Texas Rice Land Partners, Ltd. and Mike Latta v. Denbury Green Pipeline-Texas, Llc

IN THE SUPREME COURT OF TEXAS
444444444444
NO . 09-0901
444444444444
TEXAS RICE LAND PARTNERS, LTD. AND MIKE LATTA, PETITIONERS,
v.
DENBURY GREEN PIPELINE-TEXAS, LLC, RESPONDENT
4444444444444444444444444444444444444444444444444444
ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE NINTH DISTRICT OF TEXAS
4444444444444444444444444444444444444444444444444444
Argued April 19, 2011
JUSTICE WILLETT delivered the opinion of the Court.
We deny the motion for rehearing. We withdraw our opinion of August 26, 2011 and
substitute the following in its place.
The Texas Constitution safeguards private property by declaring that eminent domain can
only be exercised for “public use.”1 Even when the Legislature grants certain private entities “the
right and power of eminent domain,”2 the overarching constitutional rule controls: no taking of
property for private use.3 Accordingly, the Natural Resources Code requires so-called “common
1
T EX . C ON ST . art. I, § 17(a); see also infra note 13 and accompanying text.
2
T EX . N AT . R ES . C O D E § 111.019(a).
3
This restriction also bars “the taking of property . . . for transfer to a private entity for the primary purpose of
economic development or enhancement of tax revenues.” T EX . C ON ST . art. I, § 17(b).
carrier” pipeline companies to transport carbon dioxide “to or for the public for hire.”4 In other
words, a CO2 pipeline company cannot wield eminent domain to build a private pipeline, one
“limited in [its] use to the wells, stations, plants, and refineries of the owner.”5 A common carrier
transporting gas for hire implies a customer other than the pipeline owner itself.
This property-rights dispute asks whether a landowner can challenge in court the eminent-
domain power of a CO2 pipeline owner that has been granted a common-carrier permit from the
Railroad Commission. The court of appeals answered no, holding that (1) a pipeline owner can
conclusively acquire the right to condemn private property by checking the right boxes on a one-page
form filed with the Railroad Commission, and (2) a landowner cannot challenge in court whether
the proposed pipeline will in fact be public rather than private. We disagree. Unadorned assertions
of public use are constitutionally insufficient. Merely registering as a common carrier does not
conclusively convey the extraordinary power of eminent domain or bar landowners from contesting
in court whether a planned pipeline meets statutory common-carrier requirements. Nothing in Texas
law leaves landowners so vulnerable to unconstitutional private takings. We reverse the court of
appeals’ judgment and remand to the district court for further proceedings consistent with this
opinion.
I. Background
Denbury Resources, Inc. is a publicly traded Delaware corporation that owns all of Denbury
Operating Company. Denbury Operating Company has no employees or physical assets, but owns
4
T EX . N AT . R ES . C O D E § 111.002(6).
5
Id. § 111.003(a).
2
all the stock of two subsidiaries—Denbury Green Pipeline-Texas, LLC (Denbury Green) and
Denbury Onshore, LLC. Denbury Resources and its affiliates (collectively Denbury) share corporate
officers and are all located in the same offices in Plano, Texas.
Denbury is engaged in tertiary recovery operations that involve the injection of CO2 into
existing oil wells to increase production. Denbury owns a naturally occurring CO2 reserve in
Mississippi known as Jackson Dome, and desired to build a CO2 pipeline from Jackson Dome to
Texas oil wells to facilitate tertiary operations on the wells. The record contains some evidence that,
in the future, Denbury might purchase man-made or “anthropogenic” CO2 from third parties and
transport it in the pipeline.
In March 2008, Denbury Green applied with the Railroad Commission to operate a CO2
pipeline in Texas. This pipeline would be a continuation of a pipeline originating at Jackson Dome
in Mississippi and traversing Louisiana. Denbury Green’s portion of the pipeline would extend from
the Texas-Louisiana border to the Hastings Field in Brazoria and Galveston counties. The one-page
permit application, designated a Form T-4, has two boxes for the applicant to indicate whether the
pipeline will be operated as “a common carrier” or “a private line.” Denbury Green placed an “x”
in the common-carrier box. Separately and also relevant to common-carrier status, applicants are
directed to mark one of three boxes if the pipeline will not be transporting “only the gas and/or
liquids produced by pipeline owner or operator.” Of the three boxes, indicating the gas will be
“[p]urchased from others,” “[o]wned by others, but transported for a fee,” or “[b]oth purchased and
transported for others,” Denbury Green marked the box for “[o]wned by others, but transported for
a fee.” Denbury Green also submitted a letter, pursuant to Section 111.002(6) of the Natural
3
Resources Code,6 stating that it “accepts the provisions of Chapter 111 of the Natural Resources
Code and expressly agrees that it is a common carrier subject to duties and obligations conferred by
Chapter 111.”
In April 2008, eight days after Denbury Green filed its application, the Commission granted
the T-4 permit. In July 2008, the Commission furnished a letter to Denbury Green, stating:
This letter is to confirm the fact that [Denbury Green] has been granted a permit to
operate a pipeline (Permit No. 07737) and has made all of the currently necessary
filings to be classified as a common carrier pipeline for transportation of carbon
dioxide under the provisions of [Section 111.002(6)] and as otherwise required by
the [Commission].
In November 2008, Denbury Green filed a tariff with the Commission setting out terms for the
transportation of gas in the pipeline. The administrative process for granting the permit was
conducted without a hearing and without notice to landowners along the proposed pipeline route.
Texas Rice Land Partners, Ltd. has an ownership interest in two tracts along the pipeline
route. When Denbury Green came to survey the land in preparation for condemning a pipeline
easement, Texas Rice Land Partners and a lessee, rice farmer Mike Latta (collectively Texas Rice),
refused entry. Denbury Green sued Texas Rice for an injunction allowing access to the tracts.7 On
cross-motions for summary judgment, the trial court rendered judgment in favor of Denbury Green.
The trial court found that Denbury Green “is a ‘common carrier’ pursuant to Section 111.002(6) of
6
T EX . N AT . R ES . C O D E § 111.002(6). Unless otherwise indicated, all statutory references below are to the
Natural Resources Code, Chapter 111 of which governs common carriers of CO 2 and other substances.
7
Denbury Green filed a separate suit in county court to condemn a pipeline easement. The parties state in their
briefing that the county court suit was stayed pending the outcome of the case before us, but Denbury Green stated at
oral argument that the pipeline has been completed.
4
the Texas Natural Resources Code” and “has the power of eminent domain/authority to
condemn/right-to-take pursuant to Section 111.019 of the Texas Natural Resources Code.” The
court permanently enjoined Texas Rice from (1) interfering with Denbury Green’s “right to enter and
survey” its proposed pipeline route across Texas Rice’s land, and (2) harassing Denbury Green or
its agents and contractors while conducting the surveys.
The court of appeals affirmed, concluding that Denbury Green had established as a matter
of law its common-carrier status.8 The court relied on the fact that the pipeline “will be available
for public use from the outset of its operation.”9 One justice dissented, believing genuine issues of
material fact precluded summary judgment.10 The dissent reasoned that eminent-domain power
cannot extend to the taking of property for private use and that “[m]erely offering a transportation
service for a profit does not distinguish a private use from a public use.”11
II. Discussion
A. Common Carriers and the Power of Eminent Domain
The Natural Resources Code regulates CO2 pipelines serving as common carriers. Three
Code provisions are particularly relevant.
Section 111.002(6) states a person is a common carrier if he:
8
296 S.W .3d 877, 878, 881.
9
Id. at 881.
10
Id. at 881, 884 (Gaultney, J., dissenting).
11
Id. at 883.
5
owns, operates, or manages, wholly or partially, pipelines for the transportation of
carbon dioxide . . . to or for the public for hire, but only if such person files with the
commission a written acceptance of the provisions of this chapter expressly agreeing
that, in consideration of the rights acquired, it becomes a common carrier subject to
the duties and obligations conferred or imposed by this chapter.
Section 111.003(a) states:
The provisions of this chapter do not apply to pipelines that are limited in their use
to the wells, stations, plants, and refineries of the owner and that are not a part of the
pipeline transportation system of a common carrier as defined in Section 111.002 of
this code.
Section 111.019 states in part:
(a) Common carriers have the right and power of eminent domain.
(b) In the exercise of the power of eminent domain granted under the provisions of
Subsection (a) of this section, a common carrier may enter on and condemn the land,
rights-of-way, easements, and property of any person or corporation necessary for the
construction, maintenance, or operation of the common carrier pipeline.
While these provisions plainly give private pipeline companies the power of eminent domain,
that authority is subject to special scrutiny by the courts. The power of eminent domain is
substantial12 but constitutionally circumscribed. Article 1, Section 17 of the Texas Constitution
provides, “No person’s property shall be taken . . . for or applied to public use without adequate
compensation . . . .” This provision not only requires just compensation to the property owner, but
also “prohibits the taking of property for private use.”13
12
See Incorporated Town of Hempstead v. Gulf States Utils. Co., 206 S.W .2d 227, 229 (Tex. 1947) (noting
“extraordinary power of eminent domain” granted to private utilities).
13
Maher v. Lasater, 354 S.W .2d 923, 924 (Tex. 1962). Denbury and certain amici curiae supporting Denbury
contend that their positions are buttressed by the passage of Senate Bill 18 in the last session. Act of May 6, 2011, 82d
Leg., R.S., ch. 81, 2011 Tex. Gen. Laws 354. This bill amended various statutory provisions relating to eminent domain,
including Section 2206.001 of the Government Code. That section previously provided that “[a] governmental or private
entity may not take private property through the use of eminent domain if the taking . . . confers a private benefit on a
particular private party through the use of the property” or “is for a public use that is merely a pretext to confer a private
6
The legislative grant of eminent-domain power is strictly construed in two regards. First,
strict compliance with all statutory requirements is required.14 Second, in instances of doubt as to
the scope of the power, the statute granting such power is “strictly construed in favor of the
landowner and against those corporations and arms of the State vested therewith.”15
B. The T-4 Permit Granted By the Railroad Commission Does Not
Conclusively Establish Eminent-Domain Power
The parties dispute whether Denbury Green was entitled to summary judgment on the issue
of whether it is a common carrier. We hold at the outset that the T-4 permit alone did not
conclusively establish Denbury Green’s status as a common carrier and confer the power of eminent
domain.
benefit on a particular private party.” This provision is consistent with our view, stated above, that the taking of property
for private use is constitutionally proscribed. Section 2206.001 was amended to add a new subsection providing that
a government or private party may not take private property if the taking “is not for a public use,” and S.B. 18 replaced
references to “public purpose” in several provisions with “public use,” again consistent with our above-stated view. As
before, Section 2206.001(c) states that the entirety of Section 2206.001 does not apply to certain entities including
common carrier pipelines. However, S.B. 18 added Section 2206.002 to the Government Code, which increases the
rights of property owners subject to pipeline easements by providing that the owner can build roads over the easement.
S.B. 18 also added procedural protections for property owners, now set out in Sections 2206.051–.053 and elsewhere,
such as a requirement in Section 2206.053 that governments must now authorize the initiation of a condemnation
proceeding at a public meeting. There is no question that S.B. 18 was intended to increase the rights of property owners
facing condemnation proceedings. Denbury concedes that the bill “reformed eminent domain law by imposing new
requirements that further protect landowners’ rights.” It specifically gave property owners new rights with respect to
pipeline easements. The fact that the bill left intact a provision exempting common carrier pipelines from one section
of the Government Code does not persuade us that we are misreading the Constitution or the Natural Resources Code.
The Legislature’s desire through S.B. 18 to give more protection to some landowners does not imply that it intended to
dilute the extant property rights of others. S.B. 18 did not diminish Texas Rice’s property rights.
14
State v. Bristol Hotel Asset Co., 65 S.W .3d 638, 640 (Tex. 2001) (“Proceedings to condemn land are special
in character, and the party attempting to establish its right to condemn must show strict compliance with the law
authorizing private property to be taken for public use.”).
15
Coastal States Gas Producing Co. v. Pate, 309 S.W .2d 828, 831 (Tex. 1958).
7
Nothing in the statutory scheme indicates that the Commission’s decision to grant a common-
carrier permit carries conclusive effect and thus bars landowners from disputing in court a pipeline
company’s naked assertion of public use. As stated above, the right to condemn property is
constitutionally limited and turns in part on whether the use of the property is public or private. We
have long held that “the ultimate question of whether a particular use is a public use is a judicial
question to be decided by the courts.”16 We have also held in numerous contexts that the
Commission does not have authority to determine property rights.17 We presume the Legislature is
aware of relevant caselaw when it enacts statutes.18 Had the Legislature intended a T-4 permit to
render a company’s common-carrier status and eminent-domain power unchallengeable, it would
have said so explicitly. “[W]hen an action is inherently judicial in nature, the courts retain
jurisdiction to determine the controversy unless the legislature by valid statute has expressly granted
exclusive jurisdiction to the administrative body.”19
16
Maher, 354 S.W .2d at 925; see also Housing Auth. of Dallas v. Higginbotham, 143 S.W .2d 79, 84 (Tex.
1940) (“The question of what is public use is a question for the courts . . . .”); M ercier v. MidTexas Pipeline Co., 28
S.W .3d 712, 722 (Tex. App.— Corpus Christi 2000, pet. denied) (holding that authority of pipeline company to condemn
land was “an issue that was appropriately determined as a matter of law by the court”).
17
See Amarillo Oil Co. v. Energy-Agri Prods., Inc., 794 S.W .2d 20, 26 (Tex. 1990) (“The cause is properly
within the jurisdiction of the courts because the Railroad Commission has no authority to determine title to land or
property rights.”); R.R. Comm’n v. City of Austin, 524 S.W .2d 262, 267–68 (Tex. 1975) (“This Court has also held on
several occasions that the Commission does not have power to determine title to land or property rights.”); Jones v.
Killingsworth, 403 S.W .2d 325, 328 (Tex. 1965) (“The Railroad Commission has no power to determine property
rights.”); Nale v. Carroll, 289 S.W .2d 743, 745 (Tex. 1956) (“Rules and regulations of the Railroad Commission cannot
effect a change or transfer of property rights.”); Ryan Consol. Petroleum Corp. v. Pickens, 285 S.W .2d 201, 207 (Tex.
1955) (“[The Commission] has not been given the power to determine property rights as between litigants.”).
18
Gen. Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W .3d 591, 596 (Tex. 2001) (“[T]he Legislature is
presumed to be aware of case law relevant to statutes it amends or enacts.”); Acker v. Tex. Water Comm’n, 790 S.W .2d
299, 301 (Tex. 1990) (“A statute is presumed to have been enacted by the legislature with complete knowledge of the
existing law and with reference to it.”).
19
Amarillo Oil, 794 S.W .2d at 26.
8
Further, the record, rules, and statutes before us indicate that the Commission’s process for
granting a T-4 permit undertakes no effort to confirm that the applicant’s pipeline will be public
rather than private. The Commission’s website states that the Commission “does not have the
authority to regulate any pipelines with respect to the exercise of their eminent domain powers.”20
A spokesperson for the Commission stated in 2008 that it had never denied a T-4 permit, and that
the Commission grants them for “administrative purposes.”21 Apparently, in order to receive a
common-carrier permit, the applicant need only place an “x” in a box indicating that the pipeline will
be operated as a common carrier, and to agree under Section 111.002(6) to subject itself to “duties
and obligations conferred or imposed” by Chapter 111. Under these minimal requirements, Denbury
Green reported itself as a common carrier and obtained a permit a few days later. There was no
investigation, and certainly no adversarial testing, of whether Denbury Green was indeed entitled to
common-carrier status and the extraordinary power to condemn private property. Denbury Green
concedes in its brief that the Commission “did not adjudicate anything.” Private property cannot be
imperiled with such nonchalance, via an irrefutable presumption created by checking a certain box
on a one-page government form. Our Constitution demands far more.
The Railroad Commission’s process for handling T-4 permits appears to be one of
registration, not of application. The record suggests that in accepting an entity’s paperwork, the
20
Railroad Commission of Texas, Pipeline Eminent Domain and Condemnation Frequently Asked Questions
(FAQs), http://www.rrc.state.tx.us/about/faqs/eminentdomain.php (last visited Feb. 14, 2012).
21
Amanda B. Niles, Comment, Eminent Domain and Pipelines in Texas: It’s As Easy As 1,2,3, — Common
Carriers, Gas Utilities and Gas Corporations, 16 T EX . W ESLEY AN L. R EV . 271, 288 (2010) (quoting Mike Lee, Pipeline
Builders May Face Quandary, F O RT W O RTH S TAR -T ELEGRAM , June 22, 2008, at 1B, available at
http://startelegram.typepad.com/files/pipeline-builders-may-face-quandary.htm).
9
Commission performs a clerical rather than an adjudicative act. The registrant simply submits a
form indicating its desire to be classified as a common (or private) carrier. No notice is given to
affected parties. No hearing is held, no evidence is presented, no investigation is conducted. It is
true that Commission regulations covering CO2 pipelines (1) state that permit applications will be
granted if the Commission is satisfied “from such application and the evidence in support thereof,
and its own investigation” that the pipeline will “reduce to a minimum the possibility of waste, and
will be operated in accordance with the conservation laws and conservation rules and regulations of
the commission,” and (2) require CO2 pipelines to comply with certain safety requirements.22
However, as for the core constitutional concern—the pipeline’s public vs. private use—the parties
point to no regulation or enabling legislation directing the Commission to investigate and determine
whether a pipeline will in fact serve the public. Given this scant legislative and administrative
scheme, we cannot conceive that the Legislature intended the granting of a T-4 permit alone to
prohibit a landowner—who was not a party to the Commission permitting process and had no notice
of it—from challenging in court the eminent-domain power of a permit holder.
C. The Test for Common-Carrier Status
To qualify as a common carrier with the power of eminent domain, the pipeline must serve
the public; it cannot be built only for the builder’s exclusive use. As explained above, extending the
power of eminent domain to the taking of property for a private use cannot survive constitutional
scrutiny. The Denbury Green pipeline would not serve a public use if it were built and maintained
22
16 T EX . A D M IN . C O D E §§ 3.70(a), 8.1(a)(1)(C), 8.1(b)(2)–(3).
10
only to transport gas belonging to Denbury from one Denbury site to another. In such circumstances,
and in the absence of compelling legislative findings and declaration of public purpose, we can see
no purpose other than a purely private one.23
The relevant statutes also confirm that a CO2 pipeline owner is not a common carrier if the
pipeline’s only end user is the owner itself or an affiliate. Section 111.002(6) states a person is a
common carrier if it owns or operates a pipeline “for the transportation of carbon dioxide . . . to or
for the public for hire.” If Denbury consumes all the pipeline product for itself, it is not transporting
gas “to . . . the public for hire.” Nor can such an arrangement be characterized as transportation of
gas “for the public for hire.” The term “for the public for hire” implies that the gas is being carried
for another who retains ownership of the gas, and that the pipeline is merely a transportation conduit
rather than the point where title is transferred.24 Section 111.003(a) further confirms these notions,
since it states that the common-carrier provisions “do not apply to pipelines that are limited in their
use to the wells, stations, plants, and refineries of the owner and that are not a part of the pipeline
transportation system of a common carrier as defined in Section 111.002 of this code.”
23
See, e.g., Mercier, 28 S.W .3d at 718 (noting that pipeline indisputably “is not a common carrier” when it
“does not transport gas or allow the dedication of its capacity to the public or anyone other than” the two corporate
owners of the pipeline). W e further note that the pipeline does not serve a public use if it only transports gas for a
corporate parent or affiliate. Hence, we see no significance to the fact that Denbury Green Pipeline-Texas, LLC, the
owner of the pipeline here, is a wholly owned subsidiary of the company engaged in the tertiary recovery operations.
Transporting gas solely for the benefit of a corporate parent or other affiliate is not a public use of the pipeline.
Moreover, even if the Legislature included findings and an explicit declaration of public purpose, such material, while
undeniably instructive, would not be entitled to insurmountable deference.
24
See Thedford v. Cnty. of Jackson, 502 S.W .2d 899, 901 (Tex. Civ. App.— Corpus Christi 1973, writ ref’d
n.r.e.) (holding that owner of interest in well who wished to construct pipeline to transport only his own gas was not a
common carrier because a pipeline owner transporting his own gas was neither transporting gas “bought of others” under
relevant common carrier statute nor transporting gas “for hire”).
11
Denbury Green contends that merely making the pipeline available for public use is sufficient
to confer common-carrier status. We disagree, for two reasons. First, this argument is inconsistent
with the wording of Section 111.002(6). The statute provides that a common carrier owns or
operates a CO2 pipeline “to or for the public for hire, but only if such person files with the
commission a written acceptance” agreeing to become “a common carrier subject to the duties and
obligations conferred or imposed by this chapter.” Denbury Green points out that Chapter 111
contains common-carrier requirements such as the obligation to publish a tariff in Section 111.014,
and the obligation not to discriminate among shippers in Section 111.016. But Denbury Green’s
reading of Section 111.002(6) would confer common-carrier status and eminent-domain power even
when the pipeline will never serve the public by transporting CO2 “to or for the public for hire” under
the statute—and indeed when there was never any reasonable possibility of such service—so long
as the owner agrees to be subject to the Chapter 111 common-carrier regime. As we read the statute,
the language that the pipeline be owned or operated “to or for the public for hire” is a separate
requirement for common-carrier status, and the statute, in addition, requires the owner or operator
to agree to subject itself to Chapter 111. Denbury Green’s interpretation would read out of the
statute the language that the pipeline be operated “to or for the public for hire.” Such a reading
contravenes two settled rules: (1) that every word in a statute is presumed to have a purpose and
should be given effect if reasonable and possible;25 and (2) that strict compliance with all statutory
25
See Tex. Workers’ Comp. Ins. Fund v. DEL Indus., Inc., 35 S.W .3d 591, 593 (Tex. 2000); see also Cont'l
Cas. Ins. Co. v. Functional Restoration Assocs., 19 S.W .3d 393, 402 (Tex. 2000) (“[W ]e give effect to all words of a
statute, and, if possible, do not treat any statutory language as mere surplusage.”).
12
requirements is required to exercise eminent domain.26 Even absent these rules, the use of “but only
if” in the statute suggests that a pipeline operator must meet two requirements to obtain common-
carrier status under Chapter 111. It must first meet a broad requirement—that it operate “to or for
the public for hire.” But it can qualify as a Chapter 111 common carrier if and “only if” it meets an
additional requirement—that it subject itself to Commission regulation under Chapter 111. Again,
Denbury Green’s reading ignores the first requirement and would confer common-carrier status when
the second requirement alone is met.
Second, Denbury Green’s construction leads to a result that we cannot believe the Legislature
intended, namely a gaming of the permitting process to allow a private carrier to wield the power of
eminent domain. Suppose an oil company has a well on one property and a refinery on another. A
farmer’s property lies between the oil company’s two properties. The oil company wishes to build
a pipeline for the exclusive purpose of transporting its production from its well to its refinery. Only
about 50 feet of the proposed pipeline will traverse the farmer’s property. The farmer refuses to
allow construction of the pipeline across his property. The oil company knows that no party other
than itself will ever desire to use the pipeline. In these circumstances, the application for a common-
carrier permit is essentially a ruse to obtain eminent-domain power. The oil company should not be
able to seize power over the farmer’s property simply by applying for a crude oil pipeline permit with
the Commission, agreeing to subject itself to the jurisdiction of the Commission and all requirements
of Chapter 111, and offering the use of the pipeline to non-existent takers. “A sine qua non of lawful
26
See supra note 14 and accompanying text.
13
taking . . . for or on account of public use . . . is that the professed use be a public one in truth. Mere
fiat, whether pronounced by the Legislature or by a subordinate agency, does not make that a public
use which is not such in fact . . . .”27 Hence, we conclude that Denbury Green is not entitled to
common-carrier status simply because it obtained a common-carrier permit, filed a tariff, and agreed
to make the pipeline available to any third party wishing to transport its gas in the pipeline and
willing to pay the tariff. The statute does not allow such a result, particularly in light of the rule,
stated above, that statutes granting eminent-domain power must be strictly construed in favor of the
landowner.
We accordingly hold that for a person intending to build a CO2 pipeline to qualify as a
common carrier under Section 111.002(6),28 a reasonable probability29 must exist that the pipeline
will at some point after construction serve the public by transporting gas for one or more customers
who will either retain ownership of their gas30 or sell it to parties other than the carrier.
Consistent with judicial review of Commission determinations generally, a permit granting
common-carrier status is prima facie valid.31 But once a landowner challenges that status, the burden
27
Higginbotham, 143 S.W .2d at 84 (quoting Dallas Cotton Mills v. Indus. Co., 296 S.W . 503, 505 (Tex.
Comm’n App. 1927, judgm’t adopted)).
28
Our decision today is limited to persons seeking common-carrier pipeline status under Section 111.002(6).
W e express no opinion on pipelines where common-carrier status is at issue under other provisions of the Natural
Resources Code or elsewhere.
29
In this context, a reasonable probability is one that is more likely than not.
30
W e do not mean to suggest here that customers must trace the gas they placed in the pipeline or that ordinary
business practices accommodating the commingling of gas in a pipeline cannot be employed.
31
See T EX . N AT . R ES . C O D E § 85.243 (providing generally that when party challenges Commission order, “the
burden of proof shall be on the party complaining of the law or order, and the law or order is deemed prima facie valid”);
Cheesman v. Amerada Petroleum Corp., 227 S.W .2d 829, 831 (Tex. Civ. App.— Austin 1950, no writ) (“It must be
14
falls upon the pipeline company to establish its common-carrier bona fides if it wishes to exercise
the power of eminent domain.
D. Denbury Green Was Not Entitled to Summary Judgment
Under our test, Denbury Green did not establish common-carrier status as a matter of law.
A Denbury Green vice president attested that Denbury Green was negotiating with other parties to
transport anthropogenic CO2 in the pipeline, and that the pipeline “can transport carbon dioxide
tendered by Denbury entities as well as carbon dioxide tendered from other entities and facilities not
owned by Denbury.” This affidavit does not indicate whether Denbury Green itself intended to use
all of that gas for its own tertiary recovery operations. As discussed above, a carrier is not a common
carrier if it transports gas only for its own consumption. The witness also stated in his deposition
that the CO2 carried in the pipeline would be owned by affiliate Denbury Onshore, but that there was
“the possibility we’ll be transporting other people’s CO2 in the future.” He did not identify any
possible customers and was unaware of any other entity unaffiliated with Denbury Green that owned
CO2 near the pipeline route in Louisiana and Mississippi. This evidence does not establish a
reasonable probability that such transportation would ever occur.
Further, the record includes portions of Denbury’s own website that suggest the pipeline
would be exclusively for private use. In describing the pipeline project, the site states:
We like these tertiary operations because . . . to date, in our region of the United
States, we have not encountered any industry competition. Generally, from the Texas
Gulf Coast to Florida, there are no known significant natural sources of carbon
remembered that the Commission granted the permit which Amerada attacked by filing suit in the court below. The
permit carried a prima facie presumption of validity.”). Texas Rice, in a letter brief, acknowledges that “the pipeline
permit from the Railroad Commission could serve as prima facie proof of the right to condemn.”
15
dioxide except our own, and these large volumes of CO2 are the foundation for our
entire tertiary program.
....
We have entered into three agreements, and are having various levels of
discussions with many others, to purchase (if the plants are built) all of the CO2
production from man-made (anthropogenic) sources of CO2 from planned solid
carbon gasification projects.
....
We see these sources as a possible expansion of our natural Jackson Dome
source, assuming they are economical, and we believe that our potential ability to tie
these sources together with pipelines will give us a significant advantage over our
competitors, in our geographic area, in acquiring additional oil fields and these future
potential man-made sources of CO2.
....
We are also working on a 24" pipeline, named the Green Pipeline, to transport
CO2 to Hastings Field and our 2007 Southeast Texas acquisitions . . . . Initially, we
anticipate transporting CO2 from our natural source at Jackson Dome in this line, but
ultimately we expect that it will be used to ship predominately man-made
(anthropogenic) sources of CO2.
....
During November 2006, we acquired an option to purchase . . . Hastings
Field, a strategically significant potential tertiary flood candidate located near
Houston, Texas.
....
We believe that Hastings Field possesses . . . more reserve potential than any
other single field in our inventory. Currently, we are working on the right-of-ways
required to build a pipeline we have named our Green Pipeline to transport CO2 to
this field . . . . [O]ur goal is to continue to pursue the acquisition of other fields in
this area, which will help reduce the cost of CO2 for each field by fully utilizing the
proposed pipeline and thereby reducing our transportation cost per Mcf.
As the dissent in the court of appeals noted, these statements are “some evidence Denbury intends
to fully utilize the Green Pipeline as an essential part of its tertiary oil production operations.
Denbury’s description of the pipeline’s purpose indicates the CO2 it transports in the pipeline will
be its own . . . .”32 Denbury Green’s representations suggesting that it (1) owns most or all of the
32
296 S.W .3d at 882 (Gaultney, J., dissenting).
16
naturally occurring CO2 in the region, (2) intends to purchase all the man-made CO2 that might be
produced under current and future agreements, (3) sees its access to CO2 as giving it a significant
advantage over its competitors, and (4) intends to fully utilize the pipeline for its own purposes, are
all inconsistent with public use of the pipeline. As Denbury Green did not establish common-carrier
status as a matter of law, it was not entitled to summary judgment.
III. Conclusion
Pipeline development is indisputably important given our State’s fast-growing energy needs,
but economic dynamism—and more fundamentally, freedom itself—also demand strong protections
for individual property rights. Locke deemed the preservation of property rights “[t]he great and
chief end” of government,33 a view this Court echoed almost 300 years later, calling it “one of the
most important purposes of government.”34 Indeed, our Constitution and laws enshrine
landownership as a keystone right, rather than one “relegated to the status of a poor relation.”35
A private enterprise cannot acquire unchallengeable condemnation power under Section
111.002(6) merely by checking boxes on a one-page form and self-declaring its common-carrier
status. Merely holding oneself out is insufficient under Texas law to thwart judicial review. While
33
J O H N L O CKE , S ECO ND T REATISE OF G OVERN M EN T Chap. IX, Sec. 124 (C.B. McPherson, ed., Hackett
Publishing Co. 1980) (1690).
34
Eggemeyer v. Eggemeyer, 554 S.W .2d 137, 140 (Tex. 1977). Private property rights have been described
as “fundamental, natural, inherent, inalienable, not derived from the legislature and as preexisting even constitutions.”
Id. They are, in short, a foundational liberty, not a contingent privilege.
35
Dolan v. City of Tigard, 512 U.S. 374, 392 (1994); see also generally J AM ES W . E LY , J R ., T H E G U ARDIA N
OF E VERY O TH ER R IGH T : A C ON STITU TIO N AL H ISTO RY O F P RO PERTY R IG H TS (3d ed. 2008).
17
neighboring states impose fewer restrictions on the level of public use required for such takings,36
meaning companies may seize land to build pipelines for their exclusive use,37 the Texas Legislature
enacted a regime more protective of landowners. If a landowner challenges an entity’s common-
carrier designation, the company must present reasonable proof of a future customer, thus
demonstrating that the pipeline will indeed transport “to or for the public for hire” and is not “limited
in [its] use to the wells, stations, plants, and refineries of the owner.” We reverse the court of
appeals’ judgment, and remand this case to the district court for further proceedings consistent with
this opinion.
_______________________________________
Don R. Willett
Justice
OPINION DELIVERED: March 2, 2012
36
L A . R EV . S TAT . A N N . § 19:2; M ISS . C O D E A N N . § 11-27-47.
37
See ExxonMobil Pipeline Co. v. Union Pac. R.R. Co., 35 So.3d 192, 199 (La. 2010) (holding that “any
allocation to a use resulting in advantages to the public at large will suffice to constitute a public purpose”).
18