This Land is My Land - Texas Landowner Resistance to Permian Pipeline Projects
Next week, customers who have expressed an interest will receive the latest edition of our Permian Dashboard. If you would like a copy when it is issued, please let us know by dropping an email to Info@lawiq.com. This enhanced Permian Dashboard is based on requests from many customers to include a geographic representation of the easement progress made by the pipelines within 18 months of their projected in-service dates.
Today, we discuss why our Permian Dashboard leverages property records, in addition to state and federal permit data, as a key indicator of a project’s progress, and also describe how those records can be an indicator of possible opposition to a project. Perhaps surprising to some, in select areas, Texas landowner aggravation in response to the build of pipelines necessitated by the boom in the Permian Basin has led to more than ten bills being introduced in the Texas legislature designed to rein in the current ability of a private company to access private property.
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A Tale of Two Projects
The property records not only show how a project is progressing with regard to obtaining the property rights needed to build a project, but also offer insight into how much opposition from property owners the project may be encountering. We compare here two projects, Kinder Morgan’s Gulf Coast Express and the Epic NGL/Crude line, that run through similar counties in Texas. As seen on the maps that they each filed with the Texas Railroad Commission, the projects are following a similar route; in fact, they transit through fifteen of the same counties.
Epic NGL/Crude
Gulf Coast Express
The two projects, however, used the right granted to them under state law to take property by eminent domain in very different ways. When a company intends to take a property by eminent domain, it must file a notice in the county property records, usually referred to as a lis pendens, which is the latin phrase meaning “suit pending.” The purpose of this notice is to put any prospective purchasers of the property on notice that someone has filed a suit that could impact the title to the property -- in this case, by creating an easement across the land.
Below is the history of these two projects by month, showing both the number of voluntary land records filed across all of the counties they traverse, compared to the number of lis pendens notices that they each filed. As can be seen, Kinder Morgan is either much more aggressive in its use of this eminent domain right or has encountered substantial opposition to its proposed route. Epic Crude’s lis pendens notices are less than 5% of the voluntary property records that it has filed and most of those came very late in the voluntary acquisition process.
Conversely, Kinder Morgan’s Gulf Coast Express lis pendens notices are almost 50% of the total voluntary records that it has filed and it started using that right in far higher numbers far earlier in the process.
Beginning with this version of our Permian Dashboard, we will include a map showing how each project is progressing in acquiring the right of way by showing the number of voluntary and involuntary rights they have acquired by county, as shown below.
Gulf Coast Express -- Epic Crude
Republicans, Cowboys and Oil
When people think of Texas, many think of it as a Republican stronghold for ranchers and oil interests. However, the current boom in the Permian and the need to build pipelines to support that growth seems to be creating some tension between these two main groups, with Republicans trying to keep both constituencies happy.
Because Texas is different, this opposition is not like the opposition in many other parts of the country, where it is often part of the “keep it in the ground” movement that opposes the exploitation of fossil fuels. In Texas, the opposition is not an opposition to fossil fuels, nor even an opposition on environmental grounds. Instead, the objection by landowners is over the ability of a private company to use its eminent domain authority. It also seems to be a reaction to perceived strong-arm tactics and low-ball offers being made by some pipeline developers. Evidence of this tension can be found in the current session of the Texas state legislature, where there are more than ten bills designed to rein in perceived problems with the current ability of a private company to take someone else’s property.
Your Land is My Land
A pipeline that is currently engendering substantial pushback is Kinder Morgan’s Permian Highway project, which will extend through Hays County, Texas. Notably, Hays County has established its own website to keep community members informed and has held its own public informational meetings. On its website, the county has informed county residents that they:
- Have the right to an appraisal of their property;
- Are not obligated to take the first offer for their property (which the county reports is usually a low offer);
- Should negotiate to be compensated for any future damage to their property, along with the price and terms of easement;
- Should hire an attorney to protect their rights.
The website also urges residents to contact the State House representative, Erin Zwiener, if they feel they are being pressured to sell their land or sign an easement, and notes that Representative Zwiener has filed several bills regarding eminent domain and pipeline operations. While Representative Zwiener is a Democrat, all of the other bills introduced this session have been authored by Republicans.
One of the more onerous bills currently pending in the Texas legislature is Senate Bill 421, authored by Senator Lois Kolkhorst, whose district includes counties through which a number of proposed pipelines, including Kinder Morgan’s Permian Highway, will run. Some key elements of her bill would require the pipeline:
- To participate in a public meeting held by the local court, presumably in every county through which the pipeline runs;
- To use a specific form to be prepared by the Attorney General for the acquisition of the easement;
- To pay additional compensation of up to 35% if the initial offer is substantially below the final award in the condemnation action.
The President of the Texas and Southwestern Cattle Raisers Association joined Senator Kolkhorst and other prominent property rights advocates at a news conference on January 23, 2019 to announce the filing SB 421 and its House companion, HB 991. At that news conference, the Association’s president said that the Texas eminent domain system is commonly abused and is designed to favor private companies that subsidize their profits with the power of condemnation. Trade organizations such as the Texas Association of Manufacturers, the Texas Royalty Council and the Texas Oil and Gas Association have urged lawmakers to vote against the measure, and the Texas Pipeline Association has said that SB 421 would wreak havoc and “create one of the most onerous processes to constructing oil and gas infrastructures in the nation.” While it is unclear whether any of these bills will ultimately pass, the impact should fall only on those projects that have not yet completed the right of way acquisition process. So, any resultant legislation should not impact Epic, Cactus II, Gray Oak, or Gulf Coast. But Kinder Morgan’s Permian Highway could be severely impacted if the legislation becomes effective before it can complete its right of way acquisition. The industry could certainly lessen the risk from such legislative intervention by using the condemnation right as a last resort, similar to how it appears Epic used its condemnation right. That would go a long way toward rebutting Senator Kolkhorst’s view that there are “some really bad actors out there.”
Insights Coming Soon
- Oil rate cases
- Detailed project costs by inch/mile