Denbury Redux: TCJL Files Amicus in Pipeline Condemnation Case

Today TCJL filed an amicus brief in the Texas Supreme Court in the second round of litigation arising from the condemnation of right-of-way for a carbon dioxide pipeline in southeast Texas. In Texas Rice Land Partners, Ltd. v. Denbury Green Pipeline-Texas, LLC, 363 S.W.3d 192 (Tex. 2012), the Texas Supreme Court held that a certificated pipeline common carrier had a constitutional burden to show that there was a “reasonable probability” that the proposed pipeline would be made available for public use. But when the Court remanded the case, it did not detail how the trial court should determine that issue, particularly in a situation in which many years had elapsed between the project planning, acquisition of right-of-way, construction, and commencement of operation.

The trial court determined that Denbury did in fact construct the pipeline for public use, citing Denbury’s third-party contracts with both affiliated and unaffiliated entities to carbon dioxide transport. Consequently, the trial court granted summary judgment to Denbury in the case. The Beaumont Court of Appeals, however, reversed the trial court, ruling that the contracts were irrelevant to Denbury’s “subjective intent” at the time Denbury planned the pipeline. The effect of the Beaumont Court’s decision is to make it impossible for a common carrier to present sufficient summary judgment evidence. TCJL’s brief in Denbury I asked the Court to lay down specific standards in order to avoid repetitive and expensive litigation over the “reasonable probability” test in every county in which the pipeline is located. The Beaumont Court of Appeals seems to have confirmed these fears. As our brief in Denbury II states:

“The Court of Appeals’ opinion is a roadmap for endless litigation in every county touched by a pipeline project. But by the time such litigation works its way through the civil justice system, the cost and delay will stymie not only the proposed project at issue, but projects that may on the drawing board for the future. Energy transportation infrastructure development will be impeded by the prospect of an uncertain, lengthy, and expensive “regulation-by-litigation” process. Immense reserves of oil and gas recently discovered in the Eagleford Shale and elsewhere across the state may go unproduced, shifting jobs and investment to other states with more predictable and efficient regulatory systems, costing state and local governments substantial tax revenue for public schools and other basic governmental services, and slowing the Texas economy for the foreseeable future.”