The Seaway Pipeline Will Carry as Much Oil as the Keystone, but First It Needs to Condemn Some Land

Categories: Legal Battles

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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.

See also:
There Will Be Tar Sand: The Battle Over the Keystone XL Pipeline

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.


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16 comments
ChrisWynnykWilson
ChrisWynnykWilson

Thanks for the article.  The lawsuit is a good thing.  What needs to happen next is rule making so that this type of situation can't happen again.  There are no regulations or standards addressing reversed, repurposed or twinned pipelines, there are no specific regulations for the transport of diluted bitumen in US pipelines, these pipelines pay no tax into the Oil Spill Liability Trust Fund due to a special exemption by the IRS. Without new rules I am afraid nothing will change and lawsuits for the most part have not worked out too well for landowners when it comes to tar sands.  

Willie
Willie

Pipeline right-of-way is, unfortunately, evolving law.  Common carriers are considered to have a public purpose, like highways and utilities, and eminent domain is used to acquire the land.  Eminent domain should not apply if the pipeline is not a common carrier, but because the law isn't settled, the Freddy's of the world are getting screwed.  The Railroad Commission is merely a ministerial agency, which means all you have to do is check the boxes and pay the fee; they won't actually look into whether or not the information is accurate, so there really are no checks and balances involved in the approval.  So, Seaway is steamrolling because it can get away with it, having only to deal with county knuckleheads.  

ScottsMerkin
ScottsMerkin topcommenter

"Property rights in Texas are supposed to be sacrosanct, practically God-given."  HAHAHHAHA LMFAO.  I dont care how much land you own and how long its been paid, try not to pay your property tax and see how long you keep it.  Texas, a place where you never truly own your land

animas
animas

Perhaps it would be more in the interest of 80 year old landowners in Texas who are getting "screwed" as you put it, if our "freedom fighting"  AG -likely to be elevated to Governor- spent less time on futile suits against the feds (27 against Obamacare to date) and more time trying to define the mission of the Railroad Commission as something other than a willing  agent of the oil and gas industry.

animas
animas

Just another "benefit" of life under the Texas Republican Reich--but it's good to know that Greg (Dr. Strangelove) Abbott will "fight for Texan's rights and freedoms"--as long as the "fight" is confined to gun permit eligibility.

RTGolden1
RTGolden1 topcommenter

@animas Republicans/Democrats, Right/Left, Liberal/Conservative all have no place in this debate.  It doesn't matter what state, county or municipality you live in, if development dollars can be made off of your land, it is at risk of being seized under eminent domain.  No matter where you live or who is in power there, if you don't pay your property taxes, the government will slip your property right out from under you.  Democrats are no more likely to protect the interests of property owners than Republicans.

animas
animas

There is a possibility that God will, if the Tea'd up Taliban (Deliverance Sect  )of convenient Christianity continues to re-define everyone's personal decisions and religious choices...

scottindallas
scottindallas topcommenter

If an elected body deems it for the public good, that's long been settled law. I don't disagree with your take, but the Supremes don't agree with us. KELO settled this question

scottindallas
scottindallas topcommenter

That's not historically true RT. Though I find little refuge in such partisan claims. TX was a trial lawyer's heaven under Dem leadership, which held a lock on power into the 80s

RTGolden1
RTGolden1 topcommenter

@TXsharon @RTGolden1 @animas I understand that there are differences in the approach to eminent domain between the two parties, that isn't my contention.  My contention is that neither party is out to protect the individual landowner's interests over the interests of their large donors.  The difference is in the degree of the screwing, not the direction of the screwing.  I suspect, to the screwee, getting screwed a little less from one side or the other is little comfort.

RTGolden1
RTGolden1 topcommenter

@Willie @RTGolden1 @animas Ah, but there is nothing in TX law stopping the government from forming public/private partnerships to get their developments going.

And if you look back, I never said the gov't could seize your property for delinquent property tax; i said they will slip it out from underneath you.

TXsharon
TXsharon

@RTGolden1 @animas If you think this is not a political issue, check the voting records of the two parties. Check the campaign contributions. Check the bills the two parties author. It most decidedly IS an issue between the GOP and Democrats. Neither party is perfect by a long shot but there is a clear difference. 

Willie
Willie

@RTGolden1 @animas No, only if the development has a public purpose, which means shopping centers don't count.  And, no, the government can't seize your property.  If you don't pay your property taxes, and ignore the countless citations and notices and the like, the taxing entity (e.g., city govt, county govt) can put a tax lien on your property, which gives courts the power to foreclose on the property and put it up for public auction.  

animas
animas

There is no indication that Mr. Davenport did not pay his property tax.  In spite of conservative Republican rhetoric  including that of the Heritage foundation, apparently no one in one of the most conservative Republican states of the union is offering him much assistance with eminent domain by a commercial enterprise.

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