Texas Central HSR Project Wins Eminent Domain Case

The Texas Supreme Court on June 24 ruled, in a 5 to 3 opinion, that the private Texas Central high-speed rail project from Dallas to Houston can use eminent domain power to take property for right-of-way where the owner is unwilling to sell.

However, the decision, which ends two years of holdups, may have come too late. Texas Central’s board of directors disbanded in May and have yet to be replaced, and the CEO quit on June 12 and had to announce his departure on Linkedin – the Texas Central website doesn’t seem to have been updated in some time.

This actually caused one of the plaintiffs in the pending lawsuit to petition the Texas court for summary judgment because the defendant no longer existed, but an attorney for Texas Central replied on June 21 that “Contrary to such unsupported speculation, Texas Central remains open for business under its new management, is continuing to seek further investment, and is moving forward with the development of this high-speed train.”

The Texas Supreme Court’s opinion, authored by Justice Debra Lehrmann, is a prime example of the “textualism” judicial philosophy (when in doubt, first look at the plain meaning of the words that comprise the law). Texas Central is not a government entity, but there are two separate Texas laws that allow private rail companies to exercise eminent domain powers:

  1. A “railroad company” can use eminent domain. Such company is defined as either (1) “a railroad incorporated before September 1, 2007 under former Title 112, Revised Statutes” or (2) “any other legal entity operating a railroad, including an entity organized under the Texas Business Corporation Act or the Texas Corporation Law provisions of the Business Organizations Code.”
  2. An “interurban electric railway company” can use eminent domain. Such company is defined as “A corporation chartered for the purpose of constructing, acquiring, maintaining, or operating lines of electric railway between municipalities in this state for the transportation of freight, passengers, or both freight and passengers.”

Opponents of the Texas Central project argued that Texas Central did not qualify for (A), since they were chartered after 2007 and are not yet “operating” a railroad, and that they didn’t qualify for (B), either, since the legislative history of (B), a law enacted in 1907, seemed to be intended for trolley cars and streetcars, not bullet trains.

The majority opinion held that Texas Central does indeed qualify as an “interurban electric railway company” because of the plain meaning of the words used – the Texas Central would indeed be “interurban” and “electric” and a “railway.” The company does seem to be “chartered for the purpose of constructing, acquiring, maintaining, or operating lines of electric railway between municipalities in this state for the transportation of freight [or] passengers.”

And in addition to the plain meaning of the words in the law, the majority opinion looks at words that are absent: “no provisions in Chapter 131 (or its statutory predecessor) place any limitations on the speed a train may reach in traveling along the anticipated railway, the size of the train, or the distance between the “municipalities in this state” that the railway connects…We do not read Chapter 131 to implicitly place the above-described limitations on the statute’s scope—regarding speed, size, and distance—that the Legislature easily could have placed expressly but chose not to.”

The plaintiffs had argued that, since the interurban electric statute was written in 1907, it clearly could not apply to technology like high-speed rail that had not been invented yet. The majority opinion has an answer for that as well, relating to a 1900 precedent where they had held that a telephone company had a right to eminent domain using a law originally intended for telegraph companies, written before the invention of the telephone.

The opinion says “…high-speed rail was unimaginable when the Legislature passed the 1907 statute at issue here. But if technology had accelerated such that high-speed rail became available in 1908, no one would have thought that the Legislature would need to pass another statute to accommodate it.”

The plaintiffs also argued that the 1907 law was outdated because trolleys have been extinct in Texas since the 1930s, but the majority opinion notes that the legislature re-codified and thus re-enacted the 1907 law in 2009, when they had an opportunity to kill it along with many other “repealed, duplicative, expired and executed provisions” but chose not to.

Because the court ruled that Texas Central was entitled to use eminent domain as an interurban electric railway company, the majority opinion did not bother to address whether or not they qualified as a railroad company (though the Chief Justice issued a concurring opinion saying that he thought they did qualify there as well).

The plaintiffs had also argued that, even if Texas Central qualified as an interurban electric railway company, a prior decision of the court also required that the company have a “reasonable probability” of successfully completion. The majority opinion said that the plaintiffs were misconstruing the earlier case and that the plaintiff had “no reasoned response to the Texas Central Entities’ argument that such a test would necessarily apply to both private and public entities exercising condemnation authority and would potentially imperil any number of large public infrastructure projects. It is within the Legislature’s province to limit condemnation authority in this way, but it simply has not done so.”

Since the original case was brought solely under state law, the Texas Supreme Court’s decision is the final word.


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