Locke Lord QuickStudy: Texas Central Rail Project Under Attack

Locke Lord LLP
January 25, 2017

The Texas Central Rail Project is a potential high speed passenger rail system connecting the DFW area and Houston. Texas Central Partners, LLC (Texas Central) is a private entity that serves as the project developer. Various routes for the project are under consideration as the project remains in the environmental review phase. During this phase, Texas Central must consider the environmental impacts of the proposed project, reasonable alternatives to the proposed project, and potential mitigation for the identified impacts.  

In order to obtain information needed to complete the environmental review, Texas Central has commenced surveys along its potential routes.  Some property owners are likely to consent to allowing Texas Central to perform these surveys.  However, some property owners have objected.  When faced with an objection, Texas Central has filed  court actions seeking restraining orders prohibiting a property owner from interfering with Texas Central’s survey work.  Thus far, Texas Central has filed twenty-three such actions in Harris County, four cases in Dallas County, six cases in Ellis County, and four cases in Travis County.  In these actions, Texas Central, according to their court filings, seeks to walk the proposed route, dig 2’ x 2’ x 2’ holes every 100 yards to inspect for potential archeological and historical artifacts, and, in some cases, conduct “minor shovel tests” around bodies of water to obtain information requested by the Army Corps of Engineers.   

The restraining order case that has progressed the furthest is Texas Central Railroad & Infrastructure, Inc. v. Calvin V. House that is pending in Harris County.  In the House case, Texas Central sought a restraining order against Mr. House who had refused to allow Texas Central onto his property.  Texas Central asserted that it had both a statutory right to enter Mr. House’s property for the purpose of an inspection and, as an entity with condemnation power, an inherent right to enter Mr. House’s property.  

Mr. House resisted their efforts and, most interestingly, argued that Texas Central lacked eminent domain power.  Texas Central has not been given eminent domain power by the Texas Legislature that is specific to that entity or to the DFW-Houston project.  So, Texas Central must rely on more general grants of eminent domain authority.  Texas Central claimed eminent domain power under Texas Transportation Code §112.002(d) which grants eminent domain power to a “railroad company.”  Texas Central also claimed eminent domain power under Texas Transportation Code §131.012 that grants eminent domain power to “interurban electric railway companies.”  

Mr. House argued that Texas Central is not a valid “railroad company” because a railroad company is defined as a “legal entity operating a railroad.”  Mr. House asserted that Texas Central is not operating a railroad as it has no tracks on the ground and no rail cars moving.  

Texas Central’s second potential legislative source of eminent domain power is the power granted to “interurban electric railway companies.”  This provision of the Texas Transportation Code grants eminent domain power to “a corporation chartered for the purpose of constructing, acquiring, maintaining, or operating lines of electric railway between municipalities in this state for the transportation of freight, passengers, or both freight and passengers.”  This would seem to be a more promising provision for Texas Central.  However, Mr. House argued that Texas Central had failed to identify this source of eminent domain power when it had registered with the Texas Comptroller.  One of the requirements of Senate Bill 18 passed in 2011 was that entities with eminent domain authority had to send a letter to Texas Comptroller identifying itself and identifying each law that provided it eminent domain authority.  When Texas Central registered with the Texas Comptroller, it did not identify Texas Transportation Code §131.012 (Interurban Electric Railways) as a source of its eminent power power.  Thus, Mr. House argued that, by statute, any such power expired.  TEXAS GOV’T CODE §2206.101(c).  

Mr. House also raised other procedural objections to Texas Central’s request to come onto his property to conduct survey work.  These objections all centered around one basic theme -  Texas Central had failed to adequately demonstrate a need to do survey work for a project that was still, in Mr. House’s description, speculative.

The Harris County District Court hearing the matter (the 333rd Judicial District Court) denied Texas Central’s request to issue an injunction prohibiting Mr. House from interfering with their survey work.  Although the Court did not explain the basis for its decision (nor was it required to do so), the clear implication was that the Court was not convinced that Texas Central had valid condemnation power.  If, indeed, Texas Central is without condemnation power or its power has expired, this will place Texas Central in a difficult quandary.  Texas Central has, thus far, not chosen to seek specific condemnation power for its DFW-Houston project from the Texas Legislature.

Texas Central may seek relief by appealing the Court’s decision.  Or, it may decide to seek condemnation power during the 2017 legislative session that has recently commenced.  This high-profile project will bear watching.     

For more information on the matters discussed in this Locke Lord QuickStudy, please contact the authors.