Oil or property rights: House panel clashes over which to favor as it weighs eminent domain reforms

Lawmakers, lobbyists and landowners sparred at a Capitol committee hearing on Thursday over a batch of bills designed to protect property owners whose land may be seized by private companies to build oil and gas pipelines.

A bipartisan — though largely Republican — group of House and Senate legislators whose districts have been targeted for pipeline construction amid a historic oil and gas boom have proposed several measures this year aimed at helping landowners and local officials negotiate with deep-pocketed energy companies eager to move fossil fuels to processing and export facilities on the Gulf Coast.

The reform push has put some Republicans at odds with an industry they typically champion — and one that donates significant dollars to their political campaigns — as well as members of their own party.

Perhaps the most controversial legislation — proposed by Republican state Sen. Lois Kolkhorst of Brenham — would require companies to include specific provisions in agreements with landowners explaining exactly where they plan to construct pipelines and a promise that they will repair fences, gates or other infrastructure if they damage them.

Senate Bill 421 — one of 11 eminent domain-related bills that the House Land and Resource Management Committee considered on Thursday — also would require private companies to offer to pay landowners fair market value and to hold public meetings if they plan to seize 25 or more tracts of land.

"It’s well known that Texas property owners continue to struggle with the eminent domain process in a variety of ways and it's paramount that Texas property owners have greater assurance that the eminent domain process be fair, transparent, respectful," state Rep. DeWayne Burns, a Republican from Cleburne who filed a similar bill in the House, told the committee on Thursday.

Burns noted that the legislation, which also covers electric transmission projects, has been "heavily and painstakingly negotiated over a long period of time" with all stakeholders.

SB 421 bill easily cleared the Senate earlier this month on a 28-3 vote. (A similar measure Kolkhorst proposed in 2017 passed the Senate, but not the House).

Yet officials from energy companies told the House committee on Thursday that the measures — at least as written — would hinder pipeline construction at a time when it is desperately needed.

Matt Thompson, governmental affairs manager for Apache Corporation, told the committee that amid a crippling pipeline shortage in the Permian Basin, producers have two, less-than-ideal options: flare off natural gas or shut down wells.

Producers are already flaring a historic amount of natural gas, which poses environmental, health and safety concerns.

Dave Conover, vice president of government relations at pipeline giant Kinder Morgan, whose Permian Highway Pipeline Project has sparked fervent protests in the Hill County, said he feared that environmentalists would use the new measures to thwart projects altogether and that he wanted to see provisions added to the bill that would prevent those tactics.

"This debate isn't about pipelines versus landowners; it's about preventing private stonewalling from killing public benefits," he said.

He also expressed concern about a requirement in SB 421 that every landowner along a pipeline's route agree to the sale of a pipeline, saying "We cannot give an individual landowner a veto over the potential sale of a billion-dollar asset."

Industry officials faced tough questions from Republican state Rep. Cecil Bell of Magnolia, who sits on the committee and argued that the proposed reforms would actually speed up the construction process by adding more transparency and communication up front to keep negotiations out of the courtroom.

But another committee member, state Rep. Jonathan Stickland, hammered landowners who spoke in favor of the reforms. The Bedford Republican pressed one longtime Victoria County rancher, Bill Kyle, about why he agreed to let a pipeline company cut down an old tree on his land that he told the committee was probably older than the state of Texas.

"What I don’t understand is how you can come up here today and tell us an emotional story, but you cashed the check for that tree did you not?" Stickland asked.

Kyle said he did but only after doing everything possible to save the tree.

"What am I going to do?" Kyle said. " ... You really don't understand."

"Don’t get snippy with me please, sir," Stickland shot back.

Even Democrats on Thursday stressed that the proposed reforms are not meant to harm the oil and gas industry, but ensure a fairer and faster process for all parties.

State Rep. Erin Zwiener of Driftwood, whose fast-growing Hill Country district has been targeted for Kinder Morgan's pipeline project, told the committee that the company's proposed route was based on outdated maps and interfered with long-planned housing developments and road rerouting.

A bill she filed, House Bill 3327, is designed to prevent similar scenarios by requiring pipeline companies to offer to meet with local officials in counties where they want to build prior to contacting landowners; if officials accept, they would be able to share information on developments and environmentally and geologically sensitive areas that may impact routing.

If the bill had been in place before Kinder Morgan proposed its route, Zwiener said, "I suspect the Permian Highway Pipeline would be facing less opposition today."

During Thursday's hearing, state Rep. Tom Craddick, a Midland Republican and former House Speaker who chairs the committee, asked reform proponents if they'd be willing to abandon any future eminent domain reform efforts if they get their way this session.

"If we do a bill, I don’t want to have another next year and the year after," he told Burns.

Burns said that if he gets what he wants, "I’ll forget how to spell eminent domain – not that I know how to now."

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