Terrance J. Hlavinka, Kenneth Hlavinka, Tres Bayou Farms, Lp, and Terrance Hlavinka Cattle Company v. Hsc Pipeline Partnership, Llc
650 S.W.3d 483
Tex.2022Background:
- Landowners Hlavinka own ~13,000 acres in Brazoria County located between major refining/industrial hubs; the property already carried ~25 pipeline easements and the owners had recently sold two easements in arms‑length transactions for $3.45M and $2M.
- HSC built a polymer‑grade propylene pipeline across the Hlavinkas’ tracts in 2017, transporting propylene from Texas City to a Braskem facility; Braskem is the pipeline’s only current, unaffiliated customer; HSC filed a tariff and the line interconnects with other pipelines.
- HSC sought to condemn a 30‑ft easement (6.41 acres); Hlavinkas challenged HSC’s authority and the taking’s valuation; HSC moved for partial summary judgment on common‑carrier status.
- Trial court granted summary judgment to HSC (common‑carrier status and public use) and excluded the Hlavinkas’ testimony about recent easement sales, awarding only agricultural damages.
- Court of appeals: affirmed that polymer‑grade propylene qualifies under Business Organizations Code §2.105 and HSC has condemnation authority; held public‑use was a jury question on this record and that the trial court erred in excluding the landowner’s easement‑sale testimony.
- Supreme Court affirmed in part, reversed in part, holding §2.105 grants eminent‑domain power for polymer‑grade propylene pipelines, the pipeline serves a public use as a matter of law, and comparable arms‑length easement sales on the same property are admissible evidence of market value; remanded for a new valuation trial.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Business Organizations Code §2.105 independently confers eminent‑domain/common‑carrier authority for pipelines transporting listed products | §2.105 is subordinate to Natural Resources Code §111.002 and does not independently confer condemnation power for products not listed there | §2.105 incorporates the condemnation rights of §§111.019–111.022 and independently grants power for the products it lists | Held: §2.105 independently confers condemnation authority (affirmed) |
| Whether polymer‑grade propylene qualifies as an “oil product” under §2.105 | Propylene is a refined/byproduct not covered as an oil product | Polymer‑grade propylene is derived from refinery processes and natural gas liquids that are components of crude petroleum, so it fits the statutory and regulatory definitions | Held: Polymer‑grade propylene is an “oil product” under §2.105 (affirmed) |
| Whether the pipeline serves a “public use” (and whether that is a jury question) | Pipeline primarily serves pipeline‑owner affiliates; jury should decide public‑use sufficiency | Existing contract with an unaffiliated customer, filed tariff, interconnections and available capacity satisfy Texas Rice public‑use test as a matter of law | Held: As a matter of law, HSC demonstrated public use because pipeline reasonably will serve at least one unaffiliated customer (reversed court of appeals on this point) |
| Admissibility of landowner’s testimony about recent arms‑length easement sales on the same property to prove market value | Such evidence is speculative and may reflect enhancement from the condemnor’s project; should be excluded | Recent, voluntary, local comparable sales of easements on the same property are probative of the highest and best use and market value and rebut the agricultural‑use presumption | Held: Landowner may testify about recent arms‑length easement sales on the same property as some evidence of market value; exclusion was harmful and requires a new trial on valuation (reversed trial court) |
Key Cases Cited
- Tex. Rice Land Partners, Ltd. v. Denbury Green Pipeline-Tex., LLC, 363 S.W.3d 192 (Tex. 2012) (public‑use test: reasonable probability pipeline will serve at least one unaffiliated customer)
- Tex. Rice Land Partners, Ltd. v. Denbury Green Pipeline-Tex., LLC, 510 S.W.3d 909 (Tex. 2017) (an existing contract with an unaffiliated customer can establish public use)
- Exxon Pipeline Co. v. Zwahr, 88 S.W.3d 623 (Tex. 2002) (project‑enhancement rule limits valuation based on value created by the condemnation itself)
- Enbridge Pipelines (E. Tex.) L.P. v. Avinger Timber, LLC, 386 S.W.3d 256 (Tex. 2012) (standard of review and issues on exclusion of valuation evidence)
- Maher v. Lasater, 354 S.W.2d 923 (Tex. 1962) (ultimate question of public use is a judicial question)