Texas Court Gives TransCanada Permission to Build Keystone XL Pipeline

Monday, October 1, 2012 by Cara Richards

There has been an ongoing battle in Texas between landowners and pipeline companies. A large amount of oil in Texas needs to be moved to refineries on the gulf coast and the most effective way of transporting the oil is through pipelines. In order to construct these pipelines, the companies need access to land.  Recently, one particular pipeline company, TransCanada, has worked on plans to build a pipeline which will take heavy crude from Canada sand pits to refineries on the gulf coast. Yet, landowners are resistant to the company’s efforts.

When it comes to these disputes between property owners and pipeline companies, Texas has had many problems resolving the conflicts between landowners’ rights and the pipeline industry’s need for land. Most pipeline companies reach agreements with landowners and compensate them for their land so they can then use the land to construct the pipeline. However, sometimes landowners do not accept the compensation offer. When a landowner rejects the company’s offer, the pipeline company can still use eminent domain to acquire the land.

Yet, Texas courts have been reluctant to uphold a pipleine company’s use of eminent domain to acquire land.  In an important case, Texas Land Rice Partners vs. Denbury Green Pipeline, Texas landowners sued a pipeline company after it tried to use eminent domain to build a carbon dioxide pipeline to use in the extraction of natural gas. The court held that company had not adequately proven their right to eminent domain and thus could not use the land for a pipeline.

However, the dispute is far from over…

In a very recent case, one property owner, David Holland, refused TransCanada’s  offer of compensation for $446,864 for an easement across his land because the company refused to accept liability for future disaster and refused to lower the Keystone XL to pass under existing streams and heavy-equipment crossings already existing on his property, making the Keystone XL pipeline more enviornmentally risky than other pipelines that had agreed to his terms and held easements across his land.

Unable to acquire access to the land through compensation because of resistant landowners, TransCanada then decided to acquire the land through meeting the requirements of eminent domain. TransCanada’s lawyer argued in court and the Texas judge agreed that the statutory requirements of writ of possession were met and the judge granted TransCanada’s request to take possession of the land under state eminent domain laws, allowing the company to begin construction of the pipeline. However, the dispute is far from over because the landowners can still challenge TransCanada’s right to eminent domain in court. The judge who decided the case suggested that the best solution may actually lie with the legislature because it can set a consistent standard for these cases. If nothing else, a decision of the Supreme Court of Texas will be necessary to clarify and resolve this area of law.