Rhinoceros Ventures Group, Inc. and Batson Corridor, L.P. v. TransCanada Keystone Pipeline, L.P. and J.L. Caldwell Company Trust F/B/O Gustavus Adolphus Northcutt McFaddin

• Court: Court of Appeals of Texas
• Decided: November 29, 2012
• Docket: 09-12-00128-CV
• Status: Published

Opinion

In The

Court of Appeals Ninth District of Texas at Beaumont ________________ NO. 09-12-00128-CV ________________

RHINOCEROS VENTURES GROUP, INC. AND BATSON CORRIDOR, L.P., Appellants

V.

TRANSCANADA KEYSTONE PIPELINE, L.P. AND J.L. CALDWELL COMPANY TRUST F/B/O GUSTAVUS ADOLPHUS NORTHCUTT McFADDIN, Appellees ________________________________________________________________________

On Appeal from the County Court at Law No. 1 Jefferson County, Texas Trial Cause No. 119233 ________________________________________________________________________

OPINION

This is an appeal from the denial of appellants’ motion for summary judgment, in

which appellants contended the trial court lacked subject matter jurisdiction because

appellees were not statutorily authorized to condemn appellants’ property. We affirm the

trial court’s order denying appellants’ motion for summary judgment.

1 BACKGROUND

Appellee TransCanada Keystone Pipeline, L.P. (“TransCanada”) filed a petition

for condemnation against appellants Rhinoceros Ventures Group, Inc. (“Rhinoceros”)

and Batson Corridor, L.P. (“Batson”) as well as other entities. TransCanada alleged that

it is the owner and economic operator of the Keystone Pipeline System, which includes

the Keystone Gulf Coast Section (“Gulf Coast”). According to TransCanada, Gulf Coast

is “a common carrier pipeline that, upon completion of construction, will extend from

Fannin County, Texas, to Nederland, Texas.” TransCanada further alleged that as owner

and economic operator of Gulf Coast, it is a common carrier “as that term is used and

defined in the Texas Business Organizations Code and the Texas Natural Resources

Code,” and therefore possesses the authority to condemn land, rights-of-way, easements,

and property necessary for the construction, maintenance, or operation of the common

carrier pipeline.

Rhinoceros and Batson filed a motion for summary judgment,1 in which they

sought a summary judgment sustaining their plea to the jurisdiction “and dismissing this

cause and condemnation proceeding for lack of subject matter jurisdiction.” Rhinoceros

and Batson argued that TransCanada is not a common carrier because (1) TransCanada

cannot subject itself to the jurisdiction of the Texas Railroad Commission, (2) the

pipeline is a contract carrier limited in its use to shippers having long-term contracts, (3)

1 Rhinoceros and Batson filed their motion for summary judgment subject to their previously-filed plea to the jurisdiction. 2 TransCanada has no tariff rate schedule on file with the Railroad Commission, and (4)

TransCanada has no permit from the Railroad Commission to construct an intrastate

pipeline since the Railroad Commission had found TransCanada’s operation to be

interstate. In response, TransCanada argued that section 111.002(1) of the Texas Natural

Resources Code provides that an entity that engages in the business of transporting crude

petroleum by pipeline in Texas is a common carrier, regardless of whether the pipeline is

interstate or intrastate, and that appellants’ reliance upon section 111.002(6) is misplaced.

See Tex. Nat. Res. Code Ann. § 111.002(1), (6) (West 2011). The trial court signed an

order denying the motion for summary judgment, and this appeal followed.

ANALYSIS

Rhinoceros and Batson challenge the trial court’s ruling in three appellate issues.

In issue one, Rhinoceros and Batson contend the trial court lacked subject matter

jurisdiction of TransCanada’s petition for condemnation brought by TransCanada

because the pipeline at issue was an interstate pipeline. In issue two, appellants argue

that Chapter 111 of the Natural Resources Code does not apply to the owner of an

interstate pipeline. Finally, appellants assert in issue three that because the purpose of the

oil and gas laws of Texas is to conserve oil and gas resources, a pipeline transporting

crude petroleum from outside Texas contravenes that alleged purpose. We address these

issues together.

3 Section 111.002 of the Texas Natural Resources Code provides as follows, in

pertinent part:

A person2 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;

...

(6) owns, operates, or manages, wholly or partially, pipelines for the transportation of carbon dioxide or hydrogen 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; or

(7) owns, operates, or manages a pipeline or any part of a pipeline in the State of Texas for the transportation of feedstock for carbon gasification[.]

Tex. Nat. Res. Code Ann. § 111.002 (1), (6), (7) (West 2011) (emphasis added). Section

111.019(a) of the Natural Resources Code provides that “[c]ommon carriers have the

right and power of eminent domain.” Id. § 111.019(a). Section 111.011 provides that

“[t]the operation of common carriers covered by this chapter is a business in which the

public is interested and is subject to regulation by law.” Id. § 111.011.

2 “Person” is defined as “any individual, partnership, firm, corporation, association, or any other business entity, a state agency or institution, county, municipality, school district, or other governmental subdivision.” Tex. Nat. Res. Code Ann. § 113.002(13) (West 2011). 4 In construing a statute, we must “determine and give effect to the Legislature’s

intent.” Nat’l Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525, 527 (Tex. 2000). We look

first and foremost to the statute’s words. Hernandez v. Ebrom, 289 S.W.3d 316, 318

(Tex. 2009). However, in determining the Legislature’s intent, we do not confine our

review to isolated words, phrases, or clauses, “but rather we examine the entire act to

glean its meaning.” Meritor Auto., Inc. v. Ruan Leasing Co., 44 S.W.3d 86, 90 (Tex.

2001); see also Tex. Gov’t Code Ann. § 311.011(a) (West 2005) (instructing courts to

construe words and phrases in context). “We look first to the statute’s language to

determine that intent, as we consider it ‘a fair assumption that the Legislature tries to say

what it means, and therefore the words it chooses should be the surest guide to legislative

intent.’” Leland v. Brandal, 257 S.W.3d 204, 206 (Tex. 2008) (quoting Fitzgerald v.

Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 866 (Tex. 1999)). “If the statute’s

language is unambiguous, its plain meaning will prevail.” Id.; see also City of Houston v.

Harris Cnty. Outdoor Adver. Assoc., 732 S.W.2d 42, 53 (Tex. App.—Houston [14th

Dist.] 1987, writ ref’d n.r.e.).

A court may not judicially amend a statute and add words that are not contained in

the language of the statute unless doing so is required to give effect to a clear legislative

intent. Jones v. Liberty Mut. Ins. Co., 745 S.W.2d 901, 902 (Tex. 1988); Cameron v.

Terrell & Garrett, Inc., 618 S.W.2d 535, 540-41 (Tex. 1981). Every word used in a

statute is presumed to have been used for a purpose, and every word excluded from a

5 statute must be presumed to have been excluded for a purpose. Cameron, 618 S.W.2d at

540. In construing a statute, we may also consider the object sought to be attained; the

circumstances under which the statute was enacted; legislative history; common law or

former statutory provisions, including laws on the same or similar subjects; consequences

of a particular construction; administrative construction of the statute; and the statute’s

title, preamble, and emergency provision. Tex. Gov’t Code Ann. § 311.023 (West 2005).

The parties agree that TransCanada engages in the business of transporting crude

petroleum in Texas by a pipeline or part of a pipeline. Therefore, construing section

111.002(1) according to its plain meaning, TransCanada is a common carrier. See Tex.

Nat. Res. Code Ann. § 111.002(1); Leland, 257 S.W.3d at 206; Hernandez, 289 S.W.3d

at 318. As previously discussed, appellants contend that section 111.002(1) applies only

to intrastate pipelines. However, the Legislature did not use the words “interstate” or

“intrastate” in section 111.002(1) when describing the type of pipeline to which the

subsection applies, and we must presume that the Legislature excluded these terms for a

purpose. See Jones, 745 S.W.2d at 902; Cameron, 618 S.W.2d at 540-41; see also Tex.

Nat. Res. Code Ann. § 111.002(1). In addition, we note that, in other portions of the

Natural Resources Code, the Legislature expressly includes the term “intrastate” when it

wishes to limit the application of a particular statute to intrastate pipelines. See Tex. Nat.

Res. Code Ann. §§ 91.251(1), 91.255(e), 118.002(a), 211.012(a) (West 2011); Id. §

6 117.012(a), (k) (West Supp. 2012); see also Tex. Gov’t Code Ann. § 311.023(4) (In

construing a statute, a court may consider other laws on the same or similar subjects.).

Appellants argue that the trial court lacked subject matter jurisdiction because

TransCanada cannot comply with the requirement in section 111.002(6) that it subject

itself to regulation by the Railroad Commission. See Tex. Nat. Res. Code Ann. §

111.002(6). However, as previously discussed, when we construe section 111.002(1)

according to its plain meaning, TransCanada meets the requirements for common carrier

status pursuant to that subsection. See id. § 111.002(1). In addition, the subsections

within section 111.002 are connected disjunctively by the Legislature’s use of the word

“or.” See id. § 111.002(6); see also Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d 578,

581 (Tex. 2000) (“Or” is a disjunctive conjunction that signifies a separation between two

distinct ideas.). Therefore, if an entity meets the requirements for common-carrier status

contained in section 111.002(1), it need not also meet the requirements of section

111.002(6). We also note that subsection (6) of section 111.002 is expressly limited to

pipelines for the transportation of carbon dioxide or hydrogen. See Tex. Nat. Res. Code

Ann. § 111.002(6).

In an attempt to engraft the requirements of section 111.002(6) of the Texas

Natural Resources Code onto section 111.002(1), appellants cite Tex. Rice Land

Partners, Ltd. v. Denbury Green Pipeline-Texas, LLC, 363 S.W.3d 192 (Tex. 2012). In

Tex. Rice, the Supreme Court addressed the issue of whether a landowner may challenge

7 the eminent domain power of a carbon dioxide pipeline owner that has been granted a

common-carrier permit from the Railroad Commission. Tex. Rice, 363 S.W.3d at 195.

The Supreme Court held that section 111.002(6) governed whether Denbury Green was a

common carrier. Id. at 197-98, 200. The Tex. Rice court did not address subsection

111.002(1), and the Supreme Court expressly stated in a footnote that its decision “is

limited to persons seeking common-carrier pipeline status under Section 111.002(6)” and

expressed no opinion concerning other types of pipelines. Id. at 202 n.28. Furthermore,

the record in Tex. Rice included evidence suggesting “the pipeline would be exclusively

for private use.” Id. at 203.

Appellants also cite Vardeman v. Mustang Pipeline Co., 51 S.W.3d 308 (Tex.

App.—Tyler 2001, pet. denied). In Vardeman, the pipeline at issue was transporting

ethylene, which fit within the broad definition of “crude petroleum,” but the parties and

the Court seemed to believe that section 111.002(6), rather than 111.002(1), governed.

Vardeman, 51 S.W.3d at 312-13. Nothing in Vardeman indicates that the Tyler Court of

Appeals meant to engraft the requirements of section 111.002(6) onto section 111.002(1).

Id. Furthermore, opinions of our sister Courts of Appeals are not binding on this Court.

Mitchell v. John Wiesner, Inc., 923 S.W.2d 262, 264 (Tex. App.—Beaumont 1996, no

writ). Therefore, to the extent that Vardeman could be arguably interpreted as engrafting

the requirements of section 111.002(6) of the Natural Resources Code onto section

111.002(1), we decline to follow Vardeman.

8 Finally, appellants make a broad policy argument in issue three. Citing Peterson

v. Grayce Oil Co., 37 S.W.2d 367, 371 (Tex. Civ. App.—Fort Worth 1931), aff’d, 98

S.W.2d 781 (Tex. 1936), appellants contend that Texas’s laws “relating to oil and gas

have as their purpose the conservation of oil and gas resources for the benefit of Texas

producers and landowners so the oil and gas will have value[,] and this purpose is not

served by a pipeline transporting crude petroleum outside of Texas.” However, while

Peterson generally holds that Texas’s oil and gas laws were intended to conserve Texas’s

resources, Peterson does not support appellants’ contention that affording common-

carrier status to an entity that is transporting oil produced and sold in a foreign

jurisdiction contravenes that intention. See id. at 371-76. Appellants provide no other

pertinent authorities supporting their contention, nor do they explain why their broad

policy argument should trump the rules of statutory construction discussed above. See

Tex. R. App. P. 38.1(i) (Briefs must contain appropriate citations to authorities.). For all

of the aforementioned reasons, we overrule appellants’ issues and affirm the trial court’s

judgment.

AFFIRMED.

________________________________ STEVE McKEITHEN Chief Justice

Submitted on October 4, 2012 Opinion Delivered November 29, 2012 Before McKeithen, C.J., Gaultney and Kreger, JJ.