Face Challenges Confidently

453 In re Texas Rice Land Partners, Ltd.

Tuesday, September 8th, 2015

Richard F. Brown

The following is not a legal opinion.  You should consult your attorney if the case may be of significance to you.
In re Texas Rice Land Partners, Ltd., 402 S.W.3d 334 (Tex. App.—Beaumont 2013, mandamus denied) held that the trial court must make a preliminary finding as to a developer’s status as a common carrier before issuing a writ of possession pending final resolution of the landowner’s challenge to the developer’s common carrier status.  Unsuccessful at negotiating the purchase of an easement necessary for its crude petroleum pipeline, TransCanada Keystone Pipeline, L.P. (“TransCanada”) filed a petition for condemnation of land owned by Texas Rice Land Partners, L.P., James Holland, and David Holland (collectively, “TRL”).  The trial court appointed special commissioners to hear the matter, who then granted TransCanada the easement and awarded TRL $20,808 in compensation for the easement.  TRL objected to the commissioners’ decision and requested a jury trial on TransCanada’s common carrier status under the Texas Natural Resource Code.
TransCanada filed a motion for a writ of possession pending resolution of the jury trial and deposited the full award of $20,808 in the court registry, along with a surety bond and cost bond.  The court issued the writ of possession to TransCanada, and TRL filed a petition for writ of mandamus, claiming the trial court abused its discretion in granting TransCanada’s writ of possession prior to resolving its challenge to TransCanada’s common carrier status.
Relying on Tex. Rice Land Partners, Ltd. v. Denbury Green Pipeline—Texas, LLC, TRL argued that the trial court was required to fully resolve TransCanada’s common carrier status before TransCanada could take possession of TRL’s private property in conjunction with its suit for condemnation.  In Denbury Green, the Texas Supreme Court explained that once a landowner challenges an entity’s prima facie evidence of common carrier status pursuant to a permit granted by the Texas Railroad Commission, “‘the burden falls upon the pipeline company to establish its common-carrier bona fides if it wishes to exercise the power of eminent domain . . . .  Merely holding oneself out [as a common carrier] is insufficient under Texas law to thwart judicial review.’”
However, the court considered that the Texas Supreme Court, in Denbury Green, expressly limited its opinion to determining common carrier status under Section 111.002(6) of the Texas Resource Code.  The Texas Supreme Court did not address Section 21.021 of the Texas Property Code, the statute at issue in this case, which “allows a party with eminent domain authority to take possession of the condemned property, ‘pending the results of further litigation’ if that party pays the property owner the amount of damages and costs awarded by the special commissioners or deposits the amount of the award into the registry of the court.”
“Nevertheless, we recognize that there must be evidence in the record that reasonably supports TransCanada’s assertion that it is an entity with ‘eminent domain authority,’ and it was error for the trial court to refrain from making such a preliminary finding.”  However, the court held that the trial court’s failure to make such a finding was harmless, given uncontroverted evidence in an affidavit submitted by TransCanada that its pipeline would be operated as a common carrier pipeline and that “‘[a]ny shipper wishing to transport crude petroleum meeting the specifications set forth in the [applicable] tariff . . . will have access to ship its crude petroleum on the pipeline for a fee[.]”
The significance of this case is the court’s holding that the trial court erred by failing to make a preliminary finding of TransCanada’s common carrier status before issuing a writ of possession.