Hays County, Kyle, landowner lawsuit against railroad commission questions pipeline oversight

Heinz Stefan Roesch owns roughly 30 acres of land that falls along the route of the Permian Highway Pipeline in Blanco County.

Heinz Stefan Roesch owns roughly 30 acres of land that falls along the route of the Permian Highway Pipeline in Blanco County.

Two years ago, Heinz Stefan Roesch bought a roughly 30-acre property along RR 1623, outside of the city of Blanco. His whole family is from the Hill Country, he said, and he had been saving all his life to buy something just like it.

Last fall, he started hearing about a natural gas pipeline that the company Kinder Morgan was planning, though in the initial routing his land did not fall in its path. In January, he noticed low-flying helicopters over his house. A week later, Roesch received a letter in the mail informing him that the Permian Highway Pipeline would, in fact, cross the approximately 1,000-foot-wide parcel he calls home.

“All my future plans are basically destroyed by this thing,” Roesch said. “It’s 300 feet from where I sleep.”

Though the installation of the pipeline will clear hundreds of trees from his property and render it nearly impossible to develop the highway frontage, Roesch quickly learned that his choices in opposing the pipeline’s path across his land were limited. In Texas, private oil and gas pipeline companies have historically been given the authority to choose routes and to exercise the power of eminent domain to acquire land for that route—in other words, to take the land even if the owner does not want to part with it.

Since then, Roesch said, “I’ve been basically trying to fight this thing on so many fronts.”

The most recent front is a lawsuit filed against the Texas Railroad Commission, with Kinder Morgan as a codefendant, in Travis County state District Court on April 22. Roesch is one of the plaintiffs, along with Hays County, the city of Kyle and owners of two other parcels along the route: Andrew Sansom, a well-known conservationist and former executive director of the Texas Parks and Wildlife Department as well as Scott and Lana Nance, who own several thousand acres in Hays County.

The lawsuit, which is being funded by the members of the Texas Real Estate Advocacy and Defense, or TREAD Coalition—a bipartisan nonprofit concerned with property rights, among other issues—charges that the railroad commission’s current process of approving applications for oil and gas pipelines is unconstitutional because it does not provide oversight.

The Pipeline Process


The Permian Highway Pipeline  is a $2 billion, nearly 430-mile natural gas conduit that will stretch between the Waha pipeline junction near the Permian Basin and the Gulf Coast. Its route first became public in October, when landowners along the proposed path began to receive requests to survey their land.

Over the next several months, opposition in Hays County and the surrounding area became widespread, according to local officials, who organized town hall meetings to supplement Kinder Morgan’s open houses. Between January and April, numerous jurisdictions—including Hays County, San Marcos, Kyle, Buda, Woodcreek, Wimberley, the Barton Springs-Edwards Aquifer Conservation District, and Hays CISD—passed resolutions opposing the pipeline and asking the Legislature to take action against it and similar projects.

But despite opposition, according to lawyers with experience in the field, actually stopping an oil and gas pipeline or changing its route is unlikely, given the power delegated to the companies.

“The law in Texas as it stands today is just not very favorable to the landowner when you talk about challenging routing decisions that have been made by pipeline companies,” said Nick Laurent, a partner at Barron, Adler, Clough & Oddo, a law firm that is representing landowners along the pipeline route but is not involved in the current case against the railroad commission. “The Legislature many years ago, and the courts over the years since then, have essentially given the pipeline companies almost unfettered discretion to decide what’s best.”

The Lawsuit


The lawsuit filed April 22 against the railroad commission does not directly challenge the use of eminent domain by private companies, but it does challenge the manner in which that power is wielded.

Though the Texas Constitution gives the government an inherent right to use eminent domain under certain circumstances, private companies do not  have the same authority unless it is delegated to them by the Legislature. According to the suit, oil and gas pipeline companies like Kinder Morgan are—under the Texas Utilities Code—allowed to exercise eminent domain “in connection with constructing and operating natural gas pipelines.” But that code also requires that the exercise of those powers “must be subject to rules and policies adopted and enforced by the railroad commission.”

The rules the railroad commission has actually put in place, the lawsuit charges, require so little in the way of transparency or public process that the commission is not doing what the constitution mandates—it does not regulate pipelines in a meaningful way.

The primary permit that the developer of an oil and gas pipeline must obtain from the railroad commission is called a T-4. It is a few pages long and requires that a map of the route be attached. The company does not, however, have to hold any public meetings or release any analysis of the route.

The lawsuit calls this process “perfunctory” and charges that the “Railroad Commission conducts no investigation, evaluates no alternative route, entertains no adversarial inquiry, provides no notice, allows no hearing, and considers no evidence.”

The T-4 permit is also the prerequisite to the exercise of eminent domain under the Texas Property Code. Even if that use of eminent domain is then challenged in court, the lawsuit states that “the courts have no authority to address pipeline routing issues, including the advisability of alternative routes, or in light of local concerns, needs, and environmental sensitivities.”

The suit claims that the railroad commission, “by implementing its current toothless rules and issuing a T-4 permit” has authorized Kinder Morgan “to exercise the legislative power of choosing the route and the property to be forcibly taken without any guiding standards,” which is a violation of several articles of the state constitution.

A spokesperson for the railroad commission declined to comment on pending litigation, but information on its website does acknowledge limits to its oversight of pipelines.  Under an FAQ on the railroad commission’s role in regard to pipelines in Texas, it states: “In Texas, pipelines are not required to be permitted before being built. There is no statutory or regulatory requirement that a pipeline operator seek or receive from the railroad commission either a determination that there is a need for the pipeline capacity or prior approval to construct a pipeline and related facilities.”

A Question of Process


The incongruous thing about the use of eminent domain by private pipeline companies is that when the government uses eminent domain, the process is much longer and more involved. When the Texas Department of Transportation wants to widen a road, for example, it must produce an analysis of different routes and invite the public to weigh in about why one route might be better than another—a process that could take anywhere from five years to decades, local officials and land use attorneys have said.

“[Eminent domain] is a governmental power that’s been given to the pipeline companies, but they have it way easier than the government that gave them the power,” Laurent said.

The lawsuit against the railroad commission asks the court for an injunction against the Permian Highway Pipeline eminent domain proceedings until a more rigorous set of rules can be put in place.

As far as what that public process for a private company might look like, TREAD Coalition legal counsel David Braun said that electric utilities provide a useful parallel. Like oil and gas pipelines, electric utilities are private companies with some authority to exercise eminent domain. However unlike oil and gas pipelines, electric utilities have to go through a fairly rigorous public process in front of the Public Utilities Commission of Texas. Braun referenced the large-scale wind farms that were built in West Texas over the last decade and the transmission lines that came with them.

“Those are massive industrial facilities, similar to pipelines,” Braun said. “And the route was chosen carefully on a mile-by-mile basis to have the least impact and the best cost-benefit possible. And lots of people got to present their point of view, and it was all analyzed and professionally considered in public with transparency.”

The process required of electric utilities building transmission lines includes soliciting information from local governments, compiling environmental reports that are made public, notifying residents in the vicinity of the line regardless of whether they own land directly on the route and holding open houses, among other steps. The public is then able to file a motion to intervene, after which they may be able to participate in an administrative hearing, or to formally register opposition. The staff of the PUCT then takes all of the information gathered and makes a recommendation to either approve the project or modify it.

Though pipeline companies generally do hold open houses for the public, they are not legally required to, nor are they required to make studies public. Only landowners directly on the route must be notified, and though they can challenge the company’s use of eminent domain in court, the cases are difficult to win.

A New System


The plaintiffs in the case against the commission and their lawyers consistently point out that they are not trying to shut down or even oppose the oil and gas industry as a whole.

“We’re not trying to put them out of business,” said Lana Nance, whose husband’s family has owned several thousand acres in and around Kyle since 1838.

The Nances, along with other plaintiffs, are instead asking for an injunction against further use of eminent domain along the Permian Highway Pipeline route until a more rigorous public process is in place.

That means that even if they get what they want, it may or may not lead to the rerouting of the pipeline, though they are hopeful. Hill Country landowners and elected officials have been saying for months that the region is too environmentally sensitive for the installation of a pipeline, but  they have been unable to convince Kinder Morgan to change the route.

Part of the complaint is the idea that if there were a more rigorous public process, Kinder Morgan might not have proposed the current path of the Permian Highway Pipeline.

“We don’t believe that this line—the Kinder Morgan Permian Highway project—would survive any kind of real analysis,” said Elyse Yates, founder and CEO of the public affairs firm Influence Opinions, which represents the TREAD Coalition.

Plaintiffs also say that they did not enter into the lawsuit without a great deal of thought. Though Hays County officials did not want to comment on the lawsuit in an interview, three of four commissioners attended the press conference announcing the suit, and Commissioner Walt Smith spoke.

“The decision to do this was not made lightly,” Smith said. “The suit filed today simply asks for the state to step up and take the power that’s been granted to them by the legislature and create a process by which we have a voice. Right now we don’t.”

In an interview, Kyle Mayor Travis Mitchell said that the city joined the suit in part because officials believe that without a public process, Kinder Morgan has no incentive to cooperate.

“We realized the cards were stacked against us,” Mitchell said. “And that’s when some interested groups started having conversations with us about really what the options for remedy were.”

In a statement to Community Impact Newspaper, a representative for Kinder Morgan said that the “current Hill Country route is the best route from an environmental and constructability perspective.”

An Uncertain Future


Many lawsuits have been brought against pipeline companies that challenge their right to take land, but Braun believes that this is the first time a suit has questioned the obligation of the railroad commission to provide more regulation and transparency.

“The constitutional issue is: Can the government give away governmental powers without sitting oversight in rules and standards?”

According to a report released by the investment bank Goldman Sachs on April 24—which acknowledges that Texas is “far different than other U.S. states in terms of the ease on developing and building new long-haul crude oil and natural gas pipelines”—if the lawsuit succeeds it “could create a broader impact, potentially, on pipeline development timelines and processes.”

But for now, planning for the Permian Highway Pipeline continues. If the court does not grant an injunction, Kinder Morgan plans to start construction in the fall.

Kinder Morgan filed a motion for summary judgment May 7 asking for dismissal and saying, among other things, that the plaintiffs assert no wrongdoing with regard to the Permian Highway Pipeline. Two weeks earlier, in a statement responding to the lawsuit, Kinder Morgan defended the route of the pipeline and said the plaintiffs only want the pipeline rerouted away from their own properties—that they are acting solely in their own self interest.

But Roesch said it is much bigger than that.

“It’s important to actually have some sort of voice for property owners and for the public,” he said.  “It affects everyone. And if it is for public use and if it is eminent domain, the whole public should have a say in where it goes and how it benefits—and that just doesn’t happen.”
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