The Seaway Pipeline Will Carry as Much Oil as the Keystone, but First It Needs to Condemn Some Land
Property rights in Texas are supposed to be sacrosanct, practically God-given. So the ease with which pipeline companies seize private land through eminent domain is curious. The law here is anything but settled.
That's where landowners like Freddy Davenport come in. Increasingly, disputes between citizens like Davenport and huge pipeline companies are being settled in county court.
Davenport, 80, is from Naples, east of Mt. Pleasant, but he owns 42 acres in Collin County, near Farmersville, where he planned to develop a subdivision. He got it platted. He installed culverts and water lines. But on February 13, Seaway Crude Pipeline Co. filed a lawsuit in a Collin County court at law to condemn a right-of-way through Davenport's land.
In May, his son sat in a Holiday Inn with three court-appointed commissioners (local, disinterested real estate owners) who determined that Seaway owed Davenport a little more than $8,000 for a pipeline that would cut through his eastern acreage diagonally, rendering useless for development, he claims, as many as 20 acres.
"Candidly, this did not sit well with Freddy," attorney Jim Girard tells Unfair Park.
Seaway -- which is really a joint partnership between two massive corporations who together are knee-deep in just about every facet of fossil fuel production and transportation -- is a nearly 40-year-old pipeline that moved oil from the Texas Gulf to a hub in Cushing, Oklahoma. Enbridge Inc. and Enterprise Products Partners bought the aging line from ConocoPhillips and reversed its flow to carry oil to refiners in Freeport, Texas. A glut in Cushing, caused by diluted bitumen from Canada and tight oil from North Dakota, has created serious demand for a line to carry all those stranded hydrocarbons to the Texas coast.
By 2014, Enbridge and Enterprise want to have completed a line parallel to Seaway, which together will have the capacity to transport 850,000 barrels per day -- more than the controversial Keystone XL pipeline, which is currently undergoing environmental review.
Because Seaway is interstate, not international, it has none of Keystone's permitting headaches. In fact, it needed only a permit from the Railroad Commission of Texas, and easements along its path.
But that's where it ran into Freddy Davenport. He claims Seaway is duping landowners by waving the commission permit, known as a T-4, as proof of its right to seize land through condemnation. But if you look at the commission disclaimer, it makes very clear that it has absolutely zero authority over the exercise of eminent domain. To claim this statutory right, a pipeline must be considered a common carrier, open for hire and willing to transport oil it doesn't have a financial stake in.
On a T-4, however, that qualification is reduced to a box to be checked. "You get dragged into a commissioner's hearing before Seaway has had to prove they have any rights at all," Girard says. "Special commissioners decide how much Seaway is going to owe you, and if you don't like that, go back to court and start a whole lawsuit. It's a system that's stacked against a landowner, especially an unsophisticated landowner."
With no entity vetting Seaway's common carrier claim, and its right to condemnation, it's up to landowners like Davenport to take Seaway, a conglomeration of some of the largest publicly traded companies in the world, to court. And that's exactly what he's doing.
In his filing, he claims the Seaway line will be anything but a common carrier. "They own the pipelines, most of the oil flowing through the pipelines, the companies that service the pipelines, and companies and tanks that store the oil between the pipelines. The 'public' does not even have reasonable access to the pipelines much less have the 'good' of using the pipeline," Davenport's filing says.
His attorney, Girard, estimates Seaway and affiliated companies will own as much as 90 percent of the oil moving down the line. Seaway, for its part, has not responded to the allegations as of this posting, but we'll update when they do.
But if Davenport can prove his claims, the Texas Supreme Court has indicated it's willing to rule against pipeline companies. As recently as 2011, the court ruled that a carbon dioxide pipeline across a rice farmer's land wasn't a common carrier. It must have been small consolation, though, because therein lies the rub of using courts to suss this out. By the time the court ruled, the pipeline was already built.