In the wake of President Barack Obama’s announcement that his administration would not support the Keystone XL Pipeline, it is constructive to remember that another Washington influence is already impacting pipeline development in Texas.
More than a decade after the U.S. Supreme Court laid down the decision of Kelo v. City of New London in 2004, it continues to raise the anxiety levels of master limited partnership investors, right-of-way agents and project developers throughout the oil and gas industry. What’s more, liberals have little to nothing to do with it.
Kelo arose when a homeowner refused to sell her property to the city of New London, Connecticut, which had a plan to turn her distressed neighborhood into a upscale, mixed-use development right on the Long Island Sound. The homeowner claimed that this plan did not arise to a “public use,” which was required by the Takings Clause of the U.S. Constitution for a state entity to take someone’s property. The Supreme Court disagreed in a high-profile 5-4 opinion, holding that the plan’s “public purpose” — namely, the belief that economic development could increase the city’s tax base, bring new jobs and revitalize a down and out area — was sufficient to allow the city to take the land.
Since the ruling was handed down, no construction has yet taken place on the project, and New London's grand mixed-use project has only amounted to an empty New England field so far. But perhaps the property's old owner can take solace in the fact that the decision spurred aghast property rights advocates across the country to petition their states to take action to ensure that a taking for similar reasons would not occur on their soil.
In 2011, after some fits and starts, the Texas Legislature enacted such a reform in Senate Bill 18. The law underscored the fact that governmental entities must use eminent domain to effectuate a real public function — as opposed to private gain that may eventually help the state government’s balance sheet. Yet this wasn’t the only statewide change in eminent domain law; that same year, another elected branch of government was about to grant property owners a major new safeguard.
The Kelo decision made property rights a core issue for prospective judges seeking election to the Supreme Court of Texas at a time when conservative judicial ideologies were becoming more defined. Eventually, pro-business justices such as Tom Phillips and now-Sen. John Cornyn gave way to a majority of more ideological “constitutional conservatives,” including Jeff Boyd and current Chief Justice Don Willet.
The latter wrote the opinion of the Texas Rice Land Partners v. Denbury case, which rocked the pipeline eminent domain legal framework in Texas by requiring, for the first time, pipeline operators to prove up and document the “public use” for which they were seeking to use eminent domain. Beforehand, all these operators had to do was check a box on a one-page government form.
Suddenly, property owners were empowered to challenge various new pipeline developments — much to the chagrin of the oil and gas industry. That industry liked the old “check-the-box” system and now had to exercise its state-granted right of eminent domain in a newly murky legal environment.
The impact was felt immediately. Multiple challenges ensued, incurring significant legal costs and project delays. This year, near Big Bend, far left environmentalists and right-wing property rights advocates are uniting to fight ETP’s proposed Trans-Pecos Pipeline, using Denbury’s new documentation requirements as a key tool.
Take a drive down the Katy Freeway through the Energy Corridor any given rush hour, and it won’t be a shock to see bumper stickers shouting “Drill Baby Drill” and “Don’t Tread on Me” side by side on the same vehicular rear. But those two slogans, so often portrayed by the coastal media as going hand-in-hand, are becoming increasingly at odds within this state.
And this will likely intensify: The face of Texas politics on TV and laptop screens is no longer George W. Bush or Rick Perry — but firebrand Sen. Ted Cruz.