GOP senator, oil industry clash over proposed eminent domain reforms

For years now, Texas Sen. Lois Kolkhorst has aimed to strengthen protections for Texans whose property may be seized by governmental entities or private companies building roads, oil pipelines and other projects considered to be for the public good.

The first bill the Brenham Republican ever filed as a state senator in 2015 would have forced the entity seeking to condemn property to reimburse landowners for attorney and professional fees if they were caught making lowball offers for the targeted land; state law requires them to make a good faith offer, but many landowners complain that the initial offers often don’t jibe with the true value of their properties.

The bill never got a vote. In 2017, a similar measure by Kolkhorst passed the Senate but died in the House.

This year, she is trying again with Senate Bill 421, which includes a similar reimbursement provision but is largely limited to private, for-profit entities. The measure also would require condemnors to hold public hearings for more expansive projects and use "standard easement forms."

How Texas regulates eminent domain is more relevant than ever amid a historic oil-and-gas pipeline building spree — which has sparked a fervent backlash in the Texas Hill Country — and a continued push to build a high-speed train between Dallas and Houston. Federal land condemnations also are underway in the Rio Grande Valley to build some of the first sections of President Trump’s border wall.

The issue poses an awkward quandary for Republicans who say they support private property rights, but also assert that taking private land is often necessary for business and border security. Texas GOP officials consistently receive significant campaign contributions from the oil and gas industry, which relies on eminent domain to build pipelines and other infrastructure.

At a sometimes heated hearing of the Senate State Affairs Committee on Monday, Kolkhorst — whose Senate District 18 is a hotbed of pipeline construction — emphasized that the measure is not designed to diminish eminent domain authority, but rather to encourage more transparency and fairer offers, which she said may keep land seizure disputes out of court.

“I would never be against fossil fuels, but what I am saying to y’all is that we have a process that seemingly isn’t fair to the people that don’t want to sell their land,” Kolkhorst said, later adding, “Oil and gas: They’re my friends.”

But Kolkhorst — whose family has run a gasoline and fuel distribution company — also said that pipeline building is “all about profit” and that she could have included a provision in the bill requiring industry to give a share of earnings to landowners impacted by pipeline construction, but chose not to do that. She also said lowballing is common — particularly with vulnerable populations like the poor and elderly — and that companies often aren’t transparent about projects. Some even get to keep leftover money from condemnation budgets, so are incentivized to lowball.

“We got some really bad actors out there,” she said.

Monday’s public hearing, where roughly 50 people testified, felt like a deja vu of past hearings on Kolkhorst's legislation.

Landowners and officials from agriculture, environmental and property rights groups told the committee that while they understand the necessity of eminent domain, state law makes it impossible for landowners to get a fair shake. Many landowners said they have spent more than $100,000 in legal fees fighting condemnations.

“As an organization, we support the buildout of Texas,” said Bob McKnight, president of the Texas and Southwestern Cattle Raisers Association. But, he said, “We have a problem with the (eminent domain) process.”

Several Hill Country landowners whose properties are likely to be targeted by a major pipeline that will run from the West Texas oilfields to the Gulf Coast testified in favor of the bill but said it could go even further to protect Texans from being literally and figuratively bulldozed by powerful, deep-pocketed companies.

Meanwhile, officials from conservative think tanks, pipeline companies, industry groups and entities with eminent domain authority said the bill would impose an undue burden and hamper economic growth.

Tom Giovanetti, president of the Dallas-based Institute for Policy Innovation, a conservative think tank, said he was “forced to testify in cautious opposition to the legislation and it is not because we do not value property rights and it is not because we are not sympathetic to situations where this is an unwilling seller.”

But he said the bill — being limited to only private, for-profit companies — seems to assume “that private sector use of eminent domain is somehow more subject to abuse than government use or that there is something that is actually inappropriate about private sector use of eminent domain.”

“That is a recipe for bigger government because only government will be able to build infrastructure,” he said.

A lobbyist for the Texas Pipeline Association was more direct: “Senate Bill 421, if passed, will wreak havoc and create one of the most onerous processes to constructing oil and gas infrastructures in the nation.”

Pipeline shortages are a major concern in West Texas’ Permian Basin, where companies are pumping so much oil and gas there hasn’t been enough pipelines to move it to market — mostly Gulf Coast refineries and export terminals, which have exploded in recent years as Congress has made it easier to export fossil fuels.

Two Republican senators — Brian Birdwell of Granbury and Bob Hall of Edgewood — also expressed concern about the bill, pinpointing a provision that says property owners are entitled to additional compensation even if the private company trying to condemn the land appeals a decision by a trial court or special commission.

“This is one of the most important pieces of legislation we need to get done, but we need to get it done right,” Hall said.

Kolkhorst isn’t a member of the state affairs committee, but sat in during the hearing and asked tough questions of witnesses testifying in opposition to the bill, including Texas Oil and Gas Association President Todd Staples. The former Republican state lawmaker and state agriculture commissioner told the committee that the bill, as written, “incentivizes lawsuits, makes the process more adversarial and introduces procedural tricks.”

Kolkhorst shot back, calling part of his argument “a little skewed.”

“Don’t mess with Texas and don’t mess with Texas land, but you’re going to,” she said, referencing a 2011 quote from Staples touting private property rights.

At the end of the hearing, state Sen. Joan Huffman, the Houston Republican who chairs the committee, said the panel would vote on Kolkhorst’s legislation next week.

“The pressure is on to negotiate on this,” she said. “We’re going to find a way — you guys are going to find a way — to make this work.”

Rep. Dwayne Burns, a Republican from Cleburne, has filed a companion bill in the House that hasn't yet been scheduled for a hearing.

Disclosure: The Texas and Southwestern Cattle Raisers Association and the Texas Pipeline Association have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.