Porter Hedges Secures Eminent Domain Victory for Texas Landowners
In a test of eminent-domain and market value standards for pipelines in Texas, the Supreme Court of Texas (“SCOT”) recently held that a pipeline’s “public use” is a legal question for judges to decide, not juries. The SCOT also held a landowner may testify to negotiations for other pipeline easements and to the value of similar easement sold in non-condemnation transactions to determine market value. That holding reversed the trial court’s limit on valuation testimony to the property’s agricultural use. Porter Hedges represented the landowners/the Hlavinka Family against HSC Pipeline Partners (“HSC”), a subsidiary of Enterprise Product Partners from the inception of the case thru all appellate levels (Court of Appeals and Texas Supreme Court).
On the right to take issue, although the six inch (6”) pipeline was built for a single customer of HSC with no interconnects and no other customers identified, the SCOT found that the single contract with an unaffiliated party was sufficient to satisfy the “public use” requirement of the Texas Constitution.
On the taking valuation issue, Terrance Hlavinka testified at the trial court level that the primary purpose of buying the land was to sell pipeline easements and he had recently negotiated over $2-3 million each for two other similar easements from other pipeline companies in private non-forced sales on the same properties. The trial court originally excluded this evidence. However, the SCOT agreed with the Court of Appeals that recent fair-market sales for easements before the taking may be used to establish the property’s highest and best use, and its market value, at the time of the taking. Of the ten amici briefs at the SCOT level, seven were filed in favor of the Hlavinkas by thirteen parties, including groups such as Texas Farm Bureau, Texas Realtors, and Capital Farm Credit.
The SCOT remanded the case to the trial court for a new trial to determine the market value of the property taken. Clay Steely represented the landowner and argued for the family/landowners at all levels with assistance from Lauren Harris.
See the full SCOT opinion here.