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Texas pipeline ruling challenged by industry

World Pipelines,


The Texas Supreme Court has been asked by pipeline companies to overturn a ruling they say jeopardises new projects, escalating the battle over the costs of transporting oil and natural gas produced by the energy boom in South Texas.

According to the industry, costs are soaring as landowners, strengthened by a recent appellate-court opinion, seek much higher payments for damage to their property values from pipelines and reject what they see as lowball offers from companies. Currently, under Texas law, companies can build pipelines across private property over landowners' objections, but must pay for use of the land and any damage to the value of the rest of the property.

Some legal experts have pointed out that a dispute in a South Texas case could have ramifications in other states where pipelines are proliferating along with new oil and gas fields, as lawyers and appraisers build on arguments that have gained traction in court.

Last year, an appellate court in San Antonio upheld a jury verdict against LaSalle Pipeline LP that awarded US$ 600 000 to the Donnell family of McMullen County, Texas for the loss of value to an 8000 acre ranch after LaSalle built a natural gas pipeline that stretched for 4 miles across the property.

LaSalle did not dispute that it should pay for the rights to the 17 affected acres, but it said the pipeline didn't diminish the value of the overall property at all. The pipeline company has since appealed to the Texas Supreme Court, which has asked for briefs but not yet agreed to hear the case. Another pipeline company filed an amicus brief last month.

The verdict is having larger economic repercussions, as Tom Zabel, a Houston lawyer representing LaSalle and other pipeline companies, notes that costs to obtain rights-of-way have increased fivefold or sixfold in South Texas since the Donnell trial.

Between 2011 and 2020, in the Southwest alone, the Interstate Natural Gas Association of America estimates the region will need 50 100 miles of gathering pipelines, which take gas from wells to processing plants.

Landowners, armed just with the appellate opinion, have argued in more than 20 condemnation hearings that pipelines would reduce their property values by at least 20%, according to Dallas-based Energy Transfer Partners LP, a major pipeline operator that filed the amicus brief with the court in support of LaSalle.

Under state law, local panels hold hearings when pipeline companies sue landowners to obtain rights to build on their property.

The pipeline companies have argued that if allowed to stand, the rationale affirmed in the appellate opinion would leave companies unable to "predict the costs associated with their projects and the viability of pipelines".

Barry Diskin, a professor at Florida State University who has carried out work for pipeline companies, said he has never seen a study that found a systematic pattern in property values tied to pipelines. "I've not seen one, and I've looked," he confirmed.

Marcus Schwartz, a lawyer in Halletsville, Texas, who represents landowners, holds the opinion that just the possibility of a major explosion is enough, in the real world, to depress property values near pipelines.

Read the article online at: https://www.worldpipelines.com/business-news/13012012/texas_pipeline_ruling_challenged_by_industry/

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