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Austin Business Journal
Steve Habel

The Texas Senate on Feb. 9 passed a bill that its authors said will strengthen protections for property owners by closing a loophole in the state’s eminent domain law. That loophole, the bill’s propents said, has enabled entities to seize property at unfair prices by placing the onus and financial burden on property owners to challenge such takings in court.

Critics, however, say the measure still panders to special interests and is not specific enough.

Senate Bill 18 won unanimous approval in the Senate after being put on the fast track for action by Gov. Rick Perry at the beginning of the 82nd legislative session. The bill garnered wide support from a coalition of pipeline companies, wildlife conservationists, utility companies, ranch and farm groups, property rights advocates and local governments. Sen. Craig Estes, R-Wichita Falls, is chief author of the Senate bill, which more than two-thirds of the chamber’s 31 members signed as co-authors.

It now goes to the House, where it is expected to pass. Perry is on record as saying he will sign the bill into law.

The bill grants property owners more rights concerning easements through their land, prohibits a governmental agency or private entity from seizing property through eminent domain “if the taking is not for a public use” and grants property owners the opportunity to buy back property if the project for which it was taken is not started in 10 years.

It also requires entities that want to exercise eminent domain to register with the state and mandates that offers tendered for the targeted property be bona fide to prevent lowballing of landowners.

The outcry to change the state’s eminent domain laws was spurred by a Texas Supreme Court decision in 2004 that removed several key restraints in condemnation procedures that were favorable to landowners. Texas Agriculture Commissioner Todd Staples said the current law allows property to be taken away unfairly from farms and landowners.

“It is imperative that we correct the gross injustice that is currently allowing homeowners and landowners to be taken advantage of,” Staples said. “Don’t mess with Texas, and don’t mess with Texas land. That’s what this bill says.”

Rep. Charlie Geren, R-Fort Worth, is author of HB 279, its companion bill in the Texas House.

“This bill provides protection for Texas landowners, and there are a lot of people that will support that protection,” Geren said.

Texas has the most private property of any state. The Legislature has tried to close the current loopholes in the state’s eminent domain laws in each of the past three sessions and have mostly failed. SB 18 is nearly identical to a bill that passed by a 31-0 vote in the Senate in 2009, only to die in the House during a bureaucratic impasse at the end of the session.

A broad range of interest groups, some regularly on opposite sides of issues, formed a seemingly unlikely alliance to support SB 18 and HB 279. The Texas Farm Bureau is enthusiastically backing the measure, while other interest groups such as pipeline operators and cities got behind the bill despite concerns, with the understanding that the bill was likely the best they could expect.

“The bill is not perfect, but do we really want to wait around for something that has no flaws while the landowners are being adversely affected by the current law?” said Gene Hall, a spokesman for the Texas Farm Bureau.

Realistic compensation

Under current law, there are thousands of entities with the authority to exercise eminent domain, including certain private companies, such as railroads and utilities.

The Texas Farm Bureau believes the new law created by SB 18 and HB 279 will force companies that use eminent domain to offer landowners realistic compensation for their property.

“We are not going to get rid of eminent domain,” Hall said. “What Texas has been lagging in is in compensation for the landowner and the ability to recoup legal expenses incurred in protecting our land against companies seeking to attain it through eminent domain.”

Under the current law, critics said, condemning entities have often lowballed landowners, and only those with deep pockets have been able to fight off those attempts to capture their land.

“With SB 18, if a landowner takes an eminent domain case to court and wins, … the company that tried its lowball tactics has to pay for court costs and legal fees,” Hall explained.

Critics remain

Critics of the bill worry its provisions aren’t specific enough to prevent recurrences of past abuse. Proponents said the bill covers most eminent domain situations, but it may not cover all of them, including when the buyback provision might apply.

Melissa Cubria, a research and policy analyst for the Texas Public Interest Research Group, called SB 18 “a phony attempt to appease landowners, who for years have been outspoken and vocal against profit-driven eminent domain practices that enable private entities to repurchase land for economic development.”

Cubria said the bill provides insufficient distinction between private and public entities, which “unravels most of the landowners’ protections” contained in the bill. That’s because the enforceability of those protections is dependent on the eminent domain user’s category, she said.

“There are so many loopholes in SB 18, it is hard to know where the bill begins and ends,” Cubria said. “Officials fast-tracked legislation masked as eminent domain reform without giving the public adequate opportunity to participate in the process.”

She said the bill will benefit utility companies, the oil and gas industry, real estate developers and even private toll road investors before it ever has the opportunity to work on behalf of Texas landowners.

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