Shane Puckett, Volume 50 Articles Editor
JUSTICE GREEN DELIVERED THE OPINION FOR THE COURT.
The issue in this case was whether Denbury Green Pipeline was a common carrier when it took possession of Texas Rice’s property through eminent domain.
In Denbury v. Texas Rice, Denbury Green Pipeline (Denbury) constructed a pipeline to transport carbon dioxide (CO2) from Mississippi to Texas. Prior to the construction, Denbury obtained a T-4 permit from the Texas Railroad Commission which gave it common-carrier status. With the T-4 permit, Denbury was also given eminent domain authority over property owners that denied Denbury access to their land. When Texas Rice denied Denbury access to its land, Denbury filed an injunction against it. While the suit was pending, Denbury took possession of Texas Rice’s land and completed the CO2 pipeline. An issue then arose as to whether Denbury was entitled to exercise its eminent domain authority to take possession of the land. The trial court concluded that Denbury was a common carrier with eminent domain authority over Texas Rice. However, the court of appeals disagreed and reversed. The Supreme Court of Texas ultimately concluded that Denbury was a common carrier as a matter of law and held eminent domain authority over Texas Rice.
In order to qualify as a common carrier with the power of eminent domain, a pipeline must serve the public. Further, it cannot be built solely for the builder’s exclusive use. The test of whether a pipeline serves the public is based on reasonable probability: whether there is a reasonable probability that the pipeline, at some point after construction, will serve the public. Moreover, simply obtaining a common-carrier permit from the Texas Railroad Commission does not automatically satisfy the reasonable probability test.
Here, the Supreme Court of Texas held that Denbury was a common carrier as a matter of law because it established a reasonable probability that, at some point after construction, the pipeline would serve the public. The Court reasoned that because Denbury entered into a contract to transport CO2 for another company—in which the other company would either retain the CO2 or sell it to a third party— and the fact that the pipeline was located in close proximity to potential future customers, there was a reasonable probability that it would serve the public. Accordingly, Denbury lawfully exercised its eminent domain authority over Texas Rice when it took possession of the law.
Denbury Green Pipeline-Tex., LLC v. Tex. Rice Land Partners, Ltd., No. 15-0225 (Tex. Jan. 6, 2017).