Condemnation
Proceedings, Public
Purpose, and Changes to
Eminent Domain Law
Robert B. Neblett
Jackson Walker L.L.P.
100 Congress, Suite 1100
Austin, Texas 78701
(512) 236-2000
rneblett@jw.com
Overview
• What is eminent domain and who has
the power to use it?
• Limitations on the power of eminent
domain
• Recent Case Law and the Legislative
Response
• Issues to Consider as a Condemnor
The Power of Eminent Domain
• Stems from superior rights of the Crown
• 5th Amendment of the United States
Constitution
• Article 1, Section 17 of the Texas
Constitution
Authority to Condemn
• Vested in the Legislature
• Article 16, section 59 of the Texas
Constitution provides for the creation of
“conservation and reclamation districts.”
Authority to Condemn, (cont.)
• Texas Water Code § 11.033 (Wagstaff Act) • “All political subdivisions of the state and
constitutional governmental agencies
exercising delegated legislative powers have
the power of eminent domain to be exercised
as provided by law for domestic, municipal,
and manufacturing uses and for other
purposes authorized by this code …”
Water Code Section 49.222
“(a) A district or water supply corporation
may acquire by condemnation any land,
easements, or other property inside or
outside the district boundaries, or the
boundaries of the certificated service area
for a water supply corporation, necessary
for water . . .”
Water Code 49.222, explained
• Provides general eminent domain authority “inside
or outside the district boundaries” for all general or
special law districts.
• Specifically prohibits condemnation to acquire
groundwater or other water rights.
• Special law districts may have broader powers
according to their enabling legislation, including the
power to condemn water rights.
The Power to Condemn
• Groundwater Conservation Districts
• General Law Districts
―Municipal Utility Districts (MUDs)
―Special Utility Districts (SUDs)
―Fresh Water Supply Districts (FWSDs)
• Special Law Districts
Groundwater Conservation Districts
• A general law district created under Chapter
36 of the Texas Water Code.
• Has eminent domain power including fee
simple acquisition, but does not have the
power of eminent domain over water rights.
See Tex. Water Code § 36.105.
General Law Districts:
MUDs, SUDs, WCIDs, FWSDs, etc.
• General law districts are granted condemnation
authority by Water Code § 49.222.
• General law districts do not have the power of
eminent domain over surface or groundwater.
Special Law Districts
• Created by special act of the legislature.
• Numerous MUDs, SUDs, FWSDs and
GWCDs have been created by special
legislation.
• Condemnation authority governed by § 49.222
unless broader power granted by enabling
legislation.
River Authorities
• Feature an independent legislative
authority that trumps the Water Code.
• Have additional eminent domain powers,
as granted by their enabling legislation,
up to and including acquisition of fee
simple title and condemnation of
groundwater rights.
Bottom Line, (cont.)
• General law districts: no power to condemn
water rights.
• Generally, when any of these entities use their
power to condemn it is for easements for
pipelines, land for reservoirs, water or
wastewater treatment facilities, and/or some
form of drainage control.
Public Use: The Constitutional
Limitation of Eminent Domain
• The Texas and U.S. Constitutions both
limit the exercise of eminent domain
power.
• Must be for a “Public Use.”
Liberal View of “Public Use”
• Borden v. Trespalacios Rice and Irrigation Co.
– Borden dealt with the taking in Matagorda County that
was seemingly for the profit of private cotton and cattle
interests.
– Condemnees contended that condemnation was not for
public use and therefore the condemnation was
unlawful.
– Court held that the condemnation was for a public use,
even though it would have some private benefit.
Public Necessity
• A taking must be both for a public use,
and necessary to achieve the declared
public purpose.
• However, the condemnor’s discretion to
determine public necessity is nearly
absolute absent fraud, or arbitrary and
capricious behavior.
Public Necessity, (cont.)
• Malcomson Road Utility District v. Newsom
– Private developers seeking property asked the District to
condemn the portions of Newsom’s land that they had
failed to purchase.
– District Condemned Newsom’s land and Newsom
appealed.
– Court held that there was a fact issue as to whether the
District reached its condemnation decisions arbitrarily
and capriciously or by abusing its discretion.
The Kelo Decision
• New London, Connecticut utilized eminent
domain to revitalize an economically
distressed city.
– Revitalization was projected to create 1,000 jobs
– Create a State Park, build a marina and river walk
– 300 million dollar Pfizer, Inc. research center
• United States Supreme Court found that
promoting economic development is a public
use under the U.S. Constitution.
Texas Legislature’s Response to
Kelo
Senate Bill 7 -TEX. GOV’T CODE §
2206.001
• Prevents the condemning of property for:
– (1) the private benefit of a private party;
– (2) a public purpose that is merely pretext to
confer a private benefit on a private party; or
– (3) purely economic development purposes
Texas Legislature’s Response to
Kelo
Senate Bill 7 -TEX. GOV’T CODE §
2206.001(c)
• The Act does not affect the authority of
an entity authorized by law to take private
property through the use of eminent
domain for … water supply, wastewater,
flood control, and drainage projects…
Further Legislative Efforts Following
Kelo
• HB 1495 – Landowner’s Bill of Rights (2007)
– Codified at § 21.0112 of the Property Code
– http://www.oag.state.tx.us/agency/Landowners_billofrights.pdf
– Amended by HB 2685 in 2009
• SB 11 – Production of Certain Information (2007)
– Codified at § 21.024 of the Property Code
– Requires Condemnor for “Critical Infrastructure” to
produce certain information relating to the condemnation of the
specific property for which information was requested
Further Legislative Efforts Following
Kelo
• HB 51 & HJR 14 (2009)
• Constitutional Amendment passed in
November
–Amends Art.1, Sec. 17
–Places restriction on condemnation for
economic development within the
Constitution
Further Legislative Efforts Following
Kelo
• HB 51 & HJR 14 (2009)
• Constitutional Amendment passed in
November
– Adds qualifying language that the taking, damage, or
destruction must be for the ownership, use, and
enjoyment of the property
– Requires any new law (general, local or special)
bestowing the power of eminent domain to receive a twothirds vote of both the House and Senate
Further Legislative Efforts Following
Kelo
• HB 2006 (2007) & SB 18 (2009)
– Neither bill has become law
– Both bills would have defined public use to include the “possess use, and enjoy”
language that is now a part of our Constitution
– Would have required a governmental entity to authorize condemnation at a
public meeting and by record vote
– Would have allowed repurchase by landowner for price paid by condemnor (as
opposed to current fair market value)
– Would have slowed down condemnation process by requiring 20 days notice
prior to hearing and prohibiting the scheduling of a commissioners hearing
within 20 days from the appointment of commissioners
– Would have required a bona fide offer and allowed for abatement of suit and
recovery of fees if no bona fide offer was made.
Further Legislative Efforts Following
Kelo
• SB 1023 (2009)
– Would have added a requirement that public necessity
must be stated in petition and proven by condemnor
– Would have required the condemnor to pay attorneys
fees, expert fees and cost if the commissioners returned
an award greater than the condemnors’ final offer or, if
the case was appealed, if the court returned a higher
award than the commissioners
Non-Kelo Legislation
• SB 1253 (2009)
– Repealed section 49.2205 of the Water Code
– Water District and Water Supply Corporation right-of-way
easement now cannot be used for wind (or any other) electric
transmission line projects
• SB 1254 (2009)
– Would have limited Freshwater Utility Districts use of eminent
domain to an area of 5 miles outside its boundaries without TCEQ
approval
– Would have limited the use of eminent domain to an area of 75
miles outside its boundaries even with TCEQ approval
Public/Private Ventures after Malcomson and
Constitutional Amendment
• Hypothetical Question Raised:
– A private water supply corporation with a water
supply contacts a River Authority with the power
to condemn and asks the River Authority to
condemn for a water pipeline and then transfer
the rights to the corporation. Can they do this?
Public/Private Ventures, (cont.)
• Answer:
– Probably not, unless there is some public
necessity for the River Authority to engage in the
project in some way. It is the River Authorities
board that is making the determination that the
taking is for a public use and that it is necessary.
Practical Considerations for Partnering
under 49.227
• Public entity should participate in the project
as much as possible in order to successfully
fend off a challenge to the right to condemn.
• Such efforts on the part of the public entity
should include the following:
Practical Considerations, (cont.)
• Acquiring easements, including negotiation.
• Owning easements and physical appurtenances of
the project.
• Acquiring/identifying customers to be served by the
line.
• Utilizing condemnation agreements that do not
indemnify the District for opposing party’s attorney’s
fees should the Court find no right to condemn.
Regulatory Takings
• Barshop v. Medina County Underground
Water Conservation District
– District and cattle interests challenged the act which
created the Edwards Aquifer Authority as
unconstitutional because it allowed the Edwards Aquifer
Authority “to regulate groundwater withdrawals by well
from the aquifer[.]”
Barshop, (cont.)
– Supreme Court dodged the issue of whether
groundwater vested before or after it was captured by
the landowner, instead upholding the constitutionality
of the Act on the grounds that:
– The Act affected the use of water, not title to it;
– Even if plaintiffs were divested of a real property right,
the state has condemnation power to do so; and
– The act provided adequate due process.
CONDEMNATION PROCESS
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Governed by Chapter 21 of the Texas Property Code
Corporate Resolution
Negotiations with Landowner
File Suit
Appointment of Special Commissioners
Hearing by the Special Commissioners
Damage Calculations by Special Commissioners
Possession Pending Litigation
Adequate Compensation
• Fair Market Value
• State v. Carpenter
– “…all circumstances which tend to increase or diminish present
market value”
– But not “remote, speculative, or conjectural uses…not reflected in
present market value”
• Appraisal Approaches