines to deliver the product to storage and port facilities. Most of these new pipelines will be travelling across privately owned property. In a lot of cases, the companies may exercise the right of eminent domain to acquire the land needed for the pipelines.
Everyone knows oil and gas production is a major part of the Texas economy. The state has granted oil and gas companies the power of eminent domain to condemn property for oil and gas infrastructure projects that are deemed to be in the public interest. The pipelines that transport crude oil and natural gas are one example. The energy they transport is used to generate electricity and fuel our cars, so it can be argued that, in some instances, these pipelines serve a public interest and the use of eminent domain to condemn property could be justified.
Oil Sold on the International Market
But what happens when the oil and gas these pipelines transport aren’t being built in the public interest of Texas citizens? Should the oil companies be allowed to use their eminent domain authority to seize property to transport oil and gas that isn’t intended for domestic use but for sale on the international market?
The oil companies have invested billions in new oil and gas pipelines and terminals. To them, the question of public interest is irrelevant. Their attitude seems to be that they have the right to take the land for whatever reason they feel is necessary, as long as they pay the property owners a fair price for their land.
Some property owners, property rights advocates and environmentalists see this as a new legal argument to halt pipeline production.
The Niskanen Center, a property rights advocacy group in Washington, is preparing challenges against land condemnation for pipelines that transport LNG (liquified natural gas) to export terminals and plan to assist property owners fighting eminent domain actions. Environmentalists, who have been largely unsuccessful in stopping pipeline construction based on the potential for negative environmental impact, could use this as a new line of attack. Property owners are upset that they are being forced to give up their land not for public interest but for the energy companies to make profits overseas.
If it can be shown that the oil and gas coming out of the Permian Basin through a pipeline gets shipped out overseas with no intention of it being used by the Texas public, opponents of pipeline construction projects may have a legitimate public use challenge.
Eminent Domain Questions in Texas
Generally in Texas, eminent domain authority is granted to all levels of government entities, including federal, state, county, municipal, water districts, and school districts. In some cases, public utilities may also be granted authority to use eminent domain to for power lines, pipelines and other alleged ‘public uses.’
Read more about the legality of eminent domain.
In Texas, when a Texas property is selected for condemnation, one of the first steps is request the right to enter the property being targeted in order to conduct a professional survey. Texas eminent domain laws do not include any right to entry statutes that would require a property owner to give them access. However, refusing entry usually won’t stop the survey and won’t stop the condemnation process.
Can a condemning entity offer a Texas landowner less than fair market value for their property? Yes, absolutely. In fact, it is happens all the time. Does the property owner have to accept the condemning entity’s first offer? NO, they do not. And in most cases, they shouldn’t — especially if they haven’t spoken with a Texas eminent domain attorney.
Case Results: Trial and Appellate Victory in Pipeline Case
Dawson & Sodd have helped many landowners navigate pipeline eminent domain cases. In one case, we helped Denton County landowners Terry and Ossie Button win a long-running battle with Crosstex Energy. While Crosstex originally offered $44,955, a jury in 2011 awarded the Buttons a total of $873,824 in compensation for the pipeline easement.
The Fort Worth Court of Appeals upheld the jury verdict based on evidence that the company’s natural gas pipeline easement across the landowners’ undeveloped property diminished the land value and limited what the family could do with their land in the future. After the original appellate decision in January 2014 came down in favor of the Button family, Crosstex chose to settle instead of further appealing the case. The net recovery to the landowner after fees and litigation expenses was $609,193.36 (inclusive of the Special Commissioners’ Award).
Do the Oil and Gas Companies Want to Use Your Land?
If you are a Texas property owner who has been served notice that your land is going to be surveyed to use for a pipeline or other project, contact the experienced Texas eminent domain attorneys at Dawson & Sodd. We can determine if the condemning entity actually has eminent domain authority and, if they do, make sure you get the best deal possible. We’ve been protecting the property rights of landowners in Texas for over 100 years and have represented landowners all across the state.