Well, I have written about large power lines and pipelines coming through Walker County before and here we are in Walker County with another new pipeline project. This time a Bahia Pipeline LLC is putting in a major gas pipeline. Many of you may have been contacted in the last few months about access for a survey, but apparently this project has picked up steam, because Bahia Pipeline LLC has served lawsuits against landowners who would not agree to let them onto their property.
Property is obtained for a project like the pipeline in a similar method to an electric line. However, a pipeline does not have to have public meetings. It begins with a request to survey an area of your property for a “potential” pipeline. Then, typically an offer is made for the purchase of the property from the entity seeking to take the property for the pipeline. If the landowner does not think the offer is fair, they have to make a decision. Accept the low offer or deal with the threat of an eminent domain lawsuit.
In one of the most controversial eminent domain decisions ever, the United States Supreme Court ruled in 2005 (Kelo vs. City of New London ) that a city’s exercise of its eminent domain powers to take private property in furtherance of an economic development plan satisfied the constitutional requirement that such power be used only for a “public use,” even though private developers stood to profit handsomely from the city’s actions. In reaction to that ruling, some state legislatures have been busy crafting legislation to limit the use of condemnation powers in such circumstances. For their part, the owners of property targeted for condemnation have considered how they still might fend off the taking, or, failing that, how to maximize the compensation that the government must pay.
In Kelo vs. City of New London, a landowner was not able to defeat a condemnation initiated by a city so that a new hotel could be built on the property, but he did receive maximum compensation from an obviously sympathetic jury. The landowner was an immigrant who had spent two years and a lot of money renovating a warehouse and building a mail-order cigar business. When two private developers were unsuccessful in negotiations to buy the property as a site for a hotel, they instead reached an agreement with the city whereby the city would condemn the property for their desired use and the developers would pay the costs and fees associated with the condemnation.
When the city was first attempting to buy the property, it sent the landowner a toxic waste notice requiring him to investigate whether any toxins existed in the ground. The landowner tried to comply, but after spending many thousands of dollars he found no toxins. The city would later admit in the litigation that such an investigation was not really feasible so long as a building remained on the property. The toxic waste notice, and especially its suspicious timing, came to be seen as a tactic to put pressure on the landowner during the negotiations leading up to the condemnation.
Although the trial court ruled that the city could condemn the land for the hotel, in the subsequent trial before a jury for damages, the landowner fared much better. The jury awarded him the entire amount he had sought. The award included several million dollars each for the value of the property itself and for the loss of the goodwill associated with the cigar business. Damages for loss of a business are not typical in condemnation cases, but the landowner was able to show that there was no suitable alternative location for the business, so that he would have to start over from scratch. For good measure, the jury also awarded damages equal to the cost of the dubious toxicity study that the landowner had been forced to undertake.
As Texas’ population grows, additional property will be necessary to accommodate this growth, i.e., pipelines, roadways, etc. Usually the acquisition of this additional property will be through negotiations with the seller/owner and buyer/developer. While the landowner may believe he is negotiating the price that he will accept, he could quickly find himself boxed into a corner with limited leverage. The party pursuing eminent domain could have their lawsuit filed and a group of handpicked special commissioners, whose duty it is to determine a value for the property, already in place well before the owner is aware of what is happening. This is because the notice requirement in eminent domain lawsuits is much different than the notice requirements in other lawsuits. Additionally, it may not be the local government pursing this action. It could be a pipeline company or the state widening a highway or Farm to Market Road. Their goal is to get the property for the lowest price they can.
If you find yourself in the position of having your property taken by a pipeline company, state or local government about a road expansion, then you should immediately consult an attorney who is skilled in eminent domain, real estate transactions and familiar with the local real estate market.