Summary
The Supreme Court of Texas held that Denbury Green Pipeline-Texas, LLC established as a matter of law that its carbon dioxide pipeline was a common carrier under Chapter 111 of the Texas Natural Resources Code and therefore had eminent-domain authority. Applying the test from Texas Rice Land Partners, Ltd. v. Denbury Green Pipeline-Texas, LLC, the Court concluded that the evidence demonstrated a reasonable probability that the pipeline would serve the public, including through transportation agreements with unaffiliated entities.
Topics
Practice areas
Questions Presented
- Whether Denbury Green established as a matter of law that a reasonable probability existed that, at some point after construction, the Green Line would serve the public by transporting carbon dioxide for one or more customers who would retain ownership of their gas or sell it to parties other than Denbury Green.
- Whether the Texas Rice I common-carrier test focuses on the pipeline company's intent at the time construction was contemplated.
- Whether the public-use requirement demands proof that the pipeline's use serves a substantial public interest.
- Whether the trial court abused its discretion by entering final judgment on the parties' declaratory-judgment claims without a trial or additional evidence.
Holdings
- Denbury Green established as a matter of law a reasonable probability that, at some point after construction, the Green Line would serve the public by transporting carbon dioxide for customers who would retain ownership of the gas or sell it to parties other than the carrier. Denbury Green therefore qualified as a common carrier under Chapter 111 of the Texas Natural Resources Code and possessed eminent-domain authority.
- The Texas Rice I test does not make the pipeline company's subjective intent at the time it planned construction the central inquiry. The phrase 'for a person intending to build' identifies the party bearing the burden of establishing common-carrier status; it does not restrict the evidence to proof of the company's pre-construction intent.
- The Texas Rice I test does not require proof that the pipeline's reasonably probable public use serves a separate or substantial public interest. Evidence showing a reasonable probability that the pipeline will serve even one customer unaffiliated with the pipeline owner is sufficient to satisfy the public-use requirement.
- The trial court did not abuse its discretion by allowing Denbury Green to amend its petition and entering final judgment because the amended claims raised no additional issues and could not injure Texas Rice; Texas Rice's requested relief depended on the rejected challenge to Denbury Green's common-carrier status.
Key quotations
“While post-construction contracts considered without any other relevant evidence would normally establish only a pre-construction possibility of future public use, such contracts can be relevant to showing a reasonable probability that, “at some point after construction,” a pipeline will serve the public.” (510 S.W.3d at 914)
“With evidence that Denbury Green entered into a contract in 2013 to transport CO2 for Airgas Carbonic, along with the proximity of the Green Line to potential customers such as Airgas Carbonic and Air Products, no longer could a reasonable fact-finder determine that a genuine fact issue exists as to whether the Green Line would, at some point after construction, do what it now most certainly does: transport CO2 owned by a customer who retains ownership of the gas.” (510 S.W.3d at 916)
“We hold that evidence establishing a reasonable probability that the pipeline will, at some point after construction, serve even one customer unaffiliated with the pipeline owner is substantial enough to satisfy public use under the Texas Rice I test.” (510 S.W.3d at 918)
Factual background
Denbury Green developed and operated the Green Line, a carbon-dioxide pipeline running along the Texas Gulf Coast. Texas Rice owned approximately 3,800 acres in Jefferson County and denied Denbury Green access to survey the property. After obtaining a Railroad Commission T-4 permit, Denbury Green invoked eminent-domain authority, surveyed the property, and constructed the pipeline. On remand from the Texas Supreme Court's earlier decision, Denbury Green presented transportation agreements with unaffiliated entities Airgas Carbonic and Air Products; Airgas retained ownership of carbon dioxide transported through the Green Line, while Air Products's captured carbon dioxide was ultimately transferred to Denbury Green for use and sequestration.
Procedural history
Denbury Green obtained a Railroad Commission T-4 permit and used eminent-domain authority to survey and construct the Green Line carbon-dioxide pipeline across Texas Rice's property. On cross-motions for summary judgment, the trial court held that Denbury Green was a common carrier with eminent-domain authority. In the first appeal, the Texas Supreme Court reversed and remanded for evidence applying the Texas Rice I common-carrier test. After remand, the trial court again ruled for Denbury Green, but the court of appeals reversed. The Texas Supreme Court reversed the court of appeals and reinstated the trial court's judgment.
Remand instructions
None; the court reversed the court of appeals and reinstated the trial court's judgment.