John Boerschig v. Trans-Pecos Pipeline, L.L.C. , 872 F.3d 701 ( 2017 )

Case: 16-50931 Document: 00514180921 Page: 1 Date Filed: 10/03/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
No. 16-50931
Fifth Circuit
FILED
October 3, 2017
JOHN P. BOERSCHIG Lyle W. Cayce
Clerk
Plaintiff - Appellant
v.
TRANS-PECOS PIPELINE, L.L.C.
Defendant- Appellee
Appeal from the United States District Court
for the Western District of Texas
Before STEWART, Chief Judge, and HIGGINBOTHAM, and COSTA, Circuit
Judges.
GREGG COSTA, Circuit Judge:
Texas law allows a natural gas utility to condemn land for “public use.”
TEX. UTIL. CODE § 181.004; TEX. CONST. art. I, § 17(a). Trans-Pecos Pipeline,
LLC exercised that authority and initiated a condemnation proceeding to
obtain a 50-foot wide permanent right-of-way and easement on John
Boerschig’s ranch. The ranch is along the route of a 148-mile pipeline Trans-
Pecos is constructing in west Texas that terminates at the Mexican border in
the middle of the Rio Grande.
Boerschig contends that by ceding condemnation power to a private
company, Texas eminent domain law offends due process. His argument
principally relies on the private nondelegation doctrine, a nook of Fourteenth
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Amendment law long recognized but seldom invoked. The strength of this
constitutional challenge is the central question we must decide in reviewing
whether a federal court should enjoin the ongoing state condemnation process.
I.
The pipeline Trans-Pecos is constructing—with the exception of the
short section that crosses the Rio Grande and is thus subject to federal
authority—is intrastate and thus governed by Texas law. To place a pipeline
on land like Boerschig’s ranch, Texas requires that the company first try to
negotiate with the landowner. TEX. PROP. CODE § 21.0113.
Those negotiations failed, so Trans-Pecos invoked Texas eminent domain
power via the following statute: “A gas or electric corporation has the right and
power to enter on, condemn, and appropriate the land, right-of-way, easement,
or other property of any person or corporation.” TEX. UTIL. CODE § 181.004; see
also Anderson v. Teco Pipeline Co., 985 S.W.2d 559, 564–66 (Texas Ct. App.—
San Antonio, 1998) (discussing the statutory scheme and noting that “courts
have determined that a corporation operating a gas pipeline has the power of
eminent domain if it devotes its private property and resources to public
service and allows itself to be publicly regulated”). For statutes like this one
that do not “specifically require[ ] a condemning agency to show the necessity
for the condemnation,” courts view the legislature as delegating to the
condemning authority the question whether the taking is necessary.
Elizabeth M. Bosek, et al., 32 TEX. JUR. 3d Eminent Domain § 103; see Circle
X Land & Cattle Co. v. Mumford Indep. Sch. Dist., 325 S.W.3d 859, 864 (Tex.
App.—Houston [14th Dist.], 2010). So before exercising its power to condemn,
a gas utility must determine that the taking is necessary to further what both
the Texas and federal constitutions require—a public purpose. Anderson, 985
S.W.2d at 565 (explaining that the company’s board of directors usually makes
this finding) (citing Bevley v. Tenngasco Gas Gathering Co., 638 S.W.2d 118,
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121 (Tex. Ct. App.—Corpus Christi, 1982, writ ref’d n.r.e.)). In the judicial
review that may follow, this necessity determination is “conclusive, absent
fraud, bad faith, abuse of discretion, or arbitrary or capricious action.”
Anderson, 985 S.W.2d at 565. 1
Boerschig brought this lawsuit to stop that state review process, as
Trans-Pecos had already initiated the condemnation proceeding. That
proceeding begins with a state district court appointing special commissioners
who assess the value of the property. See City of Tyler v. Beck, 196 S.W.3d 784,
786 (Tex. 2006). After the commissioners make that award, the condemnor
can take control of the property. TEX. PROP. CODE § 21.021(a). If objections to
the commissioners’ award are filed, a case is opened in state court. Tyler, 196
S.W.3d at 786. It is during that judicial phase when the landowner may
1 There appears to be some tension in the intermediate Texas courts about
whether that limited standard of judicial review applies just to the “necessity”
determination or to the related but distinct “public purpose” requirement. Compare
Circle X Land & Cattle Co., 325 S.W.3d at 864 (applying the “bad faith, arbitrary or
capricious action, or abuse of discretion” standard to both the necessity and public
use determination when the legislature delegates those determinations to another
entity), with Whittington v. City of Austin, 174 S.W.3d 889, 897 (Tex. App.—Austin,
2005) (emphasizing that “public use ultimately remains a judicial question” even
though some deference is due when a statute generally authorizes use of eminent
domain for a purpose) (citing Maher v. Lasater, 354 S.W.2d 923, 925 (1962) (“[A]
mere declaration by the Legislature cannot change a private use or private purpose
into a public use or public purpose.”)). We need not resolve this tension, however, as
we conclude below that the scheme is probably not an unconstitutional delegation to
private entities even under the standard that is most deferential to the utility—the
one looking only at whether the use was “clearly and palpably private.” Circle X Land
& Cattle Co., 325 S.W.3d at 864 (quoting Housing Auth. of City of Dallas v.
Higginbotham, 143 S.W.2d 79, 83 (Tex. 1940)). We nonetheless note that the Texas
Supreme Court has recently emphasized the important role of judicial review of the
public use requirement in a case involving a condemnation by a private pipeline.
Texas Rice Land Partners, Ltd. v. Denbury Green Pipeline-Texas, LLC, 363 S.W.3d
192, 197–98 (Tex. 2012).
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challenge the utility’s finding of a public necessity. See, e.g., Anderson, 985
S.W.2d at 566.
But before the commissioners issued a ruling from which Boerschig could
have sought judicial review, Boerschig filed this federal suit and sought to
enjoin the state condemnation proceeding. He asserted that Texas’s eminent
domain regime violates the Due Process Clause, both because it is a broad
delegation of power to a private party and because it fails to provide for a
predeprivation hearing.
The district court did not issue an injunction, holding that the
requested relief would violate the Anti-Injunction Act, which prohibits federal
courts from enjoining ongoing state proceedings. See 28 U.S.C. § 2283. After
the district court ruling, the commissioners issued their valuation of $644,625,
Boerschig filed his objections to the taking in state court, and Trans-Pecos took
control of the property. Meanwhile, Boerschig filed this appeal of the federal
district court’s refusal to enjoin the condemnation proceedings.
II.
Because Trans-Pecos has completed construction of the pipeline on
Boerschig’s ranch during the pendency of this appeal, Trans-Pecos believes it
is too late for an injunction to issue. It thus asks us to dismiss the appeal as
moot. We review questions concerning our jurisdiction—like whether a
controversy has become moot—de novo. Harris v. City of Houston, 151 F.3d
186, 189 (5th Cir. 1998).
A request for injunctive relief generally becomes moot when the event
sought to be enjoined takes place. Id. But this rule has a well-established
exception: when the defendant completes the act to be enjoined despite having
notice of the request for injunctive relief, the plaintiff is not deprived of
appellate review if the reviewing court can restore the status quo. Porter v.
Lee, 328 U.S. 246, 251 (1946) (noting even then that the exception “has long
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been established”); see also Moore v. Cons. Edison Co. of New York, Inc., 409
F.3d 506, 510 (2d Cir. 2005) (Sotomayor, J.) (holding that a request for
preliminary injunction is not moot when the court has the ability to “offer
effective relief”). After the district court denied Boerschig’s request for
preliminary injunction, Trans-Pecos began construction on the pipeline. But
we could, pursuant to the exception in Porter, order that Trans-Pecos return
Boerschig’s land to its precondemnation state. See Bastian v. Lakefront Realty
Corp., 581 F.2d 685, 691–92 (7th Cir. 1978) (holding that an appeal of a denial
of preliminary injunction was not moot even when the property at issue had
already been sold and leased to third parties, because the court had jurisdiction
to compel restoration to the original property owner). Because we could offer
this “effective relief,” the controversy is not moot and we can consider the
appeal. See Moore, 409 F.3d at 510.
III.
As the events that have taken place since the district court ruling do not
deprive us of jurisdiction, we consider whether an injunction should have
issued. The district court denied Boerschig’s application under the Anti-
Injunction Act, which provides that a “court of the United States may not grant
an injunction to stay proceedings in a State court except as expressly
authorized by Act of Congress, or where necessary in aid of its jurisdiction, or
to protect or effectuate its judgments.” 28 U.S.C. § 2283. Rooted in federalism
concerns, the statute sets a default rule that federal courts should not interrupt
state court proceedings as any federal questions in those cases can ultimately
be reviewed on appeal by the Supreme Court. Atlantic Coast Line R. Co. v.
Bhd. of Locomotive Engineers, 398 U.S. 281, 286–87 (1970). The district court
held that the Act barred the injunction Boerschig seeks as it would enjoin a
state condemnation process that culminates in a judicial proceeding.
Boerschig argues this was error because the judicial phase of the condemnation
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had not yet commenced. He characterizes the commissioners’ role in assessing
value, what the federal court would have directly enjoined, as the type of
“nonjudicial function” to which the Anti-Injunction Act does not apply. See,
e.g., Roudebush v. Hartke, 405 U.S. 15, 21 (1972) (holding that recount
commission appointed by a state court was performing nonjudicial function to
which the Anti-Injunction Act did not apply).
The parties contest whether the Texas eminent domain scheme should
be viewed as separate proceedings (in which case the Anti-Injunction Act would
not bar a federal court from enjoining the distinct administrative process) or
as one proceeding that morphs from an administrative phase into a judicial
phase (in which case the Act would bar enjoining any part of the process as it
culminates in a state court case). This is a difficult question given the unusual
nature of the Texas scheme in which an “administrative proceeding converts
into a judicial proceeding.” Beck, 196 S.W.3d at 786. But we need not resolve
it as there is an alternative basis for affirming the district court’s refusal to
grant the preliminary injunction. We can invoke this other avenue because
the Anti-Injunction Act does not present a question of subject matter
jurisdiction that we must answer before proceeding to other issues. 2 Matter of
2 Trans-Pecos also contends that we should decline to exercise jurisdiction
because of Younger v. Harris, 401 U.S. 37 (1971). But as the Supreme Court
emphasized recently, Younger abstention should be exercised only in three
“exceptional” circumstances: (1) state criminal prosecutions; (2) civil enforcement
proceedings; and (3) civil proceedings involving certain orders that are uniquely in
furtherance of the state courts’ ability to perform their judicial functions. Sprint
Commc’ns., Inc. v. Jacobs, 134 S. Ct. 584, 588 (2013). Although Trans-Pecos asserts
that eminent domain proceedings fall under the third category, these proceedings
look unlike the cases cited in Sprint as exemplary of the category. See Juidice v. Vail,
430 U.S. 327, 336 n.12 (1977) (applying Younger abstention to a challenge to a state
court’s contempt order); Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 13–14 (1987)
(applying Younger abstention to a request to enjoin a state judgment, after a state
jury had already rendered a verdict). Younger does not apply.
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Mooney Aircraft, Inc., 730 F.2d 367, 372 (5th Cir. 1984) (“The Anti-Injunction
Act is not a jurisdictional statute, but goes only to the granting of a particular
form of equitable relief.”).
The alternative basis for affirming is that Boerschig cannot meet the
demanding standard for the issuance of an injunction. Although we generally
can affirm on any alternative ground raised below, Saucier v. Warden, 47 F.3d
426 (5th Cir. 1995) (citing Hanchey v. Energas Co., 925 F.2d 96, 97 (5th Cir.
1990)); see also Helvering v. Gowran, 302 U.S. 238, 245 (1937), Boerschig
argues that the district court’s failure to make any factual findings prevents
us from considering the equitable injunction factors in the first instance. See
FED. R. CIV. P. 52(a)(2). But a district court’s failure to make Rule 52(a)
findings does not deprive us of jurisdiction to review the injunction request.
See, e.g., Davis v. United States, 422 F.3d 1139, 1141 (5th Cir. 1970)
(“[C]ompliance with Rule 52(a) is not a jurisdictional requirement for appeal.”).
We have noted that “[w]hen the record can be intelligently reviewed, the
absence of factual findings may be overlooked by the appellate court,” Brown
v. Vance, 637 F.2d 272, 280–81 (5th Cir. 1981), and that “[w]hether a full
understanding is possible goes ‘not . . . to jurisdiction but to our discretion,’”
Golf City, Inc. v. Wilson Sporting Goods, Inc., 555 F.2d 426, 434 (5th Cir. 1977).
That full understanding is possible here because on the first requirement for
the issuance of an injunction—whether the movant can show a substantial
likelihood of success on the merits, Planned Parenthood of Houston & Se. Texas
v. Sanchez, 403 F.3d 324, 329 (5th Cir. 2005), Boerschig’s challenge presents
purely legal issues. 3 His attack on the Texas condemnation scheme does not
3 Trans-Pecos also raised this issue as an alternative basis for affirming, so Boerschig
had full notice that we might consider it. Although he did not take the opportunity to address
the merits in his reply brief, we have considered the briefing in the trial court on the request
for injunctive relief.
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rely on any particulars about Boerschig’s ranch or Trans-Pecos’s pipeline. The
strength of his due process challenge is something we evaluate de novo, and
efficiency supports us doing so now, lest we remand on the question only to
face another appeal of the injunction ruling down the road. And because we
conclude that Boerschig’s constitutional challenge is a longshot at best, we
need not reach the other injunction factors for which factual findings may play
a role. Winter v. Natural Res. Defense Council, Inc., 555 U.S. 7, 20 (2008);
Planned Parenthood, 403 F.3d at 329 (both stating that a preliminary
injunction should issue only if the movant establishes all four requirements).
Why do we conclude that Boerschig’s claims face such a steep climb? For
starters, Texas eminent domain laws are longstanding, 4 and have withstood
previous legal challenges. See, e.g., Joiner v. City of Dallas, 380 F. Supp. 754,
766–78 (N.D. Tex. 1974), aff’d, 419 U.S. 1042 (1974) 5; Smart v. Texas Power &
Light Co., 525 F.2d 1209, 1210 (5th Cir. 1976). Some of these cases expressly
reject one of Boerschig’s arguments: that due process requires that Texas
afford Boerschig a court hearing before his land is taken. Recall that Texas
law allows a condemnor to enter the land immediately after the commissioners
assess the amount of just compensation, before the courts hear the landowner’s
4 A commentator notes that Texas has given condemnation authority to private
companies since the oil and gas industry emerged in the early twentieth century.
Amanda Buffington Niles, Eminent Domain and Pipelines in Texas: It’s As Easy As
1, 2, 3—Common Carriers, Gas Utilities, and Gas Corporations, 16 TEX. WESLEYAN
L. REV. 271, 280 (2010). A version of the statute at issue here delegating
condemnation authority to natural gas companies dates back to at least 1967. See
Anderson, 985 S.W.2d at 564 (citing Act of May 26, 1967, 60th Leg., R.S. ch. 306, § 1,
1967 Tex. Gen. Laws 730).
5 Joiner was decided under the since-repealed statute requiring that
constitutional challenges to state laws be heard by a three-judge panel with a right
of direct appeal to the Supreme Court. See Gov’t of V.I. v. 19.623 Acres of Land, 536
F.2d 566, 676 (3rd Cir. 1976) (noting that the Supreme Court’s affirmance of Joiner,
even without an opinion explaining the basis for that order, is precedential).
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challenge to the taking. This “quick take” system, which exists in a number of
other states, 6 is “an expeditious procedure whereby possession of property may
quickly be had for its application to public use.” City of Houston v. Plantation
Land Co., 440 S.W.2d 691, 695 (Tex. App.—Houston [14th Dist.] 1969, writ
ref’d n.r.e.). This prevents protracted condemnation litigation involving one or
a few landowners from delaying a larger public project. Leslie A. Fields &
Karen L. Brody, Owner’s Defenses and Quick Take Statutes, SL050 ALI-ABA
39, 41 (2006). The Supreme Court and this court have repeatedly held that
such “‘quick taking’ without a prior hearing is consistent with due process.”
Joiner, 380 F. Supp. at 772, aff’d 419 U.S. 1042 (1974); Smart, 525 F.2d at 1211
(citing Dohany v. Rogers, 281 U.S. 362 (1930); Georgia v. Chattanooga, 264 U.S.
472 (1924); Joslin Manufacturing Co. v. Providence, 262 U.S. 668 (1923); and
Bragg v. Weaver, 251 U.S. 57 (1919)). So precedent blocks Boerschig’s
argument that he has a right to a predeprivation hearing.
Boerschig’s other claim—that Texas’s eminent domain scheme is an
unconstitutional delegation of power to private entities—has not been asserted
in these prior cases. Trans-Pecos says the reason is that the nondelegation
doctrine “has seldom been used, and indeed has often been declared deceased.”
Consumer Energy Council of Amer. v. FERC, 673 F.2d 425, 448 n.82 (D.C. Cir.
1982). But Trans-Pecos addresses a different nondelegation doctrine, the one
that prevents Congress from delegating too much authority to executive
branch agencies. See generally Whitman v. Am. Trucking Ass’ns, Inc., 531 U.S.
457 (2001). We need not address the vitality of that nondelegation doctrine as
it is rooted in federal separation-of-powers concerns that cannot dictate how
state governments allocate their powers.
6 See JULIUS L. SACKMAN, NICHOLS ON EMINENT DOMAIN § 24.10[2][a] (3d ed. 2017)
(collecting states statutes).
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Boerschig’s nondelegation claim arises from a constitutional provision
that does apply to states: the Due Process Clause. U.S. CONST. amend. XIV.
Like the doctrine that prevents Congress from delegating too much power to
agencies, this doctrine preventing governments from delegating too much
power to private persons and entities is of old vintage, not having been used by
the Supreme Court to strike down a statute since the early decades of the last
century. Alexander Volokh, The New Private-Regulation Skepticism: Due
Process, Non-Delegation, and Antitrust Challenges, 37 HARV. J.L. & PUB. POL’Y
931, 941–43 (2014). Although this so-called “private nondelegation” doctrine
has been largely dormant in the years since, its continuing force is generally
accepted. See General Elec. Co. v. New York State Dept. of Labor, 936 F.2d
1448, 1455 (2d Cir. 1991) (noting that the private nondelegation doctrine
remains good law); Volokh, supra, at 944 (surveying recent cases to conclude
that the doctrine remains “alive and well”).
A review of the three Supreme Court cases that held statutes
unconstitutional for delegating power to private parties provides a flavor of the
doctrine. The first ordinance allowed two-thirds of property owners on a block
to determine whether a setback line near the street should be established in
front of which no construction could take place. Eubank v. City of Richmond,
226 U.S. 137, 140–41 (1912). The second required a property owner to obtain
consent from two-thirds of nearby property owners in order to build a home for
the poor. Washington ex rel. Seattle Title Trust Co. v. Roberge, 278 U.S. 116,
118–19 (1928). The third was a New Deal measure that allowed the producers
of more than two-thirds (once again the magic supermajority these laws used)
of annual coal production negotiating with a majority of miners to set wages
and hours for all operators and miners in the area. Carter v. Carter Coal Co.,
298 U.S. 238, 310–11 (1936). Roberge summarized well the problem with such
laws:
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The section purports to give the owners of less than one-half the
land within 400 feet of the proposed building authority—
uncontrolled by any standard or rule prescribed by legislative
action—to prevent the trustee from using its land for the proposed
home. The superintendent is bound by the decision or inaction of
such owners. There is no provision for review under the ordinance;
their failure to give consent is final. They are not bound by any
official duty, but are free to withhold consent for selfish reasons or
arbitrarily and may subject the trustee to their will or caprice.
Roberge, 278 U.S. at 121–22. To put it in the words of the constitutional
guarantee, when private parties have the unrestrained ability to decide
whether another citizen’s property rights can be restricted, any resulting
deprivation happens without “process of law.”
The Texas scheme allowing gas pipelines to condemn property does not
appear to suffer from either of the twin ills that doomed these zoning and wage-
setting laws. It imposes a standard to guide the pipeline companies—that the
taking is necessary for “public use”—and provides judicial review of that
determination that prevents the company from having the final say. In
contrast to the “public use” determination that the board of a pipeline company
must render before a condemnation proceeds, 7 no standard existed to guide
whether the neighbors should limit the construction in Eubank or Roberge.
The existence of a standard like the one Texas has for exercising eminent
domain has prevented courts from finding that a delegation to private parties
involves the unfettered discretion that violates due process. See General Elec.
Co., 936 F.2d at 1455 (“These opinions still stand for the proposition that a
legislative body may not constitutionally delegate to private parties the power
to determine the nature of rights to property in which other individuals have
a property interest, without supplying standards to guide the private parties’
7 Rice Land Partners, Ltd., 363 S.W.3d at 194–95 (citing TEX. CONST. art. I, § 17(a)).
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discretion.”); see also Biener v. Calio, 361 F.3d 206, 216 (3rd Cir. 2004) (holding
that delegation to political parties to set filing fees for primaries was
constitutional because the legislature set the upper limit on the fees).
What is more, a utility’s assessment of whether the public necessity
standard has been satisfied is subject to judicial review. To be sure, that
review is deferential. As we have discussed, the state court does not determine
“public use” or “necessity” as an original matter, but only reviews the pipeline’s
decision for either “fraud, bad faith, abuse of discretion, or arbitrary or
capricious action.” Anderson, 985 S.W.2d at 565; see Malcomson Road Utility
Dist. v. Newsom, 171 S.W.3d 257, 273 (Tex. Ct. App.—Houston [1st Dist.] 2005,
reh’ing overruled) (finding a fact issue as to whether a district arbitrarily used
its discretion in condemning land for a ditch expansion). Although seemingly
feeble, this judicial review captures precisely the situations in which a private
delegation deprives a property owner of due process: when the private parties
may make a decision based “solely for their own interest, or even capriciously.”
Eubank, 226 U.S. at 144. Texas courts may review, for example, whether a
taking “confer[red] only a private benefit.” Bosek, supra § 103. And the
arbitrary and capricious review governing condemnations is essentially the
substantive due process standard in which the private nondelegation doctrine
is rooted. See Synar v. United States, 626 F. Supp. 1374, 1383 n.8 (D.D.C.
1986) (recognizing that Carter Coal is a substantive due process case); Shelton
v. City of College Station, 780 F.2d 475, 479–80 (5th Cir. 1986) (noting that
state ordinances satisfy rational basis review unless they are arbitrary). So
the judicial oversight of a pipeline’s condemnation power further distinguishes
this case from the Eubank-Roberge-Carter Coal situation in which the actions
of the private party are unreviewable. Cf. Women’s Medical Professional Corp.
v. Baird, 438 F.3d 595, 610 (6th Cir. 2006) (holding that a regulation requiring
private party consent to obtain a prerequisite for a license did not violate due
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process when a government official could waive that prerequisite). Indeed,
similar judicial review provisions are the reason a federal district court
recently held that a challenge to Ohio’s delegation of condemnation authority
to pipelines is unlikely to succeed. Cox v. State of Ohio, 2016 WL 4507779, at
*10 (N.D. Ohio Aug. 29, 2016). 8
We reach the same conclusion with respect to the Texas scheme. The
significant differences between the Texas delegation and those delegations the
Supreme Court has held unconstitutional mean that Boerschig’s due process
challenge faces long odds. His inability to establish a likelihood of success,
much less a substantial one, means he is not entitled to a preliminary
injunction.
***
The motion to dismiss on mootness grounds is DENIED. The denial of
the application for a preliminary injunction is AFFIRMED.
8 Under Ohio law, when the pipeline passes a resolution “declaring the necessity for
the appropriation” as Trans-Pecos did here, a rebuttable presumption of that necessity is
created. Cox, 2016 WL 4507779 at *2 (citing OHIO REV. CODE § 163.09(B)(1)(a)).
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