Litigation practice tip before we dive into Right-Way Sand Co. v. South Texas Pipelines LLC (STX). Waiting 27 months after being sued and after the offending activity has occurred before asking for an injunction to "protect the status quo" is probably a loser.
STX sued landowners Right-Way and others to exercise the power of eminent domain for construction of a new pipeline to carry polymer grade propylene (PGP). Landowners objected to the court's jurisdiction, arguing that STX did not satisfy the statutory requirements for exercising the power of eminent domain, and asked the court to enjoin STX from, among other activities, coming on the property, ceasing operation of an already-constructed pipeline, and requiring removal of the pipeline. The trial court granted STX's motion for partial summary judgment and denied the landowners' plea to the jurisdiction and request an injunction. The court of appeals agreed.
What is required to be a common carrier in Texas?
A person is a common carrier under the Natural Resources Code if he " ... owns, operates or manages a pipeline ... for the transportation of crude petroleum to or for the public for hire, or engages in the business of transporting crude petroleum by pipeline". "Oil" includes crude petroleum oil. A petroleum product includes " ... any other liquid petroleum product or byproduct derived from crude petroleum oil or gas."
Under the Business Organizations Code entities can use eminent domain if they engage as a common carrier in the pipeline business "for the purpose of transporting oil, oil products, gas, carbon dioxide, salt, brine, fuller's earth, sand, clay, liquefied minerals or other mineral solutions."
It's not a slam dunk. Constitutional protections require courts to give "special scrutiny" to questions about a private entity's exercise of eminent domain. An entity relying on the statutory power must strictly comply with all statutory requirements and when there is a doubt as to the scope of the power, the use of such power is construed in favor of the landowner. But that was not a big hill for STX to climb here.
PGP is an oil product whether it is derived from catalytic fracturing and distillation of oil or from dehydrogenation of propane that might have come from a gas well. It is a liquid derived from gas and is a petroleum product.
Evidence establishing a reasonable probability that the pipeline will at some point serve even one customer unaffiliated with the pipeline owner is substantial enough to satisfy the public use requirement.
The court concluded that STX is a common carrier and has the right to exercise the power of eminent domain over the landowners' property.
No injunctive relief
A party is not entitled to the extraordinary remedy of a temporary injunction unless it pleads and proves (1) a cause of action, (2) a probable right to the relief sought, and (3) a probable, imminent and irreparable injury in the interim.
The landowners failed to comply with basic requirements for a temporary injunction:
- The application was not verified,
- There was no evidentiary hearing,
- The purpose of a temporary injunction is to preserve the status quo. The landowners waited 27 months after STX filed its original petition to seek an injunction. During that time the pipeline was installed and was operating. The court had a hard time understanding what "status quo" the landowners were trying to preserve.
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