Off the Kuff Rotating Header Image

Supreme Court agrees that Texas Central is a railroad

Or at least, they declined the opportunity to say otherwise.

Texas Central Railroad, according to the Texas Supreme Court, is a railroad, ending a five-year legal battle over the controversial high-speed rail company’s right to use state eminent domain laws.

The ruling, unless a federal court intervenes or stops the company in another way, clears the path for backers of the Houston-to-Dallas bullet train to acquire land over the objections of landowners unwilling to sell.

The Supreme Court on Friday declined to review the Texas 13th Court of Appeals ruling last year that upheld Texas Central’s right to use state eminent domain laws.

“The court’s denial of review should put an end to over five years of contentious litigation and clear the path for Texas Central to bring the high-speed train to Texas,” Texas Central said in a statement.

[…]

At issue in the case, brought by Leon County landowners Jim and Barbara Miles, was whether Texas Central was classified as a railroad by state law. Despite claiming to be a railroad, Miles’ lawyers noted the company owns no trains, has no track and does not operate any service. Texas Central remains, after more than nine years, still in the planning stages, and continues to face stiff opposition from rural residents.

Being considered a railroad is important because only a railroad has a right to acquire property under eminent domain for a private purpose. Otherwise landowners simply could refuse to sell. Now, Texas Central must offer property owners fair market value, but can go to court to condemn land.

See here and here for the background. With the manufacturing contract, the final federal environmental approvals, surviving the legislative session, and now this, it’s been a few good months for Texas Central. Opponents still have some arrows in their quiver – they are challenging the environmental approvals, and it wouldn’t surprise me if Greg Abbott is asked to add consideration of eminent domain to a special session agenda – but the path forward is a lot clearer for them now than it was a year ago. Once they start actually laying track – and I know I’ve said this before, but it’s still true – they will be hard to stop.

Related Posts:

12 Comments

  1. David Fagan says:

    So, can anyone create a company, come up with a plan for a rail line, call themselves a railroad and start taking people’s property?

  2. C.L. says:

    Yes.

    You should start incurring the costs associated with doing exactly that.

  3. policywonqueria says:

    Re: “Now, Texas Central must offer property owners fair market value, but can go to court to condemn land.”

    This phrasing might be misunderstood as a choice to agree to sell at market value
    or condemnation by court with no pay. That’ s not true. When eminent domain powers are exercised, the land owner must still receive adequate compensation, and the amount can be litigated. It might, of course, be difficult to determine adequate compensation when there isn’t much of a market and when the reason for the condemning entity wanting the land is rather novel or unique.

    Also, the statement that “only a railroad has a right to acquire property under eminent domain for a private purpose” is problematic on two counts:

    First, there other private entities that can use that power: pipeline companies, notably. Second, what is a private purpose? The key concept here is “common carrier”, which means that the service to be provided must be available to the public. So, that a public purpose, albeit for private gain (profit). So, while privately owned and operated, the public – or, in the pipeline context, other market players, must be given access for patronage or usage.

    For a key SCOTX case, see Denbury Green Pipeline v. Texas Rice Land Partners, 510 S.W.3d 909 (Tex. 2017) [No. 15-0225].

    We […] decide whether Denbury Green Pipeline-Texas, LLC (Denbury Green) is a common carrier pursuant to the Texas Natural Resources Code and the test we set out in Texas Rice Land Partners, Ltd. v. Denbury Green Pipeline-Texas, LLC (Texas Rice I), 363 S.W.3d 192, 202 (Tex. 2012); TEX. NAT. RES. CODE § 111.019(a).

    Because Denbury Green’s summary judgment evidence conclusively established a reasonable probability that, at some point after construction, the carbon dioxide pipeline known as “the Green Line” would serve the public, as it does currently, we hold that Denbury Green is a common carrier as a matter of law. Accordingly, we reverse the judgment of the court of appeals and reinstate the trial court’s judgment.

    PRESENT TENSE ENCOMPASSES FUTURE TENSE

    When it got to weigh in the Miles v. Texas Central dispute, the Thirteenth Court of Appeals followed Denbury (although that case involved a different statute) and held as follows:

    While it is undisputed that appellants have not yet physically laid tracks or began to carry passengers or freight onboard a train, appellants have taken many of the necessary steps in order to be able to create and operate a railroad in the future. Title 5 regulates: (1) design, planning, and preliminary studies, see TEX. TRANSP. CODE. ANN. §§ 91.004(a)(1), 91.036, 91.054; (2) surveying, see id. § 112.051(a); (3) construction, see id. §§ 91.004(a)(1), 112.002(7), 112.057; (4) acquisition, see id. §§ 91.002(1), 131.032(a); (5) financing, see id. § 91.004(a)(4); (6) maintenance, see id.; and (7) purchasing, holding, and using property necessary to accomplish company objectives. See id. §§ 91.103(1), 112.002(6).

    Although Miles contends that appellants have only spent approximately 1% of their overall budget, appellants produced summary judgment evidence showing that they have coordinated with regulatory agencies concerning the Project, begun design, construction, and management operations, conducted land surveys, and entered into purchase agreements.

    Accordingly, considering the legislature’s instruction to view present tense as including future tense in the statute and the actions taken by appellants to begin to operate a railroad, we conclude that TCRI and ITL are railroad companies pursuant to § 81.002(2). See id. § 81.002(2).

    COMMENT

    Arguably the land owners were hopelessly outgunned (but would likely have lost anyhow). The two companies retained two (2) former justices for their team, one of whom now sits on the Supreme Court (she withdraw in the court of appeals and recused herself from the SCOTX appeal). In the Supreme Court, the two respondents had ten (10) attorneys. There were also numerous amici.

    It’s been reported that Miles wants to file a motion for rehearing. There is little reason to think that the outcome would be any different. It’s disappointing, however, that the Supreme Court didn’t even issue a per curiam opinon, given the high-profile nature of the case, and the numerous friends of the court that weighed in.

    Docket here: https://search.txcourts.gov/Case.aspx?cn=20-0393&coa=cossup

  4. mollusk says:

    With some qualifications, that’s what the relevant statutes provide. An explainer: https://texaslawbook.net/settling-questions-of-interpretation-in-james-miles-v-texas-central-railroad/

  5. David Fagan says:

    Soooooo, C.L, what you’re saying is, if you’re rich enough you can go take other people’s land, and that’s o.k.? Or, just o.k. when it isn’t your land?

  6. policywonqueria says:

    Mr. Fagan, when eminent domain powers are exercised, the land owner must still receive adequate compensation, and the amount can be litigated. – As previously mentioned.

    PRIVATE PROPERY PROTECTION IN TEXAS CONSTITUTION

    “No person’s property shall be taken, damaged, or destroyed for or applied to public use without adequate compensation being made, unless by the consent of such person . . . .” TEX.CONST. art. I, § 17(a).

    The Texas Legislature gets to decide – by means of statutes – under what conditions a private entity gets to make use of eminent domain powers. Nota bene: public use. That’s a critical limitation.

    VALUATION OF LAND IN A CONDEMNATION PROCEEDING

    “Compensation for land taken by eminent domain is measured by the fair-market value of the land at the time of the taking.” Exxon Pipeline Co. v. Zwahr, 88 S.W.3d 623, 627 (Tex.2002); see City of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177, 183 (Tex.2001). The objective of the condemnation process is to make the landowner whole. See TEX. CONST. art. I, § 17 (guaranteeing “adequate compensation”).

    So said the SCOTX in 2012, citing prior cases and the Texas constitution. See Enbridge Pipelines (E. Tex.) L.P. v. Avinger Timber, LLC, 386 S.W.3d 256 (Tex. 2012)
    https://scholar.google.com/scholar_case?case=7907092721252480374&hl=en&as_sdt=6,44

    QUESTION OF LAW, NOT ECONOMICS

    The specifics of how to establish the value of specific real estate/land in an adversarial legal proceeding are, unsprisingly, complicated, but the issue in the Miles case wasn’t the dollar value to the farmland at issue, but whether Central Texas had the right to resort to eminent domain under the relevant statute.

    That depended on whether the company qualified as a railroad under the applicable statutory definition without actually having a track record of laying track and putting “rolling stock” on it, i.e. operating trains as a factual matter, as distinguished from operation as a company that wants to get into that business and has taken preparatory steps. That’s is, for the most part, a question of statutory interpretation.

  7. David Fagan says:

    Mr. Policy,

    So, all that just means it’s o.k. when it is not your land.

    I hope the landowners argue for a percentage of ownership of this transportation line, and they recieve that percentage in income in perpetuity.

    This line could have easily followed I-45.

  8. policywonqueria says:

    Re: “So, all that just means it’s o.k. when it is not your land.”

    What’s okay is a question of general law/public policy, and how these general rules are applied by courts of competent jurisdiction if there is disagreement on application in a specific instance. It does *not* depend on how any one person feels about it, though that may of course drive the position they take in litigation. Such as refusing to sell land they say they own when an offer is made. But how do they prove ownership in the first place? They will need some official recognition thereof: title.

    PUBLIC INTEREST VS. PRIVATE INTEREST

    Eminent domain involves a general statewide policy. It means that there are no absolute private property rights and that real property may be taken against the owner’s will for a public purpose. But the owner must be compensated. Those who oppose this categorically would be opposing the federal and state constitutions. Those who oppose the exercise of public domain condemnation in a particular instance can litigate it in court, as Miles did.

    SOURCE OF TITLE

    Also remember that all land originally was that of the true natives (Indian tribes), and that in more recent times the private ownership claims of living owners depend on the existence of a legal system for inheritance rules (validity and enforceability of wills and/or laws governing inheritance without a will (intestate succession) and laws governing transfer of title to land by sale, including an official recordation system. And the modern source of title are grants from the “sovereign”.

    As a practical matter, there is no such thing as property rights in a void, i.e. apart from government, broadly speaking. Nor does it make sense to refer to property rights as sacrosanct.

    Stated differently, property rights depend on the existence of government (in some form) in the first instance.

  9. David Fagan says:

    Policy,
    If I completely read one of your comments do I get a certificate?

    Wording a bunch of law is great and all, but laws are purposefully worded as a grey area. Arguing all these points would be a waste I’d time.

    I am on the side of the private land owner be it people who will not be compensated significantly to be “made whole “(very grey area) whether it is from a rail project sourced out to France and Japan, or an I45 corridor that threatens racially marginalized people.

    I’ve never heard anyone say “thank God the government took my land and gave me fair market value for it”.

  10. C.L. says:

    David, then you should look at voting different people into elected office… ’cause that’s the world they’ve created.

    Next time you’re at the ballot box, make sure you uncheck the box for any candidate who you believe would help pass laws that were ‘grey’ in scope and language, or any SCOTX candidate who would upload these ‘grey’ laws.

  11. David Fagan says:

    Well, C.L, thank God there’s a mother fucking rainbow somewhere.

  12. C.L. says:

    Amen, David.