On January 6, 2017, the Texas supreme court ruled that Denbury Green, the private owner of a carbon monoxide pipeline, could take private property under eminent domain as a common carrier under Texas law. The court found that post-construction contracts entered into with unaffiliated gas and chemical companies were sufficient to show that the pipeline was intended for public use, thereby allowing Denbury Green to qualify as a common carrier. (Denbury Green Pipeline–Texas, LLC v. Texas Rice Land Partners, Ltd., et al., .)

Denbury Green is a wholly owned indirect subsidiary of Denbury Resources, a publically traded holding company. It was formed for the purpose of building, owning, and operating a carbon dioxide pipeline, known as "the Green Line", in Texas. The Green Line became a part of a pipeline network designed to transport both naturally sourced and anthropogenic (manmade) carbon dioxide to oil fields, underground reservoirs, and other locations for its use and storage. Denbury Green's route through Texas was specifically chosen for its proximity to refineries and other plants that could use the line to transport carbon dioxide.

In 2008, Denbury Green filed a T-4 permit application with the Texas Railroad Commission to obtain common carrier status. Under the Texas Natural Resources Code, common carriers have the authority to exercise the right and power of eminent domain (Tex. Nat. Res. Code § 111.019). The permit was granted shortly after and Denbury Green filed suit for an injunction allowing access to certain tracts of land owned by Texas Rice Land Partners, Ltd.

While the suit was pending, Denbury Green took possession of the property under Texas law, which allows a condemnor to take possession of property even while the owner challenges the condemnor's eminent domain authority (Tex. Prop. Code § 21.021(a)). The land was surveyed and construction was completed on the Green Line.

On cross motions for summary judgment, the trial court found that Denbury Green was a common carrier with eminent domain authority. The court of appeals affirmed this judgment. Texas Rice appealed to the Texas supreme court.

The Texas supreme court reversed and remanded the case to the trial court to determine whether Denbury Green met the common carrier test established under Texas case law. The court ruled that a permit granting common carrier status from the state, on its own, was insufficient to support a public use. The common carrier test required Danbury Green to produce reasonable proof of a future customer, thereby demonstrating the public use element typically required for takings under eminent domain (see Practice Note, Eminent Domain: Overview: Public Purpose).

On remand, Denbury Green produced evidence that the use of the pipeline was not limited to its private use by offering agreements with unaffiliated entities that deal in carbon monoxide and require use of a pipeline for its transport.

The supreme court found that the evidence of actual contracts entered into after the construction of the pipeline showed the pre-construction intent of public use sufficient to qualify Denbury Green as a common carrier.

This decision is important for developers in Texas seeking to use eminent domain to gain access to privately held property. The court's ruling that post-construction contracts can retroactively evince the presence of the public use element is useful because most contracts, particularly for pipelines, are entered into post-construction. Developers would have a significantly more difficult time achieving common carrier status had the court required this sort of evidence before construction. This ruling effectively eases the ability of developers in accessing land through eminent domain.

For a discussion of eminent domain requirements, see Practice Note, Eminent Domain: Overview.