Background

South Texas Pipelines, LLC, a subsidiary of Enterprise Products, initiated condemnation proceedings to acquire easements for construction of a new pipeline designed to transport polymer-grade propylene from Mont Belvieu to Corpus Christi. Right-Way Sand Co. challenged the condemnation, contesting whether STX possessed statutory authority under Texas Business Organizations Code §2.105 to exercise eminent domain for the proposed pipeline. The dispute centers on two threshold requirements: whether polymer-grade propylene constitutes an 'oil product' within the meaning of the statute, and whether STX adequately demonstrated the pipeline would serve a public use as a common carrier.

The Statutory Construction Issue

Texas Business Organizations Code §2.105 grants eminent domain authority to entities transporting oil or oil products, but does not define 'oil product' with specificity. Right-Way Sand argued that polymer-grade propylene—a refined petrochemical feedstock used primarily in plastics manufacturing—falls outside the statutory grant because it is a highly processed derivative rather than a traditional petroleum product. The First District followed the analytical framework established by the Texas Supreme Court in Hlavinka in analyzing the scope of the eminent domain statute. The parties disputed whether PGP's characteristics place it within or beyond the scope of products the Legislature intended to include when authorizing pipeline companies to exercise takings power.

Common Carrier Public Use Requirement

Even if PGP qualifies as an oil product, Right-Way Sand challenged whether STX satisfied the constitutional public use requirement. Texas law requires pipeline companies seeking eminent domain authority to demonstrate they will operate as common carriers serving the public rather than private shippers exclusively. The court considered whether STX demonstrated that the pipeline would function as a common carrier available to the public on a non-discriminatory basis.

Implications for Pipeline Condemnation Practice

The First District's resolution of the 'oil product' definition question will have consequences for midstream operators seeking to condemn easements for pipelines transporting refined petrochemicals, natural gas liquids, and other products derived from crude oil or natural gas. The court's interpretation of §2.105 will affect the scope of eminent domain authority available to pipeline companies transporting products beyond traditional crude oil and refined petroleum.