Opinion filed July 21 , 2016



### In The 

# Eleventh Court of Appeals

__________ 

### No. 11

- 14

- 00199

- CV

__________ 

### WALTER B. SANER , Appellant

V. BRIDGETEX PIPELINE COMPANY, LLC , Appellee

On Appeal from the 220 th District Court Comanche County, Texas Trial Court Cause No. CV17313

O P I N I O N
This is a condemnation case. Walter B. Saner owns a tract of land in Comanche County

. BridgeTex Pipeline Company, LLC instituted condemn ation proceedings to obtain an easement for a crude petroleum pipeline running across Saner’s land

. The trial court found that BridgeTex’s proposed taking was for a common carrier pipeline, which is a statutorily permitted public use. In one issue,2

Saner asserts that the trial court erred when it found that the pipeline was for “public use” as required by Article I, Section 17 of the Texas c onstitution. 1 We affirm. Background Facts BridgeTex is a limited liability company engaged in the location and construction of a pi peline in Texas for the transportation of cru de petroleum

. The pipeline is intended to transport crude petroleum from the Permian Basin to the
Texas Gulf Coast. In January 2013, the Texas Railroad Commission designated BridgeTex as a common carrier and granted it a T

- 4 permit

. Pursuant to its designation as a common carrier, BridgeTex exercised the power of eminent domain
and obtained an easement by condemnation across Saner’s real property in Comanche County. The special commis sioners determined the amount of compensation to which Saner was entitled to be $5,930

. Saner did not challenge the amount of the compensa tion award in the trial court. Instead, he only challenged the commissioners’ finding that th e easement was for publ ic use. The parties litigated the “public use” question in a one

- day bench trial. The trial court ruled in favor of BridgeTex and entered written findings o f fact and
conclusions of law. Among other things, the trial court found that “ BridgeTe x is a common carrier, the Pipeline will be operated as such, and the taking herein of Defendant’ s Property for the Pipeline is for a public use. ” Analysis In one issue, Saner asserts that the trial court erred when it found that the pipeline built across h is property by BridgeTex was fo r “public use

. ” “ The Texas Constitution safeguards private property by declaring that eminent do main can only be exercised for ‘ public use. ’ ” Tex

. Rice Land Partners, Ltd. v. Denbury Green Pipeline

- Tex

. , LLC , 363 S.W.3d 192, 19 4 (Tex. 2012) (quoting T EX

. C ONST

. a rt

. I,

1 Saner challenged the constitutionality of various provisions of the Texas Natural Resources Code at trial but has not raised these issues on appeal.3

§ 17 ). T he ultimate question of whether a particular use is a public use is a judicial question to be decided by the courts as a matter of law. Id

. at 198 n. 16. Denbury involved a carbon dioxide (CO 2 ) pipeline company that had been granted the power of eminent domain by the Railroad Commission as a “ common carrier ” pipeline company pursuant to the provisions of the Natural Resources Code.
Id

. at 194

– 95 ; see T EX

. N AT

. R ES

. C ODE A NN

. § 111.002 (6) (West 2 011 ) (applicable

to pipelines for the transportation of carbon dioxide ). The Texas Supreme Court
held that the common carrier permit granted by the Railroad Commission did not conclusively establish the pipeline owner’s power of eminent domain. Denbury , 363
S.W.3d at 195. Instead, the court held that a landowner can challenge the eminent

domain power of the pipeline company by contesting whether the proposed pipeline will in fact be public
, rather than private. Id

. The court held in Denbury that “[t]o qualify as a common carrier with the power of eminent domain, [a] pipeline must serve the public; it cannot be built only for the builder’s exclusive use .” 363 S.W. 3 d at 200 (emphasis added). The c ourt explained that “ extending the power of eminent domain to the taking of property for a private use cannot survive constitutional scrutiny ” and that “[t] he Denbury Green pipeline would not serve a public use if it were built and maintained only to transport gas belonging to Denbury from one Denbury site to another

. ” Id. (emphasis added). This recognition of what does not qualify as public use is mirrored in
S ection 111.003 of the Natural Resources Code, which denies common carrier status to pipelines “ that are limited in their use to the wells, stations , plants, and refineries
of the owner .” N AT

. R ES

. § 111.003 (West Supp. 2015)

. After recognizing what does not qualify as public use, the c ourt established a
test to determine what d oes qualify as public use for a carbon dioxide pipeline. See Denbury
, 363 S.W.3d at 202. The c ourt held that
, “for a person intendi ng to build a
CO 2 pipeline to qualify as a common carr ier under Section 111.002(6), a reasonable4

probability must exist that the pipeline will at some point after construction serve the public b y transporting gas for one or more customers who will either retain ownership of their gas or sell it to parties other than the carrier. ” Id. (footnotes omitted) ; c

f. Coastal States Gas Producing Co. v. Pate , 309 S.W.2d 828, 833 (Tex. 1958) (holding that “[n] o hard and fast rule can be laid down for dete rmining public

use . . . each case is usually decided upon the basis of its own facts and the surrounding circumstances ”). But the Denbury c ourt also provided that “[o]ur decision today is l imited to persons seeking common

- carrier pipeline status under Section 111.002(6) ,” applicable to carbon dioxide pipelines
, and that “[w]e express no opinion on pipelines where common

- carrier status is at issue under other provisions of the Natural Resourc es Code or elsewhere.” Denbury
, 363 S.W.3d at 202 n .28. Like the pipeline company in Denbury , BridgeTex was designated as a common carrier pipeline comp any by the Railroad Commission. However, BridgeTex’s designation as a common carrier pipeline company arose under another provision of the Natural Resources Code. Section 111.002(1) provides that a person
is a common carrier if it “owns , operates, or manages a pipeline or any part of a pipeline in the Stat e of Texas for the transportation of crude petroleum to or for the public for hire, or engages in the business of transporting crude petroleum by pipeline .” N AT

. R ES

. § 111.002(1)

. Despite Denbury ’s limitation to carbon dioxide pipelines, our sister court s have applied its “ reasonable probabil ity ” test to other provisions of the Natural Resources Code, including the provision granting common carrier status to crude petrol eum pipelines

. See Crawford Family Farm P’ ship v. TransCanada Keystone Pipeline, L.P.
, 409 S.W.3d 908, 922 (Tex. App.

— Texarkana 2013, pet. denied) (applying Denbury reasonable probability test to crude petroleum pipeline); s ee also Crosstex NGL Pipeline, L.P. v. Reins Rd. Farms

- 1, Ltd.
, 404 S.W.3d 754, 761 (Tex.5

App.

— Beaumont 2013, no pet. ) (applying Denbury reasonable probability test to natural gas liquids pipeline). In Crosstex , the Beaumont Court of Appeals addressed
the self

- imposed limitation in Denbury and nonetheless held that “ we are not persuaded the Court ’ s reasoning concerning the process of obtaining a T

– 4 permit applie s only to carbon dioxide lines.” Crosstex , 404 S.W.3d at 761

. Saner expressly acknowledges in his brief that Denbury ’s reasoning “is bro adly applicable to crude oil.”
We find th e reasoning of our sister court s persuasive. There is no distinction between crude petroleum common carriers under S ection 111.002(1) and carbon
dioxide common carriers under S ection 111.002(6) that would justify a departure
from Denbury ’s reasonable probability test. See N AT

. R ES

. § 111.002(1) , (6). Both provisions reference the constitutional “public use” requirement and grant common carrier status only when the pipelines are operated “to or for the public for hire.” Id. And both provisions are subject to S ection 111.003, which
, as stated previously,
denies common carrier status to private pipelines , i.e., pipelines “that are limited in their use to the wells, stations, plants, and refineries of the owner.” Id. § 111.003.
We join our sister courts in concluding that Denbury ’s reasonable probability test appl ies to other types of common carrier pipelines

. Accordingly, to satisfy the constitutional “public use” requirement, we hold that
, for a person intending to build a pipeline under Section 111.002(1), a reasonable probabilit y must exist that the pipeline will at some point after construction serve the public by transporting crude petroleum for one or more customers who will either retain ownership of their crude petroleum or sell it to parties other than the carrier. See Den bury
, 363 S.W.3d at
202.
With Denbury in mind, the trial court in th is case found that “there is a reasonable probability that the Pipeline will, at some point after construction, serve the public by transporting crude oil for one or more customers, not af filiated with6

BridgeTex, who will either retain ownership of their crude oil or sell it to parties other than BridgeTex.” This finding is supported by the record. A representative of BridgeTex testified at trial that BridgeTex has entered into a transportation services agreement with a shipper, who is not an affiliate or subsidiary of BridgeTex , and
that this shipper is obligated to ship 10,000 barrels of crude oil a day through the pipeline for seven years. The representative also testified that BridgeTex was in negotiations with twelve to fourteen other third

- party shippers who may either
become contr act shippers or spot shippers. He explained that the Federal Energy Regulatory Commission requires BridgeTex , as a common carr ier, to set aside ten percent of the pipeline’s capacity for spot shippers, who are essentially walk

- up
customers. He further testified that, although the pipeline was still a couple of months away from start

- up, BridgeTex had received five unsolicited ap plications from prospective spot shippers and that two of the applications had been approved while three were in the process of approval

. The representative also explained that the pipeline will be connected to seven to ten refineries, not owned by Bridge Tex , along the Texas Gulf Coast. Irrespective of the holding in Denbury and the evidence offered at trial satisfying its reasonable probability test, Saner challenges whether the pipeline built across his property is for public use

. He contends that the pipeline is not for public use because “ [ o ] nly crude oil pro ducers will use the pipeline.” Saner contends that “public” should be defined as “ everyone or the masses .” He asserts that the Texas

c onstitution requires what he refers to as “actual use” by th e public. Actual use by the public, according to Saner , is exemplified when “[a] member of the general public is a customer and he uses the electric line grid system that goes all the way to
house [sic] w hen he plugs in an appliance.” Saner explains that “ [s ] o when a transmission line comes to a house and connects to the house, one can pull off the transmission line as much electricity as needed as a member of the general public.7

This is what is contemplated by the phrase ‘ public use ’ in th e Texas Constitution .”
Saner asserts that the pipeline is not available for public use because there are “strict requirements [that] tend to exclude the public from use” and “[t]he minimum use requirement on this pipeline is a 50,000 barrel shipm ent.”
Bri dgeTex asserts that Saner ’s definition of “public us e” conflicts with settled
law. We agree

. In Housing Authority of City of Dallas v. Higginbotham , the Texas Supreme Court addressed the constitutiona lity of condemning land for government

funded low

- income housing. 143 S.W.2d 79, 84 ( Tex. 1940)

. The appellant in Higginbotham challenged the taking because the housing would not be available to the public generally but only to persons of low income. Id. at 84

. The c ourt held
th at “[t]he question of whether or not in a given case the use is a public one depends upon the character and not the extent of such use.” Id. The c ourt further stated that:
It is immaterial if the use is limited to the citizens of a local neighborhood, or that the number of citizens likely to avail themselves of it is inconsiderable, so long as it is open to all who choose to avail themselves of it. The mere fact that the ad vantage of the use inures to a particular individual or enterprise, or group thereof, will not deprive it of its public character.
Id. More recently, the Texas Supreme Court held that a taking of property in
downtown Austin by eminent domain for a “ chille d water loop ” was constitutional
when: [T] he chilled water service is available to any customer that applies, though pricing for the service is determined by the cost of connecting the customer to the chilled water lo op. While district cooling may be lim ited in its geographic scope, it is available to all who apply and agree on pricing with the City. We hold that the district plant here was serving a public use. City of Austin v. Whittington
, 384 S.W.3d 766, 784

– 85 (Tex. 2012)

. In the case before us, Saner does not deny that
, per Federal Energy Regulatory Commission requirements, 10% of the pipeline ’ s capacity will be reserved for8

“walk

- up” spot shippers , but takes issue with the apparent 50,000 barrel minimum shipping requirement

. In addressing the c onstitutional requirement of “public use,”
we do not find any meaning ful way to distinguish the 50,000 barrel minimum shipping require ment from the low

- income requirement in Higginbotham or the

cost s imposed in City of Austin

. Accordingly, w e conclude that the pipeline’s 50,000
barrel mi nimum shipping requirement do es not violate the “public use” requirement
of the Texas c onstitution . But our inquiry does not end here.
Saner also asserts that
, “[e]ven if two or five, or a hundred crude oil producers j oin together using a private pipeline to maximize their profits, this still does not constitute ‘ public use ’ as contemplated by the Texas Constitution” because “[c]rude oil producers are not the public under the Texas Constitution.” He further claims
that “it is not the case that by virtue of (either claimed or proven) common carrier
status it can be assumed that the ‘ public use ’ requirements of the Texa s Constitution have been met.” W e do not find Saner’s interpretation persuasive.
The evidence offered a t trial supported the trial court’s findings that a reasonable probability exists that the pipeline will at some point after construction serve the public by transporting crude petroleum for one or more customers who will either retain ownership or sell it to parties other than BridgeTex

. Accordingly, the
trial court did not err when it determined that the pipeline buil t across Saner’s property was for “public use” as required by Article I, Section 17 of the Texas

c onstitution. We overrule Saner’s sole issue. This Court’s Ruling We affirm the judgment of the trial court.

July 21 , 2016 JOHN M. BAILEY
Panel consists of: W right , C.J., JUSTICE Willson, J. , and Bailey, J.