Can a pipeline limited partnership use eminent domain to condemn land in Texas?

Texas AG Opinion JM-988: Can a Pipeline Limited Partnership Use Eminent Domain?

Plain-English summary

Eminent domain is the government's power to force a landowner to sell property for a public use, and Texas law extends a version of that power to certain private pipeline companies so they can lay lines across land they do not own. The question here was narrow but practical: does a pipeline business organized as a limited partnership, with a corporation acting as its general partner, get that condemnation power when the product it moves is refined petroleum rather than crude oil?

The Attorney General's answer was a qualified yes. The starting point, section 111.019 of the Natural Resources Code, hands eminent domain to "common carriers." But the companion definition in section 111.002 describes a common carrier in terms of crude petroleum, not refined products, so that statute alone does not cover a refined-products line. The power for refined-products carriers comes from a different place: article 2.01 B(3)(b) of the Texas Business Corporation Act. A Houston court had already read that provision, in Phillips Pipeline Co. v. Woods, to give pipeline carriers of products other than crude oil the same eminent domain power crude carriers enjoy.

The catch is in the wording of that Business Corporation Act proviso. It grants the power to "any corporation, or group of corporations acting in partnership or other combination with other corporations." Reading that language, the Attorney General concluded that a limited partnership can wield the power only if each of its partners, general and limited alike, is itself a corporation. A partnership that includes an individual or any non-corporate member falls outside the grant and has no condemnation power at all.

Two well-worn rules of statutory construction pushed that result. First, when a statute expressly names one category (here, corporations combining with corporations), the courts treat that as excluding what was left out. Second, Texas courts have long insisted that the drastic power of eminent domain be granted specifically by the legislature, never inferred from doubtful language, and that any condemnation statute be read strictly in favor of the landowner. Both point the same way: the corporate-partners-only reading is the safe one.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The Texas Business Corporation Act cited throughout this opinion has since been repealed and its provisions moved into the Texas Business Organizations Code, and the common-carrier and eminent domain rules for pipelines in chapter 111 of the Natural Resources Code have drawn significant judicial attention in the decades since (notably the Texas Supreme Court's line of "Denbury" pipeline-condemnation decisions). Anyone weighing a pipeline condemnation question today should work from the current Business Organizations Code and Natural Resources Code and the recent case law, not the 1955-era article and section numbers described here.

Who this opinion affected (as of 1988)

Pipeline companies organized as partnerships: The opinion told them that the eminent domain power for a refined-products line ran through the Business Corporation Act, and that a partnership could claim it only if every partner was a corporation.

Landowners along proposed pipeline routes: The opinion reinforced the strict-construction rule that protects them, confirming that a partnership missing the all-corporate structure could not condemn their land.

The Legislature and the requesting senator: The opinion flagged how the interplay of the Natural Resources Code and the Business Corporation Act limited who could exercise condemnation power, information relevant to any move to broaden or clarify the grant.

Common questions

Does a Texas pipeline company automatically get eminent domain?
No. In this opinion the power depends on qualifying as a common carrier and, for a refined-products line organized as a partnership, on the Business Corporation Act grant, which the Attorney General read to require that every partner be a corporation.

What is the difference between crude and refined petroleum here?
The Natural Resources Code definition of "common carrier" in section 111.002 is framed around crude petroleum. The Attorney General concluded that carriers of refined products draw their eminent domain power instead from article 2.01 B(3)(b) of the Business Corporation Act, as recognized in Phillips Pipeline Co. v. Woods.

What happens if one partner is an individual, not a corporation?
Then the partnership has no eminent domain power. The Attorney General concluded the grant reaches only a partnership in which each partner, general and limited, is itself a corporation.

Why read the statute so strictly?
Because Texas courts do not infer eminent domain from doubtful language. The power must be conferred specifically by the legislature, and condemnation statutes are construed strictly in favor of the landowner (Burch v. City of San Antonio; Coastal States Gas Producing Co. v. Pate).

Background and statutory framework

Section 111.019 of the Natural Resources Code expressly confers the right and power of eminent domain on "common carriers," and lets a common carrier condemn the land, rights-of-way, easements, and property necessary for constructing, maintaining, or operating the common carrier pipeline. But the definition of "common carrier" in section 111.002 is written around the transportation of crude petroleum. By its terms it appears to limit "common carrier" to carriers of crude petroleum, as opposed to carriers of refined petroleum.

The gap for refined products is filled by the Texas Business Corporation Act. In Phillips Pipeline Co. v. Woods, 610 S.W.2d 204 (Tex. Civ. App. - Houston [14th Dist.] 1980, writ ref'd n.r.e.), a pipeline company sought to condemn land to build a line carrying an ethane-propane mixture, a refined product. The court of appeals held the company did have eminent domain power, not through the Natural Resources Code, but by a specific provision of the Texas Business Corporation Act. Phillips, 610 S.W.2d at 206.

That provision, article 2.01 B(3)(b) of the Texas Business Corporation Act, addresses corporations combining the oil-producing and oil-pipeline businesses and includes a proviso that "any corporation, or group of corporations acting in partnership or other combination with other corporations, engaged as a common carrier in the pipe line business for transporting oil, oil products, gas, carbon dioxide, salt brine, fuller's earth, sand, clay, liquified minerals or other mineral solutions, shall have all of the rights and powers conferred by Section 111.019 through 111.022, Natural Resources Code." Subsection B(3)(b) was in the original 1955 Business Corporation Act in substantially its present form; a 1973 amendment corrected the citation to the Natural Resources Code after that code was recodified. By its terms, certain carriers of products other than crude petroleum receive the same eminent domain power as crude carriers.

The remaining question was whether such a common carrier organized as a limited partnership may exercise the power. The Attorney General construed the proviso to permit an otherwise qualified carrier organized as a limited partnership with a corporate general partner to exercise eminent domain only if each partner is itself a corporation, for two reasons.

First, the maxim that the express mention of one thing implies the exclusion of another. State v. Mauritz-Wells Co., 175 S.W.2d 238 (Tex. 1943); Harris County v. Dowlearn, 489 S.W.2d 140 (Tex. Civ. App. - Houston [14th Dist.] 1972, writ ref'd n.r.e.). The proviso's express reference to corporations and to partnerships or other combinations consisting of corporations indicates the legislature intended each partner in a condemning partnership to be a corporation.

Second, and more compelling, Texas courts have always required that eminent domain be conferred specifically by the legislature; the power will not be inferred from a doubtful implication. Burch v. City of San Antonio, 518 S.W.2d 540, 544 (Tex. 1975); Coastal States Gas Producing Co. v. Pate, 309 S.W.2d 828, 831 (Tex. 1958). Statutes conferring the power are construed strictly in favor of the landowner and against the entity seeking to exercise it. Coastal States Gas Producing Co. v. Pate, supra; Tenngasco Gas Gathering Co. v. Fischer, 653 S.W.2d 469 (Tex. Civ. App. - Corpus Christi 1983, writ ref'd n.r.e.). Accordingly, the Attorney General construed subsection B(3)(b) to require that each partner of an otherwise qualified oil-products carrier organized as a partnership itself be a corporation before the partnership may exercise the power of eminent domain.

Citations

Statutory authority:

• Natural Resources Code § 111.002 (definition of "common carrier")
• Natural Resources Code § 111.019 (common carriers have the power of eminent domain)
• Natural Resources Code §§ 111.019-111.022 (rights and powers referenced by the Business Corporation Act proviso)
• Texas Business Corporation Act art. 2.01 B(3)(b) (eminent domain for corporate pipeline carriers and combinations of corporations)

Cases:

• Phillips Pipeline Co. v. Woods, 610 S.W.2d 204 (Tex. Civ. App. - Houston [14th Dist.] 1980, writ ref'd n.r.e.)
• State v. Mauritz-Wells Co., 175 S.W.2d 238 (Tex. 1943)
• Harris County v. Dowlearn, 489 S.W.2d 140 (Tex. Civ. App. - Houston [14th Dist.] 1972, writ ref'd n.r.e.)
• Burch v. City of San Antonio, 518 S.W.2d 540 (Tex. 1975)
• Coastal States Gas Producing Co. v. Pate, 309 S.W.2d 828 (Tex. 1958)
• Tenngasco Gas Gathering Co. v. Fischer, 653 S.W.2d 469 (Tex. Civ. App. - Corpus Christi 1983, writ ref'd n.r.e.)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-988
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1988/jm0988.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor OCR errors may remain; the linked PDF is authoritative.

December 1, 1988

Honorable Kent A. Caperton
Chairman
Committee on Jurisprudence
Texas State Senate
P. O. Box 12068
Austin, Texas 78711

Opinion No. JM-988

Re: Whether the power of eminent domain attaches to a limited partnership with a corporate general partner where the partnership owns and operates a refined petroleum products pipeline (RQ-1560)

Dear Senator Caperton:

You ask:

Does a limited partnership with a corporate general partner that owns and operates a refined petroleum products pipeline have eminent domain rights?

You do not indicate in your request for an opinion or in the correspondence accompanying your request whether each partner in the limited partnership is a corporation. We conclude that, if each partner in the limited partnership is a corporation, the limited partnership does have the power of eminent domain. However, if even one of the partners is an entity other than a corporation, the limited partnership has no such power.

Section 111.019 of the Natural Resources Code expressly confers the right of eminent domain on "common carriers":

(a) Common carriers have the right and power of eminent domain.

(b) In the exercise of the power of eminent domain granted under the provisions of Subsection (a) of this section, a common carrier may enter on and condemn the land, rights-of-way, easements, and property of any person or corporation necessary for the construction, maintenance, or operation of the common carrier pipeline.

The phrase "common carrier" is defined at section 111.002 of the Natural Resources Code:

A person is a common carrier subject to the provisions of this chapter if it:

(1) owns, operates, or manages a pipeline or any part of a pipeline in the State of Texas for the transportation of crude petroleum to or for the public for hire, or engages in the business of transporting crude petroleum by pipeline;

(2) owns, operates, or manages a pipeline or any part of a pipeline in the State of Texas for the transportation of crude petroleum to or for the public for hire and the pipeline is constructed or maintained on, over, or under a public road or highway, or is an entity in favor of whom the right of eminent domain exists;

(3) owns, operates, or manages a pipeline or any part of a pipeline in the State of Texas for the transportation of crude petroleum to or for the public for hire which is or may be constructed, operated, or maintained across, on, along, over, or under the right-of-way of a railroad, corporation, or other common carrier required by law to transport crude petroleum as a common carrier;

(4) under lease, contract of purchase, agreement to buy or sell, or other agreement or arrangement of any kind, owns, operates, manages, or participates in ownership, operation, or management of a pipeline or part of a pipeline in the State of Texas for the transportation of crude petroleum, bought of others, from an oil field or place of production within this state to any distributing, refining, or marketing center or reshipping point within this state;

(5) owns, operates, or manages, wholly or partially, pipelines for the transportation for hire of coal in whatever form or of any mixture of substances including coal in whatever form; or

(6) owns, operates, or manages, wholly or partially, pipelines for the transportation of carbon dioxide in whatever form to or for the public for hire, but only if such person files with the commission a written acceptance of the provisions of this chapter expressly agreeing that, in consideration of the rights acquired, it becomes a common carrier subject to the duties and obligations conferred or imposed by this chapter. (Emphasis added.)

Section 111.002 of the Natural Resources Code by its terms appears to limit the meaning of "common carrier" to carriers of crude petroleum, as opposed to carriers of refined petroleum. The brief submitted with your request suggests that Phillips Pipeline Co. v. Woods, 610 S.W.2d 204 (Tex. Civ. App. - Houston [14th Dist.] 1980, writ ref'd n.r.e.) [hereinafter Phillips], stands for the proposition that carriers of refined petroleum products have been conferred eminent domain power as well, not by a section of the Natural Resources Code, but by a provision of the Texas Business Corporation Act. We agree.

In Phillips, a pipeline company sought to condemn real property for the purpose of constructing a pipeline that was to carry an ethane-propane mixture, a refined product. The lower court agreed with the landowners challenging the condemnation proceedings that the pipeline company did not have the power of eminent domain because it was not a carrier of crude petroleum. The court of appeals overruled the lower court on this issue because of a specific provision of the Texas Business Corporation Act that confers the power of eminent domain on carriers other than carriers of crude petroleum. Phillips, 610 S.W.2d at 206.

Article 2.01 B(3)(b) of the Texas Business Corporation Act provides the following:

B. No corporation may adopt this Act or be organized under this Act or obtain authority to transact business in this State under this Act:

. . . .

(3) If among its purposes for the transaction of business in this State, there is included, however worded, a combination of the two businesses listed in either of the following:

. . . .

(b) The business of engaging in the petroleum oil producing business in this State and the business of engaging directly in the oil pipe line business in this State; provided, however, that a corporation engaged in the oil producing business in this State which owns or operates private pipe lines in and about its refineries, fields or stations or which owns stock of corporations engaged in the oil pipe line business shall not be deemed to be engaging directly in the oil pipe line business in this State; and provided that any corporation, or group of corporations acting in partnership or other combination with other corporations, engaged as a common carrier in the pipe line business for transporting oil, oil products, gas, carbon dioxide, salt brine, fuller's earth, sand, clay, liquified minerals or other mineral solutions, shall have all of the rights and powers conferred by Section 111.019 through 111.022, Natural Resources Code. (Emphasis added.)1

Subsection B(3)(b) of article 2.01, Texas Business Corporation Act, was contained in the original 1955 enactment of the Business Corporation Act in substantially the same form as it now reads. A 1973 amendment corrected the citation to the relevant sections of the Natural Resources Code after that code was recodified. By the very terms of subsection B(3)(b) of article 2.01, it is clear that certain pipeline carriers that carry products other than crude petroleum are conferred the same power of eminent domain as carriers of crude petroleum. The remaining question is whether such a common carrier organized as a limited partnership may exercise that power.

The relevant proviso of subsection B(3)(b) of article 2.01, Texas Business Corporation Act, confers the power of eminent domain on a common carrier of, inter alia, oil products, organized as "any corporation, or group of corporations acting in partnership or other combination with other corporations." For the reasons discussed below, we construe subsection B(3)(b) of article 2.01 of the Texas Business Corporation Act to permit an otherwise qualified carrier organized as a limited partnership with a corporate general partner to exercise the power of eminent domain, only if each partner of such a limited partnership itself is a corporation.

First, a maxim of statutory construction states that the express mention of one thing implies exclusion of another. State v. Mauritz-Wells Co., 175 S.W.2d 238 (Tex. 1943); Harris County v. Dowlearn, 489 S.W.2d 140 (Tex. Civ. App. - Houston [14th Dist.] 1972, writ ref'd n.r.e.). The express mention in subsection B(3)(b) of article 2.01, Texas Business Corporation Act, of corporations and partnerships or other business combinations consisting of corporations indicates that the legislature intended that each partner in a limited partnership exercising the power of eminent domain itself be a corporation.

Second, and even more compelling, Texas courts always have required that the power of eminent domain be conferred specifically by the legislature; the power of eminent domain will not be conferred from a doubtful inference. Burch v. City of San Antonio, 518 S.W.2d 540, 544 (Tex. 1975); Coastal States Gas Producing Co. v. Pate, 309 S.W.2d 828, 831 (Tex. 1958). Statutes that confer the power of eminent domain are construed strictly in favor of the landowner and against the entity attempting to exercise such power. Coastal States Gas Producing Co. v. Pate, supra; Tenngasco Gas Gathering Co. v. Fischer, 653 S.W.2d 469 (Tex. Civ. App. - Corpus Christi 1983, writ ref'd n.r.e.).

Accordingly, we construe subsection B(3)(b) of article 2.01, Texas Business Corporation Act, to require that each partner of a partnership that is an otherwise qualified carrier of oil products and that exercises the power of eminent domain itself be a corporation.

1. We note that corporations that are created for the purpose of both producing oil and transporting it by pipeline are governed, not by the Texas Business Corporation Act, but by the Natural Resources Code.

SUMMARY

A limited partnership with a corporate general partner that owns and operates a refined petroleum products pipeline is conferred the power of eminent domain pursuant to subsection B(3)(b) of article 2.01 of the Texas Business Corporation Act, but only if each partner, whether limited or general, is itself a corporation.

Very truly yours,

JIM MATTOX
Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Jim Moellinger
Assistant Attorney General