Reversing course, the Texas Supreme Court has granted review in Miles v. Texas Central Railroad & Infrastructure, Inc. and Integrated Texas Logistics, Inc. (No. 20-0393). Last June the Court denied review, but an avalanche of amicus letters in support of Miles’ motion for rehearing, including those submitted by legislators and at least one statewide elected official, encouraged the justices to take another look. The Court has scheduled oral arguments on January 11 and requested the Solicitor General to file a brief expressing the view of the state.
This well-known controversy began in 2015, when Texas Central (TCRI) attempted to conduct a survey of Miles’ property in Leon County. Miles refused to allow the survey and sued TCRI and Integrated Texas Logistics (a TCRI affiliate formed in 2017 for the purpose of building and operating an interurban electric railway) for declaratory relief, including that neither TCRI nor its affiliate ITL had any statutory basis for its claim of eminent domain authority. TCRI and ITL claimed such authority under the Transportation Code as both a railroad company and interurban electric railway and thus had the right to conduct surveys. The trial court granted summary judgment in favor of Miles and awarded costs and attorney’s fees. TCRI and ITL appealed.
The Corpus Christi Court of Appeals reversed, holding that TCRI met the statutory definition of a railroad company and that TCRI and ITL met the criteria for an interurban electric railway. Miles argued that even if the entities met the definitions, they were not currently operating a railroad and did not meet the test laid out in Denbury Green Pipeline-Texas, LLC v. Texas Rice Land Partners, Ltd., 510 S.W.3d 909 (Tex. 2017) because there was no reasonable probability that TCRI and ITL would ever operate a railroad. The court of appeals reasoned that although TCRI had not laid any tracks or begun transporting passengers and freight, it had taken substantial enough steps towards doing so (e.g., conducting studies and surveys, design and construction, acquisition of right-of-way, and other activities) to indicate a reasonable probability of operating a future railroad.
Regardless of how one feels about high-speed rail, this case is significant both to private entities with eminent domain authority and landowners because it offers SCOTX an opportunity to expand further on what it meant in Denbury II by “reasonable probability.” Miles’ petition for review argues that the Denbury II test “was meant to ensure that the pipeline at issue would ‘serve the public,’ and ‘serv[ing] the public’ is a requirement imposed by a particular statute involved inDenbury: A pipeline company will ‘qualify as a common carrier with the power of eminent domain’ under Section 111.002 of the Natural Resources Code only if it ‘serve[s] the public’” [citing Denbury II]. Miles contends that the reasonable-probability test applies to any private entity seeking to exercise the power of eminent domain, not just pipelines. Miles further attempts in his petition to allay concerns that if TCRI fails the reasonable-probability test because it has no actual tracks, then the same outcome might result in the case of a pipeline company with no actual pipes.
How SCOTX receives this argument bears close watching because prospective pipelines and prospective railroads share some of the same preparatory functions, such as planning, design, studies and surveys, preliminary construction, acquisition of right-of-way, to name a few. Miles’ petition clearly calls for the Court to lump pipes and rails together for purposes of determining “reasonable probability.” This could take the Court into dangerous territory with potential fallout determining when a pipeline achieves “common carrier” status.